AMOSKEAG CO
S-4, 1998-02-12
BROADWOVEN FABRIC MILLS, COTTON
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<PAGE>   1
 
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 12, 1998.
 
                                                     REGISTRATION NO. 333-
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ---------------------
 
                                    FORM S-4
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             ---------------------
 
                             PILLOWTEX CORPORATION
             (Exact Name of Registrant as Specified in Its Charter)
 
<TABLE>
  <C>                               <C>                               <C>
               TEXAS                              2392                           75-2147728
    (State or Other Jurisdiction      (Primary Standard Industrial            (I.R.S. Employer
        of Incorporation or          Classification Control Number)         Identification No.)
            Organization)
</TABLE>
 
                                 4111 MINT WAY
                              DALLAS, TEXAS 75237
                                 (214) 333-3225
                  (Address, Including Zip Code, and Telephone
                          Number, Including Area Code,
                  of Registrant's Principal Executive Offices)
                             ---------------------
 
                               JEFFREY D. CORDES
                     PRESIDENT AND CHIEF OPERATING OFFICER
                             PILLOWTEX CORPORATION
                                 4111 MINT WAY
                              DALLAS, TEXAS 75237
                                 (214) 333-3225
                      (Name, Address, Including Zip Code,
                        and Telephone Number, Including
                        Area Code, of Agent For Service)
   SEE TABLE OF ADDITIONAL REGISTRANTS ON THE FOLLOWING PAGE FOR INFORMATION
        RELATING TO THE GUARANTORS OF THE SECURITIES REGISTERED HEREBY.
                             ---------------------
 
                                   Copies to:
 
                           KATHLEEN R. MCLAURIN, ESQ.
                           JONES, DAY, REAVIS & POGUE
                           2300 TRAMMELL CROW CENTER
                                2001 ROSS AVENUE
                              DALLAS, TEXAS 75201
                                 (214) 220-3939
                             ---------------------
 
    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
 
    If the only securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.  [ ]
 
    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  [ ]
- ------------.
 
    If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]
- ------------.
 
                        CALCULATION OF REGISTRATION FEE
 
<TABLE>
<CAPTION>
==================================================================================================================
                                                          PROPOSED             PROPOSED
        TITLE OF EACH CLASS OF          AMOUNT TO BE  MAXIMUM OFFERING    MAXIMUM AGGREGATE         AMOUNT OF
     SECURITIES TO BE REGISTERED         REGISTERED    PRICE PER UNIT     OFFERING PRICE(1)     REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
<S>                                    <C>            <C>               <C>                    <C>
9% Senior Subordinated Notes due
  2007................................  $185,000,000        100%             $185,000,000          $54,575(2)
- ------------------------------------------------------------------------------------------------------------------
Guarantees of the 9% Senior
  Subordinated Notes due 2007.........  $185,000,000         (3)                 (3)                   (3)
==================================================================================================================
</TABLE>
 
(1) Estimated solely for the purpose of calculating the registration fee under
    Rule 457 of the Securities Act of 1933, as amended (the "Securities Act").
 
(2) The registration fee for the securities offered hereby, $54,575, is
    calculated under Rule 457(f)(2) of the Securities Act.
 
(3) Pursuant to Rule 457(n) under the Securities Act, no separate fee for the
    guarantees is payable.
 
    THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>   2
 
                        TABLE OF ADDITIONAL REGISTRANTS
 
     The address of the principal executive offices of each of the additional
registrants listed below, and the name and address of the agent for service
therefor, is the same as is set forth for Pillowtex Corporation on the facing
page of this Registration Statement.
 
<TABLE>
<CAPTION>
                                        JURISDICTION OF  PRIMARY STANDARD       I.R.S.
              EXACT NAME                 INCORPORATION      INDUSTRIAL         EMPLOYER
             AS SPECIFIED                     OR          CLASSIFICATION    IDENTIFICATION
          IN THEIR CHARTERS              ORGANIZATION         NUMBER            NUMBER
          -----------------             ---------------  ----------------   --------------
<S>                                     <C>              <C>                <C>
Amoskeag Company                        Delaware             6744               04-1032485
Amoskeag Management Corporation         Delaware             8980               04-2846718
Bangor Investment Company               Maine                6748               01-0200600
Beacon Manufacturing Company            North Carolina       2281               75-2568775
Crestfield Cotton Company               Tennessee            2298               62-0909424
Downeast Securities Corporation         Delaware             6749               13-3105881
Encee, Inc.                             Delaware             5700               56-1675214
FCC Canada, Inc.                        Delaware             2298               56-1813430
Fieldcrest Cannon Financing, Inc.       Delaware             8980               56-1899877
Fieldcrest Cannon, Inc.                 Delaware             2390               56-0586036
Fieldcrest Cannon International, Inc.   Delaware             6749               56-0844275
Fieldcrest Cannon Licensing, Inc.       Delaware             8980               56-1899876
Fieldcrest Cannon Sure Fit, Inc.        Delaware             2390               56-1903913
Fieldcrest Cannon Transportation, Inc.  Delaware             4200               56-1899875
Manetta Home Fashions, Inc.             North Carolina    2211, 2297            56-1835854
Moore's Falls Corporation               Delaware             6748               04-2485069
Pillowtex, Inc.                         Delaware             2392               13-3876864
Pillowtex Management Services Company   Delaware          2211, 2221            75-2639144
PTEX Holding Company                    Delaware             6719               51-0373367
St. Mary's, Inc.                        Delaware             6749               56-1968253
Tennessee Woolen Mills, Inc.            Tennessee         2231, 2297            62-1202303
</TABLE>
<PAGE>   3
 
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
 
                 SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1998
 
                              PILLOWTEX CORP. LOGO
                                   PROSPECTUS
 
                               OFFER TO EXCHANGE
                     9% SENIOR SUBORDINATED NOTES DUE 2007,
                          FOR ANY AND ALL OUTSTANDING
                     9% SENIOR SUBORDINATED NOTES DUE 2007
                             ---------------------
 
        THE EXCHANGE OFFER WILL EXPIRE AT                , NEW YORK CITY
                   TIME, ON                , UNLESS EXTENDED.
                             ---------------------
 
     Pillowtex Corporation, a Texas corporation (the "Company"), hereby offers,
upon the terms and subject to the conditions set forth in this Prospectus and
the accompanying Letter of Transmittal (the "Letter of Transmittal"), to
exchange (the "Exchange Offer") its outstanding 9% Senior Subordinated Notes Due
2007 (the "Series A Notes"), of which $185,000,000 aggregate principal amount is
outstanding as of the date hereof, for an equal aggregate principal amount of
its newly issued 9% Senior Subordinated Notes Due 2007 (the "Series B Notes")
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"). The Series B Notes are being offered hereby in order to
satisfy certain obligations of the Company and the Guarantors (as defined
herein) under the Registration Rights Agreement, dated December 18, 1997, among
the Company and certain other signatories thereto (the "Registration Rights
Agreement"). The form and terms of the Series B Notes will be the same as those
of the Series A Notes except that the Series B Notes will have been registered
under the Securities Act, and consequently will not be subject to certain
transfer restrictions, registration rights and related liquidated damages
provisions applicable to the Series A Notes. The Series B Notes will evidence
the same debt as the Series A Notes and will be entitled to the benefits of an
indenture (the "Indenture"), dated as of December 18, 1997, by and among the
Company, the Guarantors and Norwest Bank Minnesota, National Association, as
trustee (the "Trustee"). The Indenture provides for the issuance of both the
Series A Notes and the Series B Notes. The Series A Notes and the Series B Notes
are referred to herein collectively as the "Notes" and holders of the Notes are
sometimes referred to herein as the "Holders."
 
     The Series A Notes were issued on December 18, 1997 pursuant to an offering
(the "Offering") that was exempt from registration under the Securities Act. The
Series A Notes were issued in connection with the merger (the "Merger") on
December 19, 1997 of Fieldcrest Cannon, Inc. ("Fieldcrest") with and into a
wholly owned subsidiary of the Company pursuant to the Merger Agreement (as
defined herein).
 
     The Notes mature on December 15, 2007, unless previously redeemed. Interest
on the Notes will be payable semiannually in arrears on June 15 and December 15
of each year commencing June 15, 1998. The Notes will be redeemable at the
option of the Company, in whole or in part, on or after December 15, 2002, at
the redemption prices set forth herein, plus accrued and unpaid interest
thereon, and Liquidated Damages (as defined herein), if any, to the redemption
date. Upon a Change of Control (as defined herein), the Company will be required
to make an offer to repurchase all outstanding Notes at 101% of the aggregate
principal amount thereof plus accrued and unpaid interest thereon, and
Liquidated Damages, if any, to the date of repurchase.
 
     The Series A Notes are, and the Series B Notes will be, general unsecured
obligations of the Company, ranking senior in right of payment to all existing
and future subordinated indebtedness of the Company, pari passu in right of
payment with the Company's existing 10% Senior Subordinated Notes due 2006 (the
"10% Senior Subordinated Notes"), and subordinated in right of payment to all
existing and future Senior Indebtedness (as defined herein) of the Company,
including indebtedness under the New Senior Credit
 
                                                        (continued on next page)
 
      SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN
FACTORS THAT
SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR SERIES A NOTES IN THE
EXCHANGE
OFFER.
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
    EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
       THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
          COMMISSION PASSED UPON THE ACCURACY OR
              ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
                 TO THE CONTRARY IS A CRIMINAL OFFENSE.
                             ---------------------
 
                  This Prospectus is dated             , 1998.
<PAGE>   4
 
(continued from cover page)
 
Facilities (as defined herein). The Series A Notes are, and the Series B Notes
will be, fully and unconditionally guaranteed on a senior basis (the "Subsidiary
Guarantees") by each of the Company's current and future domestic Subsidiaries
(as defined herein) (the "Guarantors"), including Fieldcrest. The Subsidiary
Guarantees are senior unsecured obligations, ranking senior in right of payment
to all existing and future subordinated indebtedness of the Guarantors, pari
passu in right of payment to the Guarantor's guarantees of the 10% Senior
Subordinated Notes, and subordinated in right of payment to all existing and
future senior indebtedness of the Guarantors, including the guarantees of
indebtedness under the New Senior Credit Facilities. As of September 27, 1997,
on a pro forma basis after giving effect to the consummation of the Merger and
the related Financing Transactions (as defined herein), including the Offering,
and the application of the proceeds from the Financing Transactions as described
under "Use of Proceeds," the Company and its subsidiaries on a consolidated
basis would have had $420.0 million of indebtedness (excluding $37.8 million in
letters of credit) effectively ranking senior to the Notes. See "Description of
Notes."
 
     The Company will accept for exchange any and all Series A Notes that are
properly tendered in the Exchange Offer and not withdrawn prior to 5:00 p.m.,
New York City time, on             , 1998 (such date if and as it may be
extended, the "Expiration Date"). Tenders of Series A Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date. In the
event the Exchange Offer is terminated, the Series A Notes not accepted for
exchange will be returned without expense to the tendering holders as promptly
as practicable. See "The Exchange Offer."
 
     Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission") as set forth in no action letters issued to third
parties, the Company believes that Series B Notes issued pursuant to the
Exchange Offer in exchange for Series A Notes may be offered for resale, resold
and otherwise transferred by Holders thereof (other than any such Holder which
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Series B Notes are acquired
in the ordinary course of such Holder's business and such Holder has no
arrangement with any person to participate in the distribution of such Series B
Notes. The Company does not intend to request the Commission to consider, and
the Commission has not considered, the Exchange Offer in the context of a
no-action letter and there can be no assurance that the staff of the Commission
would make a similar determination with respect to the Exchange Offer as in such
other circumstances. Each Holder, other than a broker-dealer, must acknowledge
that it is not engaged in, and does not intend to engage in, a distribution of
such Series B Notes and has no arrangement or understanding to participate in a
distribution of Series B Notes. Each broker-dealer that receives Series B Notes
for its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Series B Notes. 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 Series B Notes received in exchange for Series A
Notes where such Series A Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of one year after the Registration Statement has been
declared effective, it will make this Prospectus available to any broker-dealer
for use in connection with any such resale. See "The Exchange Offer" and "Plan
of Distribution."
     There is no existing trading market for the Notes, and there can be no
assurance regarding the future development of a market for the Notes, or the
ability of Holders of the Notes to sell their Notes or the price at which such
Holders may be able to sell their Notes. The Company does not intend to list the
Notes on any securities exchange nor has the Company entered into any
arrangement or understanding with any person to distribute the Notes to be
received in the Exchange Offer.
 
     Holders of Series A Notes whose Series A Notes are not tendered and
accepted in the Exchange Offer will continue to hold such Series A Notes and
will be entitled to all the rights and preferences and subject to the
limitations applicable thereto under the Indenture. Following consummation of
the Exchange Offer, the Holders of Series A Notes will continue to be subject to
the existing restrictions upon transfer thereof, and the Company will have no
further obligation to such Holders to provide for the registration under the
Securities Act of the Series A Notes.
 
     The Company will not receive any proceeds from, and has agreed to bear all
registration expenses of, the Exchange Offer. No underwriter is being used in
connection with the Exchange Offer. See "The Exchange Offer -- Fees and
Expenses."
<PAGE>   5
 
                             AVAILABLE INFORMATION
 
     The Company is subject to the information and reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files periodic reports, proxy statements, and other
information with the Commission. Such reports, proxy statements, and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
The Commission also maintains a Website, located at http://www.sec.gov, that
contains reports, proxy statements, and other information regarding registrants
that file electronically with the Commission. Copies of such reports, proxy
statements, and other information also may be obtained by mail from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Such reports, proxy statements, and other
information relating to Pillowtex may also be inspected at the offices of the
New York Stock Exchange ("NYSE") at 20 Broad Street, New York, New York 10005.
The Common Stock, par value $0.01 per share, of the Company (the "Pillowtex
Common Stock") is listed and traded on the NYSE under the symbol "PTX."
 
     The Company and the Guarantors have filed with the Commission a
registration statement on Form S-4 (including the exhibits and amendments
thereto, the "Registration Statement") under the Securities Act with respect to
the Series B Notes offered hereby. As permitted under the Securities Act and the
Exchange Act, this Prospectus does not contain all the information set forth in
the Registration Statement. Such additional information can be inspected and
copied or obtained from the Commission in the manner described above. Statements
contained in this Prospectus as to the contents of any other document referred
to herein are not necessarily complete, and each such statement is qualified in
all respects by reference to the copy of such other document filed as an exhibit
to the Registration Statement.
 
     The Company has agreed that, whether or not it is required to do so by the
rules and regulations of the Commission, for so long as any of the Notes remain
outstanding, it will furnish to the holders of the Notes and file with the
Commission (unless the Commission will not accept such filing) (i) all quarterly
and annual financial information that would be required to be contained in a
filing with the Commission on Forms 10-Q and 10-K if the Company were required
to file such forms pursuant to the Exchange Act including a "Management's
Discussion and Analysis of Results of Operations and Financial Condition" and,
with respect to the annual financial statements only, a report thereon by the
Company's independent accountants and (ii) all reports that would be required to
be filed with the Commission on Form 8-K if the Company were required to file
such reports.
 
     NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES IN ANY JURISDICTION TO OR
FROM ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION
IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
 
               INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
 
     THIS PROSPECTUS INCORPORATES CERTAIN DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS TO
SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE)
ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS PROSPECTUS IS DELIVERED
UPON WRITTEN OR ORAL REQUEST. REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED TO
PILLOWTEX CORPORATION, 4111 MINT WAY, DALLAS, TEXAS 75237, ATTENTION: MARK
KIRKPATRICK, TELEPHONE (214) 333-3225. IN ORDER TO ENSURE TIMELY DELIVERY OF
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY             , 1998.
 
                                      (ii)
<PAGE>   6
 
     The following documents which have been filed by the Company with the
Commission are hereby incorporated by reference in this Prospectus: (i) Annual
Report on Form 10-K for the year ended December 28, 1996; (ii) Quarterly Reports
on Form 10-Q for the fiscal quarters ended March 29, 1997, June 28, 1997, and
September 27, 1997; (iii) Current Report on Form 8-K, dated September 10, 1997
(as amended by an amendment on Form 8-K/A); (iv) Proxy Statement on Schedule 14A
for the Annual Meeting of Shareholders held May 8, 1997; (v) Registration
Statement on Form 8-A, effective March 17, 1993 (Commission File No. 1-11756),
and (vi) Current Report on Form 8-K, dated January 6, 1998 (as amended by an
amendment on Form 8-K/A).
 
     The following documents which have been filed by Fieldcrest with the
Commission are hereby incorporated by reference in this Prospectus: (i) Annual
Report on Form 10-K for the year ended December 31, 1996; (ii) Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1997, June 30, 1997, and September
30, 1997; (iii) Current Report on Form 8-K, dated September 15, 1997; and (iv)
Current Report on Form 8-K dated December 29, 1997.
 
     The information relating to Pillowtex and Fieldcrest contained in this
Prospectus should be read together with the information in the documents
incorporated by reference.
 
     All documents and reports filed by the Company pursuant to Section 13(a),
13(c), 14, or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the Exchange Offer are deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the dates of filing of
such documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein is deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed documents which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
 
                   NOTE REGARDING FORWARD-LOOKING INFORMATION
 
     THE INFORMATION CONTAINED IN THIS PROSPECTUS CONTAINS "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995, WHICH ARE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS
"MAY," "WILL," "COULD," "SHOULD," "EXPECT," "ANTICIPATE," "INTEND," "PLAN,"
"ESTIMATE," OR "CONTINUE" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREOF.
SUCH FORWARD-LOOKING STATEMENTS ARE NECESSARILY BASED ON VARIOUS ASSUMPTIONS AND
ESTIMATES AND ARE INHERENTLY SUBJECT TO VARIOUS RISKS AND UNCERTAINTIES,
INCLUDING RISKS AND UNCERTAINTIES RELATING TO THE POSSIBLE INVALIDITY OF THE
UNDERLYING ASSUMPTIONS AND ESTIMATES AND POSSIBLE CHANGES OR DEVELOPMENTS IN
SOCIAL, ECONOMIC, BUSINESS, INDUSTRY, MARKET, LEGAL, AND REGULATORY
CIRCUMSTANCES AND CONDITIONS AND ACTIONS TAKEN OR OMITTED TO BE TAKEN BY THIRD
PARTIES, INCLUDING CUSTOMERS, SUPPLIERS, BUSINESS PARTNERS, AND COMPETITORS AND
LEGISLATIVE, REGULATORY, JUDICIAL, AND OTHER GOVERNMENTAL AUTHORITIES AND
OFFICIALS. IN ADDITION TO ANY RISKS AND UNCERTAINTIES SPECIFICALLY IDENTIFIED IN
THE TEXT SURROUNDING SUCH FORWARD-LOOKING STATEMENTS, THE STATEMENTS IN "RISK
FACTORS" BEGINNING ON PAGE 16 OF THIS PROSPECTUS OR IN THE REPORTS, PROXY
STATEMENTS, AND OTHER INFORMATION REFERRED TO IN "AVAILABLE INFORMATION"
CONSTITUTE CAUTIONARY STATEMENTS IDENTIFYING IMPORTANT FACTORS THAT COULD CAUSE
ACTUAL AMOUNTS, RESULTS, EVENTS, AND CIRCUMSTANCES TO DIFFER MATERIALLY FROM
THOSE REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS.
 
                                      (iii)
<PAGE>   7
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Available Information.......................................  ii
Incorporation of Certain Information by Reference...........  ii
Note Regarding Forward-Looking Information..................  iii
Summary.....................................................  1
Risk Factors................................................  16
The Merger..................................................  23
Use of Proceeds.............................................  25
Pro Forma Capitalization of Pillowtex.......................  26
Unaudited Pro Forma Combined Financial Information..........  28
Selected Historical Financial Information of Pillowtex......  36
Selected Historical Financial Information of Fieldcrest.....  37
The Exchange Offer..........................................  38
Business....................................................  46
Description of Notes........................................  59
Post-Merger Indebtedness....................................  87
Pillowtex Series A Redeemable Convertible Preferred Stock...  90
Certain United States Federal Income Tax Considerations.....  92
Plan of Distribution........................................  93
Legal Matters...............................................  93
Experts.....................................................  93
</TABLE>
 
                                      (iv)
<PAGE>   8
 
                                    SUMMARY
 
     The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial data, including
the financial statements and notes thereto included elsewhere in this
Prospectus.
 
     On December 19, 1997, Fieldcrest merged with and into a wholly owned
subsidiary of Pillowtex pursuant to an Agreement and Plan of Merger dated
September 10, 1997 (as amended, the "Merger Agreement"). Upon consummation of
the Merger, Fieldcrest became a wholly owned subsidiary of Pillowtex. Except as
otherwise required by the context, references herein to periods prior to
December 19, 1997 to (i) "Pillowtex" are to Pillowtex Corporation and its
subsidiaries prior to giving effect to the Merger; (ii) "Fieldcrest" are to
Fieldcrest Cannon, Inc. and its subsidiaries prior to giving effect to the
Merger; and (iii) the "Company" are to Pillowtex Corporation and its
subsidiaries, including Fieldcrest, following the Merger. References herein to
periods after December 19, 1997 to "Pillowtex" or the "Company" include
Fieldcrest and its subsidiaries.
 
     The unaudited pro forma condensed combined financial information contained
herein gives effect to the consummation of the Merger and the Financing
Transactions, as if such transactions had been consummated as of September 27,
1997, in the case of the balance sheet information of Pillowtex, and on December
31, 1995, the first day of Pillowtex's 1996 fiscal year, in the case of the
statement of operations information. References herein to "fiscal" years are
references to fiscal years of Pillowtex (which end on December 31 for years
prior to 1995 and on the Saturday nearest December 31 for years after 1994) or
to fiscal years of Fieldcrest (which end on December 31), as the case may be.
 
                                  THE COMPANY
 
     The Company is one of the largest, based on net sales, North American
designers, manufacturers, and marketers of home textile products, offering a
full line of bed pillows, sheets, blankets, mattress pads, down comforters,
towels, bath rugs, and other home textile products. As a leading supplier across
all distribution channels, the Company sells its products to most major mass
merchants, department stores, and specialty retailers, providing its customers a
centralized "one-stop" source for their home textile merchandise.
 
     The Company manufactures and markets products utilizing established and
well recognized Company-owned trademarks and trade names, including Royal
Velvet(R), Cannon(R), Charisma(R), Touch of Class(R), Fieldcrest(R), Nettle
Creek(R), and Beacon(R). In addition, the Company has licensed, for certain
products, highly recognizable brands such as Ralph Lauren, Disney's Mickey
UNLIMITED(R), Mickey's Stuff for Kids(R), and Mickey & Co.(R), Comforel(R),
Adrienne Vittadini(R), Ellen Tracy(R), and Waverly(R) as well as such well-known
copyrighted characters as Mickey Mouse and Winnie the Pooh. This diverse
portfolio of premier brand names allows the Company to differentiate its
products from those of its competitors and provides distinct brand names for
different channels of retail distribution and for different price points. The
Company believes that this portfolio of well-known brands and trade names
provides it with a significant competitive advantage.
 
     On a pro forma combined basis, after giving effect to the Merger and the
Financing Transactions, the Company would have had net sales and pro forma
EBITDA (as defined herein) of approximately $1.6 billion and $158.5 million,
respectively, for the last 12 months ended September 27, 1997. See "Business --
General."
 
     The Company's principal executive office is located at 4111 Mint Way,
Dallas, Texas 75237, and its telephone number is (214) 333-3225.
 
                              RECENT DEVELOPMENTS
 
     Since the consummation of the Merger on December 19, 1997, the Company has
disposed of certain non-core business assets of Fieldcrest for approximately
$24.0 million in cash. The Company plans to continue to evaluate certain
Fieldcrest properties and lines of business unrelated to its core home textile
business of towel, bath rugs, sheets and fashion bedding and expects to enter
into additional agreements for the disposal of these properties and businesses.
                                        1
<PAGE>   9
 
     On January 20, 1998, the Company announced that it was consolidating its
four blanket production units into two facilities in Westminster, South Carolina
and Swannanoa, North Carolina. In connection with this consolidation the Company
has announced that it is closing certain facilities operated by its
subsidiaries, Manetta Home Fashions, Inc. and Tennessee Woolen Mills, Inc. The
consolidation is expected to be completed by the end of the second quarter of
this year. As part of the consolidation, the Company will take a pre-tax charge
to earnings of approximately $6.0 million for the period ended January 3, 1998,
and approximately $1.5 million for the period ending April 4, 1998. Management
expects these nonrecurring costs to be initially funded through cash flows and
borrowings under the New Senior Credit Facilities.
 
                                   PILLOWTEX
 
     Pillowtex, founded in 1954, is a leading North American designer,
manufacturer, and marketer of bed pillows, blankets, mattress pads, and down
comforters. Other complementary bedroom textile furnishings offered by Pillowtex
include comforter covers, featherbeds, pillow protectors, decorative pillows,
bedspreads, synthetic comforters, pillow shams, dust ruffles, and window
treatments. Pillowtex has positioned itself as a single-source supplier to
retailers for top-of-the-bed home textile furnishings (other than sheets),
offering a broad assortment of products across multiple price points.
 
     Pillowtex markets its products primarily to department stores, mass
merchants, wholesale clubs, specialty retail stores, catalogs, and institutional
distributors. Pillowtex believes it is one of the principal suppliers of bedroom
textile products to several of the largest retailers in the United States,
including Wal-Mart Stores, Inc. (including Wal-Mart and Sam's Club stores)
("Wal-Mart"), Dayton Hudson Corporation (including Mervyn's, Marshall Field's,
and Target stores) ("Dayton Hudson") and Federated Department Stores, Inc.
(including Macy's East and Macy's West, Bloomingdale's, and Burdine's stores)
("Federated").
 
     Pillowtex manufactures and markets its products under numerous
Company-owned trademarks, trade names, and customer-owned private labels, as
well as certain licensed trademarks. Pillowtex uses trademarks, trade names, and
private labels as merchandising tools to assist its customers in coordinating
their product offerings and to differentiate their products from those of their
competitors. Pillowtex has also entered into various license agreements under
which it markets pillows, down comforters, blankets, and related products, using
such well-known trademarks as Ralph Lauren, The Walt Disney Company's ("Disney")
Mickey UNLIMITED(R), Mickey's Stuff for Kids(R), and Mickey & Co.(R), and
Comforel(R). In 1996, Pillowtex entered into exclusive license agreements with
Fieldcrest for the manufacture and sale of various goods including bed pillows,
mattress pads, and down comforters under a variety of Fieldcrest's trademarks,
including Royal Velvet(R), Cannon(R), Charisma(R), Touch of Class(R), and
Fieldcrest(R). In addition, Pillowtex manufactures pillows, blankets, throws,
and mattress pads under the MARTHA STEWART EVERYDAY(TM) brand name for Kmart
Corporation ("Kmart").
 
     Pillowtex's net sales and EBITDA were $525.5 million and $59.0 million,
respectively, for the 12 months ended September 27, 1997. See "Business."
 
                                   FIELDCREST
 
     Fieldcrest, founded in 1953, designs, manufactures, and markets a broad
range of household textile products including towels, bath rugs, sheets, and
comforters. Other complementary products include furniture coverings, ceramic
accessories, and shower curtains. Fieldcrest is the leading supplier of towels
in North America and has a significant market share in bath rugs, sheets, and
fashion bedding items.
 
     Fieldcrest markets a broad range of household textile products through all
major distribution channels, including department stores, mass merchants,
wholesale clubs, specialty retail stores, catalogs, and institutional
distributors. Fieldcrest is a leading supplier to department and specialty
stores, including Federated, The May Department Stores Company, Dayton Hudson,
and Bed Bath & Beyond Inc. In addition, Fieldcrest has achieved a significant
market share in the mass merchant channel by developing relationships with the
channel's leading retailers including Wal-Mart, Kmart, and Target. Fieldcrest
also serves the institutional
 
                                        2
<PAGE>   10
 
segment of the industry, including Hilton Hotels Corporation; Marriott Hotels,
Resorts, and Suites, a division of Marriott International, Inc.; and Hyatt
Hotels Corporation.
 
     Fieldcrest's bed and bath products are sold under such brand names as Royal
Velvet(R), Cannon(R), Charisma(R), Fieldcrest(R), Royal Family(R), Caldwell(R),
and St. Mary's(R). Fieldcrest also has license agreements for the use of various
trademarks, including Waverly(R), Adrienne Vittadini(R), Court of Versailles(R),
Ellen Tracy(R), and others. In 1996, approximately 93% of Fieldcrest's sales
were derived from products carrying Fieldcrest's brand names. The Company
believes that Fieldcrest's principal brand names are widely recognized in the
industry as representing excellence and value in product quality, fashion, and
design.
 
     Fieldcrest's net sales and EBITDA were $1.1 billion and $77.9 million,
respectively, for the 12 months ended September 30, 1997.
 
                             COMPETITIVE STRENGTHS
 
     The Merger has created one of the largest firms, based on net sales, in the
home textile industry with competitive strengths that are significantly greater
than those of either Pillowtex or Fieldcrest on a stand-alone basis. The Company
has the largest market share in North America in each of the towel, bed pillow,
blanket, and down comforter product segments and a significant market share in
sheets, mattress pads, fashion bedding, and bath rugs.
 
     Pillowtex's management team has successfully integrated eight acquisitions
over the last five years while improving Pillowtex's overall efficiency and
consistently producing a record of growth and profitability. From 1991 through
1996, Pillowtex's net sales have increased from $259.0 million to $490.7
million, representing a compound annual growth rate of 13.6%. Over this same
period Pillowtex's EBITDA has improved from $22.0 million to $50.9 million,
representing a compound annual growth rate of 18.3%. The combined company's
management team will provide a breadth of expertise rivaling any in the
industry.
 
     The Company's management team will use the following competitive strengths
to enhance the Company's position in the marketplace:
 
     - Industry Leading Brands: As a result of the Merger, the Company owns some
      of the most recognizable brands in the industry, including Royal
      Velvet(R), Cannon(R), Charisma(R), and Touch of Class(R). Recent consumer
      research has shown that Cannon(R) and Fieldcrest(R) are the two most
      recognized home textile brands in the United States. In addition,
      Cannon(R) is the sixth most recognized domestic consumer brand.
      Furthermore, through licensing agreements, the Company currently has
      exclusive rights to manufacture and, in some instances, market certain
      bedding products under such well-known brands as Ralph Lauren, Disney's
      Mickey UNLIMITED(R), Mickey's Stuff for Kids(R), and Mickey & Co.(R),
      Comforel(R), Adrienne Vittadini(R), Ellen Tracy(R), and Waverly(R). This
      diverse portfolio of premier brand names allows the Company to
      differentiate its products from those of its competitors and provides
      distinct brand names for different channels of retail distribution and for
      different price points. These brand names will also enable the Company to
      assist its customers in coordinating their product offerings and
      differentiating such offerings from those of their competitors.
 
     - Strong Customer Relationships: The Company has established relationships
      with 49 of the top 50 home textile retailers in the United States and
      Canada. The combination of the two companies enhances these relationships,
      providing customers the benefits of a true "one-stop" source for bed and
      bath products. These strong relationships will create a stable base from
      which the Company can pursue future business and new product
      introductions.
 
     - Creative Merchandising Strategies: Historically, both Pillowtex and
      Fieldcrest have maintained creative partnerships with their customers,
      including extensive merchandising programs, that have resulted in the
      creation of successful new products, product mix strategies, point-of-sale
      concepts, and advertising campaigns. Retail customers are increasingly
      demanding exclusive or specially designed product lines to differentiate
      their product offerings from those of other retailers and to implement
      price tiering in
 
                                        3
<PAGE>   11
 
      order to achieve higher margins. The Company will continue this
      collaboration with its retail customers to design products and marketing
      programs responsive to individual customer needs.
 
     - Low Cost Operating Capabilities: As a result of its continued emphasis on
      cost-containment and capital expenditures to obtain greater plant
      efficiencies, the Company is a low cost producer of bed pillows, mattress
      pads, down comforters, and blankets in the home textile industry. The
      Merger provides the Company with efficient, low cost towel and bath rug
      production capabilities, including a new, state-of-the-art towel
      production facility. In addition, Pillowtex has emphasized a low cost of
      operations, creating a competitive advantage by operating with one of the
      lowest selling, general, and administrative ("SG&A") expenses, as a
      percentage of sales, in the industry. The Company believes that
      significant opportunities exist to improve this competitive position by
      lowering Fieldcrest's SG&A costs as a percentage of sales to Pillowtex's
      historic levels.
 
                               BUSINESS STRATEGY
 
     The Company's strategic objectives are to capitalize on its industry
leading position by leveraging the strength of its brand names, customer
relationships, and operational capabilities across the most comprehensive array
of product offerings in the home textile industry. The Company's strategic focus
will be to:
 
     - Capitalize on Industry Leading Position: The Merger has created a
      powerhouse within the home textiles industry in terms of dollar sales
      volume and product offerings. The Company will focus on leveraging its
      market leadership by implementing sales and marketing programs designed to
      facilitate a customer-driven "pull" strategy. By cross-marketing both
      Pillowtex and Fieldcrest products using the Company's strong brand names,
      the Company will create enhanced product value and facilitate greater
      differentiation of its products from those of its competitors.
 
     - Develop the Premier "One-Stop Shop" for Home Textiles: The breadth of the
      Company's product lines provide it with a significant competitive
      advantage as it can offer its retailer customers a centralized "one-stop"
      purchasing source for all their home textile merchandise. The Company's
      extensive assortment of home textile products will include fashion and
      utility bedding, as well as a full line of bath products. The Company will
      exploit its position as a "one-stop" purchasing source by continuing its
      practice of offering broad product assortments across diverse product
      lines, thereby offering retailers a central source from which to
      efficiently and effectively purchase their home textile items.
 
     - Further Strengthen Customer Relationships: The Company has a long history
      of strong customer relationships with the top retailers in the United
      States and Canada. The Company has developed these relationships by
      providing value-added services, such as innovative marketing and cross-
      merchandising capabilities. The Company believes that the value of such
      services to retailers will be increased significantly by combining the
      traditional Pillowtex and Fieldcrest product lines in a centralized
      purchasing source and utilizing the Fieldcrest portfolio of brand names
      across all such product lines. The Company will also increase the use of
      marketing and cross-merchandising services in connection with the
      traditional Fieldcrest products, creating opportunities for added sales
      and providing retailers with more opportunities to differentiate their
      product offerings from those of their competitors.
 
     - Enhance Operational Efficiencies: The Company will continue to focus on
      reducing its manufacturing cost structure by rationalizing its current
      operations and investing in automation, equipment modernization, process
      improvements, and system controls throughout all aspects of its business.
      The Company's management believes that significant opportunities exist to
      improve production efficiency through capital investment, improved
      operational logistics, selective outsourcing, and increased utilization of
      information systems. The Company intends to make capital expenditures in
      excess of $240.0 million over the next several years, principally to
      modernize the acquired Fieldcrest sheet and certain of the towel
      manufacturing facilities through the addition of new machinery and
      equipment. The Company anticipates that approximately $80.0 million of
      such capital expenditures will be made in fiscal 1998.
 
                                        4
<PAGE>   12
 
     - Realize Significant Cost Savings: The Company has identified
      approximately $21.6 million of annual cost savings that it expects to
      realize immediately as a result of the Merger. These cost savings are
      comprised of $20.3 million of savings from the elimination of duplicate
      staff salaries and $1.3 million of savings from the elimination of
      duplicative corporate expenses. The Company additionally expects to
      realize significant ongoing cost savings, including at least $8.4 million
      to be realized within the first 12 months after consummation of the
      Merger, as follows: (i) $0.9 million by eliminating other redundant cost
      functions; (ii) $2.0 million by improving procurement efficiencies by
      exploiting the combined company's purchasing power; (iii) $3.0 million by
      reducing trade advertising; (iv) $1.0 million by rationalizing and
      streamlining operations; and (v) $1.5 million by reducing the use of
      outside consultants.
 
                                   THE MERGER
 
     Pillowtex and Fieldcrest entered into the Merger Agreement, pursuant to
which a wholly owned subsidiary of Pillowtex was merged on December 19, 1997
with and into Fieldcrest. Following consummation of the Merger, Fieldcrest
became a wholly owned subsidiary of Pillowtex. At the effective time of the
Merger (the "Effective Time"), (i) each then-outstanding share of common stock,
par value $1.00 per share, of Fieldcrest (the "Fieldcrest Common Stock") was
exchanged for the right to receive consideration valued at $34.00, consisting of
$27.00 in cash and 0.269 Pillowtex Common Stock, and (ii) each then-outstanding
share of preferred stock, par value $0.01 per share, of Fieldcrest (the
"Fieldcrest Preferred Stock") was exchanged for the right to receive
consideration valued at $58.12, consisting of $46.15 in cash and the remainder
in shares of Pillowtex Common Stock. Each outstanding option (each, a
"Fieldcrest Option") to purchase shares of Fieldcrest Common Stock entitled the
holder thereof to receive, at the election of the holder, an amount in cash
equal to the difference between $34.00 and the per share exercise price of such
Fieldcrest Option; Fieldcrest Options in respect of which such election was not
made were assumed by Pillowtex at the Effective Time and constitute an option to
purchase a number of shares of Pillowtex Common Stock as set forth in the Merger
Agreement. From and after the Effective Time, the 6% Convertible Subordinated
Debentures due 2012 of Fieldcrest (the "Fieldcrest Convertible Debentures") are
convertible into the same consideration that a holder of the number of shares of
Fieldcrest Common Stock into which such Fieldcrest Convertible Debentures might
have been converted immediately prior to the Merger would be entitled to receive
in the Merger. See "The Merger."
 
     Pillowtex financed the Merger and refinanced certain indebtedness of
Pillowtex and Fieldcrest, paid related fees and expenses, and provided for the
ongoing working capital needs of the Company through a combination of (i)
initial borrowings of $149.0 million under a new $350.0 million revolving credit
facility (the "Revolver") and $250.0 million under a new term loan facility (the
"Term Loan"), each with NationsBank of Texas, N.A. (collectively, the "New
Senior Credit Facilities"), (ii) the issuance and sale of $185.0 million in
aggregate principal amount of the Series A Notes, and (iii) the issuance and
sale of $65.0 million in liquidation preference of Series A Redeemable
Convertible Preferred Stock (the "Pillowtex Preferred Stock") to affiliates of
Apollo Management, L.P. (collectively, "Apollo"). The issuance of the Series A
Notes and the Pillowtex Preferred Stock, the initial borrowings under the New
Senior Credit Facilities, the repayment of all amounts outstanding under
Pillowtex's and Fieldcrest's existing bank credit facilities, and the
satisfaction and discharge of all indebtedness represented by the Fieldcrest
11.25% Senior Subordinated Debentures due 2004 (the "Fieldcrest 11.25% Senior
Subordinated Debentures") pursuant to an irrevocable deposit of amounts
sufficient to provide for the redemption thereof are hereinafter referred to
collectively as the "Financing Transactions." See "The Merger," "Post-Merger
Indebtedness," and "Pillowtex Series A Redeemable Convertible Preferred Stock."
 
                                        5
<PAGE>   13
 
                               THE EXCHANGE OFFER
 
The Exchange Offer.........  The Series B Notes are being offered, upon the
                             terms and conditions set forth herein and in the
                             Letter of Transmittal, in exchange for a like
                             principal amount of Series A Notes. The issuance of
                             the Series B Notes is intended to satisfy
                             obligations of the Company contained in the
                             Registration Rights Agreement.
 
Tenders; Expiration Date;
  Withdrawal...............  The Exchange Offer will expire at 5:00 p.m., New
                             York City time, on                , 1998, or such
                             later date and time to which it is extended by the
                             Company in its sole discretion, in which case the
                             term "Expiration Date" shall mean the latest date
                             and time to which the Exchange Offer is extended.
                             The tender of Series A Notes pursuant to the
                             Exchange Offer may be withdrawn at any time prior
                             to the Expiration Date. Any Series A Note not
                             accepted for exchange for any reason will be
                             returned without expense to the tendering holder
                             thereof as promptly as practicable after the
                             expiration or termination of the Exchange Offer.
                             See "The Exchange Offer -- Procedures for Tendering
                             Series A Notes" and "The Exchange
                             Offer -- Withdrawal Rights."
 
Certain Conditions to
Exchange Offer.............  The Company shall not be required to accept for
                             exchange, or to issue Series B Notes in exchange
                             for, any Series A Notes and may terminate or amend
                             the Exchange Offer if at any time before the
                             acceptance of the Series A Notes for exchange or
                             the exchange of the Series B Notes for such Series
                             A Notes certain events have occurred, which in the
                             reasonable judgment of the Company, make it
                             inadvisable to proceed with the Exchange Offer
                             and/or with such acceptance for exchange or with
                             such exchange. Such events include (i) any
                             threatened, instituted or pending action seeking to
                             restrain or prohibit the Exchange Offer, (ii) a
                             general suspension of trading in securities on any
                             national securities exchange or in the
                             over-the-counter market, (iii) a general banking
                             moratorium, (iv) the commencement of a war or armed
                             hostilities involving the United States, and (v) a
                             material adverse change or development involving a
                             prospective material adverse change in the
                             Company's business, properties, assets,
                             liabilities, financial condition, operations,
                             results of operations or prospects that may affect
                             the value of the Series A Notes or the Series B
                             Notes. In addition, the Company will not accept for
                             exchange any Series A Notes tendered, and no Series
                             B Notes will be issued in exchange for any such
                             Series A Notes, at any such time any stop order
                             shall be threatened or in effect with respect to
                             the Registration Statement of which the Prospectus
                             constitutes a part or the qualification of the
                             Indenture under the Trust Indenture Act of 1939
                             (the "Trust Indenture Act"). See "The Exchange
                             Offer -- Certain Conditions to the Exchange Offer."
 
Procedures for Tendering
  Series A Notes...........  Each holder of Series A Notes wishing to accept the
                             Exchange Offer must complete, sign, and date the
                             Letter of Transmittal, or a facsimile thereof, in
                             accordance with the instructions contained herein
                             and therein, and mail or otherwise deliver such
                             Letter of Transmittal, or such facsimile, together
                             with such Series A Notes and any other required
                             documentation to Norwest Bank Minnesota, National
                             Association, as exchange agent (the "Exchange
                             Agent"), at the address set forth herein.
                                        6
<PAGE>   14
 
                             By executing the Letter of Transmittal, the holder
                             will represent to and agree with the Company that,
                             among other things, (i) the Series B Notes to be
                             acquired by such holder of Series A Notes in
                             connection with the Exchange Offer are being
                             acquired by such holder in the ordinary course of
                             its business, (ii) such holder is not
                             participating, does not intend to participate and
                             has no arrangement or understanding with any person
                             to participate in a distribution of the Series B
                             Notes, and (iii) such holder is not an "affiliate,"
                             as defined in Rule 405 under the Securities Act, of
                             the Company. If the holder is a broker-dealer that
                             will receive Series B Notes for its own account in
                             exchange for Series A Notes that were acquired as a
                             result of market-making or other trading
                             activities, such holder will be required to
                             acknowledge in the Letter of Transmittal that such
                             holder will deliver a prospectus in connection with
                             any resale of such Series B Notes, however, by so
                             acknowledging and by delivering a prospectus, such
                             holder will not be deemed to admit that it is an
                             "underwriter" within the meaning of the Securities
                             Act. See "The Exchange Offer -- Procedures for
                             Tendering Series A Notes."
 
Special Procedures for
Beneficial Owners..........  Any beneficial owner whose Series A Notes are
                             registered in the name of a broker, dealer,
                             commercial bank, trust company or other nominee and
                             who wishes to tender such Series A Notes in the
                             Exchange Offer should contact such registered
                             holder promptly and instruct such registered holder
                             to tender on such beneficial owner's behalf. If
                             such beneficial owner wishes to tender on such
                             owner's own behalf, such owner must, prior to
                             completing and executing the Letter of Transmittal
                             and delivering such owner's Series A Notes, either
                             make appropriate arrangements to registered
                             ownership of the Series A Notes in such owner's
                             name or obtain a properly completed bond power from
                             the registered holder. The transfer of registered
                             ownership may take considerable time and may not be
                             able to be completed prior to the Expiration Date.
                             See "The Exchange Offer -- Procedures for Tendering
                             Series A Notes."
 
Guaranteed Delivery
Procedures.................  Holders of Series A Notes who wish to tender their
                             Series A Notes and whose Series A Notes are not
                             immediately available or who cannot deliver their
                             Series A Notes, the Letter of Transmittal or any
                             other documentation required by the Letter of
                             Transmittal to the Exchange Agent prior to the
                             Expiration Date must tender their Series A Notes
                             according to the guaranteed delivery procedures set
                             forth under "The Exchange Offer -- Guaranteed
                             Delivery Procedures."
 
Effect of Not Tendering
Series A Notes for
  Exchange.................  Series A Notes that are not tendered or that are
                             not properly tendered will, following the
                             expiration of the Exchange Offer, continue to be
                             subject to the existing restrictions upon transfer
                             thereof. The Company will have no further
                             obligations to provide for the registration under
                             the Securities Act of such Series A Notes and such
                             Series A Notes will, following the expiration of
                             the Exchange Offer, bear interest at the same rate
                             and in the same manner as the Series B Notes.
 
Federal Income Tax
  Consequences.............  The exchange pursuant to the Exchange Offer should
                             not result in gain or loss to the holders or the
                             Company for federal income tax purposes. See
                             "Certain United States Federal Income Tax
                             Considerations."
 
                                        7
<PAGE>   15
 
Exchange Agent.............  Norwest Bank Minnesota, National Association is
                             serving as exchange agent in connection with the
                             Exchange Offer. Norwest Bank Minnesota, National
                             Association also serves as the Trustee under the
                             Indenture.
 
Use of Proceeds............  There will be no proceeds to the Company from the
                             exchange pursuant to the Exchange Offer. See "Use
                             of Proceeds."
 
Resale of Series B Notes...  Holders of Series A Notes who do not exchange their
                             Series A Notes for Series B Notes pursuant to the
                             Exchange Offer will continue to be subject to the
                             provisions in the Indenture regarding transfer and
                             exchange of the Series A Notes and the restrictions
                             on transfer of such Series A Notes as set forth in
                             the legend thereon as a consequence of the issuance
                             of the Series A Notes pursuant to exemptions from,
                             or in transactions not subject to, the registration
                             requirements of the Securities Act and applicable
                             state securities laws. In general, the Series A
                             Notes may not be offered or sold, unless registered
                             under the Securities Act, except pursuant to an
                             exemption from, or in a transaction not subject to,
                             the Securities Act and applicable state securities
                             laws. The Company does not currently anticipate
                             that it will register Series A Notes under the
                             Securities Act. See "Description of
                             Notes -- Registration Rights; Liquidated Damages."
                             Based on interpretations by the staff of the
                             Commission, as set forth in no-action letters
                             issued to third parties, the Company believes that
                             Series B Notes issued pursuant to the Exchange
                             Offer in exchange for Series A Notes may be offered
                             for resale, resold or otherwise transferred by
                             holders thereof (other than any holder which is an
                             "affiliate" of the Company within the meaning of
                             Rule 405 under the Securities Act) without
                             compliance with the registration and prospectus
                             delivery provisions of the Securities Act, provided
                             that such Series B Notes are acquired in the
                             ordinary course of such holders' business and such
                             holders have no arrangement with any person to
                             participate in the distribution of such Series B
                             Notes. However, the Company does not intend to
                             request the Commission to consider, and the
                             Commission has not considered, the Exchange Offer
                             in the context of a no-action letter and there can
                             be no assurance that the staff of the Commission
                             would make a similar determination with respect to
                             the Exchange Offer as in such other circumstances.
                             Each holder, other than a broker-dealer, must
                             acknowledge that it is not engaged in, and does not
                             intend to engage in, a distribution of Series B
                             Notes and has no arrangement or understanding to
                             participate in a distribution of Series B Notes. If
                             any holder is an affiliate of the Company, is
                             engaged or intends to engage in or has any
                             arrangement or understanding with respect to the
                             distribution of the Series B Notes to be acquired
                             pursuant to the Exchange Offer, such holder (i)
                             could not rely on the applicable interpretations of
                             the staff of the Commission and (ii) must comply
                             with the registration and prospectus delivery
                             requirements of the Securities Act in connection
                             with any resale transaction.
 
                             Each broker-dealer that receives Series B Notes for
                             its own account in exchange for Series A Notes must
                             acknowledge that such Series A Notes were acquired
                             by such broker-dealer as a result of market-making
                             activities or other trading activities and that it
                             will deliver a prospectus in connection with any
                             resale of such Series B Notes. 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 "under-
 
                                        8
<PAGE>   16
 
                             writer" 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 Series
                             B Notes received in exchange for Series A Notes
                             where such Series A Notes were acquired by such
                             broker-dealer as a result of market-making
                             activities or other trading activities. The Company
                             has agreed that, for a period of one year after the
                             Registration Statement has been declared effective,
                             it will make this Prospectus available to any
                             broker-dealer for use in connection with any such
                             resale. See "Plan of Distribution." In addition, to
                             comply with the state securities laws, the Series B
                             Notes may not be offered or sold in any state
                             unless they have been registered or qualified for
                             sale in such state or an exemption from
                             registration or qualification is available and is
                             complied with. The Company currently does not
                             intend to register or qualify the sale of the
                             Series B Notes in any state where an exemption from
                             registration or qualification is required and not
                             available. See "The Exchange Offer -- Consequences
                             of Exchanging Series A Notes" and "Description of
                             Notes -- Registration Rights; Liquidated Damages."
 
Termination of Certain
Rights.....................  All rights under the Registration Rights Agreement
                             accorded to holders of Series A Notes will
                             terminate upon the consummation of the Exchange
                             Offer except with respect to the Company's duty to
                             keep the Registration Statement effective until the
                             closing of the Exchange Offer and, subject to
                             certain conditions, for a period not to exceed one
                             year after the registration of the Series B Notes
                             has been declared effective, to provide copies of
                             the latest version of the Prospectus to any
                             broker-dealer that requests copies for use in
                             connection with its own account as a result of
                             market-making or other trading activities. See "The
                             Exchange Offer -- Consequences of Exchanging Series
                             A Notes."
 
                                        9
<PAGE>   17
 
                                 SERIES B NOTES
 
     The form and terms of the Series B Notes will be the same as those of the
Series A Notes except that the Series B Notes will have been registered under
the Securities Act, and consequently will not be subject to certain transfer
restrictions, registration rights and related liquidated damages provisions
applicable to the Series A Notes. See "Description of Notes -- Registration
Rights; Liquidated Damages."
 
Securities Offered.........  Up to $185,000,000 aggregate principal amount of 9%
                             Senior Subordinated Notes due 2007 of the Company,
                             which have been registered under the Securities
                             Act.
 
Maturity Date..............  December 15, 2007.
 
Interest Payment Dates.....  June 15 and December 15, commencing June 15, 1998.
 
Optional Redemption........  The Notes may be redeemed at the option of the
                             Company, in whole or in part, on or after December
                             15, 2002, at the redemption prices set forth
                             herein, plus accrued and unpaid interest and
                             Liquidated Damages (as defined herein), if any, to
                             the redemption date. See "Description of
                             Notes -- Optional Redemption."
 
Ranking....................  The Notes are general unsecured obligations of the
                             Company, ranking senior to all existing and future
                             subordinated indebtedness of the Company, pari
                             passu in right of payment with the 10% Senior
                             Subordinated Notes, and subordinated in right of
                             payment to all existing and future Senior
                             Indebtedness of the Company, including indebtedness
                             under the New Senior Credit Facilities. As of
                             September 27, 1997, on a pro forma basis after
                             giving effect to the consummation of the Merger and
                             the Financing Transactions, Pillowtex and its
                             subsidiaries would have had $420.0 million of
                             indebtedness (excluding $37.8 million in letters of
                             credit) effectively ranking senior to the Notes.
                             See "Description of Notes -- Ranking and
                             Subordination."
 
Guarantees.................  The payment of principal, premium, if any, and
                             interest on the Notes is fully and unconditionally
                             guaranteed on a joint and several basis by each of
                             the Company's existing domestic subsidiaries and
                             any future domestic Restricted Subsidiaries (as
                             defined herein) other than Receivables Subsidiaries
                             (as defined herein) and each other subsidiary of
                             the Company that guarantees the Company's
                             obligations under the New Senior Credit Facilities.
                             The Guarantees rank senior to all existing and
                             future subordinated indebtedness of the Guarantors,
                             pari passu in right of payment on the Guarantor's
                             Guarantees with the 10% Senior Subordinated Notes,
                             and are subordinated in right of payment to all
                             existing and future Senior Indebtedness of the
                             Guarantors, including the guarantees of
                             indebtedness under the New Senior Credit
                             Facilities. See "Description of Notes -- Subsidiary
                             Guarantees."
 
Change of Control..........  Upon a Change of Control (as defined herein), the
                             Company will be required to make an offer to
                             repurchase all outstanding Notes at 101% of the
                             principal amount thereof plus accrued and unpaid
                             interest thereon, if any, to the date of
                             repurchase. See "Description of Notes -- Repurchase
                             at the Option of Holders -- Change of Control."
 
Covenants..................  The Indenture restricts, among other things, the
                             ability of the Company and its Restricted
                             Subsidiaries to, among other things, incur
                             additional indebtedness; pay dividends or make
                             certain other restricted payments; incur liens;
                             apply net proceeds from certain asset sales; merge
                             or
 
                                       10
<PAGE>   18
 
                             consolidate with any other person; sell, assign,
                             transfer, lease, convey, or otherwise dispose of
                             substantially all of the assets of the Company and
                             its Restricted Subsidiaries; enter into certain
                             transactions with affiliates; or incur indebtedness
                             that is subordinate in right of payment to any
                             indebtedness and senior in right of payment to the
                             Notes or a Guarantee. See "Description of
                             Notes -- Certain Covenants."
 
Use of Proceeds............  The Company will not receive any proceeds from the
                             Exchange Offer.
 
Book-Entry, Delivery and
Form.......................  It is expected that delivery of the Series B Notes
                             will be made in book-entry form. The Company
                             expects that Series B Notes exchanged for Series A
                             Notes currently represented by a restricted global
                             notes certificate deposited with, or on behalf of,
                             The Depository Trust Company (the "DTC") and
                             registered in the name of Cede & Co., its nominee,
                             will be represented by global notes certificates
                             and deposited upon issuance with the DTC and
                             registered in its name or the name of its nominee.
                             Beneficial interests in the global notes
                             certificate representing the Series B Notes will be
                             shown on, and transfers thereof will be effected
                             through, records maintained by the DTC and its
                             participants.
 
     For additional information regarding the Notes, see "The Exchange Offer,"
"Description of Notes," and "Certain United States Federal Income Tax
Considerations."
 
                                  RISK FACTORS
 
     See "Risk Factors," which begins at page 16 for a discussion of certain
factors that should be considered in evaluating an investment in the Notes.
 
                                       11
<PAGE>   19
 
           SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
 
     The following unaudited pro forma combined financial statements of
Pillowtex give effect to the consummation of the Merger and the Financing
Transactions, as if such transactions had been consummated: (i) on September 27,
1997, in the case of the Unaudited Pro Forma Combined Balance Sheet at September
27, 1997 and (ii) on December 31, 1995, the first day of Pillowtex's 1996 fiscal
year, in the case of the Unaudited Pro Forma Combined Statement of Operations
for the fiscal year ended December 28, 1996 and the nine months ended September
27, 1997. As used herein, the term "Financing Transactions" means (i) initial
borrowings under the New Senior Credit Facilities of $149.0 million under the
Revolver and $250.0 million under the Term Loan, (ii) the issuance and sale of
$185.0 million aggregate principal amount of Notes, (iii) the issuance and sale
of 65,000 shares of Pillowtex Preferred Stock, (iv) the repayment of all amounts
outstanding under Pillowtex's and Fieldcrest's existing bank credit facilities,
and (v) the satisfaction and discharge of all indebtedness represented by
Fieldcrest's 11.25% Senior Subordinated Debentures Due 2002 to 2004 pursuant to
an irrevocable deposit of amounts sufficient to provide for the redemption
thereof.
 
<TABLE>
<CAPTION>
                                                              HISTORICAL
                                                      --------------------------     PRO FORMA
                                                       PILLOWTEX     FIELDCREST      COMBINED
                                                      -----------    -----------    -----------
                                                      (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S>                                                   <C>            <C>            <C>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER
  28, 1996:
Net sales...........................................  $   490,655    $ 1,092,496    $ 1,583,151
Cost of goods sold..................................      411,048        956,522      1,364,368
                                                      -----------    -----------    -----------
Gross profit........................................       79,607        135,974        218,783
Selling, general, and administrative expenses.......       41,445        105,405        136,434
Restructuring charge................................           --          8,130          8,130
                                                      -----------    -----------    -----------
Earnings from operations............................       38,162         22,439         74,219
Interest expense....................................       13,971         26,869         63,446
Other income, net...................................           --         (5,604)        (5,604)
                                                      -----------    -----------    -----------
Earnings before income taxes and extraordinary
  items.............................................       24,191          1,174         16,377
Income taxes........................................        9,459            114          8,375
                                                      -----------    -----------    -----------
Earnings before extraordinary items.................       14,732          1,060          8,002
Preferred dividends.................................           --         (4,500)        (1,950)
                                                      -----------    -----------    -----------
Earnings (loss) before extraordinary items
  applicable to common stock........................  $    14,732    $    (3,440)   $     6,052
                                                      ===========    ===========    ===========
OTHER DATA:
Depreciation and amortization.......................  $    12,775    $    36,678    $    57,394
EBITDA(1)...........................................       50,937         59,117        131,613
Ratio of earnings to fixed charges(2)...............          2.4x           1.0x           1.2x
BALANCE SHEET DATA AT SEPTEMBER 27, 1997:
Total current assets................................  $   261,320    $   379,828    $   660,148
Total assets........................................      419,168        789,479      1,436,625
Long-term debt......................................      218,806        308,820        821,596
Shareholders' equity................................      110,777        229,321        199,555
</TABLE>
 
- ---------------
 
(1) EBITDA is income before income taxes plus depreciation expense, amortization
    expense, and net interest expense. EBITDA is presented because it is a
    widely accepted financial indicator of a company's ability to service and/or
    incur indebtedness; however, EBITDA should not be considered as an
    alternative to net income (as a measure of operating results) or to cash
    flows (as a measure of liquidity) computed in accordance with generally
    accepted accounting principles. In addition, EBITDA as presented herein may
    not be directly comparable to EBITDA as reported by other companies.
 
(2) In calculating the ratio of earnings to fixed charges, earnings consist of
    income taxes plus fixed charges (excluding capitalized interest). Fixed
    charges consist of interest expense (which includes amortization of deferred
    financing costs) whether expensed or capitalized and one-third of rental
    expense, deemed representative of that portion of rental expense estimated
    to be attributable to interest.
 
                                       12
<PAGE>   20
 
                    SUMMARY HISTORICAL FINANCIAL INFORMATION
 
     The following summary historical financial information of Pillowtex and
Fieldcrest has been derived from the historical consolidated financial
statements of Pillowtex and Fieldcrest filed with the Commission, and should be
read in conjunction with such financial statements and the notes thereto and the
other financial information appearing in Pillowtex's Annual Report on Form 10-K
for the year ended December 28, 1996 and its Quarterly Report on Form 10-Q for
the quarter ended September 27, 1997 and Fieldcrest's Annual Report on Form 10-K
for the year ended December 31, 1996 and its Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997, each as incorporated by reference herein.
See "Available Information," "Selected Historical Financial Information of
Pillowtex," and "Selected Historical Financial Information of Fieldcrest." The
historical financial information at the end of and for each fiscal year in the
five-year period ended December 28, 1996 with respect to Pillowtex and December
31, 1996 with respect to Fieldcrest has been extracted from audited financial
statements filed with the Commission. Historical financial information at the
end of and for the nine-month periods ended September 28, 1996 and September 27,
1997 with respect to Pillowtex and September 30, 1996 and 1997 with respect to
Fieldcrest has been extracted from unaudited financial statements filed with the
Commission and, in the opinion of management, includes all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation, in all material respects, of the results of operations and
financial position at the end of and for each of the interim periods presented.
Interim period results are not necessarily indicative of results to be expected
for a complete fiscal year. See "Incorporation of Certain Information by
Reference."
 
                                       13
<PAGE>   21
 
             SUMMARY HISTORICAL FINANCIAL INFORMATION OF PILLOWTEX
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                               NINE MONTHS ENDED
                                                      FISCAL YEAR                        -----------------------------
                                  ----------------------------------------------------   SEPTEMBER 28,   SEPTEMBER 27,
                                    1992     1993(1)    1994(2)      1995       1996         1996            1997
                                  --------   --------   --------   --------   --------   -------------   -------------
<S>                               <C>        <C>        <C>        <C>        <C>        <C>             <C>
                                                                                                  (UNAUDITED)
STATEMENTS OF OPERATIONS DATA:
Net sales.......................  $273,462   $291,624   $349,520   $474,899   $490,655     $335,770        $370,633
Cost of goods sold..............   222,611    238,155    294,714    395,922    411,048      280,272         305,674
                                  --------   --------   --------   --------   --------     --------        --------
Gross profit....................    50,851     53,469     54,806     78,977     79,607       55,498          64,959
Selling, general, and
  administrative expenses.......    33,376     29,227     36,399     42,508     41,445       31,170          33,728
                                  --------   --------   --------   --------   --------     --------        --------
Earnings from operations........    17,475     24,242     18,407     36,469     38,162       24,328          31,231
Interest expense................     4,997      3,042      6,361     17,491     13,971       10,279          13,957
Other expense (income), net.....     1,049         --       (379)        --         --           --              --
                                  --------   --------   --------   --------   --------     --------        --------
Earnings before income taxes and
  extraordinary loss............    11,429     21,200     12,425     18,978     24,191       14,049          17,274
Income taxes....................       529      8,420      4,736      7,509      9,459        5,495           6,702
                                  --------   --------   --------   --------   --------     --------        --------
Earnings before extraordinary
  loss..........................    10,900     12,780      7,689     11,469     14,732        8,554          10,572
Extraordinary loss, net.........        --         --         --         --       (609)          --              --
                                  --------   --------   --------   --------   --------     --------        --------
Net earnings(3).................  $ 10,900   $ 12,780   $  7,689   $ 11,469   $ 14,123     $  8,554        $ 10,572
                                  ========   ========   ========   ========   ========     ========        ========
Net earnings available to common
  stock shareholders(3).........  $  8,400   $ 12,780   $  7,689   $ 11,469   $ 14,123     $  8,554        $ 10,572
                                  ========   ========   ========   ========   ========     ========        ========
OTHER DATA:
Depreciation and amortization...  $  3,104   $  3,868   $  6,365   $ 11,994   $ 12,775     $  9,440        $ 10,642
Capital expenditures(4).........     5,869      7,135     10,538     12,448      6,960        2,981          13,891
EBITDA(5).......................    19,530     28,110     25,151     48,463     50,937       33,768          41,873
EBITDA margin...................       7.1%       9.6%       7.2%      10.2%      10.4%        10.1%           11.3%
Ratio of earnings to fixed
  charges(6)....................       3.0x       6.8x       2.8x       2.0x       2.4x         2.2x            2.0x
BALANCE SHEET DATA:
Working capital.................  $ 65,567   $ 78,141   $122,738   $110,128   $150,506     $152,787        $181,234
Total assets....................   131,542    180,967    319,544    324,710    375,714      370,670         419,168
Long-term debt..................    63,599     63,735    177,149    153,472    194,851      180,200         218,806
Shareholders' equity............     7,072     69,329     76,478     87,990    100,004       95,042         110,777
</TABLE>
 
- ---------------
 
(1) Results for fiscal 1993 reflect the operations of Manetta Home Fashions,
    Inc. from August 30, 1993, Tennessee Woolen Mills, Inc. from September 7,
    1993 and Torfeaco Industries Limited from December 1, 1993.
 
(2) Results for fiscal 1994 reflect the operations of Imperial Feather Company
    from August 19, 1994 and Beacon Manufacturing Company from December 1, 1994.
 
(3) Pillowtex, under a 1990 stock repurchase agreement with its former majority
    shareholder, was committed to repurchase certain shares of common stock from
    the former majority shareholder which resulted in accretion of $2,500. This
    accretion was charged to retained earnings and deducted from earnings
    available for common stock shareholders in the computation of pro forma
    earnings per common share for fiscal 1992. Additionally, on a pro forma
    basis, giving effect to the termination of Pillowtex's status as an S
    corporation under subchapter S of the Internal Revenue Code (which
    termination resulted from the initial public offering of Pillowtex Common
    Stock), as if such termination had occurred on January 1, 1992, net earnings
    and net earnings available to common stock shareholders would have been
    $7,692 and $5,192 respectively, for fiscal 1992, and $12,877 and $12,877,
    respectively, for fiscal 1993.
 
(4) Capital expenditures for fiscal year 1996 exclude $5,745 and $8,335 related
    to the purchase of the assets of the Fieldcrest blanket division and the
    purchase of the Mauldin, South Carolina distribution facility, respectively.
 
(5) EBITDA is income before income taxes plus depreciation expense, amortization
    expense, and net interest expense. EBITDA is presented because it is a
    widely accepted financial indicator of a company's ability to service and/or
    incur indebtedness; however, EBITDA should not be considered as an
    alternative to net income as a measure of operating results or to cash flows
    as a measure of liquidity in accordance with generally accepted accounting
    principles.
 
(6) In calculating the ratio of earnings to fixed charges, earnings consist of
    income before income taxes plus fixed charges (excluding capitalized
    interest). Fixed charges consist of interest expense (which includes
    amortization of deferred financing costs) whether expensed or capitalized
    and one-third of rental expense, deemed representative of that portion of
    rental expense estimated to be attributable to interest.
 
                                       14
<PAGE>   22
 
             SUMMARY HISTORICAL FINANCIAL INFORMATION OF FIELDCREST
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                                         NINE MONTHS ENDED
                                                            FISCAL YEAR                            ------------------------------
                                    ------------------------------------------------------------   SEPTEMBER 30,   SEPTEMBER 30,
                                      1992        1993         1994         1995         1996          1996             1997
                                    --------   ----------   ----------   ----------   ----------   -------------   --------------
                                                                                                            (UNAUDITED)
<S>                                 <C>        <C>          <C>          <C>          <C>          <C>             <C>
STATEMENTS OF OPERATIONS DATA:
Net sales.........................  $981,773   $1,000,107   $1,063,731   $1,095,193   $1,092,496     $812,995         $820,635
Cost of sales.....................   818,729      834,701      898,437      966,642      956,522      706,482          695,615
                                    --------   ----------   ----------   ----------   ----------     --------         --------
Gross profit......................   163,044      165,406      165,294      128,551      135,974      106,513          125,020
Selling, general, and
  administrative expenses(1)......   102,189      111,843       94,756      128,663      113,535       86,536           85,563
                                    --------   ----------   ----------   ----------   ----------     --------         --------
Operating income (loss)...........    60,855       53,563       70,538         (112)      22,439       19,977           39,457
Interest expense(2)...............    34,149       27,659       23,268       27,630       26,869       21,496           18,708
Other expense (income), net.......       130         (975)         987           67       (5,604)         519           (2,021)
                                    --------   ----------   ----------   ----------   ----------     --------         --------
Income (loss) before income
  taxes...........................    26,576       26,879       46,283      (27,809)       1,174       (2,038)          22,770
Income taxes......................    10,886       11,913       15,538      (12,084)         114         (764)           8,087
                                    --------   ----------   ----------   ----------   ----------     --------         --------
Income (loss) from continuing
  operations before accounting
  changes.........................  $ 15,690   $   14,966   $   30,745   $  (15,725)  $    1,060     $ (1,274)        $ 14,683
                                    ========   ==========   ==========   ==========   ==========     ========         ========
 
Net income (loss)(3)..............  $ 15,250   $  (42,931)  $   30,745   $  (15,725)  $    1,060     $ (1,274)        $ 14,683
Preferred dividends...............        --         (463)      (4,500)      (4,500)      (4,500)      (3,375)          (3,375)
                                    --------   ----------   ----------   ----------   ----------     --------         --------
Earnings (loss) on common.........  $ 15,250   $  (43,394)  $   26,245   $  (20,225)  $   (3,440)    $ (4,649)        $ 11,308
                                    ========   ==========   ==========   ==========   ==========     ========         ========
OTHER DATA:
Depreciation and amortization.....  $ 31,370   $   31,539   $   29,828   $   31,746   $   36,678     $ 26,979         $ 26,241
Capital expenditures..............    20,687       21,594       51,929       64,153       33,386       21,035           46,214
EBITDA(4).........................    92,225       85,102      100,366       31,634       59,117       46,956           65,698
EBITDA margin.....................       9.4%         8.5%         9.4%         2.9%         5.4%         5.8%             8.0%
Ratio of earnings to fixed
  charges(5)......................       1.7x         1.8x         2.5x          --          1.0x          --              2.0x
BALANCE SHEET DATA:
Working capital...................  $296,580   $  262,326   $  282,461   $  268,477   $  229,010     $288,103         $221,210
Total assets......................   863,991      740,446      782,665      812,946      768,493      832,992          789,479
Long-term debt....................   353,419      294,611      317,744      365,262      311,496      373,748          308,820
Stockholders' equity..............   284,478      193,330      231,202      215,431      215,755      213,689          229,321
</TABLE>
 
- ---------------
 
(1) Includes restructuring charges of $10,000, $20,469 and $8,130 for fiscal
    years 1993, 1995 and 1996, respectively, and $8,130 for the nine months
    ended September 30, 1996. Such restructuring charges were incurred in
    connection with (i) a 1993 program to reduce overhead through a voluntary
    early retirement program and certain corporate reorganization costs, (ii)
    the 1995 reorganization of Fieldcrest's New York operations, and (iii) the
    1996 sale of Fieldcrest's blanket division to Pillowtex and the closing of
    the blanket facilities in Eden, North Carolina.
 
(2) Interest expense is net of interest income in the amount of $416, $613,
    $749, $1,859 and $4,161 for fiscal years 1992 through 1996, respectively,
    and $2,067 and $1,743 for the nine months ended September 30, 1996 and 1997,
    respectively.
 
(3) Includes an extraordinary loss on early retirement of debt of $5,179 for
    fiscal 1992, income from discontinued operations of $4,739 and $3,201 for
    fiscal years 1992 and 1993, respectively, and a gain from disposition of
    discontinued operations and cumulative effect of accounting changes of
    $9,207 and ($70,305), respectively, for fiscal 1993.
 
(4) EBITDA is income before income taxes plus depreciation expense, amortization
    expense and net interest expense. EBITDA is presented because it is a widely
    accepted financial indicator of a company's ability to service and/or incur
    indebtedness; however, EBITDA should not be considered as an alternative to
    net income as a measure of operating results or to cash flows as a measure
    of liquidity in accordance with generally accepted accounting principles.
 
(5) In calculating the ratio of earnings to fixed charges, earnings consist of
    income before income taxes plus fixed charges (excluding capitalized
    interest). Fixed charges consist of interest expense (which includes
    amortization of deferred financing costs) whether expensed or capitalized
    and one-third of rental expense, deemed representative of that portion of
    rental expense estimated to be attributable to interest. For the year ended
    December 31, 1995, and the nine months ended September 30, 1996, earnings
    were insufficient to cover fixed charges by $27,809 and $2,038,
    respectively.
 
                                       15
<PAGE>   23
 
                                  RISK FACTORS
 
     Prospective investors should carefully consider the following factors in
addition to the other information set forth in this Prospectus before making an
investment in the Notes offered hereby. See also "Note Regarding Forward-Looking
Information." Any or all of the risk factors discussed below could have a
material adverse effect on the business, financial condition, results of
operations, and prospects of the Company.
 
SIGNIFICANT LEVERAGE AND DEBT SERVICE
 
     The Company is highly leveraged. At September 27, 1997, on a pro forma
basis, after giving effect to the consummation of the Merger and the Financing
Transactions, Pillowtex would have had total outstanding long-term indebtedness
(including the current portion of long-term indebtedness) of approximately
$827.8 million and total shareholders' equity of approximately $199.6 million.
See "Pro Forma Capitalization of Pillowtex." In addition, subject to
restrictions contained in instruments governing its indebtedness, the Company
and its subsidiaries may incur additional indebtedness from time to time to
finance acquisitions or capital expenditures or for general corporate purposes.
 
     The level of the Company's indebtedness could have important consequences
to the business activities of the Company, including: (i) a substantial portion
of the Company's cash flow from operations must be dedicated to debt service and
will not be available for other purposes; (ii) the Company's ability to obtain
additional debt financing in the future for other acquisitions, working capital,
capital expenditures, or research and development may be limited; and (iii) the
Company's level of indebtedness could limit its flexibility in reacting to
changes in its industry or economic conditions generally.
 
     The Company's ability to service its debt obligations will depend upon its
future operating performance, which will be affected by prevailing economic
conditions and financial, business, and other factors, certain of which are
beyond its control, as well as the availability of borrowings under the New
Senior Credit Facilities or any other credit arrangement. The Company will
require substantial amounts of cash to fund scheduled payments of principal and
interest on its outstanding indebtedness, as well as future capital expenditures
and any increased working capital requirements. If the Company is unable to meet
its cash requirements out of cash flow from operations and its available
borrowings, there can be no assurance that it will be able to obtain alternative
financing or that it will be permitted to do so under the terms of the New
Senior Credit Facilities or its other indebtedness. In the absence of such
financing, the Company's ability to respond to changing business and economic
conditions, to make future acquisitions, to absorb adverse operating results, or
to fund capital expenditures or research and development costs may be adversely
affected. If the Company does not generate sufficient increases in cash flow
from operations to repay its indebtedness at maturity, it could attempt to
refinance such indebtedness; however, no assurance can be given that such
refinancing would be available on terms acceptable to the Company, if at all.
 
SUBORDINATION OF NOTES AND GUARANTEES
 
     The Notes are subordinated in right of payment to all existing and future
Senior Indebtedness (as defined herein) of the Company, including borrowings
under the New Senior Credit Facilities. In the event of bankruptcy, liquidation,
or reorganization of the Company, the assets of the Company will be available to
pay obligations on the Notes only after all Senior Indebtedness has been paid in
full, and there may not be sufficient assets remaining to pay amounts due on any
or all of the Notes then outstanding. Each Guarantee will be similarly
subordinated in right of payment to all existing and future Guarantor Senior
Indebtedness (as defined herein) of the relevant Guarantor, including such
Guarantor's guaranty of the Company's indebtedness under the New Senior Credit
Facilities. In addition, under certain circumstances the Company will not be
permitted to pay its obligations under the Notes in the event of a default under
certain Senior Indebtedness. Certain operations of the Company will be conducted
by its foreign subsidiaries that are not Guarantors. Accordingly, these
subsidiaries will have no obligations to pay amounts due under the Notes. As of
September 27, 1997, on a pro forma basis after giving effect to the consummation
of the Merger and the Financing Transactions, Pillowtex and its subsidiaries
would have had $420.0 million of indebtedness (excluding $37.8 million in
letters of credit) effectively ranking senior to the Notes. If it were assumed
that
 
                                       16
<PAGE>   24
 
the holders of all of the outstanding Fieldcrest Convertible Debentures were
converted into shares of Fieldcrest Common Stock immediately prior to the Merger
(rather than remaining outstanding), then at September 27, 1997, on a pro forma
combined basis, the revolving credit borrowings (which will be senior in right
of payment to the Notes) would have increased $71.1 million. Additional Senior
Indebtedness may be incurred by the Company from time-to-time, subject to
certain restrictions. See "Description of Notes -- Ranking and Subordination."
 
RISKS ASSOCIATED WITH ACQUISITIONS; ABILITY TO ACHIEVE COST SAVINGS
 
     The Company expects to continue a strategy of identifying and acquiring
companies with complementary products or services that may be expected to
enhance the Company's operations and profitability. There can be no assurances
that the Company will be able to integrate the operations of Fieldcrest or any
other acquired company successfully with existing operations or that any of such
acquisitions will prove profitable.
 
     The Company has identified approximately $21.6 million of annual cost
savings that it expects to realize immediately as a result of the Merger. These
cost savings are comprised of $20.3 million of savings from the elimination of
duplicate staff salaries and $1.3 million of savings from the elimination of
duplicative corporate expenses. The Company additionally expects to realize
significant ongoing cost savings, including at least $8.4 million to be realized
within the first twelve months after consummation of the Merger, as follows: (i)
$0.9 million by eliminating other redundant cost functions; (ii) $2.0 million by
improving procurement efficiencies by exploiting the combined company's
purchasing power; (iii) $3.0 million by reducing trade advertising; (iv) $1.0
million by rationalizing and streamlining operations; and (v) $1.5 million by
reducing the use of outside consultants.
 
     There can be no assurance as to the timing or amount of any cost savings
that may actually be realized, or that unforeseen costs and expenses, decreases
in sales or revenues, or other factors will not offset any cost savings actually
realized.
 
DEPENDENCE ON RAW MATERIALS
 
     The raw materials on which the Company is primarily dependent include the
raw feather and down that the Company uses to produce natural fill pillows and
down comforters. The People's Republic of China ("China") is currently the
primary source of raw feather and down for Pillowtex. See "-- Dependence on
Supply Sources in China." The raw materials on which Fieldcrest is primarily
dependent include the cotton and synthetic fibers that Fieldcrest uses to
manufacture its home furnishing products.
 
     The raw materials used by the Company are generally available from a number
of sources, and no significant shortage of such materials is currently
anticipated. However, the Company uses significant quantities of such raw
materials, which are subject to price fluctuations, and there can be no
assurance that shortages of such materials will not occur in the future, which
could increase the cost of or delay the shipment of products.
 
     Cotton is the primary raw material used in the Company's business. Cotton
is an agricultural product and, consequently, its availability is subject to
weather conditions and other factors affecting agricultural markets. There have
been historical periods of rapid and significant movement in the price of cotton
both upward and downward. There can be no assurance that the Company will be
able to pass on any increase in the price of cotton or other raw materials to
its customers.
 
DEPENDENCE ON SUPPLY SOURCES IN CHINA
 
     In fiscal year 1996 and the nine months ended September 27, 1997,
approximately 83% and 84%, respectively, of the raw feather and down that
Pillowtex used to produce natural fill pillows and down comforters was imported
from China.
 
     The Company's relationships with its suppliers in China could be disrupted
or adversely affected due to a number of factors, including governmental
regulation, fluctuation in exchange rates, and changes in economic and political
conditions in China. If the Company's supply sources in China were disrupted for
any reason, the
                                       17
<PAGE>   25
 
Company believes, based on existing market conditions, that it could establish
alternative supply relationships. However, because establishing these
relationships involves numerous uncertainties relating to delivery requirements,
price, payment terms, quality control, and other matters, the Company is unable
to predict whether such relationships would be on terms satisfactory to the
Company.
 
     The Company's relationships with its suppliers in China are also subject to
risks associated with changes in United States legislation and regulations
relating to imports, including quotas, duties, and taxes, and other charges or
restrictions on imports. Products that the Company imports from China currently
receive preferential tariff treatment accorded goods from countries granted
"most favored nation" status. Under the Trade Act of 1974, the President of the
United States is authorized, upon making specified findings, to waive certain
restrictions that would otherwise render China ineligible for most favored
nation treatment. The President has waived these provisions each year since
1979. Most favored nation status was accordingly renewed in June 1997 despite
legislation pursued by Congress demanding that China desist from certain trade
and military activities. Congress will continue to monitor these activities and
may encourage the President to reconsider the renewal of most favored nation
status for China in June 1998 and no assurance can be given that China will
continue to enjoy this status in the future. Raw materials and finished products
entering the United States from China without the benefit of most favored nation
treatment would be subject to significantly higher duty rates.
 
ADVERSE RETAIL INDUSTRY CONDITIONS
 
     The Company sells its products to a number of department stores and other
major retailers who have experienced financial difficulties during the past
several years. Some of these retailers have recently emerged from the protection
of federal bankruptcy laws and some current retail customers of the Company may
seek protection under the federal bankruptcy laws or state insolvency laws in
the future. As a result of these financial difficulties and bankruptcy and
insolvency proceedings, the Company may be unable to collect some or all amounts
owed by these retail customers. Additionally, all or part of the operations of a
retail customer that seeks bankruptcy or other debtor protection may be
discontinued or sales of the Company's products to such a customer may be
curtailed or terminated as a result of bankruptcy or insolvency proceedings.
 
DEPENDENCE ON KEY LICENSES
 
     The Company holds licenses with organizations such as Polo Ralph Lauren
Corporation, Disney, and others, using such well-known trademarks and trade
names as Ralph Lauren and Disney's Mickey UNLIMITED(R), Mickey's Stuff for
Kids(R), and Mickey & Co.(R) Although the significance of specific licenses
varies from year to year, a substantial portion of the Company's net sales for
fiscal year 1996 and the nine-month period ended September 27, 1997 were
attributable to products sold under licensed trademarks and trade names. These
licenses generally require the payment of royalties based on net sales,
including the payment of minimum annual royalties, and expire at various dates
through 1998. No assurance can be given that the Company will be able to renew
these licenses on acceptable terms upon their expiration or will be able to
acquire new licenses to use other popular trademarks.
 
     The Company's license with Polo Ralph Lauren Corporation expires on June
30, 1998. The Company has had a longstanding relationship with Polo Ralph Lauren
Corporation and has no reason to believe that its Ralph Lauren license will not
be renewed, however, renewal of the license on terms acceptable to the Company
cannot be assured and the loss of the license could have a material adverse
effect on the Company. In addition, the Company's license with Polo Ralph Lauren
Corporation provides that if Charles M. Hansen, Jr., Pillowtex's Chairman of the
Board and Chief Executive Officer, and Mary R. Silverthorne, a director of
Pillowtex, or their immediate families, in the aggregate, cease to beneficially
own at least 25% of the outstanding Pillowtex Common Stock, such license will
become subject to termination at the option of the licensor.
 
     The Company's licenses for the use of various Disney trademarks and trade
names have tended to be of brief duration, usually two years or less. The market
for new and renewal Disney licenses has become increasingly competitive, and
there can be no assurance that the Company will be able to continue to receive
 
                                       18
<PAGE>   26
 
new Disney licenses as granted or to obtain renewals of its licenses on
acceptable terms. The loss of one or more of the Company's existing Disney
licenses is unlikely to have a material adverse effect on the business of the
Company.
 
     Fieldcrest also holds licenses with third parties, including Waverly(R),
Adrienne Vittadini(R), and Ellen Tracy(R). Fieldcrest, however, primarily
manufactures and markets products bearing its own proprietary brand names. See
"-- Dependence on Brand Names."
 
DEPENDENCE ON BRAND NAMES
 
     In fiscal year 1996, approximately 93% of Fieldcrest's net sales were from
sales of products bearing Fieldcrest's proprietary brand names of Royal
Velvet(R), Cannon(R), Charisma(R), Fieldcrest(R), Royal Family(R), Caldwell(R),
Monticello(R), SureFit(R), and St. Mary's(R). The remaining 7% of Fieldcrest's
1996 net sales were from sales of private label products. Accordingly, the
Company's future success may depend in part upon the goodwill associated with
Fieldcrest's brand names.
 
     Fieldcrest's principal brand names are registered in the United States and
certain foreign countries. However, there can be no assurance that the steps
taken by Fieldcrest to protect its proprietary rights in such brand names will
be adequate to prevent the misappropriation thereof in the United States or
abroad. In addition, the laws of some foreign countries do not protect
proprietary rights in brand names to the same extent as do the laws of the
United States.
 
RISK OF LOSS OF MATERIAL CUSTOMERS
 
     In fiscal year 1996, sales to Wal-Mart and Dayton Hudson accounted for 14%
and 13% of Pillowtex's total sales, respectively. For the nine months ended
September 27, 1997, sales to Wal-Mart and Dayton Hudson accounted for 12% and
13%, respectively, of Pillowtex's total sales. No other single customer
accounted for more than 10% of Pillowtex's total sales during such periods.
 
     In fiscal year 1996, sales to Wal-Mart and its affiliates accounted for 21%
of Fieldcrest's total sales. For the nine months ended September 30, 1997, sales
to Wal-Mart and its affiliates accounted for 25% of Fieldcrest's total sales. No
other single customer accounted for more than 10% of Fieldcrest's net sales
during such periods.
 
     On a pro forma basis, after giving effect to the consummation of the Merger
as if it had been consummated December 31, 1995, sales to Wal-Mart would have
accounted for 19% of the Company's total sales for fiscal 1996 and sales to the
top ten customers would have accounted for 57% of total sales for such period.
 
     Consistent with industry practice, the Company does not operate under a
long-term written supply contract with any of its customers. The business,
financial condition, and results of operations of the Company could be
materially adversely affected by the loss of Dayton Hudson or Wal-Mart as a
customer.
 
LABOR RELATIONS
 
     Pillowtex has approximately 3,800 employees, approximately 14% of which are
subject to collective bargaining agreements. Fieldcrest has approximately 10,400
employees, approximately 27% of which are subject to collective bargaining
agreements.
 
     Since 1991, the Union of Needletrades, Industrial and Textile Workers
("UNITE") has campaigned to organize approximately 5,500 additional hourly
workers at five Fieldcrest plants, including Fieldcrest's main manufacturing
facility in Kannapolis, North Carolina. Fieldcrest has opposed UNITE's
organizing efforts. Although a majority of employees at these plants recently
voted not to select UNITE as a bargaining representative, the results are
subject to legal challenge. There can be no assurance as to whether or when the
results of such election will be certified or a new election will be scheduled.
It is impossible to predict what effect, if any, a lengthy continuation of
another organizing campaign will have on the productivity of the Fieldcrest
workforce.
 
                                       19
<PAGE>   27
 
INDUSTRY COMPETITION AND COMPETITIVE FACTORS
 
     The Company operates in a highly competitive industry. Each of Pillowtex
and Fieldcrest has competed, and continues to compete, with a number of
established manufacturers, importers, and distributors of home textile
furnishings, some of which have greater financial, distribution, manufacturing,
and marketing resources.
 
SEASONALITY OF BUSINESS
 
     The Company business is subject to a pattern of seasonal fluctuation.
During the past three years, sales and earnings from operations generated during
the second half of the year averaged approximately 61% and 66%, respectively, of
Pillowtex's total sales and earnings from operations. Pillowtex's needs for
working capital increase in the second half of the year and, accordingly, total
debt levels tend to peak in the third and fourth quarters, falling off again in
the first quarter of the following year. The amount of Pillowtex's sales
generated during the second half of the year generally depends upon a number of
factors, including the level of retail sales for home textile furnishings during
the fall and winter, weather conditions affecting the level of sales of down
comforters and blankets (which are sold in greater quantities in cold weather),
general economic conditions, and other factors beyond Pillowtex's control.
 
     Fieldcrest's business is subject to a similar pattern of seasonal
fluctuation, having greater sales volume in the last three quarters of the
calendar year than in the first calendar quarter. Accordingly, it is likely that
Fieldcrest's operating performance in the first quarter of a given calendar year
will be less favorable than operating performance in the last three quarters.
 
INFLUENCE BY SIGNIFICANT SHAREHOLDERS
 
     As of January 26, 1998, Charles M. Hansen, Jr., Mary R. Silverthorne,
certain trusts for which Ms. Silverthorne acts as trustee (i.e., the John H.
Silverthorne Marital Trust B and the John H. Silverthorne Family Trust A), and
adult children of Ms. Silverthorne owned, in the aggregate, approximately 39.6%
of the outstanding shares of the Pillowtex Common Stock. Accordingly, such
shareholders will continue to exert significant influence over the management
and direction of Pillowtex.
 
DEPENDENCE ON KEY PERSONNEL
 
     Pillowtex's business is managed by or under the direction of Charles M.
Hansen, Jr., who serves as Chairman of the Board and Chief Executive Officer.
The Company believes that its future success will be highly dependent upon its
ability to attract and retain skilled managers and other personnel, including
Mr. Hansen. The loss of Mr. Hansen's services could have a material adverse
effect on the Company.
 
RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS
 
     Certain instruments governing the Company's indebtedness, including the
Indenture, restrict, among other things, the ability of the Company and its
subsidiaries to incur additional indebtedness, pay dividends or make certain
other restricted payments, incur liens to secure pari passu or subordinated
indebtedness, sell stock of subsidiaries, apply net proceeds from certain asset
sales, merge or consolidate with any other person, sell, assign, transfer,
lease, convey, or otherwise dispose of substantially all of the assets of the
Company, enter into certain transactions with affiliates, or incur indebtedness
that is subordinate in right of payment to any Senior Indebtedness and senior in
right of payment to the Notes.
 
     The New Senior Credit Facilities contain more extensive and restrictive
covenants than the Indenture and require the Company to maintain specified
financial ratios and satisfy certain financial condition tests. The Company's
ability to meet those financial ratios and tests can be affected by events
beyond its control, and there can be no assurance that the Company will meet
those tests. The New Senior Credit Facilities also prohibit the Company from
prepaying other indebtedness (including the Notes) before indebtedness under the
New Senior Credit Facilities. A breach of any of these covenants or covenants
contained in the New Senior Credit Facilities could result in a default
thereunder. Upon the occurrence of an event of default under the New Senior
Credit Facilities, the lenders thereunder could elect to declare all amounts
outstanding under
 
                                       20
<PAGE>   28
 
the New Senior Credit Facilities, including accrued interest or other
obligations, to be immediately due and payable or proceed against the collateral
granted to them to secure that indebtedness. If any other Senior Indebtedness
(as defined herein) were to be accelerated, there can be no assurance that the
assets of the Company would be sufficient to repay in full that indebtedness and
the other indebtedness of the Company, including the Notes.
 
     As a result of the covenants described above, the ability of the Company to
respond to changing business and economic conditions and to secure additional
financing, if needed, may be significantly restricted, and the Company may be
prevented from engaging in transactions that might otherwise be considered
beneficial to the Company. See "Description of Notes -- Certain Covenants."
 
FRAUDULENT CONVEYANCE STATUTES
 
     Under applicable provisions of federal bankruptcy law or comparable
provisions of state fraudulent transfer law, if, among other things, the Company
or any Guarantor, at the time it incurred the indebtedness evidenced by the
Notes or its Guarantee, as the case may be, (i)(a) was or is insolvent or
rendered insolvent by reason of such occurrence, (b) was or is engaged in a
business or transaction for which the assets remaining with the Company or such
Guarantor constituted unreasonably small capital, or (c) intended or intends to
incur, or believed or believes that it would incur, debts beyond its ability to
pay such debts as they mature, and (ii) the Company or such Guarantor received
or receives less than reasonably equivalent value or fair consideration for the
incurrence of such indebtedness, the Notes or the applicable Guarantee could be
voided, or claims in respect of the Notes or the Guarantee could be subordinated
to all other debts of the Company or such Guarantor, as the case may be. The
voiding or subordination of any of such pledges or other security interests or
of any of such indebtedness could result in an Event of Default (as defined
herein) with respect to such indebtedness, which could result in acceleration
thereof. In addition, the payment of interest and principal by the Company
pursuant to the Notes or the payment of amounts by a Guarantor pursuant to a
Guarantee could be voided and required to be returned to the person making such
payment, or to a fund for the benefit of the creditors of the Company or such
Guarantor, as the case may be.
 
     The measures of insolvency for purposes of the foregoing considerations
will vary depending upon the law applied in any proceeding with respect to the
foregoing. Generally, however, the Company or a Guarantor would be considered
insolvent if (i) the sum of its debts, including contingent liabilities, were
greater than the fair saleable value of all of its assets at a fair valuation or
if the present fair saleable value of its assets were less than the amount that
would be required to pay its probable liability on its existing debts, including
contingent liabilities, as they become absolute and mature or (ii) it could not
pay its debts as they become due.
 
     To the extent any Guarantees were voided as a fraudulent conveyance or held
unenforceable for any other reason, holders of Notes would cease to have any
claim in respect of such Guarantor and would-be creditors solely of the Company
and any Guarantor whose Guarantee was not avoided or held unenforceable. In such
event, the claims of the holders of Notes against the issuer of an invalid
Guarantee would be subject to the prior payment of all liabilities and preferred
stock claims of such Guarantor. There can be no assurance that, after providing
for all prior claims and preferred stock interests, if any, there would be
sufficient assets to satisfy the claims of the holders of Notes relating to any
voided portions of any of the Guarantees.
 
     The Company is a holding company whose material assets consist primarily of
the capital stock of the Guarantors and certain intellectual property assets.
Consequently, the Company will be dependent upon dividends paid by the
Guarantors to pay its operating expenses, service its debt obligations,
including the Notes, and satisfy any mandatory repurchase obligations relating
to the Notes, as a result of a Change of Control (as defined herein) or a sale
or other disposition of certain assets. See "Description of Notes -- Repurchase
at the Option of the Holders."
 
POTENTIAL INABILITY TO FUND A CHANGE OF CONTROL OFFER
 
     Upon a Change of Control (as defined herein), the Company will be required
to offer to repurchase all outstanding Notes and all 10% Senior Subordinated
Notes at 101% of the principal amount thereof plus accrued and unpaid interest
to the date of repurchase and Liquidated Damages (as defined herein). There can
                                       21
<PAGE>   29
 
be no assurance, however, that sufficient funds will be available at the time of
any Change of Control to make any required repurchases of Notes and 10% Senior
Subordinated Notes tendered. Moreover, restrictions in the New Senior Credit
Facilities prohibit the Company from making such required repurchases;
consequently, any such repurchases would constitute an event of default under
the New Senior Credit Facilities. There can be no assurance that the Company
will be able to obtain appropriate consents under the New Senior Credit
Facilities to enable it to fulfill such repurchase obligations. Notwithstanding
these provisions, the Company could enter into certain transactions, including
certain recapitalizations, that would not constitute a Change of Control but
would increase the amount of debt outstanding at such time. See "Description of
Notes -- Repurchase at the Option of Holders."
 
CONSEQUENCES OF FAILURE TO EXCHANGE
 
     The Series B Notes will be issued in exchange for Series A Notes only after
timely receipt by the Exchange Agent of such Series A Notes, a properly
completed and duly executed Letter of Transmittal and all other required
documents. Therefore, holders of Series A Notes desiring to tender such Series A
Notes in exchange for Series B Notes should allow sufficient time to ensure
timely delivery. Neither the Exchange Agent nor the Company are under any duty
to give notification of defects or irregularities with respect to tenders of
Series A Notes for exchange. Series A Notes that are not tendered or that are
tendered but not accepted will, following consummation of the Exchange Offer,
continue to be subject to the existing restrictions upon transfer thereof and
will not retain any rights to registration. See "The Exchange Offer --
Consequences of Exchanging Series A Notes." In addition, any holder of Series A
Notes who tenders in the Exchange Offer for the purpose of participating in a
distribution of the Series B Notes will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer who holds Series A
Notes acquired for its own account as a result of market-making or other trading
activities and who receives Series B Notes for its own account in exchange for
such Series A Notes pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Series B Notes. To
the extent that Series A Notes are tendered and accepted in the Exchange Offer,
the trading market for untendered and tendered but unaccepted shares of Series A
Notes could be adversely affected due to the limited number of shares of Series
A Notes that are expected to remain outstanding following the Exchange Offer.
See "Plan of Distribution" and "The Exchange Offer."
 
ABSENCE OF PUBLIC MARKET
 
     The Series B Notes are being offered to the Holders of the Series A Notes.
The Series A Notes were issued on December 18, 1997 pursuant to an exemption
from registration under applicable securities laws and are subject to certain
transfer restrictions; accordingly, no public market for the Series A Notes has
developed. The Series B Notes are a new issue of securities for which there is
currently no active trading market. If any such securities are traded after
their initial issuance, they may trade at a discount from their initial offering
price, depending upon the liquidity of such securities, the market for similar
securities, and other factors, including general economic conditions and the
financial condition, performance of, and prospects for the Company.
 
                                       22
<PAGE>   30
 
                                   THE MERGER
 
GENERAL
 
     Pillowtex and Fieldcrest entered into the Merger Agreement, pursuant to
which a wholly owned subsidiary of Pillowtex was merged on December 19, 1997
with and into Fieldcrest. Following consummation of the Merger, Fieldcrest
became a wholly owned subsidiary of Pillowtex.
 
CONVERSION OF FIELDCREST SHARES
 
     At the Effective Time, each then-outstanding share of Fieldcrest Common
Stock (other than any shares held in the treasury of Fieldcrest, by any of its
subsidiaries, or directly or indirectly by Pillowtex, which shares will be
canceled and shares held by stockholders, if any, who properly exercised their
appraisal rights under Delaware law) was converted into the right to receive
total consideration valued at $34.00, consisting of (i) a cash payment in an
amount equal to $27.00 and (ii) 0.269 (the "Conversion Number") shares of
Pillowtex Common Stock.
 
     At the Effective Time, each then-outstanding share of Fieldcrest Preferred
Stock (other than shares converted into Fieldcrest Common Stock prior to the
Closing Date and any shares held in the treasury of Fieldcrest, by any of its
subsidiaries, or directly or indirectly by Pillowtex, which shares were
cancelled and shares held by stockholders, if any, who properly exercised their
appraisal rights under Delaware law) was converted into a right to receive total
consideration valued at $58.12, consisting of (i) a cash payment of $46.15 and
(ii) 0.4598286 shares of Pillowtex Common Stock.
 
TREATMENT OF FIELDCREST OPTIONS
 
     Each holder of an outstanding Fieldcrest Option had the option to elect,
prior to the Effective Time, to receive for each share of Fieldcrest Common
Stock subject to such Fieldcrest Option an amount in cash equal to the
difference between $34.00 and the per share exercise price of such Fieldcrest
Option. At the Effective Time, each outstanding Fieldcrest Option, other than
Fieldcrest Options in respect of which the above-described election was made,
was assumed by the Company and now constitutes an option to purchase, in lieu of
each share of Fieldcrest Common Stock previously subject thereto, a number of
shares of Pillowtex Common Stock (increased to the nearest whole share) equal to
the product of (i) the number of shares of Fieldcrest Common Stock subject to
such Fieldcrest Option immediately prior to the Effective Time and (ii) 1.308
(the "Option Conversion Number") at an exercise price per share of Pillowtex
Common Stock (increased to the nearest whole cent) equal to the exercise price
per share of Fieldcrest Common Stock subject to such Fieldcrest Option
immediately prior to the Effective Time divided by the Option Conversion Number.
 
TREATMENT OF FIELDCREST CONVERTIBLE DEBENTURES
 
     Fieldcrest presently has outstanding $112.5 million ($118.5 million at
September 30, 1997) in aggregate principal amount of its Fieldcrest Convertible
Debentures. The Fieldcrest Convertible Debentures are convertible into the same
consideration that a holder of the number of shares of Fieldcrest Common Stock
into which such Fieldcrest Convertible Debentures might have been converted
immediately prior to the Merger would be entitled to receive in the Merger. For
example, a Fieldcrest Convertible Debenture having an aggregate principal amount
of $1,000 is convertible into (i) a cash payment equal to the product of (a) the
amount of the cash payment to be made on account of each share of Fieldcrest
Common Stock converted in the Merger and (b) 22.60 and (ii) a number of shares
of Pillowtex Common Stock equal to the product of (i) the Conversion Number and
(ii) 22.60. It is anticipated that the Company will use funds available to it
under the Revolver to fund any conversions after the consummation of the Merger.
If it were assumed that all holders of Fieldcrest Convertible Debentures elected
this option, then at September 27, 1997, on a pro forma combined basis, the
revolving credit borrowings would have increased $71.1 million, total debt would
have declined by $26.8 million and shareholder equity would have increased by
$20.1 million. See "Unaudited Pro
 
                                       23
<PAGE>   31
 
Forma Combined Financial Information," and "Post-Merger
Indebtedness -- Fieldcrest Convertible Debentures."
 
MERGER FINANCING
 
     Pillowtex financed the Merger and refinanced certain indebtedness of
Pillowtex and Fieldcrest, paid related fees and expenses, and provided for the
ongoing working capital needs of the Company through a combination of (i)
initial borrowings of $149.0 million under the Revolver and $250.0 million under
the Term Loan, (ii) the issuance and sale of $185.0 million in aggregate
principal amount of the Series A Notes, and (iii) the issuance and sale of $65.0
million in liquidation preference of the Pillowtex Preferred Stock to affiliates
of Apollo. The Financing Transactions were effected concurrently with the
consummation of the Merger. See "Post-Merger Indebtedness," and "Pillowtex
Series A Redeemable Convertible Preferred Stock."
 
                                       24
<PAGE>   32
 
                                USE OF PROCEEDS
 
     The Company will not receive any proceeds from the Exchange Offer. The
approximate net proceeds to the Company from the issuance of the Series A Notes
of $179.9 million (after deducting certain discounts and commissions) together
with proceeds from the New Senior Credit Facilities, and the Pillowtex Preferred
Stock purchased by Apollo, were used to pay the merger consideration, repay
certain outstanding indebtedness of both Fieldcrest and Pillowtex, pay related
fees and expenses, and provide for the ongoing working capital needs of the
Company. See "The Merger -- Merger Financing."
 
     The following table sets forth the sources and uses of funds required to
effect the Merger on a pro forma basis, assuming the Merger was consummated on
September 27, 1997. The actual amounts of sources and uses of funds differed at
the closing (dollars in thousands).
 
<TABLE>
<S>                                                           <C>
Sources of Funds:
  New Senior Credit Facilities(1)...........................  $398,956
  Notes.....................................................   185,000
  Pillowtex Preferred Stock.................................    65,000
                                                              --------
                                                              $648,956
                                                              ========
Uses of Funds:
  Cash to be paid to Fieldcrest stockholders(1)(2)..........  $318,802
  Repayment of indebtedness(3)..............................   186,350
  Redemption of Fieldcrest 11.25% Senior Subordinated
     Debentures.............................................    85,000
  Settlement of Fieldcrest options and stock appreciation
     rights.................................................     6,774
  Fees and expenses(4)......................................    52,030
                                                              --------
                                                              $648,956
                                                              ========
</TABLE>
 
- ---------------
 
(1) The New Senior Credit Facilities include the Term Loan and the Revolver. The
    amount shown excludes letters of credit totaling $37,809 outstanding at the
    Effective Time. After giving effect to the Merger the Company had $163,235
    available under the Revolver. At the consummation of the Merger, the initial
    borrowings under the New Senior Credit Facilities were approximately
    $379,900. The borrowings are expected to increase as additional expenses
    incurred in connection with the Merger are paid. From and after the
    Effective Time, the Fieldcrest Convertible Debentures are convertible into
    the same consideration that a holder of the number of shares of Fieldcrest
    Common Stock into which such Fieldcrest Convertible Debentures might have
    been converted immediately prior to the Merger would be entitled to receive
    in the Merger. If it were assumed that all holders of Fieldcrest Convertible
    Debentures elected this option, then at September 27, 1997, on a pro forma
    combined basis, the revolving credit borrowings would have increased
    $71,071, total debt would have declined by $26,770, and shareholders' equity
    would have increased by $20,081. See "Unaudited Pro Forma Combined Financial
    Information of Pillowtex," "The Merger -- Fieldcrest Convertible
    Debentures," and "Post-Merger Indebtedness -- Fieldcrest Convertible
    Debentures."
 
(2) Assumes that cash to be paid to holders of Fieldcrest Common Stock will be
    $249,577 (9,243,602 shares at $27.00 per share) and the cash to be paid to
    holders of Fieldcrest Preferred Stock will be $69,225 (1,500,000 shares at
    $46.15 per share). At the consummation of the Merger, actual cash paid to
    holders of Fieldcrest Common Stock was $249,559 (9,242,935 shares at $27.00
    per share), cash paid to holders of Fieldcrest Preferred Stock was $69,225
    (1,500,000 shares at $46.15 per share) and cash paid for fractional shares
    was $38.
 
(3) Assumes repayment of $86,350 of the existing Pillowtex senior credit
    facility and $100,000 of the Fieldcrest revolving credit facility. At the
    consummation of the Merger, repayment of the existing Pillowtex senior
    credit facility and the Fieldcrest revolving credit facility was $85,964 and
    $114,085, respectively.
 
(4) Includes premium of $4,782 associated with the redemption of the Fieldcrest
    11.25% Senior Subordinated Debentures, $13,606 of severance payments,
    estimated discounts to NationsBanc Montgomery Securities, Inc. and Bear,
    Stearns & Co. Inc. (the "Initial Purchasers"), bank fees, financial advisory
    fees, and legal, accounting and other expenses payable or reimbursable by
    the Company in connection with the Merger and the Financing Transactions.
 
                                       25
<PAGE>   33
 
                     PRO FORMA CAPITALIZATION OF PILLOWTEX
 
     The following table sets forth the historical capitalization of each of
Pillowtex and Fieldcrest as of September 27, 1997 and September 30, 1997,
respectively, and the pro forma capitalization of Pillowtex as of September 27,
1997, adjusted to give effect to the consummation of the Merger and the
Financing Transactions, as if such transactions had been consummated on
September 27, 1997. "Financing Transactions" means (i) initial borrowings under
the New Senior Credit Facilities of $149.0 million under the Revolver and $250.0
million under the Term Loan, (ii) the issuance and sale of $185.0 million
aggregate principal amount of Notes, (iii) the issuance and sale of 65,000
shares of Pillowtex Preferred Stock, (iv) the repayment of all amounts
outstanding under Pillowtex's and Fieldcrest's existing bank credit facilities,
and (v) the satisfaction and discharge of all indebtedness represented by
Fieldcrest's 11.25% Senior Subordinated Debentures pursuant to an irrevocable
deposit of amounts sufficient to provide for the redemption thereof.
 
     The pro forma information set forth below is presented for illustrative
purposes only and is not necessarily indicative of what Pillowtex's actual
consolidated capitalization would have been had the foregoing transactions been
consummated on September 27, 1997, nor does it give effect to (i) any
transactions other than the foregoing transactions and those discussed in the
Notes to Unaudited Pro Forma Combined Financial Information of Pillowtex
contained elsewhere herein or (ii) Pillowtex's or Fieldcrest's respective
results of operations since September 27, 1997 and September 30, 1997,
respectively. Accordingly, the pro forma information set forth below does not
purport to be indicative of Pillowtex's consolidated capitalization as of the
Effective Time, the date hereof, or any future date.
 
     The following table should be read in conjunction with the historical
financial statements of Pillowtex and Fieldcrest and the unaudited pro forma
combined financial information and the related notes contained elsewhere herein
or incorporated herein by reference to documents previously filed with the
Commission.
 
                                       26
<PAGE>   34
 
                                 CAPITALIZATION
                               SEPTEMBER 27, 1997
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                    HISTORICAL
                                                              -----------------------    PRO FORMA
                                                              PILLOWTEX    FIELDCREST     COMBINED
                                                              ---------    ----------    ----------
<S>                                                           <C>          <C>           <C>
Short-term debt:
  Current portion of long-term debt.........................  $  1,553      $  4,697     $    6,250
                                                              --------      --------     ----------
    Total short-term debt...................................     1,553         4,697          6,250
Long-term debt:
  Revolving credit borrowings...............................    86,350       100,000        148,956
  Senior bank term A........................................        --            --        125,000
  Senior bank term B........................................        --            --        125,000
  Notes.....................................................        --            --        185,000
  10% Senior Subordinated Notes.............................   125,000            --        125,000
  Fieldcrest 6% Convertible Subordinated Debentures.........        --       112,500         93,864(a)
  Fieldcrest 11.25% Senior Subordinated Debentures..........        --        85,000             --
  Deed of Trust Note........................................     2,199            --          2,199
  PEDFA Industrial Revenue Bonds............................     2,310            --          2,310
  MBFC Industrial Revenue Bonds.............................     2,760            --          2,760
  Industrial Development Bonds due 2021.....................        --        10,000         10,000
  Industrial Revenue Installment Bonds due 2002.............        --         1,320          1,320
  Other long-term debt......................................       187            --            187
                                                              --------      --------     ----------
    Total long-term debt....................................   218,806       308,820        821,596
                                                              --------      --------     ----------
        Total debt..........................................   220,359       313,517        827,846
 
Pillowtex Series A Redeemable Convertible Preferred Stock,
  $0.01 par value, 200,000 shares authorized, 65,000 shares
  issued and outstanding (as adjusted)......................        --            --         62,882
Shareholders' equity:
Preferred Stock, $0.01 par value, 20,000,000 shares
  authorized, none issued and outstanding (Pillowtex
  historical); $0.01 par value, 10,000,000 shares
  authorized, 1,500,000 shares issued and outstanding
  (Fieldcrest historical); $0.01 par value, 20,000,000
  shares authorized, none issued and outstanding (as
  adjusted).................................................        --            15             --
Common Stock, $0.01 par value, 30,000,000 shares authorized,
  10,786,819 shares issued and outstanding (Pillowtex
  historical); $0.01 par value, 25,000,000 shares
  authorized, 12,850,002 shares issued and outstanding
  (Fieldcrest historical); $0.01 par value, 30,000,000
  shares authorized, 13,963,348 shares issued and
  outstanding (as adjusted).................................       108        12,850            140
Additional paid-in capital..................................    60,825       226,758        150,539
Retained earnings...........................................    50,316       106,923         49,348(b)
Treasury stock, 3,606,400 shares (Fieldcrest historical); ..
  0 shares (as adjusted)....................................        --      (117,225)            --
Currency translation adjustment.............................      (472)           --           (472)
                                                              --------      --------     ----------
  Total shareholders' equity................................   110,777       229,321        199,555
                                                              --------      --------     ----------
        Total capitalization................................  $331,136      $542,838     $1,090,283
                                                              ========      ========     ==========
        Ratio of total debt to total capitalization.........     66.55%        57.76%         75.93%(c)
                                                              ========      ========     ==========
</TABLE>
 
- ---------------
 
(a) Reflects an adjustment to record the Fieldcrest 6% Convertible Debentures
    due 2012 at fair market value.
(b) Reflects a charge of $968, net of income tax benefit, for the write off of
    Pillowtex unamortized debt issuance costs.
(c) Including the Pillowtex Preferred Stock together with total debt, the ratio
    would be 81.70%.
 
 See accompanying Notes to Unaudited Pro Forma Combined Financial Information.
 
                                       27
<PAGE>   35
 
        UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION OF PILLOWTEX
 
     The following unaudited pro forma combined financial statements of
Pillowtex give effect to the consummation of the Merger and the Financing
Transactions, as if such transactions had been consummated: (i) on September 27,
1997, in the case of the Unaudited Pro Forma Combined Balance Sheet at September
27, 1997 and (ii) on December 31, 1995, the first day of Pillowtex's 1996 fiscal
year, in the case of the Unaudited Pro Forma Combined Statement of Operations
for the fiscal year ended December 28, 1996 and the nine months ended September
27, 1997. As used herein, the term "Financing Transactions" means (i) initial
borrowings under the New Senior Credit Facilities of $149.0 million under the
Revolver and $250.0 million under the Term Loan, (ii) the issuance and sale of
$185.0 million aggregate principal amount of Notes, (iii) the issuance and sale
of 65,000 shares of Pillowtex Preferred Stock, (iv) the repayment of all amounts
outstanding under Pillowtex's and Fieldcrest's existing bank credit facilities,
and (v) the satisfaction and discharge of all indebtedness represented by
Fieldcrest's 11.25% Senior Subordinated Debentures Due 2002 to 2004 pursuant to
an irrevocable deposit of amounts sufficient to provide for the redemption
thereof.
 
     The following unaudited pro forma combined financial information is
presented for illustrative purposes only and is not necessarily indicative of
what Pillowtex's actual financial position or results of operations would have
been had the foregoing transactions been consummated on such dates, nor does it
give effect to (i) any transactions other than the foregoing transactions and
those described in the accompanying Notes to Unaudited Pro Forma Combined
Financial Information, (ii) Pillowtex's or Fieldcrest's results of operations
since September 27, 1997 and September 30, 1997, respectively, or (iii) one-time
charges of approximately $7.5 million, including approximately $2.0 million of
cash charges, expected to result from the Merger and the integration of the
operations of Pillowtex. Although the following unaudited pro forma combined
financial information gives effect to assumed annual cost savings of $21.6
million, it does not give effect to certain additional annual cost savings
expected to be achieved following consummation of the Merger. The pro forma
combined financial information does not purport to be indicative of the
Company's financial position or results of operations as of the date of the
closing of the Merger or for any period ended on the date of the closing of the
Merger, as of the date hereof or for any period ending on the date hereof, or as
of or for any future date or period.
 
     The following unaudited pro forma combined financial information is based
upon the historical financial statements of Pillowtex and Fieldcrest and should
be read in conjunction with such historical financial statements and the related
notes. See "Available Information," "Incorporation of Certain Information by
Reference," "Selected Historical Information of Pillowtex," and "Selected
Historical Information of Fieldcrest." In the preparation of the following
unaudited pro forma combined financial information, it has been generally
assumed that the historical value of Fieldcrest's assets and liabilities
approximates the fair value thereof (except as described in the accompanying
Notes to Unaudited Pro Forma Combined Financial Information), as an independent
valuation has not been completed. The Company will be required to determine the
fair value of the assets and liabilities of Fieldcrest (including intangible
assets) as of the Effective Time. Although such determination of fair value is
not presently expected to result in values that are materially greater or less
than the values assumed in the preparation of the following unaudited pro forma
combined financial information, there can be no assurance with respect thereto.
 
     The Unaudited Pro Forma Combined Balance Sheet at September 27, 1997 is
based upon Pillowtex's financial position at September 27, 1997 and upon
Fieldcrest's financial position at September 30, 1997. The Unaudited Pro Forma
Combined Statement of Operations for the fiscal year ended December 28, 1996 is
based upon Pillowtex's results of operations for its fiscal year ended December
28, 1996 and upon Fieldcrest's results of operations for its fiscal year ended
December 31, 1996. The Unaudited Pro Forma Combined Statement of Operations for
the nine months ended September 27, 1997 is based upon Pillowtex's results of
operations for the nine months ended September 27, 1997 and upon Fieldcrest's
results of operations for the nine months ended September 30, 1997.
 
     The home textiles and furnishings industry is seasonal in nature, with a
higher proportion of sales and earnings usually being generated in the third and
fourth quarters of the fiscal year than in other periods. Because of this
seasonality and other factors, results of operations for interim periods are not
necessarily indicative of results of operations for an entire fiscal year.
 
                                       28
<PAGE>   36
 
               UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
 
                                 BALANCE SHEET
                               SEPTEMBER 27, 1997
                                 (IN THOUSANDS)
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                 HISTORICAL                      PRO FORMA
                                         ---------------------------    ----------------------------
                                         PILLOWTEX      FIELDCREST      ADJUSTMENTS        COMBINED
                                         ---------    --------------    -----------       ----------
<S>                                      <C>          <C>               <C>               <C>
Current assets:
  Cash.................................  $     34        $  5,475        $     --(2)      $    5,509
  Accounts receivable..................   104,353         170,071              --            274,424
  Inventories..........................   150,084         202,064          19,000(1)         371,148
  Prepaid expenses and other current
     assets............................     6,849           2,218              --              9,067
                                         --------        --------        --------         ----------
     Total current assets..............   261,320         379,828          19,000            660,148
Property, plant, and equipment, net....    98,916         342,392          50,000(1)         491,308
Goodwill, net..........................    45,683           6,495         186,544(1)         238,722
Other assets, net......................    13,249          60,764         (44,129)(1)         46,447
                                                                           (1,600)(3)
                                                                           18,163(4)
                                         --------        --------        --------         ----------
          Total assets.................  $419,168        $789,479        $227,978         $1,436,625
                                         ========        ========        ========         ==========
 
                                LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities:
  Accounts payable.....................  $ 50,699        $ 63,893        $     --         $  114,592
  Accrued expenses.....................    25,253          69,435           5,318(1)          99,374
                                                                             (632)(3)
  Current portion of long-term debt....     1,553           4,697              --              6,250
  Deferred income taxes................     2,581          20,593           1,266(1)          24,440
                                         --------        --------        --------         ----------
     Total current liabilities.........    80,086         158,618           5,952            244,656
 
Long-term debt.........................   218,806         308,820         293,970(2)(4)      821,596
Deferred income taxes..................     9,499          39,758           4,984(1)          54,241
Other non-current liabilities..........        --          52,962             733(1)          53,695
                                         --------        --------        --------         ----------
     Total liabilities.................   308,391         560,158         305,639          1,174,188
 
Redeemable convertible preferred
  stock................................        --              --          62,882(5)          62,882
Shareholders' equity:
  Preferred stock......................        --              15             (15)(6)             --
  Common stock.........................       108          12,850         (12,818)(6)            140
  Additional paid-in capital...........    60,825         226,758        (137,044)(6)        150,539
  Retained earnings....................    50,316         106,923        (106,923)(6)         49,348
                                                                             (968)(3)
  Treasury stock.......................        --        (117,225)        117,225(6)              --
  Currency translation adjustment......      (472)             --              --               (472)
                                         --------        --------        --------         ----------
          Total shareholders' equity...   110,777         229,321        (140,543)           199,555
                                         --------        --------        --------         ----------
          Total liabilities and
            shareholders' equity.......  $419,168        $789,479        $227,978         $1,436,625
                                         ========        ========        ========         ==========
</TABLE>
 
 See accompanying Notes to Unaudited Pro Forma Combined Financial Information.
 
                                       29
<PAGE>   37
 
               UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
 
                            STATEMENT OF OPERATIONS
                          YEAR ENDED DECEMBER 28, 1996
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                HISTORICAL                   PRO FORMA
                                         -------------------------   --------------------------
                                          PILLOWTEX    FIELDCREST    ADJUSTMENTS     COMBINED
                                         -----------   -----------   -----------    -----------
<S>                                      <C>           <C>           <C>            <C>
Net sales..............................  $   490,655   $ 1,092,496    $      --     $ 1,583,151
Cost of goods sold.....................      411,048       956,522        3,713(7)    1,364,368
                                                                         (6,915)(8)
                                         -----------   -----------    ---------     -----------
  Gross profit.........................       79,607       135,974        3,202         218,783
Selling, general, and administrative
  expenses.............................       41,445       105,405         (530)(1)     136,434
                                                                            412(7)
                                                                        (14,644)(8)
                                                                          4,825(7)
                                                                           (479)(9)
Restructuring charges..................           --         8,130           --           8,130
                                         -----------   -----------    ---------     -----------
  Earnings from operations.............       38,162        22,439       13,618          74,219
Nonoperating (income) expense:
  Interest expense.....................       13,971        26,869       22,606(10)      63,446
  Other income, net....................           --        (5,604)          --          (5,604)
                                         -----------   -----------    ---------     -----------
          Total nonoperating expense...       13,971        21,265       22,606          57,842
                                         -----------   -----------    ---------     -----------
  Earnings before income taxes and
     extraordinary items...............       24,191         1,174       (8,988)         16,377
Income taxes...........................        9,459           114       (1,198)(11)       8,375
                                         -----------   -----------    ---------     -----------
  Earnings before extraordinary
     items.............................       14,732         1,060       (7,790)          8,002
Preferred dividends....................           --        (4,500)       2,550(12)      (1,950)
                                         -----------   -----------    ---------     -----------
  Earnings (loss) before extraordinary
     items applicable to common
     stock.............................  $    14,732   $    (3,440)   $  (5,240)    $     6,052
                                         ===========   ===========    =========     ===========
PRIMARY EARNINGS PER SHARE:
  Earnings (loss) before extraordinary
     items.............................  $      1.39   $     (0.38)                 $      0.44
                                         ===========   ===========                  ===========
  Weighted average common shares
     outstanding.......................   10,617,722     9,023,958                   13,794,251(13)
                                         ===========   ===========                  ===========
FULLY DILUTED EARNINGS PER SHARE:
  Earnings (loss) before extraordinary
     items.............................                $        --                  $      0.44
                                                       ===========                  ===========
  Weighted average common shares
     outstanding.......................                 14,413,901                   13,794,251(13)
                                                       ===========                  ===========
OTHER OPERATING DATA:
  Depreciation and amortization........  $    12,775   $    36,678                  $    57,394
  EBITDA(14)...........................       50,937        59,117                      131,613
  Ratio of earnings to fixed
     charges(15).......................          2.4x          1.0x                         1.2x
</TABLE>
 
 See accompanying Notes to Unaudited Pro Forma Combined Financial Information.
 
                                       30
<PAGE>   38
 
               UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
 
                            STATEMENT OF OPERATIONS
                      NINE MONTHS ENDED SEPTEMBER 27, 1997
                   (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                  HISTORICAL                   PRO FORMA
                                           ------------------------   ---------------------------
                                            PILLOWTEX    FIELDCREST   ADJUSTMENTS      COMBINED
                                           -----------   ----------   -----------     -----------
<S>                                        <C>           <C>          <C>             <C>
Net sales...............................   $   370,633   $  820,635    $      --      $ 1,191,268
Cost of goods sold......................       305,674      695,615        2,784(7)       998,887
                                                                          (5,186)(8)
                                           -----------   ----------    ---------      -----------
  Gross profit..........................        64,959      125,020        2,402          192,381
 
Selling, general, and administrative
  expenses..............................        33,728       85,563         (398)(1)      111,520
                                                                             310(7)
                                                                         (10,983)(8)
                                                                           3,619(7)
                                                                            (319)(9)
                                           -----------   ----------    ---------      -----------
  Earnings from operations..............        31,231       39,457       10,173           80,861
 
Nonoperating (income) expense:
  Interest expense......................        13,957       18,708       19,970(10)       52,635
  Other income, net.....................            --       (2,021)          --           (2,021)
                                           -----------   ----------    ---------      -----------
          Total nonoperating expense....        13,957       16,687       19,970           50,614
                                           -----------   ----------    ---------      -----------
 
  Earnings before income taxes and
     extraordinary items................        17,274       22,770       (9,797)          30,247
 
Income taxes............................         6,702        8,087       (1,412)(11)      13,377
                                           -----------   ----------    ---------      -----------
  Earnings before extraordinary items...        10,572       14,683       (8,385)          16,870
 
Preferred dividends.....................            --       (3,375)       1,912(12)       (1,463)
                                           -----------   ----------    ---------      -----------
  Earnings before extraordinary items
     applicable to common stock.........   $    10,572   $   11,308    $  (6,473)     $    15,407
                                           ===========   ==========    =========      ===========
PRIMARY EARNINGS PER SHARE:
  Earnings before extraordinary items...   $      0.99   $     1.23                   $      1.11(13)
                                           ===========   ==========                   ===========
  Weighted average common shares
     outstanding........................    10,669,225    9,204,171                    16,554,087
                                           ===========   ==========                   ===========
FULLY DILUTED EARNINGS PER SHARE:
  Earnings before extraordinary items...                 $     1.23                   $      1.11(13)
                                                         ==========                   ===========
  Weighted average common shares
     outstanding........................                  9,247,477                    16,554,087
                                                         ==========                   ===========
OTHER OPERATING DATA:
  Depreciation and amortization.........   $    10,642   $   26,241                   $    42,879
  EBITDA(14)............................        41,873       65,698                       123,740
  Ratio of earnings to fixed
     charges(15)........................           2.0x         2.0x                          1.5x
</TABLE>
 
 See accompanying Notes to Unaudited Pro Forma Combined Financial Information.
 
                                       31
<PAGE>   39
 
          NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
 
 (1) In connection with the Merger, at the Effective Time each then-outstanding
     share of Fieldcrest Common Stock was converted into the right to receive
     total consideration consisting of $27.00 in cash and 0.269 shares of
     Pillowtex Common Stock and each then-outstanding share of Fieldcrest
     Preferred Stock was converted into a right to receive total consideration
     consisting of $46.15 in cash and 0.4598286 shares of Pillowtex Common
     Stock. For purposes of the unaudited pro forma combined financial
     information contained herein, the fair market value of Pillowtex Common
     Stock is assumed to be $28.36 per share, which is the average closing
     market price of the Pillowtex Common Stock for the four consecutive trading
     days immediately preceding December 19, 1997 (i.e., the closing date of the
     Merger). The aggregate purchase price assumed to be paid by Pillowtex in
     connection with the acquisition of Fieldcrest pursuant to the Merger is
     summarized below.
 
ISSUANCE OF PILLOWTEX COMMON STOCK:
 
<TABLE>
<S>                                                           <C>
Number of shares of Fieldcrest Common Stock outstanding at
  the Effective Time........................................     9,243,602
Conversion ratio............................................         0.269
                                                              ------------
Number of shares of Pillowtex Common Stock assumed to be
  issued to holders of Fieldcrest Common Stock in connection
  with the Merger...........................................     2,486,529
                                                              ------------
 
Number of shares of Fieldcrest Preferred Stock outstanding
  at the Effective Time.....................................     1,500,000
Conversion ratio (rounded to the nearest one-hundredth).....          0.46
                                                              ------------
Number of shares of Pillowtex Common Stock assumed to be
  issued to holders of Fieldcrest Preferred Stock in
  connection with the Merger................................       690,000
                                                              ------------
 
Total shares of Pillowtex Common Stock assumed to be issued
  in connection with the Merger.............................     3,176,529
                                                              ============
</TABLE>
 
AGGREGATE PURCHASE PRICE:
 
<TABLE>
<S>                                                           <C>
Cash assumed to be paid to holders of Fieldcrest Common
  Stock (9,243,602 shares at $27.00 per share)..............  $249,577,000
Cash assumed to be paid to holders of Fieldcrest Preferred
  Stock (1,500,000 shares at $46.15 per share)..............    69,225,000
Assumed fair value of Pillowtex Common Stock assumed to be
  issued in connection with the Merger (3,176,529 shares at
  $28.36 per share).........................................    90,086,000
Severance costs assumed to be incurred in connection with
  the Merger................................................    13,021,000(a)
Settlement of Fieldcrest Options and Fieldcrest SARs........     6,774,000(b)
Early call premium on Fieldcrest 11.25% Senior Subordinated
  Debentures................................................     4,782,000
Financial advisors, legal, accounting, and other
  professional fees.........................................    13,606,000
                                                              ------------
 
Aggregate purchase price....................................  $447,071,000
                                                              ============
</TABLE>
 
                                       32
<PAGE>   40
 
ALLOCATION OF PURCHASE PRICE:
 
<TABLE>
<S>                                                  <C>            <C>
Aggregate purchase price...........................                 $447,071,000
Less net book value of assets acquired.............                  229,321,000
                                                                    ------------
Excess of cost over net book value of assets
  acquired.........................................                  217,750,000
 
Less adjustments to record assets and liabilities
  acquired
at fair market value:
  Inventory........................................   19,000,000(c)
  Property, plant, and equipment...................   50,000,000(d)
  Goodwill.........................................   (6,495,000)(e)
  Other assets.....................................  (44,129,000)(f)
  Accrued expenses.................................   (5,318,000)(g)
  Deferred income taxes -- current.................   (1,266,000)(h)
  Long-term debt...................................   18,636,000(i)
  Deferred income taxes -- noncurrent..............   (4,984,000)(h)
  Noncurrent liabilities...........................     (733,000)(j)   24,711,000
                                                     -----------    ------------
Excess of cost over fair market value of net assets
  acquired (k).....................................                 $193,039,000
                                                                    ============
</TABLE>
 
- ---------------
 
     (a) Reflects severance costs to be incurred in connection with the Merger
         in accordance with EITF 95-3, "Recognition of Liabilities in Connection
         with a Purchase Business Combination."
 
     (b) Reflects the settlement of the outstanding options to purchase shares
         of Fieldcrest Common Stock (the "Fieldcrest Options") and outstanding
         stock appreciation rights issued by Fieldcrest (the "Fieldcrest SARs")
         in connection with the Merger.
 
     (c) Reflects principally the elimination of Fieldcrest's last-in, first-out
         reserve, together with certain offsetting adjustments necessary to
         state inventory at fair market value.
 
     (d) Reflects a preliminary adjustment to fair value of Fieldcrest's
         property, plant, and equipment. The preliminary adjustment is based
         upon internal estimates and is allocated as follows:
 
<TABLE>
<S>                                       <C>
Land....................................  $ 5,000,000
Buildings...............................   20,000,000
Machinery and Equipment.................   25,000,000
                                          -----------
                                          $50,000,000
                                          ===========
</TABLE>
 
     (e) Reflects the elimination of Fieldcrest's existing goodwill of
         $6,495,000. The reversal of the related amortization was $530,000 for
         the year ended December 28, 1996 and $398,000 for the nine months ended
         September 27, 1997.
 
     (f) Reflects an adjustment to record the (i) preliminary fair value
         remeasurement of Fieldcrest's pension asset resulting in a reduction of
         $27,087,000, (ii) elimination of the asset related to the Fieldcrest
         licensing agreement with Pillowtex of $10,393,000, (iii) write-off of
         the unamortized balance of debt issuance costs related to Fieldcrest's
         bank credit facility, Fieldcrest's 11.25% Senior Subordinated
         Debentures Due 2002 (the "11.25% Senior Subordinated Debentures"), and
         Fieldcrest's 6% Convertible Debentures due 2012 (the "Fieldcrest
         Convertible Debentures") of $4,649,000 and (iv) preliminary fair value
         adjustment related to notes receivable of $2,000,000.
 
     (g) Reflects the adjustment to record miscellaneous reserves of $5,318,000
         charged to pre-Merger earnings.
 
     (h) To record a $6,250,000 deferred tax liability related to the temporary
         difference between the financial statement carrying amount and the tax
         basis of the Fieldcrest acquired assets as adjusted at an assumed
         income tax rate of 35.0% for the years in which those differences are
         expected to be recovered or settled.
 
     (i) Reflects the adjustment to record the Fieldcrest Convertible Debentures
         at an amount that approximates the market value of the Fieldcrest
         Convertible Debentures on December 19, 1997, (i.e., the closing date of
         the Merger). The discount of $18,636,000 will be amortized to interest
         expense using the interest method over the remaining life of the
         Fieldcrest Convertible Debentures.
 
                                       33
<PAGE>   41
 
     (j) Reflects the preliminary fair value remeasurement of Fieldcrest's
         liability for post-retirement benefits other than pension ("OPEB") of
         $733,000.
 
     (k) Upon completion of its determination of fair values, Pillowtex may
         identify intangible assets (such as trade names) to which a portion of
         the purchase price should be allocated. Pillowtex believes that the
         amortization period for such identifiable intangible assets will also
         be 40 years.
 
 (2) Reflects the adjustment to record the following:
 
<TABLE>
<S>                                                           <C>
Initial borrowings under the New Senior Credit Facilities...  $ 398,956,000
Gross proceeds from the issuance and sale of the Notes......    185,000,000
Gross proceeds from the issuance and sale of Pillowtex
  Preferred Stock...........................................     65,000,000
Cash assumed to be paid to holders of Fieldcrest Common
  Stock (9,243,602 shares at $27.00 per share)..............   (249,577,000)
Cash assumed to be paid to holders of Fieldcrest Preferred
  Stock (1,500,000 shares at $46.15 per share)..............    (69,225,000)
Repayment of Pillowtex's revolving credit facility..........    (86,350,000)
Repayment of Fieldcrest's revolving credit facility.........   (100,000,000)
Satisfaction and discharge of Fieldcrest's 11.25% Senior
  Subordinated Debentures...................................    (85,000,000)
Severance costs assumed to be incurred in connection with
  the Merger (see note 1(a))................................    (13,021,000)
Settlement of Fieldcrest Options and Fieldcrest SARs (see
  note 1(b))................................................     (6,774,000)
Early call premium on Fieldcrest 11.25% Senior Subordinated
  Debentures................................................     (4,782,000)
Financial advisors, legal, accounting, and other
  professional fees.........................................    (34,227,000)
                                                              -------------
                                                              $          --
                                                              =============
</TABLE>
 
 (3) Reflects the adjustment to (a) write off the unamortized balance of debt
     issuance costs related to the existing Pillowtex bank credit facility of
     $1,600,000, (b) record the related tax benefit of $632,000 and (c) record a
     net reduction in retained earnings of $968,000.
 
 (4) Reflects the adjustment to record the following:
 
<TABLE>
<S>                                                           <C>
Bank borrowings required to finance the Merger..............  $ 398,956,000
Issuance and sale of the Notes..............................    185,000,000
Repayment of Pillowtex's revolving credit facility..........    (86,350,000)
Repayment of Fieldcrest's revolving credit facility.........   (100,000,000)
Satisfaction and discharge of Fieldcrest's 11.25% Senior
  Subordinated Debentures...................................    (85,000,000)
Discount of the Fieldcrest Convertible Debentures at fair
  market value (see note 1(i))..............................    (18,636,000)
                                                              -------------
                                                              $ 293,970,000
                                                              =============
</TABLE>
 
     Additionally, debt issuance costs of $18,163,000 were incurred in
     connection with the Merger.
 
 (5) Reflects the issuance and sale of 65,000 shares of Pillowtex Preferred
     Stock at an offering price of $1,000 per share, net of offering costs of
     $2,118,000.
 
 (6) Reflects the (i) elimination of Fieldcrest's equity which will be canceled
     upon consummation of the Merger, (ii) issuance of 3,176,529 shares of
     Pillowtex Common Stock at a par value of $0.01 in connection with the
     Merger, and (iii) the related additional paid-in capital of $90,054,000,
     net of equity issuance costs of $340,000.
 
 (7) Reflects incremental depreciation and amortization expense as a result of
     the preliminary adjustment to fair value of Fieldcrest's property, plant,
     and equipment and the excess of cost over fair market value of the net
     assets acquired (see note 1) as follows:
 
                                       34
<PAGE>   42
 
<TABLE>
<CAPTION>
                                                                               NINE MONTHS
                                                               YEAR ENDED         ENDED
                                               ESTIMATED      DECEMBER 28,    SEPTEMBER 27,
                                              USEFUL LIFE         1996            1997
                                             -------------    ------------    -------------
<S>                                          <C>              <C>             <C>
Additional depreciation of Fieldcrest
  Merger property, plant, and equipment....  8 to 20 years     $4,125,000      $3,094,000
                                                               ==========      ==========
Amortization of excess of cost over fair
  value of net assets acquired.............    40 years        $4,825,000      $3,619,000
                                                               ==========      ==========
</TABLE>
 
 (8) Reflects the elimination of duplicate corporate expenses of $21,559,000 for
     the year ended December 28, 1996 and $16,169,000 for the nine months ended
     September 27, 1997.
 
 (9) Reflects the reversal of the amortization related to Pillowtex's debt
     issuance costs which have been written off in connection with the Merger
     (see note 3) of $479,000 for the year ended December 28, 1996 and $319,000
     for the nine months ended September 27, 1997.
 
(10) Reflects an adjustment to record additional interest expense, amortization
     of debt issuance costs, and the amortization of the discount on the
     Fieldcrest Convertible Debentures incurred in connection with the Merger.
     For each  1/8% change in the assumed effective interest rate on Pillowtex's
     floating-rate debt, interest expense would change by $672,000 and $481,000
     for the year ended December 28, 1996 and the nine months ended September
     27, 1997, respectively.
 
(11) Reflects the income tax benefit related to the effects of the pro forma
     adjustments based upon an assumed composite income tax rate of 39.5%.
 
(12) Reflects an adjustment to (i) reverse Fieldcrest's historical preferred
     stock dividends and (ii) record the dividends on the Pillowtex Preferred
     Stock assuming a 3% dividend rate as follows:
 
<TABLE>
<CAPTION>
                                                                            NINE MONTHS
                                                            YEAR ENDED         ENDED
                                                           DECEMBER 28,    SEPTEMBER 27,
                                                               1996            1997
                                                           ------------    -------------
<S>                                                        <C>             <C>
Reversal of historical Fieldcrest Preferred Stock
  dividends..............................................  $(4,500,000)     $(3,375,000)
Addition of Pillowtex Preferred Stock dividends..........    1,950,000        1,463,000
                                                           -----------      -----------
                                                           $(2,550,000)     $(1,912,000)
                                                           ===========      ===========
</TABLE>
 
    If Pillowtex were to fail to attain specified earnings per share targets in
    1999, dividends for fiscal years after 1999 would increase from the initial
    3.0% rate to 7.0% or 10.0% and Pillowtex would be required to pay an
    additional dividend consisting of shares of Pillowtex Preferred Stock, in
    each case as described above.
 
(13) The assumed conversion of the Fieldcrest Convertible Debentures and the
     Pillowtex Preferred Stock would have an anti-dilutive effect on earnings
     per share for the year ended December 28, 1996, and therefore has been
     excluded from the computation thereof.
 
    The assumed conversion of the Fieldcrest Convertible Debentures would have
    an anti-dilutive effect on earnings per share for the nine months ended
    September 27, 1997, and therefore has been excluded from the computation
    thereof.
 
(14) EBITDA is income before income taxes plus depreciation expense,
     amortization expense, and net interest expense. EBITDA is presented because
     it is a widely accepted financial indicator of a company's ability to
     service and/or incur indebtedness; however, EBITDA should not be considered
     as an alternative to net income (as a measure of operating results) or to
     cash flows (as a measure of liquidity) computed in accordance with
     generally accepted accounting principles. In addition, EBITDA as presented
     herein may not be directly comparable to EBITDA as reported by other
     companies.
 
(15) In calculating the ratio of earnings to fixed charges, earnings consist of
     income before income taxes plus fixed charges (excluding capitalized
     interest). Fixed charges consist of interest expense (which includes
     amortization of deferred financing costs) whether expensed or capitalized
     and one-third of rental expense, deemed representative of that portion of
     rental expense estimated to be attributable to interest.
 
                                       35
<PAGE>   43
 
             SELECTED HISTORICAL FINANCIAL INFORMATION OF PILLOWTEX
 
     The following summary historical financial information of Pillowtex has
been derived from the historical consolidated financial statements of Pillowtex
filed with the Commission, and should be read in conjunction with such financial
statements and the notes thereto and the other financial information appearing
in Pillowtex's Annual Report on Form 10-K for the year ended December 28, 1996
and the Quarterly Report on Form 10-Q of Pillowtex for the quarter ended
September 27, 1997, and incorporated herein by reference. See "Available
Information" and "Incorporation of Certain Information by Reference." The
historical financial information at the end of and for each fiscal year in the
five-year period ended December 28, 1996 has been extracted from audited
financial statements filed with the Commission. Historical financial information
at the end of and for the nine-month periods ended September 28, 1996 and
September 27, 1997 has been extracted from unaudited financial statements filed
with the Commission and incorporated herein by reference and, in the opinion of
management, includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation, in all material respects, of the
results of operations and financial position at the end of and for each of the
interim periods presented. Interim period results are not necessarily indicative
of results to be expected for a complete fiscal year.
 
<TABLE>
<CAPTION>
                                                                                                          NINE MONTHS ENDED
                                                                 FISCAL YEAR                        -----------------------------
                                             ----------------------------------------------------   SEPTEMBER 28,   SEPTEMBER 27,
                                               1992     1993(1)    1994(2)      1995       1996         1996            1997
                                             --------   --------   --------   --------   --------   -------------   -------------
                                                            (DOLLARS IN THOUSANDS)                           (UNAUDITED)
<S>                                          <C>        <C>        <C>        <C>        <C>        <C>             <C>
STATEMENT OF OPERATIONS DATA:
Net sales..................................  $273,462   $291,624   $349,520   $474,899   $490,655     $335,770        $370,633
Cost of goods sold.........................   222,611    238,155    294,714    395,922    411,048      280,272         305,674
                                             --------   --------   --------   --------   --------     --------        --------
Gross profit...............................    50,851     53,469     54,806     78,977     79,607       55,498          64,959
Selling, general, and administrative
  expenses ................................    33,376     29,227     36,399     42,508     41,445       31,170          33,728
                                             --------   --------   --------   --------   --------     --------        --------
Earnings from operations...................    17,475     24,242     18,407     36,469     38,162       24,328          31,231
Interest expense...........................     4,997      3,042      6,361     17,491     13,971       10,279          13,957
Other expense (income), net................     1,049         --       (379)        --         --           --              --
                                             --------   --------   --------   --------   --------     --------        --------
Earnings before income taxes and
  extraordinary loss.......................    11,429     21,200     12,425     18,978     24,191       14,049          17,274
Income taxes...............................       529      8,420      4,736      7,509      9,459        5,495           6,702
                                             --------   --------   --------   --------   --------     --------        --------
Earnings before extraordinary loss.........    10,900     12,780      7,689     11,469     14,732        8,554          10,572
Extraordinary loss, net....................        --         --         --         --       (609)          --              --
                                             --------   --------   --------   --------   --------     --------        --------
Net earnings(3)............................  $ 10,900   $ 12,780   $  7,689   $ 11,469   $ 14,123     $  8,554        $ 10,572
                                             ========   ========   ========   ========   ========     ========        ========
Net earnings available to common stock
  shareholders(3)..........................  $  8,400   $ 12,780   $  7,689   $ 11,469   $ 14,123     $  8,554        $ 10,572
                                             ========   ========   ========   ========   ========     ========        ========
OTHER DATA:
Depreciation and amortization..............  $  3,104   $  3,868   $  6,365   $ 11,994   $ 12,775     $  9,440        $ 10,642
Capital expenditures(4)....................     5,869      7,135     10,538     12,448      6,960        2,981          13,891
EBITDA(5)..................................    19,530     28,110     25,151     48,463     50,937       33,768          41,873
EBITDA margin..............................       7.1%       9.6%       7.2%      10.2%      10.4%        10.1%           11.3%
Ratio of earnings to fixed charges(6)......       3.0x       6.8x       2.8x       2.0x       2.4x         2.2x            2.0x
BALANCE SHEET DATA:
Working capital............................  $ 65,567   $ 78,141   $122,738   $110,128   $150,506     $152,787        $181,234
Total assets...............................   131,542    180,967    319,544    324,710    375,714      370,670         419,168
Long-term debt.............................    63,599     63,735    177,149    153,472    194,851      180,200         218,806
Shareholders' equity.......................     7,072     69,329     76,478     87,990    100,004       95,042         110,777
</TABLE>
 
- ---------------
 
(1) Results for fiscal 1993 reflect the operations of Manetta Home Fashions,
    Inc. from August 30, 1993, Tennessee Woolen Mills, Inc. from September 7,
    1993 and Torfeaco Industries Limited from December 1, 1993.
 
(2) Results for fiscal 1994 reflect the operations of Imperial Feather Company
    from August 19, 1994 and Beacon Manufacturing Company from December 1, 1994.
 
(3) Pillowtex, under a 1990 stock repurchase agreement with its former majority
    shareholder, was committed to repurchase certain shares of common stock from
    the former majority shareholder which resulted in accretion of $2,500. This
    accretion was charged to retained earnings and deducted from earnings
    available for common stock shareholders in the computation of pro forma
    earnings per common share for fiscal 1992. Additionally, on a pro forma
    basis, giving effect to the termination of Pillowtex's status as an S
    corporation under subchapter S of the Internal Revenue Code (which
    termination resulted from the initial public offering of Pillowtex Common
    Stock), as if such termination had occurred on January 1, 1992, net earnings
    and net earnings available to common stock shareholders would have been
    $7,692 and $5,192, respectively, for fiscal 1992 and $12,877 and $12,877,
    respectively, for fiscal 1993.
 
(4) Capital expenditures for fiscal year 1996 exclude $5,745 and $8,335 related
    to the purchase of the assets of the Fieldcrest blanket division and the
    purchase of the Mauldin, South Carolina distribution facility, respectively.
 
(5) EBITDA is income before income taxes plus depreciation expense, amortization
    expense, and net interest expense. EBITDA is presented because it is a
    widely accepted financial indicator of a company's ability to service and/or
    incur indebtedness; however, EBITDA should not be considered as an
    alternative to net income as a measure of operating results or to cash flows
    as a measure of liquidity in accordance with generally accepted accounting
    principles.
 
(6) In calculating the ratio of earnings to fixed charges, earnings consist of
    income before income taxes plus fixed charges (excluding capitalized
    interest). Fixed charges consist of interest expense (which includes
    amortization of deferred financing costs) whether expensed or capitalized
    and one-third of rental expense, deemed representative of that portion of
    rental expense estimated to be attributable to interest.
 
                                       36
<PAGE>   44
 
            SELECTED HISTORICAL FINANCIAL INFORMATION OF FIELDCREST
 
     The following summary historical financial information of Fieldcrest has
been derived from the historical consolidated financial statements of Fieldcrest
filed with the Commission, and should be read in conjunction with such financial
statements and the notes thereto and the other financial information appearing
in Fieldcrest's Annual Report on Form 10-K for the year ended December 31, 1996
and the Quarterly Report on Form 10-Q of Fieldcrest for the quarter ended
September 30, 1997, and incorporated herein by reference. See "Available
Information" and "Incorporation of Certain Information by Reference." The
historical financial information at the end of and for each fiscal year in the
five-year period ended December 31, 1996 has been extracted from audited
financial statements filed with the Commission. Historical financial information
at the end of and for the nine-month periods ended September 30, 1996 and 1997
has been extracted from unaudited financial statements filed with the Commission
and, in the opinion of management, includes all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation, in all material
respects, of the results of operations and financial position at the end of and
for each of the interim periods presented. Interim period results are not
necessarily indicative of results to be expected for a complete fiscal year.
 
<TABLE>
<CAPTION>
                                                                                                                  NINE MONTHS
                                                                                                                     ENDED
                                                                       FISCAL YEAR                               SEPTEMBER 30,
                                               ------------------------------------------------------------   -------------------
                                                 1992        1993         1994         1995         1996        1996       1997
                                               --------   ----------   ----------   ----------   ----------   --------   --------
                                                                  (DOLLARS IN THOUSANDS)                          (UNAUDITED)
<S>                                            <C>        <C>          <C>          <C>          <C>          <C>        <C>
STATEMENT OF OPERATIONS DATA:
Net sales....................................  $981,773   $1,000,107   $1,063,731   $1,095,193   $1,092,496   $812,995   $820,635
Cost of sales................................   818,729      834,701      898,437      966,642      956,522    706,482    695,615
                                               --------   ----------   ----------   ----------   ----------   --------   --------
Gross profit.................................   163,044      165,406      165,294      128,551      135,974    106,513    125,020
Selling, general and administrative
  expenses(1)................................   102,189      111,843       94,756      128,663      113,535     86,536     85,563
                                               --------   ----------   ----------   ----------   ----------   --------   --------
Operating income (loss)......................    60,855       53,563       70,538         (112)      22,439     19,977     39,457
Interest expense.............................    34,149       27,659       23,268       27,630       26,869     21,496     18,708
Other expense (income), net..................       130         (975)         987           67       (5,604)       519     (2,021)
                                               --------   ----------   ----------   ----------   ----------   --------   --------
Income (loss) before income taxes............    26,576       26,879       46,283      (27,809)       1,174     (2,038)    22,770
Income taxes.................................    10,886       11,913       15,538      (12,084)         114       (764)     8,087
                                               --------   ----------   ----------   ----------   ----------   --------   --------
Income (loss) from continuing operations
  before accounting charges..................  $ 15,690   $   14,966   $   30,745   $  (15,725)  $    1,060   $ (1,274)  $ 14,683
                                               ========   ==========   ==========   ==========   ==========   ========   ========
Net income (loss)(3).........................  $ 15,250   $  (42,931)  $   30,745   $  (15,725)  $    1,060   $ (1,274)  $ 14,683
Preferred dividends..........................        --         (463)      (4,500)      (4,500)      (4,500)    (3,375)    (3,375)
                                               --------   ----------   ----------   ----------   ----------   --------   --------
Earnings (loss) on common....................  $ 15,250   $  (43,394)  $   26,245   $  (20,225)  $   (3,440)  $ (4,649)  $ 11,308
                                               ========   ==========   ==========   ==========   ==========   ========   ========
OTHER DATA:
Depreciation and amortization................  $ 31,370   $   31,539   $   29,828   $   31,746   $   36,678   $ 26,979   $ 26,241
Capital expenditures.........................    20,687       21,594       51,929       64,153       33,386     21,035     46,214
EBITDA(4)....................................    92,225       85,102      100,366       31,634       59,117     46,956     65,698
EBITDA margin................................       9.4%         8.5%         9.4%         2.9%         5.4%       5.8%       8.0%
Ratio of earnings to fixed charges(5)........       1.7x         1.8x         2.5x          --          1.0x        --        2.0x
 
BALANCE SHEET DATA:
Working capital..............................  $296,580   $  262,326   $  282,461   $  268,477   $  229,010   $288,103   $221,210
Total assets.................................   863,991      740,446      782,665      812,946      768,493    832,992    789,479
Long-term debt...............................   353,419      294,611      317,744      365,262      311,496    373,748    308,820
Stockholders' equity.........................   284,478      193,330      231,202      215,431      215,755    213,689    229,321
</TABLE>
 
- ---------------
 
(1) Includes restructuring charges of $10,000, $20,469 and $8,130 for fiscal
    years 1993, 1995 and 1996, respectively, and $8,130 for the nine months
    ended September 30, 1996. Such restructuring charges were incurred in
    connection with (i) a 1993 program to reduce overhead through a voluntary
    early retirement program and certain corporate reorganization costs, (ii)
    the 1995 reorganization of Fieldcrest's New York operations, and (iii) the
    1996 sale of Fieldcrest's blanket division to Pillowtex and the closing of
    the blanket facilities in Eden, North Carolina.
 
(2) Interest expense is net of interest income in the amount of $416, $613,
    $749, $1,859 and $4,161 for fiscal years 1992 through 1996, respectively,
    and $2,067 and $1,743 for the nine months ended September 30, 1996 and 1997,
    respectively.
 
(3) Includes extraordinary loss on early retirement of debt of $5,179 for fiscal
    1992, income from discontinued operations of $4,739 and $3,201 for fiscal
    years 1992 and 1993, respectively, and a gain from disposition of
    discontinued operations and cumulative effect of accounting changes of
    $9,207 and ($70,305), respectively, for fiscal 1993.
 
(4) EBITDA is income before income taxes plus depreciation expense, amortization
    expense, and net interest expense. EBITDA is presented because it is a
    widely accepted financial indicator of a company's ability to service and/or
    incur indebtedness; however, EBITDA should not be considered as an
    alternative to net income as a measure of operating results or to cash flows
    as a measure of liquidity in accordance with generally accepted accounting
    principles.
 
(5) In calculating the ratio of earnings to fixed charges, earnings consist of
    income before income taxes plus fixed charges (excluding capitalized
    interest). Fixed charges consist of interest expense (which includes
    amortization of deferred financing costs) whether expended or capitalized
    and one-third of rental expense, deemed representative of that portion of
    rental expense estimated to be attributable to interest. For the year ended
    December 31, 1995, and the nine months ended September 30, 1996, earnings
    were insufficient to cover fixed charges by $27,809 and $2,038,
    respectively.
 
                                       37
<PAGE>   45
 
                               THE EXCHANGE OFFER
 
     On December 18, 1997, the Company sold $185,000,000 in aggregate principal
amount of the Series A Notes in a transaction exempt from the registration
requirements of the Securities Act. In connection with the sale of the Series A
Notes, the Company entered into the Registration Rights Agreement that requires
the Company, among other things, to use its best efforts to file with the
Commission a registration statement under the Securities Act covering the offer
by the Company to exchange all of the Series A Notes for the Series B Notes and
to cause such registration statement to become effective under the Securities
Act. The Company is further obligated, upon the effectiveness of that
registration statement, to offer each Holder of the Series B Notes the
opportunity to exchange such Series A Notes for an equal principal amount at
maturity of Series B Notes. A copy of the Registration Rights Agreement has been
filed previously with the Commission. The Exchange Offer is being made pursuant
to the Registration Rights Agreement to satisfy the Company's obligations
thereunder. The term "Holder" with respect to the Exchange Offer means any
person in whose name Series A Notes are registered on the Company's books or any
other person who has obtained a properly completed assignment from the
registered holder.
 
     Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Series A Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City Time, on             , 1998; provided, however, that if the Company,
in its sole discretion, has extended the period of time for which the Exchange
Offer is open, the term "Expiration Date" means the latest time and date to
which the Exchange Offer is extended.
 
     As of the date of this Prospectus, $185,000,000 aggregate principal amount
of the Series A Notes were outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about             , 1998, to
all holders of Series A Notes known to the Company. The Company expressly
reserves the right, at any time or from time to time, to extend the period of
time during which the Exchange Offer is open, and thereby delay acceptance for
exchange of any Series A Notes, by giving oral or written notice of such
extension to the holders thereof as described below. During any such extension,
all Series A Notes previously tendered will remain subject to the Exchange Offer
and may be accepted for exchange by the Company. Any Series A Notes not accepted
for exchange for any reason will be returned without expense to the tendering
holder thereof as promptly as practicable after the expiration or termination of
the Exchange Offer.
 
     Series A Notes tendered in the Exchange Offer must be in denominations of
principal amount of $1,000 and any integral multiple thereof. The Company will
give oral or written notice of any extension, amendment, non-acceptance or
termination to the holders of the Series A Notes as promptly as practicable,
such notice in the case of any extension to be issued by means of a press
release or other public announcement no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
 
PROCEDURES FOR TENDERING SERIES A NOTES
 
     The tender to the company of Series A Notes by a Holder thereof as set
forth below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a Holder who wishes to tender
Series A Notes for exchange pursuant to the Exchange Offer must transmit either
(i) a properly completed and duly executed Letter of Transmittal, including all
other documents required by such Letter of Transmittal, to the Exchange Agent,
at the address set forth below under "-- Exchange Agent" on or prior to the
Expiration Date, or (ii) if such Series A Notes are tendered pursuant to the
procedures for book-entry transfer set forth below, a holder tendering Series A
Notes may transmit an Agent's Message (as defined herein) to the Exchange Agent
in lieu of the Letter of Transmittal, in either case on or prior to the
Expiration Date. In addition, either (i) certificates for such Series A Notes
must be received by the Exchange Agent along with the Letter of Transmittal,
(ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Series A Notes, if such
 
                                       38
<PAGE>   46
 
procedure is available, into the Exchange Agent's account at the DTC (the
"Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, along with the Letter of Transmittal or an Agent's
Message, as the case may be, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the holder must comply with the guaranteed delivery
procedures described below. The term "Agent's Message" means a message,
transmitted to the Book-Entry Transfer Facility and received by the Exchange
Agent and forming a part of the Book-Entry Confirmation, which states that the
Book-Entry Transfer Facility has received an express acknowledgment from the
tendering Participant (as defined herein) that such Participant has received and
agrees to be bound by the Letter of Transmittal and the Company may enforce the
Letter of Transmittal against such Participant. THE METHOD OF DELIVERY OF SERIES
A NOTES, LETTERS OF TRANSMITTAL OR AGENT'S MESSAGE AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SUCH DELIVERY IS BY
MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN
RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR SERIES A NOTES SHOULD BE
SENT TO THE COMPANY.
 
     Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Series A Notes surrendered for
exchange pursuant thereto are tendered (i) by a registered holder of the Series
A Notes who has not completed the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution (as defined herein). In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case may
be, are required to be guaranteed, such guarantees must be by a firm which is a
member of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Series A Notes are registered in the name of a person other
than a signatory of the Letter of Transmittal, the Series A Notes surrendered
for exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Company in its sole discretion, duly executed by, the registered Holder with the
signature thereon guaranteed by an Eligible Institution.
 
     All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Series A Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
tenders of any particular Series A Notes not properly tendered or to refuse to
accept any particular Series A Notes which acceptance might, in the judgment of
the Company or its counsel, be unlawful. The Company also reserves the absolute
right to waive any defects or irregularities or conditions of the Exchange Offer
as to any particular Series A Notes either before or after the Expiration Date
(including the right to waive the ineligibility of any holder who seeks to
tender Series A Notes in the Exchange Offer). The interpretation of the terms
and conditions of the Exchange Offer as to any particular Series A Notes either
before or after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
Series A Notes for exchange must be cured within such reasonable period of time
as the Company shall determine. Neither the Company, the Exchange Agent nor any
other person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Series A Notes for exchange, nor
shall any of them incur any liability for failure to give such notification.
 
     If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Series A Notes, such Series A Notes must be
endorsed or accompanied by appropriate powers of attorney, in either case signed
exactly as the name or names of the registered holder or holders that appear on
the Series A Notes.
 
     If the Letter of Transmittal or any Series A Notes or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted.
                                       39
<PAGE>   47
 
     By tendering, each Holder will represent to the Company that, among other
things, the Series B Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such Series
B Notes, whether or not such person is the holder, and that neither the holder
nor such other person has any arrangement or understanding with any person to
participate in the distribution of the Series B Notes. In the case of a Holder
that is not a broker-dealer, each such holder, by tendering, will also represent
to the Company that such holder is not engaged in, or does not intend to engage
in, a distribution of the Series B Notes. If any Holder or any such other person
is an "affiliate," as defined under Rule 405 of the Securities Act, of the
Company, or is engaged in or intends to engage in or has an arrangement or
understanding with any person to participate in a distribution of such Series B
Notes to be acquired pursuant to the Exchange Offer, such Holder or any such
other person (i) could not rely on the applicable interpretations of the staff
of the Commission and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. Each broker-dealer that receives Series B Notes for its own account
in exchange for Series A Notes, where such Series A Notes 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 Series B Notes. See "Plan of Distribution." 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.
 
ACCEPTANCE OF SERIES A NOTES FOR EXCHANGE; DELIVERY OF SERIES B NOTES
 
     Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Series A Notes
properly tendered and will issue the Series B Notes promptly after acceptance of
the Series A Notes. For purposes of the Exchange Offer, the Company shall be
deemed to have accepted properly tendered Series A Notes for exchange when, as
and if the Company has given oral or written notice thereof to the Exchange
Agent, with written confirmation of any oral notice to be given promptly
thereafter.
 
     For each Series A Note accepted for exchange, the holder of such Series A
Note will receive a Series B Note having a principal amount equal to that of the
surrendered Series A Note. The Series B Note will bear interest from the date
which the Series A Note bears interest. Series A Notes accepted for exchange
will cease to accrue interest from and after the date of consummation of the
Exchange Offer. Holders of Series A Notes whose Series A Notes are accepted for
exchange will not receive any payment in respect of interest on such Series A
Notes otherwise payable on any interest payment date the record date for which
occurs on or after consummation of the Exchange Offer. If the Exchange Offer is
not consummated within the time period set forth herein under the heading
"Description of Notes -- Registration Rights; Liquidation Rights," special
interest in the form of Liquidated Damages will accrue and be payable on the
Series A Notes until the Exchange Offer is consummated.
 
     In all cases, issuance of Series B Notes for Series A Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Series A Notes or
a timely Book-Entry Confirmation of such Series A Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility, a properly completed and
duly executed Letter of Transmittal and all other required documents or, in the
case of a Book-Entry Confirmation, an Agent's Message in lieu thereof. If any
tendered Series A Notes are not accepted for any reason set forth in the terms
and conditions of the Exchange Offer of if Series A Notes are submitted for a
greater principal amount than the holder desired to exchange, such unaccepted or
non-exchanged Series A Notes will be resumed without expense to the tendering
holder thereof (or, in the case of Series A Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry procedures described below, such non-exchanged Series
A Notes will be credited to an account maintained with such Book-Entry Transfer
Facility) as promptly as practicable after the expiration or termination of the
Exchange Offer.
 
                                       40
<PAGE>   48
 
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
 
     Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue Series B Notes in
exchange for, any Series A Notes and may terminate or amend the Exchange Offer,
if at any time before the acceptance of such Series A Notes for exchange or the
exchange of the Series B Notes for exchange or the exchange of the Series B
Notes for such Series A Notes, any of the following shall occur:
 
          (a) there shall be threatened, instituted or pending any action or
     proceeding before, or any injunction, order of decree shall have been
     issued by, any court or governmental agency or other governmental
     regulatory or administrative agency or commission, (i) seeking to restrain
     or prohibit the making or consummation of the Exchange Offer or any other
     transaction contemplated by the Exchange Offer, or assessing or seeking any
     damages as a result thereof, or (ii) resulting in a material delay in the
     ability of the Company to accept for exchange or exchange some or all of
     the Series A Notes pursuant to the Exchange Offer; or any statute, rule,
     regulation, order or injunction shall be sought, proposed, introduced,
     enacted, promulgated or deemed applicable to the Exchange Offer or any of
     the transactions contemplated by the Exchange Offer by any government or
     governmental authority, domestic or foreign, or any action shall have been
     taken, proposed or threatened, by any government, governmental authority,
     agency or court, domestic or foreign, that in the reasonable judgment of
     the Company might directly or indirectly result in any of the consequences
     referred to in clauses (i) or (ii) above or, in the reasonable judgment of
     the Company, might result in the holders of Series B Notes having
     obligations with respect to resales and transfers of Series B Notes which
     are greater than those described in the interpretation of the Commission
     referred to on the cover page of this Prospectus, or would otherwise make
     it inadvisable to proceed with the Exchange Offer; or
 
          (b) there shall have occurred (i) any general suspension of or general
     limitation on prices for, or trading in, securities on any national
     securities exchange or in the over-the-counter market, (ii) any limitation
     by any governmental agency or authority which may adversely affect the
     ability of the Company to complete the transactions contemplated by the
     Exchange Offer, (iii) a declaration of a banking moratorium or any
     suspension of payments in respect of banks in the United States or any
     limitation by any governmental agency or authority which adversely affects
     the extension of credit, or (iv) a commencement of a war, armed hostilities
     or other similar international calamity directly or indirectly involving
     the United States, or, in the case of any of the foregoing existing at the
     time of the commencement of the Exchange Offer, a material acceleration or
     worsening thereof; or
 
          (c) any change (or any development involving a prospective change)
     shall have occurred or be threatened in the business, properties, assets,
     liabilities, financial condition, operations, results of operations or
     prospects of the Company and its subsidiaries taken as a whole that, in the
     reasonable judgment of the company, is or may be adverse to the Company, or
     the Company shall have become aware of facts that, in the reasonable
     judgment of the Company, have or may have adverse significance with respect
     to the value of the Series A Notes or the Series B Notes;
 
which in the reasonable judgment of the company in any case, and regardless of
the circumstances (including any action by the Company) giving rise to any event
described above, makes it inadvisable to proceed with the Exchange Offer and/or
with such acceptance for exchange or with such exchange.
 
     The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
 
     In addition, the Company will not accept for exchange any Series A Notes
tendered, and no Series B Notes will be issued in exchange for any such Series A
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the Indenture under the Trust Indenture Act.
                                       41
<PAGE>   49
 
BOOK ENTRY TRANSFER
 
     The Exchange Agent will make a request to establish an account with respect
to the Series A Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Series A Notes by causing the
Book-Entry Transfer Facility to transfer such Series A Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Series A Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof,
with any required signature guarantees, or an Agent's Message in lieu of a
Letter of Transmittal, and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at one of the addresses set
forth below under "-- Exchange Agent" on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
 
GUARANTEED DELIVERY PROCEDURES
 
     If a registered holder of the Series A Notes desires to tender Series A
Notes held by such Holder and such Series A Notes are not immediately available,
or time will not permit such Holder's Series A Notes or other required documents
to reach the Exchange Agent before the Expiration Date, or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if (i) the tender is made through an Eligible Institution, (ii) prior
to the Expiration Date, the Exchange Agent receives from such Eligible
Institution a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form
provided by the Company (by telegram, telex, facsimile transmission, mail or
hand delivery), setting forth the name and address of the Holder of Series A
Notes and the amount of Series A Notes tendered, stating that the tender is
being made thereby and guaranteeing that within three NYSE trading days after
the date of execution of the Notice of Guaranteed Delivery, the certificates for
all physically tendered Series A Notes, in proper form for transfer, or a Book-
Entry Confirmation, as the case may be, and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent, and (iii) the certificates for all physically tendered Series A
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and all other documents required by the Letter of Transmittal, are
received by the Exchange Agent within three NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
 
WITHDRAWAL RIGHTS
 
     Tenders of Series A Notes may be withdrawn at any time prior to the
Expiration Date.
 
     For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the addresses set forth below under
"-- Exchange Agent." Any such notice of withdrawal must specify the name of the
person having tendered the Series A Notes to be withdrawn, identify the Series A
Notes to be withdrawn (including the principal amount of such Series A Notes),
and (where certificates for Series A Notes have been transmitted) specify the
name in which such Series A Notes are registered, if different from that of the
withdrawing holder. If certificates for Series A Notes have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of such
certificates the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If Series A Notes have been tendered pursuant to the
procedure for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Series A Notes and otherwise comply with the
procedures of such facility. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Series A Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the Exchange Offer. Any Series A Notes which have been
tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder (or, in the case of
Series A Notes tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book-entry
                                       42
<PAGE>   50
 
transfer procedures described above, such Series A Notes will be credited to an
account maintained with such Book-Entry Transfer Facility for the Series A
Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Series A Notes may be
retendered by following one of the procedures described under "-- Procedures for
Tendering Series A Notes" above at any time on or prior to the Expiration Date.
 
EXCHANGE AGENT
 
     Norwest Bank Minnesota, National Association has been appointed as the
Exchange Agent for the Exchange Offer. All executed Letters of Transmittal
should be directed to the Exchange Agent at one of the addresses set forth
below. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
 
     By Mail or Overnight Courier:
               Norwest Bank Minnesota, National Association
           6th Street and Marquette Avenue
           M.S. 0069
           Minneapolis, MN 55479
           Attn: Jane Schweiger
     By Facsimile (for Eligible Institutions only):        (612) 667-9825
     By Telephone (to confirm receipt of facsimile):     (612) 667-2344
 
     DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
 
FEES AND EXPENSES
 
     The Company will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer.
 
     The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
$225,000.
 
TRANSFER TAXES
 
     Holders who tender their Series A Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct the Company to register Series B Notes in the name of, or request that
Series A Notes not tendered or not accepted in the Exchange Offer be returned
to, a person other than the registered tendering holder will be responsible for
the payment of any applicable transfer tax thereon.
 
ACCOUNTING TREATMENT
 
     The Series B Notes will be recorded at the same carrying value as the
Series A Notes, which is face value, as reflected in the Company's accounting
records on the date of the exchange. Accordingly, no gain or loss for accounting
purposes will be recognized. The expenses of the Exchange Offer and the
unamortized expenses related to the issuance of the Series A Notes will be
amortized over the term of the Series B Notes.
 
CONSEQUENCES OF EXCHANGING SERIES A NOTES
 
     Holders of Series A Notes who do not exchange their Series A Notes for
Series B Notes pursuant to the Exchange Offer will continue to be subject to the
provisions in the Indenture regarding transfer and exchange of the Series A
Notes and the restrictions on transfer of such Series A Notes as set forth in
the legend thereon
 
                                       43
<PAGE>   51
 
as a consequence of the issuance of the Series A Notes pursuant to exemptions
from, or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Series A
Notes may not be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register Series A Notes under the Securities
Act. See "Description of Notes." Based on interpretations by the staff of the
Commission, as set forth in no-action letters issued to third parties, the
Company believes that Series B Notes issued pursuant to the Exchange Offer in
exchange for Series A Notes may be offered for resale, resold or otherwise
transferred by holders thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such Series B Notes are acquired in the
ordinary course of such holders' business and such holders have no arrangement
or understanding with any person to participate in the distribution of such
Series B Notes. However, the Company does not intend to request the Commission
to consider, and the Commission has not considered, the Exchange Offer in the
context of a no-action letter and there can be no assurance that the staff of
the Commission would make a similar determination with respect to the Exchange
Offer as in such other circumstances.
 
     Each Holder, other than a broker-dealer, must acknowledge that it is not
engaged in, and does not intend to engage in, a distribution of Series B Notes
and has no arrangement or understanding to participate in a distribution of
Series B Notes. If any Holder is an affiliate of the Company, is engaged in or
intends to engage in or has any arrangement or understanding with respect to the
distribution of the Series B Notes to be acquired pursuant to the Exchange
Offer, such Holder (i) could not rely on the applicable interpretations of the
staff of the Commission and (ii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. In addition, to comply with state securities laws, the
Series B Notes may not be offered or sold in any state unless they have been
registered or qualified for sale in such state or an exemption from registration
or qualification is available and is complied with. The offer and sale of the
Series B Notes to "qualified institutional buyers" (as such term is defined
under Rule 144A of the Securities Act) is generally exempt from registration or
qualification under the state securities laws. The Company currently does not
intend to register or qualify the sale of the Series B Notes in any state where
an exemption from registration or qualification is required and not available.
 
     All rights under the Registration Rights Agreement accorded to Holders of
Series A Notes will terminate upon the consummation of the Exchange Offer except
with respect to the Company's duty to keep the Registration Statement effective
until the closing of the Exchange Offer and, for a period not to exceed one year
after the Registration Statement has been declared effective, to provide copies
of the latest version of this Prospectus to any broker-dealer that requests
copies of such Prospectus in the Letter of Transmittal for use in connection
with any resale by such broker-dealer of Exchange Senior Notes received for its
own account pursuant to the Exchange Offer in exchange for Private Notes
acquired for its own account as a result of market-making or other trading
activities, subject to the conditions described above.
 
PRO FORMA LIQUIDITY AND CAPITAL RESOURCES
 
     Approximately $649.0 million of financing was required in connection with
the Merger and related transactions. The Company obtained the necessary funds
from (i) the sale of the Pillowtex Preferred Stock, (ii) the issuance and sale
of the Series A Notes, and (iii) borrowings under the New Senior Credit
Facilities. See "The Merger," "Use of Proceeds," and "Post-Merger Indebtedness."
 
     The Merger had a significant impact on the capitalization of the Company.
At September 27, 1997, the pro forma combined indebtedness of Pillowtex would
have been $827.8 million compared to $220.4 million on a Pillowtex stand-alone
basis at that date.
 
     The Company intends to use cash flows from operations and funds available
under the Revolver to meet its working capital requirements, debt service
obligations, capital expenditure requirements, and, if permitted, to make
preferred and common stock dividend payments. Financing available under the New
Senior Credit Facilities includes $350.0 million under the Revolver,
approximately $163.2 million of which currently
 
                                       44
<PAGE>   52
 
remains available. In addition, the New Senior Credit Facilities include $250.0
million under the Term Loan, all of which was drawn upon closing of the Merger.
See "Unaudited Pro Forma Combined Financial Information" and "Post-Merger
Indebtedness."
 
     The Fieldcrest Convertible Debentures are convertible into the same
consideration that a holder of the number of shares of Fieldcrest Common Stock
into which such Fieldcrest Convertible Debentures might have been converted
immediately prior to the Merger would be entitled to receive in the Merger. If
all of the outstanding Fieldcrest Convertible Debentures were so converted
following the consummation of the Merger, the resulting cash component required
to be paid by the Company to the holders of such debentures would be
approximately $71.1 million. The Company expects to utilize funds available from
the Revolver to pay the cash portion of the conversion value of the Fieldcrest
Convertible Debentures to the extent these securities are converted.
 
     The Revolver matures on the sixth anniversary of the Merger. The Term Loan
consists of a $125.0 million Tranche A Term Loan and a $125.0 million Tranche B
Term Loan. The Tranche A Term Loan and the Tranche B Term Loan will begin
scheduled quarterly amortization of principal in arrears commencing in 1999 and
1998, respectively, with final maturities on December 31, 2003 and December 31,
2004, respectively. Interest on loans under the New Senior Credit Facilities
bears interest at rates based upon federal or Eurodollar rates plus an
applicable margin. Loans under the New Senior Credit Facilities are guaranteed
by any and all existing or future domestic subsidiaries of the Company and will
be secured by substantially all of the assets of the Company and its domestic
subsidiaries. See "Risk Factors -- Significant Leverage and Debt Service" and
"Post-Merger Indebtedness -- New Senior Credit Facilities."
 
     The Company enters into interest-rate swap agreements to modify the
interest characteristics of portions of its outstanding debt. Swap agreements
are designated with all or a portion of the principal balance and term of a
specific debt obligation. These agreements involve the exchange of amounts based
on a fixed or variable rate for the opposite type of rate over the life of the
agreement without an exchange of the notional amount upon which the payments are
based. The differential to be paid or received as interest rates change is
accrued and recognized as an adjustment of interest expense related to the debt
(the accrual accounting method). The fair value of the swap agreements and
changes in fair value as a result of changes in market interest rates are not
recognized in the financial statements. Subsequent to January 3, 1998, the
Company terminated a swap agreement in place covering approximately $125.0
million of indebtedness for a cash gain of approximately $1.0 million. The gain
has been deferred and will be amortized as an adjustment to interest expense
over the remaining three-year term of the terminated swap agreement. On January
9, 1998, the Company entered into an interest rate swap agreement covering
$250.0 million of indebtedness expiring February 19, 1999 at a fixed rate of
5.56%.
 
     As a result of recent discussions with the Pension Benefit Guaranty
Corporation, the Company has a $15.0 million letter of credit in support of
certain funding obligations it may have after the Merger in connection with
certain of the Fieldcrest pension plans.
 
     The Company intends to make capital expenditures in excess of $240.0
million over the next several years, principally to modernize the acquired
Fieldcrest sheet and certain of the towel manufacturing facilities through the
addition of new machinery and equipment. The Company anticipates that
approximately $80.0 million of such capital expenditures will be made in fiscal
1998. See "Business -- Business Strategy."
 
     Subsequent to the Merger, the Company will implement measures intended to
maximize economies of scale and operating efficiencies, and to achieve cost
savings, in the operation of the businesses of Pillowtex and Fieldcrest on a
combined basis. On January 20, 1998, the Company announced that it was
consolidating its four blanket production units into two facilities in
Westminster, South Carolina and Swannanoa, North Carolina. In connection with
this consolidation the Company has announced that it is closing certain
facilities operated by its subsidiaries, Manetta Home Fashions, Inc. and
Tennessee Woolen Mills, Inc. The consolidation is expected to be completed by
the end of the second quarter of this year. As part of the consolidation, the
Company will take a pre-tax charge to earnings of approximately $6.0 million for
the period ended January 3, 1998, and approximately $1.5 million for the period
ending April 4, 1998. Management expects these
 
                                       45
<PAGE>   53
 
nonrecurring costs to be initially funded through cash flows and borrowings
under the New Senior Credit Facilities.
 
     The Company anticipates that it will continue to pay a quarterly dividend
of $0.06 per share on its common stock. Through December 31, 1999 and subject to
obligations under its various debt instruments, the Company will pay dividends
on the Pillowtex Preferred Stock at a rate per annum equal to 3%, or
approximately $2.0 million per year. Thereafter, the Pillowtex Preferred Stock
will accrue dividends based upon the Company's earnings per share for the fiscal
year. See "Pillowtex Series A Redeemable Convertible Preferred Stock." The
payment of such dividends is restricted under the New Senior Credit Facilities
and the Indenture.
 
     The Company anticipates that its principal use of cash following the Merger
will be working capital requirements, debt service requirements, payment of
dividends (if permitted), and capital expenditures as well as expenditures
relating to acquisitions and integrating acquired businesses. Based upon current
and anticipated levels of operations, the Company believes that its cash flow
from operations, together with amounts available under the New Senior Credit
Facilities, will be adequate to meet its anticipated requirements through
December 31, 1998 for working capital, capital expenditures, and interest
payments. There can be no assurance, however, that the Company's business will
continue to generate sufficient cash flow from operations in the future to
service its debt, and the Company may be required to refinance all or a portion
of its existing debt or to obtain additional financing. These increased
borrowings may result in higher interest payments. There can be no assurance
that any such refinancing would be possible or that any additional financing
could be obtained. The inability to obtain additional financing could have a
material adverse effect on the Company. See "Risk Factors -- Significant
Leverage and Debt Service."
 
                                    BUSINESS
 
GENERAL
 
     The Company is one of the largest, based on net sales, North American
designers, manufacturers, and marketers of home textile products, offering a
full line of bed pillows, sheets, blankets, mattress pads, down comforters,
towels, bath rugs, and other home textile products. As a leading supplier across
all distribution channels, the Company markets to virtually all major mass
merchants, department stores, and specialty retail stores, providing its
customers a centralized "one-stop" source for their home textile merchandise.
 
     The Company manufactures and markets products utilizing established and
well recognized Company-owned trademarks and trade names, including Royal
Velvet(R), Cannon(R), Charisma(R), Touch of Class(R), Fieldcrest(R), Beacon(R),
and Nettle Creek(R). Recent consumer research has shown that Cannon(R) and
Fieldcrest(R) are the two most recognized home textile brands in the United
States. In addition, Cannon(R) is the sixth most recognized domestic consumer
brand in the United States. Furthermore, the Company has licensed, for certain
products, highly recognizable brands such as Ralph Lauren, Disney's Mickey
UNLIMITED(R), Mickey's Stuff for Kids(R), and Mickey & Co.(R), Comforel(R),
Adrienne Vittadini(R), Ellen Tracy(R), Court of Versailles(R), and Waverly(R) as
well as such well-known copyrighted characters as Mickey Mouse and Winnie the
Pooh.
 
     On a pro forma combined basis, after giving effect to the Merger and the
Financing Transactions, the Company would have had net sales and pro forma
EBITDA of approximately $1.6 billion and $131.6 million, respectively, for the
fiscal year ended December 28, 1996, and $1.2 billion and $123.7 million,
respectively, for the nine months ended September 27, 1997.
 
RECENT DEVELOPMENTS
 
     Since the consummation of the Merger on December 19, 1997, the Company has
disposed of certain non-core business assets of Fieldcrest for approximately
$24.0 million in cash. The Company plans to continue to evaluate certain
Fieldcrest properties and lines of business unrelated to its core home textile
business of towel,
 
                                       46
<PAGE>   54
 
bath rugs, sheets and fashion bedding and expects to enter into more additional
agreements for the disposal of these properties and businesses.
 
     On January 20, 1998, the Company announced that it was consolidating its
four blanket production units into two facilities in Westminster, South Carolina
and Swannanoa, North Carolina. In connection with this consolidation the Company
has announced that it is closing certain facilities operated by its
subsidiaries, Manetta Home Fashions, Inc. and Tennessee Woolen Mills, Inc. The
consolidation is expected to be completed by the end of the second quarter of
this year. As part of the consolidation, the Company will take a pre-tax charge
to earnings of approximately $6.0 million for the period ended January 3, 1998,
and approximately $1.5 million for the period ending April 4, 1998. Management
expects these nonrecurring costs to be initially funded through cash flows and
borrowings under the New Senior Credit Facilities.
 
COMPETITIVE STRENGTHS
 
     The Merger has created one of the largest firms, based on net sales, in the
home textile industry with competitive strengths that are significantly greater
than those of either Pillowtex or Fieldcrest on a stand-alone basis. The Company
has the largest market share in North America in each of the towel, bed pillow,
blanket, and down comforter product segments and a significant market share in
sheets, mattress pads, fashion bedding, and bath rugs.
 
     Pillowtex's management team has successfully integrated eight acquisitions
over the last five years while improving Pillowtex's overall efficiency and
consistently producing a record of growth and profitability. From 1991 through
1996, Pillowtex's net sales have increased from $259.0 million to $490.7
million, representing a compound annual growth rate of 13.6%. Over this same
period Pillowtex's EBITDA has improved from $22.0 million to $50.9 million,
representing a compound annual growth rate of 18.3%. The combined company's
management team will provide a breadth of expertise rivaling any in the
industry.
 
     The Company's management team will use the following competitive strengths
to enhance the Company's position in the marketplace:
 
     - Industry Leading Brands: As a result of the Merger, the Company owns some
       of the most recognizable brands in the industry, including Royal
       Velvet(R), Cannon(R), Charisma(R), and Touch of Class(R). Recent consumer
       research has shown that Cannon(R) and Fieldcrest(R) are the two most
       recognized home textile brands in the United States. In addition,
       Cannon(R) is the sixth most recognized domestic consumer brand.
       Furthermore, through licensing agreements, the Company currently has
       exclusive rights to manufacture and, in some instances, market certain
       bedding products under such well-known brands as Ralph Lauren, Disney's
       Mickey UNLIMITED(R), Mickey's Stuff for Kids(R), and Mickey & Co.(R),
       Comforel(R), Adrienne Vittadini(R), Ellen Tracy(R), and Waverly(R). This
       diverse portfolio of premier brand names allows the Company to
       differentiate its products from those of its competitors and provides
       distinct brand names for different channels of retail distribution and
       for different price points. These brand names will also enable the
       Company to assist its customers in coordinating their product offerings
       and differentiating such offerings from those of their competitors.
 
     - Strong Customer Relationships: The Company has established relationships
       with 49 of the top 50 home textile retailers in the United States and
       Canada. The combination of the two companies enhances these
       relationships, providing customers the benefits of a true "one-stop"
       source for bed and bath products. These strong relationships will create
       a stable base from which the Company can pursue future business and new
       product introductions.
 
     - Creative Merchandising Strategies: Historically, both Pillowtex and
       Fieldcrest have maintained creative partnerships with their customers,
       including extensive merchandising programs, that have resulted in the
       creation of successful new products, product mix strategies,
       point-of-sale concepts, and advertising campaigns. Retail customers are
       increasingly demanding exclusive or specially designed product lines to
       differentiate their product offerings from those of other retailers and
       to implement price tiering in order to achieve higher margins. The
       Company will continue this collaboration with its retail customers to
       design products and marketing programs responsive to individual
       customer's needs.
 
                                       47
<PAGE>   55
 
     - Low Cost Operating Capabilities: As a result of its continued emphasis on
       cost-containment and capital expenditures to obtain greater plant
       efficiencies, Pillowtex is a low cost producer of bed pillows, mattress
       pads, down comforters, and blankets in the home textile industry. The
       Merger provides the Company with efficient, low cost towel and bath rug
       production capabilities, including a new, state-of-the-art towel
       production facility. In addition, Pillowtex has emphasized a low cost of
       operations, creating a competitive advantage by operating with one of the
       lowest SG&A expenses, as a percentage of sales, in the industry. The
       Company believes that significant opportunities exist to improve this
       competitive position by lowering Fieldcrest's SG&A costs as a percentage
       of sales to Pillowtex's historic levels.
 
BUSINESS STRATEGY
 
     The Company's strategic objectives are to capitalize on its industry
leading position by leveraging the strength of its brand names, customer
relationships, and operational capabilities across the most comprehensive array
of product offerings in the home textile industry. The Company's strategic focus
will be to:
 
     - Capitalize on Industry Leading Position: The Merger has created a
      powerhouse within the home textiles industry in terms of dollar sales
      volume and product offerings. The Company will focus on leveraging its
      market leadership by implementing sales and marketing programs designed to
      facilitate a customer-driven "pull" strategy. By cross-marketing both
      Pillowtex and Fieldcrest products using the Company's strong brand names,
      the Company will create enhanced product value and facilitate greater
      differentiation of its products from those of its competitors.
 
     - Develop the Premier "One-Stop Shop" for Home Textiles: The breadth of the
      Company's product lines provide it with a significant competitive
      advantage as it can offer its retailer customers a centralized "one-stop"
      purchasing source for all their home textile merchandise. The Company's
      extensive assortment of home textile products will include fashion and
      utility bedding, as well as a full line of bath products. The Company will
      exploit its position as a "one-stop" purchasing source by continuing its
      practice of offering broad product assortments across diverse product
      lines, thereby offering retailers a central source from which to
      efficiently and effectively purchase their home textile items.
 
     - Further Strengthen Customer Relationships: The Company has a long history
      of strong customer relationships with the top retailers in the United
      States and Canada. The Company has developed these relationships by
      providing value-added services, such as innovative marketing and cross-
      merchandising capabilities. The Company believes that the value of such
      services to retailers will be increased significantly by combining the
      traditional Pillowtex and Fieldcrest product lines in a centralized
      purchasing source and utilizing the Fieldcrest portfolio of brand names
      across all such product lines. The Company will also increase the use of
      marketing and cross-merchandising services in connection with the
      traditional Fieldcrest products, creating opportunities for added sales
      and providing retailers with more opportunities to differentiate their
      product offerings from those of their competitors.
 
     - Enhance Operational Efficiencies: The Company will continue to focus on
      reducing its manufacturing cost structure by rationalizing its current
      operations and investing in automation, equipment modernization, process
      improvements, and system controls throughout all aspects of its business.
      The Company's management believes that significant opportunities exist to
      improve production efficiency through capital investment, improved
      operational logistics, selective outsourcing, and increased utilization of
      information systems. The Company intends to make capital expenditures in
      excess of $240.0 million over the next several years, principally to
      modernize the acquired Fieldcrest sheet and certain of the towel
      manufacturing facilities through the addition of new machinery and
      equipment. The Company anticipates that approximately $80.0 million in
      capital expenditures will be made in fiscal 1998.
 
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<PAGE>   56
 
     - Realize Significant Cost Savings: Currently, the Company has identified
      approximately $21.6 million of annual cost savings that it expects to
      realize immediately as a result of the Merger. These cost savings are
      comprised of $20.3 million of savings from the elimination of duplicate
      staff salaries and $1.3 million of savings from the elimination of
      duplicative corporate expenses. The Company additionally expects to
      realize significant ongoing cost savings, including at least $8.4 million
      to be realized within the first 12 months after consummation of the
      Merger, as follows: (i) $0.9 million by eliminating other redundant cost
      functions; (ii) $2.0 million by improving procurement efficiencies by
      exploiting the combined company's purchasing power; (iii) $3.0 million by
      reducing trade advertising; (iv) $1.0 million by rationalizing and
      streamlining operations; and (v) $1.5 million by reducing the use of
      outside consultants.
 
PRODUCTS
 
  Pillowtex
 
     Pillowtex, originally founded in 1954 as a pillow manufacturer, expanded
its product lines through acquisitions into other categories of top-of-the-bed
home textiles including mattress pads, comforters and blankets. Pillowtex has
been successful in integrating these acquisitions into its existing operations,
resulting in increased sales, more efficient distribution, and a broader product
line.
 
     Pillowtex originally expanded its product line to include blankets through
the acquisition of Manetta Mills, Inc. in August 1993 and Tennessee Woolen
Mills, Inc. in September 1993. However, see "-- Recent Developments." In
addition, in December 1994, Pillowtex acquired substantially all of the assets
of Beacon Manufacturing Company ("Beacon"), a manufacturer of cotton and
synthetic blankets and throws. Pillowtex expanded its manufacturing operations
into Canada through the acquisition of Torfeaco Industries, Ltd. ("Torfeaco"), a
manufacturer of fashion and synthetic bedding products, in December 1993, and
Imperial Feather Company ("Imperial"), a manufacturer of bedding products,
including natural fill and synthetic bed pillows, down comforters, and comforter
covers, in August 1994. In 1996, Pillowtex acquired certain assets from
Fieldcrest's blanket operations, including a large number of newer, more
efficient looms that have been installed at Pillowtex's other blanket
facilities.
 
     The combination of its historic pillow operations with the acquired
top-of-the-bed product lines has enabled Pillowtex to build its core business
around four utility bedding product lines that have a low risk of obsolescence.
These include bed pillows (including natural fill, synthetic fiber fill, and
latex), blankets (including cotton, wool blends, acrylic and polyester blankets,
and throws), down comforters, and mattress pads (including thread quilt, sonic
quilt and convoluted foam). Pillowtex also sells other bedroom textile
furnishings, including comforter covers, featherbeds, pillow protectors,
decorative pillows, bedspreads, synthetic comforters, pillow shams, dust
ruffles, and window treatments.
 
     Bed Pillows. Pillowtex believes that it is a leading manufacturer and
marketer of bed pillows in the United States and Canada. Pillowtex produces and
markets a broad line of traditional bed pillows, as well as specially designed
bed pillows such as the BedMate(R) body pillow and Great Shapes(R) pillows,
including Euro Square, U-Neck and Neck Roll. Pillowtex offers products at
various levels of quality and price, from synthetic pillows sold at retail
prices as low as $4 to fine white goose down pillows sold at a retail price of
up to approximately $185.
 
     Pillowtex believes that it is a leading feather and down pillow
manufacturer in the United States and Canada, offering products filled with
quality goose and duck down, or blends of feather and down, in a range of
grades. These materials, known as "natural fill," are noted for their loft and
resiliency.
 
     Pillowtex also manufactures and markets a full line of bed pillows
featuring staple (cut and crimped), tow (continuous filament), and cluster
(individual ball) synthetic fiber fills. Pillowtex believes that it is a leading
supplier of premium synthetic and latex bed pillows in the United States and
Canada.
 
     Blankets. Pillowtex believes that it is a leading producer of blankets in
the United States and Canada, manufacturing woven and nonwoven conventional and
thermal weave blankets and throws in a wide assortment of fibers, including
cotton, wool blend, acrylic, and polyester. Pillowtex is the exclusive supplier
in
 
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<PAGE>   57
 
the United States and Canada of blankets for Ralph Lauren. Pillowtex has a
strong presence in the infant blanket market with products ranging from nonwoven
receiving blankets, to jacquard throws, to the finest Supima(R) cotton crib
blanket. Pillowtex also designs and manufactures a full line of decorative
cotton and acrylic jacquard throws.
 
     Down Comforters. Pillowtex was a pioneer in marketing down comforters in
the United States, and Pillowtex believes that it is a leading manufacturer and
marketer of down comforters in the United States and Canada. Down comforters
have become increasingly popular for both their insulation and fashion
qualities, selling well in both warm and cool climates. They sell at department
stores at prices ranging from $70 to approximately $400. Increasingly popular
higher end comforters typically offer more down fill, sport higher thread count
shells and feature more appealing "surface interest," such as damask dots,
stripes and checks.
 
     Mattress Pads. Pillowtex believes that it is a leading manufacturer and
marketer of mattress pads in the United States and Canada, producing and
marketing a complete line of mattress pads, including sizes for adults and
children, natural and synthetic filled, flat, and fitted as well as its skirted
Adjust-A-Fit(R) mattress pad, an adjustable fit mattress pad made with Lycra(R),
a multidirectional stretch material produced by E.I. DuPont de Nemours & Co.
("DuPont"). The Adjust-A-Fit(R) mattress pad correctly fits a broad range of
mattress thicknesses, including pillow top mattresses.
 
     Other Bedroom Textiles. Pillowtex offers a variety of other complementary
bedroom textile products including comforter covers, featherbeds, pillow
protectors, synthetic fill comforters, decorative pillows, pillow shams, dust
ruffles, and window treatments. These products represent a source of additional
profitability as "add-on" sales for retailers.
 
  Fieldcrest
 
     Fieldcrest manufactures and markets quality bed and bath products,
including towels, sheets, comforters, and bath rugs, which are sold under such
brand names as Royal Velvet(R), Cannon(R), Fieldcrest(R), Charisma(R), St.
Mary's(R), and Royal Family(R).
 
     Towels. Fieldcrest's bathroom textile products include bath, hand and
fingertip towels, washcloths, and bath mats. Royal Velvet(R), Cannon(R),
Charisma(R), Fieldcrest(R), and St. Mary's(R) are well-known, high quality towel
brand names, providing Fieldcrest with a strong market position in key sectors
of the United States market. Fieldcrest is also recognized as the color leader
in the towel industry as it markets 40 colors in its Royal Velvet(R) franchise.
In the marketplace, Fieldcrest differentiates its towels by using fine ring spun
cotton yarns to produce Royal Velvet(R) towels and pima cotton yarns for
Charisma(R). The towel line includes solid color cam and dobby towels, woven
stripes and fancy jacquards as well as printed towels. Retail prices of
Fieldcrest's towels range from $1.84 for a 25 inch by 42 inch solid color towel
to $25.00 for a 30 inch by 52 inch Charisma(R) towel made of Supima(R) cotton.
 
     Bath Rugs. Fieldcrest markets a variety of bath and accent rugs in
conjunction with its towel offering. Sizes range from 18 inches by 30 inches to
50 inches by 30 inches. Products are marketed under the Royal Velvet(R),
Charisma(R), Fieldcrest(R) Cannon(R), and Cannon Royal Family(R) brands, as well
as private labels. Retail prices for bath rugs range from $4.99 to $35.00.
 
     Other Bath Products. Fieldcrest had marketed shower curtains and ceramic
bath accessories as complementary bath products for its towel and bath mat
product lines. In January 1998, the Company entered into a license agreement
with Ex-Cell Home Fashions, Inc. ("Ex-Cell"), pursuant to which the Company
granted Ex-Cell an exclusive, world-wide license to manufacture, sell and
distribute shower curtains and bath accessories under the highly recognized
family of Fieldcrest brands, including Charisma(R), Touch of Class(R), Royal
Velvet(R), Fieldcrest(R) and Cannon(R). The license agreement requires royalty
payments based upon product sales, including payments of minimum annual
royalties, and is for an initial term of five years with up to two optional
renewal terms of five years each.
 
     Sheets and Fashion Bedding. Fieldcrest produces a wide variety of sheets,
ranging from a 128-thread count sheet of blended cotton and polyester to
top-of-the-line 310-thread count 100% pima cotton sheets. Its principal brand
names for this product line include Cannon(R), Fieldcrest(R), Royal Velvet(R),
and Charisma(R), all
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<PAGE>   58
 
of which are widely recognized by consumers. Among Fieldcrest's sheeting
strengths are solid color sheets with coordinating decorative bedding
accessories. In addition to sheets, Fieldcrest's fashion bedding products
consist of matching comforters, duvet covers, and pillow shams along with
coordinated ruffled or pleated bed skirts. Retail prices of Fieldcrest's sheets
start at approximately $6.99 for a twin size, 128-thread count sheet set and
extend to $150.00 for a king size, 310-thread count Charisma(R) sheet.
Comforters are sold at retail prices as low as $19.99 for a solid color twin
size to approximately $449.00 for a king size Charisma(R) comforter.
 
     Furniture Covering Products. Fieldcrest also manufactures and markets a
full line of ready-made furniture coverings through its SureFit(R) operations.
Product sizes include chair, love-seat, sofa, and large sofa. These products
sell at retail prices ranging from $16.99 for lower-end solid and
polyester-cotton prints to $199.99 for novelty upholstery weight sofa covers.
 
MARKETING, SALES AND DISTRIBUTION
 
  Pillowtex
 
     Pillowtex markets its products to virtually all major retailers through
channels of distribution that include department and specialty stores, mass
merchants, discounters and catalogs, as well as institutional suppliers.
Pillowtex believes that it is one of the principal suppliers of bedroom textile
products to several of the largest retailers in the United States. Pillowtex's
top ten customers accounted for approximately 65% of total sales in 1996.
Wal-Mart and Dayton Hudson accounted for 14% and 13% of Pillowtex's total sales
in 1996, respectively. No other customer accounted for more than 10% of total
sales in 1996. For the nine months ended September 27, 1997, sales to Wal-Mart
and Dayton Hudson accounted for 12% and 13%, respectively, of Pillowtex's total
sales. Consistent with industry practice, Pillowtex does not generally operate
under long-term written supply contracts with its customers. Pillowtex does not
anticipate a reduction in customer orders after the Effective Time solely as a
result of the overlap of customers of both Pillowtex and Fieldcrest, though
there can be no assurance in this regard. See "Risk Factors -- Risk of Loss of
Material Customers."
 
     Pillowtex's current international business is concentrated in Canada,
although it also sells in Mexico, Latin America, and overseas. Pillowtex's
acquisition of Torfeaco in 1993, and of Imperial and Beacon in 1994, greatly
enhanced Pillowtex's market position in Canada and its relationships with
important Canadian retailers.
 
     Pillowtex's relationship with the Polo Ralph Lauren Corporation began in
1987 and Ralph Lauren is among Pillowtex's most important licensed trademarks.
Pillowtex holds an exclusive license for pillows, down comforters, mattress
pads, and blankets in the United States and Canada, and a non-exclusive license
to manufacture, and in certain cases to sell, a variety of fashion bedding
products in the territory. Ralph Lauren products are sold worldwide to fine
department and specialty stores.
 
     In an effort to maximize Pillowtex's product exposure and increase sales,
Pillowtex works closely with its major customers to assist them in merchandising
and promoting Pillowtex's products to the consumer. In addition to frequent
personal consultation with the employees of these customers, Pillowtex meets
with its customers' senior management periodically to jointly develop
merchandise assortments and plan promotional events specifically tailored to
that customer. Pillowtex provides merchandising assistance with store layouts,
fixture designs, advertising and point of sale displays and also provides
customers with preprinted, customized advertising materials designed to increase
sales.
 
     Pillowtex's electronic data interchange system allows customers to place,
and allows Pillowtex to fill, track and bill, orders by computer. This system
enables Pillowtex to ship products on a "quick response" basis.
 
     Pillowtex generally employs salespeople who have many years of industry
experience. Most sales people are compensated with a combination of salary and
discretionary bonus. Certain Ralph Lauren products are sold by the Ralph Lauren
sales force.
 
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<PAGE>   59
 
  Fieldcrest
 
     Fieldcrest offers its customers a broad selection of home textile items,
from affordably priced cotton-polyester blend products to the finest pima and
Supima(R) cotton products. Design leadership is a key element of Fieldcrest's
marketing strategy. Fieldcrest employs in-house design staff as well as
licensing designer names such as Waverly(R), Adrienne Vittadini(R), Court of
Versailles(R), and Ellen Tracy(R). Fieldcrest's products are marketed by its
sales and marketing staff consisting of approximately 71 professionals and
distributed nationally to customers for ultimate retail sale. Fieldcrest
generally introduces new products to the retail trade during the April and
October industry home textile markets while private label products manufactured
by Fieldcrest are introduced throughout the year. Fieldcrest's top ten customers
accounted for approximately 53% of total sales for fiscal 1996. In 1996,
Wal-Mart was Fieldcrest's largest customer, representing approximately 21% of
total sales. No other customer accounted for more than 10% of total sales in
1996. See "Risk Factors -- Risk of Loss of Material Customers."
 
     As a supplement to its primary distribution channels, Fieldcrest operates
retail outlet stores which sell Fieldcrest's products directly to customers.
These stores sell both first quality merchandise and seconds or "off-goods."
Fieldcrest's strategy is to locate its outlet stores in regions which are not
served by its primary customers and to sell its products at competitive retail
prices. Fieldcrest believes that its retail outlet stores provide an effective
channel for the distribution of its inventory of second quality merchandise and
enhances its distribution of first quality products in regions where consumers
would not otherwise have access to Fieldcrest's products. In 1996, retail outlet
stores sales were $46.3 million or 4.2% of total sales.
 
     Fieldcrest segments its use of brand names by distribution channel to
solidify the perceived value of such brands and maintain their integrity. Royal
Velvet(R), Fieldcrest(R), and Cannon Royal Family(R) brand name bed and bath
products are distributed primarily to leading department stores, specialty home
furnishing stores, and catalog merchants. St. Mary's(R) and Cannon(R) brand name
bed and bath products are distributed through mass merchants. Fieldcrest
supports its brands with national consumer advertising. In addition, Fieldcrest
utilizes private brands through large chain stores and also sells a smaller
amount of unbranded products to institutional and government customers. In 1996,
approximately 93% of Fieldcrest's sales were derived from products carrying
Fieldcrest's brand names.
 
     The Fieldcrest sales organization works closely with its customers in the
development of new product, production planning, and forecasting of the
business. Fieldcrest is currently working with several mass retailers on vendor
managed and co-managed inventory replenishment. Fieldcrest also develops
in-store collateral signing for its retail customers on the Royal Velvet(R) bed
and bath events.
 
     Fieldcrest sales and marketing personnel generally are experienced industry
professionals with diverse backgrounds in the home textiles business and
compensated with a salary and a performance oriented bonus.
 
TRADEMARKS AND LICENSE AGREEMENTS
 
  Pillowtex
 
     Pillowtex markets its products under its own proprietary trademarks, trade
names, and customer-owned private labels, as well as certain licensed trademarks
and trade names. Pillowtex uses trademarks, trade names, and private labels as
merchandising tools to assist its customers in coordinating their product
offerings and differentiating their products from those of their competitors.
 
     Pillowtex owns various trademarks and trade names, including Beacon(R),
Nettle Creek(R), Softie(R), Globe(R), and BedMate(R). Pillowtex regards its
trademarks and trade names as valuable assets and vigorously protects them
against infringement.
 
     Pillowtex holds the exclusive license for the highly regarded Ralph Lauren
trademark for pillows, down comforters, mattress pads, and blankets in the
United States and Canada. In addition, Pillowtex holds a non-exclusive license
to manufacture, and in certain cases sell, a variety of fashion bedding products
under the Ralph Lauren trademark in North America. Pillowtex's licenses with
Polo Ralph Lauren Corporation expire on June 30, 1998. Pillowtex has had a
long-standing relationship with Polo Ralph Lauren Corporation and has
 
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<PAGE>   60
 
no reason to believe that such licenses will not be renewed. However, there can
be no assurance that Pillowtex will be able to renew these licenses on
acceptable terms upon their expiration. See "Risk Factors -- Dependence on Key
Licenses."
 
     In addition, Pillowtex manufactures and sells various goods, including
pillows, blankets, and throws under non-exclusive license agreements with Disney
for the Disney standard characters including Mickey Mouse, Minnie Mouse, and
Donald Duck, as well as other characters and film properties such as Winnie the
Pooh and the Lion King. In 1996, Pillowtex entered into exclusive license
agreements with Fieldcrest for the manufacture and sale of various goods
including bed pillows, mattress pads, and down comforters under the Royal
Velvet(R), Cannon(R), Charisma(R), and Touch of Class(R) trademarks. These
license agreements generally require royalty payments based upon product sales,
including payments of minimum annual royalties, and generally expire at various
future dates in 1998. See "Risk Factors -- Dependence on Key Licenses."
 
  Fieldcrest
 
     Fieldcrest owns various trademarks and trade names including Royal
Velvet(R), Cannon(R), Charisma(R), Fieldcrest(R), Royal Family(R), Caldwell(R),
and St. Mary's(R). Recent consumer research has shown that Cannon(R) is not only
the most recognized towel brand in the United States, but is also the sixth most
recognized domestic consumer brand. Fieldcrest's other principal brand names are
widely recognized in the industry and along with Cannon(R), represent excellence
and value in product quality, fashion, and design. Fieldcrest regards its
trademarks and trade names as valuable assets and vigorously protects them
against infringement. See "Risk Factors -- Dependence on Brand Names."
 
     Fieldcrest utilizes license agreements with Waverly(R), Adrienne
Vittadini(R), Court of Versailles(R), Ellen Tracy(R), and others. Fieldcrest is
only partially dependent upon such licenses in certain product lines and the
loss of any exclusivity in these areas would not materially adversely affect
overall profitability.
 
PRODUCT DEVELOPMENT
 
  Pillowtex
 
     Pillowtex's product development staff creates and develops products with
new or superior performance characteristics in cooperation with various outside
sources, including its suppliers and customers. Pillowtex believes that this
ability is an important competitive advantage. As a result, Pillowtex commits
time and resources to identifying new materials, designs and products from a
variety of domestic and international vendors.
 
     In addition to internal product development, Pillowtex's acquisitions have
expanded its product lines and enhanced its manufacturing and other resources
available for developing existing and new product lines.
 
  Fieldcrest
 
     Fieldcrest works closely with its customers to develop new products that
would provide value to its customers and stimulate sales. In 1996, Fieldcrest
and Wal-Mart associates worked together to develop Sahara(R), a new towel that
features the patented Cannon DryFast(R) System for quicker drying. DryFast(R) is
a special combination of spinning, weaving, and finishing processes that results
in super-absorbency. In 1997, Fieldcrest extended its offering of DryFast(R)
products to kitchen towels, tub mats, and bath sheets.
 
MANUFACTURING, RAW MATERIALS AND IMPORTS
 
  Pillowtex
 
     Pillowtex operates an extensive network of manufacturing and distribution
facilities in Texas, North Carolina, South Carolina, Tennessee, California,
Pennsylvania, Mississippi, Illinois, and Toronto, Canada. Pillowtex's nationwide
manufacturing and distribution network enables Pillowtex to ship pillows,
mattress pads, and comforters cost effectively to all major cities in the United
States and Canada. The hub of the network for pillows and comforters is located
in Dallas, Texas, where Pillowtex operates what it believes to be the largest
feather and down processing facility in North America, producing significant
economies of scale.
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<PAGE>   61
 
Feather and down are processed by state-of-the-art computerized washing and
sorting equipment and are sorted into a variety of mixtures and grades used in
manufacturing natural fill pillows and comforters. The raw materials are shipped
along with imported products to Pillowtex's regional facilities for final
assembly and distribution to customers. Pillowtex also operates an automated
sewing facility in Dallas, Texas, where high speed, computerized machines cut
and sew fabric into pillow shells.
 
     Many of Pillowtex's regional manufacturing facilities produce natural fill
and synthetic fill pillows. Natural fill pillows are assembled by blowing
processed feather and down into the pillow shell and sewing the open seam
closed. Synthetic fill pillows are produced on machines known as garnets that
pull, comb, and expand compressed polyester fibers. Once expanded, the fibers
are inserted into a pillow shell and the open seam is sewn shut.
 
     Mattress pads are manufactured at the California, Mississippi,
Pennsylvania, and Toronto, Canada facilities by two automated methods. The
traditional quilt sewing method uses high speed equipment that sews the top,
bottom and fill material together. The sonic method fuses the top, bottom, and
fill material together.
 
     Pillowtex's line of natural fill comforters are manufactured by Pillowtex
at its California, Illinois, Pennsylvania, Mississippi, and Toronto, Canada
locations using processed down from the Dallas facility. Pillowtex imports the
majority of its comforter shells from China, Hong Kong, and India.
 
     Pillowtex produces blankets and spins yarn at manufacturing facilities in
North Carolina, South Carolina, and Tennessee. These plants provide full
vertical production capability, including spinning, weaving, dyeing, and
finishing. During 1996, Pillowtex acquired a 746,600 square foot warehouse in
Mauldin, South Carolina to consolidate the operations of four smaller warehouses
in a more central distribution facility.
 
     In late 1996, Pillowtex acquired certain assets from Fieldcrest's blanket
operations, including newer and faster equipment which has been installed at
Pillowtex's existing blanket facilities. As with its other lines of business,
Pillowtex plans the continuation of equipment and plant upgrades over the next
several years in order to increase production efficiency and add capacity.
 
     Pillowtex's quality control program is designed to assure that its products
meet predetermined quality standards established both internally and by its
customers. Pillowtex has devoted significant resources to support its quality
improvement efforts. Each manufacturing facility is staffed with a quality
control team that identifies and resolves quality issues. Pillowtex attempts to
maintain close contact with customer quality control or other appropriate
personnel to assure that Pillowtex understands the customer's requirements.
 
     Pillowtex analyzes feather and down and other raw materials, as well as
finished products of both Pillowtex and its competitors, at its facilities in
Dallas, Texas. Pillowtex maintains a computerized tracking system to monitor
feather and down processing from the receipt of raw materials through the
delivery of finished products. At the blanket production plants, numerous
distinct quality check points are monitored throughout the manufacturing
process. Pillowtex also has a program with its major suppliers to assure the
consistency of purchased raw materials by imposing strict standards and
materials inspection, and requiring rapid response to Pillowtex's complaints.
 
     The principal raw materials that Pillowtex uses in manufacturing its
products are: feather and down; synthetic (polyester and acrylic), cotton and
wool fibers; and cotton and polyester-cotton blend fabrics. Pillowtex imports
feather and down from several sources outside the United States. A majority of
such purchases are from China, where feather and down are by-products of ducks
and geese raised for food. Pillowtex believes that it is currently the largest
United States importer of feather and down from China, the world's largest
producing country. Pillowtex is generally able to purchase feather and down from
its suppliers in China on open credit terms without letters of credit. See "Risk
Factors -- Dependence on Supply Sources in China."
 
     As of July 1, 1996, quota restrictions on down comforter shells from China
were eliminated, allowing Pillowtex to import shells on an unlimited and
as-needed basis.
 
     Pillowtex purchases its Adjust-A-Fit(R) mattress pad Lycra(R) skirting from
DuPont. Because of DuPont's patent on Lycra(R), it is the exclusive supplier for
this material. Pillowtex believes that the risk that DuPont will
                                       54
<PAGE>   62
 
cease to manufacture and sell Lycra(R) to Pillowtex is minimal. Pillowtex
purchases synthetic fiber from, among others, DuPont, Wellman, Inc., Monsanto
Company, Cytec Industries Inc., Hoechst Celanese Textile Fibers, and Kanematsu
U.S.A. Inc. To reduce the effect of potential price fluctuations, Pillowtex
makes commitments from time to time for future purchases of synthetic and
natural fibers. In 1996, Pillowtex experienced some decreases in costs of cotton
and synthetic raw materials, however, cotton in particular is subject to price
volatility. See "Risk Factors -- Dependence on Raw Materials."
 
     Pillowtex uses fabric purchased from third parties in the production of
pillow shells, comforter covers, and various other products. Although Pillowtex
believes that fabric is a commodity-type product that is available from numerous
sources, Pillowtex currently purchases large quantities of pillow ticking fabric
from a single supplier, Santee Print Works, to control costs and quality.
Consistent with industry practice, Pillowtex and Santee Print Works have not
entered into a long-term supply contract. However, to reduce the effect of
potential price fluctuations Pillowtex makes commitments from time to time for
future purchases from Santee Print Works.
 
     Management of Pillowtex believes that its relationships with its suppliers
are good.
 
  Fieldcrest
 
     Fieldcrest is principally vertically integrated in that it purchases raw
materials, principally cotton and synthetic fibers, and converts these materials
into finished consumer products. Fieldcrest operates 15 principal facilities in
the United States; nine in North Carolina, one in Georgia, two in Alabama, one
in Pennsylvania, one in New York, and one in Virginia. Generally, each facility
ships its finished products directly to the customer. Fieldcrest has and will
continue to implement electronic data interchange and vendor-managed inventory
programs with major customers in order to minimize the lead time for customer
orders and permit a more efficient, targeted manufacturing schedule.
 
     Fieldcrest produces bath towels at its facilities in Virginia, North
Carolina, Georgia, and Alabama. Cotton and synthetic fibers are spun into yarn
utilizing Fieldcrest's spinning capacity and, then, woven into fabric or greige
cloth. The greige cloth is finished, dyed, cut, and sewn into finished towel
products. Fieldcrest's Fieldale, Virginia facility generally produces the higher
quality, department and specialty stores' products. The Columbus, Georgia and
Phenix City, Alabama facilities generally support Fieldcrest's mass merchant
business segment. The Kannapolis, North Carolina facility is capable of
producing both types of products and, as a result, is used to support both
segments.
 
     Bed sheet products are produced in Fieldcrest's facilities in the
Kannapolis, North Carolina area. As with Fieldcrest's towel operations, these
facilities provide the full range of Fieldcrest's sheet products for
substantially all channels of distribution. Cotton and synthetic fibers are spun
into yarn and woven into greige cloth for finishing, dyeing, cutting, and
sewing. In late 1995, however, Fieldcrest outsourced certain yarn production and
closed two operations to take advantage of certain cost savings made available
by a supplier of yarn. In an effort to maximize cost savings, Pillowtex intends
to review Fieldcrest's trend toward outsourcing certain manufacturing and
corporate functions on a case by case basis. Pillowtex initially intends to
continue Fieldcrest's outsourcing practices in areas that appear to result in
reduced operating costs, such as in sheeting yarn spinning, and may increase or
curtail the use of outsourcing in spinning and other areas based on future cost
and other considerations, although the potential impact of any future
outsourcing decisions on the combined companies' operating results cannot be
determined at this time.
 
     Fieldcrest produces comforters and other decorative bedding products such
as pillow shams and decorative pillows at its Eden and Laurel Hill, North
Carolina facilities. Finished cloth generally is supplied by Fieldcrest's bed
sheet operations. The cloth is cut, polyester fiber-fill is inserted, and the
product is sewn and packaged for shipment to retail customers.
 
     Bath rugs are produced in Fieldcrest's Scottsboro, Alabama facility. Tufted
yarn is punched into fabric and cut into a uniform height. A latex coating is
applied to the underside of the fabric to hold the fibers. The product is dyed,
cut and finished. Furniture coverings are produced at Fieldcrest's SureFit(R)
operations in
 
                                       55
<PAGE>   63
 
Allentown, Pennsylvania. Finished cloth is purchased from third-party vendors,
cut and sewn into generally four sizes to match standard furniture sizes.
 
     Fieldcrest's quality control program is designed to assure that its
products meet predetermined quality standards established both internally and by
its customers. Fieldcrest has devoted significant resources to support its
quality improvement efforts. Each manufacturing facility is staffed with a
quality control team that identifies and resolves quality control issues.
Fieldcrest attempts to maintain close contact with customer quality control or
other appropriate personnel to assure that Fieldcrest understands the customer's
requirements.
 
     Over the past years, Fieldcrest has initiated a number of modernization
programs. For example, Fieldcrest replaced a substantial portion of its
Fieldale, Virginia weaving capacity with modern rapier looms, reducing unit cost
and the proportion of off-goods produced. In 1996, Fieldcrest completed its
$86.0 million Phenix City, Alabama weaving facility. This program included the
installation of 172 Tsudakoma air-jet looms, automatic cutting and sewing
stations and new warehouse sortation operations, making Phenix City one of the
world's most state-of-the-art towel facilities.
 
     Fieldcrest's basic raw materials are cotton and synthetic fibers. These
materials are generally available from a wide variety of sources, and no
significant shortage of such materials is currently anticipated. Domestic cotton
merchants are Fieldcrest's primary source of cotton, and domestic fiber
producers are Fieldcrest's primary source of synthetic fibers. Fieldcrest uses
significant quantities of cotton which is subject to ongoing price fluctuations.
Fieldcrest in the ordinary course of business may arrange for purchase
commitments with vendors for future cotton requirements.
 
BACKLOG
 
     The amount of both Pillowtex's and Fieldcrest's backlog orders at any
particular time is affected by a number of factors, including seasonality and
scheduling of the manufacturing and shipment of products. In general, both
Pillowtex's and Fieldcrest's electronic data interchange and "quick response"
capabilities have resulted in shortened lead times between submission of
purchase orders and delivery and lowered the level of backlog orders.
Consequently, the Company believes that the amount of its backlog is not an
appropriate indicator of levels of future production.
 
EMPLOYEES
 
  Pillowtex
 
     As of February 2, 1998, Pillowtex had approximately 3,800 employees.
Pillowtex is subject to four collective bargaining agreements covering
approximately 550 employees. These agreements are between Pillowtex and each of
United Auto Workers; Warehouse, Mail Order, Office, Technical and Professional
Employees (Teamsters); and UNITE. One of these agreements expires August 1,
1999; the remainder expire in the first quarter of 2000.
 
     To date, none of these unions have engaged in strikes or work stoppages
against Pillowtex. Pillowtex believes that its relationships with both its union
and non-union employees are good. See "Risk Factors -- Labor Relations."
 
  Fieldcrest
 
     As of February 2, 1998, Fieldcrest had approximately 10,400 employees.
Fieldcrest is subject to three collective bargaining agreements covering
approximately 2,800 employees. These agreements are between Fieldcrest and each
of UNITE, United Textile Workers of America and United Food and Commercial
Workers International Union. The agreements expire January 6, 2000, March 28,
1998 and June 28, 1998, respectively.
 
     Since 1991, UNITE has campaigned to organize approximately 5,500 additional
hourly workers at five Fieldcrest plants, including Fieldcrest's main
manufacturing facility in Kannapolis, North Carolina. Fieldcrest
 
                                       56
<PAGE>   64
 
has opposed UNITE's organizing efforts. Although a majority of employees at
these plants recently voted not to select UNITE as a bargaining representative,
the results are subject to legal challenge. There can be no assurances as to
whether or when the results of such election will be certified or a new election
will be scheduled. It is impossible to predict the effect, if any, a lengthy
continuation of another organizing campaign will have on the productivity of the
Fieldcrest workforce.
 
     Fieldcrest believes that its relationships with both its union and nonunion
employees are good. See "Risk Factors -- Labor Relations."
 
FACILITIES
 
  Pillowtex
 
     The following table summarizes certain information concerning certain of
Pillowtex's facilities:
 
<TABLE>
<CAPTION>
                                                                               APPROX.     OWNED/
         LOCATION                            PRINCIPAL USE                   SQUARE FEET   LEASED
         --------                            -------------                   -----------   ------
<S>                           <C>                                            <C>           <C>
Dallas, Texas                 Headquarters and feather and down processing      104,000     Owned
Dallas, Texas                 General administration, manufacturing and
                                distribution                                    150,000     Owned
Los Angeles, California       Manufacturing and distribution
                                                                                320,000    Leased
Tunica, Mississippi           Manufacturing and distribution                    288,000     Owned
Hanover, Pennsylvania         Manufacturing and distribution                    291,000     Owned
Rocky Mount, North Carolina   Manufacturing and distribution                    139,000     Owned
Rocky Mount, North Carolina   Manufacturing and distribution
                                                                                 78,000    Leased
Chicago, Illinois             Manufacturing and distribution                    121,000     Owned
New York, New York            Principal sales office and showroom
                                                                                 12,500    Leased
Monroe, North Carolina        Manufacturing and distribution
                                                                                288,000    Leased
Goodlettsville, Tennessee     Warehouse and distribution
                                                                                158,000    Leased
Lebanon, Tennessee            Warehouse and distribution
                                                                                 53,000    Leased
Lebanon, Tennessee            Manufacturing                                     175,000     Owned
Toronto, Ontario, Canada      Manufacturing and distribution
                                                                                 99,000    Leased
Toronto, Ontario, Canada      Manufacturing and distribution
                                                                                 60,000    Leased
Swannanoa, North Carolina     Manufacturing, distribution, warehouse, and
                                office                                        1,425,000     Owned
Swannanoa, North Carolina     Outlet Store                                        5,000     Owned
Asheville, North Carolina     Warehouse
                                                                                177,000    Leased
Asheville, North Carolina     Warehouse
                                                                                254,000    Leased
Asheville, North Carolina     Warehouse
                                                                                185,000    Leased
Westminster, South Carolina   Manufacturing, distribution, warehouse, and
                                office                                          652,000     Owned
Westminster, South Carolina   Warehouse
                                                                                 29,000    Leased
Newton, North Carolina        Manufacturing and distribution
                                                                                297,000    Leased
Mauldin, South Carolina       Warehouse and distribution                        746,600     Owned
</TABLE>
 
     Pillowtex also maintains small sales offices for its sales staff in
Arkansas, California, Massachusetts, Minnesota, North Carolina, and Washington.
 
     Pillowtex believes that its facilities are generally well maintained, in
good operating condition and adequate for its current needs. Pillowtex will
continue to emphasize improvements at these plants, upgrading the physical plant
and purchasing additional and newer machinery and equipment.
 
                                       57
<PAGE>   65
 
  Fieldcrest
 
     The following table summarizes certain information concerning certain of
Fieldcrest's principal facilities:
 
<TABLE>
<CAPTION>
                                                                                 APPROX.     OWNED/
         LOCATION                             PRINCIPAL USE                    SQUARE FEET   LEASED
         --------                             -------------                    -----------   ------
<S>                           <C>                                              <C>           <C>
Kannapolis, North Carolina    Offices, manufacturing and warehouse              5,863,041     Owned
Kannapolis, North Carolina    Manufacturing                                       760,939     Owned
Concord, North Carolina       Manufacturing                                       696,963     Owned
Eden, North Carolina          Manufacturing and warehouse                         529,273     Owned
Eden, North Carolina          Warehouse                                           185,214     Owned
Rockwell, North Carolina      Manufacturing                                        98,240     Owned
Salisbury, North Carolina     Manufacturing                                       229,361     Owned
Salisbury, North Carolina     Manufacturing and warehouse                         567,000     Owned
Laurel Hill, North Carolina   Manufacturing and warehouse                         238,072     Owned
Scottsboro, Alabama           Manufacturing and warehouse                         272,800     Owned
Phenix City, Alabama          Manufacturing and warehouse                         678,681     Owned
Columbus, Georgia             Manufacturing and warehouse                         727,246     Owned
New York, New York            Sales office and showroom
                                                                                   64,490    Leased
Allentown, Pennsylvania       Manufacturing and warehouse
                                                                                  315,000    Leased
Fieldale, Virginia            Manufacturing and warehouse                         973,253     Owned
</TABLE>
 
     In addition to the foregoing, Fieldcrest maintains certain warehousing and
distribution centers in the states where its manufacturing facilities are
located and maintains small sales and marketing offices in seven additional
states. Fieldcrest also owns various other properties, both developed and
undeveloped, which are unrelated to its manufacturing operations. Certain of
these properties were acquired throughout the years for investment or ancillary
to specific acquisitions. Some of such properties are currently held for
investment by Fieldcrest, some are listed for sale, and some are leased by
Fieldcrest to third parties.
 
     The facilities of Fieldcrest are considered to be generally well
maintained, in good operating condition, and adequate for its current needs.
Significant capital expenditures for new plants, modernization and improvements
have been made in recent years. The plants generally operate on either a three
shift basis for a five-day week or a four shift basis for a seven-day week
during 50 weeks a year except during periods of curtailment.
 
LEGAL PROCEEDINGS
 
  Pillowtex
 
     Louisville Bedding Company ("Louisville") filed a complaint for patent
infringement against Pillowtex in the United States District Court for the
Western District of Kentucky, Louisville Division, in 1994. Louisville's
complaint alleges that certain of Pillowtex's Adjust-A-Fit(R) mattress pad
product lines infringe on certain of Louisville's patents. Louisville's
allegations relate both to Pillowtex's current mattress pad product line as well
as to certain discontinued product lines sold from 1991 through 1995.
Louisville's complaint seeks an injunction against Pillowtex's sale of its
current stretch-to-fit mattress pad line, as well as an accounting of profits
and unspecified damages relating to both Pillowtex's current and discontinued
product lines. In addition, Louisville's complaint seeks trebled damages,
interest, costs, and attorneys' fees.
 
     During April of 1997, Louisville voluntarily dismissed its infringement
claims against Pillowtex's current opening price point mattress pad line and,
during October of 1997, the district court granted summary judgment for
Pillowtex on the issue of infringement with respect to Pillowtex's current
premium product. On January 30, 1998, the district court entered an additional
order confirming that Pillowtex's current premium price point product did not
infringe Louisville's patents as alleged. The Company does not expect the
Louisville suit to have any effect on the Company's continued right to market
its current line of stretch-to-fit mattress pads. Notwithstanding the foregoing,
Louisville continues to allege that the Company's discontinued product lines
infringed upon the Louisville patents at the time of their sale and continues to
seek an accounting of profits, trebled damages, interest, costs and attorneys'
fees with respect to the Company's discontinued mattress pad line. The Company
continues to deny Louisville's allegations and is vigorously defending the suit.
 
                                       58
<PAGE>   66
 
  Fieldcrest
 
     Fieldcrest is involved in various claims and lawsuits incidental to its
business; however, the outcome of these suits is not expected to have a material
effect on the Company's financial position or results of operations.
 
COMPETITION
 
     The home textile industry consists of 15 product categories including area
rugs, bath rugs, bath towels, blankets, comforters/bedspreads,
curtains/draperies, decorative pillows, down comforters, kitchen textiles,
mattress pads, sheets/pillowcases, shower curtains, sleep pillows, table linen,
and throws. This industry is highly competitive. The Company competes with a
number of established manufacturers, importers, and distributors of home textile
furnishings, some of which have greater financial, distribution, and marketing
resources. The Company's current competitors consist primarily of domestic
suppliers of bed pillows, blankets, mattress pads, down comforters, other
bedroom textile furnishings, towels, sheets, and bath rugs.
 
     The Company competes on the basis of price, quality, brand names, and
service. The Company believes that the principal competitive factors affecting
its business and the business of the combined operations of Pillowtex and
Fieldcrest include its sales and marketing expertise, its ability to create and
develop products offering superior performance characteristics, its
relationships with customers, and its manufacturing and distribution
capabilities.
 
GOVERNMENT REGULATION
 
     The Company is subject to various federal, state and local environmental
laws and regulations governing the discharge, storage, handling and disposal of
various substances, including provisions of the California Health and Safety
Code pertaining to air quality management. The Company is also subject to
federal and state laws and regulations that require products such as bed pillows
and comforters to bear product content labels containing specified information,
including their place of origin and fiber content. In addition, the Company's
operations are governed by a variety of federal, state, local and foreign laws
and regulations relating to worker safety and health, advertising, importing and
exporting, and other matters applicable to businesses in general. All laws and
regulations are subject to change and the Company cannot predict what effect, if
any, changes in laws and regulations might have on its business.
 
                              DESCRIPTION OF NOTES
 
GENERAL
 
     The Series B Notes will be issued pursuant to the Indenture, a copy of
which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. The Notes are subject to all such terms, and the Holders are
referred to the Indenture and the Trust Indenture Act for a statement thereof.
The following summary of certain provisions of the Indenture does not purport to
be complete and is qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. The form and
terms of the Series B Notes will be the same as the form and terms of the Series
A Notes except that the Series B Notes will be registered under the Securities
Act and hence will not bear legends restricting the transfer thereof. Following
consummation of the Exchange Offer, all rights under the Registration Rights
Agreement accorded to holders of Series A Notes, including the right to receive
Liquidated Damages, to the extent and in the circumstances specified therein,
will terminate. As of the date of the Indenture, all of the Company's domestic
Subsidiaries will be Restricted Subsidiaries. However, under certain
circumstances, the Company will be able to designate current or future
Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be
subject to many of the restrictive covenants set forth in the Indenture. The
definitions of certain terms used in the following summary are set forth below
under "-- Certain Definitions." All references to the "Company" in this
"Description of Notes" are to Pillowtex and not to any of its subsidiaries.
 
                                       59
<PAGE>   67
 
PRINCIPAL, MATURITY AND INTEREST
 
     The Notes are limited in aggregate principal amount to $185.0 million and
will mature on December 15, 2007. Interest on the Notes will accrue at the rate
of 9% per annum and will be payable semiannually in arrears on June 15 and
December 15, commencing on June 15, 1998, to Holders of record on the
immediately preceding June 1 and December 1. Interest on the Notes will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from the date of original issuance. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months. Principal, premium,
if any, and interest and Liquidated Damages (as defined below) on the Notes will
be payable at the office or agency of the Company maintained for such purpose
within the City and State of New York or, at the option of the Company, payment
of interest and Liquidated Damages may be made by check mailed to the Holders of
Notes at their respective addresses set forth in the register of Holders of
Notes; provided that all payments with respect to Notes that the Holders of
which have given wire transfer instructions to the Company will be required to
be made by wire transfer of immediately available funds to the accounts
specified by the Holders thereof. Until otherwise designated by the Company, the
Company's office or agency in New York will be the office of the Trustee
maintained for such purpose. The Notes will be issued in denominations of $1,000
and integral multiples thereof.
 
RANKING AND SUBORDINATION
 
     The Series A Notes are, and the Series B Notes will be, general unsecured
obligations of the Company, ranking senior to all existing and future
subordinated indebtedness of the Company, pari passu in right of payment with
the 10% Senior Subordinated Notes; and subordinated in right of payment to all
existing and future Senior Indebtedness of the Company. The payment of principal
of, premium, if any, and interest and Liquidated Damages, if any, on the Notes
will be subordinated in right of payment, as set forth in the Indenture, to the
prior payment in full of all Senior Indebtedness, whether outstanding on the
date of the Indenture or thereafter incurred.
 
     Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities, the holders of Senior Indebtedness will be entitled to
receive payment in full of all obligations due in respect of such Senior
Indebtedness (including, in the case of Senior Indebtedness under the New Senior
Credit Facilities, interest after the commencement of any such proceeding at the
rate specified in the applicable Senior Indebtedness) before the Holders of
Notes will be entitled to receive any payment with respect to the Notes, and
until all Obligations with respect to Senior Indebtedness are paid in full, any
distribution to which the Holders of Notes would be entitled shall be made to
the holders of Senior Indebtedness (except that Holders of Notes may receive
common equity securities or debt securities that are subordinated at least to
the same extent as the Notes to Senior Indebtedness and any securities issued in
exchange for Senior Indebtedness (collectively, "Permitted Junior Securities")
and payments made from the trust described under "-- Legal Defeasance and
Covenant Defeasance").
 
     The Company also may not make any payment upon or in respect of the Notes
(except in Permitted Junior Securities or from the trust described under
"-- Legal Defeasance and Covenant Defeasance") if (i) a default in the payment
of the principal of, premium, if any, or interest on Designated Senior
Indebtedness occurs and is continuing beyond any applicable period of grace or
(ii) any other default occurs and is continuing with respect to Designated
Senior Indebtedness that permits holders of the Designated Senior Indebtedness
as to which such default relates to accelerate its maturity and the Trustee
receives a notice of such default (a "Payment Blockage Notice") from the Company
or the holders of any Designated Senior Indebtedness. Payments on the Notes may
and shall be resumed (a) in the case of a payment default, upon the date on
which such default is cured or waived and (b) in case of a nonpayment default,
the earlier of the date on which such nonpayment default is cured or waived or
179 days after the date on which the applicable Payment Blockage Notice is
received, unless the maturity of any Designated Senior Indebtedness has been
accelerated. No new period of payment blockage may be commenced unless and until
(i) 360 days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice and (ii) all scheduled
                                       60
<PAGE>   68
 
payments of principal, premium, if any, and interest on the Notes that have come
due have been paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
shall be, or be made, the basis for a subsequent Payment Blockage Notice unless
such default shall have been waived for a period of not less than 90 days.
 
     The Indenture further requires that the Company promptly notify holders of
Senior Indebtedness if payment of the Notes is accelerated because of an Event
of Default.
 
     As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, Holders of Notes may recover less ratably than
creditors of the Company who are holders of Senior Indebtedness. On a pro forma
basis, after giving effect to the Merger and the Financing Transactions,
including the offering of the Series A Notes and the application of the proceeds
therefrom, the principal amount of Senior Indebtedness outstanding at September
27, 1997 would have been approximately $420.0 million (excluding $37.8 million
in letters of credit). The Indenture limits, subject to certain financial tests,
the amount of additional Indebtedness, including Senior Indebtedness, that the
Company and its Restricted Subsidiaries may incur. See "Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock."
 
SUBSIDIARY GUARANTEES
 
     The Company's payment obligations under the Notes are jointly and severally
guaranteed by all Restricted Subsidiaries of the Company (collectively, the
"Guarantors") other than (x) Receivables Subsidiaries and (y) Restricted
Subsidiaries organized outside the United States and which do not guarantee any
Indebtedness or other obligations of the Company and its Restricted
Subsidiaries. The Guarantees are senior obligations of the Guarantors, pari
passu with all other unsubordinated Indebtedness of the Guarantors and senior to
all subordinated Indebtedness of the Guarantors. The Guarantee of each Guarantor
is subordinated to the prior payment in full of all Guarantor Senior
Indebtedness of such Guarantor, which includes the guarantees issued by the
Guarantors of the Company's obligations under the New Senior Credit Facilities.
The obligations of each Guarantor under its Guarantee are limited so as not to
constitute a fraudulent conveyance under applicable law. See "Risk
Factors -- Fraudulent Conveyance Statutes."
 
     The Indenture provides that no Guarantor may consolidate with or merge with
or into (whether or not such Guarantor is the surviving Person), another
corporation, Person or entity whether or not affiliated with such Guarantor
unless (i) subject to the provisions of the following paragraph, the Person
formed by or surviving any such consolidation or merger (if other than such
Guarantor) assumes all the obligations of such Guarantor under the Notes and the
Indenture pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, and (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists.
 
     The Indenture provides that (i) upon the release by all holders of Senior
Indebtedness and Guarantor Senior Indebtedness of all guarantees issued by a
Guarantor relating to such Senior Indebtedness and Guarantor Senior Indebtedness
and all Liens on the property and assets of such Guarantor relating to Senior
Indebtedness and Guarantor Senior Indebtedness or (ii) in the event of a sale or
other disposition of all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the capital
stock of any Guarantor, then such Guarantor (in the event of clause (i) above or
a sale or other disposition, by way of such a merger, consolidation or
otherwise, of all of the capital stock of such Guarantor or the corporation
acquiring the property (in the event of a sale or other disposition of all of
the assets of such Guarantor) will be released and relieved of any obligations
under its Guarantee; provided that the Net Proceeds of any such sale or other
disposition described in clause (ii) above are applied in accordance with the
applicable provisions of the Indenture. See "-- Repurchase at the Option of
Holders -- Asset Sales." In addition, the Indenture provides that, in the event
the Company (i) designates a Restricted Subsidiary to be an Unrestricted
Subsidiary in accordance with the Indenture or (ii) designates a Subsidiary as a
Receivables Subsidiary in accordance with the Indenture, then such newly
designated Unrestricted Subsidiary or Receivables Subsidiary, as the case may
be, shall be released from its obligations under its Subsidiary Guarantee.
 
                                       61
<PAGE>   69
 
OPTIONAL REDEMPTION
 
     The Notes will not be redeemable at the Company's option prior to December
15, 2002. Thereafter, the Notes will be subject to redemption at the option of
the Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages thereon
to the applicable redemption date, if redeemed during the 12-month period,
beginning on December 15 of the years indicated below:
 
<TABLE>
<CAPTION>
                   YEAR                      PERCENTAGE
                   ----                      ----------
<S>                                          <C>
2002.......................................   104.500%
2003.......................................   103.000%
2004.......................................   101.500%
2005.......................................   100.000%
</TABLE>
 
SELECTION AND NOTICE
 
     If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
ceases to accrue on Notes or portions thereof called for redemption if the
Company has deposited with the Paying Agent funds in satisfaction of the
redemption price pursuant to the Indenture.
 
MANDATORY REDEMPTION
 
     Except as set forth below under "-- Repurchase at the Option of Holders,"
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
 
REPURCHASE AT THE OPTION OF HOLDERS
 
  Change of Control
 
     Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, and Liquidated Damages thereon to the date of repurchase (the
"Change of Control Payment"). Within ten days following any Change of Control,
the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes pursuant to the procedures required by the Indenture and described in such
notice. The Company will comply with the requirements of Rule 14e-l under the
Exchange Act, and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
 
     On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of
 
                                       62
<PAGE>   70
 
Control Payment for such Notes, and the Trustee will promptly authenticate and
mail (or cause to be transferred by book entry) to each Holder a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered, if any;
provided that each such new Note will be in a principal amount of $1,000 or an
integral multiple thereof. The Indenture will provide that, prior to complying
with the provisions of this covenant, but in any event within 90 days following
a Change of Control, the Company will either repay all outstanding Senior
Indebtedness or obtain the requisite consents, if any, under all agreements
governing outstanding Senior Indebtedness to permit the repurchase of Notes
required by this covenant. The Company will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
 
     The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit Holders of Notes to require that the Company repurchase
or redeem the Notes in the event of a takeover, recapitalization or similar
transaction.
 
     The New Senior Credit Facilities provide that certain change of control
events with respect to the Company would constitute a default thereunder. Any
future credit agreements or other agreements relating to Senior Indebtedness to
which the Company becomes a party may contain similar restrictions and
provisions. In the event a Change of Control occurs at a time when the Company
is prohibited from repurchasing Notes, the Company could seek the consent of its
lenders to the repurchase of Notes or could attempt to refinance the borrowings
that contain such prohibition. If the Company does not obtain such a consent or
repay such borrowings, the Company will remain prohibited from repurchasing
Notes. In such case, the Company's failure to repurchase tendered Notes would
constitute an Event of Default under the Indenture which would, in turn,
constitute a default under the New Senior Credit Facilities. In such
circumstances, the subordination provisions in the Indenture would likely
restrict payments to Holders of Notes.
 
     The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," the phrase varies according to the facts and circumstances of the subject
transaction and there is no precise established definition of the phrase under
applicable law. Accordingly, the ability of a Holder of Notes to require the
Company to repurchase such Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of the Company
and its Subsidiaries taken as a whole to another Person or group may be
uncertain.
 
     The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
 
  Asset Sales
 
     The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors or a committee of the
Board of Directors, having at least one Independent director, set forth in an
officers' certificate delivered to the Trustee, or by an independent appraisal
by an accounting, appraisal or investment banking firm of national standing or,
in the case of Investment Assets, an officer's certificate) of the assets or
Equity Interests issued or sold or otherwise disposed of and (ii) at least 75%
of the consideration therefor (or 50%, in the case of any Investment Assets)
received by the Company or such Restricted Subsidiary is in the form of cash;
provided that (a) the amount of any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet) of the Company or any
such Restricted Subsidiary (other than contingent liabilities and liabilities
that by their terms are subordinated to the Notes or any guarantee thereof) that
are assumed by the transferee of any such assets (pursuant to a customary
novation agreement that releases the Company and its Restricted Subsidiaries
from all obligations
 
                                       63
<PAGE>   71
 
in respect thereof) shall be deemed to be cash for purposes of this provision
and (b) any notes or other obligations received by the Company or such
Restricted Subsidiary from such transferee in exchange for any such assets that
are promptly converted into cash (to the extent of cash received) shall be
deemed to be cash for purposes of this provision.
 
     Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply all such Net Proceeds, at its option, (i) to permanently
reduce Senior Indebtedness (and correspondingly reduce commitments with respect
thereto in the case of any reduction of borrowings under the New Senior Credit
Facilities, (ii) to the acquisition of a controlling interest in another
business, the making of a capital expenditure or the acquisition of other
long-term assets ("Productive Assets"), in each case, in the same or a similar
line of business as the Company was engaged in on the date of the Indenture, or
(iii) to reimburse the Company or its Subsidiaries for expenditures made, and
costs incurred, to repair, rebuild, replace or restore property subject to loss,
damage or taking to the extent that the net proceeds consist of insurance
proceeds received on account of such loss, damage or taking. Pending the final
application of any such Net Proceeds, the Company may temporarily reduce Senior
Indebtedness or otherwise invest such Net Proceeds in any manner that is not
prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company will be required to make an offer to
all Holders of Notes and, to the extent required by the terms of any Pari Passu
Indebtedness, to all holders of such Pari Passu Indebtedness (an "Asset Sale
Offer") to repurchase the maximum principal amount of Notes and any such Pari
Passu Indebtedness that may be repurchased out of the Excess Proceeds, at an
offer price in cash in an amount equal to 100% of the principal amount thereof
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
date of purchase, in accordance with the procedures set forth in the Indenture
or such Pari Passu Indebtedness, as applicable. To the extent that the aggregate
amount of Notes and any such Pari Passu Indebtedness tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes and any Pari Passu Indebtedness surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be repurchased on a pro rata basis. Upon completion of such offer to
repurchase, the amount of Excess Proceeds shall be reset at zero.
 
     The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Sale Offer.
 
     Notwithstanding the foregoing, the Company and its Subsidiaries will be
permitted to consummate one or more Asset Sales with respect to assets or
properties with an aggregate fair market value not in excess of $10.0 million in
the aggregate subsequent to the date of the Indenture without complying with
clause (ii) of the first paragraph of this covenant; provided that (x) at least
75% of the consideration for such Asset Sale constitutes either Productive
Assets or cash, and (y) any Net Proceeds received by the Company or any of its
Restricted Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall be subject to the provisions of the
second paragraph of this covenant.
 
CERTAIN COVENANTS
 
  Restricted Payments
 
     The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay
any dividend or make any other payment or distribution on account of the Equity
Interests of the Company or any of its Restricted Subsidiaries (including,
without limitation, any payment in connection with any merger or consolidation
involving the Company or any of its Restricted Subsidiaries) to the direct or
indirect holders of the Equity Interests of the Company or any of its Restricted
Subsidiaries in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company,
dividends or distributions payable to the Company or any Restricted Subsidiary
of the Company (other than a Receivables Subsidiary) or dividends or
distributions made by a Restricted Subsidiary of the Company (other than a
Receivables Subsidiary) to all holders of its
 
                                       64
<PAGE>   72
 
common stock on a pro rata basis); (ii) purchase, redeem or otherwise acquire or
retire for value any Equity Interests of the Company, any Restricted Subsidiary
of the Company or any direct or indirect parent of the Company, (other than any
such Equity Interests owned by the Company or any Restricted Subsidiary of the
Company (other than a Receivables Subsidiary)); (iii) make any payment on or in
respect of, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is pari passu with or subordinated to the Notes,
except at Stated Maturity or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
 
          (a) no Default or Event of Default shall have occurred and be
     continuing or would occur as a consequence thereof; and
 
          (b) the Company would, at the time of such Restricted Payment and
     after giving pro forma effect thereto as if such Restricted Payment had
     been made at the beginning of the applicable four quarter period, have been
     permitted to incur at least $1.00 of additional Indebtedness pursuant to
     the Fixed Charge Coverage Ratio test set forth in the first paragraph of
     the covenant described under the caption "-- Incurrence of Indebtedness and
     Issuance of Preferred Stock"; and
 
          (c) such Restricted Payment, together with the aggregate of all other
     Restricted Payments made by the Company and its Subsidiaries after the date
     of the Indenture (excluding Restricted Payments permitted by clauses (u)
     and (x) of the next succeeding paragraph), is less than the sum of (i) 50%
     of the Consolidated Net Income of the Company for the period (taken as one
     accounting period) commencing on the effective date of the Merger to the
     end of the Company's most recently ended fiscal quarter for which internal
     financial statements are available at the time of such Restricted Payment
     (or, if such Consolidated Net Income for such period is a deficit, less
     100% of such deficit), plus (ii) 100% of the aggregate net cash proceeds
     received by the Company from the issue or sale subsequent to the date of
     the Indenture of Equity Interests of the Company or of debt securities of
     the Company that have been converted into such Equity Interests (other than
     Equity Interests (or convertible debt securities) sold to a Subsidiary of
     the Company and other than Disqualified Stock or debt securities that have
     been converted into Disqualified Stock), plus (iii) to the extent that any
     Restricted Investment that was made after the date of the Indenture is sold
     for cash or otherwise liquidated or paid for cash, the lesser of (A) the
     cash return of capital with respect to such Restricted Investment (less the
     cost of disposition, if any) and (B) the initial amount of such Restricted
     Investment, plus (iv) $20.0 million.
 
     The foregoing provisions will not prohibit (v) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (w) the making of any Restricted Investment, or the redemption;
repurchase, retirement or other acquisition of any Equity Interests of the
Company, in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Restricted Subsidiary of the Company) of other
Equity Interests of the Company (other than any Disqualified Stock); provided
that the amount of any such net cash proceeds that are utilized for any such
Restricted Investment, redemption, repurchase, retirement or other acquisition
shall be excluded from clause (c)(ii) of the preceding paragraph; (x) the
defeasance, redemption or repurchase of pari passu or subordinated Indebtedness
with the net cash proceeds from an incurrence of Permitted Refinancing
Indebtedness or the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c) (ii) of the preceding paragraph;
(y) the repurchase, redemption or other acquisition or retirement for value of
any Equity Interests of the Company or any Restricted Subsidiary of the Company
held by any member of the Company's (or any of its Subsidiaries') management
pursuant to any management equity subscription agreement or stock option
agreement in effect as of the date of the Indenture; provided that (A) the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $1.0 million in any 12-month period plus the
aggregate cash proceeds received by the Company during such 12-month period from
any reissuance of Equity Interests by the Company to members of management of
the Company and its Restricted Subsidiaries, and (B) no
 
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<PAGE>   73
 
Default or Event of Default shall have occurred and be continuing immediately
after such transaction; and (z) so long as no Default or Event of Default shall
have occurred and be continuing, ordinary dividends paid by the Company in
respect of its Common Stock in an aggregate amount not to exceed $6.0 million
since the date of the Indenture.
 
     The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designations and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation. Such
designation will only be permitted if such Restricted Payment would be permitted
at such time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
 
     The amount of all Restricted Payments (other than cash) shall be the fair
market value (evidenced by a resolution of the Board of Directors or a committee
of the Board of Directors having at least one Independent director set forth in
an Officers' Certificate delivered to the Trustee) on the date of the Restricted
Payment of the asset(s) proposed to be transferred by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by the covenant "-- Restricted Payments" were computed, which
calculations may be based upon the Company's latest available financial
statements.
 
     The Indenture provides that the Merger (including the payment of the Merger
consideration) does not constitute a Restricted Payment under the Indenture.
 
  Incurrence of Indebtedness and Issuance of Preferred Stock
 
     The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Indebtedness) and that the Company will not issue any Disqualified
Stock, and will not permit any of its Subsidiaries to issue any shares of
preferred stock; provided, however, that (x) the Company and the Guarantors may
incur Indebtedness (including Acquired Indebtedness) and (y) the Company may
issue shares of Disqualified Stock, in each case if the Fixed Charge Coverage
Ratio for the Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least 2.0 to 1.0, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.
 
     The foregoing provisions will not apply to:
 
          (i) the incurrence by the Company of Indebtedness under the New Senior
     Credit Facilities (and guarantees thereof by the Guarantors) in an
     aggregate principal amount at any time outstanding (with letters of credit
     being deemed to have a principal amount equal to the maximum potential
     liability of the Company and its Subsidiaries thereunder) not to exceed the
     greater of (x) $600.0 million and (y) the sum of 80% of Eligible Receivable
     and 65% of Eligible Inventory, less, in the case of each of clause (x) and
     clause (y), the aggregate amount of all Net Proceeds of Asset Sales applied
     to permanently reduce the commitments with respect to such Indebtedness
     pursuant to the covenant described above under the caption "-- Repurchase
     at the Option of Holders -- Asset Sales";
 
          (ii) the incurrence by the Company of Indebtedness represented by the
     Notes and the incurrence by the Guarantors of Indebtedness represented by
     the Guarantees;
 
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<PAGE>   74
 
          (iii) the incurrence by the Company or any of its Subsidiaries of
     Indebtedness represented by Capital Lease Obligations (whether or not
     incurred pursuant to sale and leaseback transactions), mortgage financing
     or purchase money obligations, in each case incurred for the purpose of
     financing all or any part of the purchase price or cost of construction or
     improvement of property, plant or equipment used in the business of the
     Company or such Restricted Subsidiary, in an aggregate principal amount not
     to exceed $15.0 million at any time outstanding;
 
          (iv) the incurrence by the Company or any of its Subsidiaries of
     Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
     which are used to extend, refinance, renew, replace, defease or refund,
     Existing Indebtedness or Indebtedness that was permitted by the Indenture
     to be incurred (other than any such Indebtedness incurred pursuant to
     clause (i), (iii), (v), (vi), (vii) (viii) or (xiii) of this paragraph);
 
          (v) the incurrence by the Company or any of its Wholly Owned
     Subsidiaries (other than a Receivables Subsidiary) of intercompany
     Indebtedness between or among the Company and any of its Wholly Owned
     Subsidiaries (other than a Receivables Subsidiary); provided, however, that
     (i) if the Company is the obligor on such Indebtedness, such Indebtedness
     is expressly subordinate to the payment in full of all Obligations with
     respect to the Notes and (ii)(A) any subsequent issuance or transfer of
     Equity Interests that results in any such Indebtedness being held by a
     Person other than the Company or a Wholly Owned Subsidiary (other than a
     Receivables Subsidiary) and (B) any sale or other transfer of any such
     Indebtedness to a Person that is not either the Company or a Wholly Owned
     Subsidiary (other than a Receivables Subsidiary) shall be deemed, in each
     case, to constitute an incurrence of such Indebtedness by the Company or
     such Subsidiary, as the case may be;
 
          (vi) the incurrence by the Company or any Subsidiary of Hedging
     Obligations that are incurred for the purpose of fixing or hedging interest
     rate risk that is permitted by the terms of the Indenture to be incurred;
 
          (vii) the incurrence by the Company of Hedging Obligations under
     commodity hedging and currency exchange agreements; provided that, such
     agreements were entered into in the ordinary course of business for the
     purpose of limiting risks that arise in the ordinary course of business;
 
          (viii) the incurrence of Indebtedness of a Guarantor represented by
     guarantees of Indebtedness of the Company that has been incurred in
     accordance with the terms of the Indenture;
 
          (ix) the incurrence of Indebtedness by the Company and its
     Subsidiaries solely in respect of performance bonds, workers' compensation
     claims, payment obligations in connection with self-insurance and other
     similar requirements (to the extent that such incurrence does not result in
     the incurrence of any obligation to repay any obligation relating to
     borrowed money of others) in the ordinary course of business in accordance
     with customary industry practices, in amounts and for the purpose customary
     in the Company's industry;
 
          (x) Existing Indebtedness;
 
          (xi) the incurrence of Indebtedness arising from agreements providing
     for indemnification, adjustment of purchase price or similar obligations,
     or from guarantees or letters of credit, surety bonds or performance bonds
     securing any such obligations of the Company or any such Subsidiary
     pursuant to such agreements, in each case incurred in connection with the
     disposition of any business, assets or Subsidiary of the Company, other
     than Guarantees of Indebtedness incurred by any Person acquiring all or any
     portion of such business, assets or Subsidiary for the purpose of financing
     such acquisition, provided that none of the foregoing results in
     Indebtedness required to be reflected as indebtedness on the balance sheet
     of the Company or any such Subsidiary in accordance with GAAP and the
     maximum aggregate liability in respect of all such Indebtedness shall at no
     time exceed 100% of the gross proceeds actually received by the Company and
     its Subsidiaries in connection with such disposition;
 
                                       67
<PAGE>   75
 
          (xii) the incurrence of Indebtedness by a Receivables Subsidiary that
     is not recourse to the Company or to any other Subsidiary of the Company
     (other than Standard Securitization Undertakings) incurred in connection
     with a Qualified Receivables Transaction;
 
          (xiii) the incurrence by the Company of Indebtedness (in addition to
     Indebtedness permitted by any other clause of this paragraph) in an
     aggregate principal amount (or accreted value, as applicable) at any time
     outstanding not to exceed $20.0 million; and
 
          (xiv) the incurrence by the Company's Unrestricted Subsidiaries of
     Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
     to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
     deemed to constitute an incurrence of Indebtedness by a Restricted
     Subsidiary of the Company that was not permitted by this clause (xiv).
 
  Liens
 
     The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien securing Indebtedness on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens, unless all payments
due under the Indenture and the Notes are secured on an equal and ratable basis
with the Indebtedness so secured until such time as such is no longer secured by
a Lien; provided that if such Indebtedness is by its terms expressly
subordinated to the Notes or any Guarantee, the Lien securing such Indebtedness
shall be subordinate and junior to the Lien securing the Notes and the
Guarantees with the same relative priority as such subordinate or junior
Indebtedness shall have with respect to the Notes and the Guarantees.
 
  Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
 
     The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (1) on
its Capital Stock or (2) with respect to any other interest or participation in,
or measured by, its profits, or (b) pay any Indebtedness owed to the Company or
any of its Restricted Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries. The foregoing shall
not apply to encumbrances or restrictions existing under or by reason of (a)
applicable law, (b) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, (c) customary non-assignment provisions in leases entered
into in the ordinary course of business and consistent with past practices, (d)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii) above
on the property so acquired, or (e) Permitted Refinancing Indebtedness, provided
that the restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those contained in the
agreements governing the Indebtedness being refinanced or (f) any Purchase Money
Note, or other Indebtedness or contractual requirements of a Receivables
Subsidiary, in each case, incurred in connection with a Qualified Receivables
Transaction, provided that such restrictions apply only to such Receivables
Subsidiary.
 
  Merger, Consolidation, or Sale of Assets
 
     The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving
 
                                       68
<PAGE>   76
 
any such consolidation or merger (if other than the Company) or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the entity or Person
formed by or surviving any such consolidation or merger (if other than the
Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Notes and the Indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; and
(iv) except in the case of a merger of the Company with or into a Wholly Owned
Subsidiary of the Company (other than a Receivables Subsidiary), the Company or
the entity or Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) will have Consolidated
Net Worth immediately after the transaction equal to or greater than 95% of the
Consolidated Net Worth of the Company immediately preceding the transaction and
(B) will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described above under the caption "-- Incurrence
of Indebtedness and Issuance of Preferred Stock."
 
  Transactions with Affiliates
 
     The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person, (ii) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$2.0 million the Company delivers to the Trustee, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors and (iii) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, the Company delivers to the Trustee, an opinion as to the fairness
to the Holders of Notes of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing; provided that (v) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans approved by
the Board of Directors or the payment of fees and indemnities to directors of
the Company and its Restricted Subsidiaries in the ordinary course of business
and consistent with the past practice of the Company or such Restricted
Subsidiary, (w) loans or advances to employees in the ordinary course of
business, (x) transactions between or among the Company and/or its Restricted
Subsidiaries (other than a Receivables Subsidiary) or between Restricted
Subsidiaries (other than Receivables Subsidiaries), (y) Restricted Payments
(other than Investments) that are permitted by the provisions of the Indenture
described above under the caption "-- Restricted Payments," and (z) sales or
other transfers or dispositions of accounts receivable and other related assets
customarily transferred in an asset securitization transaction involving
accounts receivable to a Receivables Subsidiary in a Qualified Receivables
Transaction, in each case, shall not be deemed Affiliate Transactions.
 
  Guarantees of Certain Indebtedness
 
     The Indenture provides that (i) the Company will not permit any of its
Subsidiaries that is not a Guarantor to incur, guarantee or secure through the
granting of Liens the payment of any Senior Indebtedness and (ii) the Company
will not and will not permit any of its Subsidiaries to pledge any intercompany
notes representing obligations of any of its Subsidiaries, to secure the payment
of any Senior Indebtedness, in each case unless such Subsidiary, the Company and
the Trustee execute and deliver a supplemental indenture
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<PAGE>   77
 
evidencing such Subsidiary's Guarantee (providing for the unconditional
guarantee by such Subsidiary, on a senior subordinated basis, of the Notes).
 
  Limitation on Layering
 
     The Indenture provides that (i) the Company will not incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Indebtedness of the Company and
senior in any respect in right of payment to the Notes, and (ii) no Guarantor
will incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness of such Guarantor that is subordinate or junior in right of payment
to any Indebtedness of such Guarantor and senior in any respect in right of
payment to the Guarantee of such Guarantor.
 
  Payments for Consent
 
     The Indenture provides that neither the Company nor any of its Subsidiaries
will, directly or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or the Notes unless such consideration is offered to be paid or
is paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
 
  Reports
 
     The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
will furnish to Holders of Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K under the Exchange Act if the Company were
required to file such Forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" that describes the financial
condition and results of operations of the Company and its consolidated
Subsidiaries (showing in reasonable detail, either on the face of the financial
statements or in the footnotes thereto and in Management's Discussion and
Analysis of Financial Condition and Results of Operations, the financial
condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operation of
the Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the Commission on Form 8-K if the Company were required to file such reports. In
addition, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information and reports
with the Commission for public availability and make such information available
to securities analysts and prospective investors upon request. In addition, the
Company and the Guarantors have agreed that, for so long as any Notes remain
outstanding, they will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
 
  Events of Default and Remedies
 
     The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company to
comply with the provisions described under the captions "Repurchase at the
Option of Holders -- Change of Control," "-- Repurchase at the Option of
Holders -- Asset Sales," "--Restricted Payments," "-- Incurrence of Indebtedness
and Issuance of Preferred Stock" or "Special Redemption"; (iv) failure by the
Company for 60 days after notice to comply with any of its other agreements in
the Indenture or the Notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the
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<PAGE>   78
 
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness at its final stated maturity or (b) results in the
acceleration of such Indebtedness prior to its maturity and, in each case, the
principal amount of which Indebtedness, together with the principal amount of
any other such Indebtedness described in clauses (a) and (b) above, aggregates
$10.0 million or more; (vi) failure by the Company or any of its Subsidiaries to
pay final judgments aggregating in excess of $10.0 million, which judgments are
not paid, discharged or stayed for a period of 60 days; (vii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; or (viii) the Guarantee of any Guarantor is held in judicial
proceedings to be unenforceable or invalid or ceases for any reason to be in
full force and effect (other than in accordance with the terms of the Indenture)
or any Guarantor or any Person acting on behalf of any Guarantor denies or
disaffirms such Guarantor's obligations under its Guarantee (other than by
reason of a release of such Guarantor from its Guarantee in accordance with the
terms of the Indenture.
 
     If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately; provided, however, that
if any Senior Indebtedness is outstanding under the New Senior Credit
Facilities, upon a declaration of acceleration, the Notes shall be payable upon
the earlier of (x) the day which is five Business Days after the provision to
the Company and the agent under the New Credit Senior Facilities of written
notice of such declaration and (y) the date of acceleration of any Indebtedness
under the New Senior Credit Facilities. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to the Company, any Significant Subsidiary or any group
of Subsidiaries that, taken together, would constitute a Significant Subsidiary,
all outstanding Notes will become due and payable without further action or
notice. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of Notes
notice of any continuing Default or Event of Default (except a Default or Event
of Default relating to the payment of principal or interest) if it determines
that withholding notice is in their interest.
 
     In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
December 15, 2002, by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to December 15, 2002, then the
premium specified in the Indenture shall also become immediately due and payable
to the extent permitted by law upon the acceleration of the Notes.
 
     The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
 
     The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
 
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS
 
     No director, officer, employee, incorporator or shareholder of the Company
or any Guarantor, as such, shall have any liability for any obligations of the
Company or any Guarantor under the Notes, the Guarantees, the Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of
 
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<PAGE>   79
 
the consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws, and it is the view of the
Commission that such a waiver is against public policy.
 
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
 
     The Company may, at its option and at any time, elect to have all of the
obligations of the Company and the Guarantors discharged with respect to the
outstanding Notes ("Legal Defeasance") except for (i) the rights of Holders of
outstanding Notes to receive payments in respect of the principal of, premium,
if any, and accrued and unpaid interest and Liquidated Damages on such Notes
when such payments are due from the trust referred to below, (ii) the Company's
obligations with respect to the Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payment and money for security payments
held in trust, (iii) the rights, powers, trusts, duties and immunities of the
Trustee, and the Company's obligations in connection therewith and (iv) the
Legal Defeasance provisions of the indenture. In addition, the Company may, at
its option and at any time, elect to have the obligations of the Company
released with respect to certain covenants that are described in the Indenture
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the Notes.
 
     In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of Notes, cash in United States dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and accrued and unpaid interest and
Liquidated Damages on the outstanding Notes on the stated maturity or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date; (ii) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that (a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the date of the
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel shall
confirm that, the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the
Company shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming "that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred; (iv) no
Default or Event of Default shall have occurred and be continuing on the date of
such deposit (other than a Default or Event of Default resulting from the
borrowing of funds to be applied to such deposit) or insofar as Events of
Default from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit; (v) such Legal
Defeasance or Covenant Defeasance will not result in a breach or violation of,
or constitute a default under any material agreement or instrument (other than
the Indenture) to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound; (vi) the Company must
have delivered to the Trustee an opinion of counsel to the effect that after the
91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally; (vii) the Company must deliver to the,
Trustee an Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders of Notes over the other
creditors of the Company or any Guarantor with the intent of defeating,
hindering, delaying or defrauding creditors, any Guarantor of the Company or
others; and (viii) the Company must deliver to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
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<PAGE>   80
 
SATISFACTION AND DISCHARGE
 
     The Indenture will be discharged and will cease to be of further effect as
to all Notes issued thereunder when (i) either (a) all such Notes theretofore
authenticated and delivered (except lost, stolen or destroyed Notes which have
been replaced or paid and Notes for which payment money has theretofore been
deposited in trust and thereafter repaid to the Company) have been delivered to
the Trustee for cancellation; or (b) all such Notes not theretofore delivered to
such Trustee for cancellation have become due and payable by reason of the
making of a notice of redemption or otherwise or will become due and payable
within one year and the Company has irrevocably deposited or caused to be
deposited with such Trustee as trust funds in trust solely for the benefit of
the Holders, cash in United States dollars, non-callable Government Securities,
or a combination thereof, in such amounts as will be sufficient without
consideration of any reinvestment of interest, to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation for principal, premium, if any, and accrued interest to the date of
maturity or redemption; (ii) no Default or Event of Default with respect to the
Indenture or the Notes shall have occurred and be continuing on the date of such
deposit or shall occur as a result of such deposit and such deposit will not
result in a breach or violation of, or constitute a default under, any other
instrument to which the Company is a party or by which the Company is bound;
(iii) the Company has paid or caused to be paid all sums payable by it under
such Indenture; and (iv) the Company has delivered irrevocable instructions to
the Trustee under such Indenture to apply the deposited money toward the payment
of such Notes at maturity or the redemption date, as the case may be. In
addition, the Company must deliver an Officers' Certificate and an opinion of
counsel to the Trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.
 
AMENDMENT, SUPPLEMENT AND WAIVER
 
     Except as provided in the next succeeding paragraphs, the Indenture, the
Guarantees or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in aggregate principal amount of the Notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Notes), and any existing
default or compliance with any provision of the Indenture, the Guarantees or the
Notes may be waived with the consent of the Holders of a majority in aggregate
principal amount of the then outstanding Notes (including consents obtained in
connection with a purchase of, or a tender offer or exchange offer for, Notes).
 
     Without the consent of each Holder affected, an amendment, supplement or
waiver may not (with respect to any Notes held by a non-consenting Holder): (i)
reduce the principal amount of Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any Note or alter the provisions with respect to the redemption or repurchase
of the Notes (other than provisions relating to the covenant described above
under the caption -- Repurchase at the Option of Holders"), (iii) reduce the
rate of or change the time for payment of interest on any Note, (iv) waive a
Default or Event of Default in the payment of principal of or premium, if any,
or interest on the Notes (except a rescission of acceleration of the Notes by
the Holders of at least a majority in aggregate principal amount of the Notes
and a waiver of the payment default that resulted from such acceleration), (v)
make any Note payable in money other than that stated in the Notes, (vi) make
any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of principal of
or premium, if any, or interest on the Notes, (vii) waive a redemption payment
with respect to any Note (other than a payment required by one of the covenants
described above under the caption "-- Repurchase at the Option of Holders"
(viii) release any Guarantor from any of its obligations under its Guarantee or
the Indenture, except in accordance with the terms of the Indenture, (ix) make
any change to the provisions of the Indenture described under "Special
Redemption" above, or (x) make any change in the foregoing amendment and waiver
provisions. In addition, any amendment to the provisions of Article 10 of the
Indenture (which relate to subordination) or the related definitions will
require the consent of the Holders of at least 75% in aggregate principal amount
of the Notes then outstanding if such amendment would adversely affect the
rights of Holders of Notes.
 
     Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company, the Guarantors and the Trustee may amend or supplement the
Indenture, the Guarantees or the Notes to cure any
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<PAGE>   81
 
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company's or a Guarantor's obligations to Holders of Notes in the case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, or to comply with
requirements of the Commission in order to effect or maintain the location of
the Indenture under the Trust Indenture Act.
 
CONCERNING THE TRUSTEE
 
     The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
 
     The Holders of a majority in aggregate principal amount of the then
outstanding Notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee),
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any Holder of Notes, unless such Holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
 
BOOK-ENTRY, DELIVERY AND FORM
 
     The Series A Notes were offered and sold (i) to qualified institutional
buyers in reliance on Rule 144A under the Securities Act ("Rule 144A Notes"),
(ii) to institutional "accredited investors" as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act ("Accredited Investor Notes") and (iii) in
offshore transactions in reliance on Regulation S under the Securities Act
("Regulation S Notes") and in each case are represented by a separate note in
registered, global form (collectively, the "Series A Global Notes").
 
     The Series B Notes will initially be issued in the form of one global
certificate (the "Series B Global Note" and collectively with the Series A
Global Notes, the "Global Notes"). The Series B Global Note will be deposited on
the date of the consummation of the Exchange Offer (the "Exchange Offer Closing
Date") with or on behalf of DTC and registered in the name of DTC or its
nominee.
 
     The Company understands that DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code, and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies, and clearing corporations and may include certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers, and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants").
 
     So long as DTC, or its nominee, is the registered owner or holder of the
Series B Global Note, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the Notes represented by such Series B
Global Note for all purposes under the Indenture. The Company understands that
pursuant to procedures established by DTC (i) upon deposit of the Series B
Global Note in amounts proportionate to the respective beneficial interests in
the principal amount of the Series B Global Note and (ii) ownership of the
Series B Notes evidenced by the Series B Global Note will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by DTC (with respect to the interests of DTC's
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<PAGE>   82
 
participants), DTC's participants and DTC's indirect participants. No beneficial
owner of an interest in the Series B Global Note will be able to transfer that
interest except in accordance with DTC's applicable procedures, in addition to
those provided for under the Indenture.
 
     Payments made with respect to the Series B Global Note will be made to DTC
or its nominee, as the case may be, as the registered owner thereof. The Company
will have no responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Series B
Global Note or for maintaining, supervising, or reviewing any records relating
to such beneficial ownership interests.
 
     The Company expects that DTC or its nominee, upon receipt of any payments
made with respect to the Series B Global Note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the amount of such Series B Global Note as shown on the records of
DTC or its nominee. The Company also expects that payments by participants to
owners of beneficial interests in such Series B Global Note held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the names of nominees for such customers. Such payments will be the
responsibility of such participants.
 
     Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds.
 
     Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in the Series B Global Note among participants
of DTC, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. The Company
will have no responsibility for the performance by DTC or its respective
participants or indirect participants of its respective obligations under the
rules and procedures governing their operations.
 
CERTIFICATED NOTES
 
     Subject to certain conditions contained in the Indenture, any person having
a beneficial interest in the Global Notes may, upon request to the Trustee,
exchange such beneficial interest for Series B Notes in registered certificated
form ("Certificated Notes"). Upon any such issuance, the Trustee is required to
register such Certificated Notes in the name of, and cause the same to be
delivered to, such person or persons (or the nominee of any thereof). In
addition, if (i) the Company notifies the Trustee in writing that DTC is no
longer willing or able to act as a depositary and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Series B
Notes in the form of Certificated Notes under the Indenture, then, upon
surrender by the Global Note Holder of the Global Notes, Series B Notes in such
form will be issued to each person that the Global Note Holder and the DTC
identify as being the beneficial owner of the related Series A Notes.
 
     Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the DTC in identifying the beneficial owners of the Notes
and the Company and the Trustee may conclusively rely on, and will be protected
in relying on, instructions from the Global Note Holder or the DTC for all
purposes.
 
SAME DAY SETTLEMENT AND PAYMENT
 
     The Indenture requires that payments in respect of the Notes represented by
the Global Notes (including principal, premium, if any, interest and Liquidated
Damages, if any) be made by wire transfer of immediately available funds to the
accounts specified by the Global Note Holder. With respect to Notes in
certificated form, the Company will make all payments of principal, premium, if
any, interest and Liquidated Damages, if any, by wire transfer of immediately
available funds to the accounts specified by the Holders thereof or, if no such
account is specified, by mailing a check to each such holder's registered
address. The Notes represented by the Global Notes are expected to trade in the
DTC's Same-Day Funds Settlement System and any permitted secondary market
trading activity in such Notes will, therefore, be required by the DTC to be
settled in immediately available funds. The Company expects that secondary
trading in any certificated Notes will also be settled in immediately available
funds.
 
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<PAGE>   83
 
     Because of time zone differences, the securities account of a Euroclear
System ("Euroclear") or Cedel Bank societe anonyme ("Cedel") participant
purchasing an interest in a Global Note from a Participant in DTC will be
credited, and any such crediting will be reported to the relevant Euroclear or
Cedel participant, during the securities settlement processing day (which must
be a business day for Euroclear and Cedel) immediately following the settlement
date of DTC. DTC has advised the Company that cash received in Euroclear or
Cedel as a result of sales of interests in a Global Note by or through a
Euroclear or Cedel participant to a Participant in DTC will be received with
value on the settlement date of DTC but will be available in the relevant
Euroclear or Cedel cash account only as of the business day for Euroclear or
Cedel following DTC's settlement date.
 
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
 
     The Holders of the Series B Notes are not entitled to any registration
rights with respect to the Series B Notes. The Company, the Guarantors, and the
Initial Purchasers have entered into the Registration Rights Agreement dated as
of December 18, 1997. Pursuant to the Registration Rights Agreement, the Company
agreed to file with the Commission the Exchange Offer Registration Statement on
the appropriate form under the Securities Act with respect to the Series B
Notes. The Registration Statement of which this Prospectus forms a part
constitutes the Exchange Offer Registration Statement. Upon the effectiveness of
the Exchange Offer Registration Statement, the Company will offer to the Holders
of Transfer Restricted Securities pursuant to the Exchange Offer who are able to
make certain representations the opportunity to exchange their Transfer
Restricted Securities for Series B Notes. If (i) the Company and the Guarantors
are not required to file the Exchange Offer Registration Statement or permitted
to consummate the Exchange Offer because the Exchange Offer is not permitted by
applicable law or Commission policy or (ii) any Holder of Transfer Restricted
Securities notifies the Company within the specified time period that (a) it is
prohibited by law or Commission policy from participating in the Exchange Offer,
or (b) that it may not resell the Series B Notes acquired by it in the Exchange
Offer to the public without delivering a prospectus and the prospectus contained
in the Exchange Offer Registration Statement is not appropriate or available for
such resales, or (c) that it is a broker-dealer and owns Series A Notes acquired
directly from the Company or an affiliate of the Company, the Company and the
Guarantors will file with the Commission a Shelf Registration Statement to cover
resales of the Series A Notes by the Holders thereof who satisfy certain
conditions relating to the provision of information in connection with the Shelf
Registration Statement. The Company will use its best efforts (x) to cause the
applicable registration statement to be declared effective as promptly as
possible by the Commission and (y) to keep such Shelf Registration Statement
effective for up to one year after the Closing Date or such shorter period
ending when all of the Notes have been sold thereunder. For purposes of the
foregoing, "Transfer Restricted Securities" means each Series A Note until (i)
the date on which such Note has been exchanged by a person other than a
broker-dealer for a Series A Note in the Exchange Offer, (ii) following the
exchange by a broker-dealer in the Exchange Offer of a Series A Note for a
Series B Note, the date on which such Series B Note is sold to a purchaser who
receives from such broker-dealer on or prior to the date of such sale a copy of
the prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Series A Note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (iv) the date on which such Series A Note is distributed to the
public pursuant to Rule 144 under the Securities Act.
 
     The Registration Rights Agreement provides that (i) the Company will file
an Exchange Offer Registration Statement with the Commission on or prior to 60
days after December 18, 1997, (ii) the Company will use its best efforts to have
the Exchange Offer Registration Statement declared effective by the Commission
on or prior to 105 days after December 18, 1997, (iii) unless the Exchange Offer
would not be permitted by applicable law or Commission policy, the Company will
commence the Exchange Offer and use its best efforts to issue on or prior to 30
business days after the date on which the Exchange Offer Registration Statement
was declared effective by the Commission, Series B Notes in exchange for all
Series A Notes tendered prior thereto in the Exchange Offer, and (iv) if
obligated to file the Shelf Registration Statement, the Company will use its
best efforts to file the Shelf Registration Statement with the Commission on or
prior to 45 days after such filing obligation arises and to cause the Shelf
Registration Statement to be declared effective by the Commission on or prior to
105 days after such obligation arises. If (a) the Company fails to
                                       76
<PAGE>   84
 
file any of the Registration Statements required by the Registration Rights
Agreement on or before the date specified for such filing, (b) any of such
Registration Statements is not declared effective by the Commission on or prior
to the date specified for such effectiveness (the "Effectiveness Date"), or (c)
the Company fails to Consummate the Exchange Offer within 30 business days of
the Effectiveness Target Date with respect to the Exchange Offer Registration
Statement, or (d) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted Securities
during the periods specified in the Registration Rights Agreement (each such
event referred to in clauses (a) through (d) above a "Registration Default"),
then the Company will pay Liquidated Damages to each Holder of Notes, with
respect to the first 90-day period immediately following the occurrence of such
Registration Default in an amount equal to $.05 per week per $1,000 principal
amount of Notes held by such Holder. The amount of the Liquidated Damages will
increase by an additional $.05 per week per $1,000 principal amount of Notes
with respect to each subsequent 90-day period until all Registration Defaults
have been cured, up to a maximum amount of Liquidated Damages of $.30 per week
per $1,000 principal amount of Notes. All accrued Liquidated Damages will be
paid by the Company on each Damages Payment Date to the Global Note Holder by
wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Notes by wire transfer to the accounts specified by them
or by mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
 
     Holders of Series A Notes will be required to make certain representations
to the Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Series A Notes
included in the Shelf Registration Statement and benefit from the provisions
regarding Liquidated Damages set forth above.
 
     The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, reference to all the provisions of the Registration Rights
Agreement, a copy of which is filed as an exhibit to the Registration Statement
of which this Prospectus constitutes a part.
 
CERTAIN DEFINITIONS
 
     Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
 
     "Acquired Indebtedness" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person
that was not incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Restricted Subsidiary of such
specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
 
     "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that,
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control, except with respect to the definition of "Related
Party" below.
 
     "Asset Sale" means the sale, lease, conveyance or other disposition of any
assets (including; without limitation, by way of a sale and leaseback) whether
in a single transaction or a series of related transactions that (a) have a fair
market value in excess of $1,000,000 or (b) net proceeds in excess of
$1,000,000; provided that, the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company and
                                       77
<PAGE>   85
 
its Restricted Subsidiaries taken as a whole will be governed by the provisions
of the Indenture described above under the caption "-- Repurchase at the Option
of Holders -- Change of Control" and/or the provisions described above under the
caption "-- Certain Covenants -- Merger, Consolidation or Sale of Assets" and
shall not be deemed to be "Asset Sales." Notwithstanding the foregoing, the
following transactions shall not constitute Asset Sales: (i) the conveyance,
sale, transfer, assignment or other disposition of inventory and other property
in the ordinary course of business; (ii) the sale or disposition of damaged,
worn out or other obsolete personal property in the ordinary course of business
so long as such property is no longer necessary for the proper conduct of the
business of the Company or such Restricted Subsidiary, as applicable; (iii) the
surrender or waiver of contract rights or the settlement, release or surrender
of contract, tort or other claims of any kind; (iv) the granting of Liens not
prohibited by the Indenture; (v) sales of accounts receivable and related assets
customarily transferred in an asset securitization transaction involving
accounts receivable to a Receivables Subsidiary or by a Receivables Subsidiary
in connection with a Qualified Receivables Transaction; (vi) a transfer of
assets by the Company to a Wholly Owned Restricted Subsidiary (other than a
Receivables Subsidiary) or by a Wholly Owned Restricted Subsidiary (other than a
Receivables Subsidiary) to the Company or to another Wholly Owned Restricted
Subsidiary (other than a Receivables Subsidiary); (vii) an issuance of Equity
Interests by a Wholly Owned Restricted Subsidiary (other than a Receivables
Subsidiary) to the Company or to another Wholly Owned Subsidiary (other than a
Receivables Subsidiary); (viii) a Restricted Payment that is permitted by the
covenant described above under the caption "-- Restricted Payments;" and (ix)
the execution of contracts to provide manufacturing consideration and other
services, including in connection with Asset Sales.
 
     "Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
 
     "Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
 
     "Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than 12
months from the date of acquisition, (iii) United States dollar or Canadian
dollar denominated (or foreign currency fully hedged) time deposits,
certificates of deposit, Eurodollar time deposits or Eurodollar certificates of
deposit of (a) any domestic commercial bank of recognized standing having
capital and surplus in excess of $500 million or (b) any bank whose short term
commercial paper rating from Standard & Poor's is at least A-1 or the equivalent
thereof or from Moody's is at least P-1 or the equivalent thereof (any such bank
being an "Approved Lender"), in each case with maturities of not more than 12
months from the date of acquisition; and (iv) commercial paper issued by any
Approved Lender (or by the parent company thereof) or any variable rate notes
issued by, or guaranteed by, any domestic corporation rated A-2 (or the
equivalent thereof) or better by Standard & Poor's or P-2 (or the equivalent
thereof) or better by Moody's and maturing within 12 months of the date of
acquisition.
 
     "Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries,
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than the Principals or their Related Parties, (ii) the
adoption of a plan relating to the liquidation or dissolution of the Company,
(iii) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as defined
above), other than the Principals and their Related Parties, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act), directly or indirectly, of more than 50% of the Voting Stock
of the Company or (iv) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors. The Indenture
provides that the Merger shall not constitute a Change of Control.
                                       78
<PAGE>   86
 
     "Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was included in computing such Consolidated
Net Income, plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations' the interest component of all payments associated with
Capital Lease Obligations commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash charges (excluding any such non-cash
charge to the extent that it represents an accrual of or reserve for cash
charges in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash
charges were deducted in computing such Consolidated Net Income minus (v)
non-cash items of such Person and its Restricted Subsidiaries increasing
Consolidated Net Income for such period, in each case, on a consolidated basis
and determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash charges of, a Restricted Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in same proportion) that the Net
Income of such Restricted Subsidiary was included in calculating the
Consolidated Net Income of such Person and only if a corresponding amount would
be permitted at the date of determination to be dividend to the Company by such
Restricted Subsidiary without prior governmental approval (that has not been
obtained), and without direct or indirect restriction 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.
 
     "Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
shareholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, (iv) the cumulative effect of a change in accounting principles
shall be excluded, and (v) the Net Income of any Unrestricted Subsidiary shall
be excluded.
 
     "Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common shareholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of the Indenture in the book value of
any asset owned by such Person or a consolidated Restricted Subsidiary of such
Person, (y) all investments as of such date in unconsolidated
                                       79
<PAGE>   87
 
Restricted Subsidiaries and in Persons that are not Subsidiaries (except, in
each case, Permitted Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges as of such date, all of the foregoing
determined in accordance with GAAP.
 
     "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the Issue Date or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
 
     "Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
 
     "Designated Senior Indebtedness" means (i) so long as Senior Indebtedness
is outstanding under the New Senior Credit Facilities, all Senior Indebtedness
outstanding under the New Senior Credit Facilities and (ii) thereafter, any
other Senior Indebtedness permitted under the Indenture the principal amount of
which is $50.0 million or more and that has been designated by the Company as
"Designated Senior Indebtedness."
 
     "Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature.
 
     "Eligible Inventory" means, as of any date, all inventory of the Company
and any of its Subsidiaries, wherever located, valued in accordance with GAAP
and shown on the balance sheet of the Company for the quarterly period most
recently ended prior to such date for which financial statements of the Company
are available.
 
     "Eligible Receivables" means, as of any date, all accounts receivable of
the Company and any of its Restricted Subsidiaries arising out of the sale of
inventory in the ordinary course of business, valued in accordance with GAAP and
shown on the balance sheet of the Company for the quarterly period most recently
ended prior to such date for which financial statements of the Company are
available.
 
     "Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
 
     "Existing Indebtedness" means (i) Indebtedness of the Company and its
Restricted Subsidiaries in existence on the Issue Date and (ii) Indebtedness of
Fieldcrest and its Subsidiaries outstanding on the effective date of the Merger;
provided that immediately following the consummation of the Merger all
Indebtedness of Fieldcrest outstanding under its existing credit facilities
shall be refinanced with the proceeds of borrowings under the New Senior Credit
Facility and Fieldcrest's obligations under its 11.25% Senior Subordinated
Debentures shall have been satisfied and discharged in accordance with the terms
of the Indenture governing such securities.
 
     "Fixed Charges" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period calculated in conformity with GAAP, whether paid or
accrued (including, without limitation, amortization of original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations but excluding amortization of debt,
issuance costs and deferred financing fees, incurred in connection with the
Merger on or before the Issue Date) and (ii) the consolidated interest expense
of such Person and its Restricted Subsidiaries that was capitalized during such
period, and (iii) any interest expense on Indebtedness of another Person that is
guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such guarantee or Lien is called upon) and (iv) the product of (a) all cash
dividend payments (and non-cash dividend payments in the case of a Person that
is a Restricted Subsidiary) on any series of preferred stock of
 
                                       80
<PAGE>   88
 
such Person and its Restricted Subsidiary, times (b) a fraction, the numerator
of which is one and the denominator of which is one minus the then current
combined federal, state and local statutory tax rate of such Person, expressed
as a decimal, in each case, on a consolidated basis and in accordance with GAAP.
 
     "Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated without giving effect to
clause (iii) of the proviso set forth in the definition of Consolidated Net
Income, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
 
     "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession which are in effect on the Issue Date.
 
     "Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
 
     "Guarantor Senior Indebtedness" means, with respect to any Guarantor, (i)
the guarantee of such Guarantor of the Company's Obligations under the New
Senior Credit Facilities and (ii) any other Indebtedness permitted to be
incurred by such Guarantor under the terms of the Indenture, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is on a parity with or subordinated in right of payment to the Guarantee of such
Guarantor. Notwithstanding anything to the contrary in the foregoing, Guarantor
Senior Indebtedness will not include (u) any Indebtedness of such Guarantor
representing a guarantee of Indebtedness of the Company or any other Guarantor
which Indebtedness is subordinate or junior to, or pari passu with, the Notes or
the Guarantee of such other Guarantor, as the case may be, (v) any Indebtedness
that is expressly subordinate or junior in right of payment to any other
Indebtedness of such Guarantor, (w) any liability for federal, state, local or
other taxes owed or owing by such Guarantor, (x) any Indebtedness of such
Guarantor to any of its Subsidiaries or other Affiliates, (y) any trade payables
or (z) that portion of any Indebtedness that is incurred in violation of the
Indenture.
 
     "Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates, the value of foreign currencies and the value of commodities purchased by
the Company or any of its Restricted Subsidiaries in the ordinary course of
business.
 
                                       81
<PAGE>   89
 
     "Indebtedness" means, with respect to any Person, (a) any indebtedness of
such Person, whether or not contingent, (i) in respect of borrowed money; (ii)
evidenced by bonds, notes, debentures or similar instruments; (iii) evidenced by
letters of credit (or reimbursement agreements in respect thereof) or banker's
acceptances; (iv) representing Capital Lease Obligations; (v) representing the
balance deferred and unpaid of the purchase price of any property; or (vi)
representing any net obligations under Hedging Obligations, if and only to the
extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, and excluding therefrom any portion of
any indebtedness constituting an accrued expense or trade payable; (b) all
indebtedness of others secured by a Lien on any asset of such Person (whether or
not such indebtedness is assumed by such Person) and, (c) to the extent not
otherwise included, the guarantee by such Person of any indebtedness of any
other Person.
 
     "Independent" means, with respect to the Company and its Subsidiaries, any
person who (i) is in fact independent, (ii) does not have any direct financial
interest or any material indirect financial interest in the Company or any of
its Subsidiaries, or in any Affiliate of the Company or any of its Subsidiaries
(other than as a result of holding securities of the Company) and (iii) is not
an officer, employee, promoter, underwriter, trustee, partner or person
performing similar functions for the Company or any of its Subsidiaries.
 
     "Investment Assets" means assets and property of the Company and its
Restricted Subsidiaries held for investment on the effective date of the Merger
with an aggregate fair market value not exceeding $25.0 million.
 
     "Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities by
the Company for consideration consisting of common equity securities of the
Company shall not be deemed to be an Investment.
 
     "Issue Date" means the date of the original issuance of Notes under the
Indenture.
 
     "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any option
or other agreement to sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction, any capital lease and any other
preferential arrangement that has substantially the same practical effect as a
security interest in an asset).
 
     "Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
 
     "Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting,
and investment banking fees, and sales commissions), any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts
 
                                       82
<PAGE>   90
 
required to be applied to the repayment of Indebtedness (other than Indebtedness
under the New Senior Credit Facilities) secured by a Lien on the asset or assets
that were the subject of such Asset Sale, and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.
 
     "New Senior Credit Facilities" means the credit agreements entered into by
and among the Company, NationsBanc Montgomery Securities, Inc., as arranger and
syndication agent, certain lending parties thereto and NationsBank of Texas,
N.A., as agent, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, as such credit
agreements and/or related documents may be amended, restated, supplemented,
renewed, replaced or otherwise modified from time to time whether or not with
the same agent, trustee, representative lenders or holders, and, subject to the
proviso to the next succeeding sentence, irrespective of any changes in the
terms and conditions thereof. Without limiting the generality of the foregoing,
the term "New Senior Credit Facilities" shall include any amendment, amendment
and restatement, renewal, extension, restructuring, supplement or modification
to any New Senior Credit Facilities and all refundings, refinancings and
replacements of any New Senior Credit Facilities, including any agreement (i)
extending the maturity of any Indebtedness incurred thereunder or contemplated
thereby, (ii) adding or deleting borrowers or guarantors thereunder, so long as
borrowers and issuers include one or more of the Company and its Subsidiaries
and their respective successors and assigns, or (iii) increasing the amount of
Indebtedness incurred thereunder or available to be borrowed thereunder.
 
     "Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes being offered hereby) of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in the documents governing such
Indebtedness that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
 
     "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
 
     "Pari Passu Indebtedness" means Indebtedness ranking pari passu in right of
payment with the Notes.
 
     "Permitted Investment" means (i) Investments by the Company or any
Guarantor in any person that is or immediately after such Investment becomes a
Guarantor, or immediately after such Investment merges or consolidates into the
Company or any Guarantor in compliance with the terms of the Indenture, provided
that such Person is engaged in all material respects in Related Business; (ii)
Investments in the Company by any Guarantor; provided that in the case of
Indebtedness constituting any such Investment, such Indebtedness shall be
unsecured and subordinated in all respects to the Company's obligations under
the Notes; (iii) Hedging Obligations entered into in the ordinary course of the
Company's or its Subsidiaries' businesses and otherwise in compliance with the
Indenture; (iv) Investments in securities of trade creditors or customers
received in settlement of obligations that arose in the ordinary course of
business or pursuant to any plan of reorganization or similar arrangement upon
the bankruptcy or insolvency of such trade creditors or customers; (v)
Investments made by the Company or any of its Subsidiaries as a result of
non-cash consideration received in connection with an Asset Sale made in
compliance with the covenant described above under the caption "-- Repurchase at
the Option of Holders -- Asset Sales;" (vi) any Investment by the Company or a
Subsidiary of the Company in a Receivables Subsidiary or any Investment by a
Receivables Subsidiary in any other person or assets in connection with a
Qualified Receivables Transaction; provided, that the foregoing Investment in
any such person is in the form of a Purchase Money Note, an equity interest or
interests in accounts receivable generated by the Company or a Subsidiary of the
Company and transferred to any person in connection with a Qualified Receivables
Transaction or any such person owning such accounts receivable; (vii)
Investments by the Company outstanding on the Issue Date; (viii) acquisitions by
the Company of
 
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<PAGE>   91
 
assets, Equity Interests or other securities for consideration consisting solely
of Capital Stock (other than Disqualified Stock) of the Company; and (ix)
Investments in Cash Equivalents or money market funds which invest solely in
Cash Equivalents.
 
     "Permitted Lien" means (i) Liens existing on the Issue Date; (ii) Liens
securing Senior Indebtedness and Liens on assets of Restricted Subsidiaries
securing Guarantor Senior Indebtedness permitted to be incurred under the
Indenture; (iii) Liens securing Permitted Refinancing Indebtedness which is
incurred to refinance any Indebtedness which has been secured by a Lien
permitted under the Indenture and which has been incurred in accordance with the
provisions of the Indenture, provided, however, that such Liens (a) are not
materially less favorable to the Holders and are not materially more favorable
to the lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being refinanced and (b) do not extend to or cover any property or
assets of the Company or any of its Restricted Subsidiaries not securing the
Indebtedness so refinanced; (iv) Liens securing the Notes; (v) Liens securing
Indebtedness of a Person existing at the time such Person becomes a Subsidiary,
provided that such liens were in existence prior to the contemplation of such
acquisition, merger or consolidation, were not incurred in anticipation thereof,
and do not extend to any other assets; (vi) Liens arising from Indebtedness
permitted to be incurred under clause (iii) of the covenant "Limitation on
Incurrence of Additional Indebtedness and Issuance of Preferred Stock," provided
such Liens relate solely to the property, plant or equipment which is purchased,
constructed or improved pursuant to such financing; (vii) Liens imposed by
governmental authorities for taxes, assessments or other charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or any of its Subsidiaries shall have
set aside on its books such reserves as may be required pursuant to GAAP; (viii)
statutory Liens of landlords, carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen and other like Liens arising by operation of law in the
ordinary course of business for sums not yet delinquent or being contested in
good faith, if such reserves or other appropriate provisions, if any, as shall
be required by GAAP shall have been made in respect thereof; (ix) Liens incurred
or deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security or
similar obligations, including any Lien securing letters of credit issued in the
ordinary course of business in connection therewith, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed money)
incurred in the ordinary course of business; (x) judgment Liens not giving rise
to an Event of Default so long as such Lien is adequately bonded and any
appropriate legal proceedings which may have been duly initiated for the review
of such judgment shall not have been finally terminated or the period within
which such proceedings may be initiated shall not have expired; (xi) easements,
rights-of-way, zoning restrictions, minor defects or irregularities with title
and other similar charges or encumbrances in respect of real property not
materially detracting from the value of the property subject thereto and not
interfering in any material respect with the ordinary conduct of business of the
Company or any of its Subsidiaries; (xii) Liens upon specific items of inventory
or other goods and proceeds of any person securing such person's obligations in
respect of banker's acceptances issued or created for the account of such person
to facilitate the purchase, shipment or storage of such inventory or other goods
in the ordinary course of business; (xiii) Liens in favor of the Company or a
Guarantor; (xiv) leases or subleases granted to others not interfering in any
material respect with the business of the Company or its Subsidiaries; (xv)
Liens arising out of consignment or similar arrangements for the sale of goods
entered into by the Company or any of its Subsidiaries in the ordinary course of
business; and (xvi) Liens on assets of a Receivables Subsidiary securing
Indebtedness incurred in connection with a Qualified Receivables Transaction.
 
     "Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that: (i) the aggregate principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
aggregate principal amount (or accreted value, if applicable) of the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (ii)
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
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<PAGE>   92
 
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary that is the obliger on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
 
     "Principals" means Charles M. Hansen, Jr., his spouse and any of his lineal
descendants.
 
     "Purchase Money Note" means a promissory note evidencing a line of credit,
which may be irrevocable, from, or evidencing other Indebtedness owed to, the
Company or any Subsidiary of the Company in connection with a Qualified
Receivables Transaction, which note shall be repaid from cash available to the
maker of such note, other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest,
principal and other amounts owing to such investors, and amounts paid in
connection with the purchase of newly generated receivables.
 
     "Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any Subsidiary pursuant
to which the Company or any Subsidiary may sell, convey or otherwise transfer to
(i) a Receivables Subsidiary (in the case of a transfer by the Company or any
Subsidiary) and (ii) any other person (in the case of a transfer by a
Receivables Subsidiary), or may grant a security interest in, any accounts
receivable (whether now existing or arising in the future) of the Company or any
Subsidiary of the Company, and any assets related thereto, including, without
limitation, all collateral securing such accounts receivable, all contracts and
all guarantees or other obligations in respect of such accounts receivable,
proceeds of such 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.
 
     "Receivables Subsidiary" means a Wholly Owned Restricted Subsidiary of the
Company (other than a Subsidiary Guarantor) which engages in no activities other
than in connection with the financing or sale of accounts receivable and which
is designated by the Board of Directors of the Company (as provided below) as a
Receivables Subsidiary (i) no portion of any Indebtedness or any other
Obligations (contingent or otherwise) of which (a) is guaranteed by the Company
or any other Restricted Subsidiary of the Company (excluding guarantees of
obligations (other than the principal of and interest on, Indebtedness) pursuant
to Standard Securitization Undertakings), (b) is recourse to or obligates the
Company or any other Restricted Subsidiary of the Company in any way other than
pursuant to Standard Securitization Undertakings, or (c) subjects any property
or asset of the Company or any other Subsidiary of the Company, directly or
indirectly, contingently or otherwise, to the satisfaction thereof, other than
pursuant to Standard Securitization Undertakings, (ii) with which neither the
Company nor any other Restricted Subsidiary of the Company has any material
contract, agreement, arrangement or understanding (except in connection with a
Purchase Money Note or Qualified Receivables Transaction) other than on terms no
less favorable to the Company or such other Restricted Subsidiary of the Company
than those that might be obtained at the time from persons that are not
Affiliates of the Company, other than fees payable in the ordinary course of
business in connection with servicing accounts receivable; and (iii) to which
neither the Company nor any of its other Restricted Subsidiaries has any
obligation to maintain or preserve such entity's financial condition or cause
such entity to achieve certain levels of operating results. Any such designation
by the Board of Directors of the Company shall be evidenced to the Trustee by
the filing with the Trustee a certified copy of the resolution of the Board of
Directors of the Company giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions.
 
     "Related Business" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses.
 
                                       85
<PAGE>   93
 
     "Related Party" with respect to any Principal means any trust, corporation,
partnership or other entity, the beneficiaries, shareholders, partners, owners,
or Persons beneficially holding a 50% or more controlling interest of which
consist of such Principal.
 
     "Restricted Investment" means an Investment other than a Permitted
Investment.
 
     "Restricted Subsidiary" means each Subsidiary of the Company that is not
designated as an Unrestricted Subsidiary in accordance with the provisions of
the Indenture.
 
     "Senior Indebtedness" means (i) Indebtedness under the New Senior Credit
Facilities (including interest in respect thereof accruing after the
commencement of any bankruptcy or similar proceeding to the extent that such
interest is allowable as a bankruptcy claim in such proceeding) and (ii) any
other Indebtedness permitted to be incurred by the Company under the terms of
the Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes. Notwithstanding anything to the contrary in the foregoing,
Senior Indebtedness will not include (v) any Indebtedness that is expressly
subordinate or junior in right of payment to any other Indebtedness of the
Company, (w) any liability for federal, state, local or other taxes owed or
owing by the Company (x) any Indebtedness of the Company to any of its
Subsidiaries or other Affiliates, (y) any trade payables or (z) that portion of
Indebtedness that is incurred in violation of the Indenture.
 
     "Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
 
     "Standard Securitization Undertaking" means representations, warranties,
covenants, and indemnities entered into by the Company or any Subsidiary of the
Company that are reasonably customary in an accounts receivable transaction.
 
     "Stated Maturity" means, with respect to any payment of interest on or
principal of any Indebtedness, the date on which such payment was scheduled to
be made in the documentation governing such Indebtedness, without regard to the
occurrence of any subsequent event or contingency.
 
     "Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
 
     "Unrestricted Subsidiary" means any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution;
but only to the extent that such Subsidiary: (i) has no Indebtedness other than
Non-Recourse Debt; (ii) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of the
Company; (iii) is a Person with respect to which neither the Company nor any of
its Restricted Subsidiaries has any direct or indirect obligations (x) to
subscribe for additional Equity Interests or (y) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any specified
levels of operating results; and (iv) has not guaranteed or otherwise directly
or indirectly provided credit support for any Indebtedness of the Company or any
of its Restricted Subsidiaries. Any such designation by the Board of Directors
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions and was permitted by the covenant described above under the caption
"Certain Covenants -- Restricted Payments." If, at any time, any Unrestricted
Subsidiary would fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
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<PAGE>   94
 
purposes of the Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of such date under
the covenant described under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock," the Company shall be in default of such covenant).
The Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
the covenant described under the caption "Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis
as if such designation had occurred at the beginning of the four-quarter
reference period, and (ii) no Default or Event of Default would be in existence
following such designation.
 
     "Voting Stock" means, with respect to any Person as of any date, the
Capital Stock of such Person that is at the time entitled to vote in the
election of the Board of Directors of such Person.
 
     "Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
 
     "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
 
                            POST-MERGER INDEBTEDNESS
 
INTRODUCTION
 
     Principal indebtedness of the Company currently outstanding following the
Merger is described briefly below.
 
NEW SENIOR CREDIT FACILITIES
 
     The agreement with respect to the New Senior Credit Facilities (the "New
Senior Credit Facilities Agreement") provides for, on the terms and subject to
the conditions set forth therein, (i) the Revolver (including $55.0 million for
standby and commercial letters of credit and up to $25.0 million for swing line
loans) and (ii) the Term Loan. The Term Loan consists of a $125.0 million
Tranche A Term Loan and a $125.0 million Tranche B Term Loan. The Revolver will
terminate on December 31, 2003. The Tranche A Term Loan and the Tranche B Term
Loan will begin scheduled quarterly amortization of principal in arrears
commencing in 1999 and 1998, respectively, with final maturities on December 31,
2003 and December 31, 2004, respectively. Pillowtex drew fully on the Term Loan
at the closing of the New Senior Credit Facilities and drew a portion of the
Revolver contemporaneously with the consummation of the Merger. The Company will
initially pay quarterly a commitment fee of 50 basis points per annum calculated
on the unused portion of the Revolver. The commitment fee could, however, be
reduced during future periods depending upon the ratio of the Company's
consolidated indebtedness to EBITDA (as defined in the definitive documents with
respect to the New Senior Credit Facilities).
 
     The Revolver and the Tranche A Term Loan bear interest, at the option of
the Company, at a rate per annum equal to either (i) the LIBOR interbank rate,
adjusted for reserves, plus a margin of up to 225 basis points or (ii) the "Base
Rate" (which is the higher of (a) the prime rate then in effect and published by
NationsBank of Texas, N.A. and (b) the Federal Funds rate plus 0.5%), plus a
margin of up to 75 basis points, subject to adjustments in accordance with the
terms of the New Senior Credit Facilities Commitment.
 
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<PAGE>   95
 
The specific margin in any particular case will depend upon the ratio of the
Company's consolidated indebtedness to EBITDA, as calculated based upon the
Company's quarterly financial statements. The Tranche B Term Loan bears interest
on a similar basis, plus an additional margin of 50 basis points, but will not
bear interest at a rate less than LIBOR plus 200 basis points or the Base Rate
plus 50 basis points. The initial interest rates will not be less than (i) the
LIBOR interbank rate plus 200 basis points or the Base Rate plus 50 basis points
for the Revolver and the Tranche A Term Loan and (ii) the LIBOR interbank rate
plus 250 basis points or the Base Rate plus 100 basis points for the Tranche B
Term Loan, and will not be subject to any change until the receipt of the
Company's March 31, 1998 financial statements.
 
     The Revolver and the Term Loan are guaranteed by each of the domestic
subsidiaries of the Company, including Fieldcrest and its domestic subsidiaries,
and are secured by first priority liens on all of the capital stock of each
domestic subsidiary of the Company, including Fieldcrest and its domestic
subsidiaries, and by 65% of the capital stock of each foreign subsidiary of the
Company and Fieldcrest. The Company also granted a first priority security
interest in all of its presently unencumbered and future domestic assets and
properties and all presently unencumbered and future domestic assets and
properties of each of its subsidiaries, including Fieldcrest and its
subsidiaries. The Term Loan is subject to mandatory prepayment from all net cash
proceeds of asset sales and debt issuances by the Company or any of its
subsidiaries, 50% of the net cash proceeds of equity issuances by the Company or
any of its subsidiaries, and 75% of Excess Cash Flow (as defined). All mandatory
prepayments will be applied pro rata between the Tranche A Term Loan and the
Tranche B Term Loan (and within each tranche pro rata) to reduce the remaining
installments of principal.
 
     The New Senior Credit Facilities Agreement includes representations,
warranties, and covenants (including financial covenants) usual and customary
for credit facilities such as the New Senior Credit Facilities, and provides for
usual and customary events of default, including without limitation nonpayment
of principal, interest, or fees, violation of any covenant, inaccurate
representations and warranties, bankruptcy, actual or asserted invalidity of any
loan documents or security interests, change of control, and cross-default with
other material agreements and indebtedness of the Company.
 
10% SENIOR SUBORDINATED NOTES
 
     The Company presently has outstanding $125.0 million aggregate principal
amount of the 10% Senior Subordinated Notes. The 10% Senior Subordinated Notes
bear interest at a rate of 10% per annum, payable semiannually in arrears on May
15 and November 15 of each year. The 10% Senior Subordinated Notes are scheduled
to mature in their entirety on November 15, 2006. The Company has the option to
redeem the 10% Senior Subordinated Notes, in whole or in part, at any time on or
after November 15, 2001, at redemption prices starting at 105% of stated
principal on November 15, 2001 and decreasing at a rate of 1.667% per year to
100% on and after November 15, 2004, plus all accrued and unpaid interest to the
redemption date. There is no mandatory redemption of the 10% Senior Subordinated
Notes except upon a Change of Control (as defined in the Indenture with respect
to the 10% Senior Subordinated Notes). Upon the occurrence of a Change of
Control, each holder of 10% Senior Subordinated Notes will have the right to
require the Company to repurchase all or any part of such holder's 10% Senior
Subordinated Notes pursuant to a Change of Control Offer (as defined in the
Indenture with respect to the 10% Senior Subordinated Notes) at a price equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest
and Liquidated Damages (as defined in the Indenture with respect to the 10%
Senior Subordinated Notes) thereon to the date of purchase.
 
     The 10% Senior Subordinated Notes are subject to certain covenants which
restrict, among other things, the Company's ability to incur additional
indebtedness and issue preferred stock, incur liens to secure subordinated
indebtedness, pay dividends or make certain other restricted payments, apply net
proceeds from certain asset sales, enter into certain transactions with
affiliates, incur indebtedness that is subordinate in right of payment to any
senior indebtedness and senior in right of payment to the 10% Senior
Subordinated Notes, merge or consolidate with any other person, sell stock of
subsidiaries, or sell, assign, transfer, lease, convey, or otherwise dispose of
substantially all of the assets of the Company.
 
                                       88
<PAGE>   96
 
FIELDCREST CONVERTIBLE DEBENTURES
 
     Fieldcrest presently has outstanding $112.5 million ($118.5 million at
September 30, 1997) in aggregate principal amount of its Convertible Debentures,
of which $4.0 million is current maturities. The Fieldcrest Convertible
Debentures currently remain outstanding as debt obligations of the Company. The
Fieldcrest Convertible Debentures bear interest at the rate of 6.0% per annum,
payable on March 15 and September 15 of each year. The Fieldcrest Convertible
Debentures are convertible into the same consideration that a holder of the
number of shares of Fieldcrest Common Stock into which such Fieldcrest
Convertible Debentures might have been converted immediately prior to the Merger
would be entitled to receive in the Merger. For example, a Fieldcrest
Convertible Debenture having an aggregate principal amount of $1,000 is
convertible into (i) a cash payment equal to the product of (a) the amount of
the cash payment to be made on account of each share of Fieldcrest Common Stock
converted in the Merger and (b) 22.60 and (ii) a number of shares of Pillowtex
Common Stock equal to the product of (a) the Conversion Number and (b) 22.60.
 
     The Fieldcrest Convertible Debentures are presently redeemable at their
stated principal amount, in whole or in part, at the option of Fieldcrest, plus
any accrued and unpaid interest to the date of redemption. The Fieldcrest
Convertible Debentures are subject to mandatory redemption at their stated
principal amount plus any accrued and unpaid interest pursuant to a sinking fund
provision whereby Fieldcrest is required on March 15 of the years 1997 to 2011
inclusive, to deposit with the indenture trustee an amount equal to 5.0% of the
original $125.0 million aggregate principal amount of Fieldcrest Convertible
Debentures. The sinking fund provision is designed to cause the redemption of
75% of the Fieldcrest Convertible Debentures as of their maturity date.
 
PILLOWTEX DEED OF TRUST NOTE
 
     Pillowtex presently has outstanding a $2.4 million deed of trust note
collateralized by land and buildings (the "Pillowtex Trust Note"). The Pillowtex
Trust Note bears interest at 10.5% per annum, payable monthly in arrears, and
matures on July 1, 1998.
 
PILLOWTEX INDUSTRIAL REVENUE BONDS
 
     Pillowtex has certain obligations in respect of certain industrial revenue
bonds issued by the Pennsylvania Economic Development Financing Authority (the
"PEDFA Bonds"). The PEDFA Bonds bear interest, payable semiannually, at a
variable rate (7.0% to 7.85% per annum), and mature serially in annual amounts
ranging from $285,000 to $640,000 through April 1, 2002. Approximately $2.8
million in aggregate principal amount of PEDFA Bonds is presently outstanding.
 
     Pillowtex also has certain obligations in respect of certain industrial
revenue bonds issued by the Mississippi Business Finance Corporation (the "MBFC
Bonds"). The MBFC Bonds bear interest, payable monthly (or, in certain
circumstances, quarterly), at a variable rate (2.75% to 4.5% per annum), provide
for annual principal payments of $460,000 beginning July 1, 1995, and mature on
July 1, 2004. Approximately $3.2 million in aggregate principal amount of MBFC
Bonds is presently outstanding.
 
FIELDCREST INDUSTRIAL REVENUE BONDS
 
     Fieldcrest has additional obligations in respect of certain industrial
revenue bonds issued by the Industrial Development Board of the City of
Scottsboro, Alabama (the "Scottsboro Bonds"). The Scottsboro Bonds bear
interest, payable semiannually, at a rate equal to 6.75% per annum, provide for
annual principal payments of $200,000 beginning September 1, 1998, and mature on
September 1, 2002. Approximately $1.0 million in aggregate principal amount of
the Scottsboro Bonds is presently outstanding.
 
     Fieldcrest has further obligations in respect of certain industrial revenue
bonds issued by the State Industrial Development Authority of the State of
Alabama (the "Alabama Bonds"). The Alabama Bonds bear interest at a variable
rate (approximating LIBOR), and mature on July 1, 2021. Approximately
$10,000,000 in aggregate principal amount of the Alabama Bonds is presently
outstanding.
 
                                       89
<PAGE>   97
 
           PILLOWTEX SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK
 
     General. Pursuant to the terms of Pillowtex Preferred Stock Purchase
Agreement, as amended (the "Preferred Stock Purchase Agreement"), Apollo
purchased of 65,000 shares of Pillowtex Preferred Stock at an offering price of
$1,000 per share, which resulted in net proceeds to Pillowtex of approximately
$62.9 million.
 
     Liquidation Preference; Ranking. Each share of Pillowtex Preferred Stock
has a liquidation preference of $1,000, plus accrued and unpaid dividends (the
"Liquidation Preference"). The Pillowtex Preferred Stock ranks senior in right
of payment to all common equity stock and all other classes of preferred stock
of the Company (other than parity securities), but ranks junior in right of
payment to all indebtedness of the Company. The terms of the Pillowtex Preferred
Stock restrict, among other things, the Company's ability to pay dividends or
make certain other restricted payments on the Pillowtex Common Stock.
 
     Dividends. Subject to the provisions described below, dividends will accrue
on the Pillowtex Preferred Stock from the issue date through and including
December 31, 1999, at a rate per annum equal to 3.0%. However, the Company may
at its option pay dividends in cash during each quarterly period during calendar
years 1998 and 1999 at a rate in excess of 3.0%. Beginning January 1, 2000,
dividends will accrue on the Pillowtex Preferred Stock at the Applicable
Dividend Rate, which is defined as 3.0%, 7.0%, or 10.0% depending upon the
Company's 1999 Pro Forma EPS (as defined herein) as set forth in the following
table:
 
<TABLE>
<CAPTION>
                                                     APPLICABLE DIVIDEND
                      1999                                 RATE AT
                  PRO FORMA EPS                        JANUARY 1, 2000
                  -------------                      -------------------
<S>                                                  <C>
$2.70 or greater.................................       3.0% per annum
$2.35 to $2.69...................................       7.0% per annum
$2.34 or less....................................      10.0% per annum
</TABLE>
 
     The term "1999 Pro Forma EPS" is defined as the Company's diluted earnings
per share as included in its audited financial statements for the fiscal year
ending January 1, 2000, as adjusted to exclude the after-tax effect of (i) any
change in generally accepted accounting principles from September 5, 1997, other
than the effects of Financial Accounting Standards Board Statement No. 128; (ii)
extraordinary gains or losses, and (iii) gain on sale of assets having a fair
market value in excess of $1.0 million ("1999 EPS"), calculated on a pro forma
basis assuming (a) the dividend rate on the Pillowtex Preferred Stock for
calendar 1997 (if applicable) and calendar 1998 was (1) 3.0% per annum if 1999
EPS is equal to or greater than $2.35 or (2) 10.0% per annum if 1999 EPS is less
than $2.35; (b) the dividend rate on the Pillowtex Preferred Stock for calendar
1999 was (1) 3.0% per annum if 1999 EPS is greater than or equal to $2.70, (2)
7.0% per annum if 1999 EPS is greater than or equal to $2.35 but less than
$2.70, and (3) 10.0% per annum if 1999 EPS is less than $2.35; and (c) any
incremental dividends included pursuant to clauses (a) and (b) which were not
paid when due (either in cash or in shares of Pillowtex Preferred Stock) were
paid in additional shares of Pillowtex Preferred Stock (including the effect of
all dividends earned on unpaid dividends).
 
     In addition to paying dividends from and after January 1, 2000 at the
Applicable Dividend Rate, the Company is required to pay a one-time Catch Up
Dividend in shares of Pillowtex Preferred Stock in 1999 equal to the difference
between the aggregate amount of dividends paid (whether in cash or additional
shares of Pillowtex Preferred Stock)(the "Aggregate Dividends Paid") and the
aggregate amount of dividends that would have been paid on the Pillowtex
Preferred Stock from the issue date through and including the last Dividend
Payment Date prior to the date on which the Company finally determines the
amount of 1999 Pro Forma EPS ("Aggregate Dividends Owed") assuming (i) the
dividend rate for calendar 1997 (if applicable) and calendar 1998 was (a) 3.0%
per annum if 1999 Pro Forma EPS is equal to or greater than $2.35 or (b) 10.0%
per annum if 1999 Pro Forma EPS is less than $2.35, (ii) the dividend rate for
calendar 1999 was the Applicable Dividend Rate, and (iii) any incremental
dividends included in calculating dividends described in clauses (i) and (ii)
which were not paid when due (either in cash or in shares of Pillowtex Preferred
Stock) were paid in additional shares of Pillowtex Preferred Stock (including
the effect of all dividends earned on unpaid dividends). If the Aggregate
Dividends Paid is more than the Aggregate Dividends Owed, then no Catch Up
Dividend will be payable and an amount equal to the difference between Aggregate
Dividends Paid
                                       90
<PAGE>   98
 
and Aggregate Dividends Owed will be offset against dividends payable on the
next succeeding Dividend Payment Date or Dividend Payment Dates, as the case may
be.
 
     The following table sets forth for each of the three categories of 1999 Pro
Forma EPS indicated the number of shares to be issued as a Catch Up Dividend
(assuming that the Pillowtex Preferred Stock were to be initially issued on
December 31, 1997, that dividends due prior to January 1, 2000 are paid in cash
when due at a rate per annum of 3.0%, and that the Determination Price is $24.00
per share):
 
<TABLE>
<CAPTION>
                      1999                            APPLICABLE CATCH
                  PRO FORMA EPS                          UP DIVIDEND
                  -------------                      -------------------
<S>                                                  <C>
$2.70 or greater.................................                  N/A
$2.35 to $2.69...................................      2,669.05 shares
$2.34 or less....................................      9,952.15 shares
</TABLE>
 
     If the Determination Price is less than $23.00, each of the $2.35 and $2.70
targets for 1999 Pro Forma EPS will be reduced by an amount equal to the product
of (i) 0.065 and (ii)(a) $23.00 minus (b) the Determination Price. All dividends
will be cumulative, whether or not declared, on a daily basis from the date of
issuance and will be payable quarterly, in arrears, on March 31, June 30,
September 30, and December 31 (each a "Dividend Payment Date"). Dividends (in
the form of additional dividends due) will compound quarterly on all unpaid
dividends from the Dividend Payment Date with respect thereto until the date of
payment. At the option of the Company, dividends other than the Catch Up
Dividend will be payable either in cash or in kind (through the issuance of
additional shares of Pillowtex Preferred Stock) for the first five years after
issuance and will be payable only in cash thereafter.
 
     In the event that after the fifth anniversary of the initial issuance of
the Pillowtex Preferred Stock, Pillowtex fails to pay dividends in cash on the
Dividend Payment Date when due, the dividend rate applicable to any period in
which any such dividends remain unpaid will be increased by 0.5% per quarter for
each quarter in which any such dividends remain unpaid (such rate increase, the
"Dividend Increase"). The applicable dividend rate plus the Dividend Increase
applicable to any period will not exceed the lesser of (i) 18.0% per annum and
(ii) the maximum rate permitted by applicable law. After a Dividend Increase,
when the Company pays all accrued and unpaid dividends, and upon the payment of
dividends on the next Dividend Payment Date at the rate in effect prior to
giving effect to any Dividend Increase, the annual dividend rate will be
decreased to the otherwise applicable dividend rate.
 
     Conversion. At the option of the holders thereof, at any time or from time
to time, each share of the Pillowtex Preferred Stock will be convertible into
the number of shares of Pillowtex Common Stock as is determined by dividing (i)
the sum of (a) $1,000 and (b) any unpaid dividends on such share by (ii) an
initial conversion price equal to $24.00 per share, except that if the
Determination Price is less than $23.00, then the conversion price will be equal
to the Determination Price plus $1.00, subject to subsequent adjustment in
certain circumstances to prevent dilution.
 
     Mandatory Redemption. Each share of Pillowtex Preferred Stock is subject to
mandatory redemption on the date ten and one-half years after the initial
issuance of the Pillowtex Preferred Stock (the "Mandatory Redemption Date"), at
a redemption price equal to $1,000, plus accrued and unpaid dividends.
 
     Optional Redemption. The Company has the right to, at any time and from
time to time after the fourth anniversary of the initial issuance of the
Pillowtex Preferred Stock, call all or any portion of the Pillowtex Preferred
Stock for redemption at a redemption price equal to (i) the Liquidation
Preference plus (ii) the product of (a) a premium, which declines ratably from
the percentage equal to the applicable dividend rate on such fourth anniversary
to zero on the Mandatory Redemption Date, and (b) the Liquidation Preference
(minus any accrued and unpaid dividends from the Dividend Payment Date prior to
the date fixed for redemption).
 
     Voting Rights. Except as described below and as otherwise required by law,
holders of Pillowtex Preferred Stock are not entitled to any vote on matters
presented to shareholders of the Company.
 
                                       91
<PAGE>   99
 
     So long as any shares of the Pillowtex Preferred Stock are outstanding, the
Company may not (i) amend its Articles of Incorporation (the "Pillowtex
Articles") so as to (a) affect adversely the specified rights, preferences,
privileges, or voting rights of holders of shares of Pillowtex Preferred Stock
or (b) authorize the issuance of additional shares of any class of senior
securities or (ii) merge, consolidate, or enter into any other reclassification
that would (a) materially affect adversely the special or relative rights,
preferences, privileges, or voting rights of the Pillowtex Preferred Stock or
(b) result in a breach of the terms of the Pillowtex Preferred Stock without, in
any such case, the affirmative vote or consent of holders of more than 50% of
the outstanding shares of the Pillowtex Preferred Stock. In addition, any
amendment to the Pillowtex Articles that would alter in any material respect the
dividend rates, liquidation preference, redemption rights, or conversion rights
of the Pillowtex Preferred Stock will require the affirmative vote or consent of
each holder of Pillowtex Preferred Stock.
 
     In the event of the Company's failure to pay dividends or the occurrence of
certain breaches that shall have continued for a period of 60 days after notice
thereof from any holder of Pillowtex Preferred Stock, within ten business days
of such events, the number of members on the Board of Directors of Pillowtex
would be automatically increased by 25% and the holders of the Pillowtex
Preferred Stock would be entitled to elect directors to fill the new positions
created by such expansion, so long as such nonpayment of dividends and breaches
were not cured after notice thereof, except that if the event of default related
to (i) the failure to redeem the Pillowtex Preferred Stock, (ii) a breach of
certain restrictions on the Company's activities, or (iii) a bankruptcy event
with respect to the Company or any of its subsidiaries, there would be no 60-day
grace period or right to cure and the holders' right to so elect directors would
continue for as long as the Pillowtex Preferred Stock were outstanding.
 
     Registration Rights. Upon the occurrence of certain conditions, holders of
Pillowtex Preferred Stock will have the right to require the Company to file a
registration statement with the Commission to register shares of Pillowtex
Common Stock receivable by such holders upon conversion of Pillowtex Preferred
Stock. Holders will also have so-called "piggyback" registration rights with
respect to shares of Pillowtex Common Stock receivable upon conversion of
Pillowtex Preferred Stock.
 
            CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
 
     The exchange of Series A Notes for Series B Notes pursuant to the Exchange
Offer will not be considered a taxable exchange for federal income tax purposes
because the Series B Notes will not differ materially in kind or extent from the
Series A Notes and because the exchange will occur by operation of the terms of
the Series B Notes. Accordingly, such exchange will have no federal income tax
consequences to Holders of Series A Notes. A Holder's adjusted tax basis and
holding period in a Series B Note will be the same as such Holder's adjusted tax
basis and holding period, respectively, in the Series A Note exchanged therefor.
 
     Holders considering the exchange of Series A Notes for Series B Notes
should consult their own tax advisors concerning the United States federal
income tax consequences in light of their particular situations as well as any
consequences arising under state, local, and foreign income tax and other tax
law.
 
                                       92
<PAGE>   100
 
                              PLAN OF DISTRIBUTION
 
     The Series B Notes will be offered by the Company to the holders of the
Series A Notes in exchange for the Series A Notes pursuant to the Exchange
Offer.
 
     Except as described below, a broker-dealer may not participate in the
Exchange Offer in connection with a distribution of the Series B Notes. Each
broker-dealer that receives Series B Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such Series B Notes. 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 Series B Notes received in exchange for Series A Notes where
such Series A Notes were acquired as a result of market-making activities or
other trading activities. The Company has agreed that for a period of one year
after the Registration Statement has been declared effective, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale subject to the conditions described under
"The Exchange Offer -- Consequences of Exchanging Series A Notes."
 
     The Company will not receive any proceeds from any sale of Series B Notes
by broker-dealers. Series B Notes 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 Series B Notes 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 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 Series B Notes. Any broker or
dealer that participates in a distribution of such Series B Notes may be deemed
to be an "underwriter" within the meaning of the Securities Act, and any profit
on any such resale of Series B Notes 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.
 
     The Company has agreed to pay all expenses incident to the Exchange Offer
other than commissions or concessions of any brokers or dealers and expenses of
counsel for the holders of the Series B Notes and will indemnify the holders of
the Series B Notes (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
 
                                 LEGAL MATTERS
 
     Certain legal matters with respect to the validity of the Series B Notes
offered hereby will be passed upon for the Company by Jones, Day, Reavis &
Pogue, Dallas, Texas.
 
                                    EXPERTS
 
     The consolidated financial statements of Pillowtex as of December 30, 1995
and December 28, 1996, and for each of the years in the three-year period ended
December 28, 1996 have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
 
     The consolidated financial statements of Fieldcrest incorporated by
reference in and included in an exhibit to Fieldcrest's Annual Report (Form
10-K) for the year ended December 31, 1996 and incorporated herein by reference,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report incorporated by reference therein and included in an exhibit
thereto and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
 
                                       93
<PAGE>   101
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 20.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
     Set forth below is a description of certain provisions of the articles of
incorporation and bylaws of the Company and the Guarantors. These descriptions
are intended as a summary only and are qualified in their entirety by reference
to the appropriate articles, bylaws and state law.
 
     (a) Pillowtex Corporation (a Texas corporation).  Under the Texas Business
Corporation Act (the "TBCA"), a corporation may indemnify a person who was, is,
or is threatened to be made a named defendant or respondent in any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative, any appeal in such an action,
suit, or proceeding, or any inquiry or investigation that could lead to such an
action, suit, or proceeding (a "proceeding"), because the person is or was a
director of the corporation or, while a director of the corporation, is or was
serving at the request of the corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, but only if
it is determined in the manner described below that the person: (i) conducted
himself in good faith; (ii) reasonably believed (a) in the case of conduct in
his official capacity as a director of the corporation, that his conduct was in
the corporation's best interests, and (b) in all other cases, that his conduct
was at least not opposed to the corporation's best interests; and (iii) in the
case of any criminal proceeding, had no reasonable cause to believe his conduct
was unlawful. Except to the extent described in the next following sentence, a
director may not be indemnified under the TBCA in respect of a proceeding in
which the person is found liable on the basis that personal benefit was
improperly received by him, whether or not the benefit resulted from an action
taken in the person's official capacity, or in which the person is found liable
to the corporation. A person may be indemnified as described in the second
preceding sentence against judgments, penalties (including excise and similar
taxes), fines, settlements, and reasonable expenses (including court costs and
attorneys' fees) actually incurred by the person in connection with a
proceeding, except that if the person is found liable to the corporation or is
found liable on the basis that personal benefit was improperly received by the
person, the indemnification (i) is limited to reasonable expenses (including
court costs and attorneys' fees) actually incurred by the person in connection
with the proceeding and (ii) will not be made in respect of any proceeding in
which the person shall have been found liable for willful or intentional
misconduct in the performance of his duty to the corporation.
 
     Under the TBCA, a corporation must indemnify a director against reasonable
expenses (including court costs and attorneys' fees) incurred by him in
connection with a proceeding in which he is a named defendant or respondent
because he is or was a director of the corporation or, while a director of the
corporation, is or was serving at the request of the corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other enterprise,
if he has been wholly successful, on the merits or otherwise, in the defense of
the proceeding. Under the TBCA, if, in a suit for the indemnification required
as described in the immediately preceding sentence, a court of competent
jurisdiction determines that the director is entitled to such indemnification,
the court will order indemnification and will award to the director the expenses
(including court costs and attorneys' fees) incurred in securing the
indemnification. Under the TBCA, if, upon application of a director, a court of
competent jurisdiction determines, after giving any notice the court considers
necessary, that the director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not he has
met the requirements for indemnification described in the first sentence of the
immediately preceding paragraph or has been found liable in the circumstances
described in the second sentence of such paragraph, the court may order the
indemnification that the court determines is proper and equitable, except that
if the person is found liable to the corporation or is found liable on the basis
that personal benefit was improperly received by the person, the indemnification
will be limited to reasonable expenses (including court costs and attorneys'
fees) actually incurred by the person in connection with the proceeding.
 
                                      II-1
<PAGE>   102
 
     A determination that indemnification as described in the first sentence of
the second preceding paragraph is permissible must be made: (i) by a majority
vote of a quorum consisting of directors who at the time of the vote are not
named defendants or respondents in the proceeding; (ii) if such a quorum cannot
be obtained, by a majority vote of a committee of the board of directors,
designated to act in the matter by a majority vote of all directors, consisting
solely of two or more directors who at the time of the vote are not named
defendants or respondents in the proceeding; (iii) by special legal counsel
selected by the board of directors or a committee of the board by vote as
described in clauses (i) and (ii) above, or, if such a quorum cannot be obtained
and such a committee cannot be established, by a majority vote of all directors;
or (iv) by the shareholders in a vote that excludes the shares held by directors
who are named defendants or respondents in the proceeding. Under the TBCA,
authorization of indemnification and determination as to reasonableness of
expenses must be made in the same manner as the determination that
indemnification is permissible, except that if the determination that
indemnification is permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of expenses must be
made in the manner described in clause (iii) of the immediately preceding
sentence for the selection of special legal counsel; a provision contained in
the articles of incorporation, the bylaws, a resolution of shareholders or
directors, or an agreement that makes mandatory the indemnification permitted
under the TBCA will be deemed to constitute authorization of indemnification in
the manner required by the TBCA even though such provision may not have been
adopted or authorized in the same manner as the determination that
indemnification is permissible. The TBCA provides that reasonable expenses
(including court costs and attorneys' fees) incurred by a director who was, is,
or is threatened to be made a named defendant or respondent in a proceeding may
be paid or reimbursed by the corporation, in advance of the final disposition of
the proceeding and without the determination, authorization, or determination
described above, after the corporation receives a written affirmation by the
director of his good faith belief that he has met the standard of conduct
necessary for indemnification and a written undertaking by or on behalf of the
director to repay the amount paid or reimbursed if it is ultimately determined
that he has not met the standard or if it is ultimately determined that
indemnification of the director against expenses incurred by him in connection
with that proceeding is prohibited by the TBCA; a provision contained in the
articles of incorporation, the bylaws, a resolution of shareholders or
directors, or an agreement that makes mandatory the payment or reimbursement
permitted under the TBCA will be deemed to constitute authorization of that
payment or reimbursement.
 
     Under the TBCA, an officer of the corporation must be indemnified as, and
to the same extent described in the second preceding paragraph, for a director.
A corporation may indemnify and advance expenses to an officer, employee, or
agent of the corporation to the same extent that it may indemnify and advance
expenses to directors as described above. In addition, under the TBCA, a
corporation may indemnify and advance expenses to persons who are not or were
not officers, employees, or agents of the corporation but who are or were
serving at the request of the corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise to the same
extent that it may indemnify and advance expenses to directors.
 
     Under the TBCA, a corporation may purchase and maintain insurance or
another arrangement on behalf of any person who is or was a director, officer,
employee, or agent of the corporation or who is or was serving at the request of
the corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise, against any liability asserted against him
and incurred by him in such a capacity or arising out of his status as such a
person, whether or not the corporation would have the power to indemnify him
against that liability under the TBCA. Pillowtex has purchased liability
insurance policies covering its directors and officers to insure against losses
incurred in their capacities, including liabilities under the Securities Act.
 
     The Pillowtex Articles do not address indemnification of directors,
officers, or other persons. The Bylaws of Pillowtex (the "Pillowtex Bylaws"),
however, provide that: (i) Pillowtex will indemnify persons who are or were
directors or officers (both in their capacities as directors and officers and,
if serving at the request of Pillowtex as a director, officer, trustee,
employee, agent, or similar functionary of another foreign or domestic
 
                                      II-2
<PAGE>   103
 
corporation, trust, partnership, joint venture, sole proprietorship, employee
benefit plan, or other enterprise, in each of those capacities) to the full
extent permitted by the TBCA; (ii) Pillowtex will pay or reimburse, in advance
of the final disposition of any proceeding, to all persons who are or were
directors or officers of Pillowtex all reasonable expenses incurred by such
persons to the full extent permitted by the TBCA; and (iii) Pillowtex will
indemnify persons who are or were employees or agents (other than directors or
officers), or persons who are not or were not employees or agents but who are or
were serving at the request of Pillowtex as directors, officers, trustees,
employees, agents, or similar functionaries of another foreign or domestic
corporation, trust, partnership, joint venture, sole proprietorship, employee
benefit plan or other enterprise (collectively, together with the directors and
officers, "Corporate Functionaries"), to the full extent permitted by the TBCA.
The Pillowtex Bylaws also provide that Pillowtex may purchase or maintain
insurance on behalf of any Corporate Functionary against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as a Corporate Functionary, whether or not Pillowtex would have the power to
indemnify him against the liability under the TBCA or the Pillowtex Bylaws.
 
     Pillowtex has entered into Indemnification Agreements with each of its
directors pursuant to which Pillowtex has agreed to indemnify the directors to
the full extent authorized or permitted by the TBCA.
 
     Pillowtex Corporation maintains directors' and officers' liability
insurance on behalf of the directors and officers of Pillowtex Corporation and
each of its subsidiaries (including Fieldcrest) against liability arising from
actions taken in their capacity as directors or officers. Additionally, pursuant
to the Merger Agreement, the Company has purchased and will maintain directors'
and officers' liability insurance on behalf of former directors and officers of
Fieldcrest for a period of four years after consummation of the Merger.
 
     (b) Guarantors.
 
     Under the Delaware General Corporation Law (the "DGCL"), directors and
officers as well as other employees and individuals may be indemnified against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement in connection with specified actions, suits, or proceedings, whether
civil or criminal, administrative, or investigative (other than an action by or
in the right of the corporation as a derivative action) if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
However, the DGCL does not permit a corporation to eliminate or limit a
director's personal liability for monetary damages to the corporation or its
stockholders (i) for any branch of the director's duty of loyalty to such
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, (iii)
for paying a dividend or approving a stock repurchase in violation of Section
174 of the DGCL, or (iv) for any transaction from which the director derived an
improper personal benefit.
 
     Amoskeag Company (a Delaware corporation).  The Amended and Restated
Certificate of Incorporation provides that, except to the extent that the DGCL
prohibits the elimination or limitation of liability of directors for breaches
of fiduciary duty, no director of Amoskeag Company shall be personally liable to
Amoskeag Company or its stockholders for monetary damages for any breach of
fiduciary duty as a director, notwithstanding any provision of law imposing such
liability.
 
     The Amended and Restated Certificate of Incorporation provides that
Amoskeag Company shall, to the fullest extent permitted by Section 145 of the
DGCL, as amended from time to time, indemnify each person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was, or has agreed to become,
a director or officer of Amoskeag Company, or is or was serving, or has agreed
to serve, at the request of Amoskeag Company, as a director, officer or trustee
of, or in a similar capacity with, another corporation, partnership, joint
venture, trust or other enterprise (including any employee benefit plan), or by
reason of any action alleged to have been taken or omitted in such capacity,
against all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him or on his behalf in
connection with such action, suit or proceeding and any appeal therefrom.
 
                                      II-3
<PAGE>   104
 
     With respect to any action, suit, proceeding or investigation for which
indemnity will or could be sought, Amoskeag Company will be entitled to
participate therein at its own expense and/or to assume the defense thereof at
its own expense, with legal counsel reasonably acceptable to the person seeking
indemnification.
 
     In the event that Amoskeag Company does not assume the defense of any
action, suit, proceeding or investigation for which indemnity will or could be
sought, any expenses (including attorneys' fees) incurred by the person seeking
indemnification in defending a civil or criminal action, suit, proceeding or
investigation or any appeal therefrom shall be paid by Amoskeag Company in
advance of the final deposition of such matter upon receipt of any undertaking
by the person indemnified to repay such payment if it is ultimately determined
that such person is not entitled to indemnification under the Amended and
Restated Certificate of Incorporation, which undertaking may be accepted without
reference to the financial ability of such person to make such repayment.
 
     Amoskeag Company will not indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person
unless the initiation thereof was approved by the Board of Directors.
 
     The indemnification rights provided in the Amended and Restated Certificate
of Incorporation (i) shall not be deemed exclusive of any other rights to which
those indemnified may be entitled under any law, agreement or vote of
stockholders or disinterested directors or otherwise, and (ii) shall inure to
the benefit of the heirs, executors and administrators of such persons. Amoskeag
Company may, to the extent authorized from time to time by its Board of
Directors, grant indemnification rights to other employees or agents of Amoskeag
Company or other persons serving Amoskeag Company and such rights may be
equivalent to, or greater or less than, those set forth in the Amended and
Restated Certificate of Incorporation.
 
     The Bylaws of Amoskeag Company do not contain any indemnification
provisions.
 
     Amoskeag Management Corporation (a Delaware corporation).  The Certificate
of Incorporation provides that Amoskeag Management Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of Amoskeag Management Corporation), or a stockholder
purporting to act on behalf of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments and fines actually imposed or
reasonably incurred by him in connection with such action, suit or proceeding
unless in any proceeding he shall be finally adjudged not to have acted in good
faith and in a manner reasonably believed to be in or not opposed to the best
interest of Amoskeag Management Corporation; provided, however, that such
indemnification shall not cover liabilities in connection with any manner which
shall be disposed of through a compromise payment by such person, pursuant to a
consent decree or otherwise, unless such compromise shall be approved as in the
best interests of Amoskeag Management Corporation, after notice that it involves
such indemnification, (i) by a vote of the directors in which no interested
director participates, or (ii) by a vote or the written approval of the holders
of a majority of the outstanding stock at the time having the right to vote for
directors, not counting as outstanding any stock owned by any interested
director or officer. Such indemnification may include payment by Amoskeag
Management Corporation of expenses incurred in defending a civil or criminal
action or proceeding in advance of the final disposition of such action or
proceeding, upon receipt of an undertaking by the person indemnified to repay
such payment if he shall be adjudicated to be not entitled to indemnification
under these provisions.
 
     The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create any presumption that the person did not act in good
faith and in a manner in which he reasonably believed to be in the best
interests of the corporation, and with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful. The
rights of indemnification hereby provided shall not be exclusive of or affect
other rights to which any director, officer, employee, agent or stockholder may
be entitled. As used in this paragraph, the terms "director", "officer",
"employee", "agent", or "stockholder" include their respective heirs, executors
and
                                      II-4
<PAGE>   105
 
administrators, and an "interested" director or officer is one against whom as
such the proceeding in question or another proceeding on the same or similar
grounds is then pending. Any indemnification to which a person is entitled under
the Certificate of Incorporation shall be provided although the person to be
indemnified is no longer such a director, officer, employee, agent or
stockholder.
 
     The Bylaws of Amoskeag Management Corporation do not contain any
indemnification provisions.
 
     Downeast Securities Corporation (a Delaware corporation).  The Certificate
of Incorporation, as amended, provides that Downeast Securities Corporation
shall indemnify any person who was or is party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (including an action by
or in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or a stockholder
purporting to act on behalf of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments and fines actually imposed or
reasonably incurred by him in connection with such action, suit or proceeding
unless in any proceeding he shall be finally adjudged not to have acted in good
faith in reasonable belief that his action was in the best interest of the
corporation; provided, however, that such indemnification shall not cover
liabilities in connection with any matter which shall be disposed of through a
compromise payment by such person, pursuant to a consent decree or otherwise,
unless such compromise shall be approved as in the best interests of the
corporation, after notice that it involves such indemnification, (i) by vote of
the directors in which no interested director participates, or (ii) by a vote or
the written approval of the holders of a majority of the outstanding stock at
the time having the right to vote for directors, not counting as outstanding any
stock owned by any interested director or officer. Such indemnification may
include payment by the corporation of expenses incurred in defending a civil or
criminal action or proceeding in advance of the final disposition of such action
or proceeding, upon receipt of an undertaking by the person indemnified to repay
such payment if he shall be adjudicated to be not entitled to indemnification
under these provisions.
 
     The rights of indemnification provided shall not be exclusive of or affect
other rights to which any director, officer, employee, agent or stockholder may
be entitled. As used in this paragraph, the terms "director", "officer",
"employee", "agent" or "stockholder" include their respective heirs, executors
and administrators, and an "interested" director or officer is one against whom
as such the proceeding in question or another proceeding on the same or similar
grounds is then pending. Any indemnification to which a person is entitled under
this paragraph shall be provided although the person to be indemnified is no
longer such a director, officer, employee, agent or stockholder.
 
     The Bylaws of Downeast Securities Corporation do not contain any
indemnification provisions.
 
     Encee, Inc. (a Delaware corporation).  The Certificate of Incorporation
provides that Encee, Inc. shall, to the full extent permitted by Section 145 of
the DGCL, as amended from time to time, indemnify all persons whom it may
indemnify pursuant thereto. The Bylaws of Encee, Inc. do not contain any
indemnification provisions.
 
     FCC Canada, Inc. (a Delaware corporation).  The Certificate of
Incorporation eliminates the personal liability of the directors of FCC Canada,
Inc. to the fullest extent permitted by the DGCL, as the same may be amended and
supplemented.
 
     The Certificate of Incorporation also, to the fullest extent permitted by
the DGCL, indemnifies any and all persons whom it shall have power to indemnify
from and against any and all of the expenses, liabilities or other matters. The
indemnification provided for in the Certificate of Incorporation is not
exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
 
     The Bylaws of FCC Canada, Inc. do not contain any indemnification
provisions.
 
                                      II-5
<PAGE>   106
 
     Fieldcrest Cannon Financing, Inc., Fieldcrest Cannon Licensing, Inc.,
Fieldcrest Cannon Sure Fit, Inc., Fieldcrest Cannon Transportation, Inc. (each,
a Delaware corporation).  These four entities have identical indemnification
provisions in their Certificates of Incorporation and Bylaws.
 
     The Certificates of Incorporation provide that no person who is serving or
has served as a director shall be liable to the corporation or to any
stockholder for monetary damages for breach of any fiduciary duty of such person
as a director by reason of any act or omission occurring on or after the date
this article becomes effective. Nothing within such Certificate of Incorporation
shall be deemed to limit or eliminate the liability of any person (i) for any
breach of such person's duty of loyalty as a director to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; (iii) for the unlawful
payment of a dividend by the corporation or the unlawful purchase or redemption
of the corporation's capital stock by the corporation; (iv) for any transaction
from which such person derived an improper personal benefit; or (v) to any
extent that such liability may not be limited or eliminated by virtue of the
provisions of Section 102(b)(7) of the DGCL or any successor statute.
 
     The indemnification provisions of the Bylaws provide that each person who
was or is made a party to or is threatened to be made a party to or is otherwise
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she is or was a director, officer or employee of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans (hereinafter an "indemnitee"), whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or
agent, shall be indemnified and held harmless by the corporation to the fullest
extent authorized by the DGCL. Indemnification shall continue as to an
indemnitee who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the indemnitee's heirs, executors and administrators.
The corporation shall indemnify and any such indemnitee in connection with a
proceeding (or part thereof) initiated by such indemnitee only if such
proceeding (or part thereof) was authorized by the Board of Directors of the
corporation. The right to indemnification conferred is a contract right and
shall include the right to be paid by the corporation and the expenses incurred
in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that if the DGCL
requires, an advancement of expenses incurred by an indemnitee in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including without limitation,
service to an employee benefit plan) shall be made only upon delivery to the
corporation of an undertaking, by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right to appeal that such indemnitee is
not entitled to be indemnified for such expenses under the Bylaws.
 
     If a claim for indemnification is not paid in a timely manner, the
indemnitee may at any time thereafter bring suit against the corporation to
recover the unpaid amount of the claim. If successful in whole or in part in any
suit or in a suit brought by the corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
any suit brought by the indemnitee to enforce a right hereunder, or by the
corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is not entitled to be
indemnified or to such advancement of expenses under the Bylaws shall be on the
corporation.
 
     The rights to indemnification and to the advancement of expenses shall not
be exclusive of any other right which any person may have or acquire. In
addition, the corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss under the DGCL.
 
     The corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses, to any agent of the corporation to the fullest extent allowed under
these bylaws with respect to the indemnification and advancement of expenses of
directors, officers and employees of the corporation.
 
                                      II-6
<PAGE>   107
 
     Fieldcrest Cannon, Inc. (a Delaware corporation).  The Restated Certificate
of Incorporation, as amended, provides that the corporation will indemnify each
person (and his heirs, executors, administrators, or other legal
representatives) who is, or shall have been, a director, officer or employee of
the corporation or any person who is serving, or shall have served, at the
request of this corporation as a director or officer of another corporation,
against all liabilities and expenses (including judgments, fines, penalties and
attorneys' fees) reasonably incurred by any such director, officer, employee or
person in connection with, or arising out of, any action, suit or proceeding in
which any such director, officer, employee or person may be a party defendant or
with which he may be threatened or otherwise involved, directly or indirectly,
by reason of his being or having been a director, officer or employee of this
corporation or such other corporation, except in relation to matters as to which
any such director, officer, employee or person shall be finally adjudged in such
action, suit or proceeding to have been liable for misconduct or negligence in
the performance of his duty as such director, officer or employee. Where a
director, officer, employee or person has not been finally adjudged to have been
liable for negligence or misconduct in the performance of his duty as such
director, officer or employee, indemnity will not be made unless the corporation
has received an opinion of independent counsel to the effect that such director,
officer, employee or person acted in good faith, for a purpose which he
reasonably believed would be in the best interests of the corporation and had no
reasonable cause to believe that his conduct was unlawful.
 
     The indemnification provision also applies to all amounts paid in
compromise or settlement (other than amounts paid to the corporation or such
other corporation), and all expenses (including attorneys' fees) reasonably
incurred, provided that prior to such indemnification the corporation shall have
received an opinion of independent counsel to the effect that the director,
officer, employee or person making such compromise or settlement was not liable
for misconduct or negligence in the performance of his duty in connection with
the matter or matters out of which such compromise or settlement arose.
 
     The corporation may from time to time, if authorized by the directors,
prior to final adjudication or compromise or settlement of the matter or matters
as to which indemnification is claimed, advance to such director, officer,
employee or person all expenses imposed upon or incurred by him if the
corporation shall have received an opinion of independent counsel to the effect
that it is probable that upon the termination of the action, suit or proceeding
or threatened action, suit or proceeding as to which such reimbursement is
sought, such director, officer, employee or person will be entitled to indemnity
under the Restated Certificate of Incorporation, as amended, in respect of such
advances and that such advances may properly be made by the corporation. The
rights of indemnification shall not be exclusive of other rights to which any
director, officer, employee or person is entitled.
 
     The Amended and Restated Bylaws of Fieldcrest Cannon, Inc. provide that the
corporation will indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that he
is or was a director, officer or employee of the corporation, or is or was
serving at the request of the corporation as a director, officer or employee of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, will not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
 
     Further, the corporation will indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer or employee of the
corporation, or is or was serving at the request of the corporation as a
director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and
                                      II-7
<PAGE>   108
 
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation. To the extent
that a director, officer, employee or agent of the corporation has been
successful on the merits or otherwise in defense of any such action, suit or
proceeding he shall be indemnified against expenses actually and reasonably
incurred. Indemnification will not be made, however if such person has been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the corporation unless and only to the extent that the Court of Chancery
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such expenses which the Court of Chancery or such other court
shall deem proper.
 
     Whether indemnification is available will be decided (i) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (ii) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders.
 
     Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as authorized. Such expenses incurred by other employees may be paid
upon such terms and conditions, if any, as the Board of Directors deems
appropriate.
 
     The indemnification provided shall not be deemed exclusive of any other
rights to which those seeking indemnification may be entitled as to action in
his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer or employee and shall inure to the benefit of the heirs, executors and
administrators of such a person.
 
     The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity.
 
     Fieldcrest Cannon International, Inc. (a Delaware corporation).  The
Certificate of Incorporation, as amended, provides that any person made a party
to any action, suit or proceeding by reason of the fact that he, his testator or
intestate, is or was a director, officer or employee of the corporation or of
any corporation which he served as such at the request of the corporation, shall
be indemnified by the corporation against the reasonable expenses, including
attorneys' fees, actually and necessarily incurred by him in connection with the
defense of such action, suit or proceeding, or in connection with any appeal
therein, except in relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such officer, director or employee is liable for
negligence or misconduct in the performance of his duties. Such right of
indemnification shall not be deemed exclusive of any other rights to which such
director, officer or employee may be entitled by law.
 
     The Bylaws of Fieldcrest Cannon International, Inc., as amended, do not
contain any indemnification provisions.
 
     Moore's Falls Corporation (a Delaware corporation).  The Certificate of
Incorporation, as amended, provides that the corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than action by or in the right
of the corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation,
 
                                      II-8
<PAGE>   109
 
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
 
     The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in conjunction with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification will not be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such expenses which the Court of Chancery of the State of Delaware
or such other court shall deem proper.
 
     Any indemnification will be made by the corporation only as authorized in
the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct. Such determination shall be made (i) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (ii) if such quorum is
not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion or (iii) by the
stockholders.
 
     Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of the directors,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the corporation.
 
     The indemnification provided shall not be deemed exclusive of any other
rights to which those seeking indemnification may be entitled, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
 
     The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity.
 
     The Bylaws of Moore's Falls Corporation do not contain any indemnification
provisions.
 
     Pillowtex, Inc. and PTEX Holding Company (each, a Delaware
corporation).  The Certificates of Incorporation of both Pillowtex, Inc. and
PTEX Holding Company provide that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL,
or (iv) for any transaction from which the director derived an improper personal
benefit. The limitation on personal liability shall be limited to the fullest
extent permitted by the amended DGCL. Any repeal or modification of this
paragraph by
 
                                      II-9
<PAGE>   110
 
the stockholders of the corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
corporation existing at the time of such repeal or modification.
 
     Bylaws of both entities provide that the corporation will indemnify (i) any
person who is or was a director, officer, agent, or employee of the corporation,
and (ii) any person who serves or served at the corporation's request as a
director, officer, partner, venturer, proprietor, trustee, agent, employee, or
similar functionary of another corporation or of a partnership, joint venture,
sole proprietorship, joint venture, sole proprietorship, trust, employee benefit
plan, or other enterprise (collectively "indemnitees").
 
     In case of a suit, action, or proceeding (whether civil, criminal,
administrative, or investigative), other than a suit by or on behalf of the
corporation against an indemnitee, collectively hereinafter referred to as a
nonderivative suit, the corporation may indemnify such person for amounts
actually and reasonably incurred by such person in connection with the defense
or settlement of the nonderivative suit for judgments, penalties, including
excise and similar taxes, fines, settlements, and reasonable expenses actually
incurred (including attorneys' fees).
 
     In case of a derivative suit, an indemnitee may be indemnified if such
person acted in good faith in the transaction that is the subject of the suit,
and in a manner reasonably believed to be in or not opposed to the corporation's
best interest; provided that no indemnification shall be made in respect to any
claim, issue, or matter as to which such person shall have been adjudged to be
liable to the corporation unless, and only to the extent that, the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or other such court
shall deem proper. In the case of nonderivative suit, indemnification will be
provided if such person acted in good faith and in a manner reasonably believed
to be in or not opposed to the corporation's best interest. With respect to any
criminal action or proceeding, the person must have had no reasonable cause to
believe that the conduct that is the subject of such action was unlawful. The
termination of a nonderivative proceeding by judgment, order, settlement,
conviction, or on a plea of nolo contendere or its equivalent, does not of
itself create a presumption that the person does not meet the standards set
forth in this paragraph.
 
     The corporation will indemnify against expenses (including attorneys' fees)
actually and reasonably incurred in connection with a proceeding in which such
person is a party by reason of such person holding their position to the extent
such person has been successful, on the merits or otherwise, in the defense of
the proceeding.
 
     A determination that the standard has been satisfied shall be made by (i)
majority vote of the directors of the corporation who at the time of the vote
are not parties to the action, suit, or proceeding even though less than a
quorum, or (ii) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (iii) the shareholders of
the corporation.
 
     The corporation may pay in advance any expense (including attorneys' fees)
that may become subject to indemnification under the bylaws if the person
receiving the payment affirms in writing that in good faith the person believes
the standards set forth in the bylaws have been met, and undertakes to repay any
advance payments if it is ultimately determined that such person has not yet met
those standards.
 
     The corporation may purchase and maintain insurance on behalf of any person
who holds or who has held any position named in the bylaws, against any
liability asserted against or incurred by such person in any such position, or
arising out of such person's status.
 
     The rights of indemnification provided in the bylaws shall be in addition
to any other rights to which any person named may otherwise be entitled by
contract, under the DGCL or as a matter of law; and if any such person dies,
then such rights shall extend to such person's heirs and legal representatives.
 
     St. Marys, Inc. (a Delaware corporation).  The Certificate of Incorporation
provides that the corporation shall indemnify all persons to the full extent
permitted by Section 145 of the DGCL. The Bylaws of St. Mary's, Inc. do not
contain any indemnification provisions.
 
                                      II-10
<PAGE>   111
 
     Under Section 3817 of the Delaware Business Trust Act, a business trust may
indemnify and hold harmless any trustee or beneficial owner or other person from
and against any and all claims and demands subject to any standards and
restrictions, if any, set forth in the governing instrument. The absence of a
provision for indemnity in the governing instrument shall not be construed to
deprive any trustee or beneficial owner or other person of any right to
indemnity which is otherwise available to such person under Delaware law.
 
     Pillowtex Management Services Company (a Delaware business trust).  The
Certificate of Trust of Pillowtex Management Services Company does not contain
any indemnification provisions, however, the Declaration of Trust provides that
no Beneficial Interest Holder will be liable for any debt, claim, demand,
judgment or obligation of any kind of, against or with respect to the Trust by
reason of being a Beneficial Interest Holder, nor shall any Beneficial Interest
Holder, by reason of such status, be subject to any personal liability
whatsoever, in tort, contract or otherwise, to any person in connection with the
Trust Estate or the affairs of the Trust.
 
     A Trustee, when acting in such capacity, will be personally liable to any
person other than the Trust or a Beneficial Interest Holder for any act,
omission or obligation of the Trust or any Trustee. To the maximum extent that
Delaware law in effect from time to time permits limitation of the liability of
trustees of a business trust, no Trustee will be liable to the Trust or to any
Beneficial Interest Holder for monetary damages for breach of any duty
(including, without limitation, fiduciary duty) as a Trustee, except (i) for
acts or omissions which involve actual fraud or willful misconduct or (ii) for
any transaction from which the Trustee derived improper personal benefit.
 
     Neither the Beneficial Interest Holders nor the Trustees, officers,
employees or agents of the Trust will be liable under any written instrument
creating an obligation of the Trust, and all persons shall look solely to the
Trust Estate for the payment of any claim under or for the performance of that
instrument. All such written instruments may contain an express exculpatory
clause to the foregoing effect. The omission of the foregoing exculpatory
language from any instrument shall not affect the validity or enforceability of
such instrument and shall not render any Beneficial Interest Holder, Trustee,
officer, employee or agent liable thereunder to any third party, nor shall the
Trustee or any officer, employee or agent of the Trust be liable to anyone for
such omission.
 
     The Trust shall indemnify and hold harmless each Trustee and officer of the
Trust (including any persons who, while a Trustee or officer of the Trust, is or
was serving at the request of the Trust as a director, officer, partner,
trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, other enterprise or employee benefit plan) to
the maximum extent permitted by law, except to the extent that the indemnitee is
found liable for (i) an act or omission involving actual fraud or willful
misconduct or (ii) a transaction in which the indemnitee received an improper
personal benefit. The Trust shall, upon request by the concerned Trustee or
officer assume the defense of any claim made against such Trustee or officer and
(i) whether or not such request is made, pay in advance of any final disposition
of such claims all costs of defense upon an undertaking by or on behalf of such
Trustee or officer to repay such amount if it shall be ultimately determined
that such Trustee or officer is not entitled to indemnification by the Trust,
and (ii) satisfy any judgment thereon from the assets of the Trust.
 
     In the event any Beneficial Interest Holder or former Beneficial Interest
Holder shall be held to be personally liable for any obligation of the Trust
solely by reason of his or its being or having been a Beneficial Interest Holder
and not because of his or its acts or omissions or some other reason, the
Beneficial Interest Holder or former Beneficial Interest Holder (or his or its
legal representatives or successors) shall be entitled to be indemnified and
held harmless out of the Trust Estate against all loss and expenses arising from
such liability. The Trust shall, upon request by the concerned Beneficial
Interest Holder, assume the defense of any claim made against the Beneficial
Interest Holder and (i) whether or not such request is made, pay in advance of
any final disposition of such claims all costs of defense upon an undertaking by
or on behalf of such Beneficial Interest Holder to repay such amount if it is
ultimately determined that such Beneficial Interest Holder is not entitled to
indemnification by the Trust, and (ii) satisfy any judgment thereon from the
assets of the Trust.
 
                                      II-11
<PAGE>   112
 
     Subject to any express restrictions in the Declaration of Trust or adopted
by the Managing Trustees, the Trust may enter into any contract or transaction
of any kind (including without limitation, for the purchase or sale of property
or for any type of services, including those in connection with underwriting or
the offer of sale of securities of the Trust) with any person, including any
Trustee, officer, employee or agent of the Trust or any person affiliated with a
Trustee, officer, employee or agent of the Trust, whether or not any of them has
a financial interest in such transaction.
 
     The Maine Business Corporation Act generally provides that a corporation
must indemnify, if so provided in the bylaws of the corporation, any person who
was or is a party or threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, if that person is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, trustee, partner, fiduciary, employee or agent of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by that person in connection with such action, suit or proceeding; provided that
no indemnification may be provided for any person with respect to any matter as
to which that person shall have been fully adjudicated. A corporation may not
indemnify any person with respect to any claim, issue or matter asserted by or
in the right of the corporation as to which that person is finally adjudicated
to be liable to the corporation unless the court in which the action, suit or
proceeding was brought shall determine that, in view of all the circumstances of
the case, that person is fairly and reasonably entitled to indemnity for such
amounts as the court shall deem reasonable.
 
     Bangor Investment Company (a Maine corporation).  The Articles of
Incorporation of Bangor Investment Company, as amended, do not contain any
indemnification provisions, however, the Bylaws provide that the company shall
indemnify each present and future director and officer of the company (and his
heirs, executors and administrators) against all expenses and liabilities
reasonably incurred by him in connection with or arising out of any action, suit
or proceeding in which he may be involved by reason of his being or having been
a director or officer of the company, except in relation to matters as to which
he shall be adjudged in such action, suit or proceeding to have been liable for
negligence or misconduct in the performance of his duties as such director or
officer.
 
     The North Carolina Business Corporation Act ("NCBCA") grants corporations
the power to indemnify an individual made a party to a proceeding because he or
she is or was a director against liability incurred in the proceeding if: (i)
the director conducted himself or herself in good faith, (ii) he or she
reasonably believed (a) if in the case of conduct in official capacity, the
conduct was in the best interests of the corporation and (b) in all other cases,
that the conduct was at the least not opposed to the best interests of the
corporation, and (iii) in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful. A corporation may not
indemnify a director (i) if the director was adjudged liable to the corporation,
or (ii) if the director was adjudged liable on the basis that personal benefit
was improperly received. The NCBCA mandates that unless limited by its articles
of incorporation, a corporation must indemnity a director who was wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which he or she was a party because he or she is or was a director of the
corporation against reasonable expenses incurred by the director in connection
with the proceeding. In addition, the NCBCA generally provides that a
corporation indemnify an officer to the same extent as a director.
 
     Beacon Manufacturing Company, Manetta Home Fashions, Inc. (each, a North
Carolina corporation). The Articles of Incorporation, as amended, of both
corporations provide that to the fullest extent permitted by law, no person who
is serving or who has served as a director of the corporation shall be
personally liable in any action for monetary damages for breach of his or her
duty as a director, whether such action is brought by or in the right of the
corporation or otherwise.
 
     The Bylaws for both corporations provide that any person who at any time
serves or has served as a director or officer of the corporation or of any
wholly owned subsidiary of the corporation, or in such capacity at the request
of the corporation for any other foreign or domestic corporation, partnership,
joint venture, trust or other enterprise, or as a trustee or administrator under
any employee benefit plan of the corporation or of
 
                                      II-12
<PAGE>   113
 
any wholly owned subsidiary thereof (a "Claimant"), shall have the right to be
indemnified and held harmless by the corporation to the fullest extent permitted
by law against all liabilities and litigation expenses in the event a claim
shall be made or threatened against that person in, or that person is made or
threatened to be made a party to, any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
and whether or not brought by or on behalf of the corporation, including all
appeals therefrom (a "proceeding"), arising out of such service; provided, that
such indemnification shall not be effective with respect to (i) that portion of
any liabilities or litigation expenses with respect to which the Claimant is
entitled to receive payment under any insurance policy or (ii) any liabilities
or litigation expenses incurred on account of any of the Claimant's activities
which were at the time taken known or believed by the Claimant to be clearly in
conflict with the best interests of the corporation.
 
     The corporation shall not be liable to indemnify the Claimant for any
amounts paid in settlement of any proceeding effected without the corporation's
written consent. The corporation will not unreasonably withhold its consent to
any proposed settlement.
 
     Except as provided below, any litigation expenses shall be advanced to any
Claimant within 30 days of receipt by the secretary of the corporation of a
demand therefor, together with an undertaking by or on behalf of the Claimant to
repay to the corporation such amount unless it is ultimately determined that the
Claimant is entitled to be indemnified by the corporation against such expenses.
The secretary shall promptly forward notice of the demand and undertaking
immediately to all directors of the corporation. Within 10 days after mailing of
notice to the directors, any disinterested director may, if desired, call a
meeting of all disinterested directors to review the reasonableness of the
expenses so requested. No advance shall be made if a majority of the
disinterested directors affirmatively determines that the item of expense is
unreasonable in amount; but if the disinterested directors determine that a
portion of the expense item is reasonable, the corporation shall advance such
portion. The board of directors may take action to advance any litigation
expenses to a Claimant upon receipt of an undertaking by or on behalf of the
Claimant to repay to the corporation such amount unless it is ultimately
determined that the Claimant is entitled to be indemnified by the corporation
against such expenses.
 
     No Claimant shall be entitled to bring suit against the corporation to
enforce his rights under this Article until sixty days after a written claim has
been received by the corporation, together with any undertaking to repay.
Neither the failure of the corporation to determine that indemnification of the
Claimant is proper, nor determination by the corporation that indemnification is
not due shall be a defense to the action or create a presumption that the
Claimant has not met the applicable standard or conduct.
 
     The right of indemnification provided herein or therein shall inure to the
benefit of the legal representatives of any Claimant, and the right shall not be
exclusive of any other rights to which the Claimant or legal representative may
be entitled. The rights granted shall not be limited by the provisions of the
NCBCA or any successor statute.
 
     The Tennessee Business Corporation Act grants corporations the power to
indemnify an individual made a party to a proceeding because he or she is or was
a director against liability incurred in the proceeding if: (i) the director
conducted himself or herself in good faith, (ii) he or she reasonably believed
(a) if in the case of conduct in official capacity, the conduct was in the best
interests of the corporation and (b) in all other cases, that the conduct was at
the least not opposed to the best interests of the corporation, and (iii) in the
case of any criminal proceeding, he had no reasonable cause to believe his
conduct was unlawful. A corporation may not indemnify a director (i) if the
director was adjudged liable to the corporation, or (ii) if the director was
adjudged liable on the basis that personal benefit was improperly received. The
Tennessee Business Corporation Act mandates that unless limited by its articles
of incorporation, a corporation must indemnity a director who was wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which he or she was a party because he or she is or was a director of the
corporation against reasonable expenses incurred by the director in connection
with the proceeding. The Tennessee Business Corporation Act generally provides
that a corporation indemnify an officer to the same extent as a director.
 
     Crestfield Cotton Company (a Tennessee corporation).  The Charter of
Crestfield Cotton Company, as amended, does not contain any indemnification
provisions, however, the Bylaws, as amended, provide that the
                                      II-13
<PAGE>   114
 
corporation shall indemnify each present and future director and officer of the
corporation against, and each director or officer shall be entitled without
further act to indemnity from the corporation for, all expenses (including
counsel fees and the amount of judgments and the amount of reasonable
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the corporation itself) reasonably incurred in connection
with or arising out of any action, suit or proceeding in which he may be
involved by reason of being or having been a director or officer. Provided,
however, that the director or officer (i) conducted himself in good faith; and
(ii) reasonably believed: (a) in the case of conduct in his official capacity
with the corporation that his conduct was in its best interest; and (b) in all
other cases, that his conduct was at least not opposed to the corporation's best
interest; and (iii) in the case of any criminal proceeding, he had no reasonable
cause to believe his conduct was unlawful. However, the corporation shall not
indemnify a director or officer in connection with: (i) a proceeding by or in
the right of the corporation in which the director was adjudged liable to the
corporation; or (ii) in connection with any other proceeding charging improper
personal benefit to him, whether or not involving action in his official
capacity, in which he was adjudged liable on the basis that personal benefit was
improperly received by him.
 
     In addition, the corporation may pay for or reimburse the reasonable
expenses incurred by an officer or director who is a party to a proceeding in
advance of the final disposition of the proceeding if: (i) the director or
officer furnishes the corporation a written affirmation of his good faith belief
that he has met the standard of conduct hereinbefore described; (ii) the
director or officer furnishes the corporation a written undertaking, executed
personally or on his behalf, to repay the advance if it is ultimately determined
that he is not entitled to indemnification; and (iii) a determination is made
that the facts then known to those making the determination would not preclude
indemnification. The determination whether indemnification is permissible shall
be made by (i) a majority vote of a quorum of the Board of Directors not parties
to the proceeding; (ii) by majority vote of a committee duly designated by the
Board of Directors consisting of two or more directors not parties to the
proceeding; (iii) by independent special legal counsel selected by the Board of
Directors, or its committee; or by the shareholders, except the shares owned or
voted under the control of directors who are at the time parties to the
proceeding may not be voted on the determination. In no event shall
indemnification be made to, or on behalf of any director or officer if a
judgment or final adjudication adverse to the director or officer establishes
his liability (i) for any breach of the duty of loyalty to the corporation or
its shareholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; or (iii) for any
unlawful distributions from the corporation. The foregoing right of
indemnification shall inure to the benefit of the heirs, executors or
administrators of each director or officer and shall be in addition to all other
rights to which the director or officer may be entitled as a matter of law.
 
     Tennessee Woolen Mills, Inc. (a Tennessee corporation).  The Restated
Charter of Tennessee Woolen Mills, Inc., as amended, provides that to the
fullest extent permitted by the Tennessee Business Corporation Act, a director
of the corporation shall not be liable to the corporation or its shareholders
for monetary damages for breach of fiduciary duty as a director. If the
Tennessee Business Corporation Act or any successor statute is amended after
adoption of this provision to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of the corporation shall be eliminated or limited to the fullest extent
permitted by the Tennessee Business Corporation Act, as so amended from time to
time. Any repeal or modification of this indemnification by the shareholders of
the corporation shall not adversely affect any right or protection of a director
of the corporation existing at the time of such repeal or modification or with
respect to events occurring prior to such time.
 
     The Bylaws provide that any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action suit or
proceeding, whether civil, criminal, administrative or investigative (including
any action by or in the right of the corporation) by reason of the fact that he
is or was serving as an officer or director of the corporation or is or was
serving at the request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified by the corporation against expenses (including reasonable attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith for a purpose which he reasonably believed to be in the best
interest of the
 
                                      II-14
<PAGE>   115
 
corporation, and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful, to the maximum extent
permitted by, and in the manner provided by, the Tennessee General Corporation
Act.
 
ITEM 21.  EXHIBITS
 
     Pursuant to Item 601 of Regulation S-K, 17 C.F.R. sec. 229.601 (b) (4)
(iii) (A), the Company has excluded from Exhibit No. 4 instruments defining the
rights of holders of long-term debt with respect to debt that does not exceed
10% of the total assets of the Company. The Company agrees to furnish copies of
such instruments to the Commission upon request.
 
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS
   -------                       -----------------------
<C>            <S>
     2.1       -- Agreement and Plan of Merger, dated as of September 10,
                  1997, by and among Pillowtex Corporation, Pegasus Merger
                  Sub, Inc., and Fieldcrest Cannon, Inc. (incorporated by
                  reference to Exhibit 2.1 to Pillowtex Corporation's
                  Registration Statement on Form S-4 (No. 333-36663) filed
                  on September 29, 1997)
     2.2       -- Amendment to Agreement and Plan of Merger, dated as of
                  September 23, 1997, by and among Pillowtex Corporation,
                  Pegasus Merger Sub, Inc., and Fieldcrest Cannon, Inc.
                  (incorporated by reference to Exhibit 2.2 to Pillowtex
                  Corporation's Registration Statement on Form S-4 (No.
                  333-36663) filed on September 29, 1997)
     3.1       -- Restated Articles of Incorporation of Pillowtex
                  Corporation, as amended (incorporated by reference to
                  Exhibit 3.1 to Pillowtex Corporation's Current Report on
                  Form 8-K No. 001-11756) filed on January 6, 1998)
     3.2       -- Amended and Restated Bylaws of Pillowtex Corporation, as
                  amended (incorporated by reference to Exhibit 3.2 to
                  Pillowtex Corporation's Annual Report on Form 10-K for
                  the fiscal year ended December 30, 1994)
     3.3       -- Restated Certificate of Incorporation of Fieldcrest
                  Cannon, Inc., as amended (incorporated by reference to
                  Exhibit 3.1 to Fieldcrest Cannon, Inc.'s Registration
                  Statement on Form S-3 (No. 33-52325) filed on February
                  18, 1994)
     3.4       -- Amended and Restated Bylaws of Fieldcrest Cannon, Inc.,
                  as amended (incorporated by reference to Exhibit 3.1 of
                  Fieldcrest Cannon, Inc.'s Current Report on Form 8-K
                  dated November 24, 1993)
    *3.5       -- Amended and Restated Certificate of Incorporation of
                  Amoskeag Company
    *3.6       -- Bylaws of Amoskeag Company, as amended
    *3.7       -- Certificate of Incorporation of Amoskeag Management
                  Corporation
    *3.8       -- Bylaws of Amoskeag Management Corporation
    *3.9       -- Articles of Incorporation of Bangor Investment Company,
                  as amended
    *3.10      -- Bylaws of Bangor Investment Company
    *3.11      -- Articles of Amendment of Beacon Manufacturing Company
    *3.12      -- Amended and Restated Bylaws of Beacon Manufacturing
                  Company
    *3.13      -- Charter of Crestfield Cotton Company, as amended
    *3.14      -- Bylaws of Crestfield Cotton Company, as amended
    *3.15      -- Certificate of Incorporation of Downeast Securities
                  Corporation, as amended
    *3.16      -- Bylaws of Downeast Securities Corporation
    *3.17      -- Certificate of Incorporation of Encee, Inc.
    *3.18      -- Bylaws of Encee, Inc.
    *3.19      -- Certificate of Incorporation of FCC Canada, Inc.
    *3.20      -- Bylaws of FCC Canada, Inc.
</TABLE>
 
                                      II-15
<PAGE>   116
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                            DESCRIPTION OF EXHIBITS
- ---------  --------------------------------------------------------------------------------------------------------
<C>        <S>
   *3.21   -- Certificate of Incorporation of Fieldcrest Cannon Financing, Inc.
   *3.22   -- Bylaws of Fieldcrest Cannon Financing, Inc.
   *3.23   -- Certificate of Incorporation Fieldcrest Cannon International, Inc., as amended
   *3.24   -- Bylaws of Fieldcrest Cannon International, Inc., as amended
   *3.25   -- Certificate of Incorporation of Fieldcrest Cannon Licensing, Inc.
   *3.26   -- Bylaws of Fieldcrest Cannon Licensing, Inc.
   *3.27   -- Certificate of Incorporation of Fieldcrest Cannon Sure Fit, Inc.
   *3.28   -- Bylaws of Fieldcrest Cannon Sure Fit, Inc.
   *3.29   -- Certificate of Incorporation of Fieldcrest Cannon Transportation, Inc.
   *3.30   -- Bylaws of Fieldcrest Cannon Transportation, Inc.
   *3.31   -- Articles of Incorporation of Manetta Home Fashions, Inc., as amended
   *3.32   -- Bylaws of Manetta Home Fashions, Inc.
   *3.33   -- Certificate of Incorporation of Moore's Falls Corporation, as amended
   *3.34   -- Bylaws of Moore's Falls Corporation
   *3.35   -- Certificate of Incorporation of Pillowtex, Inc.
   *3.36   -- Bylaws of Pillowtex, Inc.
   *3.37   -- Certificate of Trust of Pillowtex Management Services Company
   *3.38   -- Declaration of Trust of Pillowtex Management Services Company
   *3.39   -- Certificate of Trust of PTEX Holding Company
   *3.40   -- Bylaws of PTEX Holding Company
   *3.41   -- Certificate of Incorporation of St. Mary's, Inc.
   *3.42   -- Bylaws of St. Mary's, Inc.
   *3.43   -- Articles of Amendment to the Restated Charter of Tennessee Woolen Mills, Inc.
   *3.44   -- Bylaws of Tennessee Woolen Mills, Inc.
   *4.1    -- Indenture, dated as of December 18, 1997, among Pillowtex Corporation, the guarantors listed on the
              signature page thereto, and Norwest Bank Minnesota, National Association, as Trustee
   *4.2    -- Supplemental Indenture, dated as of December 19, 1997, among Pillowtex Corporation, the guarantors
              listed on the signature page thereto, and Norwest Bank Minnesota, National Association, as Trustee
    4.3    -- Registration Rights Agreement, dated as of December 18, 1997, among Pillowtex Corporation, the
              guarantors listed on the signature page thereto, and NationsBanc Montgomery Securities, Inc. and
              Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 10.7 to Pillowtex Corporation's
              Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998)
    4.4    -- Registration Rights Agreement Supplement, dated as of December 19, 1997, among Pillowtex Corporation,
              the guarantors listed on the signature page thereto, and NationsBanc Montgomery Securities, Inc. and
              Bear, Stearns & Co. Inc. (incorporated by reference to Exhibit 10.8 to Pillowtex Corporation's
              Current Report on Form 8-K (No. 001-11756) filed on January 6, 1998)
   *4.5    -- Form of 9% Senior Subordinated Note
   *4.6    -- Form of Guarantee
  **5.1    -- Opinion of Jones, Day, Reavis & Pogue regarding the legality of securities to be issued
    9.1    -- Voting Agreement, dated as of October 2, 1997, by and between Pillowtex Corporation and Charles M.
              Hansen, Jr. (incorporated by reference to Exhibit 9.1 to Pillowtex Corporation's Registration
              Statement on Form S-4 (No. 333-36663) filed on September 29, 1997)
</TABLE>
 
                                      II-16
<PAGE>   117
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS
   -------                       -----------------------
<C>            <S>
     9.2       -- Voting Agreement, dated as of October 2, 1997, by and
                  between Pillowtex Corporation, on the one hand, and Mary
                  R. Silverthorne, the John H. Silverthorne Marital Trust
                  B, and the John H. Silverthorne Family Trust A, on the
                  other hand (incorporated by reference to Exhibit 9.2 to
                  Pillowtex Corporation's Registration Statement on Form
                  S-4 (No. 333-36663) filed on September 29, 1997)
    10.1       -- Commitment Letter, dated September 10, 1997, by and
                  between NationsBank of Texas, N.A. and Pillowtex
                  Corporation (incorporated by reference to Exhibit 10.1 to
                  Pillowtex Corporation's Current Report on Form 8-K dated
                  September 10, 1997, as amended by a Form 8-K/A (Amendment
                  No. 1) dated September 10, 1997)
    10.2       -- Registration Rights Agreement, dated as of November 12,
                  1996, by and among Pillowtex Corporation, each domestic
                  subsidiary of Pillowtex Corporation, and NationsBanc
                  Capital Markets, Inc., and Merrill Lynch, Pierce, Fenner
                  & Smith, Incorporated (incorporated by reference to
                  Exhibit 10.59 to Pillowtex Corporation's Form S-4 (No.
                  333-17731) filed on December 12, 1996)
    10.3       -- Restated Credit Agreement, dated as of November 12, 1996,
                  by and among Pillowtex Corporation and NationsBank of
                  Texas, N.A., as Agent for the Lenders specified therein
                  (excludes Schedules) (incorporated by reference to
                  Exhibit 10.60 to Pillowtex Corporation's Form S-4 (No.
                  333-17731) filed on December 12, 1996)
    10.4       -- Form of Swing-Line Note, dated as of November 12, 1996,
                  by and among Pillowtex Corporation and NationsBank of
                  Texas, N.A. (incorporated by reference to Exhibit 10.61
                  to Pillowtex Corporation's Form S-4 (No. 333-17731) filed
                  on December 12, 1996)
    10.5       -- Form of Revolving Note, by and among Pillowtex
                  Corporation and NationsBank of Texas, N.A. (incorporated
                  by reference to Exhibit 10.62 to Pillowtex Corporation's
                  Form S-4 (No. 333-17731) filed on December 12, 1996)
    10.6       -- Form of Restated Guaranty, by and among Beacon
                  Manufacturing Company, Manetta Home Fashions, Inc.,
                  Tennessee Woolen Mills, Inc., Pillowtex, Inc., PTEX
                  Holding Company, and Pillowtex Management Services
                  Company as guarantors, NationsBank of Texas, N.A. as
                  Agent, and Pillowtex Corporation as Borrower
                  (incorporated by reference to Exhibit 10.63 to Pillowtex
                  Corporation's Form S-4 (No. 333-17731) filed on December
                  12, 1996)
    10.7       -- Form of Restated Security Agreement, by and among
                  Pillowtex Corporation as Debtor/Borrower, NationsBank of
                  Texas, N.A. as Secured Party, and Beacon Manufacturing
                  Company, Manetta Home Fashions, Inc., Tennessee Woolen
                  Mills, Inc., Pillowtex, Inc., PTEX Holding Company, and
                  Pillowtex Management Services Company as Subsidiary
                  Debtors (incorporated by reference to Exhibit 10.64 to
                  Pillowtex Corporation's Form S-4 (No. 333-17731) filed on
                  December 12, 1996)
    10.8       -- Asset Purchase Agreement, dated as of October 3, 1996, by
                  and among Pillowtex Corporation and Fieldcrest Cannon,
                  Inc. (incorporated by reference to Exhibit 10.65 to
                  Pillowtex Corporation's Form S-4 (No. 333-17731) filed on
                  December 12, 1996)
    10.9       -- Mississippi Business Finance Corporation Industrial
                  Development Variable Rate Demand Notes (Pillowtex
                  Corporation Project) Series 1992 Loan Agreement,
                  Indenture of Trust, Promissory Note, Remarketing and
                  Interest Services Agreement, Placement Agreement, Deed of
                  Trust and Security Agreement, Bond Fund Trustee
                  Agreement, Reimbursement Agreement, and Lease Agreement
                  (including First Amendment) (incorporated by reference to
                  Exhibit 10.3 to Pillowtex Corporation's Registration
                  Statement on Form S-1 (No. 33-57314) filed on January 22,
                  1993)
    10.10      -- Second through Fourth Amendment to Mississippi Business
                  Finance Corporation Industrial Development Variable Rate
                  Demand Notes (Pillowtex Corporation Project) Loan
                  Agreement (incorporated by reference to Exhibit 10.4 to
                  Pillowtex Corporation's Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1993)
</TABLE>
 
                                      II-17
<PAGE>   118
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS
   -------                       -----------------------
<C>            <S>
    10.11      -- Deed of Trust (with Security Agreement and Assignment of
                  Rents and Leases), dated as of July 15, 1988, between
                  Pillowtex Corporation and Principal Mutual Life Insurance
                  Company, as amended, Deed of Trust Note, and Loan
                  Modification and Amendment Agreement (incorporated by
                  reference to Exhibit 10.5 to Pillowtex Corporation's
                  Registration Statement on Form S-1 (No. 33-57314) filed
                  on January 22, 1993)
    10.12      -- Second Loan Agreement Modification and Amendment
                  Agreement dated as of January 19, 1993, between Pillowtex
                  Corporation and Principal Mutual Life Insurance Company
                  (incorporated by reference to Exhibit 10.6 to Pillowtex
                  Corporation's Registration Statement on Form S-1 (No.
                  33-57314) filed on January 22, 1993)
    10.13      -- Deed of Trust Note dated as of July 15, 1988, from
                  Pillowtex Corporation to Principal Mutual Life Insurance
                  Company (incorporated by reference to Exhibit 10.7 to
                  Pillowtex Corporation's Registration Statement on Form
                  S-1 (No. 33-57314) filed on January 22, 1993)
    10.14      -- Loan and Security Agreement dated April 6, 1992, between
                  MetLife Capital Corporation and Pillowtex Corporation, as
                  amended, and including Term Note dated June 5, 1992
                  (incorporated by reference to Exhibit 10.8 to Pillowtex
                  Corporation's Registration Statement on Form S-1 (No.
                  33-57314) filed on January 22, 1993)
    10.15      -- Pennsylvania Economic Development Financing Authority
                  ("PEDFA") Economic Development Revenue Bonds 1990 Series
                  C (Silversen-Hanover Corporation Project), dated April 1,
                  1990, Indenture of Trust between PEDFA and First
                  Pennsylvania Bank; Financing Agreement between PEDFA and
                  Silversen-Hanover Corporation; Bond Placement Agreement
                  among PEDFA, NCNB National Bank of North Carolina, and
                  Silversen-Hanover Corporation; Reimbursement Agreement
                  between Silversen-Hanover Corporation and NCNB National
                  Bank of North Carolina; and Form of Bond (incorporated by
                  reference to Exhibit 10.44 to Pillowtex Corporation's
                  Annual Report on Form 10-K for the fiscal year ended
                  December 31, 1993)
    10.16      -- Distribution Agreement, dated February 1, 1995 by and
                  among Beacon Manufacturing Company, Manetta Home
                  Fashions, Inc.,Tennessee Woolen Mills, Inc., NEMCOR,
                  Inc., Norm McIntyre, Tim McIntyre, and Don McIntyre
                  (incorporated by reference to Exhibit 10.35 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1994)
    10.17      -- The Priorities Agreement, dated February 27, 1995,
                  between Toronto Dominion Bank, Manetta Home Fashions,
                  Inc., Tennessee Woolen Mills, Beacon Manufacturing
                  Company, and NEMCOR, Inc. (incorporated by reference to
                  Exhibit 10.36 to Pillowtex Corporation's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1994)
    10.18      -- A Guarantee, dated February 27, 1995, between Beacon
                  Manufacturing Company, Manetta Home Fashions, Inc.,
                  Tennessee Woolen Mills, Inc., and NEMCOR, Inc.
                  (incorporated by reference to Exhibit 10.37 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 30, 1994)
    10.19      -- Security Agreement, dated February 16, 1995, between
                  NEMCOR, Inc. and Manetta Home Fashions, Inc.
                  (incorporated by reference to Exhibit 10.38 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1994)
    10.20      -- Security Agreement, dated February 16, 1995, between
                  NEMCOR, Inc. and Tennessee Woolen Mills, Inc.
                  (incorporated by reference to Exhibit 10.39 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1994)
    10.21      -- Security Agreement, dated February 16, 1995, between
                  NEMCOR, Inc. and Beacon Manufacturing Company
                  (incorporated by reference to Exhibit 10.40 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1994)
</TABLE>
 
                                      II-18
<PAGE>   119
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS
   -------                       -----------------------
<C>            <S>
    10.22      -- Amended and Restated Acquisition Agreement, dated as of
                  November 30, 1994, by and among David H. Murdock, Beacon
                  Manufacturing Company, Wiscassett Mills Company,
                  Pillowtex Corporation, Be-Ac, Inc., Realmac, Inc., and
                  Wiscat, Inc. (incorporated by reference to Exhibit 10.41
                  to Pillowtex Corporation's Current Report on Form 8-K
                  dated December 14, 1994)
    10.23      -- Purchase agreement between Coopers & Lybrand and Torfeaco
                  Industries Limited for certain assets, dated August 19,
                  1994 (incorporated by reference to Exhibit 10.42 to
                  Pillowtex Corporation's Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1994)
    10.24      -- Indenture dated as of February 1, 1994, by and among
                  Torfeaco Industries Limited and Lodestone Investments
                  Limited, Lese Holdings Limited, Golden Elms Limited, M.
                  Swadron Limited, and Helsinor Investments Limited
                  (incorporated by reference to Exhibit 10.29 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1993)
    10.25      -- Sublicense Agreement, dated as of July 1, 1995, between
                  Pillowtex Corporation and the Ralph Lauren Home
                  Collection (incorporated by reference to Exhibit 10 to
                  Pillowtex Corporation's Quarterly on Form 10-Q for the
                  quarter ended July 1, 1995)
    10.26      -- Lease Agreement, dated as of September 18, 1995, between
                  Pillowtex Corporation and Sanwa Business Credit Corp.
                  (incorporated by reference to Exhibit 10.4 to Pillowtex
                  Corporation's Quarterly Report on Form 10-Q, as amended
                  for the quarter ended September 30, 1995)
    10.27      -- Agreement of Lease, dated May 23, 1995, between Ten
                  Seventy One Joint Venture and Pillowtex Corporation
                  (incorporated by reference to Exhibit 10.66 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 30, 1995)
    10.28      -- Lease, dated as of March 1, 1977, by and among Torfeaco
                  Industries Limited and Standa Investment Limited, and
                  Sharon Construction Limited (incorporated by reference to
                  Exhibit 10.43 to Pillowtex Corporation's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1993)
    10.29      -- Industrial Lease, dated as of November 23, 1992, between
                  Angel and Jean Echevarria and Pillowtex Corporation
                  (incorporated by reference to Exhibit 10.21 to Pillowtex
                  Corporation's Registration Statement on Form S-1 (No.
                  33-57314) filed on January 22, 1993)
    10.30      -- Form of Lease, dated as of October 12, 1988, between
                  Jimmie D. Smith, Jr. and Pillowtex Corporation
                  (incorporated by reference to Exhibit 10.23 to Pillowtex
                  Corporation's Registration Statement on Form S-1 (No.
                  33-57314) filed on January 22, 1993)
    10.31      -- Form of Equipment Leasing Agreement between BTM Financial
                  & Leasing Corporation B-4 and Beacon Manufacturing
                  Company, Manetta Home Fashions, Inc., and Tennessee
                  Woolen Mills, Inc., dated as of June 14, 1996 (without
                  Exhibits) (incorporated by reference to Exhibit 10 to
                  Pillowtex Corporation's Quarterly Report on Form 10-Q for
                  the quarter ended June 30, 1996)
    10.32      -- Employment Agreement dated as of January 1, 1993, between
                  Pillowtex Corporation and Charles M. Hansen, Jr.
                  (incorporated by reference to Exhibit 10.2 to Pillowtex
                  Corporation's Registration Statement on Form S-1 (No.
                  33-57314) filed on January 22, 1993)
    10.33      -- Amendment to Employment Agreement, dated as of July 26,
                  1993, between Pillowtex Corporation and Charles M.
                  Hansen, Jr. (incorporated by reference to Exhibit 10.26
                  to Pillowtex Corporation's Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1993)
    10.34      -- Forms of Employment Agreement dated as of September 1,
                  1995, between Pillowtex Corporation and each of
                  Christopher N. Baker, Jeffrey D. Cordes, and Scott E.
                  Shimizu (incorporated by reference to Exhibits 10.1,
                  10.2, and 10.3 to Pillowtex Corporation's Quarterly
                  Report on Form 10-Q, as amended, for the quarter ended
                  September 30, 1995)
</TABLE>
 
                                      II-19
<PAGE>   120
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS
   -------                       -----------------------
<C>            <S>
    10.35      -- Forms of Change of Control Agreement, dated as of
                  September 1, 1995, between Pillowtex Corporation and each
                  of Christopher N. Baker, Jeffrey D. Cordes, and Scott E.
                  Shimizu (incorporated by reference to Exhibits 10.5,
                  10.6, and 10.7 to Pillowtex Corporation's Quarterly
                  Report on Form 10-Q, as amended, for the quarter ended
                  September 30, 1995)
    10.36      -- Form of Confidentiality and Noncompetition Agreement
                  (incorporated by reference to Exhibit 10.27 to Pillowtex
                  Corporation's Registration Statement on Form S-1 (No.
                  33-57314) filed on January 22, 1993)
    10.37      -- Form of Director Indemnification Agreement (incorporated
                  by reference to Exhibit 10.36 to Pillowtex Corporation's
                  Registration Statement on Form S-1 (No. 33-57314) filed
                  on January 22, 1993)
    10.38      -- Split Dollar Life Insurance Agreement between Pillowtex
                  Corporation and Charles M. Hansen, Jr. dated July 26,
                  1993 (incorporated by reference to Exhibit 10.32 to
                  Pillowtex Corporation's Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1993)
    10.39      -- Pillowtex Corporation 1993 Stock Option Plan
                  (incorporated by reference to Appendix A to Pillowtex
                  Corporation's Proxy Statement relating to its Annual
                  Meeting of Shareholders held on May 8, 1997)
    10.40      -- Form of Employment Agreement entered into between
                  Pillowtex Management Services Company and each of
                  Christopher N. Baker, Jeffrey D. Cordes, Scott E.
                  Shimizu, and John H. Karnes (incorporated by reference to
                  Exhibit 10.1 to Pillowtex Corporation's Quarterly Report
                  on Form 10-Q for the quarter ended June 28, 1997)
    10.41      -- Form of Guaranty Agreement dated as of April 22, 1997,
                  between Pillowtex Corporation and each of Christopher N.
                  Baker, Jeffrey D. Cordes, Scott E. Shimizu, Kevin M.
                  Finlay, and John H. Karnes (incorporated by reference to
                  Exhibit 10.2 to Pillowtex Corporation's Quarterly Report
                  on Form 10-Q for the quarter ended June 28, 1997)
    10.42      -- Form of Employment Agreement dated as of April 11, 1997,
                  between Pillowtex Management Services Company and Kevin
                  M. Finlay (incorporated by reference to Exhibit 10.3 to
                  Pillowtex Corporation's Quarterly Report on Form 10-Q for
                  the quarter ended June 28, 1997)
    10.43      -- Pillowtex Corporation Supplemental Executive Retirement
                  Plan, effective as of January 1, 1997 (incorporated by
                  reference to Exhibit 10.1.44 to Pillowtex Corporation's
                  Registration Statement on Form S-4 (No. 33-36663) filed
                  on September 29, 1997)
    10.44      -- Pillowtex Corporation Management Incentive Plan
                  (incorporated by reference to Appendix B to Pillowtex
                  Corporation's Proxy Statement relating to its Annual
                  Meeting of Shareholders held on May 8, 1997)
    10.45      -- Amended and Restated Director Stock Option Plan of the
                  Registrant approved by the stockholders of the
                  Corporation on April 28, 1992 (incorporated by reference
                  to Exhibit A to Fieldcrest Cannon, Inc.'s Proxy Statement
                  relating to its Annual Meeting of Stockholders held on
                  April 28, 1992)
    10.46      -- Stock Option Agreement between Fieldcrest Cannon, Inc.
                  and James M. Fitzgibbons, dated as of September 11, 1991
                  (incorporated by reference to Exhibit 4.1 to Fieldcrest
                  Cannon, Inc.'s Registration Statement on Form S-8 (No.
                  33-44703) filed on December 23, 1991)
    10.47      -- Employee Retention Agreement between Fieldcrest Cannon,
                  Inc. and James M. Fitzgibbons, effective as of July 9,
                  1993 (incorporated by reference to Exhibit 10.2 to
                  Fieldcrest Cannon, Inc.'s Quarterly Report on Form 10-Q
                  for the quarter ended September 30, 1993)
    10.48      -- Instrument of Amendment, dated July 15, 1996 between
                  Fieldcrest Cannon, Inc. and James M. Fitzgibbons
                  (incorporated by reference to Exhibit 10.4 to Fieldcrest
                  Cannon, Inc.'s Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1996)
    10.49      -- Employee Retention Agreement between Fieldcrest Cannon,
                  Inc. and Robert E. Dellinger, effective as of July 9,
                  1993 (incorporated by reference to Exhibit 10.9 to
                  Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for
                  the fiscal year ending December 31, 1993)
</TABLE>
 
                                      II-20
<PAGE>   121
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS
   -------                       -----------------------
<C>            <S>
    10.50      -- Instrument of Amendment, dated July 29, 1993 between
                  Fieldcrest Cannon, Inc. and Robert E. Dellinger
                  (incorporated by reference to Exhibit 10.10 to Fieldcrest
                  Cannon, Inc.'s Annual Report on Form 10-K for the fiscal
                  year ending December 31, 1993)
    10.51      -- Instrument of Amendment, dated July 15, 1996 between
                  Fieldcrest Cannon, Inc. and Robert E. Dellinger
                  (incorporated by reference to Exhibit 10.7 Fieldcrest
                  Cannon, Inc.'s Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1996)
    10.52      -- Employee Retention Agreement between Fieldcrest Cannon,
                  Inc. and Thomas R. Staab, effective as of July 9, 1993
                  (incorporated by reference to Exhibit 10.8 to Fieldcrest
                  Cannon, Inc.'s Annual Report on Form 10-K for the fiscal
                  year ending December 31, 1995)
    10.53      -- Instrument of Amendment, dated July 29, 1993 between
                  Fieldcrest Cannon, Inc. and Thomas R. Staab (incorporated
                  by reference to Exhibit 10.9 to Fieldcrest Cannon, Inc.'s
                  Annual Report on Form 10-K for the fiscal year ending
                  December 31, 1995)
    10.54      -- Instrument of Amendment, dated July 15, 1996 between
                  Fieldcrest Cannon, Inc. and Thomas R. Staab (incorporated
                  by reference to Exhibit 10.10 to Fieldcrest Cannon,
                  Inc.'s Annual Report on Form 10-K for the fiscal year
                  ended December 31, 1996)
    10.55      -- Employee Retention Agreement between Fieldcrest Cannon,
                  Inc. and John Nevin, effective as of October 3, 1996
                  (incorporated by reference to Exhibit 10.11 to Fieldcrest
                  Cannon, Inc.'s Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1996)
    10.56      -- Form of Employee Retention Agreement between Fieldcrest
                  Cannon, Inc. and other executive officers of Fieldcrest
                  Cannon, Inc., effective as of July 9, 1993 (incorporated
                  by reference to Exhibit 10.6 to Fieldcrest Cannon, Inc.'s
                  Quarterly Report on Form 10-Q for the quarter ended
                  September 30, 1993)
    10.57      -- Form of Instrument of Amendment, dated July 29, 1993
                  between Fieldcrest Cannon, Inc. and other executive
                  officers of Fieldcrest Cannon, Inc. (incorporated by
                  reference to Exhibit 10.7 to Fieldcrest Cannon, Inc.'s
                  Quarterly Report on Form 10-Q for the quarter ended
                  September 30, 1993)
    10.58      -- Form of Instrument of Amendment, dated July 15, 1996
                  between Fieldcrest Cannon, Inc. and other executive
                  officers of Fieldcrest Cannon, Inc. (incorporated by
                  reference to Exhibit 10.14 to Fieldcrest Cannon, Inc.'s
                  Annual Report on Form 10-K for the fiscal year ended
                  December 31, 1996)
    10.59      -- 1995 Employee Stock Option Plan of Fieldcrest Cannon,
                  Inc. (incorporated by reference to Exhibit 4.1 of
                  Fieldcrest Cannon, Inc.'s Registration Statement of Form
                  S-8 (No. 33-59145) filed on May 8, 1995)
    10.60      -- Yarn Purchase Agreement between Parkdale Mills,
                  Incorporated and Fieldcrest Cannon, Inc. (incorporated by
                  reference to Exhibit 10 to Fieldcrest Cannon, Inc.'s
                  Quarterly Report on Form 10-Q for the quarter ended March
                  31, 1996)
    10.61      -- Amended and Restated Credit Agreement, dated as of
                  December 19, 1997, among Pillowtex Corporation, certain
                  Lenders named therein, and NationsBank of Texas, N.A., as
                  Administrative Agent (incorporated by reference to
                  Exhibit 10.1 to Pillowtex Corporation's Current Report on
                  Form 8-K (No. 001-11756) filed on January 6, 1998)
    10.62      -- Term Credit Agreement, dated as of December 19, 1997,
                  among Pillowtex Corporation, certain Lenders named
                  herein, and NationsBank of Texas, N.A., as Administrative
                  Agent (incorporated by reference to Exhibit 10.2 to
                  Pillowtex Corporation's Current Report on Form 8-K (No.
                  001-11756) filed on January 6, 1998)
    10.63      -- Preferred Stock Purchase Agreement, dated as of September
                  10, 1997, by and among Pillowtex Corporation, Apollo
                  Investment Fund III, L.P., Apollo Overseas Partners III,
                  L.P., and Apollo (UK) Partners III, L.P. (incorporated by
                  reference to Exhibit 10.2 to Pillowtex Corporation's
                  Current Report on Form 8-K dated September 10, 1997, as
                  amended by a Form 8-K/A (Amendment No. 1) dated September
                  10, 1997)
</TABLE>
 
                                      II-21
<PAGE>   122
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS
   -------                       -----------------------
<C>            <S>
    10.64      -- Amendment No. 1 to the Preferred Stock Purchase
                  Agreement, dated as of November 21, 1997, by and among
                  Pillowtex Corporation, Apollo Investment Fund III, L.P.,
                  Apollo Overseas Partners III, L.P., and Apollo (UK)
                  Partners III, L.P. (incorporated by reference to Exhibit
                  10.1 to Pillowtex Corporation's Current Report on Form
                  8-K dated November 21, 1997)
    10.65      -- Purchase Agreement, dated December 15, 1997, among
                  Pillowtex Corporation, the guarantors listed on the
                  signature page thereto, and NationsBanc Montgomery
                  Securities, Inc. and Bear, Stearns & Co. Inc.
                  (incorporated by reference to Exhibit 10.5 to Pillowtex
                  Corporation's Current Report on Form 8-K (No. 001-11756)
                  filed on January 6, 1998)
    10.66      -- Purchase Agreement Supplement, dated December 19, 1997,
                  among Pillowtex Corporation, the guarantors listed on the
                  signature page thereto, and NationsBank Montgomery
                  Securities, Inc. and Bear, Stearns & Co. Inc.
                  (incorporated by reference to Exhibit 10.6 to Pillowtex
                  Corporation's Current Report on Form 8-K (No. 001-11756)
                  filed on January 6, 1998)
    11.1       -- Fieldcrest Cannon, Inc.'s Computation of Primary and
                  Fully Diluted Net Income Per Share (incorporated by
                  reference to Exhibit 11 to Fieldcrest Cannon, Inc.'s
                  Annual Report on Form 10-K for the fiscal year ended
                  December 31, 1996)
    11.2       -- Fieldcrest Cannon, Inc.'s Computation of Primary and
                  Fully Diluted Net Income Per Share (incorporated by
                  reference to Exhibit 11 to Fieldcrest Cannon, Inc.'s
                  Quarterly Report on Form 10-Q for the quarter ended
                  September 30, 1997)
   *12.1       -- Statement regarding computation of ratios
    16.1       -- Letter from Ernst & Young LLP (incorporated by reference
                  to Exhibit 16.1 to Fieldcrest Cannon, Inc.'s Current
                  Report on Form 8-K (No. 002-79328) filed on December 29,
                  1997)
    21.1       -- List of Pillowtex Corporation's Principal Operating
                  Subsidiaries (incorporated by reference to Exhibit 21.1
                  to Pillowtex Corporation's Form S-4 (No. 333-17731) filed
                  on December 12, 1996)
    21.2       -- List of Fieldcrest Cannon, Inc.'s Principal Operating
                  Subsidiaries (incorporated by reference to Exhibit 21 to
                  Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1996)
    23.1       -- Consent of Jones, Day, Reavis & Pogue (included in
                  Exhibit 5.1)
   *23.2       -- Consent of KPMG Peat Marwick LLP
   *23.3       -- Consent of Ernst & Young LLP
   *24.1       -- Powers of Attorney
   *25.1       -- Statement of eligibility under the Trust Indenture Act of
                  1939 on Form T-1
   *99.1       -- Form of Letter of Transmittal
   *99.2       -- Form of Notice of Guaranteed Delivery
</TABLE>
 
- ---------------
 
* Filed herewith
 
+ To be filed by amendment
 
                                      II-22
<PAGE>   123
 
ITEM 22.  UNDERTAKINGS
 
     (a) The undersigned registrant hereby undertakes:
 
          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this registration statement:
 
             (i) To include any prospectus required by Section 10(a)(3) of the
        Securities Act of 1933;
 
             (ii) To reflect in the prospectus any facts or events arising after
        the effective date of the registration statement (or the most recent
        post-effective amendment thereof) which, individually or in the
        aggregate, represent a fundamental change in the information set forth
        in the registration statement. Notwithstanding the foregoing, any
        increase or decrease in volume of securities offered (if the total
        dollar value of securities offered would not exceed that which was
        registered) and any deviation from the low or high end of the estimated
        maximum offering range may be reflected in the form of prospectus filed
        with the Commission pursuant to Rule 424(b) if, in the aggregate, the
        changes in volume and price represent no more than a 20% change in the
        maximum aggregate offering price set forth in the "Calculation of
        Registration Fee" table in the effective registration statement; and
 
             (iii) To include any material information with respect to the plan
        of distribution not previously disclosed in the registration statement
        or any material change to such information in the registration
        statement;
 
     provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
     registration statement is on Form S-3 or Form S-8, and the information
     required to be included in a post-effective amendment by those paragraphs
     is contained in periodic reports filed with or furnished to the Commission
     by the registrant pursuant to Sections 13 or 15(d) of the Securities
     Exchange Act of 1934 that are incorporated by reference in the registration
     statement.
 
          (2) That, for the purpose of determining any liability under the
     Securities Act of 1933, each such post-effective amendment shall be deemed
     to be a new registration statement relating to the securities offered
     therein, and the offering of such securities at that time shall be deemed
     to be the initial bona fide offering thereof.
 
          (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.
 
     (b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
 
     (c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnifica-
 
                                      II-23
<PAGE>   124
 
tion by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
 
     (d) The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
 
     (e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
 
     (f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
 
                                      II-24
<PAGE>   125
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Pillowtex
Corporation has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas on February 11, 1998.
 
                                          PILLOWTEX CORPORATION
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                               President and Chief Operating
                                                      Officer, Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                            Chairman of the Board and Chief Executive Officer;
- ---------------------------------------------            Director (Principal Executive Officer)
           Charles M. Hansen, Jr.
 
                      *                                                 Director
- ---------------------------------------------
            Christopher N. Baker
 
                      *                                                 Director
- ---------------------------------------------
               Kevin M. Finlay
 
                      *                                                 Director
- ---------------------------------------------
              Scott E. Shimizu
 
                      *                                                 Director
- ---------------------------------------------
            Mary R. Silverthorne
 
                      *                                                 Director
- ---------------------------------------------
              William B. Madden
 
                      *                                                 Director
- ---------------------------------------------
              M. Joseph McHugh
 
                      *                                                 Director
- ---------------------------------------------
              Paul G. Gillease
 
                      *                                                 Director
- ---------------------------------------------
               Ralph La Rovere
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-25
<PAGE>   126
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Amoskeag
Company has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Dallas, State of
Texas on February 11, 1998.
 
                                          AMOSKEAG COMPANY
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                         President
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-26
<PAGE>   127
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Amoskeag
Management Corporation has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Dallas, State of Texas on February 11, 1998.
 
                                          AMOSKEAG MANAGEMENT CORPORATION
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-27
<PAGE>   128
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Bangor
Investment Company has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas on February 11, 1998.
 
                                          BANGOR INVESTMENT COMPANY
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                                 Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
 
                      *                                 Vice President and Controller; Director
- ---------------------------------------------
              Ronald M. Wehtje
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-28
<PAGE>   129
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Beacon
Manufacturing Company has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Dallas, State of Texas on February 11, 1998.
 
                                          BEACON MANUFACTURING COMPANY
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                    President and Chief
                                                Operating Officer, Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                            Chairman of the Board and Chief Executive Officer;
- ---------------------------------------------            Director (Principal Executive Officer)
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-29
<PAGE>   130
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Crestfield
Cotton Company has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas on February 11, 1998.
 
                                          CRESTFIELD COTTON COMPANY
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-30
<PAGE>   131
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Downeast
Securities Corporation has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Dallas, State of Texas on February 11, 1998.
 
                                          DOWNEAST SECURITIES CORPORATION
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-31
<PAGE>   132
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Encee, Inc. has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on
February 11, 1998.
 
                                          ENCEE, INC.
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-32
<PAGE>   133
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, FCC Canada,
Inc. has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Dallas, State of
Texas on February 11, 1998.
 
                                          FCC CANADA, INC.
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-33
<PAGE>   134
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Fieldcrest
Cannon, Inc. has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas on February 11, 1998.
 
                                          FIELDCREST CANNON, INC.
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-34
<PAGE>   135
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Fieldcrest
Cannon Financing, Inc. has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Dallas, State of Texas on February 11, 1998.
 
                                          FIELDCREST CANNON FINANCING, INC.
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-35
<PAGE>   136
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Fieldcrest
Cannon International, Inc. has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Dallas, State of Texas on February 11, 1998.
 
                                        FIELDCREST CANNON INTERNATIONAL, INC.
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
 
                      *                                 Vice President and Controller; Director
- ---------------------------------------------
              Ronald M. Wehtje
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-36
<PAGE>   137
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Fieldcrest
Cannon Licensing, Inc. has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Dallas, State of Texas on February 11, 1998.
 
                                          FIELDCREST CANNON LICENSING, INC.
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-37
<PAGE>   138
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Fieldcrest
Cannon Sure Fit, Inc. has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Dallas, State of Texas on February 11, 1998.
 
                                          FIELDCREST CANNON SURE FIT, INC.
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-38
<PAGE>   139
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Fieldcrest
Cannon Transportation, Inc. has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Dallas, State of Texas on February 11, 1998.
 
FIELDCREST CANNON TRANSPORTATION, INC.
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-39
<PAGE>   140
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Manetta Home
Fashions, Inc. has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas on February 11, 1998.
 
                                          MANETTA HOME FASHIONS, INC.
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                    President and Chief
                                                Operating Officer, Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                            Chairman of the Board and Chief Executive Officer;
- ---------------------------------------------            Director (Principal Executive Officer)
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-40
<PAGE>   141
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Moore's Falls
Corporation has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas on February 11, 1998.
 
                                          MOORE'S FALLS CORPORATION
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
 
                      *                                 Vice President and Controller; Director
- ---------------------------------------------
              Ronald M. Wehtje
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-41
<PAGE>   142
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Pillowtex, Inc.
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on
February 11, 1998.
 
                                          PILLOWTEX, INC.
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                    President and Chief
                                                Operating Officer, Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                            Chairman of the Board and Chief Executive Officer;
- ---------------------------------------------            Director (Principal Executive Officer)
           Charles M. Hansen, Jr.
 
                      *                                            Resident Director
- ---------------------------------------------
            Charles H. Slaybaugh
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-42
<PAGE>   143
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Pillowtex
Management Services Company has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Dallas, State of Texas on February 11, 1998.
 
PILLOWTEX MANAGEMENT SERVICES COMPANY
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                               President and Managing Trustee
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                             Managing Trustee and President -- Manufacturing
- ---------------------------------------------                           Division
            Christopher N. Baker
 
                      *                                             Managing Trustee
- ---------------------------------------------
              Scott E. Shimizu
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-43
<PAGE>   144
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, PTEX Holding
Company has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Dallas, State of
Texas on February 11, 1998.
 
                                          PTEX HOLDING COMPANY
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                    President and Chief
                                                Operating Officer, Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                            Chairman of the Board and Chief Executive Officer;
- ---------------------------------------------            Director (Principal Executive Officer)
           Charles M. Hansen, Jr.
 
                      *                                            Resident Director
- ---------------------------------------------
            Charles H. Slaybaugh
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-44
<PAGE>   145
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, St. Marys, Inc.
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on
February 11, 1998.
 
                                          ST. MARYS, INC.
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                   President and Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                                   Chief Executive Officer and Director
- ---------------------------------------------
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-45
<PAGE>   146
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Tennessee
Woolen Mills, Inc. has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas on February 11, 1998.
 
                                          TENNESSEE WOOLEN MILLS, INC.
 
                                          By      /s/ JEFFREY D. CORDES
                                            ------------------------------------
                                                     Jeffrey D. Cordes
                                                    President and Chief
                                                Operating Officer, Director
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on February 11, 1998.
 
<TABLE>
<CAPTION>
                 SIGNATURES                                              TITLE
                 ----------                                              -----
<C>                                                <C>
                      *                            Chairman of the Board and Chief Executive Officer;
- ---------------------------------------------            Director (Principal Executive Officer)
           Charles M. Hansen, Jr.
</TABLE>
 
The undersigned, by signing his name hereto, does sign and execute this
Registration Statement pursuant to the Powers of Attorney executed on behalf of
the above-named officers and directors and filed herewith.
 
                                                 /s/ JEFFREY D. CORDES
                                          --------------------------------------
                                                    Jeffrey D. Cordes
                                                     Attorney-in-Fact
 
                                      II-46
<PAGE>   147
 
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS                     PAGE NUMBER
   -------                       -----------------------                     -----------
<C>            <S>                                                           <C>
     2.1       -- Agreement and Plan of Merger, dated as of September 10,        NOT
                  1997, by and among Pillowtex Corporation, Pegasus Merger   APPLICABLE
                  Sub, Inc., and Fieldcrest Cannon, Inc. (incorporated by
                  reference to Exhibit 2.1 to Pillowtex Corporation's
                  Registration Statement on Form S-4 (No. 333-36663) filed
                  on September 29, 1997)
     2.2       -- Amendment to Agreement and Plan of Merger, dated as of         NOT
                  September 23, 1997, by and among Pillowtex Corporation,    APPLICABLE
                  Pegasus Merger Sub, Inc., and Fieldcrest Cannon, Inc.
                  (incorporated by reference to Exhibit 2.2 to Pillowtex
                  Corporation's Registration Statement on Form S-4 (No.
                  333-36663) filed on September 29, 1997)
     3.1       -- Restated Articles of Incorporation of Pillowtex                NOT
                  Corporation, as amended (incorporated by reference to      APPLICABLE
                  Exhibit 3.1 to Pillowtex Corporation's Current Report on
                  Form 8-K (No. 001-11756) filed on January 6, 1998)
     3.2       -- Amended and Restated Bylaws of Pillowtex Corporation, as       NOT
                  amended (incorporated by reference to Exhibit 3.2 to       APPLICABLE
                  Pillowtex Corporation's Annual Report on Form 10-K for
                  the fiscal year ended December 30, 1994)
     3.3       -- Restated Certificate of Incorporation of Fieldcrest            NOT
                  Cannon, Inc., as amended (incorporated by reference to     APPLICABLE
                  Exhibit 3.1 to Fieldcrest Cannon, Inc.'s Registration
                  Statement on Form S-3 (No. 33-52325) filed on February
                  18, 1994)
     3.4       -- Amended and Restated Bylaws of Fieldcrest Cannon, Inc.,        NOT
                  as amended (incorporated by reference to Exhibit 3.1 of    APPLICABLE
                  Fieldcrest Cannon, Inc.'s Current Report on Form 8-K
                  dated November 24, 1993)
    *3.5       -- Amended and Restated Certificate of Incorporation of
                  Amoskeag Company
    *3.6       -- Bylaws of Amoskeag Company, as amended
    *3.7       -- Certificate of Incorporation of Amoskeag Management
                  Corporation
    *3.8       -- Bylaws of Amoskeag Management Corporation
    *3.9       -- Articles of Incorporation of Bangor Investment Company,
                  as amended
    *3.10      -- Bylaws of Bangor Investment Company
    *3.11      -- Articles of Amendment of Beacon Manufacturing Company
    *3.12      -- Amended and Restated Bylaws of Beacon Manufacturing
                  Company
    *3.13      -- Charter of Crestfield Cotton Company, as amended
    *3.14      -- Bylaws of Crestfield Cotton Company, as amended
    *3.15      -- Certificate of Incorporation of Downeast Securities
                  Corporation, as amended
    *3.16      -- Bylaws of Downeast Securities Corporation
    *3.17      -- Certificate of Incorporation of Encee, Inc.
    *3.18      -- Bylaws of Encee, Inc.
    *3.19      -- Certificate of Incorporation of FCC Canada, Inc.
    *3.20      -- Bylaws of FCC Canada, Inc.
    *3.21      -- Certificate of Incorporation of Fieldcrest Cannon
                  Financing, Inc.
    *3.22      -- Bylaws of Fieldcrest Cannon Financing, Inc.
</TABLE>
 
                                      II-47
<PAGE>   148
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER                                   DESCRIPTION OF EXHIBITS                                    PAGE NUMBER
- ---------  -------------------------------------------------------------------------------------  -----------------
<C>        <S>                                                                                    <C>
   *3.23   -- Certificate of Incorporation Fieldcrest Cannon International, Inc., as amended
   *3.24   -- Bylaws of Fieldcrest Cannon International, Inc., as amended
   *3.25   -- Certificate of Incorporation of Fieldcrest Cannon Licensing, Inc.
   *3.26   -- Bylaws of Fieldcrest Cannon Licensing, Inc.
   *3.27   -- Certificate of Incorporation of Fieldcrest Cannon Sure Fit, Inc.
   *3.28   -- Bylaws of Fieldcrest Cannon Sure Fit, Inc.
   *3.29   -- Certificate of Incorporation of Fieldcrest Cannon Transportation, Inc.
   *3.30   -- Bylaws of Fieldcrest Cannon Transportation, Inc.
   *3.31   -- Articles of Incorporation of Manetta Home Fashions, Inc., as amended
   *3.32   -- Bylaws of Manetta Home Fashions, Inc.
   *3.33   -- Certificate of Incorporation of Moore's Falls Corporation, as amended
   *3.34   -- Bylaws of Moore's Falls Corporation
   *3.35   -- Certificate of Incorporation of Pillowtex, Inc.
   *3.36   -- Bylaws of Pillowtex, Inc.
   *3.37   -- Certificate of Trust of Pillowtex Management Services Company
   *3.38   -- Declaration of Trust of Pillowtex Management Services Company
   *3.39   -- Certificate of Incorporation of PTEX Holding Company
   *3.40   -- Bylaws of PTEX Holding Company
   *3.41   -- Certificate of Incorporation of St. Mary's, Inc.
   *3.42   -- Bylaws of St. Mary's, Inc.
   *3.43   -- Articles of Amendment to the Restated Charter of Tennessee Woolen Mills, Inc.
   *3.44   -- Bylaws of Tennessee Woolen Mills, Inc.
   *4.1    -- Indenture, dated as of December 18, 1997, among Pillowtex Corporation, the
              guarantors listed on the signature page thereto, and Norwest Bank Minnesota,
              National Association, as Trustee
   *4.2    -- Supplemental Indenture, dated as of December 19, 1997, among Pillowtex
              Corporation, the guarantors listed on the signature page thereto, and Norwest Bank
              Minnesota, National Association, as Trustee
    4.3    -- Registration Rights Agreement, dated as of December 18, 1997, among Pillowtex        NOT APPLICABLE
              Corporation, the guarantors listed on the signature page thereto, and NationsBanc
              Montgomery Securities, Inc. and Bear, Stearns & Co. Inc. (incorporated by
              reference to Exhibit 10.7 to Pillowtex Corporation's Current Report on Form 8-K
              (No. 001-11756) filed on January 6, 1998)
    4.4    -- Registration Rights Agreement Supplement, dated as of December 19, 1997, among       NOT APPLICABLE
              Pillowtex Corporation, the guarantors listed on the signature page thereto, and
              NationsBanc Montgomery Securities, Inc. and Bear, Stearns & Co. Inc. (incorporated
              by reference to Exhibit 10.8 to Pillowtex Corporation's Current Report on Form 8-K
              (No. 001-11756) filed on January 6, 1998)
   *4.5    -- Form of 9% Senior Subordinated Note
   *4.6    -- Form of Guarantee
  **5.1    -- Opinion of Jones, Day, Reavis & Pogue regarding the legality of securities to be
              issued
</TABLE>
 
                                      II-48
<PAGE>   149
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS                     PAGE NUMBER
   -------                       -----------------------                     -----------
<C>            <S>                                                           <C>
     9.1       -- Voting Agreement, dated as of October 2, 1997, by and          NOT
                  between Pillowtex Corporation and Charles M. Hansen, Jr.   APPLICABLE
                  (incorporated by reference to Exhibit 9.1 to Pillowtex
                  Corporation's Registration Statement on Form S-4 (No.
                  333-36663) filed on September 29, 1997)
     9.2       -- Voting Agreement, dated as of October 2, 1997, by and          NOT
                  between Pillowtex Corporation, on the one hand, and Mary   APPLICABLE
                  R. Silverthorne, the John H. Silverthorne Marital Trust
                  B, and the John H. Silverthorne Family Trust A, on the
                  other hand (incorporated by reference to Exhibit 9.2 to
                  Pillowtex Corporation's Registration Statement on Form
                  S-4 (No. 333-36663) filed on September 29, 1997)
    10.1       -- Commitment Letter, dated September 10, 1997, by and            NOT
                  between NationsBank of Texas, N.A. and Pillowtex           APPLICABLE
                  Corporation (incorporated by reference to Exhibit 10.1 to
                  Pillowtex Corporation's Current Report on Form 8-K dated
                  September 10, 1997, as amended by a Form 8-K/A (Amendment
                  No. 1) dated September 10, 1997)
    10.2       -- Registration Rights Agreement, dated as of November 12,        NOT
                  1996, by and among Pillowtex Corporation, each domestic    APPLICABLE
                  subsidiary of Pillowtex Corporation, and NationsBanc
                  Capital Markets, Inc., and Merrill Lynch, Pierce, Fenner
                  & Smith, Incorporated (incorporated by reference to
                  Exhibit 10.59 to Pillowtex Corporation's Form S-4 (No.
                  333-17731) filed on December 12, 1996)
    10.3       -- Restated Credit Agreement, dated as of November 12, 1996,      NOT
                  by and among Pillowtex Corporation and NationsBank of      APPLICABLE
                  Texas, N.A., as Agent for the Lenders specified therein
                  (excludes Schedules) (incorporated by reference to
                  Exhibit 10.60 to Pillowtex Corporation's Form S-4 (No.
                  333-17731) filed on December 12, 1996)
    10.4       -- Form of Swing-Line Note, dated as of November 12, 1996,        NOT
                  by and among Pillowtex Corporation and NationsBank of      APPLICABLE
                  Texas, N.A. (incorporated by reference to Exhibit 10.61
                  to Pillowtex Corporation's Form S-4 (No. 333-17731) filed
                  on December 12, 1996)
    10.5       -- Form of Revolving Note, by and among Pillowtex                 NOT
                  Corporation and NationsBank of Texas, N.A. (incorporated   APPLICABLE
                  by reference to Exhibit 10.62 to Pillowtex Corporation's
                  Form S-4 (No. 333-17731) filed on December 12, 1996)
    10.6       -- Form of Restated Guaranty, by and among Beacon                 NOT
                  Manufacturing Company, Manetta Home Fashions, Inc.,        APPLICABLE
                  Tennessee Woolen Mills, Inc., Pillowtex, Inc., PTEX
                  Holding Company, and Pillowtex Management Services
                  Company as guarantors, NationsBank of Texas, N.A. as
                  Agent, and Pillowtex Corporation as Borrower
                  (incorporated by reference to Exhibit 10.63 to Pillowtex
                  Corporation's Form S-4 (No. 333-17731) filed on December
                  12, 1996)
    10.7       -- Form of Restated Security Agreement, by and among              NOT
                  Pillowtex Corporation as Debtor/Borrower, NationsBank of   APPLICABLE
                  Texas, N.A. as Secured Party, and Beacon Manufacturing
                  Company, Manetta Home Fashions, Inc., Tennessee Woolen
                  Mills, Inc., Pillowtex, Inc., PTEX Holding Company, and
                  Pillowtex Management Services Company as Subsidiary
                  Debtors (incorporated by reference to Exhibit 10.64 to
                  Pillowtex Corporation's Form S-4 (No. 333-17731) filed on
                  December 12, 1996)
</TABLE>
 
                                      II-49
<PAGE>   150
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS                     PAGE NUMBER
   -------                       -----------------------                     -----------
<C>            <S>                                                           <C>
    10.8       -- Asset Purchase Agreement, dated as of October 3, 1996, by      NOT
                  and among Pillowtex Corporation and Fieldcrest Cannon,     APPLICABLE
                  Inc. (incorporated by reference to Exhibit 10.65 to
                  Pillowtex Corporation's Form S-4 (No. 333-17731) filed on
                  December 12, 1996)
    10.9       -- Mississippi Business Finance Corporation Industrial            NOT
                  Development Variable Rate Demand Notes (Pillowtex          APPLICABLE
                  Corporation Project) Series 1992 Loan Agreement,
                  Indenture of Trust, Promissory Note, Remarketing and
                  Interest Services Agreement, Placement Agreement, Deed of
                  Trust and Security Agreement, Bond Fund Trustee
                  Agreement, Reimbursement Agreement, and Lease Agreement
                  (including First Amendment) (incorporated by reference to
                  Exhibit 10.3 to Pillowtex Corporation's Registration
                  Statement on Form S-1 (No. 33-57314) filed on January 22,
                  1993)
    10.10      -- Second through Fourth Amendment to Mississippi Business        NOT
                  Finance Corporation Industrial Development Variable Rate   APPLICABLE
                  Demand Notes (Pillowtex Corporation Project) Loan
                  Agreement (incorporated by reference to Exhibit 10.4 to
                  Pillowtex Corporation's Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1993)
    10.11      -- Deed of Trust (with Security Agreement and Assignment of       NOT
                  Rents and Leases), dated as of July 15, 1988, between      APPLICABLE
                  Pillowtex Corporation and Principal Mutual Life Insurance
                  Company, as amended, Deed of Trust Note, and Loan
                  Modification and Amendment Agreement (incorporated by
                  reference to Exhibit 10.5 to Pillowtex Corporation's
                  Registration Statement on Form S-1 (No. 33-57314) filed
                  on January 22, 1993)
    10.12      -- Second Loan Agreement Modification and Amendment               NOT
                  Agreement dated as of January 19, 1993, between Pillowtex  APPLICABLE
                  Corporation and Principal Mutual Life Insurance Company
                  (incorporated by reference to Exhibit 10.6 to Pillowtex
                  Corporation's Registration Statement on Form S-1 (No.
                  33-57314) filed on January 22, 1993)
    10.13      -- Deed of Trust Note dated as of July 15, 1988, from             NOT
                  Pillowtex Corporation to Principal Mutual Life Insurance   APPLICABLE
                  Company (incorporated by reference to Exhibit 10.7 to
                  Pillowtex Corporation's Registration Statement on Form
                  S-1 (No. 33-57314) filed on January 22, 1993)
    10.14      -- Loan and Security Agreement dated April 6, 1992, between       NOT
                  MetLife Capital Corporation and Pillowtex Corporation, as  APPLICABLE
                  amended, and including Term Note dated June 5, 1992
                  (incorporated by reference to Exhibit 10.8 to Pillowtex
                  Corporation's Registration Statement on Form S-1 (No.
                  33-57314) filed on January 22, 1993)
    10.15      -- Pennsylvania Economic Development Financing Authority          NOT
                  ("PEDFA") Economic Development Revenue Bonds 1990 Series   APPLICABLE
                  C (Silversen-Hanover Corporation Project), dated April 1,
                  1990, Indenture of Trust between PEDFA and First
                  Pennsylvania Bank; Financing Agreement between PEDFA and
                  Silversen-Hanover Corporation; Bond Placement Agreement
                  among PEDFA, NCNB National Bank of North Carolina, and
                  Silversen-Hanover Corporation; Reimbursement Agreement
                  between Silversen-Hanover Corporation and NCNB National
                  Bank of North Carolina; and Form of Bond (incorporated by
                  reference to Exhibit 10.44 to Pillowtex Corporation's
                  Annual Report on Form 10-K for the fiscal year ended
                  December 31, 1993)
</TABLE>
 
                                      II-50
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<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS                     PAGE NUMBER
   -------                       -----------------------                     -----------
<C>            <S>                                                           <C>
    10.16      -- Distribution Agreement, dated February 1, 1995 by and          NOT
                  among Beacon Manufacturing Company, Manetta Home           APPLICABLE
                  Fashions, Inc.,Tennessee Woolen Mills, Inc., NEMCOR,
                  Inc., Norm McIntyre, Tim McIntyre, and Don McIntyre
                  (incorporated by reference to Exhibit 10.35 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1994)
    10.17      -- The Priorities Agreement, dated February 27, 1995,             NOT
                  between Toronto Dominion Bank, Manetta Home Fashions,      APPLICABLE
                  Inc., Tennessee Woolen Mills, Beacon Manufacturing
                  Company, and NEMCOR, Inc. (incorporated by reference to
                  Exhibit 10.36 to Pillowtex Corporation's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1994)
    10.18      -- A Guarantee, dated February 27, 1995, between Beacon           NOT
                  Manufacturing Company, Manetta Home Fashions, Inc.,        APPLICABLE
                  Tennessee Woolen Mills, Inc., and NEMCOR, Inc.
                  (incorporated by reference to Exhibit 10.37 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 30, 1994)
    10.19      -- Security Agreement, dated February 16, 1995, between           NOT
                  NEMCOR, Inc. and Manetta Home Fashions, Inc.               APPLICABLE
                  (incorporated by reference to Exhibit 10.38 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1994)
    10.20      -- Security Agreement, dated February 16, 1995, between           NOT
                  NEMCOR, Inc. and Tennessee Woolen Mills, Inc.              APPLICABLE
                  (incorporated by reference to Exhibit 10.39 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1994)
    10.21      -- Security Agreement, dated February 16, 1995, between           NOT
                  NEMCOR, Inc. and Beacon Manufacturing Company              APPLICABLE
                  (incorporated by reference to Exhibit 10.40 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1994)
    10.22      -- Amended and Restated Acquisition Agreement, dated as of        NOT
                  November 30, 1994, by and among David H. Murdock, Beacon   APPLICABLE
                  Manufacturing Company, Wiscassett Mills Company,
                  Pillowtex Corporation, Be-Ac, Inc., Realmac, Inc., and
                  Wiscat, Inc. (incorporated by reference to Exhibit 10.41
                  to Pillowtex Corporation's Current Report on Form 8-K
                  dated December 14, 1994)
    10.23      -- Purchase agreement between Coopers & Lybrand and Torfeaco      NOT
                  Industries Limited for certain assets, dated August 19,    APPLICABLE
                  1994 (incorporated by reference to Exhibit 10.42 to
                  Pillowtex Corporation's Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1994)
    10.24      -- Indenture dated as of February 1, 1994, by and among           NOT
                  Torfeaco Industries Limited and Lodestone Investments      APPLICABLE
                  Limited, Lese Holdings Limited, Golden Elms Limited, M.
                  Swadron Limited, and Helsinor Investments Limited
                  (incorporated by reference to Exhibit 10.29 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1993)
    10.25      -- Sublicense Agreement, dated as of July 1, 1995, between        NOT
                  Pillowtex Corporation and the Ralph Lauren Home            APPLICABLE
                  Collection (incorporated by reference to Exhibit 10 to
                  Pillowtex Corporation's Quarterly on Form 10-Q for the
                  quarter ended July 1, 1995)
</TABLE>
 
                                      II-51
<PAGE>   152
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS                     PAGE NUMBER
   -------                       -----------------------                     -----------
<C>            <S>                                                           <C>
    10.26      -- Lease Agreement, dated as of September 18, 1995, between       NOT
                  Pillowtex Corporation and Sanwa Business Credit Corp.      APPLICABLE
                  (incorporated by reference to Exhibit 10.4 to Pillowtex
                  Corporation's Quarterly Report on Form 10-Q, as amended
                  for the quarter ended September 30, 1995)
    10.27      -- Agreement of Lease, dated May 23, 1995, between Ten            NOT
                  Seventy One Joint Venture and Pillowtex Corporation        APPLICABLE
                  (incorporated by reference to Exhibit 10.66 to Pillowtex
                  Corporation's Annual Report on Form 10-K for the fiscal
                  year ended December 30, 1995)
    10.28      -- Lease, dated as of March 1, 1977, by and among Torfeaco        NOT
                  Industries Limited and Standa Investment Limited, and      APPLICABLE
                  Sharon Construction Limited (incorporated by reference to
                  Exhibit 10.43 to Pillowtex Corporation's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1993)
    10.29      -- Industrial Lease, dated as of November 23, 1992, between       NOT
                  Angel and Jean Echevarria and Pillowtex Corporation        APPLICABLE
                  (incorporated by reference to Exhibit 10.21 to Pillowtex
                  Corporation's Registration Statement on Form S-1 (No.
                  33-57314) filed on January 22, 1993)
    10.30      -- Form of Lease, dated as of October 12, 1988, between           NOT
                  Jimmie D. Smith, Jr. and Pillowtex Corporation             APPLICABLE
                  (incorporated by reference to Exhibit 10.23 to Pillowtex
                  Corporation's Registration Statement on Form S-1 (No.
                  33-57314) filed on January 22, 1993)
    10.31      -- Form of Equipment Leasing Agreement between BTM Financial      NOT
                  & Leasing Corporation B-4 and Beacon Manufacturing         APPLICABLE
                  Company, Manetta Home Fashions, Inc., and Tennessee
                  Woolen Mills, Inc., dated as of June 14, 1996 (without
                  Exhibits) (incorporated by reference to Exhibit 10 to
                  Pillowtex Corporation's Quarterly Report on Form 10-Q for
                  the quarter ended June 30, 1996)
    10.32      -- Employment Agreement dated as of January 1, 1993, between      NOT
                  Pillowtex Corporation and Charles M. Hansen, Jr.           APPLICABLE
                  (incorporated by reference to Exhibit 10.2 to Pillowtex
                  Corporation's Registration Statement on Form S-1 (No.
                  33-57314) filed on January 22, 1993)
    10.33      -- Amendment to Employment Agreement, dated as of July 26,        NOT
                  1993, between Pillowtex Corporation and Charles M.         APPLICABLE
                  Hansen, Jr. (incorporated by reference to Exhibit 10.26
                  to Pillowtex Corporation's Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1993)
    10.34      -- Forms of Employment Agreement dated as of September 1,         NOT
                  1995, between Pillowtex Corporation and each of            APPLICABLE
                  Christopher N. Baker, Jeffrey D. Cordes, and Scott E.
                  Shimizu (incorporated by reference to Exhibits 10.1,
                  10.2, and 10.3 to Pillowtex Corporation's Quarterly
                  Report on Form 10-Q, as amended, for the quarter ended
                  September 30, 1995)
    10.35      -- Forms of Change of Control Agreement, dated as of              NOT
                  September 1, 1995, between Pillowtex Corporation and each  APPLICABLE
                  of Christopher N. Baker, Jeffrey D. Cordes, and Scott E.
                  Shimizu (incorporated by reference to Exhibits 10.5,
                  10.6, and 10.7 to Pillowtex Corporation's Quarterly
                  Report on Form 10-Q, as amended, for the quarter ended
                  September 30, 1995)
    10.36      -- Form of Confidentiality and Noncompetition Agreement           NOT
                  (incorporated by reference to Exhibit 10.27 to Pillowtex   APPLICABLE
                  Corporation's Registration Statement on Form S-1 (No.
                  33-57314) filed on January 22, 1993)
</TABLE>
 
                                      II-52
<PAGE>   153
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS                     PAGE NUMBER
   -------                       -----------------------                     -----------
<C>            <S>                                                           <C>
    10.37      -- Form of Director Indemnification Agreement (incorporated       NOT
                  by reference to Exhibit 10.36 to Pillowtex Corporation's   APPLICABLE
                  Registration Statement on Form S-1 (No. 33-57314) filed
                  on January 22, 1993)
    10.38      -- Split Dollar Life Insurance Agreement between Pillowtex        NOT
                  Corporation and Charles M. Hansen, Jr. dated July 26,      APPLICABLE
                  1993 (incorporated by reference to Exhibit 10.32 to
                  Pillowtex Corporation's Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1993)
    10.39      -- Pillowtex Corporation 1993 Stock Option Plan                   NOT
                  (incorporated by reference to Appendix A to Pillowtex      APPLICABLE
                  Corporation's Proxy Statement relating to its Annual
                  Meeting of Shareholders held on May 8, 1997)
    10.40      -- Form of Employment Agreement entered into between              NOT
                  Pillowtex Management Services Company and each of          APPLICABLE
                  Christopher N. Baker, Jeffrey D. Cordes, Scott E.
                  Shimizu, and John H. Karnes (incorporated by reference to
                  Exhibit 10.1 to Pillowtex Corporation's Quarterly Report
                  on Form 10-Q for the quarter ended June 28, 1997)
    10.41      -- Form of Guaranty Agreement dated as of April 22, 1997,         NOT
                  between Pillowtex Corporation and each of Christopher N.   APPLICABLE
                  Baker, Jeffrey D. Cordes, Scott E. Shimizu, Kevin M.
                  Finlay, and John H. Karnes (incorporated by reference to
                  Exhibit 10.2 to Pillowtex Corporation's Quarterly Report
                  on Form 10-Q for the quarter ended June 28, 1997)
    10.42      -- Form of Employment Agreement dated as of April 11, 1997,       NOT
                  between Pillowtex Management Services Company and Kevin    APPLICABLE
                  M. Finlay (incorporated by reference to Exhibit 10.3 to
                  Pillowtex Corporation's Quarterly Report on Form 10-Q for
                  the quarter ended June 28, 1997)
    10.43      -- Pillowtex Corporation Supplemental Executive Retirement        NOT
                  Plan, effective as of January 1, 1997 (incorporated by     APPLICABLE
                  reference to Exhibit 10.1.44 to Pillowtex Corporation's
                  Registration Statement on Form S-4 (No. 33-36663) filed
                  on September 29, 1997)
    10.44      -- Pillowtex Corporation Management Incentive Plan                NOT
                  (incorporated by reference to Appendix B to Pillowtex      APPLICABLE
                  Corporation's Proxy Statement relating to its Annual
                  Meeting of Shareholders held on May 8, 1997)
    10.45      -- Amended and Restated Director Stock Option Plan of the         NOT
                  Registrant approved by the stockholders of the             APPLICABLE
                  Corporation on April 28, 1992 (incorporated by reference
                  to Exhibit A to Fieldcrest Cannon, Inc.'s Proxy Statement
                  relating to its Annual Meeting of Stockholders held on
                  April 28, 1992)
    10.46      -- Stock Option Agreement between Fieldcrest Cannon, Inc.         NOT
                  and James M. Fitzgibbons, dated as of September 11, 1991   APPLICABLE
                  (incorporated by reference to Exhibit 4.1 to Fieldcrest
                  Cannon, Inc.'s Registration Statement on Form S-8 (No.
                  33-44703) filed on December 23, 1991)
    10.47      -- Employee Retention Agreement between Fieldcrest Cannon,        NOT
                  Inc. and James M. Fitzgibbons, effective as of July 9,     APPLICABLE
                  1993 (incorporated by reference to Exhibit 10.2 to
                  Fieldcrest Cannon, Inc.'s Quarterly Report on Form 10-Q
                  for the quarter ended September 30, 1993)
    10.48      -- Instrument of Amendment, dated July 15, 1996 between           NOT
                  Fieldcrest Cannon, Inc. and James M. Fitzgibbons           APPLICABLE
                  (incorporated by reference to Exhibit 10.4 to Fieldcrest
                  Cannon, Inc.'s Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1996)
</TABLE>
 
                                      II-53
<PAGE>   154
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS                     PAGE NUMBER
   -------                       -----------------------                     -----------
<C>            <S>                                                           <C>
    10.49      -- Employee Retention Agreement between Fieldcrest Cannon,        NOT
                  Inc. and Robert E. Dellinger, effective as of July 9,      APPLICABLE
                  1993 (incorporated by reference to Exhibit 10.9 to
                  Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for
                  the fiscal year ending December 31, 1993)
    10.50      -- Instrument of Amendment, dated July 29, 1993 between           NOT
                  Fieldcrest Cannon, Inc. and Robert E. Dellinger            APPLICABLE
                  (incorporated by reference to Exhibit 10.10 to Fieldcrest
                  Cannon, Inc.'s Annual Report on Form 10-K for the fiscal
                  year ending December 31, 1993)
    10.51      -- Instrument of Amendment, dated July 15, 1996 between           NOT
                  Fieldcrest Cannon, Inc. and Robert E. Dellinger            APPLICABLE
                  (incorporated by reference to Exhibit 10.7 Fieldcrest
                  Cannon, Inc.'s Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1996)
    10.52      -- Employee Retention Agreement between Fieldcrest Cannon,        NOT
                  Inc. and Thomas R. Staab, effective as of July 9, 1993     APPLICABLE
                  (incorporated by reference to Exhibit 10.8 to Fieldcrest
                  Cannon, Inc.'s Annual Report on Form 10-K for the fiscal
                  year ending December 31, 1995)
    10.53      -- Instrument of Amendment, dated July 29, 1993 between           NOT
                  Fieldcrest Cannon, Inc. and Thomas R. Staab (incorporated  APPLICABLE
                  by reference to Exhibit 10.9 to Fieldcrest Cannon, Inc.'s
                  Annual Report on Form 10-K for the fiscal year ending
                  December 31, 1995)
    10.54      -- Instrument of Amendment, dated July 15, 1996 between           NOT
                  Fieldcrest Cannon, Inc. and Thomas R. Staab (incorporated  APPLICABLE
                  by reference to Exhibit 10.10 to Fieldcrest Cannon,
                  Inc.'s Annual Report on Form 10-K for the fiscal year
                  ended December 31, 1996)
    10.55      -- Employee Retention Agreement between Fieldcrest Cannon,        NOT
                  Inc. and John Nevin, effective as of October 3, 1996       APPLICABLE
                  (incorporated by reference to Exhibit 10.11 to Fieldcrest
                  Cannon, Inc.'s Annual Report on Form 10-K for the fiscal
                  year ended December 31, 1996)
    10.56      -- Form of Employee Retention Agreement between Fieldcrest        NOT
                  Cannon, Inc. and other executive officers of Fieldcrest    APPLICABLE
                  Cannon, Inc., effective as of July 9, 1993 (incorporated
                  by reference to Exhibit 10.6 to Fieldcrest Cannon, Inc.'s
                  Quarterly Report on Form 10-Q for the quarter ended
                  September 30, 1993)
    10.57      -- Form of Instrument of Amendment, dated July 29, 1993           NOT
                  between Fieldcrest Cannon, Inc. and other executive        APPLICABLE
                  officers of Fieldcrest Cannon, Inc. (incorporated by
                  reference to Exhibit 10.7 to Fieldcrest Cannon, Inc.'s
                  Quarterly Report on Form 10-Q for the quarter ended
                  September 30, 1993)
    10.58      -- Form of Instrument of Amendment, dated July 15, 1996           NOT
                  between Fieldcrest Cannon, Inc. and other executive        APPLICABLE
                  officers of Fieldcrest Cannon, Inc. (incorporated by
                  reference to Exhibit 10.14 to Fieldcrest Cannon, Inc.'s
                  Annual Report on Form 10-K for the fiscal year ended
                  December 31, 1996)
    10.59      -- 1995 Employee Stock Option Plan of Fieldcrest Cannon,          NOT
                  Inc. (incorporated by reference to Exhibit 4.1 of          APPLICABLE
                  Fieldcrest Cannon, Inc.'s Registration Statement of Form
                  S-8 (No. 33-59145) filed on May 8, 1995)
    10.60      -- Yarn Purchase Agreement between Parkdale Mills,                NOT
                  Incorporated and Fieldcrest Cannon, Inc. (incorporated by  APPLICABLE
                  reference to Exhibit 10 to Fieldcrest Cannon, Inc.'s
                  Quarterly Report on Form 10-Q for the quarter ended March
                  31, 1996)
</TABLE>
 
                                      II-54
<PAGE>   155
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS                     PAGE NUMBER
   -------                       -----------------------                     -----------
<C>            <S>                                                           <C>
    10.61      -- Amended and Restated Credit Agreement, dated as of             NOT
                  December 19, 1997, among Pillowtex Corporation, certain    APPLICABLE
                  Lenders named therein, and NationsBank of Texas, N.A., as
                  Administrative Agent (incorporated by reference to
                  Exhibit 10.1 to Pillowtex Corporation's Current Report on
                  Form 8-K (No. 001-11756) filed on January 6, 1998)
    10.62      -- Term Credit Agreement, dated as of December 19, 1997,          NOT
                  among Pillowtex Corporation, certain Lenders named         APPLICABLE
                  herein, and NationsBank of Texas, N.A., as Administrative
                  Agent (incorporated by reference to Exhibit 10.2 to
                  Pillowtex Corporation's Current Report on Form 8-K (No.
                  001-11756) filed on January 6, 1998)
    10.63      -- Preferred Stock Purchase Agreement, dated as of September      NOT
                  10, 1997, by and among Pillowtex Corporation, Apollo       APPLICABLE
                  Investment Fund III, L.P., Apollo Overseas Partners III,
                  L.P., and Apollo (UK) Partners III, L.P. (incorporated by
                  reference to Exhibit 10.2 to Pillowtex Corporation's
                  Current Report on Form 8-K dated September 10, 1997, as
                  amended by a Form 8-K/A (Amendment No. 1) dated September
                  10, 1997)
    10.64      -- Amendment No. 1 to the Preferred Stock Purchase                NOT
                  Agreement, dated as of November 21, 1997, by and among     APPLICABLE
                  Pillowtex Corporation, Apollo Investment Fund III, L.P.,
                  Apollo Overseas Partners III, L.P., and Apollo (UK)
                  Partners III, L.P. (incorporated by reference to Exhibit
                  10.1 to Pillowtex Corporation's Current Report on Form
                  8-K dated November 21, 1997)
    10.65      -- Purchase Agreement, dated December 15, 1997, among             NOT
                  Pillowtex Corporation, the guarantors listed on the        APPLICABLE
                  signature page thereto, and NationsBanc Montgomery
                  Securities, Inc. and Bear, Stearns & Co. Inc.
                  (incorporated by reference to Exhibit 10.5 to Pillowtex
                  Corporation's Current Report on Form 8-K (No. 001-11756)
                  filed on January 6, 1998)
    10.66      -- Purchase Agreement Supplement, dated December 19, 1997,        NOT
                  among Pillowtex Corporation, the guarantors listed on the  APPLICABLE
                  signature page thereto, and NationsBank Montgomery
                  Securities, Inc. and Bear, Stearns & Co. Inc.
                  (incorporated by reference to Exhibit 10.6 to Pillowtex
                  Corporation's Current Report on Form 8-K (No. 001-11756)
                  filed on January 6, 1998)
    11.1       -- Fieldcrest Cannon, Inc.'s Computation of Primary and           NOT
                  Fully Diluted Net Income Per Share (incorporated by        APPLICABLE
                  reference to Exhibit 11 to Fieldcrest Cannon, Inc.'s
                  Annual Report on Form 10-K for the fiscal year ended
                  December 31, 1996)
    11.2       -- Fieldcrest Cannon, Inc.'s Computation of Primary and           NOT
                  Fully Diluted Net Income Per Share (incorporated by        APPLICABLE
                  reference to Exhibit 11 to Fieldcrest Cannon, Inc.'s
                  Quarterly Report on Form 10-Q for the quarter ended
                  September 30, 1997)
   *12.1       -- Statement regarding computation of ratios earnings to
                  fixed charges
    16.1       -- Letter from Ernst & Young LLP (incorporated by reference       NOT
                  to Exhibit 16.1 to Fieldcrest Cannon, Inc.'s Current       APPLICABLE
                  Report on Form 8-K (No. 002-79328) filed on December 29,
                  1997)
    21.1       -- List of Pillowtex Corporation's Principal Operating            NOT
                  Subsidiaries (incorporated by reference to Exhibit 21.1    APPLICABLE
                  to Pillowtex Corporation's Form S-4 (No. 333-17731) filed
                  on December 12, 1996)
</TABLE>
 
                                      II-55
<PAGE>   156
<TABLE>
<CAPTION>
   EXHIBIT
   NUMBER                        DESCRIPTION OF EXHIBITS                     PAGE NUMBER
   -------                       -----------------------                     -----------
<C>            <S>                                                           <C>
    21.2       -- List of Fieldcrest Cannon, Inc.'s Principal Operating          NOT
                  Subsidiaries (incorporated by reference to Exhibit 21 to   APPLICABLE
                  Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for
                  the fiscal year ended December 31, 1996)
    23.1       -- Consent of Jones, Day, Reavis & Pogue (included in
                  Exhibit 5.1)
   *23.2       -- Consent of KPMG Peat Marwick LLP
   *23.3       -- Consent of Ernst & Young LLP
   *24.1       -- Powers of Attorney
   *25.1       -- Statement of eligibility under the Trust Indenture Act of
                  1939 on Form T-1
   *99.1       -- Form of Letter of Transmittal
   *99.2       -- Form of Notice of Guaranteed Delivery
</TABLE>
 
- ---------------
 
* Filed herewith
 
+ To be filed by amendment
 
                                      II-56

<PAGE>   1
                                                                     EXHIBIT 3.5

               AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
                                        
                                       OF
                                        
                               AMOSKEAG COMPANY,
                             a Delaware corporation
                                        
                          Incorporated January 5, 1965
                                        
                     Pursuant to Section 242 and 245 of the
                General Corporation Law of the State of Delaware

     The undersigned, W. Randle Mitchell, Jr. and Samuel B. Bartlett, President
and Secretary respectively, of AMOSKEAG COMPANY, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"), do hereby certify as follows:

     FIRST.    The name of the Corporation is Amoskeag Company which is the
name under which the Corporation was originally incorporated.

     SECOND.   The Corporation's original Certificate of Incorporation was
initially filed with the Secretary of State of the State of Delaware on January
5, 1965. Certificates of Amendment thereto were filed with the Secretary of
State of the State of Delaware on May 9, 1980, December 2, 1980 and July 27,
1984. A Restated Certificate of Incorporation was filed with the Secretary of
State of the State of Delaware on April 27, 1987.

     THIRD.    The text of the Certificate of Incorporation of the Corporation,
as heretofore restated and amended, is hereby further amended pursuant to
Sections 242 and 245 of the General Corporation Law of the State of Delaware to
read in its entirety as follows:

     1.   The name of the Corporation is: AMOSKEAG COMPANY.

     2.   The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.

     3.   The nature of the business or purposes to be conducted or promoted by
the Corporation is as follows:


                                      -1-
<PAGE>   2
          To engage in any lawful act or activity for which corporations may be
          organized under the General Corporation Law of Delaware.

     4.   The total number of shares of stock which the Corporation shall have
authority to issue is 1,000 shares of Common Stock, $.01 par value per share.

     5.   The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote, irrespective of the provisions of Section 242(b)(2) of the
General Corporation Law of Delaware.

     6.   In furtherance of and not in limitation of powers conferred by
statute, it is further provided:

          A.   Election of directors need not be by written ballot.

          B.   The Board of Directors is expressly authorized to adopt, amend
               or repeal the By-Laws of the Corporation.

     7.   Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of


                                      -2-

     
<PAGE>   3
stockholders, of this Corporation, as the case may be, and also on this
Corporation.

     8.   Except to the extent that the General Corporation Law of Delaware
prohibits the elimination or limitation of liability of directors for breaches
of fiduciary duty, no director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, notwithstanding any provision of law imposing
such liability. No amendment to or repeal of this provision shall apply to or
have any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.

     9.   The Corporation shall, to the fullest extent permitted by Section 145
of the General Corporation Law of Delaware, as amended from time to time,
indemnify each person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was, or has agreed to become, a director or officer of the Corporation,
or is or was serving, or has agreed to serve, at the request of the
Corporation, or is or was serving, or has agreed to serve, at the request of
the Corporation, as a director, officer or trustee of, or in a similar capacity
with, another corporation, partnership, joint venture, trust or other
enterprise (including any employee benefit plan), or by reason of any action
alleged to have been taken or omitted in such capacity, against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with
such action, suit or proceeding and any appeal therefrom.

          With respect to any action, suit, proceeding or investigation for
which indemnity will or could be sought, the Corporation will be entitled to
participate therein at its own expense and/or to assume the defense thereof at
its own expense, with legal counsel reasonably acceptable to the person seeking
indemnification.

          In the event that the Corporation does not assume the defense of any
action, suit, proceeding or investigation for which indemnity will or could be
sought, any expenses (including attorneys' fees) incurred by the person seeking
indemnification in defending a civil or criminal action, suit, proceeding or
investigation or any appeal therefrom shall be paid by the Corporation in
advance of the final disposition of such matter upon receipt of an undertaking
by the person indemnified to repay such payment if it is ultimately determined
that such person is not entitled to indemnification under this Article, which


                                      -3-
<PAGE>   4
undertaking may be accepted without reference to the financial ability of such
person to make such repayment.

          The Corporation shall not indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person unless the initiation thereof was approved by the Board of
Directors of the Corporation.

          The indemnification rights provided in this Article (i) shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any law, agreement or vote of stockholders or disinterested directors or
otherwise, and (ii) shall inure to the benefit of the heirs, executors and
administrators of such persons. The Corporation may, to the extent authorized
from time to time by its Board of Directors, grant indemnification rights to
other employees or agents of the Corporation or other persons serving the
Corporation and such rights may be equivalent to, or greater or less than those
set forth in this Article.

     10.  The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute and this Certificate of Incorporation, and
all rights conferred upon stockholders herein are granted subject to this
reservation.

     EXECUTED at Boston, Massachusetts on November 28th, 1993.


                                   /s/ W. RANDLE MITCHELL, JR.
                                   -------------------------------------
                                   W. Randle Mitchell, Jr.
                                   President and Chief Executive Officer



ATTEST:


/s/ SAMUEL B. BARTLETT
- ---------------------------
Samuel B. Bartlett
Secretary


                                      -4-

<PAGE>   1
                                                                     EXHIBIT 3.6




                                AMOSKEAG COMPANY

                            (a Delaware Corporation)




                                    BY-LAWS



                          As Adopted January 7, 1965
                          As Amended May 13, 1966
                          As Amended January 13, 1971
                          As Amended November 29, 1972
                          As Amended March 9, 1977
                          As Amended January 5, 1978
                          As Amended February 26, 1980
                          As Amended July 8, 1986
                          As Amended April 27, 1987
<PAGE>   2
                                    BY-LAWS

                                       OF

                                AMOSKEAG COMPANY

                               TABLE OF CONTENTS

                                                                Page
                                                                ----
ARTICLE I           Certificate of Incorporation                 1
ARTICLE II          Annual Meeting                               1
ARTICLE III         Special Meetings of Stockholders             2
ARTICLE IV          Notice of Stockholders' Meetings             2
ARTICLE V           Quorum of Stockholders                       2
ARTICLE VI          Proxies and Voting                           3
ARTICLE VII         Board of Directors                           4
ARTICLE VIII        Powers of Directors                          5
ARTICLE IX          Executive Committee                          6
ARTICLE X           Meetings of the Board of Directors           7
ARTICLE XI          Quorum of the Board of Directors             8
ARTICLE XII         Officers and Agents                          8
ARTICLE XIII        President and Chairman and Vice Chairman
                    of the Board                                 9
ARTICLE XIV         Vice Presidents                              9
ARTICLE XV          Secretary                                   10
ARTICLE XVI         Treasurer                                   10
ARTICLE XVII        Removals                                    11
ARTICLE XVIII       Vacancies                                   11
ARTICLE XIX         Capital Stock                               11
ARTICLE XX          Certificate of Stock                        12
ARTICLE XXI         Transfer of Shares of Stock                 12
ARTICLE XXII        Record Date                                 13
ARTICLE XXIII       Loss of Certificate                         14
ARTICLE XXIV        Seal                                        14
ARTICLE XXV         Execution of Papers                         14
ARTICLE XXVI        Fiscal Year                                 14
ARTICLE XXVII       Amendments                                  15
<PAGE>   3
                          BY-LAWS OF AMOSKEAG COMPANY

                                   ARTICLE I

                          Certificate of Incorporation

     The name, location of principal office and purposes of the Corporation
shall be as set forth in its Certificate of Incorporation.  These By-laws, the
powers of the Corporation and of its Directors and stockholders, and all
matters concerning the conduct and regulation of the business of the 
Corporation shall be subject to such provisions in regard thereto, if any, as
are set forth in said Certificate of Incorporation.  The Certificate of
Incorporation is hereby made a part of these By-laws.

     All references in these By-laws to the Certificate of Incorporation shall
be construed to mean the Certificate of Incorporation of the Corporation as
from time to time amended and restated, including (unless the context shall 
otherwise require) all certificates and any agreement of consolidation or
merger filed pursuant to the Delaware General Corporation Law, as amended.

                                   ARTICLE II

                                 Annual Meeting

     The annual meeting of stockholders for the election of Directors and for
the transaction of such other business as may properly come before the meeting
shall be held at twelve o'clock noon on such day not a legal holiday in April
each year and in Boston, Massachusetts, at such place within said municipality
as such day and place may from time to time be fixed by the Board of Directors
and stated in the notice of the meeting.  Purposes for which the annual meeting
is to be held additional to those prescribed by law, by the Certificate of
Incorporation and by these By-laws may be specified, prior to the giving of
notice of said meeting, by resolution of the Board of Directors or by a writing
filed with the Secretary signed by the President or by a majority of the
Directors.  If the election for Directors shall not be held on the day
designated for the annual meeting, the Directors shall cause the election to be
held as soon thereafter as convenient, at a special meeting of stockholders
called for the purpose of holding such election.
<PAGE>   4
                                  ARTICLE III

                        Special Meetings of Stockholders

     Special meetings of stockholders may be held either within or without the
State of Delaware,at such time and place and for such purposes as shall be
specified in a call for such meeting made by resolution of the Board of
Directors or by a writing filed with the Secretary signed by the President or a
majority of the Directors.

                                   ARTICLE IV

                        Notice of Stockholders' Meetings

     Except as otherwise required by law or by other provisions of these
By-laws, a written or printed notice of each meeting of stockholders, stating
the place, day and hour thereof and the purposes for which the meeting is
called, shall be given by or under the direction of the Secretary, at least ten
days and not more than sixty days before the date fixed for such meeting, to
each stockholder entitled to vote at such meeting, by leaving such notice with
him or at his residence or usual place of business or by mailing it, postage
prepaid and addressed to him at his post office address as it appears on the 
books of the Corporation.  In the case of the death, absence, incapacity or 
refusal of the Secretary, such notice may be given by a person designated either
by the Secretary or by the person or persons calling the meeting or by the Board
of Directors.  A waiver of such notice in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to such notice, and no notice need be given
to any person who may become a stockholder of record after such mailing of such
notice and prior to such meeting or to any person with whom communication is
made unlawful by any law of the United States of America, or any rule,
regulation, proclamation or executive order issued under any such law.  Except
as required by law, notice of any adjourned meeting of the stockholders shall
not be required.

     An affidavit of the Secretary or an Assistant Secretary or the transfer
agent of the Corporation that notice of a stockholders' meeting has been given
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein.

                                  ARTICLE V

                            Quorum of Stockholders

     At any meeting of stockholders a majority of the holders of all classes
of common stock then issued and outstanding shall constitute a quorum when
represented at such meeting by the holders thereof in person or by their duly
constituted and


                                      -2-

                                     
<PAGE>   5

authorized attorneys, but a lesser interest may adjourn any meeting from time
to time, and the meeting may be held as adjourned without further notice when a
quorum is present at any meeting, a majority of the stock so represented thereat
and entitled to vote shall, except where a larger vote is required by law, by
the Certificate of Incorporation, or by these By-laws, decide any question
brought before such meeting.

                                   ARTICLE VI

                               Proxies and Voting

     Except as otherwise provided in the Certificate of Incorporation, each
stockholder when entitled to vote shall have one vote in person or by proxy for
each share of Common Stock held by such stockholder and ten votes in person or
by proxy for each share of Class B Common Stock held by such stockholder, but
no proxy shall be voted after three years from its date, unless the proxy
provides for a longer period, and, except where the transfer books of the
Corporation shall have been closed or a date shall have been fixed as a record 
date for the determination of the stockholders entitled to vote, as provided by
Article XXII of these By-laws, no share of stock shall be voted at any election
for Directors which shall have been transferred on the books of the Corporation
within twenty days next preceding such election of Directors. Persons holding
stock in a fiduciary capacity shall be entitled to vote the shares so held, and
persons whose stock is pledged shall be entitled to vote, unless in the
transfer by the pledgor on the books of the Corporation he shall have expressly
empowered the pledgee to vote thereon, in which case only the pledgee or his
proxy may represent said stock and vote thereon. Shares of the capital stock
of the Corporation belonging to the Corporation shall not be voted, directly or
indirectly.

     The Secretary or other officer who has charge of the stock ledger shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders of each class entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder for
any purpose germane to the meeting, during ordinary business hours, for a
period of least ten days prior to the meeting, either at place within the city
where the meeting is to be held, which place shall be specified in the notice
of the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall be produced and kept at the time and place of meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine such list or the books of



                                      -3-
<PAGE>   6
the Corporation, or to vote in person or by proxy at any meeting of 
stockholders.

     Unless otherwise provided in the Certificate of Incorporation, any action
required to be taken at any annual or special meeting of stockholders of the
Corporation or any action which may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting
of less than unanimous written consent shall be given to those stockholders who
have not consented in writing.

                                  ARTICLE VII

                               Board of Directors

     The Board of Directors for each corporate year shall consist of
such number, not fewer than nine nor more than fifteen, of members as may be
fixed by the stockholders at the annual meeting held in such year and shall be
divided into three classes as nearly equal in number as may be. The Directors
elected at the meetings of stockholders held in 1970, 1971 and 1972 for the
purpose of electing Directors shall be Directors of the first class, the second
class and the third class, respectively. The term of office of each class of
Directors shall expire at the annual meeting held in the third corporate year
following that in which the members, other than members elected to fill an
enlarged number of Directors, of such class were elected, provided that the
term of office of Directors in office on the effective date of this Article
shall continue until the original expiration date. During any year the Board
of Directors may be enlarged and additional Directors elected to complete the
enlarged number, to not more than the maximum number above specified, by the
stockholders at any meeting, and the stockholders may, at any meeting held for
the purpose during such year, decrease, to not fewer than the minimum number
above specified, the number of Directors as thus fixed or enlarged and remove
Directors to the decreased number, provided, that any such enlargement or
decrease shall maintain as nearly equal number of Directors of each class as
may be. The class to which each person elected a Director shall belong shall
be specified by the vote by which he shall be elected. Directors shall be
chosen by stockholders entitled to vote for the election of Directors; such
choice need not be made by ballot. Directors need not be stockholders. Each
Director shall hold office, subject to the provisions of Article XVII of these
By-laws and to any power of removal otherwise conferred 



                                      -4-
<PAGE>   7
by law upon the stockholders, for the term of the class to which he belongs and
until his successor shall have been elected and qualified.

                                  ARTICLE VIII

                              Powers of Directors

     The business of the Corporation shall be managed under the direction of
the Board of Directors which shall have and may exercise all the powers of the
Corporation except as otherwise provided in the Certificate of Incorporation or
the By-laws.

     The Board of Directors may, by resolution passed by a majority of all the
Directors then in office, designate one or more committees. In addition to the
Executive Committee provided for in Article IX of these By-laws, each committee
to consist of two or more of the Directors of the Corporation, which, to the
extent provided in the said resolution or in other provisions of the By-laws,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it. In the absence or disqualification of any member of any such
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Such committee
or committees shall have such name or names as shall be determined from time to
time by resolution adopted by the Board of Directors. Each committee shall
appoint a secretary, who need not be a member and who shall keep regular
minutes of the actions of said committee, and report the same to the Board of
Directors.

     The Board of Directors may determine the place or places, within or
without the State of Delaware, at which the Corporation shall have an office or
offices, in addition to its principal office.

     Each Director and each member of any committee designated by the Board of
Directors shall, in the performance of his duties, be fully protected in
relying in good faith upon the books of account or reports made to the
Corporation by any of its officers, or by an independent certified public
accountant, or by an appraiser selected with reasonable care by the Board of
Directors or by any such committee, or in relying in good faith upon other 
records of the Corporation. 
 



                                      -5-
<PAGE>   8
                                   ARTICLE IX

                              Executive Committee

         The Board of Directors may, by resolution or resolutions passed by a
majority of all the Directors then in office, designate not fewer than three
nor more than nine of their number, of whom the Chairman of the Board, if any,
and the President shall be members, to constitute an Executive Committee. The
Board of Directors, by like resolution or resolutions, may appoint alternate
members of the Executive Committee to serve in the temporary absence or
disability of any member, may at any time, without notice and with or without
cause, dissolve the Executive Committee, remove any member (except the Chairman
and the President) or alternate member of the Executive Committee, and may
elect another member or appoint another alternate in place of the member or
alternate so removed.

         In all cases in which specific directions shall not have been given by
the Board of Directors, the Executive Committee shall have and may exercise all
of the Powers of the Board of Directors, so far as may be permitted by law, in
the management of the business and affairs of the Corporation whenever the
Board of Directors is not in session and shall have power to authorize the seal
of the Corporation to be affixed to all papers which may require it; but the
Executive Committee shall not have power to fill vacancies in the Board of
Directors or to change or fill vacancies in its membership or to make or amend
the By-laws, nor shall it have the power or authority in reference to amending
the Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all the Corporation's property and assets, recommending to
the stockholders a dissolution of the Corporation or a revocation of a
dissolution or amending the By-laws. The Executive Committee may declare a
dividend. The Executive Committee shall not have the power to authorize the
issuance of stock.  The fact that the Executive Committee has acted shall be
conclusive evidence that the Board of Directors was not in session at the time
of such action and had not theretofore given specific directions with respect
to the matters concerning which the Executive Committee took action, unless
actual notice to the contrary shall have been given. To the extent permitted by
law and the By-laws, the Board of Directors may delegate to the Executive
Committee any or all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation and may from time to time
expand, modify, curtail or restrict the powers so delegated. The Executive
Committee shall report its acts and proceedings to the Board of Directors at
the next succeeding meeting of the Board and at such other time or times as
the Board of Directors shall request.

                                    - 6 -
<PAGE>   9
         The Executive Committee may meet at stated times, or upon not less
than twenty-four hours notice given to all by any one of its members in person
or in the manner provided for notice to Directors in Article X of the By-laws.
Attendance of a member at a meeting shall constitute a waiver of notice of such
meeting, except when such member attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. The Executive Committee
shall choose its own chairman and shall fix its own rules of procedure and
shall meet at such times and at such place or places as may be provided by such
rules or by resolution of the Executive Committee or of the Board of Directors.
The Executive Committee shall appoint a secretary, who shall keep regular
minutes of the actions of the committee, and report the same to the Board of
Directors. At every meeting of the Executive Committee, the presence of a
majority of all members shall be necessary to constitute a quorum and the
affirmative vote of a majority of the members present shall be necessary for
the adoption by it of any resolutions.

                                   ARTICLE X

                       Meetings of the Board of Directors

         Regular meetings of the Board of Directors may be held, without call
or formal notice, at the principal place of business of the Corporation or at
such other offices or places, within or without the State of Delaware, as the
Board may by vote from time to time determine. A regular meeting of the Board
of Directors may be held without call or formal notice immediately after and at
the same place as the annual meeting of the stockholders, or the special
meeting of the stockholders held in place of such annual meeting. If a meeting
day falls on a legal holiday, the meeting shall be held the next following
business day.

         Special meetings of the Board of Directors may be held at any place
either within or without the State of Delaware at any time when called by the
Chairman of the Board, the President, or two or more Directors, reasonable
notice of the time and place thereof being given to each Director. A waiver of
such notice in writing, signed by the Director or Directors entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent to such notice and no notice need be given to any person with whom
communication is made unlawful by any law of the United States of America, or,
by any rule, regulation, proclamation or executive order issued under any such
law. Attendance of a Director at a meeting shall constitute a waiver of notice
of such meeting, except when such Director attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or


                                    - 7 -
<PAGE>   10
convened. No notice of any adjourned meeting of the Directors shall be
required. In any case, it shall be deemed sufficient notice to a Director to
send notice by mail at least forty-eight hours, or to deliver personally or to
send notice by written wire communication at least twenty-four hours, before
the meeting, addressed to him at his usual or last known business or residence
address.

         Unless otherwise restricted by the Certificate of Incorporation or 
By-laws, members of the Board of Directors, or any committee designated by the 
Board, may participate in a meeting of such Board or committee by means of 
conference telephone or similar communications equipment by means of which all 
persons participating in the meeting can hear each other, and participation in 
a meeting pursuant to this subsection shall constitute presence in person at 
such meeting.

         Unless otherwise restricted by the Certificate of Incorporation or by
other provisions of these By-laws, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting, if all members of the Board or committee, as the case
may be, consent thereto in writing and the writing or writings are filed with
the minutes of proceedings of the Board or committees.

                                   ARTICLE XI

                        Quorum of the Board of Directors

         A majority of all the Directors at the time in office shall constitute
a quorum for the transaction of business at any meeting, but a lesser number
may adjourn any meeting, from time to time. When a quorum is present at any
meeting, a majority of the Directors present thereat shall, except where a
larger vote is required by law, the Certificate of Incorporation, or the
By-laws, decide any question brought before such meeting.

                                  ARTICLE XII

                              Officers and Agents

         The Corporation shall have a President, a Secretary and a Treasurer
and have a Chairman and Vice Chairman of the Board or Directors, all of whom
shall be chosen by the Directors and shall hold their offices, subject to these
By-laws, until their respective successors are chosen and qualify. The
President, any Chairman and any Vice Chairman of the Board of Directors shall
be chosen from among the Directors. No other officer need be a Director and no
officer need be a stockholder. The Corporation may have such other officers and
agents, including but not limited to one or more Vice Presidents, as are
necessary, who shall be chosen by the Board of Directors upon


                                    - 8 -
<PAGE>   11
nomination by the President, which nomination shall determine the necessity of
such office. Each of such other officer and agent shall hold his office for
such term and shall have such authority and duties as may be determined by the
Board of Directors upon recommendation of the President. The Board of Directors
may secure the fidelity of any or all of such officers by bond or otherwise.
Any two or more offices may be held by the same person, provided, however, that
neither the Chairman nor the President may be the Secretary or the Treasurer.

                                  ARTICLE XIII

         President and Chairman and Vice Chairman of the Board

         The President shall be the Chief Executive Officer of the Corporation
and shall have general supervision and control of it's affairs and business and
over its agents and employees, unless the Board of Directors designates the
Chairman of the Board as Chief Executive Officer, in which event the president
shall have such duties as the Board of Directors prescribes. In case of the
death, incapacity or absence of the officer having the responsibilities of
Chief Executive Officer, that is the President or the Chairman of the Board, as
the case may be, the other such officer shall assume the responsibilities of
the Chief Executive Officer until action of the Board of Directors. In case of
the death, incapacity or absence of both the President and Chairman of the
Board, the Vice Chairman of the Board shall assume their duties and
responsibilities until action of the Board of Directors. If there shall be no
Chairman or Vice Chairman of the Board, or in their absence, the President
shall preside at all meetings of the Directors and stockholders. The President
shall have custody of the Treasurer's bond, if any. If there shall be a
Chairman of the Board, he shall make his counsel available to the officers of
the Corporation and shall have such other duties and powers as may from time to
time be conferred upon him by the Directors, and he shall preside at all
meetings of the stockholders and of the Directors at which he is present.
Except as herein provided, the Vice Chairman of the Board of Directors, if any,
shall assume the duties of the Chairman in his absence or incapacity and shall
have such other duties and powers as may from time to time be conferred upon
him by the Board of Directors.

                                  ARTICLE XIV

                                Vice Presidents

         The Vice Presidents, if any, shall perform such duties as may be
assigned by the officer acting as Chief Executive Officer or the Board of
Directors.


                                    - 9 -
<PAGE>   12
                                   ARTICLE XV

                                   Secretary

         The Secretary shall have charge of the seal of the Corporation and of
the stock ledger (which nay, however, be kept by any transfer agent or agents
of the Corporation under the direction of the Secretary). The Secretary shall
attend to the giving of notices required by the By-laws, except as otherwise
provided in the By-laws, and shall have the duty to record all proceedings of
the meetings of the stockholders and Directors in a book or books, which shall
be the property of the Corporation to be kept for that purpose at one of the
offices of the Corporation, and shall have such further powers and perform such
other duties as may be from time to time prescribed by the Board of Directors
or the officer acting as Chief Executive Officer. If the Secretary is absent or
unavailable, any Assistant Secretary shall have the duties and powers of the
Secretary and shall have such further duties and powers as the Board of
Directors or the officer acting as Chief Executive-Officer shall from time to
time determine.

                                  ARTICLE XVI

                                   Treasurer

         The Treasurer shall, unless the Board of Directors makes a different
designation, be the Chief Financial Officer of the Corporation and shall have
the care and custody of all funds, securities, evidences of indebtedness and
other personal property of the Corporation and shall deposit the same in
accordance with the instructions of the Board of Directors. He shall receive
and give receipts and discharges for moneys paid in on account of the
Corporation and shall pay out of the funds on hand all bills, payrolls and
other just debts of the Corporation of whatever nature upon maturity of the
same. He shall perform all other duties incident to the office of the
Treasurer and shall make such reports to the Board of Directors and to the
officer acting as Chief Executive Officer as may be required by the Board or
such officer at any time. The Treasurer shall have such further powers and
perform such other duties as may be from time to time prescribed by the Board
of Directors or the officer acting as Chief Executive Officer. If the Treasurer
is absent or unavailable, any Assistant Treasurer shall have the duties and
powers as the Board of Directors or the officer acting as Chief Executive
officer shall from time to time determine.


                                   - 10 -
<PAGE>   13
                                  ARTICLE XVII

                                    Removals

         The stockholders may, at any meeting called for the purpose, by vote
of a majority of the capital stock issued and outstanding and entitled to vote
thereon, remove any Director from office.

         The Board of Directors may at any meeting called for the purpose, by
vote of a majority of their entire number, remove from office any officer,
agent or factor of the Corporation or any member of any committee appointed by
the Board of Directors or by any committee appointed by the Board of Directors
or by any officer, agent or factor of the Corporation.

                                 ARTICLE XVIII

                                   Vacancies

         Except as otherwise provided by law, vacancies occurring in the office
of Director shall be filled by a majority of Directors then in office, though
less than a quorum, and the Directors so chosen shall hold office until the
next annual election of the class for which each such Director has been chosen
and until his successor is duly elected and qualified, unless sooner displaced,
provided that immediately after filling any such vacancy at least two-thirds of
the Directors then holding office shall have been elected to such office by the
stockholders of the Corporation at an annual or special meeting of the
stockholders called for that purpose. In the event that, at any time, less than
a majority of the Directors holding office at that time were so elected by the
stockholders' the Board of Directors shall forthwith cause to be held as
promptly as possible, and in any event within sixty days, a meeting of
stockholders for the purpose of electing Directors to fill any existing
vacancies in the Board of Directors.

         Any vacancy occurring in the office of President, Secretary or
Treasurer or in any other office by death, resignation, removal or otherwise,
shall be filled by the Board of Directors and the officers so chosen shall hold
office for the unexpired term in respect of which the vacancy occurred and
until their successors shall be duly elected and qualified.

                                  ARTICLE XIX

                                 Capital Stock

         The amount of the capital stock and the par value, if any, of the 
shares shall be fixed in the Certificate of incorporation. At all times, when 
there are two or more classes of stock or one or more series within any class


                                   - 11 -
<PAGE>   14
thereof, the several classes and series shall have the respective voting
powers, if any, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations and
restrictions thereof, stated and expressed in the Certificate of Incorporation
or in the resolution or resolutions providing for the issue of such stock or
series adopted by the Board of Directors pursuant to authority expressly vested
in it by the provisions of the Certificate of Incorporation.

         Except as otherwise provided in the Certificate of Incorporation, the
Directors may, at any time and from time to time, if all of the shares of
capital stock which the Corporation is authorized by its Certificate of
Incorporation to issue have not been issued, subscribed for, or otherwise
committed to be issued, issue or take subscriptions for additional shares of
its capital stock up to the amount authorized in its Certificate of
Incorporation. Such stock shall be issued and the consideration paid therefor
in the manner prescribed by law.

                                   ARTICLE XX

                              Certificate of Stock

         Every holder of stock in the Corporation shall be entitled to have a
certificate signed by, or in the name of the Corporation by, the Chairman or
Vice Chairman of the Board of Directors, or the President or a Vice President
and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary of the Corporation, certifying the number of shares owned by him in
the Corporation. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who shall have
signed, or whose facsimile signature or signatures shall have been used on, any
such certificate or certificates shall cease to be such officer, transfer agent
or registrar of the Corporation, before such certificate or certificates shall
have been delivered by the Corporation, such certificate or certificates may
nevertheless be issued and delivered by the Corporation with the same effect as
if he were such officer, transfer agent, or registrar on the date of issue.
Certificates of stock shall be in such form as shall, in conformity to law, be
prescribed from time to time by the Board of Directors.

                                  ARTICLE XXI

                          Transfer of Shares of Stock

         Subject to the restrictions, if any, imposed by the Certificate of
Incorporation, and to the provisions of the General Corporation Law of the
State of Delaware and cognate acts in amendment thereof, supplemental thereto
or in


                                   - 12 -
<PAGE>   15
substitution therefor, title to a certificate of shares of stock of the
Corporation and shares represented thereby shall be transferable only (a) by
delivery of the certificate endorsed either in blank or to a specified person
by the person appearing by the certificate to be the owner of the shares
represented thereby or (b) by delivery of the certificate and a separate
document containing a written assignment of the certificate or a power of
attorney to sell, assign or transfer the same or the shares represented
thereby, signed by the person appearing by the certificate to be the owner of
the shares represented thereby. Such assignment or power of attorney may be
either in blank or to a specific person. Whenever any transfer of shares shall
be made for collateral security, and not absolutely, it shall be so expressed
in the entry of the transfer. The Corporation and its transfer agent and
registrars, if any, shall be entitled to treat the holder of record of any
share or shares of stock as the absolute owner thereof for all purposes except
as otherwise expressly provided by the Certificate of Incorporation and the
laws of the State of Delaware.

                                  ARTICLE XXII

                                  Record Date

         In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date, which
shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.

         If no record date is fixed by the Board of Directors:

                 (a)      The record date for determining stockholders entitled
         to notice of or to vote at a meeting of stockholders shall be at the
         close of business on the day next preceding the day on which notice is
         given, or, if notice is waived, at the close of business on the day
         next preceding the day on which the meeting is held.

                 (b)      The record date for determining stockholders entitled
         to express consent to corporate action in writing without a meeting,
         when no prior action by the Board of


                                   - 13 -
<PAGE>   16
         Directors is necessary, shall be the day on which the first written
         consent is expressed.

                 (c)      The record date for determining stockholders for any
         other purpose shall be at the close of business on the day on which
         the Board of Directors adopts the resolution relating thereto.

                                 ARTICLE XXIII

                              Loss of Certificates

         In case of the alleged loss or destruction or the mutilation of a
certificate of stock, a new certificate of stock may be issued in the place
thereof, upon such terms in conformity with law as the Board of Directors may
prescribe.

                                  ARTICLE XXIV

                                      Seal

         The corporate seal of the Corporation shall, subject to alteration by
the Board of Directors, consist of a flat-faced circular die with the word
"Delaware, together with the name of the Corporation and the year of its
organization, cut or engraved thereon. The corporate seal of the Corporation
may be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.

                                  ARTICLE XXV

                              Execution of Papers

         Except as otherwise provided in these By-Laws or as the Board of
Directors may generally or in particular cases otherwise determine, all deeds,
leases, transfers, contracts, bonds, notes, checks, drafts and other
obligations authorized to be executed on behalf of the Corporation, shall be
signed by the President or by the Treasurer.

                                  ARTICLE XXVI

                                  Fiscal Year

         Except as from time to time otherwise provided by the Board of
Directors, the fiscal year of the Corporation shall be the calendar year.


                                   - 14 -
<PAGE>   17
                                 ARTICLE XXVII

                                   Amendments

         Except as in the Certificate of Incorporation or in these By-laws or
otherwise expressly provided by law, these By-laws, as from time to time
altered and amended, may be altered, amended or repealed at any annual or
special meeting of the stockholders called for the purpose, of which the notice
shall specify the subject matter of the proposed alteration, amendment or
repeal, or the articles to be affected thereby, or at any meeting of the Board
of Directors, provided, however, that, except as from time to time otherwise
provided by law, neither the time nor the place for the election of Directors
shall be changed within sixty days next before the day on which any election of
Directors is to be held, and provided, further, that a notice of any such
change shall be given to each stockholder twenty days before the election is
held, in person or by letter mailed to his last known post office address and
provided, further, that the power of the Board of Directors to amend these
By-laws shall not extend to Article VII or to Article XVII.


                                   - 15 -

<PAGE>   1
                                                                     EXHIBIT 3.7

                          CERTIFICATE OF INCORPORATION

                                       OF

                        AMOSKEAG MANAGEMENT CORPORATION


         FIRST. The name of the corporation is AMOSKEAG MANAGEMENT
CORPORATION.

         SECOND. The address of its registered office in the State of Delaware
is Corporation Trust Center No. 1209 Orange Street, in the City of Wilmington,
County of New Castle, Delaware 19801. The name of its registered agent at such
address is The Corporation Trust Company.

         THIRD. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.

         FOURTH. The total number of shares of stock which the corporation
shall have authority to issue is two thousand (2,000) shares of common stock
without par value.

         The following restrictions are imposed upon the transfer of shares of
the capital stock of the corporation:

         The corporation shall have the right to purchase, or to direct the
transfer of, the shares of its capital stock in the events and subject to the
conditions and at a price fixed as provided below; each holder of shares of
such


<PAGE>   2
capital stock holds his shares subject to this right and by accepting the same
upon original issue or subsequent transfer thereof, the stockholder agrees for
himself, his legal representatives and assigns as follows:

         In the event of any change in the ownership of any share or shares of
such capital stock (made or proposed) or in the right to vote thereon (whether
by the holder's act or by death, legal disability, operation of law, legal
processes, order of court, or otherwise, except by ordinary proxies or powers
of attorney) the corporation has the right to purchase such share or all or any
part of such shares or to require the same to be sold to a purchaser or
purchasers designated by the corporation or to follow each such method in part
at a price per share equal to the fair value thereof at the close of business
on the last day next preceding such event as determined by mutual agreement or,
failing such agreement, by arbitration as provided below.

         In any such event the owner of the share or shares concerned therein
(being for the purposes of these provisions, all persons having any property
interest therein) shall give notice thereof in detail satisfactory to the
corporation. Within ten days after receipt of said owner's notice, the
corporation shall elect whether or not to


                                      -2-
<PAGE>   3
exercise its said rights in respect to said shares and, if it elects to
exercise them, shall give notice of its election.

         Failing agreement between the owner and the corporation as to the
price per share to be paid, such price shall be the fair value of such shares
as determined by three arbitrators, one designated within five days after the
termination of said ten-day period by the registered holder of said share or
shares or his legal representatives, one within said period of five days by the
corporation and the third within five days after said appointment last
occurring by the two so chosen. Successor arbitrators, if any shall be
required, shall be appointed, within reasonable time, as nearly as may be in
the manner provided as to the related original appointment. No appointment
shall be deemed as having been accomplished unless such arbitrator shall have
accepted in writing his appointment as such within the time limited for his
appointment. Notice of each appointment of an arbitrator shall be given
promptly to the other parties in interest. Said arbitrators shall proceed
promptly to determine said fair value. The determination of the fair value of
said share or shares by agreement of any two of the arbitrators shall be
conclusive upon all parties interested in such

                                      -3-
<PAGE>   4
shares. Forthwith upon such determination the arbitrators shall mail or deliver
notice of such determination to the owner (as above defined) and to the
corporation.

         Within ten days after agreement upon said price or mailing of notice
of determination of said price by arbitrators as provided below (whichever
shall last occur), the shares specified therein for purchase shall be
transferred to the corporation or to the purchaser or purchasers designated
therein or in part to each as indicated in such notice of election against
payment of said price at the principal office of the corporation.

         If in any of the said events, notice therefor having been given as
provided above, the corporation elects in respect of any such shares or any
part thereof not to exercise its said rights, or fails to exercise them or to
give notice or make payment all as provided above, or waives said rights by
vote or in authorized writing, then such contemplated transfer or such change
may become effective as to those shares with respect to which the corporation
elects not to exercise them or to give notice or to make payment, if
consummated within thirty days after such election, failure or waiver by the
corporation, or within such longer period as the corporation may authorize.

                                      -4-
<PAGE>   5
     If the owner's notice in respect of any of such shares of capital stock is
not received by the corporation as provided above, or if the owner fails to
comply with these provisions in respect of any such shares in any other regard,
the corporation, at its option and in addition to its other remedies, may
suspend the rights to vote or to receive dividends on said shares, or may refuse
to register on its books any transfer of said shares or otherwise to recognize
any transfer or change in the ownership thereof or in the right to vote
thereon, one or more, until these provisions are complied with to the
satisfaction of the corporation; and if the required owner's notice is not
received by the corporation after written demand by the corporation it may also
or independently proceed as though a proper owner's notice had been received at
the expiration of ten days after mailing such demand, and, if it exercises its
rights with respect to said shares or any of them, the shares specified shall be
transferred accordingly.

     In respect of these provisions with respect to the transfer of shares of
capital stock, the corporation may act by its board of directors. Any notice or
demand under said provisions shall be deemed to have been sufficiently given if
in writing delivered by hand or addressed by mail



                                      -5-
<PAGE>   6
postpaid, to the corporation at its principal office or to the owner (as above
defined) or to the holder registered on the books of the corporation (or his
legal representative) of the share or shares in question at the address stated
in his notice or at his address appearing on the books of the corporation.

     Nothing herein contained shall prevent the pledging of shares, if there is
neither a transfer of the legal title thereto nor a transfer on the books of
the corporation into the name of the pledgee, but no pledgee or person claiming
thereunder shall be entitled to make or cause to be made any transfer of
pledged shares by sale thereof or otherwise (including in this prohibition
transfer on the books of the corporation into the name of the pledgee) except
upon compliance herewith any such pledge shall be subject to those conditions
and restrictions.

     FIFTH. The name and mailing address of the sole incorporator is as follows:


          NAME                                    MAILING ADDRESS
          ----                                    ---------------

          Alan L. Lefkowitz                  Gaston Snow & Ely Barlett
                                             One Federal Street
                                             Boston, MA  02110


     SIXTH. The corporation is to have perpetual existence.



                                      -6-
<PAGE>   7
     SEVENTH. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:

     To make, alter, amend, or repeal the by-laws of the corporation.

     To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.

     To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.

     By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The by-laws may provide that in the absence or disqualification
of a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in the place of any such absent or



                                      -7-
<PAGE>   8
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, or in the by-laws of the corporation,
shall have and may exercise all the powers and authority of the board of
directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers which
may require it; but no such committee shall have the power or authority in
reference to amending the certificate of incorporation, adopting an agrement
of merger or consolidation, recommending to the stockholder the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless resolution or by-laws expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.

     When and as authorized by the stockholders in accordance with statute to
sell, lease or exchange all or substantially all of the property and assets of
the corporation, including its good will and it corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of



                                      -8-
<PAGE>   9
money or property including shares of stock in, and/or other securities of, any
other corporation or corporations, as its board of directors shall deem
expedient and for the best interest of the corporation.

     EIGHT. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as the
case may be, to be summoned in such manner as the said court directs if a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement


                                      -9-
<PAGE>   10
and to any reorganization of this corporation as consequence of such compromise
or arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case  may
be, and also on this corporation.

     NINTH. Meetings of stockholders may be held at such place, either within
or without the State of Delaware, as the by-laws may provide. The books of the
corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the board of directors or in the by-laws of the corporation.
Elections of directors need not be by written ballot unless the by-laws of the
corporation shall so provide.
     
     TENTH. The powers of the incorporator are to terminate upon the filing of
this certificate of incorporation with the Secretary of State of the State of
Delaware. The name and mailing address of the persons who are to serve as the
directors of the corporation, subject to the by-laws, until the first annual
meeting of stockholders or until their successors are elected and qualify are:


                                      -10-
<PAGE>   11
            NAME                                MAILING ADDRESS
            ----                                ---------------

      Joseph B. Ely, II                         5 Webster Lane
                                                Wayland, MA 01778

      F. C. Dumaine                             201 Newton Street
                                                Weston, MA 02193

      W. Randle Mitchell, Jr.                   5 Webster Lane
                                                Wayland, MA 01778


     ELEVENTH. The corporation shall indemnify any person who was or is party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or a stockholder purporting to act on behalf of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments and fines actually imposed or reasonably incurred by him in
connection with such action, suit or proceeding unless in any proceeding he
shall be finally adjudged not to have acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interest of the
corporation; provided, however, that such indemnification shall not cover
liabilities in connection


                                      -11-
<PAGE>   12
with any matter which shall be disposed of through a compromise payment by such
person, pursuant to a consent decree or otherwise, unless such compromise shall
be approved as in the best interests of the corporation, after notice that it
involves such indemnification, (a) by a vote of the directors in which no
interested director participates, or (by) a vote or the written approval of the
holders of a majority of the outstanding stock at the time having the right to
vote for directors, not counting as outstanding any stock owned by any
interested director or officer. Such indemnification may include payment by the
corporation of expenses incurred in defending a civil or criminal action or
proceeding in advance of the final disposition of such action or proceeding,
upon receipt of an undertaking by the person indemnified to repay such payment
if he shall be adjudicated to be not entitled to indemnification under these
provisions. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create any presumption that the person did not
act in good faith and in a manner in which he reasonably believed to be in the
best interests of the corporation, and with respect to any criminal action or
proceeding, had reasonable cause to


                                      -12-
<PAGE>   13

believe that his conduct was unlawful. The rights of indemnification hereby
provided shall not be exclusive of or affect other rights to which any
director, officer, employee, agent or stockholder may be entitled. As used in
this paragraph, the terms "director", "officer", "employee", "agent" or
"stockholder" include their respective heirs, executors and administrators, and
an "interested" director or officer is one against whom as such the proceeding
in question or another proceeding on the same or similar grounds is then
pending. Any indemnification to which a person is entitled under this paragraph
shall be provided although the person to be indemnified is no longer such a
director, officer, employee, agent or stockholder.

     TWELFTH. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or thereafter prescribed by statute, and all rights conferred upon a
stockholder herein are granted subject to this reservation.
     
     I, THE UNDERSIGNED, being the sole incorporator hereinabove named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and


                                      -13-
<PAGE>   14
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand this 14th day of December, 1984.


                                                  /s/ALAN L. LEFKOWITZ
                                                  --------------------------
                                                  Alan L. Lefkowitz





                                      -14-

<PAGE>   1
                                                                     EXHIBIT 3.8

                                                             Effective: 12/27/84

                                    BY-LAWS
                                        
                                       OF
                                        
                        AMOSKEAG MANAGEMENT CORPORATION

                                   ARTICLE I.
                                   
                          Certificate of Incorporation

     These by-laws, the powers of the corporation and of its directors and
stockholders, and all matters concerning the conduct and regulation of the
business of the corporation shall be subject to such provisions in regard
thereto as are set forth in the certificate of incorporation filed pursuant to
the General Corporation Law of Delaware which is hereby made a part of these
by-laws.

     The term "certificate of incorporation" in these by-laws, unless the
context requires otherwise, includes not only the original certificate of
incorporation filed to create the corporation but also all other certificates,
agreements of merger or consolidation, plans of reorganization, or other
instruments, howsoever designated, filed pursuant to the General Corporation Law
of Delaware which have the effect of amending or supplementing in some respect
the corporation's original certificate of incorporation.

ARTICLE II.

                                 Annual Meeting

     An annual meeting of stockholders shall be held for the election of
directors and for the transaction of any other business for the transaction of
which the meeting shall have been properly convened during the month of April in
each year, on such date and at such place, within or without the State of
Delaware, and at such time as shall be fixed by the board of directors and
specified in the notice of the meeting.  Any other proper business may be
transacted at the annual meeting.  If the annual meeting for election of
directors shall not be held on the date designated therefor, the directors shall
cause the meeting to be held as soon thereafter as convenient.



<PAGE>   2
                                  ARTICLE III.
                                        
                        Special Meetings of Stockholders

          Special meetings of the stockholders may be held either within or
without the State of Delaware, at such time and place and for such purposes as
shall be specified in a call for such meeting made by the board of directors or
by a writing filed with the secretary signed by the president or by a majority
of the directors.

                                  ARTICLE IV.

                        Notice of Stockholders' Meetings

          Whenever stockholders are required or permitted to take any action at
a meeting, a written notice of the meeting shall be given which shall state the
place, date and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, which notice shall be
given not less than ten nor more than fifty days before the date of the
meeting, except where longer notice is required by law, to each stockholder
entitled to vote at such meeting, by leaving such notice with him or by mailing
it, postage prepaid, directed to him at his address as it appears upon the
records of the corporation.  In case of the death, absence, incapacity or
refusal of the secretary, such notice may be given by a person designated either
by the secretary or by the person or persons calling the meeting or by the board
of directors.  When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken.  At the adjourned
meeting the corporation may transact any business which might have been
transacted at the original meeting.  If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.

          An affidavit of the secretary or an assistant secretary or of the
transfer agent of the corporation that the notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.



                                      -2-
<PAGE>   3
                                   ARTICLE V.

                    Quorum of Stockholders; Stockholder List

     At any meeting of the stockholders, a majority of all shares issued and
outstanding and entitled to vote upon a question to be considered at the
meeting shall constitute a quorum for the consideration of such question when
represented at such meeting by the holders thereof in person or by their duly
constituted and authorized attorney or attorneys, but a less interest may
adjourn any meeting from time to time, and the meeting may be held as adjourned
without further notice.  When a quorum is present at any meeting a majority of
the stock so represented thereat and entitled to vote shall, except where a
larger vote is required by law, by the certificate of incorporation or by these
by-laws, decide any question brought before such meeting.

     The secretary or other officer having charge of the stock ledger shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting; arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder.  Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours for a period of at least ten days prior to the
meeting, either at a place within the city or town where the meeting is to be
held, which place shall have been specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held.  Said list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof and may be inspected by any stockholder who is present.  The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list of stockholders required by this Article
or the books of the corporation, or the stockholders entitled to vote in person
or by proxy at any meeting of stockholders.

                                   ARTICLE VI.

                   Stockholder's Meeting, Proxies and Voting

     Except as otherwise provided in the certificate of incorporation, each
stockholder shall at every meeting of the stockholders be entitled to one vote
for each share of the capital stock held by such stockholder.  Each stockholder
entitled to vote at a meeting of stockholders or to express consent or dissent
to corporate action in writing without a meeting may authorize another person
or persons to act for him by proxy but (except as otherwise expressly permitted
by law) no proxy shall


                                      -3-
<PAGE>   4
be voted or acted upon after three years from its date, unless the proxy
provides for a longer period or so long as it is coupled with an interest
sufficient in law to support an irrevocable power.

     Unless otherwise provided in the certificate of incorporation, any action
required by law to, or which may, be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote therein were present and voted.
Prompt notice of the taking of such action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.

                                  ARTICLE VII.

                           Stockholders's Record Date

     In order that the corporation my determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock or for the purpose of any other
lawful action, the board of directors may fix, in advance, a record date, which
shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action.

     If no record date is fixed:

     (1)  The record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived,
at the close of business on the day next preceding the day on which the meeting
is held.

     (2)  The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the board of directors is necessary, shall be the day on which the first
written consent is expressed.


                                      -4-
<PAGE>   5
     (3)  The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating hereto.

     A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting,
provided, however, that the board of directors may fix a new record date for
the adjourned meeting.

                                  ARTICLE VIII.

                               Board of Directors

     Except as otherwise provided by law or by the certificate of incorporation
or by these by-laws, the business and affairs of the corporation shall be
managed by its board of directors.

     The number of directors shall be such number, not fewer than one nor more 
than three, as may be fixed for any corporate year and elected by the
stockholders at the annual meeting.  During any year the board of directors may
be enlarged and additional directors elected to complete the enlarged number, to
not more than the maximum number above specified, by the stockholders at any
meeting or by a vote of a majority of the directors then in office.  The
stockholders may, at any meeting held for the purpose during such year,
decrease, to not fewer than the minimum number above specified, the number of
directors as thus fixed or enlarged and remove directors to the decreased
number.  Each director shall hold office until his successor is elected and
qualified or until his earlier resignation or removal.  Any director may resign
at any time upon written notice to the corporation.  No director need be a
stockholder.

                                   ARTICLE IX.

                                   Committees

     The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, each committee to consist of one
or more of the directors of the corporation.  The board may designate one or
more directors as alternate members of any committee who may replace any absent
or disqualified member at any meeting of the committee and may define the number
and qualifications which shall constitute a quorum of such committee.  Except as
otherwise limited by law, any such committee, to the extent provided in the
resolu-


                                      -5-
<PAGE>   6
tion appointing such committee, shall have and may exercise the powers of the
board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it. In the absence or disqualification of a member of
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.

                                   ARTICLE X.
                                        
              Meetings of the Board of Directors and of Committees

     Regular meetings of the board of directors may be held without call or
formal notice at such places either within or without the State of Delaware and
at such times as the board may by vote from time to time determine.

     Special meetings of the board of directors may be held at any place either
within or without the State of Delaware at any time when called by the
president, treasurer, secretary or two or more directors, reasonable notice of
the time and place thereof being given to each director. A waiver of such
notice in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent to
such notice. In any case it shall be deemed sufficient notice to a director to
send notice by mail at least forty-eight hours, or to deliver personally or to
send notice by telegram at least twenty-four hours, before the meeting,
addressed to him at his usual or last known business or residence address.

     Unless otherwise restricted by the certificate of incorporation or by
other provisions of these by-laws, (a) any action required or permitted to be
taken at any meeting of the board of directors or of any committee thereof may
be taken without a meeting if all members of the board or of such committee,
as the case may be, consent thereto in writing and such writing or writings are
filed with the minutes of proceedings of the board or committee, and (b)
members of the board of directors or of any committee designated by the board
may participate in a meeting thereof by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation shall constitute
presence in person at such meeting.


                                      -6-
<PAGE>   7
                                   ARTICLE XI.

                        Quorum of the Board of Directors

     Except as otherwise expressly provided in the certificate of incorporation
or in these by-laws, a majority of the total number of directors at the time in
office shall constitute a quorum for the transaction of business, but a lesser
number may adjourn any meeting from time to time.  Except as otherwise so
expressly provided, the vote of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of
directors, provided, that the affirmative vote in good faith of a majority of
the disinterested directors, even though the disinterested directors shall be
fewer than a quorum, shall be sufficient to authorize a contract or transaction
in which one or more directors have interest if the material facts as to such
interest and the relation of the interested directors to the contract or
transaction have been disclosed or are known to the directors.

                                  ARTICLE XII.

                          Waiver of Notice of Meetings

     Whenever notice is required to be given under any provision of law or the
certificate of incorporation or by-laws, a written waiver thereof, signed by
the person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice.  Attendance of a person at a meeting
shall constitute a waiver of notice of such meeting, except when the person
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened.  Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the stockholders, directors or members of
a committee of directors need be specified in any written waiver of notice
unless so required by the certificate of incorporation or the by-laws.

                                 ARTICLE XIII.

                              Officers and Agents

     The corporation shall have a president, secretary and treasurer, who shall
be chosen by the directors, each of whom shall hold his office until his
successor has been chosen and qualified or until his earlier resignation or
removal.  The corporation may have such other officers and agents as are
desired, each of whom shall be chosen by the board of directors and shall hold
his office for such term and have such authority


                                      -7-
<PAGE>   8
and duties as shall be determined by the board of directors.  The board of
directors may secure the fidelity of any or all of such officers or agents by
bond or otherwise.  Any number of offices may be held by the same person.  Each
officer shall, subject to these by-laws, have in addition to the duties and
powers herein set forth, such duties and powers as the board of directors shall
from time to time designate.  In all cases where the duties of any officer,
agent or employee are not specifically prescribed by the by-laws, or by the
board of directors, such officer, agent or employee shall obey the orders and
instructions of the president.  Any officer may resign at any time upon written
notice to the corporation.

                                  ARTICLE XIV.

                                   President

     The president shall, subject to the direction and under the supervision of
the board of directors, be the chief executive officer of the corporation and
shall have general and active control of its affairs and business and general
supervision over its officers, agents and employees.  Except as otherwise voted
by the board he shall preside at all meetings of the stockholders and of the
board of directors at which he is president.  The president shall have custody
of the treasurer's bond, if any.

                                  ARTICLE XX.

                                   Secretary

     The secretary shall record all the proceedings of the meetings of the
stockholders and directors in a book, which shall be the property of the
corporation, to be kept for that purpose; and perform such other duties as
shall be assigned to him by the board of directors.  In the absence of the
secretary from any such meeting, a temporary secretary shall be chosen, who
shall record the proceedings of such meeting in the aforesaid book.

                                  ARTICLE XXI.

                                   Treasurer

     The treasurer shall, subject to the direction and under the supervision of
the board of directors, have the care and custody of the funds and valuable
papers of the corporation, except his own bond, and he shall, except as the
board of directors shall generally or in particular cases authorize the
endorsement thereof in some other manner, have power to endorse

                                      -8-
<PAGE>   9
for deposit or collection all notes, checks, drafts and other obligations for
the payment of money to the corporation or its order.  He shall keep, or cause
to be kept, accurate books of account, which shall be the property of the
corporation.

                                 ARTICLE XVII.

                              Voting of Securities

          As long as all of the issued and outstanding capital stock of the
corporation is owned beneficially and of record by a single entity, the
corporation shall act in respect of any securities which it owns in accordance
with the instructions of such entity.  Such instructions need not be in writing.

                                 ARTICLE XVIII.

                                    Removals

          The stockholders may, at any meeting called for the purpose, by vote
of a majority of the capital stock issued and outstanding and entitled to vote
thereon, remove any director from office.

          The board of directors may, at any meeting called for the purpose, by
vote of a majority of their entire number remove from office any officer or
agent of the corporation or any member of any committee appointed by the board
of directors or by any committee appointed by the board of directors or by any
officer or agent of the corporation.

                                  ARTICLE XIX.

                                   Vacancies

          Any vacancy occurring in any office of the corporation by death,
resignation, removal or otherwise and newly created directorships resulting
from any increase in the authorized number of directors, may be filled by a
majority of the directors then in office (though less than a quorum) or by a
sole remaining director and each of the incumbents so chosen shall hold office
for the unexpired term in respect of which the vacancy occurred and until his
successor shall have been duly elected and qualified or for such shorter period
as shall be specified in the filling of such vacancy or, if such vacancy shall
have occurred in the office of director, until such a successor shall have been
chosen by the stockholders.


                                      -9-
<PAGE>   10
                                  ARTICLE XX.

                             Certificates of Stock

     Every holder of stock in the corporation shall be entitled to have a
certificate signed by, or in the name of the corporation by the chairman or
vice-chairman of the board of directors (if one shall be incumbent) or the
president or a vice-president and by the treasurer or an assistant treasurer,
or the secretary or an assistant secretary, certifying the number of shares
owned by him in the corporation.  If such certificate is countersigned (1) by a
transfer agent other than the corporation of its employee, or (2) by a
registrar other than the corporation of its employee, any other signatures on
the certificate may be a facsimile.  In case any officer who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of
issue.

     If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificates which the corporation shall issue to represent such
class or series of stock or there shall be set forth on the face or back of the
certificates which the corporation shall issue to represent such class or series
of stock, a statement that the corporation will furnish, without charge to each
stockholder who so requests, the designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights. Any restrictions imposed upon the transfer of shares or
registration of transfer of shares shall be noted conspicuously on the
certificate representing the shares subject to such restriction.

                                  ARTICLE XXI.

                              Loss of Certificate

     The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the directors may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made


                                      -10-
<PAGE>   11
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate in its place and upon such
other terms or without any such bond which the board of directors shall
prescribe.

                                 ARTICLE XXII.

                                      Seal

     The corporate seal shall, subject to alteration by the board of directors,
consist of a flat-faced circular die with the word "Delaware" together with the
name of the corporation and the year of its organization cut or engraved
thereon.  The corporate seal may be used by causing it or a facsimile thereof
to be impressed or affixed or reproduced or otherwise.

                                 ARTICLE XXIII.

                              Execution of Papers

     Except as otherwise provided in these by-laws or as the board of directors
may generally or in particular cases authorize the execution thereof in some
other manner, all deeds, leases, transfers, contracts, bonds, notes, checks,
drafts and other obligations made, accepted or endorsed by the corporation,
shall be signed by the president, or by the vice president, if any, or by the
treasurer.

                                 ARTICLE XXIV.

                                  Fiscal Year

     Except as from time to time otherwise provided by the board of directors,
the fiscal year of the corporation shall end on the last day of December of
each year.

                                  ARTICLE XXV.

                                  Amendments.

     Except as otherwise provided by the law or by the certificate of
incorporation, these by-laws, as from time to time altered or amended, may be
made, altered or amended at any annual or special meeting of the stockholders
called for the purpose, of which the notice shall specify the subject matter of
the proposed alteration or amendment or new by-law or the article or articles
to be affected thereby.  If the certificate of incorporation so provides, these
by-laws may also be made,


                                      -11-
<PAGE>   12
altered or amended by a majority of the whole number of directors.  Such
action may be taken at any meeting of the board of directors, of which notice
shall have been given as for a meeting of stockholders.




                                      -12-

<PAGE>   1
                                                                     EXHIBIT 3.9

                                STATE Of MAINE.

                              ------------------
     Certificate of Organization of a Corporation under the General Law.

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

     The undersigned, officers of a corporation organized at Bangor, Maine, at
a meeting of the signers of the articles of agreement therefor, duly called and
held at the Director's Room of B. &  A. R. R. Co., in the city of Bangor on
Saturday the 29th day of October A.D. 1904, hereby certify as follows:

     The name of said corporation is Bangor Investment Company.

     The purposes of said corporation are purchasing, acquiring, owning and
selling real estate and the stock, and bonds of other corporations, and of
improving real estate, leasing its real estate, and acquiring by lease real
estate,  from other persons or corporations, and of doing all things necessary,
useful or convenient in carrying on any of its aforesaid business.

<PAGE>   2
The amount of capital stock is one hundred and fifty thousand dollars,
($150,000)

The amount of common stock is one hundred and fifty thousand dollars,
($150,000)

The amount of capital stock already paid in is nothing

The par value of the shares is one dollar ($1)

The names and residences of the owners of said shares are as follows:

     NAMES.              RESIDENCES.         NO. OF SHARES.
                                                COMMON


Franklin W. Cram         Bangor, Maine,           1

Frederick H. Appleton    Bangor, Maine,           1

Charles H. Wood          Bangor, Maine,           1


Remaining in treasury                         149,997


<PAGE>   3
Said corporation is located at Bangor in the County of Penobscot

The number of directors is three and their names are Franklin W. Cram,
Frederick H. Appleton and Charles H. Wood,

The name of the clerk is Frederick H. Appleton and his residence is Bangor,
Maine. The undersigned, Franklin W. Cram, is president; the undersigned,
Frederick H. Appleton is treasurer; and the undersigned, Franklin W. Cram,
Frederick H. Appleton, and Charles H. Wood are a majority of the directors of 
said corporation.

     Witness our hands this 29th day of October A.D. 1904.

                    Franklin W. Cram,      President.
                    -----------------------

                    Frederick H. Appleton, Treasurer.
                    -----------------------  


                    Franklin W. Cram.)
                    -----------------------  
                    Frederick H. Appleton)
                    -----------------------  Directors.
                    Charles H. Wood)
                    -----------------------  




                    
Penobscot ss.                                  October 29th,  A.D. 1904.

     Then personally appeared Franklin W. Cram, Frederick H. Appleton and
Charles H. Wood and severally made oath to the foregoing certificate, that the 
same is true.

                    Before me,
                              Hugh R. Chaplin
                    ---------------------------- Justice of the Peace.


                            ------------------------
                                 STATE OF MAINE
                            ------------------------

                              Attorney General's Office, October 31, A.D. 1904.

     I hereby certify that I have examined the foregoing certificate, and the
same is properly drawn and signed, and is conformable to the constitution and
laws of the State.

                              Geo. M. Seiders,    
                    ---------------------------- Attorney General
<PAGE>   4

To the Honorable Secretary of the State of Maine:

     I, Frederick H. Appleton of Bangor, County of Penobscot and State of
Maine, hereby certify that I am Clerk of the Bangor Investment Company, a
corporation duly organized under the laws of the State of Maine, having its
principal office at said Bangor, Maine; that at a special meeting of the
Stockholders of said Corporation held at the principal office thereof on the
Fifth day of November, 1907, at which meeting a majority of the capital stock
of said corporation issued and outstanding was represented in person or by
proxy, it was unanimously voted as follows, to wit,

     WHEREAS it appears that the amount of capital stock of this corporation is
insufficient for the purposes for which said corporation is organized, therefore

     Resolved, that the capital stock of this corporation be increased from the
sum of $150,000 consisting of 150,000 shares of the par value of one dollar
each to the sum of $250,000 consisting of 250,000 shares of the par value of
one dollar each; that the By-Laws be amended in accordance herewith; that the
Clerk file with the Secretary of State a certificate of the action of this
meeting and obtain his certificate therefor within ten days thereof that the
Treasurer pay to the Treasurer of State the necessary fee required for such
increase.

     I further certify that said meeting was duly and legally called and
notified in accordance with the provisions of the By-Laws of the corporation,
and that the action proposed to be taken at said meeting was specified in said
notice.
Dated Bangor, Maine, November 6, 1907.



                                                       /s/ FREDERICK H. APPLETON
                                                                         Clerk.
<PAGE>   5
     AGREEMENT for merger and consolidation of Katahdin Warehouse Company and
Aroostook Construction Company with and into Bangor Investment Company.

                                   -  -  -  -

     AGREEMENT dated this twenty-third day of May, 1925, by and between
Katahdin Warehouse Company, Aroostook Construction Company, and Bangor
Investment Company, all corporations organized and existing under the laws of
the State of Maine, having offices and principal places of business at Bangor,
County of Penobscot in said State.

     WHEREAS Bangor Investment Company is the owner of the entire outstanding
capital stock of Katahdin Warehouse Company, consisting of Five Thousand (5000)
shares of par value One (1) Dollar per share, and

     WHEREAS the owners of the shares of capital stock of Bangor Investment
Company and the owners of the shares of capital stock of Aroostook Construction
Company are identical and, in percentage to the total outstanding shares of
each of said Companies, the number of shares held by each of said owners in
each of said Companies is identical, and 

     WHEREAS Aroostook Construction Company has liquidated its assets and has
paid, or has provided for payment, of all known liabilities, and has made
distribution in cash of substantially the entire amount received in liquidation
of its assets, and now holds no property of any kind, name or nature, either
real or personal, except a small cash balance in the bank, and 

     WHEREAS the affairs of Bangor Investment Company, Katahdin Warehouse
Company, and Aroostook Construction Company, can be more efficiently and
economically managed if said affairs are under one sole management and control,
and 

     WHEREAS it is for the best interests of the stockholders and in the
interests of better conduct of business, that the affairs of said three
Companies be placed under one sole management and control
 
<PAGE>   6
                                     - 2 -

to be effected by merging and consolidating said Katahdin Warehouse Company and
said Aroostook Construction Company with and into Bangor Investment Company, so
that thereafter Bangor Investment Company shall have, exercise and own all the
property, rights, privileges and powers of Katahdin Warehouse Company and of
Aroostook Construction Company, in addition to the property, rights, privileges
and powers by it now held, and shall be subject to all the duties, obligations
and liabilities of said Katahdin Warehouse Company and of said Aroostook
Construction Company, in addition to its own present duties, obligations and
liabilities,

     NOW THEREFORE, Bangor Investment Company, Katahdin Warehouse Company, and
Aroostook Construction Company, all corporations of the State of Maine, and all
having offices and principal places of business at Bangor, in the County of
Penobscot in said State, pursuant to legal authority given by their
stockholders at meetings for that purpose duly called and legally held, do
hereby enter into this agreement of merger and consolidation:

          1.   Katahdin Warehouse Company will execute an instrument conveying
     to Bangor Investment Company all its right, title and interest in and to
     any property, whether real or personal, which it may have or shall be 
     entitled to, and also conveying all its rights, title, privileges and 
     powers; recordation of said instrument shall be conclusive evidence of the
     assumption by Bangor Investment Company of all the duties, obligations and
     liabilities of Katahdin Warehouse Company.

          2.   Aroostook Construction Company will executive an instrument
     conveying to Bangor Investment Company all its right, title and interest
     in and to any property, whether real or personal, which it may have or
     shall be entitled to, and also conveying all its right, title, privileges
     and powers; recordation of said instrument shall be conclusive evidence of
     the assumption by Bangor Investment Company of all the duties, obligations
     and liabilities of Aroostook Construction Company.
 
          3.   The shares of capital stock of Katahdin Warehouse Company owned
     by Bangor Investment Company, to-wit: Five Thousand (5000) shares of par
     value One (1) Dollar per share, and constituting the entire capital stock
     of said Katahdin Warehouse Company, are to be cancelled and destroyed.

          4.   The shares of capital stock of Aroostook Construction Company,
     consisting of Five Thousand (5000) shares of par value One Hundred (100)
     Dollars per share, are to be
 
<PAGE>   7
                                      -3-

surrendered to Bangor Investment Company, and by it cancelled and destroyed.

     5.   There shall be no change in the capitalization of Bangor Investment
Company, and the present outstanding capital stock of Bangor Investment
Company, to-wit: One Hundred Fifty-Eight Thousand Five Hundred and Seventy
(158,570) shares of par value One (1) Dollar per share, shall be the capital
stock of Bangor Investment Company as said Company shall exist when the merger
and consolidation of Katahdin Warehouse Company and Aroostook Construction
Company with and into Bangor Investment Company shall have been completed and
shall have become effective.

     6.   All cash and miscellaneous property of Katahdin Warehouse Company
shall be turned over and delivered to Bangor Investment Company.

     7.   All cash and miscellaneous property of Aroostook Construction Company
shall be turned over and delivered to Bangor Investment Company.

     8.   Upon completion of the merger and consolidation of Katahdin Warehouse
Company and Aroostook Construction Company with and into Bangor Investment
Company, the consolidated corporation, under the name of Bangor Investment
Company, shall enjoy all the property, rights, privileges and powers previously
by it held, and also shall have and enjoy all the property, rights, privileges
and powers of Katahdin Warehouse Company and of Aroostook Construction Company;
the corporate franchises, entity and existence of Katahdin Warehouse Company and
of Aroostook Construction Company shall be continued in, merged into, and
consolidated with, the Bangor Investment Company, and the Bangor Investment
Company shall be fully vested therewith; and upon the taking effect of this
agreement the corporate existence of Katahdin Warehouse Company and of Aroostook
Construction Company shall cease except as so continued in, merged into, and
consolidated with Bangor Investment Company.

     9.   Upon completion of the merger and consolidation Bangor Investment
Company will assume, and from the effective date of such merger and
consolidation shall be responsible for, all the duties, obligations and
liabilities of Katahdin Warehouse Company and of Aroostook Construction
Company; all and singular the rights, privileges, powers and franchises, and
all the property, real, personal and mixed, belonging either to Katahdin
Warehouse Company or to Aroostook Construction Company, and all debts due to
either of said Companies on whatever account, shall forthwith be vested in
Bangor Investment Company, and the title to any real estate or other property
vested in either Katahdin Warehouse Company or Aroostook Construction Company,
whether by deed or otherwise, shall not revert or be in any way impaired by
reason of such merger and consolidation; provided, however, that all rights of
creditors and all liens upon the property of Katahdin Warehouse Company and of
Aroostook Construction Company shall be preserved and remain unimpaired,
<PAGE>   8
                                      -4-

and all debts, liabilities and duties of Katahdin Warehouse Company and of
Aroostook Construction Company shall thenceforth and thereafter attach to
Bangor Investment Company and may be enforced against it to the same extent as
if said debts, liabilities and duties had been incurred or contracted by it, it
being expressly provided that the merger and consolidation herein provided for
shall not in any manner impair the rights of any creditor of Katahdin
Warehouse Company or of Aroostook Construction Company.

     10. From and after the completion of the merger and consolidation the
corporate existence of said Katahdin Warehouse Company and of said Aroostook
Construction Company will be continued in and become a part of the corporate
existence of Bangor Investment Company, but under the name of said latter
Company; the officers and directors of Bangor Investment Company as at present
elected, or appointed, and serving, shall continue as the officers and directors
of the consolidated corporation to be known as Bangor Investment Company, and
the By-laws of Bangor Investment Company as at present in effect shall continue
as the By-laws of the consolidated corporation to be known as Bangor Investment
Company, and all business shall be done in the name of Bangor Investment
Company, and the present corporate seal of the Bangor Investment Company shall
be the corporate seal of the consolidated corporation; and said consolidated
corporation, under the name of Bangor Investment Company, shall have full power
to sell, convey, transfer, lease or otherwise dispose of, in the ordinary course
of business, any and all property formerly standing in the name of either
Katahdin Warehouse Company or Aroostook Construction Company.

     11.  When the agreement of merger and consolidation duly has been executed
by the proper officers of the respective corporations, the same shall be
submitted to the Attorney General of the State of Maine for his approval, and
when said agreement has had the approval of said Attorney General it shall be
recorded in the Registry Deeds for Penobscot County, the County in which all of
the corporations involved are located, and after said agreement has been
endorsed with respect to filing and recordation in said County, the same shall
be filed in the office of the Secretary of State of the State of Maine.

     12.  The merger and consolidation of said Katahdin Warehouse Company and
said Aroostook Construction Company with and into Bangor Investment Company
shall be and become complete and effective when duly executed counterpart of
this agreement shall have been filed in the office of the Secretary of the State
of Maine, and note of such filing duly made thereon; immediately upon the
merger and consolidation becoming effective, the agreement therefor, bearing
notation of filing with the Secretary of State of the State of Maine, shall be
filed in the Counties of Aroostook, Piscataquis and Waldo, in which said
Counties one or more of said corporation is the owner of property, real or
personal.

     13.  When the duly executed counterpart of this agreement shall be filed
with the Secretary of State of the State of Maine, there shall be filed 
therewith -
<PAGE>   9
                                      -5-

               (a)  Affidavit by the Clerk of the Corporation, Katahdin 
     Warehouse Company, that at a meeting duly called for the purpose, legal
     authority was given by the stockholders authorizing the merger and
     consolidation, said affidavit to state the number of shares of stock
     represented, the number voting in favor, and the number voting against,
     and attached thereto a certified copy of the call for the meeting.

               (b)  Affidavit by the Clerk of the Corporation, Aroostook 
     Construction Company, that at a meeting duly called for the purpose, legal
     authority was given by the stockholders authorizing the merger and
     consolidation, said affidavit to state the number of shares of stock
     represented, the number voting in favor, and the number voting against,
     and attached thereto a certified copy of the call for the meeting.

               (c)  Affidavit by the Clerk of the Corporation, Bangor 
     Investment Company, that at a meeting duly called for the purpose, legal
     authority was given by the stockholders authorizing the merger and
     consolidation, said affidavit to state the number of shares of stock
     represented, the number voting in favor, and the number voting against,
     and attached thereto a certified copy of the call for the meeting.

     14.  The consolidated corporation to be known as Bangor Investment Company
  shall pay all expenses of merger and consolidation, including all fees 
  required by the statutes of the State of Maine, and all proper legal expenses.

     IN WITNESS WHEREOF Bangor Investment Company, acting by its President
thereunto duly authorized, Katahdin Warehouse Company, acting by its President
thereunto duly authorized, and Aroostook Construction Company, acting by its
President thereunto duly authorized, have caused this agreement of merger and
consolidation to be signed in six counterparts and the respective corporate
seals hereto affixed and attested by the Clerk of the Corporation, this
twenty-third day May, 1925.


Attest:                                 BANGOR INVESTMENT COMPANY

                                        By

/s/ [ILLEGIBLE]                           /s/ [ILLEGIBLE]
- ---------------------------               -----------------------------
Clerk of the Corporation                               President

Attest:                                 KATAHDIN WAREHOUSE COMPANY

                                        By

/s/ [ILLEGIBLE]                           /s/ [ILLEGIBLE]
- ---------------------------               -----------------------------
Clerk of the Corporation                               President

Attest:                                 AROOSTOOK CONSTRUCTION COMPANY

                                        By

/s/ [ILLEGIBLE]                           /s/ [ILLEGIBLE]
- ---------------------------               -----------------------------
Clerk of the Corporation                               President


<PAGE>   10
                                 STATE OF MAINE

Penobscot ss:

          On the 23rd day of May, 1925, Percy R. Todd, to me personally known,
who, being by me duly sworn, did depose and say that he resides in Bangor,
County of Penobscot, State of Maine; that he is President of Bangor Investment
Company, one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and attestation thereof was made in his
presence by Wingate F. Cram, Clerk of the Corporation, by similar order of the
Board of Directors thereof; and that he, the said Percy R. Todd, signed his name
thereto as President of Bangor Investment Company, for and in behalf of said
Company, by like order, and he acknowledged the foregoing instrument to be his
free act and deed in his said capacity as President of said corporation, and the
free act and deed of said corporation.

                              Before me,

                              /s/HENRY J. HART
                              ----------------------
                              Henry J. Hart
                              Notary Public


[SEAL]

                                        (My commission expires May 21, 1931)
<PAGE>   11
                                 STATE OF MAINE

Penobscot ss:

          On the 23rd day of May, 1925, I.K. Stetson, to me personally known,
who, being by me duly sworn, did depose and say that he resides in Bangor,
County of Penobscot, State of Maine; that he is President of Katahdin Warehouse
Company, one of the corporations described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and attestation thereof was made in his
presence by P.A. Hubbard, Clerk of the Corporation, by similar order of the
Board of Directors thereof; and that he, the said I.K. Stetson, signed his name
thereto as President of Katahdin Warehouse Company, for and in behalf of the
said Company, by like order, and he acknowledged the foregoing instrument to be
his free act and deed in his said capacity as President of said corporation, and
the free act and deed of said corporation.

                              Before me,

                              /s/HENRY J. HART
                              ----------------------
                              Henry J. Hart
                              Notary Public


[SEAL]

                                        (My commission expires May 21, 1931)
<PAGE>   12
                                 STATE OF MAINE

Penobscot ss:

          On the 23rd day of May, 1925, I.K. Stetson, to me personally known,
who, being by me duly sworn, did depose and say that he resides in Bangor,
County of Penobscot, State of Maine; that he is President of Aroostook
Construction Company, one of the corporations described in and which executed
the foregoing instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
by order of the Board of Directors of said corporation, and attestation thereof
was made in his presence by P.A. Hubbard, Clerk of the Corporation, by similar
order of the Board of Directors thereof; and that he, the said I. K. Stetson,
signed his name thereto as President of Aroostock Construction Company, for and
in behalf of the said Company, by like order, and he acknowledged the foregoing
instrument to be his free act and deed in his said capacity as President of said
corporation, and the free act and deed of said corporation.

                              Before me,


                              /s/HENRY J. HART
                              ----------------------
                              Henry J. Hart                              
                              Notary Public


[SEAL]

                                        (My commission expires May 21, 1931)
<PAGE>   13
State of Maine      )
                    ) ss:
County of Penobscot )



               On the twenty-third day of May, A.D. 1925, Wingate F. Cram, to
me personally known, signed the foregoing in my presence and made oath that the
statements contained therein are true in all respects.



     [SEAL]                        Before me,


                                        /s/ HENRY J. HART
                                        ----------------------------------
                                        Henry J. Hart
                                        Notary Public


                              (my commission expires May 21, 1931).





<PAGE>   14
     I, Percival A. Hubbard, Clerk of the Corporation, Katahdin Warehouse
Company, do hereby certify that the foregoing agreement was submitted to the
stockholders of said Corporation at a special meeting thereof duly called for
the purpose of considering the same, notice of the time, place and purpose of
such meeting having been sent to each stockholder in the manner required by the
By-laws of the Corporation; that said meeting was held in the Directors' Room
of the First National Bank of Bangor, Bangor, Maine, on the 14th day of March,
1925; that at said meeting the President of the Corporation explained to the
stockholders the full content and purport of the proposed agreement for merger
and consolidation; that a vote of the stockholders was taken for the adoption
or rejection of said agreement, each share of issued and outstanding stock
entitling the holder thereof to one vote thereon; that out of a total of Five
Thousand (5000) shares of capital stock issued and outstanding and entitled to
one vote per share there were represented at the meeting in person or by proxy
Four Thousand Nine Hundred and Ninety-Nine (4999) shares, the same constituting
almost the entire number of shares entitled to vote at said meeting; That Four
Thousand Nine Hundred and Ninety-Nine (4999) votes were cast in favor of the
adoption of the agreement for merger and consolidation and none were cast in
opposition thereto; that the proposed agreement for merger and consolidation
was spread upon the records of said meeting of the stockholders, and the terms
and conditions of said agreement specifically approved, and the President of
the Company, for and in behalf of the Company, was authorized to sign and
execute said agreement, and the Clerk of the Corporation was authorized and
directed to affix thereto the corporate seal.

     Witness my hand and the seal of the Corporation this twenty third day of
May, A.D.1925.



                                        /s/ PERCIVAL A. HUBBARD
                                        ----------------------------------
                                             Clerk of the Corporation


                                                              [SEAL]



<PAGE>   15
     I, Wingate F. Cram, Clerk of the corporation, Bangor Investment company, do
hereby certify that the foregoing agreement was submitted to the stockholders
of said corporation at a special meeting thereof duly called for the purpose of
considering the same, notice of the time, place and purpose of such meeting
having been sent to each stockholder in the manner required by the By-laws of
the Corporation; that said meeting was held in the Graham Building, Bangor,
Maine, on the 21st day of April, 1925; that at said meeting the President of
the corporation explained to the stockholders the full content and purport of
the proposed agreement for merger and consolidation: that a vote of the
stockholders was taken for the adoption or rejection of said agreement, each
share of issued and outstanding stock entitling the holder thereof to one vote
thereon; that out of a total of One hundred Fifty-Eight Thousand Five Hundred
and Seventy (158,570) shares of capital stock issued and outstanding and
entitled to one vote per share there were represented at the meeting in person
or by proxy One Hundred Twenty-One Thousand Five Hundred and Forty-One
(121,541) shares, the same constituting more than seventy-six per cent of the
total number of shares entitled to vote at said meeting; that One Hundred
Twenty- One Thousand Five Hundred and Forty-One (121,541) votes were cast in
favor of the adoption of the agreement for merger and consolidation and none
were cast in opposition thereto; that the proposed agreement for merger and
consolidation was spread upon the records of said meeting of the stockholders,
and the terms and conditions of said agreement specifically approved, and the
President of the Company, for and in behalf of the Company was authorized to
sign and execute said agreement, and the clerk of the corporation was
authorized and directed to affix thereto the corporate seal.

     Witness my hand and the seal of the corporation this twenty-third day of
May, A.D. 1925.

[SEAL]
                                             /s/ WINGATE F. CRAM
                                             ------------------------------- 
                                             Clerk of the Corporation
<PAGE>   16
State of Maine      )
                    ) ss:
County of Penobscot )

     
     On the twenty-third day of May, A.D. 1925, Percival A. Hubbard, to me
personally known, signed the foregoing in my presence and made oath that the
statements contained therein are true in all respects.



                                   Before me,

                                   /s/HENRY J. HART
                                   ----------------------------
                                   Henry J. Hart



                                        (My commission expires May 21, 1931).
<PAGE>   17
     I, Percival A. Hubbard, Clerk of the Corporation, Aroostook Construction
Company, do hereby certify that the foregoing agreement was submitted to the
stockholders of said Corporation at a special meeting thereof duly called for
the purpose of considering the same, notice of the time, place and purpose of
such meeting having been sent to each stockholder in the manner required by the
By-laws of the Corporation; that said meeting was held in the Directors' Room
of the First National Bank of Bangor, Bangor, Maine, on the 14th day of March,
1925; that at said meeting the President of the Corporation explained to the
stockholders the full content and purport of the proposed agreement for merger
and consolidation; that a vote of the stockholders was taken for the adoption or
rejection of said agreement, each share of issued and outstanding stock
entitling the holder thereof to one vote thereon; that out of a total of Five
Thousand (5000) shares of capital stock issued and outstanding and entitled to
one vote per share there were represented at the meeting in person or by proxy
Three Thousand Five Hundred and Thirty (3530) shares, the same constituting more
than seventy per cent of the total number of shares entitled to vote at said
meeting; that Three Thousand Five Hundred and Thirty (3530) votes were cast in
favor of the adoption of the agreement for merger and consolidation and none
were cast in opposition thereto; that the proposed agreement for merger and
consolidation was spread upon the records of said meeting of the stockholders,
and the terms and conditions of said agreement specifically approved, and the
President of the Company, for and in behalf of the company, was authorized to
sign and execute said agreement, and the Clerk of the Corporation was authorized
and directed to affix thereto the corporate seal. Witness my hand and the seal
of the Corporation this twenty-third day of may, A.D. 1925.

                                             /s/ PERCIVAL A. HUBBARD
                                             -------------------------------
                                             Clerk of the Corporation
                                             
                                                       [SEAL]
<PAGE>   18
State of Maine           )
                         )  ss:
County of Penobscot      )


     On the twenty-third day of May, A.D. 1925, Percival A. Hubbard, to me
personally known, signed the foregoing in my presence and made oath that the
statements contained therein are true in all respects.




[SEAL]                             Before me,


                                        /s/ HENRY J. HART
                                        -------------------------------
                                                Notary Public

                              (My commission expires May 21, 1931).

<PAGE>   19
                                STATE OF MAINE
                                       
                           ATTORNEY GENERAL'S OFFICE
                                       
                                  ----------


                                                            May 26, A.D., 1925.

     I hereby certify that I have examined the foregoing agreement, and the
same is properly drawn and signed, and is conformable to the constitution and
laws of the State, and I am satisfied that such agreement is made in good faith
and not for the purpose of avoiding payment of fees or taxes to the State.


                                                         /s/ SANFORD L. FOGG
                                                         -----------------------
                                                        Deputy Attorney General

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


Penobscot ss.

                               Registry of Deeds

Received May 28, 1925.

at 10h. 40m. A.M.

and Recorded in Corporation Book 4, Page 472.

/s/ WARREN E. CRAIG Register.
- -------------------





                                       
<PAGE>   20

                                        July 2, 1925.  

Hon. Frank W. Ball
Secretary of State
Augusta, Maine.
Dear Sir:

                                   MERGER OF KATAHDIN WAREHOUSE COMPANY
                                   AND AROOSTOOK CONSTRUCTION COMPANY
                                   WITH AND INTO BANGOR INVESTMENT COMPANY.

     In order that the records of your office may be complete I beg to advise
that the capital stock of the two former companies has been cancelled and
destroyed in accordance with the terms of the merger and that the agreement of
merger (recorded with you in Vol. 6, Page 235) has been recorded in all of the
Registries representing the places where any of the companies have done
business, namely:


Penobscot County Registry of Deeds, Corporation Book No. 4, Page 472.

Waldo County      "       "    "     Vol. 361,  Page 29.

Piscataquis Cy.   "       "    "     Vol. 223,  Page 147. 

Aroostook Cy.     "       "    "     Vol. 360,  Page 198. 

   "      " (Northern Dist.)   "     Vol. 110,  Page 484.


                                             Yours truly,

                                             /s/ WINGATE F. CRAM

                                                   Clerk.



<PAGE>   21

TO THE SECRETARY OF STATE

     STATE OF MAINE

          You are hereby notified, pursuant to Section 48 of Chapter 51 of the
Revised Laws of the State of Maine, that Bangor Investment Company has made a
change in its Charter, Certificate of Organization and/or Articles of
Association for the more convenient transaction of its business. Such change
was adopted by unanimous vote of the entire outstanding capital stock of the
Corporation at a meeting of the stockholders, duly called and held on April
20, 1926. The vote relative to said change in respect of the purposes of the
Corporation is as follows:

          By changing the period (.) at the end of first paragraph to a
          semi-colon (;) and adding:- "further purposes of the Corporation shall
          be the operation of motor vehicles, directly by the Corporation or
          through agents, on the highways of the State of Maine for the
          transportation of passengers, freight, mail and express, and to do all
          such other things permitted by law, as may be necessary and convenient
          to effect such operation, including the making of contracts with
          persons, firms and corporations.".

                                             
  
                                           BANGOR INVESTMENT COMPANY

                                             By
                                                /s/ WINGATE F. CRAM
                                               -----------------------------
                                                  Clerk of Corporation

Dated at Bangor, Maine
April 21, 1926.

                                    [SEAL]

                                STATE OF MAINE.

                                             Attorney General's Office
                                                April 24, 1926.

I hereby certify that I have examined the foregoing certificate, and the same
is properly drawn and signed, and is conformable to the constitution and laws
of the state, and I am satisfied that such changes are made in good faith and
not for the purpose of avoiding payment of fees or taxes to the State.


 /s/  SANFORD L. FOGG                             Deputy Attorney General.
- --------------------------
<PAGE>   22
         WHEREAS, at a meeting held on October 29, 1904 to effect the corporate
organization of Bangor Investment Company it was voted that the capital stock
of the Company be fixed at One Hundred Fifty Thousand Dollars ($150,000), to be
divided into one hundred fifty thousand (150,000) shares of par value of One
Dollar ($1.00) per share, and

         WHEREAS, at the annual meeting of the stockholders of said Company
held on November 5, 1907 it was voted to increase the authorized amount of
capital stock from One Hundred Fifty Thousand Dollars ($150,000), divided into
one hundred fifty thousand (150,000) shares, to Two Hundred Fifty Thousand
Dollars ($250,000), to be divided into two hundred fifty thousand (250,000)
shares of par value of One Dollar ($1.00) per share, and

         WHEREAS, a total of but one hundred fifty-eight thousand five hundred
seventy (158,570) share, of par value of One Dollar ($1.00) per share, have
been issued, and

         WHEREAS, the value of the assets of the Company materially have
decreased during recent years and the business activities of the Company now
have become substantially restricted, and

         WHEREAS, the financial needs of the Company no longer require an
authorized amount of capital stock in excess of One Hundred Sixty Thousand
Dollars ($160,000), to be divided into one hundred sixty thousand (160,000)
shares of par value of One Dollar ($1.00) per share:

         NOW, THEREFORE, it is voted unanimously by the stockholders

         That the authorized amount of capital stock of Bangor Investment 
Company be and it hereby is reduced from Two Hundred Fifty Thousand Dollars 
($250,000), divided into
<PAGE>   23
                                      -2-

two hundred fifty thousand (250,000) shares of par value of one Dollar ($1.00)
per share, to One Hundred Sixty Thousand Dollars ($160,000), divided into one
hundred sixty thousand (160,000) shares of par value of One Dollar ($1.00) per
share; and the proper officers of the Company be and they hereby are authorized
to prepare and to file with the Secretary of State of the State of Maine all
papers, certificates and documents which may be requisite and necessary to
effect and to record, in accordance with the laws of the State of Maine, such
reduction and decrease in the authorized capital stock of the Company.

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

                                                                  Bangor, Maine,
                                                               (August 24, 1939)

         I, Henry J. Hart, Clerk of the Corporation of Bangor Investment
Company, hereby certify that the foregoing is a true copy of the preambles and
vote unanimously adopted by the stockholders of Bangor Investment Company at a
meeting of said stockholders legally held at Bangor, Maine, on August 24, 1939.


                                                /s/ HENRY J. HART
                                                ------------------------


         Subscribed and sworn to before me this 24th day of August, 1939.

        
                                                
                                                /s/ MAURICE K. BAKER 
                                                ------------------------
                                                      Notary Public


  My commission expires December 21, 1945              [NOTARY PUBLIC'S SEAL]
<PAGE>   24
     I, Henry J. Hart, Clerk of Corporation of Bangor Investment Company hereby
certify that at a special meeting of the stockholders of Bangor Investment
Company, legally held on December 21, 1944, the stockholders of said
Corporation unanimously voted to increase the authorized capital stock of the
Company from 160,000 shares, of par value of $1.00 per share, to 250,000
shares, of par value of $1.00 per share; and I further certify that the
following is a true transcript from the record of said stockholder's meeting:

     "VOTED that the authorized capital stock of this Company be and it hereby
     is increased from 160,000 shares of par value of $1.00 per share to
     250,000 shares of par value of $1.00 per share; and further

     VOTED that the outstanding capital stock of the Company be increased from
     158,570 shares to 250,000 shares, and the Board of Directors of the Company
     hereby is authorized to sell, at $1.00 per share, 91,430 shares of capital 
     stock of this Company, said stock first to be offered to the present
     stockholders of this Company; the date of issuance of said shares shall be
     determined by the Board of Directors."




                                                    /s/ HENRY J. HART
                                                    Henry J. Hart
                                                    ----------------------------
                                                    Clerk of Corporation of
                                                    Bangor Investment Company.




Dated at Bangor, Maine,
December 21, 1944.


                                 STATE OF MAINE


Penobscot, ss.                                                December 21, 1944.


     Subscribed and sworn to before me this twenty-first day of December, 1944.



                                                    /s/ MAURICE S. C. BAKER
                                                    Maurice S. C. Baker,
                                                   -----------------------------
                                                    Notary Public.
My commission expires
December 21, 1945.
<PAGE>   25
TO THE SECRETARY OF STATE
     STATE OF MAINE

         You are hereby notified, pursuant to Section 71 of Chapter 49 of the
Revised Statutes of the State of Maine, 1944, that Bangor Investment Company
has made a change in its Charter, Certificate of Organization and/or Articles
of Association for the more convenient transaction of its business. Such change
was adopted by unanimous vote of the entire outstanding capital stock of the
Corporation at a meeting of the stockholders, duly called and held on April 17,
1951. The vote relative to said change in respect of the purposes of the
Corporation is as follows:

         VOTED that the corporate purposes of Bangor Investment Company shall be
         enlarged to include the following: to undertake, do, engage in,
         transact and carry on any and all kinds of manufacturing, mechanical,
         mercantile, trading, contracting, commercial, building, agricultural,
         logging, lumbering, mining, quarrying, real estate, pipeline
         transportation, and general highway transportation business; also to
         carry passengers or freight, or both, upon the high seas, or from port
         or ports in the State of Maine to a foreign port or ports, or to a
         port or ports in other states, or to carry freight or passengers, or
         both, upon any waters where the corporation may navigate; and any and
         all other kinds of business incidental, ancillary, related,
         pertaining, necessary, desirable or proper to or connected with any
         one or all of the purposes and kinds of business mentioned in this
         paragraph. Provided, however, that nothing in this paragraph contained
         shall be construed as authorizing the corporation to transact business
         in any state, territory or foreign country contrary to the laws
         thereof, or shall be construed to give the corporation any rights,
         powers, or privileges not permitted by the laws of Maine to
         corporations organized under Section 8, Chapter 49, of the Revised
         Statutes of Maine, 1944; and provided further, however, that nothing
         in this paragraph contained shall be construed as abridging or
         limiting in any manner any of the other authorized corporate purposes
         of the corporation.

                                       BANGOR INVESTMENT COMPANY
                                       By
                                          /s/ GORDON D. BRIGGS
                                         ---------------------------
Dated at Bangor, Maine                              Clerk
    April 27, 1951


[SEAL]
<PAGE>   26
                           S T A T E  O F  M A I N E



                                       Attorney General's Office, April 30, 1951

     I hereby certify that I have examined the foregoing certificate, and the
same is properly drawn and signed, and is conformable to the constitution and
laws of the State, and I am satisfied that such changes are made in good faith
and not for the purpose of avoiding payment of fees or taxes to the State.




                                                     /s/ [ILLEGIBLE]
                                                  ------------------------------
                                                      Deputy Attorney General
<PAGE>   27
                                  CERTIFICATE



     I, William M. Houston, Clerk of Bangor Investment Company, hereby certify
that the following is that portion of the Company's Bylaws that refers to the
number of Directors, and that said Bylaws were in effect on December 31, 1971:

                    The officers of the corporation shall be a President, a
          Clerk, a Treasurer, six Directors and such other officers as from
          time to time may be appointed by the President or by the Board of
          Directors.  Any person whether or not he is a director may hold more
          than one office.





                                                       /s/ WILLIAM M. HOUSTON
                                                       -------------------------
                                                       William M. Houston
                                                       Clerk
                                                       BANGOR INVESTMENT COMPANY





Hermon, Maine
May 11, 1984
<PAGE>   28

                        STATE OF MAINE        
                                              
                      ARTICLES OF AMENDMENT   
                   (Amendment of Shareholders)
                      Voting as One Class     
                   Pursuant to 13-A MRSA 
                   Sections 805 and 807, the 
                   undersigned corporation    
                   adopts these Articles of   
                   Amendment: 



FIRST:    All outstanding shares were entitled to vote on the following
          amendment as ONE class.

SECOND:   The amendment set out in Exhibit A attached was adopted by the
          shareholders 

          A.   at a meeting legally called and held on MARCH 7, 1984.
                                                       -------------

THIRD:    Shares outstanding and entitled to vote and shares voted for and
          against said amendment were:

<TABLE>
<CAPTION>
               Number of Shares Outstanding        NUMBER         NUMBER
                  and Entitled to Vote           Voted For    Voted Against
               ---------------------------       ---------    -------------
               <S>                               <C>          <C>
                        250,000                  250,000             0
</TABLE>

FOURTH:   If such amendment provides for exchange, reclassification or
          cancellation of issued shares, the manner in which this shall be
          effected is contained in Exhibit B attached if it is not set forth in
          the amendment itself.

FIFTH:    (Complete if Exhibits do not give this information.) If the amendment
          changes the number or par values of authorized shares, the number of
          shares the corporation has authority to issue thereafter, is as
          follows:
 
<TABLE>
<CAPTION>
          Class     Series (If Any)     Number of Shares    Par Value (If Any)
          -----     ---------------     ----------------    ------------------
          <S>       <C>                 <C>                 <C>
</TABLE>


          The aggregate par value of all such shares (of all classes and
               series) HAVING PAR VALUE is $__________________________.
          The total number of all such shares (of all classes and series)
               WITHOUT PAR VALUE is __________________ shares.

SIXTH:    Address of the registered office in Maine: Rt. #2  Bangor, Me 04401
                                                    ---------------------------
                                                    (street, city and zip code)

                                                    Bangor Investment Company
   ------------------------------------             ---------------------------
      MUST BE COMPLETED FOR VOTE OF                    (Name of Corporation - 
              SHAREHOLDERS                                Typed or Printed)
   ------------------------------------
   I certify that I have custody of the             By*: /s/ WILLIAM M. HOUSTON
       minutes showing the above                        -----------------------
       action by the shareholders.                          (Signature)
                                                       
           WILLIAM M. HOUSTON                       William M. Houston, Clerk
       ---------------------------                  ---------------------------
          (signature of clerk)                         (type or print name
   ------------------------------------                    and capacity)

                                                    By*: /s/ RICHARD B. GRAY
                                                    ---------------------------
                                                            (Signature)

                                                         Richard B. Gray, 
Dated: May 17, 1985                                      Assistant Clerk
      --------------                                ---------------------------
                                                        (type or print name
                                                           and capacity)


<PAGE>   1
                                                                    EXHIBIT 3.10

                            BANGOR INVESTMENT COMPANY
           
                                     BYLAWS

               CORRECTED AT MEETING OF STOCKHOLDERS MARCH 7, 1984


                                       I.

     This corporation shall be known by the name of Bangor Investment Company
and shall have a common seal bearing the words "Bangor Investment Company
incorporated 1904."

                                      II.

     The officers of the corporation shall be a President, a Clerk, a Treasurer,
three Directors and such other officers as from time to time may be appointed by
the President or by the Board of Directors. Any person, whether or not he is a
Director, may hold more than one office.

                                      III.

     The Directors shall be elected annually by the stockholders and shall
continue in office until their successors are elected, but in case of any
vacancy caused by death, resignation or otherwise, a person shall be elected by
the Board of Directors to fill such vacancy.

                                      IV.

     Meetings of the Board of Directors shall be called by the Clerk upon
direction of the President or two or more of the Directors, and two members
shall constitute a quorum for the transaction of business at such meetings. At
least one day's notice by mail, telephone or telegraph, of meetings of the
Board of Directors shall be given, except that such notice may be waived by a
majority of the Directors if they shall sign a statement to that
<PAGE>   2



effect in the minutes of such meeting. The President shall preside at meetings
of the Board of Directors, except that in the event of his absence those present
shall elect a presiding officer.

                                       V.

     The Annual Meeting of Stockholders shall be held on the same date as the
Annual Meeting of Stockholders of Bangor and Aroostook Railroad Company, at a
time and place determined by the Directors. Special meetings of the Stockholders
may be called at the direction of a majority of the Board of Directors, or at
the written request of the holders of a majority in voting power of the capital
stock outstanding.

     At meetings of Stockholders a representation in person or by proxy of
one-fifth in voting power of the capital stock legally outstanding shall
constitute a quorum for the transaction of business. Notice of annual or special
meetings, which notice shall include a general statement of the business to be
considered at such meeting, shall be given by the Clerk in writing by mailing,
to each stockholder of record on a day designated by the Board of Directors,
such notice by first-class mail, postage prepaid, at least ten days in advance
of the date set for such meeting; except that all requirements as to notice may
be waived if at the meeting unanimous consent of the Stockholders is given by
endorsement into the minutes, such consent to be given in person or by proxy.
The President shall preside at meetings of the Stockholders, except that in the
event of his absence those present shall elect a presiding officer.

<PAGE>   3
                                      VI.

     The Board of Directors shall have the following powers in addition to
powers granted elsewhere herein:

      (a) To call special meetings of the Stockholders.

      (b) To fill vacancies in their number.

      (c) To exercise general control over the business of the corporation.

      (d) To declare dividends out of the profits of the corporation.

      (e) To audit all accounts or cause them to be audited.

      (f) To do all things which in their judgment will promote the interests of
          the corporation, not inconsistent with these Bylaws and of the laws of
          the State and of the United States.

                                      VII.

      (1) The President shall have general control and management of the
corporation and shall perform duties designated by the Board of Directors. He
shall be empowered to delegate his duties to other officers as he may designate
to an extent not inconsistent with the directions and powers of the Board of
Directors.

      (2) The Clerk shall be elected by the Stockholders and shall hold office
until his successor is elected. Either in person or through competent
assistants, he shall keep the minutes of the meetings of the Stockholders and of
the Board of Directors, shall have the custody and use of the seal of the
corporation for corporate purposes, shall maintain a list of stockholders, shall
notify Stockholders and Directors of meetings, shall receive and have custody of
proxies submitted by Stockholders, and 

<PAGE>   4

shall perform such other duties as may be required by law and such other
duties, not inconsistent with the duties herein specified, as may be required
by the President and the Board of Directors. In the event of death of the Clerk
or his inability to serve, a successor shall be named by the Board of
Directors, which successor shall hold office until a further successor shall be
elected by the Stockholders.

      (3) The Treasurer shall be elected by the Board of Directors and, either
in person or through competent assistants, shall have custody of all moneys of
the corporation and shall disburse same under the general direction of the
Board of Directors. He shall keep regular and detailed accounts of all receipts
and disbursements and make reports of same to the Board of Directors and to the
President when required. He shall perform such other duties in connection with
the financial affairs of the corporation as may be required by the President
and the Board of Directors. When required by the Board of Directors, the
Treasurer shall furnish a bond for the faithful discharge of his duties, in
such sum as the Directors shall determine.

                                      VIII.

     The Board of Directors shall provide for the issue, transfer and
registration of the shares of capital stock of the Company and may appoint the
necessary Transfer Agents and Registrars for that purpose. The Directors shall
determine the form and denominations of stock certificates and may designate
what officer or officers may sign said certificates in the name of the Company.

<PAGE>   5
     Additional capital stock of the Company may be authorized by the
Stockholders in accordance with law, which capital stock shall be non-assessable
and shall be issued by the Board of Directors, without regard to pre-emptive
rights, upon such terms and conditions and in such amounts as the Directors from
time to time deem to be in the best interests of the Company.

                                       IX.

     The Company shall indemnify each present and future Director and Officer of
the Company (and his heirs, executors and administrators) against all expenses
and liabilities reasonably incurred by him in connection with or arising out of
any action, suit or proceeding in which he may be involved by reason of his
being or having been a Director or Officer of the Company, except in relation to
matters as to which he shall be adjudged in such action, suit or proceeding to
have been liable for negligence or misconduct in the performance of his duties
as such Director or Officer.

                                       X.

     The Bylaws may be altered or amended to an extent not inconsistent with
law, by the Board of Directors at any meeting legally held and attended by a
majority of said Board, or by the Stockholders at any meeting legally held and
attended either in person or by proxy by the holders of a majority of the voting
power of capital stock outstanding.

<PAGE>   6
                                STATE OF MAINE                           

                             NOTICE OF RESIGNATION
                                    OF CLERK

Pursuant to 13-A MRSA Section 304(4) you are hereby notified that the
undersigned has resigned as the Clerk of Bangor Investment Company, a Maine
                                         -------------------------
corporation, whose address is
                   c/o Bangor and Aroostook Railroad Company,
                 RFD #2, Bangor, Maine 04401                                   .
- -------------------------------------------------------------------------------
                       (street, city, state and zip code)

*A copy of the notice of resignation has been mailed to Walter E. Travis, at
                                                       -----------------
                                                         (insert name)
                           Bangor Investment Company
                   c/o Bangor and Aroostook Railroad Company
                          RFD #2, Bangor, Maine 04401
- --------------------------------------------------------------------------------
                               (mailing address)                (zip code)
the         President        of the corporation.
    -------------------------
       (corporate officer)



Dated: September 2, 1987
      ------------------



                                                  /s/ WILLIAM M. HOUSTON
                                                  ------------------------------
                                                       (signature of clerk)

                                                        WILLIAM M. HOUSTON
                                                  ------------------------------
                                                       (type or print name)

<PAGE>   7
                              STATE OF MAINE             
                            CHANGE OF CLERK OR           
                         REGISTERED OFFICE OR BOTH       
                                                         
                    Pursuant to 13-A MRSA Section 304    
                   the undersigned corporation advises   
                    you of the following change(s):      
                                                                     
                                                                     

FIRST:    The name and registered office of the clerk appearing on the record in
          Secretary of State's office

                               William M. Houston
- -------------------------------------------------------------------------------
                          RFD #2, Bangor, Maine 04401
- ------------------------------------------------------------------------------- 
                       (street, city, state and zip code)

SECOND:   The name and registered office of its successor (new) clerk who must
          be a Maine resident

          Shirley R. Strout, c/o Bangor and Aroostook Railroad Company
- -------------------------------------------------------------------------------
           Northern Maine Junction Park, RFD #2, Bangor, Maine 04401
- -------------------------------------------------------------------------------
                       (street, city, state and zip code)

THIRD:    Upon a change in clerk this must be completed:

          ( )  Such change was authorized by the board of directors and the
               power to make such change is not reserved to the shareholders by
               the articles or the bylaws.

          (XX) Such change was authorized by the shareholders. (Complete the
               following)

                    I certify that I have custody of the minutes showing the
                    above action by the shareholders.

                                                  /s/ SHIRLEY R. STROUT
                                                  ---------------------------
                                                  (signature of new clerk, 
                                                   secretary or assistant
                                                   secretary)
                                                  Shirley R. Strout, Clerk

Dated:    September 2, 1987
      ---------------------------------  
                                                   BANGOR INVESTMENT COMPANY
                                                  ---------------------------
                                                      (name of corporation)

                                                  By /s/ SHIRLEY R. STROUT
                                                    -------------------------
                                                            (signature)
                                                    
                                                    Shirley R. Strout, Clerk
                                                  ---------------------------
                                                    (type or print name and
                                                      capacity)
                                                  
                                                  By
                                                     ------------------------
                                                             (signature)

                                                  ---------------------------
                                                    (type or print name and 
                                                      capacity)

<PAGE>   8
                                 STATE OF MAINE
                                        
                             ARTICLES OF AMENDMENT
                           (AMENDMENT BY SHAREHOLDERS
                              VOTING AS ONE CLASS)
                                        
          Pursuant to 13-A MRSA Sections 805 and 807, the undersigned
                corporation adopts these Articles of Amendment:


         FIRST:   All outstanding shares were entitled to vote on the following
                  amendment as one class.

         SECOND:  The amendment set out in Exhibit A attached was adopted by
                  the shareholders (Circle one)

                  A.       at a meeting legally called and held on, OR June 14,
                           1988.
                 [B.]      by unanimous written consent on

         THIRD:   Shares outstanding and entitled to vote and shares voted for
                  and against said amendment were:

                        Number of Shares Outstanding    NUMBER         NUMBER
                            and Entitled to Vote       Voted For   Voted Against
                        ----------------------------   ---------   -------------
                                   250,000              250,000          0     

         FOURTH:  If such amendment provides for exchange, reclassification or
                  cancellation of issued shares, the manner in which this shall
                  be effected is contained in Exhibit B attached if it is not
                  set forth in the amendment itself.
                                 See Exhibit A
         FIFTH:   (Complete if Exhibits do not give this information.) If the
                  amendment changes the number or par values of authorized
                  shares, the number of shares the corporation has authority to
                  issue thereafter, is as follows:

                  Class    Series (If any)  Number of Shares  Par Value (If any)
                  -----    ---------------  ----------------  ------------------
              Common Stock     none             179,810              none      

                  The aggregate par value of all shares (of all classes and
                  series) having par value is $ 0.
                  The total number of all such shares (of all classes and
                  series) without par value is 179,810 shares.

<TABLE>
         <S>                                                   <C>
                                                               c/o Bangor and Aroostook Railroad Company, RFD#2
         SIXTH:   Address of the registered office in Maine:   Northern Maine Junction Park, Bangor, ME 04401  
                                                               ------------------------------------------------
                                                                         (street, city and zip code)
         ----------------------------------------------------
                   MUST BE COMPLETED FOR VOTE OF                          BANGOR INVESTMENT COMPANY
                            SHAREHOLDERS                       ------------------------------------------------
          --------------------------------------------------       (Name of Corporation -- Typed or Printed)
          I certify that I have custody of the minutes
          showing the above action by the shareholders.        By* /s/ SHIRLEY R. STROUT
                                                                  ---------------------------------------------
                       /s/ SHIRLEY R. STROUT                                     (signature)
          --------------------------------------------------   
          (signature of clerk, secretary or asst. secretary)                 Shirley R. Strout, Clerk
         ----------------------------------------------------  ------------------------------------------------
                                                                       (type or print name and capacity)

                                                              
                                                              
                                                              
         Dated:  June 15, 1988
               ---------------------------------------------- 
                                                              
</TABLE>
<PAGE>   9
                                                                       EXHIBIT A

                     BANGOR AND AROOSTOOK RAILROAD COMPANY

                         Written Consent of Shareholder

                   Pursuant to Section 620, Sub-Section 2 and
                       Section 803, Sub-Section 5 of the
                         Maine Business Corporation Act

     The undersigned being the owner of all of the issued and outstanding
common stock of Bangor Investment Company, a Maine Corporation, hereby consents
to the following action being taken for and in behalf of said Bangor Investment
Company:

VOTED:    That pursuant to 13-A, Maine Revised Statutes, Sections 801 and 802,
          Sub-Section 2G, the following amendment to the Composite Certificate
          of Organization of Bangor Investment Company, a Maine corporation, all
          of whose issued and outstanding common stock is owned by this Company,
          be and hereby is adopted: (i) to change the 250,000 shares of common
          stock of $1.00 per share par value, which have been previously issued
          and are presently outstanding, into 179,810 shares of common stock
          without par value; (ii) to change the amount of capital stock
          previously authorized from $250,000 (consisting of 250,000 shares of
          common stock of $1.00 per share par value) to 179,810 shares without
          par value; and (iii) to change the par value of the shares of common
          stock from $1.00 par value to no par value.

                                          BANGOR AND AROOSTOOK RAILROAD COMPANY

                                          BY          [ILLEGIBLE]
                                            -----------------------------------
                                                       President

June 14, 1988
<PAGE>   10
                                 STATE OF MAINE
                                        
                               ARTICLES OF MERGER
                                        
                                       OF
                                        
                             BIC MERGER CORPORATION
                          ---------------------------
                              A MAINE CORPORATION
                                        
                                      INTO
                                        
                           BANGOR INVESTMENT COMPANY
                          ---------------------------
                              A MAINE CORPORATION



     Pursuant to 13 -- A MRSA Section 903, the board of directors of each
participating corporation approve and the undersigned corporations, adopt the
following Articles of Merger:

     FIRST:    The plan of merger is set forth in Exhibit A attached hereto and
made a part hereof.

     SECOND:   As to each participating corporation, the shareholders of which
voted on such plan of merger, the number of shares outstanding and the number
of shares entitled to vote on such plan, and the number of such shares voted
for and against the plan, are as follows:

<TABLE>
<CAPTION>
                              Number of
     Name of                    Shares         Number of Shares
     Corporation              Outstanding     Entitled to Vote     Voted For      Voted Against
- -----------------------       -----------     ----------------     ---------      -------------
<S>                         <C>               <C>                <C>              <C>
BIC Merger Corporation             100                 100               100            0
Bangor Investment
Company                        179,296             179,296           178,547          307
</TABLE>


     THIRD:    If the shares of any class were entitled to vote as a class, the
designation and number of the outstanding shares of each such class, and the
number of shares of each such class voted for and against the plan, are as
follows:


<TABLE>
<CAPTION>
     Name of                  Designation        Number of       
     Corporation                of Class           Shares          Voted For      Voted Against
- -----------------------       -----------     ----------------     ---------      -------------
<S>                         <C>               <C>                <C>              <C>

                                Not Applicable.
</TABLE>

                                        
   (Include the following paragraph if the merger was authorized without the
vote of the shareholders of the surviving corporation.  Omit if not applicable.)

     FOURTH:   The plan of merger was adopted by the participating corporation 
which is to become the surviving corporation in the merger without any vote of
its shareholders, pursuant to section 902, subsection 5.  The number of shares
of each class outstanding immediately prior to the effective date of the
merger, and the number of shares of each class to be issued or delivered
pursuant to the plan of merger of the surviving corporation are set forth as
follows:

                         Not Applicable.


<TABLE>
<CAPTION>
                                             Number of Shares Outstanding       Number of Shares to Be Issued
Designation                                  Immediately Prior to Effective     Or Delivered Pursuant To The
 Of Class                                           Date of Merger                        Merger
- ------------                                 ------------------------------     -----------------------------
<S>                                          <C>                                <C>


</TABLE>
<PAGE>   11
FIFTH:    The address of the registered office of the surviving corporation is 

          c/o Bangor & Aroostook Railroad Company, Northern Maine Junction Park,
          ----------------------------------------------------------------------
          RFD #2, Bangor, ME 04401.
          ----------------------------------------------------------------------
                            (street, city, state and zip code)

          The address of the registered office of the merged corporation is

          One Portland Square, P.O. Box 586, Portland, ME 04112.
          ----------------------------------------------------------------------
                            (street, city, state and zip code)

SIXTH:    Effective date of the merger (if other than date of filing of Article)
          is ______________, 19 _____.
                                        
          See Section 2 of attached Plan of Merger and Reorganization.
          (Not to exceed 60 days from date of filing of the Articles.)

Dated:    January 24, 1989                    BANGOR INVESTMENT COMPANY
      --------------------------             --------------------------------
                                                 (surviving corporation)


===================================================
           MUST BE COMPLETED FOR VOTE OF
                   SHAREHOLDERS
===================================================
I certify that I have custody of the minutes
showing the above action by the shareholders of

Bangor Investment Company
- ---------------------------------------------------
               (name of corporation)

/s/ SHIRLEY R. STROUT
- ---------------------------------------------------
(signature of clerk, secretary or asst. secretary.)
===================================================


Dated:  January 24, 1989
       --------------------------------------------


===================================================
           MUST BE COMPLETED FOR VOTE OF
                   SHAREHOLDERS
===================================================
I certify that I have custody of the minutes
showing the above action by the shareholders of

BIC Merger Corporation
- ---------------------------------------------------
               (name of corporation)

/s/ GREGORY S. FRYER
- ---------------------------------------------------
(signature of clerk, secretary or asst. secretary)
===================================================

By* /s/ SHIRLEY R. STROUT
   ------------------------------------------------
                     (Signature)

Shirley R. Strout, Clerk
- ---------------------------------------------------
         (type or print name and capacity)



BIC MERGER CORPORATION
- ---------------------------------------------------
               (merged corporation)


By* /s/ GREGORY S. FRYER
   ------------------------------------------------
                     (Signature)

Gregory S. Fryer, Clerk
- ---------------------------------------------------
         (type or print name and capacity)
<PAGE>   12

                                                                       EXHIBIT A

                       PLAN OF MERGER AND REORGANIZATION

          PLAN OF MERGER AND REORGANIZATION dated as of December 7, 1988 by and
among Downeast Securities Corporation, a Delaware corporation ("Downeast");
Deer Isle Corporation, a Delaware corporation ("Deer Isle"); Bangor &
Aroostook Railroad Company, a Maine corporation ("BAR"); Bangor Investment
Company, a Maine corporation ("BIC"); BAR Merger Corporation, a Maine
corporation ("Newco BAR"); and BIC Merger Corporation, a Maine corporation
("Newco BIC") (all of such corporations, collectively, being herein referred to
as the "Corporations").

                              W I T N E S S E T H:

          WHEREAS, the Board of Directors of each Corporation has determined
that it is in the best interests of such Corporation to participate in the
reorganization contemplated by this Plan of Merger and Reorganization;

          WHEREAS, Downeast owns approximately 99.325% of the outstanding
shares of Common Stock of BAR, approximately 99.325% of the outstanding shares
of Common Stock of BIC, 100% of the outstanding shares of Common Stock of Deer
Isle, 100% of the outstanding Common Stock of Newco BAR, and 100% of the
outstanding shares of Common Stock of Newco BIC;

 NOW, THEREFORE, the contemplated reorganization shall be effected as follows:

          1.          Pursuant to this Plan of Merger and Reorganization, as of
the Effective Date (as defined below), (a) Newco BAR shall merge into BAR (the
"BAR Merger", with BAR being the surviving corporation of such merger, and (b)
Newco BIC shall merge into BIC (the "BIC Merger"), with BIC being the surviving
corporation of such merger. Upon the Effective Date, the separate existence of
Newco BAR and Newco BIC shall be merged with and into BAR and BIC,
respectively.

          2.          The BAR Merger and the BIC Merger shall become effective
as of the time and date of filing, with the office of the Secretary of State of
Maine, of Articles of Merger for the BAR Merger and the BIC Merger, whichever
filing occurs later (the "Effective Date").

          3.          The articles of incorporation and bylaws of BAR and BIC
in effect immediately prior to the Effective Date shall remain the articles of
incorporation and bylaws of BAR and BIC, respectively, upon and after the
Effective Date, until subsequently altered, amended, or repealed as provided by
law.

          4.          The directors and officers of BAR and BIC immediately
prior to the Effective Date shall remain the directors and
<PAGE>   13
officers Of BAR and BIC, respectively, upon and after the Effective Date, until
their respective successors are duly elected or appointed and have been
qualified in the manner provided in the articles of incorporation and bylaws of
BAR and BIC, respectively, or as otherwise provided by law.

          5.          By virtue of the BAR Merger, (a) each share of Common
Stock of Newco BAR outstanding immediately prior to the Effective Date shall,
upon the Effective Date, be converted into 1/10th new share of Common Stock, no
par value, of BAR; (b) each share of Common Stock of BAR owned of record
immediately prior to the Effective Date by Downeast shall remain outstanding in
the name of Downeast upon the Effective Date; and (c) all other shares of
Common Stock of BAR outstanding immediately prior to the Effective Date shall,
upon the Effective Date, be cancelled and each stock certificate for such
cancelled shares shall thereupon represent solely the right to be paid $150.00
per share in cash upon surrender of the certificate to BAR.

          6.          By virtue of the BIC Merger, (a) each share of Common
Stock of Newco BIC outstanding immediately prior to the Effective Date shall,
upon the Effective Date, be converted into 1/10th new share of Common Stock, no
par value, of BIC; (b) each share of Common Stock of BIC owned of record
immediately prior to the Effective Date by Downeast shall remain outstanding in
the name of Downeast upon the Effective Date; and (c) all other shares of
Common Stock of BIC outstanding immediately prior to the Effective Date shall,
upon the Effective Date, be cancelled and each stock certificate for such
cancelled shares shall thereupon represent solely the right to be paid $60.00
per share in cash upon surrender of the certificate to BIC.

          7.          Following consummation of the BAR Merger, Downeast shall
make a capital contribution to Deer Isle in the form of all capital stock owned
by Downeast in BAR. Through such capital contribution, BAR shall become the
wholly-owned subsidiary of Deer Isle, which shall remain the wholly-owned
subsidiary of Downeast.

          8.          Following consummation of the BAR Merger and the BIC
Merger, BIC shall pay a dividend to its sole shareholder (Downeast) in the form
of all capital stock owned by BIC in the following wholly-owned subsidiaries:
Bangor & Aroostook Transportation Company, Machine Accounting, Inc., Maine
Rent-a-Car System, Maine Rent-a-Truck System, and McKay Rock Products, Inc.
(collectively, the "BIC Subsidiaries"). Downeast shall then make a capital
contribution to Deer Isle in the form of all capital stock owned by Downeast in
the BIC Subsidiaries. Through such dividend and such capital contribution, the
BIC Subsidiaries shall become wholly-owned subsidiaries of Deer Isle.

          9.  Consummation of the BAR Merger and BIC Merger and all other
transactions contemplated by this Plan of Merger and Reorganization shall be
conditioned upon prior approval of this





                                      -2-
<PAGE>   14
Plan of Merger and Reorganization by (i) the Boards of Directors of each of the
Corporations (by vote or by written consent in the manner provided by law),
(ii) the affirmative vote of the holders of a majority of the outstanding shares
of each of BAR and BIC and (iii) the written consent of Downeast as sole
shareholder of Newco BAR, Newco BIC, and Deer Isle Corporation.

          10. The Board of Directors of any of the Corporations may by
resolution at any time prior to the Effective Date cause this Plan of Merger
and Reorganization to be abandoned. Any such action shall not require a further
vote of the shareholders of any of the Corporations.

          11. The provisions set forth in this Plan of Merger and
Reorganization shall not be deemed to be exclusive of or otherwise to limit the
statutory dissenters' rights provided under the Maine Business Corporation
Act, Title 13-A Maine Revised Statutes Annotated.





                                      -3-
<PAGE>   15
                                 STATE OF MAINE
                                        
                               CHANGE OF CLERK or
                           REGISTERED OFFICE or BOTH
                                                    

               Pursuant to 13-A MRSA Section 304 the undersigned
               corporation advises you of the following change(s):
                                    

FIRST:    The name and registered office of the clerk appearing on the record
          in Secretary of State's office

          Shirley R. Strout
          --------------------------------------------------------------------
          c/o Bangor & Aroostook Railroad, Northern Main Junction
          Park; RFD 2; Bangor, Maine 04401
          --------------------------------------------------------------------
                       (street, city, state and zip code)

SECOND:   The name and registered office of its successor (new) clerk who 
          must be a Maine resident:

          Roberta H. Toothaker
          --------------------------------------------------------------------
                                     (name)
          One Portland Square, P.O. Box 586, Portland, ME 04112-0586
          --------------------------------------------------------------------
                       (street, city, state and zip code)

THIRD:    Upon a change in clerk this must be completed:

          (x ) Such change was authorized by the board of directors and the
               power to make such change is not reserved to the shareholders by
               the articles or the bylaws.

          (  ) Such change was authorized by the shareholders. (Complete the
               following)

            I certify that I have custody of the minutes showing the above
            action by the shareholders.
    
                                         
                                        --------------------------------
                                            (signature of new clerk, 
                                             secretary or assistant
                                                   secretary)

   Dated: November 17, 1993             BANGOR INVESTMENT COMPANY          
          ------------------            --------------------------------
                                             (name of Corporation)

                                     By  /s/ ROBERTA H. TOOTHAKER
                                        --------------------------------
                                               (signature)
                                        Roberta H. Toothaker, Clerk
                                        --------------------------------
                                        (type or print name and capacity)

<PAGE>   16
                         STATE OF MAINE          
                                   
                       CHANGE OF CLERK or        
                    REGISTERED OFFICE or BOTH    
                                                 

               Pursuant to 13-A MRSA Section 304 the undersigned
               corporation advises you of the following change(s):
                                    

FIRST:    The name and registered office of the clerk appearing on the record
          in Secretary of State's office

          Roberta H. Toothaker
          --------------------------------------------------------------------
          One Portland Square, P.O. Box 586, Portland, ME 04112-0586
          --------------------------------------------------------------------
                       (street, city, state and zip code)

SECOND:   The name and physical location of the registered office of the
          successor (new) clerk, who must be a Maine resident, are:

          Mark K. Googins
          --------------------------------------------------------------------
                                     (name)
          One Portland Square, P.O. Box 586, Portland, ME 04112-0586
          --------------------------------------------------------------------
           (street address (not P.O. Box), city, state and zip code)

          --------------------------------------------------------------------
                   (mailing address if different from above)

THIRD:    Upon a change in clerk this must be completed:

          (  ) Such change was authorized by the board of directors and the
               power to make such change is not reserved to the shareholders by
               the articles or the bylaws.

          (X ) Such change was authorized by the shareholders. (Complete the
               following)

            I certify that I have custody of the minutes showing the above
            action by the shareholders.
    
                                        /s/ MARK K. GOOGINS
                                        --------------------------------
                                             (signature of new clerk)

   Dated: December 13, 1995             BANGOR INVESTMENT COMPANY          
          ------------------            --------------------------------
                                             (name of Corporation)

                                     By  /s/ MARK K. GOOGINS
                                        --------------------------------
                                               (signature)
                                        Mark K. Googins, Clerk
                                        --------------------------------
                                        (type or print name and capacity)

<PAGE>   17
                           BANGOR INVESTMENT COMPANY

                                     BYLAWS

               CORRECTED AT MEETING OF STOCKHOLDERS MARCH 7, 1984

                                       I.

     This corporation shall be known by the name of Bangor Investment Company
and shall have a common seal bearing the words "Bangor Investment Company
incorporated 1904."

                                      II.

     The officers of the corporation shall be a President, a Clerk, a
Treasurer, three Directors and such other officer as from time to time may be
appointed by the President or by the Board of Directors. Any person, whether or
not he is a Director, may hold more than one office.

                                      III.

     The Directors shall be elected annually by the stockholders and shall
continue in office until their successors are elected, but in case of any
vacancy caused by death, resignation or otherwise, a person shall be elected by
the Board of Directors to fill such vacancy.

                                      IV.

     Meetings of the Board of Directors shall be called by the Clerk upon
direction of the President or two or more of the Directors, and two members
shall constitute a quorum for the transaction of business at such meetings. At
least one day's notice by mail, telephone or telegraph, of meetings of the
Board of Directors shall be given, except that such notice may be waived by a
majority of the Directors if they shall sign a statement to that
<PAGE>   18
effect in the minutes of such meeting. The President shall preside at meetings
of the Board of Directors, except that in the event of his absence those
present shall elect a presiding officer.

                                       V.

     The Annual Meeting of Stockholders shall be held on the same date as the
Annual Meeting of Stockholders of Bangor and Aroostook Railroad Company, at a
time and place determined by the Directors. Special meetings of the
Stockholders may be called at the direction of a majority of the Board of
Directors, or at the written request of the holders of a majority in voting
power of the capital stock outstanding.

     At meetings of Stockholders a representation in person or by proxy of
one-fifth in voting power of the capital stock legally outstanding shall
constitute a quorum for the transaction of business. Notice of annual or
special meetings, which notice shall include a general statement of the
business to be considered at such meeting, shall be given by the Clerk in
writing by mailing, to each stockholder of record on a day designated by the
Board of Directors, such notice by first-class mail, postage prepaid, at least
ten days in advance of the date set for such meeting; except that all
requirements as to notice may be waived if at the meeting unanimous consent of
the Stockholders is given by endorsement into the minutes, such consent to be
given in person or by proxy. The President shall preside at meetings of the
Stockholders, except that in the event of his absence those present shall elect
a presiding officer.
<PAGE>   19
                                      VI.

     The Board of Directors shall have the following powers in addition to
powers granted elsewhere herein:

     (a)  To call special meetings of the Stockholders.

     (b)  To fill vacancies in their number.

     (c)  To exercise general control over the business of the corporation.

     (d)  To declare dividends out of the profits of the corporation.

     (e)  To audit all accounts or cause them to be audited.

     (f)  To do all things which in their judgment will promote the interests
          of the corporation, not inconsistent with these Bylaws and of the laws
          of the State and of the United States.

                                      VII.

     (1)  The President shall have general control and management of the
corporation and shall perform duties designated by the Board of Directors. He
shall be empowered to delegate his duties to other officers as he may designate
to an extent not inconsistent with the directions and powers of the Board of
Directors.

     (2)  The Clerk shall be elected by the Stockholders and shall hold office
until his successor is elected. Either in person or through competent
assistants, he shall keep the minutes of the meetings of the Stockholders and
of the Board of Directors, shall have the custody and use of the seal of the
corporation for corporate purposes, shall maintain a list of stockholders,
shall notify Stockholders and Directors of meetings, shall receive and have
custody of proxies submitted by Stockholders, and

<PAGE>   20
shall perform such other duties as may be required by law and such other
duties, not inconsistent with the duties herein specified, as may be required
by the President and the Board of Directors. In the event of death of the Clerk
or his inability to serve, a successor shall be named by the Board of Directors,
which successor shall hold office until a further successor shall be elected by
the Stockholders.

     (3)  The Treasurer shall be elected by the Board of Directors and, either
in person or through competent assistants, shall have custody of all moneys of
the corporation and shall disburse same under the general direction of the Board
of Directors. He shall keep regular and detailed accounts of all receipts and
disbursements and make reports of same to the Board of Directors and to the
President when required. He shall perform such other duties in connection with
the financial affairs of the corporation as may be required by the President and
the Board of Directors. When required by the Board of Directors, the Treasurer
shall furnish a bond for the faithful discharge of his duties, in such sum as
the Directors shall determine.

                                     VIII.

     The Board of Directors shall provide for the issue, transfer and
registration of the shares of capital stock of the Company and may appoint the
necessary Transfer Agents and Registrars for that purpose. The Directors shall
determine the form and denominations of stock certificates and may designate
what officer or officers may sign said certificates in the name of the Company.
<PAGE>   21
     Additional capital stock of the Company may be authorized by the
Stockholders in accordance with law, which capital stock shall be
non-assessable and shall be issued by the Board of Directors, without regard to
pre-emptive rights, upon such terms and conditions and in such amounts as the
Directors from time to time deem to be in the best interests of the Company.

                                      IX.

     The Company shall indemnify each present and future Director and Officer
of the Company (and his heirs, executors and administrators) against all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his being or having been a Director or Officer of the Company, except
in relation to matters as to which he shall be adjudged in such action, suit or
proceeding to have been liable for negligence or misconduct in the performance
of his duties as such Director or Officer.

                                       X.

     The Bylaws may be altered or amended to an extent not inconsistent with
law, by the Board of Directors at any meeting legally held and attended by a
majority of said Board, or by the Stockholders at any meeting legally held and
attended either in person or by proxy by the holders of a majority of the
voting power of capital stock outstanding.
<PAGE>   22
                                                                       EXHIBIT A

                                     BYLAWS

                                       OF

                    COMMUNICATIONS RESOURCE ASSOCIATES, INC.
                     (formerly B & A Communications, Inc.)

                                   ARTICLE I

                                  DEFINITIONS

     When used in these Bylaws, the terms defined below shall have the meanings
specified.

     The "Articles" shall mean the Articles of Incorporation of the Corporation,
including any and all amendments thereto, as then in effect.

     The "Board" shall mean the Board of Directors of the Corporation.

     The "Corporation" shall mean Communications Resource Associates, Inc., a
Maine Corporation.

     The "Corporation Act" shall mean the Maine Business Corporation Act, Title
13-A of the Revised Maine Statutes Annotated, as then in effect.

     The "State" shall mean the State of Maine.

                                   ARTICLE II

                               CORPORATE OFFICES

     SECTION 2.1  Principal Office. The principal office of the Corporation
shall at Northern Maine Junction Park, R.R. 2, Bangor, Maine 04401, or such
other location as the Board may from time to time designate.

     SECTION 2.2  Registered office. The Clerk of the Corporation shall maintain
the registered office of the Corporation at some fixed place within the State,
which may be, but need not be, the Corporation's principal office.

     SECTION 2.3  Other Offices. The Corporation may also have offices at such
other places either within or without the State as the Board may from time to
time determine or as the business may require.

                                 ARTICLE III

                          MEETINGS OF SHAREHOLDERS

     SECTION 3.1  Annual Meetings. The annual meeting of shareholders of the
Corporation for the election of directors
<PAGE>   23
and the transaction of other business shall be held (i) on the third Thursday
of March of each year, if not a legal holiday, and if a legal holiday then on
the next succeeding weekday not a legal holiday, or (ii) at such other date and
time as the Board shall specify by resolution.

     SECTION 3.2  Special Meetings. Special meetings of the shareholders may be
called only by the President, the Board, the holders of not less than ten (10)
percent of the shares entitled to vote at the meeting, or such other persons as
are specifically entitled by the Corporation Act to call special meetings of
shareholders.

     SECTION 3.3  Place of Meetings. All meetings of shareholders shall be held 
at the principal office of the Corporation or at such other place within or
without the State as may be determined by the Board.

     SECTION 3.4  Notice of Meetings. Written notice of each meeting of
shareholders, stating the place, date, and hour of the meeting, shall be
delivered, either personally or by mail, to each shareholder of record entitled
to vote at such meeting, not less than three (3) nor more than sixty (60) days
before the meeting. In the case of a special meeting, or to the extent
otherwise required by the Corporation Act, the Articles, or these Bylaws, such
notice shall also state the purpose or purposes for which the meeting is
called. If mailed, such notice shall be deemed delivered when deposited with
postage prepaid in the United States mail, addressed to the shareholder at his
address as it appears on the stock transfer books of the Corporation.
Notwithstanding any provision of these Bylaws, defects in the calling or notice
of a meeting of shareholders shall be deemed waived to the extent provided by
the Corporation Act.

     SECTION 3.5  Record Date. For the purpose of determining shareholders
entitled to notice of and to vote at any meeting of shareholders, the Board may
fix in advance a record date, which date shall not be more than sixty (60)
days, nor less than three (3) full days, prior to the date of the meeting of
shareholders. If the Board does not fix a record date for a meeting of
shareholders, the record date shall be the date next preceding the date on
which notice of the meeting is mailed.

     SECTION 3.6  Quorum. At each meeting of shareholders, the holders of a
majority of the shares entitled to vote thereat, present in person or by proxy,
shall constitute a quorum for the transaction of business.

     SECTION 3.7  Adjournments. In the absence of a quorum, any meeting of
shareholders may be adjourned from time to time by vote of a majority of the
shares present, or if no shares are present, by the Clerk.


                                     -2-
<PAGE>   24
     SECTION 3.8  Organization. Each meeting of shareholders shall be presided
over by the President or by a person designated by the President to act as
chairman of the meeting. If the President is not present and no person is so
designated by him, the chairman of the meeting shall be chosen by plurality
vote of the shares present or represented at the meeting and entitled to vote.
The order of business at all meetings of shareholders shall be as determined by
the chairman of the meeting. The secretary of the meeting shall keep a record
of all actions taken by the shareholders at the meeting.

     SECTION 3.9  Voting. Except as otherwise provided by the Articles, each
share of stock shall be entitled to one vote on each matter submitted to the
shareholders. Except as otherwise provided by statute, the Articles, these
Bylaws, or resolution of the Board of Directors, any corporate action shall be
authorized by a majority of the votes cast at the meeting by the holders of
shares entitled to vote on the subject matter.

     SECTION 3.10  Voting Inspectors. At each meeting of shareholders, the Clerk
shall act as voting inspector unless the Board or the chairman of the meeting
shall have designated one or more voting inspectors for such meeting. No
director or candidate for the office of director shall act as an inspector for
the election of directors.

     SECTION 3.11  List of Shareholders. The officer or agent having charge of
stock transfer books for shares of the Corporation shall, in advance of each
meeting of shareholders, prepare a complete list of the shareholders entitled
to vote at that meeting.

     SECTION 3.12  Consent of Shareholders. Any action required or permitted to
be taken at any meeting of shareholders may be taken without a meeting if
written consents, setting forth the action so taken, are signed by the
holders of all outstanding shares entitled to vote on such action and are filed
with the Clerk. Such written consents shall have the same force and effect as a
unanimous vote of shareholders.

                                 ARTICLE IV

                                  DIRECTORS

     SECTION 4.1  General Powers. The Board shall manage and direct the 
management of the business and affairs of the Corporation and may exercise all
powers of the Corporation and do or cause to be done on behalf of the
Corporation all lawful acts as are not expressly reserved to the shareholders
by the Corporation Act, the Articles, or these Bylaws.

     SECTION 4.2  Number. The number of directors constituting the Board shall
be not less than one (1) nor more than nine (9), and shall be fixed in the
manner provided by the Articles.

                                       -3-

<PAGE>   25
     SECTION 4.3  Qualifications. Directors must have attained the age of
twenty-one (21) years.

     SECTION 4.4  Election and Term. Unless otherwise provided by the Articles 
and except as hereinafter provided, the directors shall be elected each year at
the annual meeting of shareholders. Each director shall hold office until the
expiration of the term for which he is elected and until his successor has been
elected and qualified, or until his earlier resignation, removal from office,
death, or incapacity.

     SECTION 4.5  Vacancies. Vacancies in the Board, including Vacancies created
by an increase in the number of directors, may be filled by a majority of the
directors then in office, even if less than a quorum, or by a sole remaining
director. Any director elected to fill any vacancy shall be elected for the
unexpired term of his predecessor.

     SECTION 4.6  Meetings and Notice. Regular meetings of the Board may be held
without notice at such place, date, and hour as shall be fixed from time to
time by resolution of the Board. Special meetings of the Board may be called
only by the President, any director, or such other persons as are specifically
permitted by the Corporation Act to call special meetings of directors. Notice
of the place, date, and hour of each special meeting (i) shall be mailed to
each director, addressed to him at his residence or usual place of business, at
least three (3) business days before the meeting or (ii) shall have been sent
to him at such place by telegram or cable, or received by him in person by
telephone, at least twenty-four (24) hours before the meeting. Notwithstanding
any provision of these Bylaws, defects in the calling or notice of a meeting of
directors shall be deemed waived to the extent provided by the Corporation Act.

     SECTION 4.7  Quorum; Voting. At each meeting of the Board, a majority of 
the directors then in office shall constitute a quorum for the transaction of
business. Except as otherwise provided by the Corporation Act, the Articles, or
these Bylaws, the vote of a majority of the directors present at any meeting of
directors at which a quorum is or was once present shall constitute the act of
the Board. In the absence of a quorum, any meeting of directors may be
adjourned from time to time by vote of a majority of the directors present.

     SECTION 4.8  Committees. By resolution adopted by a majority of the 
directors then in office, the Board may designate from among its members an
executive committee and other committees, each consisting of two (2) or more
directors. The Board may delegate to any such committee all or any portion of
the authority of the Board, except to the extent prohibited by the Corporation
Act.

     SECTION 4.9  Telephonic Meetings. Members of the Board or any committee
thereof may participate in a meeting of the Board

                                       -4-
<PAGE>   26
or such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in a meeting pursuant to this section shall
constitute presence in person at such meeting.

     SECTION 4.10  Consent of Directors. Any action required or permitted to be
taken at a meeting of the Board or of any committee thereof may be taken
without a meeting if written consents, setting forth the action taken, are
signed by all members of the Board or committee, as the case may be. Such
consents shall be filed with the minutes of the Board meetings or committee
meetings (as the case may be) and shall have the same effect as a unanimous
vote.

                                   ARTICLE V

                                    OFFICERS

     SECTION 5.1  Principal Officers. The principal officers of the Corporation
shall be a President, one or more Vice Presidents, a Secretary, a Treasurer, a
Clerk, and any other officers designated by the Board as principal officers.
Any two or more offices may be held by the same person.

     SECTION 5.2  Appointive Officers. The Board or the President may from time
to time appoint or delegate the appointment of such other officers and
assistant officers as are deemed necessary, including one or more Assistant
Secretaries or Treasurers.

     SECTION 5.3  Term of Office; Removal. Officers shall hold their offices
until their successors are chosen and have qualified, or until their earlier
resignation or removal from office. Any officer may be removed at any time,
with or without cause, by the Board. Any officer appointed by the President
pursuant to these Bylaws may be removed at any time, with or without cause, by
the President.

     SECTION 5.4  Resignations. Any officer may resign at any time by giving
written notice to the President or the Clerk.  Unless otherwise specified
therein, a resignation shall take effect upon receipt of such notice, and the
acceptance of such resignation shall not be necessary to make it effective.

     SECTION 5.5  Vacancies. A vacancy in any office, however occurring, shall 
be filled for the unexpired portion of the term in the manner prescribed by
these Bylaws for regular election or appointment to such office.

     SECTION 5.6  Powers and Duties. Except as hereinafter provided and subject
to the control of the Board, the officers of the Corporation shall each have
such powers and duties as generally pertain to their respective offices, as
well as such

                                       -5-
<PAGE>   27
powers and duties as from time to time may be conferred by the Board or, in the
case of appointive offices, by the President.

      (a)   President. The President shall be the chief executive officer of 
the Corporation, shall preside at all meetings of shareholders and (unless the
Board shall have appointed a chairman of the board) all meetings of the Board,
and shall see that all orders and resolutions of the Board are carried into
effect. The President shall have authority to appoint and remove agents and
employees and to prescribe their powers and duties and may authorize any other
officer or officers to do so. He shall have authority to institute or defend
legal proceedings whenever the directors or shareholders are deadlocked.

      (b)   Vice President. The Board may elect one or more Vice Presidents, who
shall have such powers and duties as the Board shall designate. In the absence
or disability of the President, the Vice President (or, in case there shall be
more than one, the Vice Presidents in such order as the Board shall designate)
shall perform the duties and exercise the powers of the President.

      (c)   Secretary. The Secretary shall attend all meetings of the Board and
record its proceedings. He may give, or cause to be given, notice of all
meetings of shareholders and directors of the Corporation. The Secretary may
certify all votes, resolutions, and actions of the shareholders, the Board, and
committees of the Board.

      (d)   Treasurer. The Treasurer shall have charge and custody of, and be
responsible for, all funds and securities of the Corporation and shall exercise
the powers and shall perform the duties incident to the office of Treasurer.

      (e)   Assistant Secretaries and Assistant Treasurers.  Assistant 
Secretaries and Assistant Treasurers shall perform such duties as from time to
time may be assigned to them by the Board, the President, or the Secretary or
Treasurer (respectively). At the request of the Secretary or the Treasurer, or
in case of his absence or inability to act, any Assistant Secretary or
Assistant Treasurer (respectively) may act in his place.


      (f)   Clerk. The Clerk shall be a resident of the State and keep, at the
registered office of the corporation, records of all meetings of shareholders.
The Clerk may certify all votes, resolutions, and actions of the shareholders,
the Board, and committees of the Board.

                                   ARTICLE VI

                                INDEMNIFICATION

     SECTION 6.1 Indemnification of Directors and Officers. The Corporation 
shall in all cases indemnify any existing or


                                     -6-
<PAGE>   28
former director or officer of the Corporation who was or is a party or is
threatened to be made a party to any Action (as defined below) by reason of the
fact that he is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, trustee, partner, fiduciary, employee, or agent of another
Entity (as defined below), or by reason of his conduct in any such capacity,
against Expenses (as defined below) actually and reasonably incurred by him in
connection with such Action.

     SECTION 6.2  Indemnification of Employees and Agents. The Corporation may, 
but except as provided in Section 6.1 above shall not be required to, indemnify
any other person who was or is a party or is threatened to be made a party to
any Action by reason of the fact that he is or was an employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, trustee, employee, partner, fiduciary, or agent of another
Entity, or by reason of his conduct in any such capacity, against Expenses
actually and reasonably incurred by him in connection with such Action. Such
indemnification shall be subject to any restrictions imposed by applicable law
or by the Board in its discretion. Unless ordered by a court or required by
Section 6.1, indemnification permitted by this Section 6.2 shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of such person is proper in the circumstances and that he has
met the applicable standard of conduct set forth in clauses (i) and (ii) of
Section 6.3 below. Such determination shall be made by the Board by a majority
vote of a quorum consisting of directors who were not parties to such Action,
or if such a quorum is not obtainable (or even if obtainable, if a quorum of
disinterested directors so directs) by independent legal counsel in a written
opinion, or by the shareholders.

     SECTION 6.3  Standards for Indemnification. Notwithstanding the
foregoing, no indemnification pursuant to Section 6.1 or 6.2 above shall be
provided for any person with respect to any matter as to which he shall have
been finally adjudicated in any Action not to have met the following standard
of conduct:

     (i)    That such person acted honestly and in the reasonable belief that 
            his action was in or not opposed to the best interests of the
            Corporation or its shareholders or, in the case of a person serving
            as a fiduciary of an employee benefit plan or trust, in or not
            opposed to the best interests of that plan or trust or its
            participants or beneficiaries; and

     (ii)   With respect to any criminal action or proceeding, that such person
            did not have reasonable cause to believe that his conduct was
            unlawful.

                                     -7-
<PAGE>   29
Moreover, except to the extent otherwise permitted by law, no indemnification
shall be provided for any person with respect to any matter as to which he
shall have been finally adjudicated to be liable to the Corporation. The
termination of any Action by judgment, order, or conviction adverse to such
person, or by settlement or plea of nolo contendere or its equivalent, shall
not of itself create a presumption that such person did not satisfy the
foregoing standard of conduct. Satisfaction of the foregoing standard of
conduct shall not of itself make mandatory any indemnification that is
otherwise permitted but not required by this Article VI.

     SECTION 6.4  Expenses.  (a) All Expenses reasonably incurred by any 
existing or former director or officer in connection with any Action referred
to in Section 6.1 above shall promptly be paid by the Corporation, even in
advance of the final disposition of that Action.

     (b)  Any Expenses reasonably incurred by any other existing or former 
employee or agent in connection with any Action referred to in Section 6.2
above may be paid by the Corporation, if so authorized by the Board, in advance
of the final disposition of that Action; provided, however, that Expenses may
be paid to an employee or agent only upon a determination (made in accordance
with Section 6.2 above) that, based solely on the facts then known to those
making the determination and without further investigation, the employee or
agent seeking indemnification satisfied the standard of conduct set forth in
clauses (i) and (ii) of Section 6.3 above. The Board, in its sole discretion,
may impose such conditions as it deems appropriate on any advance payment of
Expenses to an employee or agent under this paragraph (b).

     (c)  Notwithstanding paragraphs (a) and (b) of this Section 6.4, no advance
payment of Expenses shall be made hereunder unless the Company shall be in
receipt of:

     (i)    A written undertaking by or on behalf of the indemnified person to 
            repay that amount if such person is finally adjudicated not to be
            entitled to indemnification by the Corporation; and

     (ii)   A written affirmation by the indemnified person that he has met the
            standard of conduct set forth in clauses (i) and (ii) of Section
            6.3 above.

The undertaking required by clause (i) of this paragraph (c) shall be an
unlimited general obligation of the person seeking the advance, but (except to
the extent otherwise provided by the Board pursuant to paragraph (b) of this
Section 6.4) shall not be secured and shall be accepted without reference to
financial ability to make the repayment.

     SECTION 6.5  Enforceability. Once any right to indemnification against or
payment of Expenses arises


                                     -8-
<PAGE>   30
hereunder, it shall be deemed a contract right and may not be modified or
revoked, whether by amendment of these Bylaws or otherwise, without the express
written consent of the indemnitee. Indemnification and payment rights hereunder
shall inure to the benefit of the indemnitee's heirs, devisees, executors, and
administrators. Any right to indemnification or payment of Expenses arising
under these Bylaws may be enforced by a separate action against the
Corporation, if and to the extent an order for such indemnification or payment
has not been entered by a court in any Action in respect of which
indemnification or payment of Expenses is sought.

     SECTION 6.6  Nonexclusive Remedy. The rights provided by this Article VI 
shall not be deemed exclusive of any other right of indemnification or
reimbursement provided by contract, the Articles, vote of shareholders or
directors, or otherwise.

     SECTION 6.7  Insurance. The Corporation may purchase and maintain 
insurance on behalf of itself and any person who is or was a director, officer,
employee, or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, trustee, partner, fiduciary, employee,
or agent of another Entity, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the Corporation Act.

     SECTION 6.8  Definitions. For purposes hereof, the term "Action" shall 
include any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative; the term "Entity"
shall include any corporation, partnership, joint venture, trust, pension or
other employee benefit plan, or other enterprise; and the term "Expenses" shall
include expenses (including, without limitation, costs of investigation and
attorneys, fees), judgments, fines, ERISA excise taxes or penalties, and
amounts paid in settlement. A person who serves as a director, officer,
trustee, employee, partner, fiduciary, or agent of an Entity controlled by the
Corporation, or a pension or employee benefit plan operated for the benefit of
employees of the Corporation, shall be deemed to be doing so at the request of
the Corporation.

                                  ARTICLE VII

                     CONTRACTS, CHECKS, BANK ACCOUNTS, ETC.

     SECTION 7.1  Execution of Contracts. The President, and any other officer,
employee, or agent authorized by the Board or the President shall have
authority, in the name and on behalf of the corporation, to enter into any
contract. Such authority may be general, or may be confined to specific
instances or otherwise limited.


                                     -9-
<PAGE>   31
     SECTION 7.2  Loans. The President or any other officer, employee, or agent
authorized by the Board or the President may obtain loans and advances for the
Corporation from any person or entity; execute and deliver promissory notes or
other evidences of indebtedness of the Corporation for such loans or advances;
and when authorized to do so by the Board may pledge, hypothecate, or transfer
any property of the Corporation as security for any such loans or advances.
Such authority may be general, or may be confined to specific instances or
otherwise limited.

     SECTION 7.3  Checks, Drafts, Etc. The Board or the President shall 
establish from time to time the manner in which checks, drafts, and other
orders for the payment of money from the funds of the Corporation and all other
instruments evidencing indebtedness of the Corporation are to be executed on
behalf of the Corporation.

     SECTION 7.4  Bank Accounts. The Board, the President, or any other officer
designated by the Board may from time to time authorize the opening and keeping
of general and special bank accounts with such banks, trust companies, or other
depositories as may be selected by the President or any such other officer or
officers. The Board may make such special rules and regulations with respect to
bank accounts, not inconsistent with the provisions of these Bylaws, as it may
deem expedient.

                                  ARTICLE VIII

                                 CAPITAL STOCK

     SECTION 8.1  Share Certificates. Each shareholder, upon payment in full 
for his shares, shall be entitled to a certificate certifying the number of
shares owned by him in the Corporation. No certificate shall be issued for any
share until such share is fully paid. Each such certificate shall be signed in
the name of the Corporation by any two officers of the Corporation. Share
certificates of the Corporation shall conform to all requirements imposed
thereon by the Corporation Act or these Bylaws and shall bear such additional
legends, if any, as the Clerk shall consider appropriate.

     SECTION 8.2  Lost Certificates. The Board may direct that a new 
certificate be issued in place of any certificate previously issued by the
Corporation and alleged to have been lost, stolen, or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen, or destroyed. The Board may, in its discretion,
require the owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the Corporation a bond, in such sum and with such
sureties as the Board may direct, to indemnify the Corporation against any
claim that may be made against the Corporation with respect to the certificate
alleged to have been lost, stolen, or destroyed.


                                    -10-

<PAGE>   32
     SECTION 8.3  Transfer of Shares. Each transfer of shares of stock of the
Corporation shall be made only on the books of the Corporation by the
registered holder thereof, or by his duly authorized attorney-in-fact, or with
a transfer agent appointed in accordance with this Article VIII, upon surrender
of the certificate or certificates of such shares properly endorsed and the
payment of all taxes thereon. The person in whose name shares of stock stand on
the books of the Corporation shall be deemed the owner thereof for all purposes
as regards the Corporation, and the Corporation shall not be bound to recognize
any equitable or other claim to or interest in such shares on the part of any
other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by law; provided that whenever any transfer of
shares shall be made for collateral security and not absolutely, such fact, if
known to the Corporation or to its transfer agent, shall be so expressed in the
entry of transfer if requested in writing by both the transferor and
transferee. The Board may, from time to time, make such additional rules and
regulations as it may deem expedient, not inconsistent with these Bylaws or the
Articles, concerning the issue, transfer, and registration of certificates for
shares of the capital stock of the Corporation.

                                   ARTICLE IX

                               GENERAL PROVISIONS

     SECTION 9.1  Fiscal Year. The fiscal year of the Corporation shall end on 
December 31 of each year, except as otherwise fixed by resolution of the Board.

     SECTION 9.2  Corporate Seal. The corporate seal shall have inscribed 
thereon the name of the Corporation and its state of incorporation and may be
in any form approved by the Board or the Clerk from time to time. The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise. In the event it is inconvenient to use such a seal,
the signature of the Corporation followed by the word "seal" enclosed in
parentheses shall be deemed the seal of the Corporation.

     SECTION 9.3  Interpretation. Headings and captions used herein are inserted
for convenience  only and in no way describe or define the scope or content of
any provision. Whenever used herein, the masculine gender shall include the
feminine and neuter genders, as the context requires. In the case of any
conflict between the provisions of the Articles and these Bylaws, the Articles
shall control.


                                    -11-

<PAGE>   1
                                                                    EXHIBIT 3.11
           
                            State of North Carolina
                      Department of the Secretary of State 

                           ARTICLES OF INCORPORATION                           
                                                                               
Pursuant to Section 55-2-02 of the General Statutes of North Carolina, the
undersigned does hereby submit these Articles of Incorporation for the purpose
of forming a business corporation.

1.   The name of the corporation is Be-Ac, Inc. (the "Corporation").

2.   The Corporation is authorized to issue 100,000 shares, all of one class,
     designated as common stock.

3.   The street address, mailing address, and county of the initial registered
     office of the Corporation is 225 Hillsborough Street; Raleigh, County of
     Wake, North Carolina  27603.

4.   The name of the initial registered agent is CT Corporation System.

5.   The name and addresses of the persons who are to serve as the initial Board
     of Directors of the Corporation until the first meeting of shareholders or
     until their successors be elected and qualified are as follows:

     Charles M. Hansen, Jr.
     4111 Mint Way
     Dallas, Texas  75237

     Jeffrey D. Cordes
     4111 Mint Way
     Dallas, Texas  75237
     
     John C. Macauley
     4111 Mint Way
     Dallas, Texas  75237

6.   To the fullest extent from time to time permitted by law, no person who 
     is serving or who has served as a director of the Corporation shall be
     personally liable in any action for monetary damages for breach of his or
     her duty as a director, whether such action is brought by or in the right
     of the Corporation or otherwise.  Neither the amendment or repeal of this
     Article, nor the adoption of any provision of these Articles of
     Incorporation inconsistent with this Article, shall eliminate or reduce the
     protection afforded by this Article to a director of the Corporation with
     respect to any matter which occurred, or any cause of action, suit or claim
     which but for this Article would have accrued or arisen, prior to such
     amendment, repeal or adoption.


 
<PAGE>   2
7.   The name and address of the incorporator are as follows:

          NAME                     ADDRESS
               
     Richard L. Waggoner      1601 Elm Street
                              3000 Thanksgiving Tower
                              Dallas, TX  75201
     
8.   These articles will be effective upon filing.

     IN WITNESS WHEREOF, the undersigned has set hereunto his hand this 24th
day of August, 1994.


                                        /s/  RICHARD L. WAGGONER
                                        ------------------------------
                                        Richard L. Waggoner
                                        Incorporator



                                      -2-
<PAGE>   3

                            State of North Carolina
                      Department of the Secretary of State
                                        
                             ARTICLES OF AMENDMENT

Pursuant to Section 55-10-06 of the General Statutes of North Carolina, the
undersigned corporation hereby submits the following Articles of Amendment for
the purposes of amending its Articles of Incorporation.

1.   The name of the corporation is Be-Ac, Inc., a North Carolina corporation
     (the "Corporation").

2.   The following amendment to the Articles of Incorporation was adopted by the
     Corporation as of Dec 1, 1994:

          Article 1 of the Articles of Incorporation is hereby deleted in its
          entirety.

          A new Article 1 is hereby added to the Articles of Incorporation of
          the Corporation, to read in its entirety as follows:

          "1. The name of the corporation is Beacon Manufacturing Company (the
          "Corporation")."

3.   The amendment was approved by shareholder action. Shareholder approval of
     the Articles of Amendment was obtained as required by Chapter 55 of the
     North Carolina General Statutes.

4.   The Articles of Amendment will be effective upon filing with the Secretary
     of State of North Carolina.

This the 29th day of November, 1994.


                                   BE-AC, INC.

                         
                                   By: /s/ JEFFREY D. CORDES
                                       ---------------------------------
                                       Jeffrey D. Cordes,
                                       Executive Vice President 
<PAGE>   4

                            State of North Carolina
                      Department of the Secretary of State
                                        
                               ARTICLES OF MERGER

Pursuant to Section 55-11-05 of the General Statutes of North Carolina, the
undersigned corporation as the surviving corporation in a merger hereby submits
the following Articles of Merger.

1.   The name of the surviving corporation is Beacon Manufacturing Company, a
     corporation organized under the laws of North Carolina; the name of the
     merged corporation is Realmac, Inc., a corporation organized under the laws
     of North Carolina.

2.   Attached is a copy of the Agreement and Plan of Merger that was adopted in
     the manner prescribed by law by the board of directors of each of the
     corporations participating in the merger.

3.   Shareholder approval of both corporations was required for the merger and
     the merger was approved by the shareholders as required by Chapter 55 of
     the North Carolina General Statutes.

4.   These articles will be effective at 11:59 p.m. on June 30, 1995.



     This the 28 day of June, 1995.



                                        BEACON MANUFACTURING COMPANY


                                        By: /s/ JEFFREY D. CORDES
                                            ------------------------------
                                            Jeffrey D. Cordes
                                            Executive Vice President 
<PAGE>   5
                          AGREEMENT AND PLAN OF MERGER

          This Agreement and Plan of Merger is executed as of June 28, 1995, by
and between Realmac, Inc., a North Carolina corporation ("Realmac"), and Beacon
Manufacturing Company, a North Carolina corporation ("Beacon").

                                   WITNESSETH:

          WHEREAS, the authorized capital stock of Beacon consists of 100,000
shares of Common Stock, no par value ("Beacon Common Stock"), of which 1,000
shares are issued and outstanding; and

          WHEREAS, the authorized capital stock of Realmac consists of 100,000
shares of Common Stock, no par value ("Realmac Common Stock"), of which 1,000
shares are issued and outstanding; and

          WHEREAS, the boards of directors and sole shareholder of each of
Realmac and Beacon deem it to be desirable and in the best interest of the
respective corporations that the two corporations merge into a single
corporation (the "Merger") , and, pursuant to resolutions duly adopted, each
board of directors and sole shareholder have approved and adopted this
Agreement;

          NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements and covenants contained herein, the parties hereto agree as follows:

                                    ARTICLE I

          Section 1.1. In accordance with the provisions of the North Carolina
General Statutes, at the Effective Time (defined below) of the Merger, Realmac
shall be merged into Beacon, which shall be the surviving corporation (in its
capacity as such surviving corporation Beacon is hereinafter sometimes referred
to as the "Surviving Corporation", and Realmac and Beacon are hereinafter
sometimes referred to collectively as the "Constituent Corporations") , and as
such Beacon shall continue to be governed by the laws of the State of North
Carolina.

          Section 1.2. The Merger shall become effective at 11:59 p.m. on June
30, 1995. The time when the Merger shall become effective is herein called the
"Effective Time."

          Section 1.3. Except as may otherwise be set forth herein, at the
Effective Time, the corporate existence and identity of Beacon, with all its
purposes, powers, franchises, privileges, rights and immunities shall continue
under the laws of the State of North Carolina, unaffected and unimpaired by the
Merger, and the corporate existence and identity of Realmac, with all its
purposes, powers, franchises, privileges, rights and immunities, shall be




<PAGE>   6



merged with and into Beacon and the Surviving Corporation shall be vested fully
therewith, and the separate corporate existence and identity of Realmac shall
thereafter cease, except to the extent continued by applicable law. At the
Effective Time, the Surviving Corporation shall have the following rights and
obligations:

               (a) The Surviving Corporation shall have all the rights,
          privileges, immunities and powers, and shall be subject to all of the
          duties and liabilities, of a corporation organized under the laws of
          the State of North Carolina.

               (b) The Surviving Corporation shall succeed to, without other
          transfer, and shall possess and enjoy, all of the rights, privileges,
          immunities, powers, purposes and franchises, of both a public and
          private nature, of the Constituent Corporations and all property,
          real, personal and mixed, and all debts due to either of the
          Constituent Corporations on whatever account and all other choices in
          action, and every other interest of or belonging to either of the
          Constituent Corporations shall be deemed to be transferred to and
          vested in the Surviving Corporation without further act or deed, and
          shall thereafter be the property of the Surviving Corporation as they
          were of the respective Constituent Corporations, and the title to any
          real estate vested by deed or otherwise in either of said Constituent
          Corporations shall not revert or be in any way impaired by reason of
          the Merger.

               (c) The Surviving Corporation shall thenceforth be responsible
          and liable for all debts, liabilities, obligations and duties of
          either of the Constituent Corporations, and any claim existing or
          action or proceeding pending by or against either Constituent
          Corporation may be prosecuted as if the Merger had not occurred, or
          the Surviving Corporation may be substituted in its place. Neither the
          rights of creditors nor any liens upon the property of either
          Constituent Corporation shall be impaired by the Merger.

          Section 1.4. If at any time the Surviving Corporation shall deem or be
advised that any further transfers, assignments, conveyances, assurances in law
or other acts or things are necessary or desirable to vest or confirm in the
Surviving Corporation the title to any property or assets of either of the
Constituent Corporations, each Constituent Corporation and its proper officers
and directors shall execute and deliver any and all such proper transfers,
assignments, conveyances and assurances in law, and shall do all other acts and
things as are necessary or proper to vest or confirm title to such property and
assets in the Surviving Corporation and to otherwise carry out the purposes and
intent of this Agreement.




<PAGE>   7



                                   ARTICLE II

          Section 2.1. The Articles of Incorporation of Beacon in effect at the
Effective Time shall constitute the Articles of Incorporation of the Surviving
Corporation, until amended, altered or repealed in the manner provided by law.

          Section 2.2. The Bylaws of Beacon in effect at the Effective Time
shall be the Bylaws of the Surviving Corporation, until amended, altered or
repealed.

          Section 2.3. The directors of Beacon at the Effective Time shall be
the directors of the Surviving Corporation and shall hold office in accordance
with the Bylaws of the Surviving Corporation until the next annual meeting of
shareholders of the Surviving Corporation or until their respective successors
are elected and qualified.

          Section 2.4. The officers of Beacon at the Effective Time shall be the
officers of the Surviving Corporation and shall hold office subject to the
Bylaws of the Surviving Corporation.

                                   ARTICLE III

          Section 3.1. At the Effective Time, all of the outstanding shares of
Realmac Common Stock shall by virtue of the Merger and without any further
action be cancelled and retired and shall cease to exist, all certificates
representing such shares shall be cancelled and no cash or securities or other
property shall be issued in respect of such shares.


                                   ARTICLE IV

          Section 4.1. This Agreement may be executed by the parties hereto in
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one instrument.

          Section 4.2. Subject to applicable law, this Agreement may be amended,
modified or supplemented only by written agreement of Realmac and Beacon at any
time prior to the Effective Time.

          Section 4.3. This Agreement may be terminated at any time prior to the
Effective Time by mutual agreement of the parties hereto.

                                        3

<PAGE>   8



          IN WITNESS WHEREOF, each of the Constituent Corporations has caused
this Agreement to be executed on its behalf by its respective officers hereunto
duly authorized as of the date first above written.


                                             BEACON MANUFACTURING COMPANY



                                             By: /s/ JEFFREY D. CORDES
                                             ----------------------------------
                                             Jeffrey D. Cordes,
                                             Executive Vice President


                                             REALMAC, INC.



                                             By: /s/ JEFFREY D. CORDES
                                             ----------------------------------
                                             Jeffrey D. Cordes,
                                             Executive Vice President






                                        4








<PAGE>   1
                                                                    EXHIBIT 3.12


                           AMENDED AND RESTATED 

                                   BYLAWS

                                     OF

                        BEACON MANUFACTURING COMPANY

                       (a North Carolina corporation)









                                                      Effective December 1, 1994

<PAGE>   2



                              TABLE OF CONTENTS TO

                           AMENDED AND RESTATED BYLAWS

                                       OF

                          BEACON MANUFACTURING COMPANY
<TABLE>

<S>       <C>                                                                        <C>
ARTICLE   1 - OFFICES                                                                1

           Section 1.    Principal and Registered Office                             1
           Section 2.    Other Offices                                               1

ARTICLE   2 -  MEETINGS OF SHAREHOLDERS                                              1

           Section 1.    Place of Meeting                                            1
           Section 2.    Annual Meeting                                              1
           Section 3.    Substitute Annual Meeting                                   1
           Section 4.    Special Meetings                                            1
           Section 5.    Notice of Meetings                                          1
           Section 6.    Quorum                                                      2
           Section 7.    Shareholders' List                                          2
           Section 8.    Voting of Shares                                            3
           Section 9.    Action Without Meeting                                      3

ARTICLE   3 -  BOARD OF DIRECTORS                                                    3

           Section 1.    General Powers                                              3
           Section 2.    Number, Term and Qualification                              3
           Section 3.    Removal                                                     4
           Section 4.    Vacancies                                                   4
           Section 5.    Compensation                                                4

ARTICLE   4 -  MEETINGS OF DIRECTORS                                                 4

           Section 1.    Annual and Regular Meetings                                 4
           Section 2.    Special Meetings                                            5
           Section 3.    Notice of Meetings                                          5
           Section 4.    Quorum                                                      5
           Section 5.    Manner of Acting                                            5
           Section 6.    Presumption of Assent                                       5
           Section 7.    Action Without Meeting                                      6
           Section 8.    Meeting by Communications Device                            6

ARTICLE   5 - COMMITTEES                                                             6

           Section 1.    Election and Powers                                         6
           Section 2.    Removal; Vacancies                                          7
           Section 3.    Meetings                                                    7
           Section 4.    Minutes                                                     7

</TABLE>


<PAGE>   3

<TABLE>

<S>      <C>                                                                         <C>
ARTICLE  6 - OFFICERS                                                               7

          Section  1.    Titles                                                      7
          Section  2.    Election; Appointment                                       7
          Section  3.    Removal                                                     7
          Section  4.    Vacancies                                                   8
          Section  5.    Compensation                                                8
          Section  6.    Chairman and Vice Chairman
                         of the Board of Directors                                   8
          Section  7.    Chief Executive Office                                      8
          Section  8.    President                                                   8
          Section  9.    Vice Presidents                                             9
          Section  10.   Secretary                                                   9
          Section  11.   Assistant Secretaries                                       9
          Section  12.   Treasurer                                                   9
          Section  13.   Assistant Treasurers                                       10
          Section  14.   Controller and Assistant Controllers                       10
          Section  15.   Voting Upon Stocks                                         10

ARTICLE  7 - CAPITAL STOCK                                                          10

          Section  1.    Certificates                                               10
          Section  2.    Transfer of Shares                                         11
          Section  3.    Transfer Agent and Registrar                               11
          Section  4.    Regulations                                                11
          Section  5.    Fixing Record Date                                         11
          Section  6.    Lost Certificates                                          11

ARTICLE  8 - INDEMNIFICATION OF DIRECTORS AND OFFICERS                              12

          Section  1.    Indemnification Provisions                                 12
          Section  2.    Definitions                                                12
          Section  3.    Settlements                                                13
          Section  4.    Litigation Expense Advances                                13
          Section  5.    Approval of Indemnification Payments                       13
          Section  6.    Suits by Claimant                                          13
          Section  7.    Consideration; Personal Representatives
                         and Other Remedies                                         14
          Section  8.    Scope of Indemnification Rights                            14

ARTICLE  9 - GENERAL PROVISIONS                                                     14

          Section  1.    Dividends and other Distributions                          14
          Section  2.    Seal                                                       14
          Section  3.    Waiver of Notice                                           14
          Section  4.    Checks                                                     14
          Section  5.    Fiscal Year                                                15
          Section  6.    Amendments                                                 15
          Section  7.    Shareholders' Agreement                                    15

</TABLE>



                                       -2-




<PAGE>   4



                           AMENDED AND RESTATED BYLAWS

                                       OF

                          BEACON MANUFACTURING COMPANY

                               ARTICLE 1 - OFFICES

          Section 1. Principal and Registered Office. The principal office of
the corporation shall be located at 4111 Mint Way, Dallas, Texas 75237. The
registered office of the corporation shall be located at 225 Hillsborough
Street, Raleigh, North Carolina 27603.

          Section 2. Other Offices. The corporation may have offices at such
other places, either within or without the State of North Carolina, as the board
of directors may from time to time determine.


                      ARTICLE 2 - MEETINGS OF SHAREHOLDERS

          Section 1. Place of Meeting. Meetings of shareholders shall be held at
the principal office of the corporation, or at such other place, either within
or without the State of North Carolina, as shall be designated in the notice of
the meeting.

          Section 2. Annual Meeting. The annual meeting of shareholders shall be
held at 9 o'clock a.m. on the second Wednesday of April of each year, if not a
legal holiday, but if a legal holiday, then on the next business day which is
not a legal holiday, for the purpose of electing directors of the corporation
and the transaction of such other business as may be properly brought before the
meeting.

          Section 3. Substitute Annual Meeting. If the annual meeting is not
held in accordance with these bylaws, a substitute annual meeting may be called
in accordance with Section 4 of this Article. A meeting so called shall be
designated and treated for all purposes as the annual meeting.

          Section 4. Special Meetings. Special meetings of the shareholders may
be called at any time by the president or the board of directors.

          Section 5. Notice of Meetings. At least 10 and no more than 60 days
prior to any annual or special meeting of shareholders, the corporation shall
notify shareholders of the date, time and place of the meeting and, in the case
of a special or substitute annual meeting or where otherwise required by law,
shall briefly describe the purpose or purposes of the meeting. Only business
within the purpose or purposes described in the notice may be conducted at a
special meeting. Unless otherwise required by the articles of incorporation or
by law (for example,




<PAGE>   5

in the event of a meeting to consider the adoption of a plan of merger or share
exchange, a sale of assets other than in the ordinary course of business or a
voluntary dissolution), the corporation shall be required to give notice only to
shareholders entitled to vote at the meeting. If an annual or special
shareholders' meeting is adjourned to a different date, time or place, notice
thereof need not be given if the new date, time or place is announced at the
meeting before adjournment. If a new record date for the adjourned meeting is
fixed pursuant to Article 7, Section 5 hereof, notice of the adjourned meeting
shall be given to persons who are shareholders as of the new record date. It
shall be the primary responsibility of the secretary to give the notice, but
notice may be given by or at the direction of the president or other person or
persons calling the meeting. If mailed, such notice shall be deemed to be
effective when deposited in the United States mail with postage thereon prepaid,
correctly addressed to the shareholder's address shown in the corporation's
current record of shareholders.

          Section 6. Quorum. A majority of the votes entitled to be cast by a
voting group on a matter, represented in person or by proxy at a meeting of
shareholders, shall constitute a quorum for that voting group for any action on
that matter, unless quorum requirements are otherwise fixed by a court of
competent jurisdiction acting pursuant to Section 55-7-03 of the General
Statutes of North Carolina. Once a share is represented for any purpose at a
meeting, it is deemed present for quorum purposes for the remainder of the
meeting and any adjournment thereof, unless a new record date is or must be set
for the adjournment. Action may be taken by a voting group at any meeting at
which a quorum of that voting group is represented, regardless of whether action
is taken at that meeting by any other voting group. In the absence of a quorum
at the opening of any meeting of shareholders, such meeting may be adjourned
from time to time by a vote of the majority of the shares voting on the motion
to adjourn.

          Section 7. Shareholders' List. After a record date is fixed for a
meeting, the secretary of the corporation shall prepare an alphabetical list of
the names of all its shareholders who are entitled to notice of the
shareholders' meeting. Such list shall be arranged by voting group (and within
each voting group by class or series of shares) and shall show the address of
and number of shares held by each shareholder. The shareholders' list shall be
made available for inspection by any shareholder beginning two business days
after notice of the meeting is given for which the list was prepared and
continuing through the meeting, at the corporation's principal office or at such
other place identified in the meeting notice in the city where the meeting will
be held. The corporation shall make the shareholders' list available at the
meeting, and any shareholder or his agent or attorney is entitled to inspect the
list at any time during the meeting or any adjournment.

                                       -2-




<PAGE>   6



          Section 8. Voting of Shares. Except as otherwise provided by the
articles of incorporation or by law, each outstanding share of voting capital
stock of the corporation shall be entitled to one vote on each matter submitted
to a vote at a meeting of the shareholders. Unless otherwise provided in the
articles of incorporation or by law, cumulative voting for directors shall not
be allowed. Action on a matter by a voting group for which a quorum is present
is approved if the votes cast within the voting group favoring the action exceed
the votes cast opposing the action, unless the vote of a greater number is
required by law or by the articles of incorporation. Voting on all matters shall
be by voice vote or by a show of hands, unless the holders of one-tenth of the
shares represented at the meeting shall demand a ballot vote on a particular
matter. Absent special circumstances, the shares of the corporation are not
entitled to vote if they are owned, directly or indirectly, by a second
corporation, domestic or foreign, and the corporation owns, directly or
indirectly, a majority of the shares entitled to vote for directors of the
second corporation, except that this provision shall not limit the power of the
corporation to vote shares held by it in a fiduciary capacity.

          Section 9. Action Without Meeting. Any action which the shareholders
could take at a meeting may be taken without a meeting if one or more written
consents, setting forth the action taken, shall be signed, before or after such
action, by all the shareholders who would be entitled to vote upon the action at
a meeting. The consent shall be delivered to the corporation for inclusion in
the minutes or filing with the corporate records. If by law, the corporation is
required to give its nonvoting shareholders written notice of the proposed
action, it shall do so at least 10 days before the action is taken, and such
notice must contain or be accompanied by the same material that would have been
required by law to be sent to nonvoting shareholders in a notice of meeting at
which the proposed action would have been submitted to the shareholders for
action.


                         ARTICLE 3 - BOARD OF DIRECTORS

          Section 1. General Powers. The business and affairs of the corporation
shall be managed under the direction of the board of directors except as
otherwise provided by the articles of incorporation or by a valid shareholders'
agreement.

          Section 2. Number, Term and Qualification. The number of directors of
the corporation shall consist of one or more individuals. The shareholders at
any annual meeting may by resolution fix the number of directors to be elected
at the meeting; but in the absence of such resolution, the number of directors
elected at the meeting shall constitute the number of directors of the
corporation until the next annual meeting of

                                       -3-




<PAGE>   7



shareholders, unless the number is changed prior to such meeting by action of
the shareholders. The board of directors shall have the authority to increase or
decrease by thirty percent within any twelve-month period the number of
directors. Each director's term shall expire at the annual meeting next
following the director's election as a director, provided, that notwithstanding
the expiration of the term of the director, the director shall continue to hold
office until a successor is elected and qualifies or until his death,
resignation, removal or disqualification or until there is a decrease in the
number of directors. Directors need not be residents of the State of North
Carolina or shareholders of the corporation unless the articles of incorporation
so provide.

          Section 3. Removal. Directors may be removed from office with or
without cause (unless the articles of incorporation provide that directors may
be removed only for cause) provided the notice of the shareholders' meeting at
which such action is to be taken states that a purpose of the meeting is removal
of the director and the number of votes cast to remove the director exceeds the
number of votes cast not to remove him.

          Section 4. Vacancies. Except as otherwise provided in the articles of
incorporation, a vacancy occurring in the board of directors, including, without
limitation, a vacancy resulting from an increase in the number of directors or
from the failure by the shareholders to elect the full authorized number of
directors, may be filled by a majority of the remaining directors or by the sole
director remaining in office. The shareholders may elect a director at any time
to fill a vacancy not filled by the directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.

          Section 5. Compensation The directors shall not receive compensation
for their services as such, except that by resolution of the board of directors,
the directors may be paid fees, which may include but are not restricted to fees
for attendance at meetings of the board or of a committee, and they may be
reimbursed for expenses of attendance. Any director may serve the corporation in
any other capacity and receive compensation therefor.


                        ARTICLE 4 - MEETING OF DIRECTORS

          Section 1. Annual and Regular Meetings. The annual meeting of the
board of directors shall be held immediately following the annual meeting of the
shareholders. The board of directors may by resolution provide for the holding
of regular meetings of the board on specified dates and at specified times.
Notice of regular meetings held at the principal office of the corporation and
at the usual scheduled time shall not be required. If any date for which a
regular meeting is scheduled shall be a

                                       -4-




<PAGE>   8

legal holiday, the meeting shall be held on a date designated in the notice of
the meeting, if any, during either the same week in which the regularly
scheduled date falls or during the preceding or following week. Regular meetings
of the board shall be held at the principal office of the corporation or at such
other place as may be designated in the notice of the meeting.

          Section 2. Special Meetings. Special meetings of the board of
directors may be called by or at the request of the chairman of the board, the
president or any two directors. Such meetings may be held at the time and place
designated in the notice of the meeting.

          Section 3. Notice of Meetings. Unless the articles of incorporation
provide otherwise, the annual and regular meetings of the board of directors may
be held without notice of the date, time, place or purpose of the meeting. The
secretary or other person of persons calling a special meeting shall give notice
by any usual means of communication to be sent at least two days before the
meeting if notice is sent by means of telephone, telecopy or personal delivery
and at least five days before the meeting if notice is sent by mail. A
director's attendance at, or participation in, a meeting for which notice is
required shall constitute a waiver of notice, unless the director at the
beginning of the meeting (or promptly upon arrival) objects to holding the
meeting or transacting business at the meeting and does not thereafter vote for
or assent to action taken at the meeting.

          Section 4. Quorum. Except as otherwise provided in the articles of
incorporation, a majority of the directors in office shall constitute a quorum
for the transaction of business at a meeting of the board of directors.

          Section 5. Manner of Acting. Except as otherwise provided in the
articles of incorporation, the affirmative vote of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.

          Section 6. Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken is deemed to have assented to the action taken unless he objects
at the beginning of the meeting (or promptly upon arrival) to holding, or
transacting business at, the meeting, or unless his dissent or abstention is
entered in the minutes of the meeting or unless he shall file written notice of
his dissent or abstention to such action with the presiding officer of the
meeting before its adjournment or with the corporation immediately after
adjournment of the meeting. The right of dissent or abstention shall not apply
to a director who voted in favor of such action.



                                      -5-

<PAGE>   9



          Section 7. Action Without Meeting. Unless otherwise provided in the
articles of incorporation, action required or permitted to be taken at a meeting
of the board of directors may be taken without a meeting if the action is taken
by all members of the board. The action must be evidenced by one or more written
consents signed by each director before or after such action, describing the
action taken, and included in the minutes or filed with the corporate records.
Action taken without a meeting is effective when the last director signs the
consent, unless the consent specifies a different effective date.

          Section 8. Meeting by Communications Device. Unless otherwise provided
in the articles of incorporation, the board of directors may permit any or all
directors to participate in a regular or special meeting by, or conduct the
meeting through the use of, any means of communication by which all directors
participating may simultaneously hear each other during the meeting. A director
participating in a meeting by this means is deemed to be present in person at
the meeting.


                             ARTICLE 5 - COMMITTEES

          Section 1. Election and Powers. Unless otherwise provided by the
articles of incorporation or the bylaws, a majority of the board of directors
may create one or more committees and appoint two or more directors to serve at
the pleasure of the board on each such committee. To the extent specified by the
board of directors or in the articles of incorporation, each committee shall
have and may exercise the powers of the board in the management of the business
and affairs of the corporation, except that no committee shall have authority to
do the following:

          (a) Authorize distributions.

          (b) Approve or propose to shareholders action required to be 
approved by shareholders.

          (c) Fill vacancies on the board of directors or on any of its
committees.

          (d) Amend the articles of incorporation.

          (e) Adopt, amend or repeal the bylaws.

          (f) Approve a plan of merger not requiring shareholder approval.

          (g) Authorize or approve the reacquisition of shares, except according
to a formula or method prescribed by the board of directors.


                                       -6-

<PAGE>   10

     (h) Authorize or approve the issuance, sale or contract for sale of shares,
or determine the designation and relative rights, preferences and limitations of
a class or series of shares, except that the board of directors may authorize a
committee (or a senior executive officer of the corporation) to do so within
limits specifically prescribed by the board of directors.

          Section 2. Removal; Vacancies. Any member of a committee may be
removed at any time with or without cause, and vacancies in the membership of a
committee by means of death, resignation, disqualification or removal shall be
filled by a majority of the whole board of directors.

          Section 3. Meetings. The provisions of Article 4 governing meetings of
the board of directors, action without meeting, notice, waiver of notice and
quorum and voting requirements shall apply to the committees of the board and
its members.

          Section 4. Minutes. Each committee shall keep minutes of its
proceedings and shall report thereon to the board of directors at or before the
next meeting of the board.

                            ARTICLE 6 - OFFICERS

          Section 1. Titles. The officers of the corporation shall be a 
president and a secretary and may include a chairman and vice chairman of the 
board of directors, an executive vice president, a treasurer, one or more 
additional vice presidents, a controller, one or more assistant secretaries, 
one or more assistant treasurers, one or more assistant controllers, and such 
other officers as shall be deemed necessary. The officers shall have the 
authority and perform the duties as set forth herein or as from time to time 
may be prescribed by the board of directors or by the president (to the extent 
that the president is authorized by the board of directors to prescribe the 
authority and duties of officers). Any two or more offices may be held by the 
same individual, but no officer may act in more than one capacity where action 
of two or more officers is required.

          Section 2. Election; Appointment. The officers of the corporation
shall be elected from time to time by the board of directors or appointed from
time to time by the president (to the extent that the president is authorized by
the board to appoint officers).

          Section 3. Removal. Any officer may be removed by the board at any
time with or without cause whenever in its judgment the best interests of the
corporation will be served, but removal shall not itself affect the officer's
contract rights, if any, with the corporation.

                                       -7-




<PAGE>   11

          Section 4. Vacancies. Vacancies among the officers may be filled and
new offices may be created and filled by the board of directors, or by the
president (to the extent authorized by the board).

          Section 5. Compensation. The compensation of the officers shall be
fixed by, or under the direction of, the board of directors.

          Section 6. Chairman and Vice Chairman of the Board of Directors. The
chairman of the board of directors, if such officer is elected, shall preside at
meetings of the board of directors and shall have such other authority and
perform such other duties as the board of directors shall designate. The vice
chairman, if elected, shall preside at meetings of the board in the absence of
the chairman and shall have such other authority and perform such other duties
as the board of directors shall designate.

          Section 7. Chief Executive Officer. The chief executive officer of the
corporation shall have, subject to the provisions of these bylaws, general
supervision of the affairs of the corporation and general and active control of
all its business. He shall preside, in the absence of the chairman of the board,
at all meetings of shareholders and at all meetings of the board of directors.
He shall see that all orders and resolutions of the board of directors and the
shareholders are carried into effect. He shall have general authority to execute
bonds, deeds and contracts in the name of the corporation and affix the
corporate seal thereto; to sign stock certificates; to cause the employment or
appointment of such employees and agents of the corporation as the proper
conduct of operations may require, and to fix their compensation, subject to the
provisions of these bylaws; to remove or suspend any employee or agent who shall
have been employed or appointed under his authority or under authority of an
officer subordinate to him; to suspend for cause, pending final action by the
authority which shall have elected or appointed him, any officer subordinate to
the chairman of the board; and, in general, to exercise all the powers and
authority usually appertaining to the chief executive officer of a corporation,
except as otherwise provided in these bylaws.

          Section 8. President. The president shall be the chief operating
officer of the corporation, shall in the absence or disability of the chief
executive officer perform the duties and exercise the powers of the chief
executive officer, and shall have, subject to review and approval of the chief
executive officer, responsibility for the general day-to-day operations of the
corporation's properties and facilities and such other duties and
responsibilities as (i) are customarily possessed by a chief operating officer
of a corporation similar in size and line of business as the corporation and
(ii) may be delegated to him from time to time by the board of directors of the
corporation.

                                       -8-




<PAGE>   12



          Section 9. Vice Presidents. The executive vice president, if such
officer is elected or appointed, shall exercise the powers of the president
during that officer's absence or inability to act. In default of both the
president and the executive vice president, any other vice president may
exercise the powers of the president. Any action taken by a vice president in
the performance of the duties of the president shall be presumptive evidence of
the absence or inability to act of the president at the time the action was
taken. The vice presidents shall have such other powers and perform such other
duties as may be assigned by the board of directors or by the president (to the
extent that the president is authorized by the board of directors to prescribe
the authority and duties of other officers).

          Section 10. Secretary. The secretary shall keep accurate records of
the acts and proceedings of all meetings of shareholders and of the board of
directors and shall give all notices required by law and by these bylaws. The
secretary shall have general charge of the corporate books and records and shall
have the responsibility and authority to maintain and authenticate such books
and records. The secretary shall have general charge of the corporate seal and
shall affix the corporate seal to any lawfully executed instrument requiring it.
The secretary shall have general charge of the stock transfer books of the
corporation and shall keep at the principal office of the corporation a record
of shareholders, showing the name and address of each shareholder and the number
and class of the shares held by each. The secretary shall sign such instruments
as may require the signature of the secretary, and in general shall perform the
duties incident to the office of secretary and such other duties as may be
assigned from time to time by the board of directors or the president (to the
extent that the president is authorized by the board of directors to prescribe
the authority and duties of other officers).

          Section 11. Assistant Secretaries. Each assistant secretary, if such
officer is elected, shall have such powers and perform such duties as may be
assigned by the board of directors or the president (if authorized by the board
of directors to prescribe the authority and duties of other officers), and the
assistant secretaries shall exercise the powers of the secretary during that
officer's absence or inability to act.

          Section 12. Treasurer. The treasurer shall have custody of all funds
and securities belonging to the corporation and shall receive, deposit or
disburse the same under the direction of the board of directors. The treasurer
shall keep full and accurate accounts of the finances of the corporation, which
may be consolidated or combined statements of the corporation and one or more of
its subsidiaries as appropriate, that include a balance sheet as of the end of
the fiscal year, an income statement for that year, and a statement of cash
flows for the year unless that information appears elsewhere in the financial
statements. If

                                       -9-




<PAGE>   13

financial statements are prepared for the corporation on the basis of generally
accepted accounting principles, the annual financial statements must also be
prepared on that basis. The treasurer shall in general perform all duties
incident to the office and such other duties as may be assigned from time to
time by the board of directors or the president (to the extent that the
president is authorized by the board of directors to prescribe the authority and
duties of other officers).

          Section 13. Assistant Treasurers. Each assistant treasurer, if such
officer is elected, shall have such powers and perform such duties as may be
assigned by the board of directors or the president (to the extent that the
president is authorized by the board of directors to prescribe the authority and
duties of other officers), and the assistant treasurers shall exercise the
powers of the treasurer during that officer's absence or inability to act.

          Section 14. Controller and Assistant Controllers. The controller, if
such officer is elected, shall have charge of the accounting affairs of the
corporation and shall have such other powers and perform such other duties as
the board of directors or the president (to the extent that the president is
authorized by the board of directors to prescribe the authority and duties of
other officers) shall designate. Each assistant controller shall have such
powers and perform such duties as may be assigned by the board of directors or
the president (to the extent that the president is authorized by the board of
directors to prescribe the authority and duties of other officers), and the
assistant controllers shall exercise the powers of the controller during that
officer's absence or inability to act.

          Section 15. Voting Upon Stocks. Unless otherwise ordered by the board
of directors, the president shall have full power and authority on behalf of the
corporation to attend, act and vote at meetings of the shareholders of any
corporation in which this corporation may hold stock, and at such meetings shall
possess and may exercise any and all rights and powers incident to the ownership
of such stock and which, as the owner, the corporation might have possessed and
exercised if present. The board of directors may by resolution from time to time
confer such power and authority upon any other person or persons.


                            ARTICLE 7 - CAPITAL STOCK

          Section 1. Certificates. Shares of the capital stock of the
corporation shall be represented by certificates. The name and address of the
persons to whom shares of capital stock of the corporation are issued, with the
number of shares and date of issue, shall be entered on the stock transfer
records of the corporation. Certificates for shares of the capital stock of the



                                      -10-
<PAGE>   14

corporation shall be in such form not inconsistent with the articles of
incorporation of the corporation as shall be approved by the board of directors.
Each certificate shall be signed (either manually or by facsimile) by (a) the
president or any vice president and by the secretary, assistant secretary,
treasurer or assistant treasurer or (b) any two officers designated by the board
of directors. Each certificate may be sealed with the seal of the corporation or
a facsimile thereof.

          Section 2. Transfer of Shares. Transfer of shares shall be made on the
stock transfer records of the corporation, and transfers shall be made only upon
surrender of the certificate for the shares sought to be transferred by the
recordholder or by a duly authorized agent, transferee or legal representative.
All certificates surrendered for transfer or reissue shall be cancelled before
new certificates for the shares shall be issued.

          Section 3. Transfer Agent and Registrar. The board of directors may
appoint one or more transfer agents and one or more registrars of transfers and
may require all stock certificates to be signed or countersigned by the transfer
agent and registered by the registrar of transfers.

          Section 4. Regulations.  The board of directors may make rules and 
regulations as it deems expedient concerning the issue, transfer and 
registration of shares of capital stock of the corporation.

          Section 5. Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders, or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other purpose, the board of directors may fix in advance
a date as the record date for the determination of shareholders. The record date
shall be not more than 70 days before the meeting or action requiring a
determination of shareholders. A determination of shareholders entitled to
notice of or to vote at a shareholders' meeting shall be effective for any
adjournment of the meeting unless the board of directors fixes a new record
date, which it shall do if the meeting is adjourned to a date more than 120 days
after the date fixed for the original meeting. If no record date is fixed for
the determination of shareholders, the record date shall be the day the notice
of the meeting is mailed or the day the action requiring a determination of
shareholders is taken. If no record date is fixed for action without a meeting,
the record date for determining shareholders entitled to take action without a
meeting shall be the date the first shareholder signs a consent to the action
taken.

          Section 6. Lost Certificates.  The board of directors must authorize
the issuance of a new certificate in place of a certificate claimed to have been
lost, destroyed or wrongfully



                                      -11-
<PAGE>   15

taken, upon receipt of (a) an affidavit from the person explaining the loss,
destruction or wrongful taking, and (b) a bond from the claimant in a sum as the
corporation may reasonably direct to indemnify the corporation against loss from
any claim with respect to the certificate claimed to have been lost, destroyed
or wrongfully taken. The board of directors may, in its discretion, waive the
affidavit and bond and authorize the issuance of a new certificate in place of a
certificate claimed to have been lost, destroyed or wrongfully taken.


     ARTICLE 8 - INDEMNIFICATION OF DIRECTORS AND OFFICERS

          Section 1. Indemnification Provisions. Any person who at any time
serves or has served as a director or officer of the corporation or of any
wholly owned subsidiary of the corporation, or in such capacity at the request
of the corporation for any other foreign or domestic corporation, partnership,
joint venture, trust or other enterprise, or as a trustee or administrator under
any employee benefit plan of the corporation or of any wholly owned subsidiary
thereof (a "Claimant"), shall have the right to be indemnified and held harmless
by the corporation to the fullest extent from time to time permitted by law
against all liabilities and litigation expenses (as hereinafter defined) in the
event a claim shall be made or threatened against that person in, or that
person is made or threatened to be made a party to, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, and whether or not brought by or on behalf of the corporation,
including all appeals therefrom (a "proceeding"), arising out of such service;
provided, that such indemnification shall not be effective with respect to (a)
that portion of any liabilities or litigation expenses with respect to which the
Claimant is entitled to receive payment under any insurance policy or (b) any
liabilities or litigation expenses incurred on account of any of the Claimant's
activities which were at the time taken known or believed by the Claimant to be
clearly in conflict with the best interests of the corporation.

          Section 2. Definitions. As used in this Article, (a)"liabilities"
shall include, without limitation, (1) payments in satisfaction of any judgment,
money decree, excise tax, fine or penalty for which Claimant had become liable
in any proceeding and (2) payments in settlement of any such proceeding subject,
however, to Section 3 of this Article 8; (b)"litigation expenses" shall
include, without limitation, (1) reasonable costs and expenses and attorneys'
fees and expenses actually incurred by the Claimant in connection with any
proceeding and (2) reasonable costs and expenses and attorneys' fees and
expenses in connection with the enforcement of rights to the indemnification
granted hereby or by applicable law, if such enforcement is successful in whole
or in part; and (c) "disinterested directors" shall mean directors who are not a
party to the proceeding in question.



                                      -12-

<PAGE>   16

          Section 3. Settlements.  The corporation shall not be liable to
indemnify the Claimant for any amounts paid in settlement of any proceeding
effected without the corporation's written consent. The corporation will not
unreasonably withhold its consent to any proposed settlement.

          Section 4. Litigation Expense Advances.

          (a) Except as provided in subsection (b) below, any litigation
expenses shall be advanced to any Claimant within 30 days of receipt by the
secretary of the corporation of a demand therefor, together with an undertaking
by or on behalf of the Claimant to repay to the corporation such amount unless
it is ultimately determined that the Claimant is entitled to be indemnified by
the corporation against such expenses. The secretary shall promptly forward
notice of the demand and undertaking immediately to all directors of the
corporation.

          (b) Within 10 days after mailing of notice to the directors pursuant
to subsection (a) above, any disinterested director may, if desired, call a
meeting of all disinterested directors to review the reasonableness of the
expenses so requested. No advance shall be made if a majority of the
disinterested directors affirmatively determines that the item of expense is
unreasonable in amount; but if the disinterested directors determine that a
portion of the expense item is reasonable, the corporation shall advance such
portion.

          (c) Without limiting the rights contained in subsection (a) above,
the board of directors may take action to advance any litigation expenses to a
Claimant upon receipt of an undertaking by or on behalf of the Claimant to repay
to the corporation such amount unless it is ultimately determined that the
Claimant is entitled to be indemnified by the corporation against such expenses.

          Section 5. Approval of Indemnification Payments. Except as provided in
Section 4 of this Article, the board of directors of the corporation shall take
all such action as may be necessary and appropriate to authorize the corporation
to pay the indemnification required by Section 1 of this Article, including,
without limitation, making a good faith evaluation of the manner in which the
Claimant acted and of the reasonable amount of indemnity due the Claimant. In
taking any such action, any Claimant who is a director of the corporation shall
not be entitled to vote on any matter concerning such Claimant's right to
indemnification.

          Section 6. Suits by Claimant. No Claimant shall be entitled to bring
suit against the corporation to enforce his rights under this Article until
sixty days after a written claim has been received by the corporation, together
with any undertaking to repay as required by Section 4 of this Article. It shall
be a



                                      -13-
<PAGE>   17
defense to any such action that the Claimant's liabilities or litigation
expenses were incurred on account of activities described in clause (b) of
Section 1 of this Article, but the burden of proving this defense shall be on
the corporation. Neither the failure of the corporation to determine that
indemnification of the Claimant is proper, nor determination by the corporation
that indemnification is not due because of application of clause (b) of Section
1 of this Article shall be a defense to the action or create a presumption that
the Claimant has not met the applicable standard of conduct.

          Section 7. Consideration; Personal Representatives and Other Remedies.
Any Claimant who during such time as this Article or corresponding provisions of
predecessor bylaws is or has been in effect serves or has served in any of the
capacities described in Section 1 of this Article shall be deemed to be doing so
or to have done so in reliance upon, and as consideration for, the right of
indemnification provided herein or therein. The right of indemnification
provided herein or therein shall inure to the benefit of the legal
representatives of any Claimant hereunder, and the right shall not be exclusive
of any other rights to which the Claimant or legal representative may be
entitled apart from this Article.

          Section 8. Scope of Indemnification Rights.  The rights granted herein
shall not be limited by the provisions of Section 55-8-51 of the General
Statutes of North Carolina or any successor statute.


                         ARTICLE 9 - GENERAL PROVISIONS

          Section 1. Dividends and other Distributions. The board of directors
may from time to time declare and the corporation may pay dividends or make
other distributions with respect to its outstanding shares in the manner and
upon the terms and conditions provided by law.

          Section 2. Seal. The seal of the corporation shall be any form 
approved from time to time or at any time by the board of directors.

          Section 3. Waiver of Notice. Whenever notice is required to be given
to a shareholder, director or other person under the provisions of these bylaws,
the articles of incorporation or applicable law, a waiver in writing signed by
the person or persons entitled to the notice, whether before or after the date
and time stated in the notice, and delivered to the corporation shall be
equivalent to giving the notice.

          Section 4. Checks.  All checks, drafts or orders for the payment of
money shall be signed by the officer or officers or



                                      -14-
<PAGE>   18

other individuals that the board of directors may from time to time designate.

          Section 5. Fiscal Year.  The fiscal year of the corporation shall be
fixed by the board of directors.  

          Section 6. Amendments. Unless otherwise provided in the articles of
incorporation or a bylaw adopted by the shareholders or by law, these bylaws may
be amended or repealed by the board of directors, except that a bylaw adopted,
amended or repealed by the shareholders may not be readopted, amended or
repealed by the board of directors if neither the articles of incorporation nor
a bylaw adopted by the shareholders authorizes the board of directors to adopt,
amend or repeal that particular bylaw or the bylaws generally. These bylaws may
be amended or repealed by the shareholders even though the bylaws may also be
amended or repealed by the board of directors. A bylaw that fixes a greater
quorum or voting requirement for the board of directors may be amended or
repealed (a) if originally adopted by the shareholders, only by the
shareholders, unless such bylaw as originally adopted by the shareholders
provides that such bylaw may be amended or repealed by the board of directors or
(b) if originally adopted by the board of directors, either by the shareholders
or by the board of directors. A bylaw that fixes a greater quorum or voting
requirement may not be adopted by the board of directors by a vote less than a
majority of the directors then in office and may not itself be amended by a
quorum or vote of the directors less than the quorum or vote prescribed in such
bylaw or prescribed by the shareholders.

          Section 7. Shareholders' Agreement.  In the event of a conflict
between these bylaws and a valid shareholders' agreement, the shareholders'
agreement shall control.

                                     *****



                                      -15-

<PAGE>   19
                                CERTIFICATION


        THIS IS TO CERTIFY that the above amended and restated bylaws of Beacon
Manufacturing Company, a North Carolina corporation (the "Corporation"), were
adopted by the board of directors of the Corporation by action taken without a
meeting effective as of December 1, 1994

        This 1st day of December, 1994.


                                            /s/ JEFFREY D. CORDES
                                            -----------------------------------
                                            JEFFREY D. CORDES, Secretary





                                      -16-

<PAGE>   1
                                                                    EXHIBIT 3.13

NOVEMBER 30, 1973                                   

                                                    

                                  CHARTER OF
                            EUGENIA COTTON CO., INC.

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

     THE UNDERSIGNED natural person, having capacity to contract and acting as
the incorporator of a corporation under the Tennessee General Corporation Act,
adopts the following Charter for such corporation:

                                      I.

     The name of the corporation is Eugenia Cotton Co., Inc.

                                      II.

     The duration of the corporation is perpetual.

                                     III.

     The address of the principal office of the corporation in the State of
Tennessee shall be Cotton Exchange Building, 65 Union Avenue, Memphis, Shelby
County, Tennessee 38103.

                                      IV.

     The corporation is for profit.

                                      V.

     The purpose for which the corporation is organized is to engage in, carry
out and conduct a business for the general merchandizing of cotton and other
fibers; to buy, sell and generally deal in cotton and other fibers, both as
principal and as agent for others; to deal in or with any materials, articles
or things and to generally transact such business as is or may be incidental to
or required in connection with any such business activities and generally to
carry on any other business which can or may be advantageously pursued in
conjunction with or incidental to any of the above purposes and to transact any
lawful business for which corporations may be incorporated and to have and
possess all powers vested in corporations for profit under the Tennessee
General Corporation Act.









<PAGE>   2
NOVEMBER 30, 1973                                         


                                                          

                                      -2-

                                      VI.

     The maximum number of shares which the corporation shall have the authority
to issue is ONE THOUSAND (1,000) with no par value.

                                     VII.

     The corporation will not commence business until consideration of ONE
THOUSAND DOLLARS ($1,000.00) has been received for the issuance of the shares.

     DATED this 28th day of November, 1973.


                                                  /s/ ROY W. HENDRIX, JR.
                                                  --------------------------
                                                  Roy W. Hendrix, Jr.
                                                  Incorporator

                                                  
<PAGE>   3


          I, JOE C. CARR, Secretary of State, do certify that this Charter,
with certificate attached, the foregoing of which is a true copy, was this day
registered and certified to by me.

          This the 30th day of November, 1973


                                                            JOE C. CARR,
                    
                                                            SECRETARY OF STATE

                                                                FEE: $20.00
<PAGE>   4
                      ARTICLES OF AMENDMENT TO THE CHARTER

                                       OF

                           EUGENIA COTTON CO., INC.
- --------------------------------------------------------------------------------

                         CHANGING THE PRINCIPAL OFFICE

     Pursuant to the provisions of Section 48-303 of the Tennessee General
Corporation Act, the undersigned corporation adopts the following articles of
amendment to its charter:

     1.   The name of the corporation is:

     Eugenia Cotton Co., Inc.

     2.   The amendment adopted is:

          The address of the principal office of the corporation
     
          in the State of Tennessee shall be:

          Street:  99 S. Second Street, Suite A

          City:  Memphis, Tennessee

          Zip Code:  38103

          County:  Shelby

     3.   The amendment was duly adopted (at a meeting) of the directors on
     
     December 26, 1984.  

     4.   The amendment is to be effective when filed by the Secretary of 

     State.


     Dated:  December 26, 1984


                                   EUGENIA COTTON CO., INC.
                                   ----------------------------
                                   Name of Corporation

                              By:  /s/ 
                                   ----------------------------
                                   Signature
                                       PRESIDENT
                                   ----------------------------
                                   Title




               
          
<PAGE>   5
                      ARTICLES OF AMENDMENT TO THE CHARTER


PURSUANT TO THE PROVISIONS OF SECTION 48-20-106 OF THE TENNESSEE BUSINESS
CORPORATION ACT, THE UNDERSIGNED CORPORATION ADOPTS THE FOLLOWING ARTICLES OF
AMENDMENT TO ITS CHARTER:

PLEASE MARK THE BLOCK THAT APPLIES:

[ ]  AMENDMENT IS TO BE EFFECTIVE WHEN FILED BY THE SECRETARY OF STATE.
[ ]  AMENDMENT IS TO BE EFFECTIVE,   JULY        31,             1992
                                   -----------------------------------
                                   MONTH        DAY              YEAR

(NOT TO BE LATER THAN THE 90TH DAY AFTER THE DATE THIS DOCUMENT IS FILED.) IF
NEITHER BLOCK IS CHECKED, THE AMENDMENT WILL BE EFFECTIVE AT THE TIME OF
FILING.

1.   PLEASE INSERT THE NAME OF THE CORPORATION AS IT APPEARS ON RECORD:
     EUGENIA COTTON CO., INC.
     ------------------------------------------------------------------
     IF CHANGING THE NAME, INSERT THE NEW NAME ON THE LINE BELOW:
     CRESTFIELD COTTON COMPANY
     ------------------------------------------------------------------

2.   PLEASE INSERT ANY CHANGES THAT APPLY:
     A.   PRINCIPAL ADDRESS:  
                              ------------------------------------------
                              STREET ADDRESS

          --------------------------------------------------------------
          CITY                STATE                             ZIP CODE


     B.   REGISTERED AGENT:   UNITED STATES CORPORATION COMPANY
                              ------------------------------------------
                              
                              MaClellan Building, 3rd Floor 
     C.   REGISTERED ADDRESS: 722 Chestnut Street
                              ------------------------------------------
                              STREET ADDRESS

          Chattanooga         TN         37402
          --------------------------------------------------------------
          CITY               STATE      ZIP CODE                  COUNTY

     D.   OTHER CHANGES:


3.   THE CORPORATION IS FOR PROFIT.

4.   THE MANNER (IF NOT SET FORTH IN THE AMENDMENT) FOR IMPLEMENTATION OF ANY
     EXCHANGE, RECLASSIFICATION, OR CANCELLATION OF ISSUED SHARES IS AS 
     FOLLOWS:

5.   THE AMENDMENT WAS DULY ADOPTED ON JULY   31, 1992 BY:
                                       ------------------
                                       MONTH  DAY  YEAR

     (NOTE: PLEASE MARK THE BLOCK THAT APPLIES)

[ ] - THE INCORPORATORS     
     
[X] - THE BOARD OF DIRECTORS WITHOUT SHAREHOLDER APPROVAL, AS SUCH IS NOT 
      REQUIRED.

[ ] - THE SHAREHOLDERS.                                 
                                                        
  Secretary                   /s/ M. KENNETH DOSS       
- -------------------------     ------------------------- 
SIGNER'S CAPACITY             SIGNATURE                 
                                                        
                                                           
                              M. Kenneth Doss               
                              -------------------------         
                              NAME OF SIGNER (TYPED OR PRINTED)






<PAGE>   1
                                                                    EXHIBIT 3.14

                          TABLE OF CONTENTS OF BY LAWS
                                       OF
                            EUGENIA COTTON CO., INC.

<TABLE>
<CAPTION>
I.       OFFICES AND REGISTERED AGENTS
<S>                                                                 <C>
         Section 1. Principal office                                Page 1
         Section 1. Registered agent                                Page 1

II.      MEETINGS OF SHAREHOLDERS

         Section 1. Meetings                                        Page 1
         Section 2. Annual meetings                                 Page 2
         Section 3. Special meetings                                Page 2
         Section 4. Quorum                                          Page 3
         Section 5. Meeting chairman                                Page 4
         Section 6. Shareholders entitled to vote                   Page 4
         Section 7. Proxies                                         Page 5

III.     BOARD OF DIRECTORS

         Section 1. Number of directors                             Page 5
         Section 2. Removal of directors                            Page 6
         Section 3. Filling of vacancies                            Page 6
         Section 4. First meeting                                   Page 6
         Section 5. Special meetings                                Page 7
         Section 6. Notice of meetings                              Page 7
         Section 7. Quorum                                          Page 8
         Section 8. Action without meeting                          Page 8
         Section 9. Dissent to action                               Page 8

IV.      OFFICERS

         Section 1. Appointment                                     Page 9
         Section 2. Term of office                                  Page 9
         Section 3. Removal                                         Page 9
         Section 4. Duties                                          Page 9

V.       CAPITAL STOCK

         Section 1. Certificates                                    Page 10
         Section 2. Required signature                              Page 10
         Section 3. Notice of restrictions                          Page 10
         Section 4. Re-issuance of certificates                     Page 11
</TABLE>
<PAGE>   2
<TABLE>
<S>      <C>                                                        <C>
         Section 5. Transfer of shares                              Page 11
         Section 6. Endorsements                                    Page 12

VI.      DIVIDENDS, SURPLUS AND RESERVE

         Section 1. Dividends                                       Page 12
         Section 2. Capital distributions                           Page 13
         Section 3. Increases of capital surplus                    Page 14

VII.     MISCELLANEOUS

         Section 1. Corporate seal                                  Page 14
         Section 2. Fiscal year                                     Page 14
         Section 3. Financial statements                            Page 15

VIII.    AMENDMENTS

         Section 1. Shareholders required                           Page 15
         Section 2. Restrictions on directors                       Page 15
</TABLE>
<PAGE>   3
                                    BY-LAWS

                                       OF

                            EUGENIA COTTON CO., INC.

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

                                       I.

                         OFFICES AND REGISTERED AGENTS

         Section 1. The principal office of this corporation is at Suite 2518,
100 North Main Building, Memphis, Tennessee, as provided in the Charter. The
Board of Directors may, by Resolution, amend the Charter to change the address
of the principal office in the State of Tennessee.

         Section 2. The corporation has designated and shall continue to have a
registered agent in the State of Tennessee. If the registered agent resigns or
is for any reason unable to perform his duties, the corporation shall promptly
designate another registered agent. The corporation may, by Resolution of the
Board of Directors, appoint such other agents for the service of process in
such other jurisdictions as the Board of Directors may determine.

                                      II.

                            MEETINGS OF SHAREHOLDERS

         Section 1. Meetings of the shareholders shall be held at such place,
either within or without the State of Tennessee, as may be set by Resolution of
the Board of Directors. Except as the Board may otherwise determine, meetings
shall be held at the principal office of the corporation.
<PAGE>   4
                                     - 2 -

         Section 2. Annual meetings of the shareholders, beginning with the
year 1974, shall be held on the third Monday in September of each year; if said
date is not a legal holiday, and if a legal holiday, then on the next day not a
legal holiday, for the purpose of electing directors of the corporation and for
the transacting of such other business as may properly come before the meeting.
The Board of Directors may, however, by Resolution, fix the date of the annual
meeting on any day within the period of sixty (60) days next succeeding the
foregoing date. The time of the annual meeting shall be, in any event, fixed by
the Board of Directors.

         Section 3. Special meetings of the shareholders may be called by the
Board of Directors or by the Chairman of the Board, or by the President, and
shall be called by the Chairman, the President, the Secretary, or an assistant
Secretary at the request in writing of three or more members of the Board of
Directors, or at the request in writing of the holders of record of at least
ten percent (10%) of the outstanding shares of the corporation entitled to vote
at the meeting. Each special meeting shall be held at such time as the Board of
Directors shall determine, or in the absence of such determination by the Board
of Directors, such time as the person or persons calling or requesting the call
of the meeting shall specify in the notice or in the written request. All
notices of shareholders meetings shall be made in writing, stating the place,
day and hour of the meeting, and, in the case of a special meeting, the purpose
or purposes for which the meeting is called
<PAGE>   5
                                     - 3 -

and the person or persons calling the meeting, or otherwise giving notice as
provided in Section 48-703 Tennessee Code Annotated, provided, however, that
the stockholders may waive the requirement of notice by written waiver duly
executed and filed with the Minutes of the meeting to which it pertains.
Notices of meetings shall be delivered not less than ten (10) nor more than
sixty (60) days before the date of the meeting and shall be deemed to be
delivered when deposited in the United States Mail, addressed to the
shareholder at his address as it appears on the Stock Transfer Books of the
corporation. A certificate of the Secretary or the person giving the notice, or
of a transfer agent of the corporation, that the notice required by this
Section has been given, in the absence of fraud, shall be prima facie evidence
of the facts therein stated.

         Section 4. At any meeting of the shareholders, as a prerequisite for
the transaction of any business, a quorum shall be present. A quorum shall
consist of the holders of record of not less than a majority of the outstanding
shares of the corporation entitled to vote at such meeting, present either in
person or by proxy. When a quorum is once present to organize a meeting, it is
not broken by the subsequent withdrawal of any of those present. A meeting may
be adjourned, despite the absence of a quorum, by the Chairman of the meeting,
or a majority of the shareholders, present in person or by proxy, until holders
of the requisite amount of shares shall attend.
<PAGE>   6
                                     - 4 -

         Section 5. The Chairman of the Board, or in his absence or inability
to serve, the President, or in his absence or inability to serve, the Senior
Vice President, shall call meetings of the shareholders to order and act as
Chairman of such meetings. The shareholders my elect anyone of their number to
act as Chairman of any meeting in the absence of the aforenamed individuals.

         Section 6. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment
thereof, or shareholders entitled to receive payment of any dividend, or an
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may provide that the Stock Transfer Books shall be closed
for a stated period, but not to exceed forty (40) days. If the Stock Transfer
Books shall be closed for the purpose of determining shareholders entitled to
notice of or to vote at a meeting of shareholders, such books shall be closed
for at least ten (10) days immediately preceding such meeting. In lieu of
closing the Stock Transfer Books, the Board of Directors may fix in advance a
date as the record date for any such determination of shareholders, such date
in any case to be not less than ten (10) days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the Stock Transfer Books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or entitled to vote at a
meeting of shareholders or shareholders
<PAGE>   7
                                     - 5 -


entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed, or the date on which the Resolution of the Board declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of shareholders.

         Section 7. Every shareholder entitled to vote at a shareholders'
meeting, or to express consent or dissent without a meeting, may authorize
another person or persons to act for him by proxy. Each proxy must be in
writing and signed by the shareholder or by his attorney in fact. No proxy
shall be valid after the expiration of eleven (11) months from the date thereof
unless otherwise provided in the proxy. Each proxy shall be revocable at the
pleasure of the shareholder executing it, unless it conforms to the
requirements of an irrevocable proxy, as provided in Section 48-706(4)
Tennessee Code Annotated. All proxies must be delivered to the Secretary of the
corporation prior to the opening of the meeting, except for proxies granted
after the meeting has opened, which proxies shall be delivered to the Secretary
as soon as practicable after execution.

                                      III.

                               BOARD OF DIRECTORS

         Section 1. Any affairs of this corporation shall be managed by a Board
of three (3) directors who shall be elected by the shareholders at the regular
meeting for a term of one year until their successors are elected and
qualified. The number may be changed by the shareholders or by the Board by
amending these By-Laws; provided, that the adoption of such an amendment by the
Board of Directors shall
<PAGE>   8
                                     - 6 -

require the vote of a majority of the entire Board. No decrease in the number
of directors shall shorten the term of any incumbent director.

         Section 2. Any or all directors may be removed with or without cause
by a vote of a majority of the shareholders entitled to vote; such vote may be
held at any meeting of the shareholders, notice of which shall have referred to
the proposed action. Any directors may be removed for cause as defined in
Section 48-807(1), Tennessee Code Annotated, at any meeting of the directors,
notice of which shall have referred to the proposed action, by vote of a
majority of the entire Board.

         Section 3. Newly created directorships resulting from an increase in
the number of directors and vacancies occurring in the Board of Directors for
any reason, except the removal of directors, without cause, may be filled by a
vote of the majority of the directors then in office, although less than a
quorum exists, or any such newly created directorships and vacancies occurring
in the Board of Directors, for any reason, may be filled by vote of the
shareholders at any meeting of the shareholders, notice of which shall have
referred to the proposed election. Any director elected to fill a vacancy shall
be elected to hold office for the unexpired term of his predecessor, of, if
there is no predecessor, until the next annual meeting of shareholders.

         Section 4. The first meeting of the newly elected Board of Directors
may be held immediately after the annual meeting of shareholders, and at the
same place as such annual meeting of
<PAGE>   9
                                     - 7 -

shareholders, provided a quorum be present, and no notice of such meeting shall
be necessary. In the event such first meeting of the newly elected Board of
Directors is not held at such time and place, the same shall be held as
provided otherwise in this Section.

         Section 5. Special meetings of the Board of Directors may be called by
the Chairman of the Board, or the President, or in the absence or disability of
the Chairman of the Board and the President, by any Vice President, or by any
two directors.

         Section 6. Notice of each regular or special meeting of the Board of
Directors, except as provided in Section 5, shall be given by the Secretary, or
an assistant Secretary, or in the absence or disability of the Secretary or any
assistant Secretary, by the person or persons calling the meeting. Such notice
shall be given to each member of the Board, not less than three (3) days before
the meeting by depositing the notice in the United States Mail directed to each
member of the Board at the address designated by him for such purpose, or, not
less than one (1) day before the meeting by either delivering the same to each
member of the Board of Directors personally, or, delivering it to the address
designated by him for that purpose. Notice of the meeting need not be given to
any director who submits a signed waiver of notice, whether before, at or after
the meeting. The notice of any meeting of the Board of Directors need not
specify the purpose or purposes for which the meeting is called, except as
otherwise provided in these By-Laws.
<PAGE>   10
                                     - 8 -

         Section 7. At all meetings of the Board of Directors, except as
otherwise provided by law, the Charter, or by these By-Laws, a quorum shall
consist of a majority of the total number of directors then in office.

         Section 8. Directors may take any action which they are required or
permitted to take under the law, the Charter, or these By-Laws, without a
meeting, on written consent, setting forth the actions so taken signed by all
of the persons entitled to vote thereon.

         Section 9. A director who is present at a meeting of the Board, at
which any action is taken, shall be presumed to have concurred in the action,
unless his dissent thereto shall be entered in the Minutes of the meeting, or,
unless he shall submit his written dissent to the person acting as the
Secretary of the meeting before the adjournment thereof, or shall deliver or
send such dissent to the Secretary of the corporation promptly after the
adjournment of the meeting.  Such rights to dissent shall not apply to a
director who voted in favor of any such action. A director who is absent from a
meeting at which such action is taken, shall be presumed to have concurred in
the action unless he shall deliver or send by registered or certified mail his
dissent thereto to the Secretary of the corporation and shall cause such
dissent to be filed with the Minutes of the proceedings of the Board within a
reasonable time after learning of such action.
<PAGE>   11
                                     - 9 -

                                      IV.

                                    OFFICERS

         Section 1. The Board of Directors shall annually, at the first meeting
of the Board after the annual meeting of shareholders, appoint or elect a
Chairman of the Board, a President, one or more Vice Presidents, a Secretary,
and a Treasurer. The Board of Directors may, from time to time, elect or
appoint such additional officers as it may determine are necessary. Such
additional officers shall have such authority and perform such duties as the
Board of Directors prescribes. Any two of the aforementioned officers, except
those of President and Secretary, may be filled by the same person, but no
person shall purport to execute or attest any document or instrument on behalf
of the corporation in more than one capacity.

         Section 2. The officers of the corporation shall hold office for one
year, or, until their successors are chosen and qualified, subject, however,
to the removal of any officer pursuant to these By-Laws.

         Section 3. Any officer elected by the Board of Directors may be
removed at any time by the affirmative vote of the majority of the entire
Board.

         Section 4. All officers shall have such authority to perform such
duties in the management of the corporation as are normally incident to their
offices and as the Board of Directors may from time to time provide.
<PAGE>   12
                                     - 10 -

                                       V.

                                 CAPITAL STOCK

         Section 1. The certificates of stock of the corporation shall be
numbered consecutively and shall be entered on the books of the corporation as
they are issued. Every shareholder shall be entitled to a certificate or
certificates of capital stock of the corporation.

         Section 2. Certificates of stock shall be signed by the President, and
countersigned by the Secretary. If the certificate is countersigned by a
transfer agent or registered by a register, other than an officer or employee
of the corporation, the signature and countersignature of the corporate
officers may be facsimiles. In case any officer who has signed or whose
facsimile signature has been placed upon such certificates shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issuance.

         Section 3. Each certificate of stock which is restricted or limited as
to its transferability or voting rights, or which is callable under the
Charter, which is preferred or limited as to dividends or rights upon voluntary
or involuntary dissolution, shall have a notice of such restriction,
limitation, or preference conspicuously stated on the face or back of the
certificate. Upon the removal or expiration of any such restriction or
limitation, the holder of such certificate shall be entitled to receive a new
certificate upon the surrender of the old restricted or limited certificates;
and the payment of the reasonable expenses of the corporation incurred in
connection therewith.
<PAGE>   13
         Section 4. The corporation shall issue a new stock certificate in the
place of any certificate previously issued where the holder of record of the
certificate:

         A.  Makes proof in affidavit form that it has been lost,
             destroyed, or wrongfully taken;
             
         B.  Satisfies any other reasonable requirements imposed
             by the corporation.
             
         Section 5. The corporation shall register a transfer of a
stock certificate presented to it for transfer if:

         A.  The certificate is endorsed by the appropriate person
             or persons;
             
         B.  The signature of the appropriate person or persons has
             been guaranteed by a national banking association, a bank
             organized and operating under the statutes of the State of
             Tennessee, or a member of the National Association of Security
             Dealers, and reasonable assurance is given that the
             endorsements are effective, unless the Secretary of the
             corporation waives such requirements;
             
         C.  The corporation has no duty to inquire into adverse claims
             or has discharged any such duties;
             
         D.  There has been compliance with any applicable law relating
             to the collection of taxes; and
             
         E.  The transfer is in fact rightful or is to a bonafide purchaser.
<PAGE>   14
                                     - 12 -


         Section 6. An endorsement of the stock certificate in registered form
is made when an appropriate person signs on it or on a separate document an
assignment or transfer of it, or a power to assign or transfer it, or when the
signature of this person is written without more upon the back of the
certificate. An endorsement may be in blank, which includes an endorsement to
bearer, or special, which specifies the person whom the stock is to be
transferred, or who has the power to transfer it. The corporation may elect to
require reasonable assurance beyond that specified in this Section, but if it
both requires and obtains a copy of a controlling instrument for a purpose
other than showing appropriate evidence of appointment or incumbency of a
fiduciary, it is charged with notice of all matters contained in effect in the
transfer.

                                      VI.

                         DIVIDENDS, SURPLUS AND RESERVE

         Section 1. The Board of Directors may, from time to time, declare, and
the corporation may pay, dividends on its outstanding shares in cash, property,
or its own shares, except where the corporation is insolvent, as that term is
defined in Section 48-102(n) Tennessee Code Annotated, or when the payment
thereof would render the corporation insolvent, or when the declaration of
payment thereof would be contrary to any restrictions contained in the Charter,
these By-Laws, or in any applicable valid contract. The declaration and payment
of any such dividend shall be in accordance with Section 48-511, Tennessee Code
Annotated.
<PAGE>   15
                                     - 13 -

         Section 2. The Board of Directors may distribute to the shareholders
of the corporation out of capital surplus, a portion of its assets, in cash or
property, subject to the following provisions:

         A.  No such distribution shall be made at a time when the
             corporation is insolvent or when such distribution
             would render the corporation insolvent;
             
         B.  No such distribution shall be made unless such distribution is
             authorized by the affirmative vote of the holders of the
             majority of all of the outstanding shares of stock entitled to
             vote thereon;
             
         C.  No such distribution shall be made to the holders of any
             class of shares unless all cumulative dividends accrued an all
             preferred or special classes of shares entitled to
             preferential dividends shall have been fully paid;
             
         D.  No such distribution shall be made to the holders of any
             class of shares which would reduce the remaining net assets of
             the corporation below the aggregate preferential amount
             payable in the event of voluntary liquidation to the holders
             of shares having preferential rights to the assets of the
             corporation in the event of liquidation;
             
         E.  Each such distribution, when made, shall be identified
             as a distribution from capital surplus in the amount per share
             shall be disclosed to the shareholders receiving the same,
             concurrently with the distribution thereof.
<PAGE>   16
                                     - 14 -


         Section 3. The capital surplus of the corporation may be increased
from time to time by Resolution of the Board, directing that all or part of the
earned surplus of the corporation be transferred to capital surplus. The Board
of Directors may, by Resolution, apply any part or all of the capital surplus
of the corporation to the reduction or elimination of any deficit arising from
losses during surplus, and then only to the extent that such losses exceed the
earned surplus. Each such application of capital surplus shall, to the extent
thereof, effect a reduction of capital surplus.

                                      VII.

                            MISCELLANEOUS PROVISIONS

         Section 1. The corporation shall have a corporate seal which shall
have inscribed thereon the name of the corporation, the year of incorporation,
and the word "Tennessee" and "Seal" and shall be circular in form. The presence
or absence of such seal on any instrument, or its addition thereto, shall not
effect the character, or validity, or legal effect thereof in any respect. The
affixing of the seal shall not be necessary for the execution of any instrument
or document by the corporation, and such seal shall be used only where deemed
expedient in the judgment of the officer executing documents or instruments on
behalf of the corporation.

         Section 2. The fiscal year of the corporation shall be fixed by
Resolution of the Board of Directors.
<PAGE>   17
                                     - 15 -


         Section 3. The Board of Directors shall cause a true statement of the
assets and liabilities of this corporation as of the close of each fiscal year
and of the results of its operations and of the changes in surplus for such
fiscal year, all in reasonable detail, to be made and filed at the principal
office of the corporation in this state, within four (4) months after the end
of such fiscal year, and there, kept available for period of at least two (2)
years for inspection on request by any shareholder. The officers of the
corporation shall mail or otherwise deliver a copy of the latest of such
statement to any such shareholder upon his written request therefor.

                                     VIII.

                                   AMENDMENTS

         Section 1. These By-Laws may be amended by a vote of a majority of all
of the stock issued and outstanding entitled to vote at any regular or special
meeting of the shareholders, provided notice of intention to amend shall have
been contained in the notice of any special meeting for that purpose.

         Section 2. The Board of Directors may, by a majority vote of the
entire Board, at any regular meeting, or at any duly called special meeting,
amend these By-Laws, including By-Laws adopted by the shareholders, provided,
that the shareholders may from time to time specify particular provision of
these By-Laws which shall not be amended by the Board of Directors.

         I, Roy W. Hendrix, Jr., incorporator of Eugenia Cotton Co., Inc., do
hereby certify that the above By-Laws of Eugenia Cotton Co., Inc. were adopted
by me, as sole incorporator of said
<PAGE>   18
                                     - 16 -

corporation at a special meeting of the sole incorporator on December 12, 1973.




                                          /s/ ROY W. HENDRIX, JR.         
                                          --------------------------------
                                          Roy W. Hendrix, Jr.
                                          Incorporator
                                          
<PAGE>   19

                           AMENDMENT TO THE BYLAWS OF
                            EUGENIA COTTON CO., INC.
                           ADOPTED NOVEMBER 22, 1991

                Article VII of the bylaws of the corporation shall be amended 
by the addition of the following Section 4:

         Section 4. Indemnification of Officers and Directors. The corporation
         shall indemnify each present and future director and officer of the
         corporation against, and each director or officer shall be entitled
         without further act to indemnity from the corporation for, all
         expenses (including counsel fees and the amount of judgments and the
         amount of reasonable settlements made with a view to the curtailment
         of costs of litigation, other than amounts paid to the corporation
         itself) reasonably incurred in connection with or arising out of any
         action, suit or proceeding in which he may be involved by reason of
         being or having been a director or officer.  Provided, however, that
         the director or officer 1) conducted himself in good faith; and 2)
         reasonably believed: (a) in the case of conduct in his official
         capacity with the corporation that his conduct was in its best
         interest; and (b) in all other cases, that his conduct was at least
         not opposed to the corporation's best interest; and, 3) in the case
         of any criminal proceeding, he had no reasonable cause to believe his
         conduct was unlawful. However, the corporation shall not indemnify a
         director or officer in connection with: 1) a proceeding by or in the
         right of the corporation in which the director was adjudged liable to
         the corporation; or 2) in connection with any other proceeding
         charging improper
<PAGE>   20
         personal benefit to him, whether or not involving action in his
         official capacity, in which he was adjudged liable on the basis that
         personal benefit was improperly received by him. In addition, the
         corporation may pay for or reimburse the reasonable expenses incurred
         by an officer or director who is a party to a proceeding in advance of
         the final disposition of the proceeding if: 1) the director or officer
         furnishes the corporation a written affirmation of his good faith
         belief that he has met the standard of conduct hereinbefore described;
         2) the director or officer furnishes the corporation a written
         undertaking, executed personally or on his behalf, to repay the
         advance if it is ultimately determined that he is not entitled to
         indemnification; and (3) a determination is made that the facts then
         known to those making the determination would not preclude
         indemnification. The determination whether indemnification is
         permissible shall be made by 1) a majority vote of a quorum of the
         Board of Directors not parties to the proceeding; 2) by majority vote
         of a committee duly designated by the Board of Directors consisting of
         two or more directors not parties to the proceeding; 3) by independent
         special legal counsel selected by the Board of Directors, or its
         committee; or by the shareholders, except the shares owned or voted
         under the control of directors who are at the time parties to the
         proceeding may not be voted on the determination. In no event shall
         indemnification be made to, or on behalf of any director





                                       2
<PAGE>   21
         or officer if a judgment or final adjudication adverse to the director
         or officer establishes his liability 1) for any breach of the duty of
         loyalty to the corporation or its shareholders; 2) for acts or
         omissions not in good faith or which involve intentional misconduct or
         a knowing violation of the law; or 3) for any unlawful distributions
         from the corporation. The foregoing right of indemnification shall
         inure to the benefit of the heirs, executors or administrators of each
         director or officer and shall be in addition to all other rights to
         which the director or officer may be entitled as a matter of law.





                                       3

<PAGE>   1
                                                                    EXHIBIT 3.15

                          CERTIFICATE OF INCORPORATION

                                       OF

                         4500 SERVICE CORPORATION, INC.

     FIRST. The name of the corporation is 4500 SERVICE CORPORATION, INC.

     SECOND. The address of its registered office in the State of Delaware is
No. 100 West Tenth Street, in the City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.

     THIRD. The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.

     FOURTH. The total number of shares of stock which the corporation shall
have authority to issue is two thousand (2,000) shares of common stock without
par value.

     The following restrictions are imposed upon the transfer of shares of the
capital stock of the corporation:

     The corporation shall have the right to purchase, or to direct the transfer
of, the shares of its capital stock in the events and subject to the conditions
and at a price fixed as provided below; each holder of shares of such capital
stock holds his shares subject to this right and by accepting the same upon
original issue or subsequent transfer thereof, the stockholder agrees for
himself, his legal representatives and assigns as follows:



<PAGE>   2
     In the event of any change in the ownership of any share or shares of such
capital stock (made or proposed) or in the right to vote thereon (whether by the
holder's act or by death, legal disability, operation of law, legal processes,
order of court, or otherwise, except by ordinary proxies or powers of attorney)
the corporation has the right to purchase such share of all or any part of such
shares or to require the same to be sold to a purchaser or purchasers designated
by the corporation or to follow each such method in part at a price per share
equal to the fair value thereof at the close of business on the last day next
preceding such event as determined by mutual agreement or, failing such
agreement, by arbitration as provided below.

     In any such event the owner of the share or shares concerned therein
(being for the purposes of these provisions, all persons having any property
interest therein) shall give notice thereof in detail satisfactory to the
corporation. Within ten days after receipt of said owner's notice, the
corporation shall elect whether or not to exercise its said rights in respect to
said shares and, if it elects to exercise them, shall give notice of its
election.

     Failing agreement between the owner and the corporation as to the price per
share to be paid, such price shall be the fair value of such shares as
determined by three arbitrators, one designated within five days after the
termination of said ten-day period by the registered holder of said share or
shares or his legal representatives, one within said period of five days by the
corporation and the third within five days after said appointment



                                       -2-
<PAGE>   3
last occurring by the two so chosen. Successor arbitrators, if any shall be
required, shall be appointed, within reasonable time, as nearly as may be in the
manner provided as to the related original appointment. No appointment shall be
deemed as having been accomplished unless such arbitrator shall have accepted in
writing his appointment as such within the time limited for his appointment.
Notice of each appointment of an arbitrator shall be given promptly to the other
parties in interest. Said arbitrators shall proceed promptly to determine said
fair value. The determination of the fair value of said share or shares by
agreement of any two of the arbitrators shall be conclusive upon all parties
interested in such shares. Forthwith upon such determination the arbitrators
shall mail or deliver notice of such determination to the owner (as above
defined) and to the corporation.

     Within ten days after agreement upon said price or mailing of notice of
determination of said price by arbitrators as provided below (whichever shall
last occur), the shares specified therein for purchase shall be transferred to
the corporation or to the purchaser or purchasers designated therein or in part
to each as indicated in such notice of election against payment of said price at
the principal office of the corporation.

     If in any of the said events, notice therefor having been given as provided
above, the corporation elects in respect of any such shares or any part thereof
not to exercise its said rights, or fails to exercise them or to give notice or
make payment all as provided above, or waives said rights by vote or in
authorized



                                       -3-
<PAGE>   4
writing, then such contemplated transfer or such change may become effective as
to those shares with respect to which the corporation elects not to exercise
them or to give notice or to make payment, if consummated within thirty days
after such election, failure or waiver by the corporation, or within such longer
period as the corporation may authorize.

     If the owner's notice in respect of any of such shares of capital stock is
not received by the corporation as provided above, or if the owner fails to
comply with these provisions in respect of any such shares in any other regard,
the corporation, at its option and in addition to its other remedies, may
suspend the rights to vote or to receive dividends on said shares, or may refuse
to register on its books any transfer of said shares or otherwise to recognize
any transfer or change in the ownership thereof or in the right to vote thereon,
one or more, until these provisions are complied with to the satisfaction of
the corporation; and if the required owner's notice is not received by the
corporation after written demand by the corporation it may also or independently
proceed as though a proper owner's notice had been received at the expiration of
ten days after mailing such demand, and, if it exercises its rights with respect
to said shares or any of them, the shares specified shall be transferred
accordingly.

     In respect of these provisions with respect to the transfer of shares of
capital stock, the corporation may act by its board of directors. Any notice or
demand under said provisions shall



                                       -4-
<PAGE>   5
be deemed to have been sufficiently given if in writing delivered by hand or
addressed by mail postpaid, to the corporation at its principal office or to the
owner (as above defined) or to the holder registered on the books of the
corporation (or his legal representative) of the share or shares in question at
the address stated in his notice or at his address appearing on the books of the
corporation.

     Nothing herein contained shall prevent the pledging of shares, if there is
neither a transfer of the legal title thereto nor a transfer on the books of the
corporation into the name of the pledgee, but no pledgee or person claiming
thereunder shall be entitled to make or cause to be made any transfer of pledged
shares by sale thereof or otherwise (including in this prohibition transfer on
the books of the corporation into the name of the pledgee) except upon
compliance herewith and any such pledge shall be subject to those conditions and
restrictions.

     FIFTH. The name and mailing address of the sole incorporator is as
follows:

              NAME                             MAILING ADDRESS
              ----                             ---------------
         Alan L. Lefkowitz                 Gaston Snow & Ely Bartlett
                                           One Federal Street
                                           Boston, Massachusetts 02110

     SIXTH. The corporation is to have perpetual existence.

     SEVENTH. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:



                                      -5-
<PAGE>   6
     To make, alter, amend, or repeal the by-laws of the corporation.

     To authorize and cause to be executed mortgages and liens upon the real and
personal property of the corporation.

     To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.

     By a majority of the whole board, to designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. The by-laws may provide that in the absence of disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
or in the by-laws of the corporation, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certifi-



                                       -6-
<PAGE>   7
cate of incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholder the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amending the by-laws of the corporation; and, unless the resolution or
by-laws expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.

     When and as authorized by the stockholders in accordance with statute to
sell, lease or exchange all or substantially all of the property and assets of
the corporation, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its board of directors
shall deem expedient and for the best interests of the corporation.

     EIGHT. Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, in the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware



                                       -7-
<PAGE>   8
Code or on the application of trustees in dissolution or of any receiver or
receivers appointed for this corporation under the provisions of Section 279 of
Title 8 of the Delaware Code order a meeting of the creditors or class of
creditors, and/or of the stockholders of class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said court
directs if a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.

     NINTH. Meetings of stockholders may be held at such place, either within or
without the State of Delaware, as the by-laws may provide. The books of the
corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the board of directors or in the by-laws of the corporation.
Elections of directors need not be by written ballot unless the by-laws of the
corporation shall so provide.



                                      -8-
<PAGE>   9
     TENTH. The powers of the incorporation are to terminate upon the filing of
this certificate of incorporation with the Secretary of State of the State of
Delaware. The name and mailing address of the person who is to serve as the
director of the corporation, subject to the by-laws, until the first annual
meeting of stockholders or until his successor is elected and qualifies is:

           NAME                                MAILING ADDRESS
           ----                                ---------------
       Joseph B. Ely, II                       5 Webster Lane
                                               Wayland, MA 01778

     ELEVENTH. The corporation shall indemnify any person who was or is party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or a stockholder purporting to act on behalf of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments and
fines actually imposed or reasonably incurred by him in connection with such
action, suit or proceeding unless in any proceeding he shall be finally adjudged
not to have acted in good faith in the reasonable belief that his action was in
the best interest of the corporation; provided, however, that such
indemnification shall not cover liabilities in connection with



                                       -9-
<PAGE>   10
any matter which shall be disposed of through a compromise payment by such
person, pursuant to a consent decree or otherwise, unless such compromise shall
be approved as in the best interests of the corporation, after notice that it
involves such indemnification, (a) by a vote of the directors in which no
interested director participates, or (b) by a vote or the written approval of
the holders of a majority of the outstanding stock at the time having the right
to vote for directors, not counting as outstanding any stock owned by any
interested director or officer. Such indemnification may include payment by the
corporation of expenses incurred in defending a civil or criminal action or
proceeding in advance of the final disposition of such action or proceeding,
upon receipt of an undertaking by the person indemnified to repay such payment
if he shall be adjudicated to be not entitled to indemnification under these
provisions. The rights of indemnification hereby provided shall not be exclusive
of or affect other rights to which any director, officer, employee, agent or
stockholder may be entitled. As used in this paragraph, the terms "director",
"officer", "employee", "agent" or "stockholder" include their respective heirs,
executors and administrators, and an "interested" director or officer is one
against whom as such the proceeding in question or another proceeding on the
same or similar grounds is then pending. Any indemnification to which a person
is entitled under this paragraph shall be provided although the person to be
indemnified is no longer such a director, officer, employee, agent or
stockholder.



                                     -10-
<PAGE>   11
     TWELFTH. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or thereafter prescribed by statute, and all rights conferred upon a
stockholder herein are granted subject to this reservation.

     I, THE UNDERSIGNED, being the sole incorporator hereinabove named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 29th day of December, 1981.


                                                /s/ ALAN L. LEFKOWITZ
                                                -------------------------------
                                                    Alan L. Lefkowitz



                                      -11-
<PAGE>   12

                            CERTIFICATE OF AMENDMENT

                                       OF

                          CERTIFICATE OF INCORPORATION

                                  * * * * *

     4500 SERVICE CORPORATION, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware,

DOES HEREBY CERTIFY:

     FIRST: That the Board of Directors of said corporation, by the written
consent of its sole member, filed with the minutes of the Board, adopted a
resolution proposing and declaring advisable the following amendment to the
Certificate of Incorporation of said corporation:

                 RESOLVED, that the Certificate of Incorporation of this
                 corporation is hereby amended by changing the FIRST Article
                 thereof so that, as amended, said Article shall be and read as
                 follows:

                 "The name of the corporation is DOWNEAST SECURITIES
                 CORPORATION."

     SECOND: That since the corporation at the time of the adoption of the
aforesaid resolution had not received any payment for any of its stock, the
aforesaid amendment was duly adopted in accordance with the applicable
provisions of section 241 of the General Corporation law of the State of
Delaware.
<PAGE>   13
     IN WITNESS WHEREOF, said 4500 SERVICE CORPORATION, INC. has caused this
certificate to be signed by Joseph B. Ely, II, its president, and attested by
Frederic P. Melzar, its secretary, this 15th day of January, 1982.

                               4500 SERVICE CORPORATION, INC.

                               By  /s/ JOSEPH B. ELY, II
                                   -------------------------
                                        President

ATTESTED:


By  /s/ FREDERIC P. MELZAR
    ------------------------
    Secretary
<PAGE>   14
                             CERTIFICATE OF MERGER
                                       OF
                        DOWNEAST MANAGEMENT CORPORATION
                                      INTO
                        DOWNEAST SECURITIES CORPORATION

     The undersigned corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware,

     DOES HEREBY CERTIFY:

     FIRST:  That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:

<TABLE>
<CAPTION>
               Name                     State of Incorporation
     <S>                                     <C>
     Downeast Securities Corporation         Delaware
     Downeast Management Corporation         Maine
</TABLE>

     SECOND:  That an Agreement and Plan of Merger by and between the parties to
the merger has been approved, adopted, certified, executed and acknowledged by
each of the constituent corporations in accordance with the requirements of
subsection (c) of Section 252 of the General Corporation Law of the State of
Delaware.

     THIRD:   That the name of the surviving corporation of the merger is
Downeast Securities Corporation.

     FOURTH:  That the certificate of incorporation of Downeast Securities
Corporation, a Delaware corporation, shall be the certificate of incorporation
of the surviving corporation.

     FIFTH:   That the executed Agreement and Plan of Merger is on file at the
principal place of business of the surviving corporation.  The address of the
principal place of business of the surviving corporation is c/o Gaston Snow
Beekman & Bogue (ATTN: Daniel A. Demarest, Esq.), 14 Wall Street, New York, NY
10005.

     SIXTH:  That a copy of the Agreement and Plan of Merger will be furnished
by the surviving corporation, on request and without cost to any stockholder of
any constituent corporation.

     SEVENTH:  That the authorized capital stock of Downeast Management
Corporation; a Maine corporation, is 250 shares, $100 par value.


                                        Downeast Securities Corporation


                                        By: /s/ JOSEPH B. ELY, II
                                            ---------------------------
                                            President

ATTEST:


By: /s/ FREDERIC P. MELZAR
    ---------------------------
    Secretary






<PAGE>   1
                                                                    EXHIBIT 3.16

                                    BY-LAWS

                                       OF

                         4500 SERVICE CORPORATION, INC.

                                   ARTICLE I.

                          Certificate of Incorporation

    These by-laws, the powers of the corporation and of its directors and
stockholders, and all matters concerning the conduct and regulation of the
business of the corporation shall be subject to such provisions in regard
thereto as are set forth in the certificate of incorporation filed pursuant to
the General Corporation Law of Delaware which is hereby made a part of these
by-laws.

    The term "certificate of incorporation" in these by-laws, unless the
context requires otherwise, includes not only the original certificate of
incorporation filed to create the corporation but also all other certificates,
agreements of merger or consolidation, plans of reorganization, or other
instruments, howsoever designated, filed pursuant to the General Corporation
Law of Delaware which have the effect of amending or supplementing in some
respect the corporation's original certificate of incorporation.

                                  ARTICLE II.

                                 Annual Meeting

    An annual meeting of stockholders shall be held for the election of
directors and for the transaction of any other business for the transaction of
which the meeting shall have been properly convened during the month of April
in each year, on such date and at such place, within or without the State of
Delaware, and at such time as shall be fixed by the board of directors and
specified in the notice of the meeting. Any other proper business may be
transacted at the annual meeting. If the annual meeting for election of
directors shall not be held on the date designated therefor, the directors
shall cause the meeting to be held as soon thereafter as convenient.

                                  ARTICLE III.

                        Special Meetings of Stockholders

    Special meetings of the stockholders may be held either within or without
the State of Delaware, at such time and place
<PAGE>   2
and for such purposes as shall be specified in a call for such meeting made by
the board of directors or by a writing filed with the secretary signed by the
president or by a majority of the directors.

                                  ARTICLE IV.

                        Notice of Stockholders' Meetings

    Whenever stockholders are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given which shall state the
place, date and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, which notice shall be
given not less than ten nor more than fifty days before the date of the
meeting, except where longer notice is required by law, to each stockholder
entitled to vote at such meeting, by leaving such notice with him or by mailing
it, postage prepaid, directed to him at his address as it appears upon the
records of the corporation. In case of the death, absence, incapacity or
refusal of the secretary, such notice may be given by a person designated
either by the secretary or by the person or persons calling the meeting or by
the board of directors. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken. At the
adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.

    An affidavit of the secretary or an assistant secretary or of the transfer
agent of the corporation that the notice has been given shall, in the absence
of fraud, be prima facie evidence of the facts stated therein.

                                   ARTICLE V.

                    Quorum of Stockholders; Stockholder List

    At any meeting of the stockholders, a majority of all shares issued and
outstanding and entitled to vote upon a question to be considered at the
meeting shall constitute a quorum for the consideration of such question when
represented at such meeting by the holders thereof in person or by their duly
constituted and authorized attorney or attorneys, but a less interest may
adjourn any meeting from time to time, and the meeting may be held as
adjourned without further notice. When a quorum is present at any





                                      -2-
<PAGE>   3
meeting a majority of the stock so represented thereat and entitled to vote
shall, except where a larger vote is required by law, by the certificate of
incorporation or by these by-laws, decide any question brought before such
meeting.

    The secretary or other officer having charge of the stock ledger shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours for a period of at least ten days prior to the
meeting, either at a place within the city or town where the meeting is to be
held, which place shall have been specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. Said list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof and may be inspected by any stockholder who is present. The
stock ledger shall be the only evidence as to who are the stockholders entitled
to examine the stock ledger, the list of stockholders required by this Article
or the books of the corporation, or the stockholders entitled to vote in person
or by proxy at any meeting of stockholders.

                                  ARTICLE VI.

                   Stockholder's Meetings, Proxies and Voting

    Except as otherwise provided in the certificate of incorporation, each
stockholder shall at every meeting of the stockholders be entitled to one vote
for each share of the capital stock held by such stockholder. Each stockholder
entitled to vote at a meeting of stockholders or to express consent or dissent
to corporate action in writing without a meeting may authorize another person
or persons to act for him by proxy but (except as otherwise expressly permitted
by law) no proxy shall be voted or acted upon after three years from its date,
unless the proxy provides for a longer period or so long as it is coupled with
an interest sufficient in law to support an irrevocable power.

    Unless otherwise provided in the certificate of incorporation, any action
required by law to, or which may be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote therein were present and voted.
Prompt notice of the taking





                                      -3-
<PAGE>   4
of such action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.

                                  ARTICLE VII.

                           Stockholders' Record Date

    In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or to express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the board of directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such meeting, nor
more than sixty days prior to any other action.

    If no record date is fixed:

    (1)  The record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived,
at the close of business on the day next preceding the day on which the meeting
is held.

    (2)  The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the board of directors is necessary, shall be the day on which the first
written consent is expressed.

    (3)  The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating thereto.

    A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting,
provided, however, that the board of directors may fix a new record date for
the adjourned meeting.

                                 ARTICLE VIII.

                               Board of Directors

    Except as otherwise provided by law or by the certificate of incorporation
or by these by-laws, the business and affairs of the corporation shall be
managed by its board of directors.



                                      -4-
<PAGE>   5
         The number of directors shall be such number, not fewer than one nor
more than three, as may be fixed for any corporate year and elected by the
stockholders at the annual meeting. During any year the board of directors may
be enlarged and additional directors elected to complete the enlarged number,
to not more than the maximum number above specified, by the stockholders at any
meeting or by a vote of a majority of the directors then in office. The
stockholders may, at any meeting held for the purpose during such year,
decrease, to not fewer than the minimum number above specified, the number of
directors as thus fixed or enlarged and remove directors to the decreased
number. Each director shall hold office until his successor is elected and
qualified or until his earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. No director need be a
stockholder.

                                  ARTICLE IX.

                                   Committees

    The board of directors may, by resolution passed by a majority of the whole
board, designate one or more committees, each committee to consist of one or
more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee who may replace any absent or
disqualified member at any meeting of the committee and may define the number
and qualifications which shall constitute a quorum of such committee. Except as
otherwise limited by law, any such committee, to the extent provided in the
resolution appointing such committee, shall have and may exercise the powers of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it. In the absence or disqualification of a member of
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.

                                   ARTICLE X.

              Meetings of the Board of Directors and of Committees

    Regular meetings of the board of directors may be held without call or
formal notice at such places either within or without the State of Delaware and
at such times as the board may by vote from time to time determine.

    Special meetings of the board of directors may be held at any place either
within or without the State of Delaware at any time when called by the
president, treasurer, secretary or



                                      -5-
<PAGE>   6
two or more directors, reasonable notice of the time and place thereof being
given to each director. A waiver of such notice in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to such notice. In any case it shall
be deemed sufficient notice to a director to send notice by mail at least
forty-eight hours, or to deliver personally or to send notice by telegram at
least twenty-four hours, before the meeting, addressed to him at his usual or
last known business or residence address.

    Unless otherwise restricted by the certificate of incorporation or by other
provisions of these by-laws, (a) any action required or permitted to be taken
at any meeting of the board of directors or of any committee thereof may be
taken without a meeting if all members of the board or of such committee, as
the case may be, consent thereto in writing and such writing or writings are
filed with the minutes of proceedings of the board or committee, and (b)
members of the board of directors or of any committee designated by the board
may participate in a meeting thereof by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation shall constitute
presence in person at such meeting.

                                  ARTICLE XI.

                        Quorum of The Board of Directors

    Except as otherwise expressly provided in the certificate of incorporation
or in these by-laws, a majority of the total number of directors at the time in
office shall constitute a quorum for the transaction of business, but a lesser
number may adjourn any meeting from time to time. Except as otherwise so
expressly provided, the vote of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the board of
directors, provided, that the affirmative vote in good faith of a majority of
the disinterested directors, even though the disinterested directors shall be
fewer than a quorum, shall be sufficient to authorize a contract or transaction
in which one or more directors have interest if the material facts as to such
interest and the relation of the interested directors to the contract or
transaction have been disclosed or are known to the directors.

                                  ARTICLE XII.

                          Waiver of Notice of Meetings

    Whenever notice is required to be given under any provision of law or the
certificate of incorporation or by-laws, a written waiver thereof, signed by
the person entitled to notice, whether before or after the time stated therein,
shall be deemed




                                      -6-
<PAGE>   7
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors or members of a
committee of directors need be specified in any written waiver of notice unless
so required by the certificate of incorporation or the by-laws.

                                 ARTICLE XIII.

                              Officers and Agents

    The corporation shall have a president, secretary and treasurer, who shall
be chosen by the directors, each of whom shall hold his office until his
successor has been chosen and qualified or until his earlier resignation or
removal. The corporation may have such other officers and agents as are
desired, each of whom shall be chosen by the board of directors and shall hold
his office for such term and have such authority and duties as shall be
determined by the board of directors. The board of directors may secure the
fidelity of any or all of such officers or agents by bond or otherwise. Any
number of offices may be held by the same person. Each officer shall, subject
to these by-laws, have in addition to the duties and powers herein set forth,
such duties and powers as the board of directors shall from time to time
designate. In all cases where the duties of any officer, agent or employee are
not specifically prescribed by the by-laws, or by the board of directors, such
officer, agent or employee shall obey the orders and instructions of the
president. Any officer may resign at any time upon written notice to the
corporation.

                                  ARTICLE XIV.

                                   President

    The president shall, subject to the direction and under the supervision of
the board of directors, be the chief executive officer of the corporation and
shall have general and active control of its affairs and business and general
supervision over its officers, agents and employees. Except as otherwise voted
by the board he shall preside at all meetings of the stockholders and of the
board of directors at which he is present. The president shall have custody of
the treasurer's bond, if any.

                                  ARTICLE XX.

                                   Secretary

    The secretary shall record all the proceedings of the meetings of the
stockholders and directors in a book, which shall



                                      -7-
<PAGE>   8
be the property of the corporation, to be kept for that purpose; and perform
such other duties as shall be assigned to him by the board of directors. In the
absence of the secretary from any such meeting, a temporary secretary shall be
chosen, who shall record the proceedings of such meeting in the aforesaid book.

                                  ARTICLE XXI.

                                   Treasurer

    The treasurer shall, subject to the direction and under the supervision of
the board of directors, have the care and custody of the funds and valuable
papers of the corporation, except his own bond, and he shall, except as the
board of directors shall generally or in particular cases authorize the
endorsement thereof in some other manner, have power to endorse for deposit or
collection all notes, checks, drafts and other obligations for the payment of
money to the corporation or its order. He shall keep, or cause to be kept,
accurate books of account, which shall be the property of the corporation.

                                 ARTICLE XVII.

                              Voting of Securities

    As long as all of the issued and outstanding capital stock of the
corporation is owned beneficially and of record by a single entity, the
corporation shall act in respect of any securities which it owns only upon the
written instructions of such entity.

                                 ARTICLE XVIII.

                                    Removals

    The stockholders may, at any meeting called for the purpose, by vote of a
majority of the capital stock issued and outstanding and entitled to vote
thereon, remove any director from office.

    The board of directors may, at any meeting called for the purpose, by vote
of a majority of their entire number remove from office any officer or agent of
the corporation or any member of any committee appointed by the board of
directors or by any committee appointed by the board of directors or by any
officer or agent of the corporation.

                                  ARTICLE XIX.

                                   Vacancies

    Any vacancy occurring in any office of the corporation by death,
resignation, removal or otherwise and newly created


                                      -8-
<PAGE>   9
directorships resulting from any increase in the authorized number of
directors, may be filled by a majority of the directors then in office (though
less than a quorum) or by a sole remaining director and each of the incumbents
so chosen shall hold office for the unexpired term in respect of which the
vacancy occurred and until his successor shall have been duly elected and
qualified or for such shorter period as shall be specified in the filling of
such vacancy or, if such vacancy shall have occurred in the office of director,
until such a successor shall have been chosen by the stockholders.

                                  ARTICLE XX.

                             Certificates of Stock

    Every holder of stock in the corporation shall be entitled to have a
certificate signed by, or in the name of the corporation by the chairman or
vice-chairman of the board of directors (if one shall be incumbent) or the
president or a vice-president and by the treasurer or an assistant treasurer,
or the secretary or an assistant secretary, certifying the number of shares
owned by him in the corporation. If such certificate is countersigned (1) by a
transfer agent other than the corporation or its employee, or (2) by a
registrar other than the corporation of its employee, any other signatures on
the certificate may be facsimile. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of
issue.

    If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights shall be set forth in full or summarized on the
face or back of the certificates which the corporation shall issue to represent
such class or series of stock or there shall be set forth on the face or back
of the certificates which the corporation shall issue to represent such class
or series of stock, a statement that the corporation will furnish, without
charge to each stockholder who so requests, the designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights. Any restriction imposed upon the transfer of
shares or registration of transfer of shares shall be noted conspicuously on
the certificate representing the shares subject to such restriction.



                                      -9-
<PAGE>   10
                                  ARTICLE XXI.

                              Loss of Certificate

    The corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the directors may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it
on account of the alleged loss, theft or destruction of any such certificate or
the issuance of such new certificate in its place and upon such other terms or
without any such bond which the board of directors shall prescribe.

                                 ARTICLE XXII.

                                      Seal

    The corporate seal shall, subject to alteration by the board of directors,
consist of a flat-faced circular die with the word "Delaware" together with the
name of the corporation and the year of its organization cut or engraved
thereon. The corporate seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.

                                 ARTICLE XXIII.

                              Execution of Papers

    Except as otherwise provided in these by-laws or as the board of directors
may generally or in particular cases authorize the execution thereof in some
other manner, all deeds, leases, transfers, contracts, bonds, notes, checks,
drafts and other obligations made, accepted or endorsed by the corporation,
shall be signed by the president or by the treasurer.

                                 ARTICLE XXIV.

                                  Fiscal Year

    Except as from time to time otherwise provided by the board of directors,
the fiscal year of the corporation shall end on the last day of December of
each year.

                                  ARTICLE XXV.

                                   Amendments

    Except as otherwise provided by law or by the certificate of incorporation,
these by-laws, as from time to time altered or amended, may be made, altered or
amended at any annual or special



                                      -10-
<PAGE>   11
meeting of the stockholders called for the purpose, of which the notice shall
specify the subject matter of the proposed alteration or amendment or new by-
law or the article or articles to be affected thereby. If the certificate of
incorporation so provides, these by-laws may also be made, altered or amended
by a majority of the whole number of directors. Such action may be taken at any
meeting of the board of directors, of which notice shall have been given as for
a meeting of stockholders.

<PAGE>   12
                        DOWNEAST SECURITIES CORPORATION

              Action by Unanimous Written Consent of Stockholders
                      in Lieu of a Meeting of Stockholders

     The undersigned, being the sole stockholder of Downeast Securities
Corporation, a Delaware corporation (the "Corporation"), hereby consents to the
following actions and adopts the following votes in lieu of a meeting of
stockholders:

VOTED:    That Article VIII of the By-laws of the Corporation be amended to
          read in its entirety in the form submitted to the stockholders
          of this corporation and attached to this consent as Exhibit A.

VOTED:    That the number of directors of this Corporation, until changed in
          accordance with the By-laws, as amended, is fixed at four; and that
          the following persons are elected directors to serve in accordance
          with the By-laws:

                              James M. Fitzgibbons
                              M. Kenneth Doss
                              Thomas R. Staab
                              Clifford D. Paulsen

VOTED:    That all previous actions taken by or on behalf of this Corporation
          by its officers or directors in fulfillment of their duties as
          officers or directors, or purported to be taken by or on behalf of
          this Corporation by a person purporting to be an officer of this
          Corporation in fulfillment of their duties as officer, including
          without limitation all actions described in the minutes of meetings of
          directors of this Corporation, the minutes of meetings of stockholders
          of this Corporation and the stock records of this Corporation, hereby
          are ratified, approved and confirmed in all respects; and that all
          issuances by this Corporation of shares of its capital stock as
          reflected in this Corporation's stock records hereby are ratified,
          approved and confirmed in all respects.

     This consent has been executed in more or more counterparts and shall be
filed with the minutes of meetings of the









 
     

<PAGE>   13
stockholders of the Corporation and shall be treated for all purposes as votes
taken at a meeting.

                                   AMOSKEAG COMPANY



                                   By:  /s/ JAMES M. FITZGIBBONS
                                        --------------------------
                                        Name:  James M. Fitzgibbons
                                        Title:  President and Chief
                                                  Executive Officer

Dated:  August 15, 1994








                                      -2-
<PAGE>   14
                                                                      EXHIBIT A

                                  ARTICLE VIII

                               Board of Directors

     Except as otherwise provided by law or by the certificate of incorporation
or by these by-laws, the business and affairs of the corporation shall be
managed by its board of directors.

     The number of directors shall be such number, not fewer than one nor more
than five, as may be fixed for any corporate year and elected by the
stockholders at the annual meeting.  During any year the board of directors may
be enlarged and additional directors elected to complete the enlarged number,
to not more than the maximum number above specified, by the stockholders at any
meeting or by a vote of a majority of the directors then in office.  The
stockholders may, at any meeting held for the purpose during such year,
decrease, to not fewer than the minimum number above specified, the number of
directors as thus fixed or enlarged and remove directors to the decreased
number.  Each director shall hold office until his successor is elected and
qualified or until his earlier resignation or removal.  Any director may resign
at any time upon written notice to the corporation.  No director need by a
stockholder.






<PAGE>   1
                                                                    EXHIBIT 3.17

                          CERTIFICATE OF INCORPORATION

                                      -of-

                                  ENCEE, INC.

                             - - - - - - - - - - -

          I, THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, do hereby certifies as follows:

          FIRST:    The name of the corporation is

                                  ENCEE, INC.

          SECOND:   The registered office of the corporation is to be located
at 306 South State Street, in the City of Dover, in the County of Kent, in the
State of Delaware. The name of its registered agent at that address is the
United States Corporation Company.

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

          Without limiting in any manner the scope and generality of the
foregoing, it is hereby provided that the corporation shall have the following
purposes, objects and powers:

                    To purchase, manufacture, produce, assemble, receive, lease
          or in any manner acquire, hold, own, use, operate, install, maintain,
          service, repair, process, alter, improve, import, export, sell, 
          lease, assign, transfer and generally
          
<PAGE>   2
to trade and deal in and with raw materials, natural or manufactured articles
or products, machinery, equipment, devices, systems, parts, supplies,
apparatus, goods, wares, merchandise and personal property of every kind,
nature or description, tangible or intangible, used or capable of being
used for any purpose whatsoever; and to engage and participate in any
mercantile, manufacturing or trading business of any kind or character.

          To improve, manage, develop, sell, assign, transfer, lease, mortgage,
pledge or otherwise dispose of or turn to account or deal with all or
any part of the property of the corporation and from time to time to vary any
investment or employment of capital of the corporation.

          To borrow money, and to make and issue notes, bonds, debentures,
obligations and evidences of indebtedness of all kinds, whether secured by
mortgage, pledge or otherwise, without limit as to amount, and to secure the
same by mortgage, pledge or otherwise; and generally to make and perform
agreements and contracts of every kind and description, including contracts of
guaranty and suretyship.

          To lend money for its corporate purposes, invest and reinvest its
funds, and take, hold and deal with real and personal property as security for
the payment of funds so loaned or invested.

          To the same extent as natural persons might or could do, to purchase
or otherwise acquire, and to hold, own, maintain, work, develop, sell, lease,
exchange, hire, convey, mortgage or otherwise dispose of and deal in lands and
leaseholds, and any interest, estate and rights in real property, and any
personal or mixed property, and any franchises, rights, licenses or privileges
necessary, convenient or appropriate for any of the purposes herein expressed.

          To apply for, obtain, register, purchase, lease or otherwise to
acquire and to hold, own, use, develop, operate and introduce and to sell,
assign, grant licenses or territorial rights in respect to, or otherwise to
turn to account or dispose of, any copyrights, trade marks, trade names,
brands, labels, patent rights, letters patent of the United States or of any
other country or government, inventions, improvements and processes, whether
used in connection with or secured under letters patent or otherwise.
<PAGE>   3
          To participate with others in any corporation, partnership, limited
partnership, joint venture, or other association of any kind, or in any
transaction, undertaking or arrangement which the participating corporation
would have power to conduct by itself, whether or not such participation
involves sharing or delegation of control with or to others; and to be an
incorporator, promoter or manager of other corporations of any type or kind.

          To pay pensions and establish and carry out pension, profit sharing,
stock option, stock purchase, stock bonus, retirement, benefit, incentive and
commission plans, trusts and provisions for any or all of its directors,
officers and employees, and for any or all of the directors, officers, and
employees of its subsidiaries; and to provide insurance for its benefit on
the life of any of its directors, officers or employees, or on the life of any
stockholder for the purpose of acquiring at his death shares of its stock
owned by such stockholders.

          To acquire by purchase, subscription or otherwise, and to hold for
investment or otherwise and to use, sell, assign, transfer, mortgage, pledge or
otherwise deal with or dispose of stocks, bonds or any other obligations or
securities of any corporation or corporations; to merge or consolidate with any
corporation in such manner as may be permitted by law; to aid in any manner any
corporation whose stocks, bonds or other obligations are held or in any manner
guaranteed by this corporation, or in which this corporation is in any way
interested; and to do any other acts or things for the preservation,
protection, improvement or enhancement of the value of any such stock, bonds or
other obligations; and while owner of any such stock, bonds or other
obligations to exercise all the rights, powers and privileges of ownership
thereof, and to exercise any and all voting powers thereon; and to guarantee
the payment of dividends upon any stock, the principal or interest or both, of
any bonds or other obligations, and the performance of any contracts.

          To do all and everything necessary, suitable and proper for the
accomplishment of any of the purposes or the attainment of any of the objects
or the furtherance of any of the powers hereinbefore set
<PAGE>   4
          forth, either alone or in association with other corporations, firms
          or individuals, and to do every other act or acts, thing or things
          incidental or appurtenant to or growing out of or connected with the
          aforesaid business or powers or any part or parts thereof, provided
          the same be not inconsistent with the laws under which this
          corporation is organized.

                    The business or purpose of the corporation is from time to
          time to do any one or more of the acts and things hereinabove set
          forth, and it shall have power to conduct and carry on its said
          business, or any part thereof, and to have one or more offices,
          and to exercise any or all of its corporate powers and rights, in the
          State of Delaware, and in the various other states, territories,
          colonies and dependencies of the United States, in the District of
          Columbia, and in all or any foreign countries.

                    The enumeration herein of the objects and purposes of the
          corporation shall be construed as powers as well as objects and
          purposes and shall not be deemed to exclude by inference any powers,
          objects or purposes which the corporation is empowered to exercise,
          whether expressly by force of the laws of the State of Delaware now or
          hereafter in effect, or impliedly by the reasonable construction of
          the said laws.

          FOURTH:   The total number of shares of stock which the corporation
is authorized to issue is one thousand (1,000) shares, all of which are without
par value.                    

          FIFTH:    The name and address of the incorporator are as follows:

          NAME                       ADDRESS

          Leif A. Tonnessen          60 Wall Street, New York, N.Y. 10005

          SIXTH:    The following provisions are inserted for the management of
the business and for the conduct of the affairs of the corporation, and for
further definition, limitation and regulation of the powers of the corporation
and of its directors and stockholders:
<PAGE>   5
          (1) The number of directors of the corporation shall be such as from
time to time shall be fixed by, or in the manner provided in the by-laws.
Election of directors need not be by ballot unless the by-laws so provide.

          (2) The Board of Directors shall have power without the assent or
vote of the stockholders

              (a) To make, alter, amend, change, add to or repeal the By-Laws of
          the corporation; to fix and vary the amount to be reserved for any
          proper purpose; to authorize and cause to be executed mortgages and 
          liens upon all or any part of the property of the corporation; to 
          determine the use and disposition of any surplus or net profits; and 
          to fix the times for the declaration and payment of dividends.

              (b) To determine from time to time whether, and to what extent,
          and at what times and places, and under what conditions and
          regulations, the accounts and books of the corporation (other than the
          stock ledger) or any of them, shall be open to the inspection of the
          stockholders.

          (3) The directors in their discretion may submit any contract or act
for approval or ratification at any annual meeting of the stockholders called
for the purpose of considering any such act or contract, and any contract or
act that shall be approved or be ratified by the vote of the holders of a
majority of the stock of the corporation which is represented in person or by
proxy at such meeting and entitled to vote thereat (provided that a lawful
quorum of stockholders be there represented in person or by proxy) shall be as
valid and as binding upon the corporation and upon all the stockholders as
though it had been approved or ratified by every
<PAGE>   6
stockholder of the corporation, whether or not the contract or act would
otherwise be open to legal attack because of directors' interest, or for
any other reason.

          (4)  In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the corporation; subject, nevertheless, to the provisions of the
statutes of Delaware, of this certificate, and to any by-law from time to time
made by the stockholders; provided, however, that no by-laws so made shall
invalidate any prior act of the directors which would have been valid if such
by-law had not been made.

          SEVENTH:  The corporation shall, to the full extent permitted by
Section 145 of the Delaware General Corporation Law, as amended from time to
time, indemnify all persons whom it may indemnify pursuant thereto.

          EIGHTH:  Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the
<PAGE>   7
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this corporation under the provisions or
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said
court directs. If a majority in number representing three-fourths in value of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise
or arrangement and to any reorganization of this corporation as consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.

          NINTH:    The corporation reserves the right to amend, alter, change
or repeal any provision contained in this certificate of incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power.
<PAGE>   8



          IN WITNESS WHEREOF, I have hereunto set my hand and seals, the 3rd
day of January, 1973.


                                             /s/ LEIF A. TONNESSEN    (L.S.)   
                                             --------------------------
                                                 Leif A. Tonnessen


<PAGE>   1
                                                                    EXHIBIT 3.18

                                  B Y - L A W S

                                       OF

                                   ENCEE, INC.

                                   -----------

                                    ARTICLE I

                                     OFFICES


     SECTION 1. REGISTERED OFFICE.--The registered office shall be established
and maintained at the office of the United States Corporation Company, in the
City of Dover, in the County of Kent, in the State of Delaware, and said
corporation shall be the registered agent of this corporation in charge thereof.


     SECTION 2. OTHER OFFICES.--The corporation may have other offices, either
within or without the State of Delaware, at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require.

                                   ARTICLE II

                            MEETINGS OF STOCKHOLDERS

     SECTION 1. ANNUAL MEETINGS.--Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the State
of Delaware, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting. In the event the
Board of Directors fails to so determine the time, date and place of meeting,
the annual meeting of stockholders shall be held at the registered office of the
corporation in Delaware on the second Wednesday of September.

     If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
they may transact such other corporate business as shall be stated in the notice
of the meeting.

     SECTION 2. OTHER MEETINGS.--Meetings of stockholders for any purpose
other than the election of directors may be held at such time and place, within
or without the State of Delaware, as shall be stated in the notice of the
meeting.



<PAGE>   2
     SECTION 3. VOTING.--Each stockholder entitled to vote in accordance with
the terms of the Certificate of Incorporation and in accordance with the
provisions of these By-Laws shall be entitled to one vote, in person or by
proxy, for each share of stock entitled to vote held by such stockholder, but no
proxy shall be voted after three years from its date unless such proxy provides
for a longer period. Upon the demand of any stockholder, the vote for directors
and the vote upon any question before the meeting, shall be by ballot. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of the State of Delaware.

     A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the address of each, and the
number of shares held by each, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.

     SECTION 4. QUORUM.--Except as otherwise required by Law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or
by proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to times, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.

     SECTION 5. SPECIAL MEETINGS.--Special meetings of the stockholders for any
purpose or purposes may be called by the President or Secretary, or by
resolution of the directors.

     SECTION 6. NOTICE OF MEETINGS.--Written notice, stating the place, date
and time of the meeting, and the general nature of the business to
be considered, shall be given to each stockholder entitled to vote thereat at
his address as it appears on the records of the corporation, not less than ten
nor more than sixty days before the date of the meetings. No business other than
that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.



<PAGE>   3
     SECTION 7. ACTION WITHOUT MEETING.--Unless otherwise provided by the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.

                                   ARTICLE III

                                    DIRECTORS

     SECTION 1. NUMBER AND TERM.--The number of directors shall be four (4). The
directors shall be elected at the annual meeting of the stockholders and each
director shall be elected to serve until his successor shall be elected and
shall qualify. Directors need not be stockholders.

     SECTION 2. RESIGNATIONS.--Any director, member of a committee or other
officer may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.

     SECTION 3. VACANCIES.--If the office of any director, member of a committee
or other officer becomes vacant, the remaining directors in office, though
less than a quorum by a majority vote, may appoint any qualified person to fill
such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.

     SECTION 4. REMOVAL.--Any director or directors may be removed either for or
without cause at any time by the affirmative vote of the holders of a majority
of all the shares of stock outstanding and entitled to vote, at a special
meeting of the stockholders called for the purpose and the vacancies thus
created may be filled, at the meeting held for the purpose of removal, by the
affirmative vote of a majority in interest of the stockholders entitled to vote.

     SECTION 5. INCREASE OF NUMBER.--The number of directors may be increased by
amendment of these By-Laws by the affirmative vote of a majority of the
directors, though less than a quorum, or, by the affirmative vote of a majority
in interest of the stockholders, at the annual meeting or at a special meeting
called for that purpose, and by like vote the additional directors may be
chosen at such meeting to hold office until the next annual election and until
their successors are elected and qualify.



<PAGE>   4
     SECTION 6. POWERS.--The Board of Directors shall exercise all of the
powers of the corporation except such as are by law, or by the Certificate of
Incorporation of the corporation or by these By-Laws conferred upon or reserved
to the stockholders.

     SECTION 7. COMMITTEES.--The Board of Directors may, by resolution or
resolutions passed by a majority of the whole board, designate one or more
committees, each committee to consist of two or more of the directors of the
corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of any member of
such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member.

     Any such committee, to the extent provided in the resolution of the Board
of Directors, or in these By-Laws, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
By-Laws of the corporation; and, unless the resolution, these By-Laws, or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.

     SECTION 8. MEETINGS.--The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders; or
the time and place of such meeting may be fixed by consent in writing of all the
directors.

     Regular meetings of the directors may be held without notice at such places
and times as shall be determined from time to time by resolution of the
directors.

     Special meetings of the board may be called by the President or by the
Secretary on the written request of any two directors




<PAGE>   5
on at least two days' notice to each director and shall be held at such place or
places as may be determined by the directors, or as shall be stated in the call
of the meeting.

     SECTION 9. QUORUM.--A majority of the directors shall constitute a quorum
for the transaction of business. If at any meeting of the board there shall be
less than a quorum present, a majority of those present may adjourn the meeting
from time to time until a quorum is obtained, and no further notice thereof
need be given other than by announcement at the meeting which shall be so
adjourned.

     SECTION 10. COMPENSATION.--Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the board a fixed fee and expenses of attendance may be allowed for
attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.

     SECTION 11. ACTION WITHOUT MEETING.--Any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting, if prior to such action a written consent
thereto is signed by all members of the board, or of such committee as the
case may be, and such written consent is filed with the minutes of proceedings
of the board or committee.

                                   ARTICLE IV

                                    OFFICERS

     SECTION 1. OFFICERS.--The officers of the corporation shall be a President,
a Treasurer, and a Secretary, all of whom shall be elected by the Board of
Directors and who shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman, one or
more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as
they may deem proper. None of the officers of the corporation need be directors.
The officers shall be elected at the first meeting of the Board of Directors
after each annual meeting. More than two offices may be held by the same person.

     SECTION 2. OTHER OFFICERS AND AGENTS.--The Board of Directors may appoint
such other officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.

     SECTION 3. CHAIRMAN.-- The Chairman of the Board of Directors, if one be
elected, shall preside at all meetings of the





<PAGE>   6
Board of Directors and he shall have and perform such other duties as from time
to time may be assigned to him by the Board of Directors.

     SECTION 4. PRESIDENT.--The President shall be the chief executive officer
of the corporation and shall have the general powers and duties of supervision
and management usually vested in the office of President of a corporation. He
shall preside at all meetings of the stockholders if present thereat, and in the
absence or non-election of the Chairman of the Board of Directors, at all
meetings of the Board of Directors, and shall have general supervision,
direction and control of the business of the corporation. Except as the Board of
Directors shall authorize the execution thereof in some other manner, he shall
execute bonds, mortgages and other contracts in behalf of the corporation, and
shall cause the seal to be affixed to any instrument requiring it and when so
affixed the seal shall be attested by the signature of the Secretary or the
Treasurer or an Assistant Secretary or an Assistant Treasurer.

     SECTION 5. VICE-PRESIDENT.--Each Vice-President shall have such powers and
shall perform such duties as shall be assigned to him by the directors.

     SECTION 6. TREASURER.-- The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositories as may be designated by the Board of Directors.

     The Treasurer shall disburse the funds of the corporation as may be ordered
by the Board of Directors, or the President, taking proper vouchers for such
disbursements. He shall render to the President and Board of Directors at the
regular meetings of the Board of Directors, or whenever they may request it, an
account of all his transactions as Treasurer and of the financial condition of
the corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the board shall prescribe.

     SECTION 7. SECRETARY.--The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the President, or by the directors, or stockholders, upon whose requisition
the meeting is called as provided in these By-Laws. He shall record all the
proceedings of the meetings of the corporation and of the directors in a book to
be kept for that purpose, and shall perform




<PAGE>   7
such other duties as may be assigned to him by the directors or the President.
He shall have the custody of the seal of the corporation and shall affix the
same to all instruments requiring it, when authorized by the directors or the
President, and attest the same.

     SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.

                                    ARTICLE V

                                  MISCELLANEOUS


     SECTION 1. CERTIFICATES OF STOCK.--Certificate of stock, signed by the
Chairman or Vice Chairman of the Board of Directors, if they be elected,
President or Vice-President, and the Treasurer or an Assistant Treasurer, or
Secretary or an Assistant Secretary, shall be issued to each stockholder
certifying the number of shares owned by him in the corporation. Any of or all
the signatures may be facsimiles.

     SECTION 2. LOST CERTIFICATES.--A new certificate of stock may be issued in
the place of any certificate theretofore issued by the corporation, alleged to
have been lost or destroyed, and the directors may, in their discretion,
require the owner of the lost or destroyed certificate, or his legal
representatives, to give the corporation a bond, in such sum as they may
direct, not exceeding double the value of the stock, to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.

     SECTION 3. TRANSFER OF SHARES.--The shares of stock of the corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the corporation by the delivery
thereof to the person in charge of the stock and transfer books and ledgers, or
to such other person as the directors may designate, by whom they shall be
cancelled, and new certificates shall thereupon be issued. A record shall be
made of each transfer and whenever a transfer shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer.

     SECTION 4. STOCKHOLDERS RECORD DATE.--In order that the corporation may
determine the stockholders entitled to notice of or



<PAGE>   8
to vote at any meeting of stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting; or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior to
any other action.  A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.

     SECTION 5. DIVIDENDS.--Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.

     SECTION 6. SEAL.--The corporate seal shall be circular in form and shall
contain the name of the corporation, the year of its creation and the words
"CORPORATE SEAL DELAWARE". Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.

     SECTION 7. FISCAL YEAR.--The fiscal year of the corporation shall be the
calendar year.

     SECTION 8. CHECKS.--All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.

     SECTION 9. NOTICE AND WAIVER OF NOTICE.--Whenever any notice is required
by these By-Laws to be given, personal notice is not meant unless expressly so
stated, and any notice so required shall be deemed to be sufficient if given by
depositing the same in the United States mail, postage prepaid, addressed to the
person entitled thereto at his address as it appears on the records of the
corporation, and such notice shall be deemed to have been given on the day of
such mailing. Stockholders not entitled to vote shall not be entitled to receive
notice of any meetings except as otherwise provided by Statute.



<PAGE>   9
     Whenever any notice whatever is required to be given under the provisions
of any law, or under the provisions of the Certificate of Incorporation of the
corporation or these By-Laws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.

                                   ARTICLE VI

                                   AMENDMENTS


     These By-Laws may be altered or repealed and By-Laws may be made at any
annual meeting of the stockholders or at any special meeting thereof if notice
of the proposed alteration or repeal or By-Law or By-Laws to be made be
contained in the notice of such special meeting, by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat, or
by the affirmative vote of a majority of the Board of Directors, at any regular
meeting of the Board of Directors, or at any special meeting of the Board of
Directors, if notice of the proposed alteration or repeal, or By-Law or By-Laws
to be made, be contained in the notice of such special meeting.

<PAGE>   1
                                                                    EXHIBIT 3.19



                        CERTIFICATE OF INCORPORATION

                                     OF

                              FCC CANADA, INC.

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

        The undersigned, a natural person, for the purpose of organizing a 
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of
the State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code
and the acts amendatory thereof and supplemental thereto, and known, 
identified and referred to as the "General Corporation Law of the State of
Delaware"), hereby certifies that:

       FIRST:  The name of the corporation (hereinafter called the 
"corporation") is

                              FCC CANADA, INC.

       SECOND: The address, including street, number, city, and county, of 
the registered office of the corporation in the State of Delaware is 32
Loockerman Square, Suite L-100, City of Dover, County of Kent; and the name of
the registered agent of the corporation in the State of Delaware is The
Prentice-Hall Corporation System, Inc.

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

       FOURTH:   The total number of shares of stock which the corporation shall
have authority to issue is One Thousand (1,000). The par value of each of such
shares in One Dollar ($1.00). All such shares are of one class and are shares of
Common Stock.

       No holder of any of the shares of the stock of the corporation, whether
now or hereafter authorized and issued, shall be entitled as of right to
purchase or subscribe for any unissued stock of any class, or any additional
shares of any class to be issued by reason of any increase of the authorized
capital stock of any class of the corporation, or bonds, certificates of
indebtedness, debentures, or other securities convertible into stock of any
class of the
<PAGE>   2


corporation, or carrying any right to purchase stock of any class of the 
corporation, but any such unissued stock or any such additional authorized
issue of any stock or of other securities convertible into stock, or carrying
any right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms, corporations, or
associations, and upon such terms, as may be deemed advisable by the Board of
Directors in the exercise of its discretion.

          FIFTH:  The name and the mailing address of the incorporator 
are as follows:

    NAME                                 MAILING ADDRESS

  N. S. Truax                    32 Loockerman Square, Suite L-100
                                 Dover, Delaware  19901

          SIXTH:  The corporation is to have perpetual existence.


          SEVENTH: Whenever a compromise or arrangement is proposed between 
this corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this corporation, as the
case may be, to be summoned in such manner as the said court directs.  If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may be,
and also on this corporation.

                                      -2-
<PAGE>   3





          EIGHTH: For the management of the business and for the conduct of 
the affairs of the corporation, and in further definition, limitation and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:

              1.  The management of the business and the
         conduct of the affairs of the corporation shall be
         vested in its Board of Directors.  The number of
         directors which shall constitute the whole Board of
         Directors shall be fixed by, or in the manner
         provided in, the By-Laws.  The phrase "whole Board"
         and the phrase "total number of directors" shall be
         deemed to have the same meaning, to wit, the total
         number of directors which the corporation would have
         if there were no vacancies.  No election of directors
         need be by written ballot.

              2.  After the original or other By-Laws of the
         corporation have been adopted, amended, or repealed,
         as the case may be, in accordance with the provisions
         of Section 109 of the General Corporation Law of the
         State of Delaware, and, after the corporation has
         received any payment for any of its stock, the power
         to adopt, amend, or repeal the By-Laws of the
         corporation may be exercised by the Board of
         Directors of the corporation; provided, however, that
         any provision for the classification of directors of
         the corporation for staggered terms pursuant to the
         provisions of subsection (d) of Section 141 of the
         General Corporation Law of the State of Delaware
         shall be set forth in an initial By-Law or in a
         By-Law adopted by the stockholders entitled to vote
         of the corporation unless provisions for such
         classification shall be set forth in this certificate
         of incorporation.

              3.  Whenever the corporation shall be authorized
         to issue only one class of stock, each outstanding
         share shall entitle the holder thereof to notice of,
         and the right to vote at, any meeting of
         stockholders.  Whenever the corporation shall be
         authorized to issue more than one class of stock, no
         outstanding share of any class of stock which is
         denied voting power under the provisions of the
         certificate of incorporation shall entitle the holder
         thereof to the right to vote at any meeting of
         stockholders except as the provisions of paragraph
         (2) of subsection (b) of section 242 of the General
         Corporation Law of the State of Delaware


                                      -3-
<PAGE>   4





        shall otherwise require; provided, that no share of any such class 
        which is otherwise denied voting power shall entitle the holder thereof
        to vote upon the increase or decrease in the number of authorized 
        shares of said class.

          NINTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of
paragraph (7) of subsection (b) of Section 102 of the General Corporation Law of
the State of Delaware, as the same may be amended and supplemented.

          TENTH: The corporation shall, to the fullest extent permitted 
by the provisions of Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matters referred to in
or covered by said section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any By-Law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.

          ELEVENTH: From time to time any of the provisions of this 
certificate of incorporation may be amended, altered or repealed, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted in the manner and at the time prescribed by said laws,
and all rights at any time conferred upon the stockholders of the corporation by
this certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.

Signed on February 16, 1993.



                                              By: /s/ N. S. TRUAX
                                                  ------------------------
                                                  N. S. Truax
                                                  Incorporator




                                     -4-

<PAGE>   1
                                                                    EXHIBIT 3.20

                                     BYLAWS
                                       OF
                                FCC CANADA, INC.
                            (a Delaware corporation)

                                   ARTICLE I

                                  STOCKHOLDERS

                 1. CERTIFICATES REPRESENTING STOCK. Certificates representing
stock in the corporation shall be signed by, or in the name of, the corporation
by the Chairman or Vice-Chairman of the Board of Directors, if any, or by the
President or a Vice-President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue.

                 Whenever the corporation shall be authorized to issue more
than one class of stock or more than one series of any class of stock, and
whenever the corporation shall issue any shares of its stock as partly paid
stock, the certificates representing shares of any such class or series or of
any such partly paid stock shall set forth thereon the statements prescribed by
the General Corporation Law. Any restrictions on the transfer or registration
of transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.

                 The corporation may issue a new certificate of stock or
uncertificated shares in place of any certificate theretofore issued by it,
alleged to have been lost, stolen, or destroyed, and the Board of Directors may
require the owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
<PAGE>   2
                 2. UNCERTIFICATED SHARES. Subject to any conditions imposed by
the General Corporation Law, the Board of Directors of the corporation may
provide by resolution or resolutions that some or all of any or all classes or
series of the stock of the corporation shall be uncertificated shares. Within a
reasonable time after the issuance or transfer of any uncertificated shares, the
corporation shall send to the registered owner thereof any written notice
prescribed by the General Corporation Law.

                 3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall
not be required to, issue fractions of a share. If the corporation does not
issue fractions of a share, it shall (1) arrange for the disposition of
fractional interests by those entitled thereto, (2) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined, or (3) issue scrip or warrants in registered form
(either represented by a certificate or uncertificated) or bearer form
(represented by a certificate) which shall entitle the holder to receive a full
share upon the surrender of such scrip or warrants aggregating a full share. A
certificate for a fractional share or an uncertificated fractional share shall,
but scrip or warrants shall not unless otherwise provided therein, entitle the
holder to exercise voting rights, to receive dividends thereon, and to
participate in any of the assets of the corporation in the event of liquidation.
The Board of Directors may cause scrip or warrants to be issued subject to the
conditions that they shall become void if not exchanged for certificates
representing the full shares or uncertificated full shares before a specified
date, or subject to the conditions that the shares for which scrip or warrants
are exchangeable may be sold by the corporation and the proceeds thereof
distributed to the holders of scrip or warrants, or subject to any other
conditions which the Board of Directors may impose.

                 4. STOCK TRANSFERS. Upon compliance with provisions restricting
the transfer or registration of transfer of shares of stock, if any, transfers
or registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case of shares represented by certificates, on
surrender of the certificate or certificates for such shares of stock properly
endorsed and the payment of all taxes due thereon.
<PAGE>   3
                 5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record date is fixed by the Board of Directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting. In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining the stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is required by the General Corporation Law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and prior
action by the Board of Directors is required by the General Corporation Law, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action. In
order that the corporation may determine the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any





                                      -3-
<PAGE>   4
other lawful action, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record
date is adopted, and which record date shall be not more than sixty days prior
to such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.

                 6. MEANING OF CERTAIN TERMS. As used herein in respect of the
right to notice of a meeting of stockholders or a waiver thereof or to
participate or vote thereat or to consent or dissent in writing in lieu of a
meeting, as the case may be, the term "share" or "shares" or "share of stock" or
"shares of stock" or "stockholder" or "stockholders" refers to an outstanding
share or shares of stock and to a holder or holders of record of outstanding
shares of stock when the corporation is authorized to issue only one class of
shares of stock, and said reference is also intended to include any outstanding
share or shares of stock and any holder or holders of record of outstanding
shares of stock of any class upon which or upon whom the certificate of
incorporation confers such rights where there are two or more classes or series
of shares of stock or upon which or upon whom the General Corporation Law
confers such rights notwithstanding that the certificate of incorporation may
provide for more than one class or series of shares of stock, one or more of
which are limited or denied such rights thereunder; provided, however, that no
such right shall vest in the event of an increase or a decrease in the
authorized number of shares of stock of any class or series which is otherwise
denied voting rights under the provisions of the certificate of incorporation,
except as any provision of law may otherwise require.

                 7. STOCKHOLDER MEETINGS.

                 - TIME. The annual meeting shall be held on. the date and at
the time fixed, from time to time, by the directors, provided, that the first
annual meeting shall be held on a date within thirteen months after the
organization of the corporation, and each successive annual meeting shall be
held on a date within thirteen months after the date of the preceding annual
meeting. A special meeting shall be held on the date and at the time fixed by
the directors.

                 - PLACE. Annual meetings and special meetings shall be held at
such place, within or without the State of Delaware, as the directors may, from
time to time, fix. Whenever the directors shall fail to fix such place, the
meeting shall be held at the registered office of the corporation in the State
of Delaware.





                                      -4-
<PAGE>   5
                 - CALL. Annual meetings and special meetings may be called by
the directors or by any officer instructed by the directors to call the
meeting.

                 - NOTICE OR WAIVER OF NOTICE. Written notice of all meetings
shall be given, stating the place, date, and hour of the meeting and stating
the place within the city or other municipality or community at which the list
of stockholders of the corporation may be examined. The notice of an annual
meeting shall state that the meeting is called for the election of directors
and for the transaction of other business which may properly come before the
meeting, and shall (if any other action which could be taken at a special
meeting is to be taken at such annual meeting) state the purpose or purposes.
The notice of a special meeting shall in all instances state the purpose or
purposes for which the meeting is called. The notice of any meeting shall also
include, or be accompanied by, any additional statements, information, or
documents prescribed by the General Corporation Law. Except as otherwise
provided by the General Corporation Law, a copy of the notice of any meeting
shall be given, personally or by mail, not less than ten days nor more than
sixty days before the date of the meeting, unless the lapse of the prescribed
period of time shall have been waived, and directed to each stockholder at his
record address or at such other address which he may have furnished by request
in writing to the Secretary of the corporation. Notice by mail shall be deemed
to be given when deposited, with postage thereon prepaid, in the United States
Mail. If a meeting is adjourned to another time, not more than thirty days
hence, and/or to another place, and if an announcement of the adjourned time
and/or place is made at the meeting, it shall not be necessary to give notice
of the adjourned meeting unless the directors, after adjournment, fix a new
record date for the adjourned meeting. Notice need not be given to any
stockholder who submits a written waiver of notice signed by him before or
after the time stated therein. Attendance of a stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends the meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.

                 - STOCKHOLDER LIST. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the





                                      -5-
<PAGE>   6
number of shares registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city or other municipality
or community where the meeting is to be held, which place shall be specified in
the notice of the meeting, or if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. The stock ledger shall be the only evidence as to
who are the stockholders entitled to examine the stock ledger, the list
required by this section or the books of the corporation, or to vote at any
meeting of stockholders.

                 - CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and if
present and acting - the Chairman of the Board, if any, the Vice-Chairman of
the Board, if any, the President, a Vice-President, or, if none of the
foregoing is in office and present and acting, by a chairman to be chosen by
the stockholders. The Secretary of the corporation, or in his absence, an
Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the Chairman of the meeting
shall appoint a secretary of the meeting.

                 - PROXY REPRESENTATION. Every stockholder may authorize
another person or persons to act for him by proxy in all matters in which a
stockholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the stockholder or by his
attorney-in-fact. No proxy shall be voted or acted upon after three years from
its date unless such proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and, if, and only, as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally.

                 - INSPECTORS. The directors, in advance of any meeting, may,
but need not, appoint one or more inspectors of election to act at the meeting
or any adjournment thereof. If an inspector or inspectors are not appointed,
the person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may





                                      -6-
<PAGE>   7
be appointed as an inspector fails to appear or act, the vacancy may be filled
by appointment made by the directors in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, if any, before
entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspectors at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots,
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots, or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the person
presiding at the meeting, the inspector or inspectors, if any, shall make a
report in writing of any challenge, question, or matter determined by him or
them and execute a certificate of any fact found by him or them. Except as
otherwise required by subsection (e) of Section 231 of the General Corporation
Law, the provisions of that Section shall not apply to the corporation.

                 - QUORUM. The holders of a majority of the outstanding shares
of stock shall constitute a quorum at a meeting of stockholders for the
transaction of any business. The stockholders present may adjourn the meeting
despite the absence of a quorum.

                 - VOTING. Each share of stock shall entitle the holders
thereof to one vote. Directors shall be elected by a plurality of the votes of
the shares present in person or represented by proxy at the meeting and
entitled to vote on the election of directors. Any other action shall be
authorized by a majority of the votes cast except where the General Corporation
Law prescribes a different percentage of votes and/or a different exercise of
voting power, and except as may be otherwise prescribed by the provisions of
the certificate of incorporation and these Bylaws. In the election of
directors, and for any other action, voting need not be by ballot.

                 8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by
the General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the





                                      -7-
<PAGE>   8
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. Action taken pursuant to this
paragraph shall be subject to the provisions of Section 228 of the General
Corporation Law.

                                   Article II

                                   DIRECTORS

                 1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of Directors
of the corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.

                 2. QUALIFICATIONS AND NUMBER. A director need not be a
stockholder, a citizen of the United States, or a resident of the State of
Delaware. The initial Board of Directors shall consist of one person. Thereafter
the number of directors constituting the whole board shall be at least one.
Subject to the foregoing limitation and except for the first Board of Directors,
such number may be fixed from time to time by action of the stockholders or of
the directors, or, if the number is not fixed, the number shall be one. The
number of directors may be increased or decreased by action of the stockholders
or of the directors.

                 3. ELECTION AND TERM. The first Board of Directors, unless the
members thereof shall have been named in the certificate of incorporation, shall
be elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualified or until their earlier resignation or removal. Except
as the General Corporation Law may otherwise require, in the interim between
annual meetings of stockholders or of special meetings of stockholders called
for the election of directors and/or for the removal of one or more directors





                                      -8-
<PAGE>   9
and for the filling of any vacancy in that connection, newly created
directorships and any vacancies in the Board of Directors, including unfilled
vacancies resulting from the removal of directors for cause or without cause,
may be filled by the vote of a majority of the remaining directors then in
office, although less than a quorum, or by the sole remaining director.

                 4. MEETINGS.

                 - TIME. Meetings shall be held at such time as the Board shall
fix, except that the first meeting of a newly elected Board shall be held as
soon after its election as the directors may conveniently assemble.

                 - PLACE. Meetings shall be held at such place within or
without the State of Delaware as shall be fixed by the Board.

                 - CALL. No call shall be required for regular meetings for
which the time and place have been fixed. Special meetings may be called by or
at the direction of the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, or the President, or of a majority of the directors in office.

                 - NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be given
for special meetings in sufficient time for the convenient assembly of the
directors thereat. Notice need not be given to any director or to any member of
a committee of directors who submits a written waiver of notice signed by him
before or after the time stated therein. Attendance of any such person at a
meeting shall constitute a waiver of notice of such meeting, except when he
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the directors need be specified in any
written waiver of notice.

                 - QUORUM AND ACTION. A majority of the whole Board shall
constitute a quorum except when a vacancy or vacancies prevents such majority,
whereupon a majority of the directors in office shall constitute a quorum,
provided, that such majority shall constitute at least one-third of the whole
Board. A majority of the directors present, whether or not a quorum is present,
may adjourn a meeting to another time and place. Except as herein otherwise





                                      -9-
<PAGE>   10
provided, and except as otherwise provided by the General Corporation Law, the
vote of the majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board. The quorum and voting provisions herein
stated shall not be construed as conflicting with any provisions of the General
Corporation Law and these Bylaws which govern a meeting of directors held to
fill vacancies and newly created directorships in the Board or action of
disinterested directors.

                 Any member or members of the Board of Directors or of any
committee designated by the Board, may participate in a meeting of the Board,
or any such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other.

                 - CHAIRMAN OF THE MEETING. The Chairman of the Board, if any
and if present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairman of the Board, if any and if present and acting, or the President,
if present and acting, or any other director chosen by the Board, shall
preside.

                 5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by
the General Corporation Law, any director or the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors.

                 6. COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of any member of any such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation with the exception of
any authority the delegation of which is prohibited by Section 141 of the
General Corporation Law, and may authorize the seal of the corporation to be
affixed to all papers which may require it.





                                      -10-
<PAGE>   11
                 7. WRITTEN ACTION. Any action required or permitted to be taken
at any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.

                                  ARTICLE III

                                    OFFICERS

                 The officers of the corporation shall consist of a President,
a Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by
the Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board,
an Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other
officers with such titles as the resolution of the Board of Directors choosing
them shall designate. Except as may otherwise be provided in the resolution of
the Board of Directors choosing him, no officer other than the Chairman or
Vice-Chairman of the Board, if any, need be a director. Any number of offices
may be held by the same person, as the directors may determine.

                 Unless otherwise provided in the resolution choosing him, each
officer shall be chosen for a term which shall continue until the meeting of
the Board of Directors following the next annual meeting of stockholders and
until his successor shall have been chosen and qualified.

                 All officers of the corporation shall have such authority and
perform such duties in the management and operation of the corporation as shall
be prescribed in the resolutions of the Board of Directors designating and
choosing such officers and prescribing their authority and duties, and shall
have such additional authority and duties as are incident to their office
except to the extent that such resolutions may be inconsistent therewith. The
Secretary or an Assistant Secretary of the corporation shall record all of the
proceedings of all meetings and actions in writing of stockholders, directors,
and committees of directors, and shall exercise such additional authority and
perform such additional duties as the Board shall assign to him. Any officer
may be removed, with or without cause, by the Board of Directors. Any vacancy
in any office may be filled by the Board of Directors.





                                      -11-
<PAGE>   12
                                   ARTICLE IV

                                 CORPORATE SEAL

                 The corporate seal shall be in such form as the Board of 
Directors shall prescribe.

                                   ARTICLE V

                                  FISCAL YEAR

                 The fiscal year of the corporation shall be fixed, and shall
be subject to change, by the Board of Directors.

                                   ARTICLE VI

                              CONTROL OVER BYLAWS

                 Subject to the provisions of the certificate of incorporation
and the provisions of the General Corporation Law, the power to amend, alter,
or repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of
Directors or by the stockholders.

                 I HEREBY CERTIFY that the foregoing is a full, true, and
correct copy of the Bylaws of FCC CANADA, INC., a Delaware corporation, as in
effect on the date hereof.

Dated:



                                   -------------------------
                                        Secretary of
                                        FCC CANADA, INC.

(SEAL)





                                      -12-
<PAGE>   13
                                                               City of Dover
                                                               County of Kent
                                                               February 22, 1993

               ORGANIZATION ACTION IN WRITING OF INCORPORATOR

                                     OF

                               FCC CANADA, INC

                               ---------------
                        (organized February 22, 1993)

                 The following action is taken this day through this instrument
by the incorporator of the above corporation:

                 1.       The adoption of the initial By-Laws of the
                          corporation.

                 2.       The election of the following person to serve as the
                          director of the corporation until the first annual
                          meeting of stockholders and until his successors are
                          elected and qualified or until his earlier
                          resignation or removal:

                                Charles G. Horn

                                        /s/  N. S. TRUAX
                                        -------------------------    
                                             N. S. Truax
                                                Incorporator





                                      -13-

<PAGE>   1
                                                                    EXHIBIT 3.21

                          CERTIFICATE OF INCORPORATION
                                       OF
                       FIELDCREST CANNON FINANCING, INC.

     The undersigned, being of the age of eighteen years or more, does hereby
make and acknowledge this Certificate of Incorporation for the purpose of
forming a business corporation under and by virtue of the laws of the State of
Delaware.

                                       I.

     The name of the corporation is Fieldcrest Cannon Financing, Inc.

                                      II.

     The address of the initial registered office of the corporation in the
State of Delaware is 32 LOOCKERMAN Square, Suite L-100, City of Dover, Delaware
19904, County of Kent, and the name of the initial registered agent at such
address is The Prentice-Hall Corporation System, Inc.

                                      III.

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

                                      IV.

     The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000) shares of Common Stock, no par value
per share.

                                       V.

     The name and address of the sole incorporator are Joyce Kotzker, 200 West
Second Street, 1600 Southern National Financial Center, Winston-Salem, NC 27101.

                                      VI.

     No person who is serving or has served as director of the corporation
shall be liable to the corporation or to any stockholder for monetary damages
for breach of any fiduciary 
                                                        
                                    
<PAGE>   2
this article becomes effective. Nothing herein shall be deemed to limit or
eliminate the liability of any person (i) for any breach of such person's duty
of loyalty as a director to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law; (iii) for the unlawful payment of a dividend by
the corporation or the unlawful purchase or redemption of the corporation's
capital stock by the corporation; (iv) for any transaction from which such
person derived an improper personal benefit; or (v) to any extent that such
liability may not be limited or eliminated by virtue of the provisions of
Section 102(b)(7) of the General Corporation Law of the State of Delaware or
any successor statute.

     The undersigned incorporator hereby acknowledges that the foregoing
certificate of incorporation is her act and deed and that the facts stated
therein are true.

     IN WITNESS WHEREOF, the undersigned sole incorporator of the corporation
has hereunto set her hand this 8th day of December, 1994.



                                      /s/ JOYCE KOTZKER
                                      --------------------------------------
                                      Joyce Kotzker, Incorporator

<PAGE>   1
                                                                    EXHIBIT 3.22


                                     BYLAWS


                                       OF


                        FIELDCREST CANNON FINANCING, INC.













                                                      Effective December 8, 1994
<PAGE>   2
                                     BYLAWS

                                       OF

                       FIELDCREST CANNON FINANCING, INC.

                                   ARTICLE I

                                    Offices

         Section 1. Principal and Registered Offices. The principal office of
the Corporation shall be located at such place as the Board of Directors may
specify from time to time. The registered office of the Corporation shall be
located at 306 South State Street, Kent County, Dover, Delaware.

         Section 2. Other Offices. The Corporation may have offices at such
other places, either within or without the State of Delaware, as the Board of
Directors may from time to time determine.

                                   ARTICLE II

                            Meetings of Stockholders

         Section 1. Place of Meeting. Meetings of stockholders shall be held at
the principal office of the Corporation or at such other place or places, either
within or without the State of Delaware, as shall either (i) be designated in
the notice of the meeting or (ii) be agreed upon at or before the meeting by a
majority of the stockholders entitled to vote at the meeting.

         Section 2. Annual Meetings. The annual meeting of stockholders shall be
at such time as determined by the Board of Directors for the purpose of electing
directors of the Corporation and the transaction of such other business as may
be properly brought before the meeting.

         Section 3. Substitute Annual Meeting. If the annual meeting is not held
on the day designated by these bylaws, a substitute annual meeting may be called
in accordance with Section 4 of this Article II. A meeting so called shall be
designated and treated for all purposes as the annual meeting.

         Section 4. Special Meetings. Special meetings of the stockholders for
any purpose or purposes may be called at any time by the President or by order
of the Board of Directors, and shall be called by the President or by order of
the Board of Directors upon the written request of any member of the Board of
Directors or the holder or holders of at least 10% of all the shares of capital
stock entitled to vote at the meeting.
<PAGE>   3
         Section 5. Notice of Meetings. Written or printed notice, stating the
time and place of the meeting and, in the case of a special meeting, briefly
describing the purpose or purposes of the meeting, shall be given not less than
ten nor more than sixty days before the date of the meeting, to each stockholder
of record entitled to vote at the meeting, by delivering a written notice
thereof to him personally, or by mailing such notice in a postage prepaid
envelope directed to him at his last address as it appears on the stock records
of the Corporation. It shall be the primary responsibility of the Secretary to
give the notice, but notice may be given by or at the direction of the President
or other person or persons calling the meeting. If a matter (other than the
election of directors) is to be considered at an annual meeting on which a vote
of stockholders is required by law or otherwise, notice shall be given as if the
meeting were a special meeting. If any stockholder shall, in person or by
attorney thereunto authorized, waive in writing notice of any meeting of the
stockholders, whether prior to or after such meeting, notice thereof need not be
given to him. Notice of any adjourned meeting of the stockholders shall not be
required to be given, except where expressly required by law.

         Section 6. Proxies. A stockholder may attend, represent, and vote his
shares at any meeting in person, or be represented and have his shares voted for
by a proxy which such stockholder has duly executed in writing. No proxy shall
be valid after eleven (11) months from the date of its execution unless a longer
period is expressly provided in the proxy. Each proxy shall be revocable unless
otherwise expressly provided therein or unless otherwise made irrevocable by
law.

         Section 7. Quorum  Except as otherwise provided by law, the holders of
a majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of stockholders. In the absence of a
quorum, any officer entitled to preside at, or act as Secretary of, such
meeting, shall have the power to adjourn the meeting from time to time until a
quorum shall be constituted. At any such adjourned meeting at which a quorum
shall be present any business may be transacted which might have been transacted
at the meeting as originally called. When a quorum is once present to organize a
meeting, the stockholders present may continue to do business at the meeting or
at any adjournment thereof notwithstanding the withdrawal of enough stockholders
to leave less than a quorum.

         Section 8. Voting of Shares. Each outstanding share of voting capital
stock of the Corporation shall be entitled to one vote, on each matter submitted
to a vote at a meeting of the stockholders, except as otherwise provided in the
certificate of incorporation. The vote by the holders of a majority of the
shares voted on any matter at a meeting of stockholders at which a quorum is
present shall be the act of the stockholders on that matter, unless the vote of
a greater number is required by law, by the certificate of incorporation, or by
these bylaws of the Corporation.  Voting on all matters shall be by voice vote
or by a show of hands, unless the holders of 10% of the shares represented at
the meeting shall demand a vote by written ballot on a particular matter.

         Section 9. Action Without Meeting. Any action which the stockholders
could take at a meeting may be taken without a meeting if a consent in writing,
setting forth the action taken, shall be signed by the holders of outstanding
stock having not less than the minimum

                                      -2-
<PAGE>   4
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
The consent shall be filed with the Secretary of the Corporation as part of the
corporate records. Such written consent shall have the same force and effect as
a vote of stockholders, and may be stated as such in any articles, certificates
or documents filed with the Secretary of State of Delaware, or any other state
wherein the Corporation may do business.

         Section 10. Meeting by Use of Conference Telephone. Subject to the
requirement for notice of meetings and if permitted by applicable law,
stockholders may participate in and hold a meeting of such stockholders by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in such a meeting shall constitute presence in person at such meeting, except
where a person participates in the meeting for the express purpose of objecting
to the transaction of any business on the ground that the meeting is not
lawfully called or convened.

         Section 11. Record Date. The Board of Directors may fix, in advance, a
date as the record date for the purpose of determining stockholders entitled to
notice of or to vote at any meeting of stockholders, or stockholders entitled
to receive payment of any dividend or the allotment of any rights, or in order
to make a determination of stockholders for any other proper purpose. Such
date, in any case, shall be not more than sixty days, and in case of a meeting
of stockholders not less ten days, prior to the date on which the particular
action requiring such determination of stockholders is to be taken. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting unless
the Board of Directors fixes a new record date for the adjourned meeting. If
the stock transfer books are not closed, and no record date is fixed for the
determination of stockholders, or of stockholders entitled to receive payment
of a dividend, the date on which notice of the meeting is mailed, or the date
on which the resolution of the Board of Directors declaring the dividend is
adopted, as the case may be, shall be the record date for the determination of
stockholders.

         Section 12. List of Stockholders. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the
stock records, either directly or through a transfer agent appointed by the
Board of Directors, to prepare and make, at least ten days before every
stockholders meeting, a complete list of stockholders entitled to vote at such
meeting arranged in alphabetical order. Such list shall be open to the
examination of any stockholder at the principal office of the Corporation for
said ten days before such meeting, and shall be produced and kept at the time
and place of the meeting during the whole time thereof and shall be subject to
the inspection of any stockholder who may be present. The stock records of the
Corporation shall be the only evidence of who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.

                                      -3-
<PAGE>   5
                                  ARTICLE  III

                               Board of Directors

         Section 1. General Powers. The business and affairs of the Corporation
shall be managed by the Board of Directors except as otherwise provided by law,
by the certificate of incorporation of the Corporation or by these bylaws.

         Section 2. Number, Term and Qualification. The Board of Directors of
the Corporation shall consist of one or more members, the number of which shall
be set each year by the stockholders of the Corporation. The initial number of
directors shall be four. Each director shall hold office until the next annual
meeting of stockholders and until a successor is elected and qualified, or until
his death, resignation or removal pursuant to these bylaws. Directors need not
be residents of the State of Delaware or stockholders of the Corporation.

         Section 3. Removal. Directors may be removed from office with or
without cause by a vote of stockholders who hold shares entitled to vote at an
election of directors that constitute a majority of the aggregate voting power
of the outstanding capital stock of the Corporation. If any directors are so
removed, new directors may be elected at the same meeting.

         Section 4. Resignation. Any director of the Corporation may resign at
any time by giving written notice to the President or the Secretary of the
Corporation. The resignation of any director shall take effect upon receipt of
notice thereof or at such later time as shall be specified therein. The
acceptance of such resignation shall not be necessary to make it effective.

         Section 5. Vacancies. Any vacancy in the Corporation's Board of
Directors may be filled by a majority of the remaining directors (or the sole
remaining director). Any vacancy created by an increase in the authorized number
of directors shall be filled only by election at an annual meeting or at a
special meeting of stockholders called for that purpose. The stockholders may
elect a director at any time to fill a vacancy not filled by the directors.

         Section 6. Compensation. The directors shall not receive compensation
for their services as such, except that the directors shall be entitled to be
reimbursed for any reasonable expenses paid by them by reason of their
attendance at any regular or special meeting of the Board of Directors or any of
its committees, and by resolution of the Board of Directors, the directors may
be paid fees, which may include but are not restricted to fees for attendance at
meetings of the Board or any of its committees. Any director may serve the
Corporation in any other capacity and receive compensation therefor.

                                      -4-
<PAGE>   6
                                  ARTICLE IV

                             Meetings of Directors

         Section 1. Annual and Regular Meetings. The annual meeting of the Board
of Directors for the purpose of electing officers and transacting such other
business as may be brought before the meeting shall be held immediately
following the annual meeting of the stockholders. The Board of Directors may by
resolution provide for the holding of regular meetings of the Board on specified
dates and at specified times. If any date for which a regular meeting is
scheduled shall be a legal holiday, the meeting shall be held on the next
business day that is not a legal holiday or on a date designated in the notice
of the meeting during either the same week in which the regularly scheduled date
falls or during the preceding or following week. Regular meetings of the Board
shall be held at the principal office of the Corporation or at such other place
as may be designated in the notice of the meeting. Notice of annual meetings or
any regular meetings held at the principal office of the Corporation and at the
usual scheduled time shall not be required.

         Section 2. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board, the President
or any one director. Such meetings may be held at the time and place designated
in the notice of the meeting.

         Section 3. Notice of Meetings. The Secretary or other person or persons
calling a meeting for which notice is required shall give notice by mail or
telegram at least five days before the meeting, or by telephone at least
twenty-four hours before the meeting. Oral notice may be substituted for such
written notice if given not less than five days before the meeting. Notice of
the time, place and purpose of such meeting may be waived in writing before or
after such meeting, and shall be equivalent to the giving of the notice.
Attendance by a director at a meeting for which notice is required shall
constitute a waiver of notice, except where a director attends the meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called. Except as otherwise herein provided, neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in this notice of such meeting.

         Section 4. Quorum.  A majority of the directors in office shall
constitute a quorum for the transaction of business at a meeting of the Board of
Directors, but a smaller number may adjourn the meeting from time to time until
a quorum shall be present. Any regular or special directors' meeting may be
adjourned from time to time by those present, whether a quorum is present or
not.

         Section 5. Manner of Acting. Except as otherwise provided by law, these
bylaws or the certificate of incorporation of the Corporation or otherwise, the
act of the majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.

         Section 6. Action Without Meeting. Action taken by a majority of the
directors or of a committee of directors without a meeting is nevertheless board
or committee

                                      -5-
<PAGE>   7
action, if written consent to the action is signed by all the director or
members of the committee, as the case may be, and filed with the minutes of the
proceedings of the Board or committee, whether done before or after the action
is taken. Such unanimous written consent shall have the same force and effect
as a unanimous vote at a meeting, and may be stated as such in any articles,
certificates or documents filed with the Secretary of State of Delaware, or any
other state wherein the corporation may do business.

         Section 7. Meeting by Use of Conference Telephone. Any one or more
directors or members of a committee may participate in a meeting of the Board or
any of its committees by means of a conference telephone or similar
communications device which allows all persons participating in the meeting to
hear each other, and such participation in a meeting shall be deemed presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.


                                   ARTICLE V

                                   Committees

         Section 1. Designation of Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more of the directors of
the Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. Any such committee, to the extent
provided in these bylaws or in the resolution of the Board of Directors
establishing the same, shall have and may exercise all the powers and authority
of the Board of Directors in the management of the business and affairs of the
Corporation. Such committees or committees shall have such name or names as may
be determined from time to time by resolution adopted by the Board of Directors.

         Section 2. Executive Committee. There may be an Executive Committee of
not more than three directors designated by resolution passed by a majority of
the whole Board of Directors. Such committee may meet at stated times, or on
notice to all by any of their own number. During intervals between meetings of
the Board of Directors, the Executive Committee shall have and may exercise the
powers of the Board of Directors in the management of the business and affairs
of the Corporation, except that the Executive Committee shall not have authority
to authorize or approve the following matters:

         (a)     The dissolution, merger or consolidation of the Corporation or
the sale, lease or exchange of all or substantially all the property or assets
of the Corporation.

         (b)     The designation of an Executive Committee or any other
committee of directors having power to exercise any of the authority of the
Board of Directors in the management of the Corporation or the filling of
vacancies in the Board of Directors or in such committee.

                                      -6-
<PAGE>   8
         (c)     The fixing of compensation of the directors for serving on
the Board or on such committee.

         (d)     The amendment or repeal of the bylaws, or the adoption of new
bylaws.

         (e)     The amendment or repeal of any resolution of the Board of
Directors which by its terms shall not be so amendable or repealable.

Vacancies in the membership of the Executive Committee shall be filled by a
majority of the whole Board of Directors at a regular meeting or at a special
meeting called for that purpose.

         Section 3.  Minutes. Each committee shall keep minutes of its
proceedings and shall report thereon to the Board of Directors at or before the
next meeting of the Board.

         Section 4. Action Without Meeting: Telephonic Meeting. Action may be
taken by each committee in the manner allowed by the Board of Directors pursuant
to Sections 6 and 7 of Article IV.

                                   ARTICLE VI

                                    Officers

         Section 1. Titles. The officers of the Corporation shall be elected by
the Board of Directors and shall consist of a President, a Secretary and a
Treasurer. The Board of Directors may also elect a Chairman of the Board of
Directors, an Executive Vice President, one or more additional Vice Presidents,
a Controller, one or more Assistant Secretaries, one or more, Assistant
Treasurers, one or more Assistant Controllers, and such other officers as it
shall deem necessary. Except as otherwise provided in these bylaws, the
additional officers shall have the authority and perform the duties as from time
to time may be prescribed by the Board of Directors. Any two or more offices may
be held by the same individual, but no officer may act in more than one capacity
where action of two or more officers is required.

         Section 2. Election and Term. The officers of the Corporation shall be
elected by the Board of Directors at the regular meeting of the Board held each
year immediately following the annual meeting of the stockholders. Each officer
shall hold office until the next regular meeting at which officers are to be
elected and until a successor is elected and qualifies or until his death,
resignation, or removal pursuant to these bylaws.

         Section 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board whenever in its judgment the best
interests of the Corporation will be served, but removal shall be without
prejudice to any contract rights of the individual removed. Election or
appointment of an officer or agent shall not of itself create contract rights.

         Section 4. Vacancies. Vacancies among the officers may be created and
filled by the Board of Directors.

                                      -7-
<PAGE>   9
         Section 5. Compensation. The compensation and all other terms of
employment of the officers shall be fixed by the disinterested members of the
Board of Directors. No officer shall be prevented from receiving such
compensation by reason of the fact that such officer is also a director of the
Corporation.

         Section 6. Chairman of the Board of Directors. The Chairman of the
Board of Directors, if such officer is elected, shall preside at meetings of the
Board of Directors and shall have such other authority and perform such other
duties as the Board of Directors shall designate.

         Section 7. President.  The President shall be in general charge of the
affairs of the Corporation in the ordinary course of its business, and shall
preside at meetings of the stockholders. The President may perform such acts,
not inconsistent with the applicable law or the provisions of these bylaws, as
may be performed by the president of a corporation and may sign and execute all
authorized notes, bonds, contracts and other obligations in the name of the
Corporation. The President shall have such other powers and perform such other
duties as the Board of Directors shall designate or as may be provided by
applicable law or elsewhere in these bylaws.

         Section 8. Vice Presidents. The Executive Vice President, if such,
officer is elected, shall exercise the powers of the President during that
officer's absence or inability to act. In default of both the President and the
Executive Vice President, any other Vice President may exercise the powers of
the President. Any action taken by a Vice President in the performance of the
duties of the President shall be presumptive evidence of the absence or
inability to act of the President at the time the action was taken. The Vice
Presidents shall have such other powers and perform such other duties as may be
assigned by the Board of Directors.

         Section 9. Treasurer. The Treasurer shall have custody of all funds and
securities belonging to the Corporation and shall receive, deposit or disburse
the same under the direction of the Board of Directors. The treasurer shall keep
full and accurate accounts of the finances of the Corporation and shall cause a
true statement of the assets and liabilities of the Corporation as of the close
of each fiscal year and of the results of its operations and of changes in
surplus, all in reasonable detail, to be made and filed at the principal office
of the Corporation within four months after the end of the fiscal year. The
statement shall be available  for inspection by any stockholder for a period of
ten years, and the Treasurer shall mail or otherwise deliver a copy of the
latest statement to any stockholder upon written request. The Treasurer shall in
general perform all duties incident to the office and such other duties as may
be assigned from time to time by the President or by the Board of Directors.

         Section 10. Assistant Treasurers. Each Assistant Treasurer shall have
such powers and perform such duties as may be assigned by the Board of
Directors, and the Assistant Treasurers shall exercise the powers of the
Treasurer during that officer's absence or inability to act.

         Section 11. Controller and Assistant Controllers. The Controller shall
have charge of the accounting affairs of the corporation and shall have such
other powers and

                                      -8-

<PAGE>   10

perform such other duties as the Board of Directors shall designate. Each
Assistant Controller shall have such Powers and perform such duties as may be
assigned by the Board of Directors and the Assistant Controllers shall exercise
the powers of the Controller during that officer's absence or inability to act.

         Section 12. Secretary. The Secretary shall keep accurate records of
the acts and proceedings of all meetings of stockholders and of the Board of
Directors and shall give all notices required by law and by these bylaws.  The
Secretary shall have general charge of the corporate books and records and of
the corporate seal and shall affix the corporate seal to any lawfully executed
instrument requiring it. The Secretary shall have general charge of the stock
transfer books of the Corporation and shall keep at the principal office of the
Corporation a record of stockholders, showing the name and address of each
stockholder and the number and class of the shares held by each. The Secretary
shall sign such instruments as may require the signature of the Secretary, and
in general shall perform the duties incident to the office of Secretary and such
other duties as may be assigned from time to time by the President or by the
Board of Directors.

         Section 13. Assistant Secretaries. Each Assistant Secretary shall have
such powers and perform such duties as may be assigned by the Board of
Directors, and the Assistant Secretaries shall exercise the powers of the
Secretary during that officer's absence or inability to act.

         Section 14. Voting Upon Stocks. Unless otherwise ordered by the Board
of Directors; the President shall have full power and authority in behalf of the
Corporation to attend, act and vote at meetings of the stockholders of any
Corporation in which this Corporation may hold stock, and at such meetings shall
possess and may exercise any and all rights and powers incident to the ownership
of such stock and which, as the owner, the Corporation might have possessed and
exercised if present. The Board of Directors may by resolution from time to time
confer such power and authority upon any other person or persons.

                                  ARTICLE VII

                                 Capital Stock

         Section 1. Certificates. Certificates for shares of the capital stock
of the Corporation shall be in such form not inconsistent with the certificate
of incorporation of the Corporation as shall be approved by the Board of
Directors. The certificates shall be consecutively numbered or otherwise
identified. The name and address of the persons to whom they are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
records of the Corporation. Each certificate shall be signed by the President or
any Vice President and by the Secretary, Assistant Secretary, Treasurer or
Assistant Treasurer; provided, that where a certificate is signed by a transfer
agent or assistant transfer agent of the Corporation, the signatures of such
officers of the Corporation upon the certificate may be by facsimile, engraved
or printed. Each certificate shall be sealed with the seal of the Corporation or
a facsimile thereof.

                                      -9-
<PAGE>   11
         Section 2. Transfer of Shares. Transfer of shares shall be made on the
stock transfer books of the Corporation only upon surrender of the certificate
for the shares sought to be transferred by the record holder or by a duly
authorized agent, transferee or legal representative. All certificates
surrendered for transfer shall be cancelled before new certificates for the
transferred shares shall be issued.

         Section 3. Transfer Agent and Registrar. The Board of Directors may
appoint one or more transfer agents and one or more registrars of transfers and
may require all stock certificates to be signed or countersigned by the transfer
agent and registered by the registrar of transfers.

         Section 4. Regulations. The Board of Directors shall have power and
authority to make rules and regulations as it may deem expedient concerning the
issue, transfer and registration of certificates for shares of capital stock of
the Corporation.

         Section 5. Lost Certificates. The Board of Directors may authorize the
issuance of a new certificate in place of a certificate claimed to have been
lost or destroyed, upon receipt of an affidavit from the person explaining the
loss or destruction. When authorizing issuance of a new certificate, the Board
may require the claimant to give the Corporation a bond in a sum as it may
direct to indemnify the Corporation against loss from any claim with respect to
the certificate claimed to have been lost or destroyed; or the Board may, by
resolution reciting that the circumstances justify such action, authorize the
issuance of the new certificate without requiring a bond.


                                  ARTICLE VIII

                               General Provisions

         Section 1. Dividends. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends out of its earned surplus on its
outstanding shares in the manner and upon the terms and conditions provided by
law.

         Section 2. Seal. The seal of the Corporation shall have inscribed
thereon the name of the Corporation and "Delaware" around the perimeter, and the
words "Corporate Seal" in the center.

         Section 3. Waiver of Notice. Whenever notice is required to be given to
a stockholder, director or other person under the provisions of these bylaws,
the certificate of incorporation of the Corporation or by applicable law, a
waiver in writing signed by the person or persons entitled to the notice,
whether before or after the time stated in the notice, shall be equivalent to
giving the notice.

         Section 4. Depositories and Checks. All funds of the Corporation shall
be deposited in the name of the Corporation in such bank, banks, or other
financial institutions as the Board of Directors may from time to time designate
and shall be drawn out on checks, drafts

                                      -10-
<PAGE>   12
or other orders signed on behalf of the Corporation by such person or persons
as the Board of Directors may from time to time designate.

         Section 5. Bond. The Board of Directors may by resolution require any
or all officers, agents and employees of the Corporation to give bond to the
Corporation, with sufficient sureties, conditioned on the faithful performance
of the duties of their respective offices or positions, and to comply with such
other conditions as may from time to time be required by the Board.

         Section 6. Loans. No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.

         Section 7. Taxable Year. The taxable year of the Corporation shall be
the period ending on December 31 of each year or such other period as the Board
of Directors shall from time to time determine.

         Section 8. Indemnification of Directors and Officers.

         (a) Right to Indemnification. Each person who was or is made a party
    to or is threatened to be made a party to or is otherwise involved in any
    action, suit or proceeding, whether civil, criminal, administrative or
    investigative (hereinafter a "proceeding"), by reason of the fact that he
    or she is or was a director, officer or employee of the Corporation or is
    or was serving at the request of the Corporation as a director, officer,
    employee or agent of another corporation or of a partnership, joint
    venture, trust or other enterprise, including service with respect to
    employee benefit plans (hereinafter an "indemnitee"), whether the basis of
    such proceeding is alleged action in an official capacity as a director,
    officer, employee or agent, shall be indemnified and held harmless by the
    Corporation to the fullest extent authorized by the Delaware General
    Corporation Law, as the same exists or may hereafter be amended (but, in
    the case of any such amendment, only to the extent that such amendment
    permits the Corporation to provide broader indemnification rights than such
    law permitted the Corporation to provide prior to such amendment), against
    all expense, liability and loss (including attorneys' fees, judgments,
    finds, ERISA excise taxes or penalties and amounts paid in settlement)
    reasonably incurred or suffered by such indemnitee in connection therewith
    and such indemnification shall continue as to an indemnitee who has ceased
    to be a director, officer, employee or agent and shall inure to the benefit
    of the indemnitee's heirs, executors  and administrators; provided,
    however, that, except as provided in paragraph (b) hereof with respect to
    proceedings to enforce rights to indemnification, the Corporation shall
    indemnify any such indemnitee in connection with a proceeding (or part
    thereof) initiated by such indemnitee only if such proceeding (or part
    thereof) was authorized by the Board of Directors of the Corporation. The
    right to indemnification conferred in this Section shall be a contract
    right and shall include the right to be paid by the Corporation the
    expenses incurred in defending any such proceeding in advance of its final
    disposition (hereinafter an "advancement of expenses"); provided, however,
    that if the Delaware General Corporation Law requires, an advancement of
    expenses

                                      -11-
<PAGE>   13
    incurred by an indemnitee in his or her capacity as a director or officer
    (and not in any other capacity in which service was or is rendered by such
    indemnitee, including without limitation, service to an employee benefit
    plan) shall be made only upon delivery to the Corporation of an
    undertaking, by or on behalf of such indemnitee, to repay all amounts so
    advanced if it shall ultimately be determined by final judicial decision
    from which there is no further right to appeal that such indemnitee is not
    entitled to be indemnified for such expenses under this Section or
    otherwise (hereinafter an "undertaking').

         (b) Right of Indemnitee to Bring Suit.    If a claim under paragraph
    (a) of this Section is not paid in full by the Corporation within sixty
    days after a written claim has been received by the Corporation, except in
    the case of a claim for an advancement of expenses, in which case the
    applicable period shall be twenty days, the indemnitee may at any time
    thereafter bring suit against the Corporation to recover the unpaid amount
    of the claim. If successful in whole or in part in any such suit or in a
    suit brought by the Corporation to recover an advancement of expenses
    pursuant to the terms of an undertaking, the indemnitee shall be entitled
    to be paid also the expense of prosecuting or defending such suit. In (i)
    any suit brought by the indemnitee to enforce a right to indemnification
    hereunder (but not in a suit brought by the indemnitee to enforce a right
    to an advancement of expenses) it shall be a defense that, and (ii) any suit
    by the Corporation to recover an advancement of expenses pursuant to the
    terms of an undertaking the Corporation shall be entitled to recover such
    expenses upon a final adjudication that, the indemnitee has not met the
    applicable standard of conduct set forth in the Delaware General
    Corporation Law. Neither the failure of the Corporation (including its
    Board of Directors, independent legal counsel or its stockholders) to have
    made a determination prior to the commencement of such suit that
    indemnification of the indemnitee is proper in the circumstances because
    the indemnitee has met the applicable standard of conduct set forth in the
    Delaware General Corporation Law, nor an actual determination by the
    Corporation (including its Board of Directors, independent legal counsel or
    its stockholders) that the indemnitee has not met such applicable standard
    of conduct, shall create a presumption that the indemnitee has not met the
    applicable standard of conduct or, in the case of such a suit brought by
    the indemnitee, be a defense to such suit. In any suit brought by the
    indemnitee to enforce a right hereunder, or by the Corporation to recover
    an advancement of expenses pursuant to the terms of an undertaking, the
    burden of proving that the indemnitee is not entitled to be indemnified or
    to such advancement of expenses under this Section or otherwise shall be on
    the Corporation.

         (c) Non-Exclusivity of Rights.    The rights to indemnification and to
    the advancement of expenses conferred in this Section shall not be
    exclusive of any other right which any person may have or hereafter acquire
    under any statute, this certificate of incorporation, these bylaws, by
    agreement, by vote of stockholders or disinterested directors or
    otherwise.

         (d) Insurance.    The Corporation may maintain insurance, at its
    expense, to protect itself and any director, officer, employee or agent of
    the Corporation or another

                                      -12-
<PAGE>   14
    corporation, partnership, joint venture, trust or other enterprise against
    any expense, liability or loss under the Delaware General Corporation Law.

         (e) Indemnification of Agents of the Corporation.  The Corporation 
    may, to the extent authorized from time to time by the Board of
    Directors, grant rights to indemnification and to the advancement of
    expenses, to any agent of the Corporation to the fullest extent of the
    provisions of the Section with respect to the indemnification and
    advancement of expenses of directors, officers and employees of the
    Corporation.

    Section 9.   Amendments. Except as otherwise provided herein, these bylaws
may be amended or repealed and new bylaws may be adopted by the affirmative
vote of the holders of shares of the Corporation then issued and entitled to
vote at any annual meeting or at any special meeting of stockholders called for
the purpose of considering such action that constitute at least a majority of
the aggregate voting power of the outstanding capital stock of the Corporation.

    Section 10.  Stockholders Agreement.  To the extent that the provisions of
these bylaws are inconsistent with any stockholders agreement subsequently
entered into by the holders of the Corporation's capital stock, the
stockholders agreement shall control.

                                    * * * *

    THIS IS TO CERTIFY that the above bylaws of Fieldcrest Cannon Financing,
Inc. were duly adopted by the Board of Directors of the Corporation by action
taken by unanimous written consent effective the 8th day of December, 1994.

    This 8th day of December, 1994.

                                            /s/ [ILLEGIBLE]
                                            ---------------------------------
                                            Secretary

    [Corporate Seal]

                                      -13-
<PAGE>   15


                                    RESTATED
                          CERTIFICATE OF INCORPORATION

     FIELDCREST MILLS INTERNATIONAL, INC., a corporation organized and existing
under and by virtue of the General Corporation law of the State of Delaware,

     DOES HEREBY CERTIFY:

     FIRST: That at a meeting of the Board of Directors on July 29, 1991, a
resolution was duly adopted setting forth a proposed Restated Certificate of
Incorporation of said Corporation, declaring said Restated Certificate of
Incorporation to be advisable and calling a meeting of the stockholders of said
Corporation for consideration thereof. The resolution setting forth the
proposed Restated Certificate of Incorporation is as follows:

          RESOLVED: That the proposal to restate the
          Certificate of Incorporation to change the
          corporate name from Fieldcrest Mills
          International, Inc. to Fieldcrest Cannon
          International, Inc., be and hereby is approved and
          that the same be submitted by the Corporation to
          its stockholders at a special meeting of
          stockholders to be held July 29, 1991 at the
          offices of Amoskeag Company, located at Boston,
          Massachusetts.

     SECOND: That thereafter, pursuant to resolution of its Board of Directors,
a special meeting of the stockholders of said Corporation was duly called and
held, upon notice, in accordance with Section 222 of the General Corporation
law of the State of Delaware, at which meeting the necessary number of shares
as required by statute were voted in favor of the Restated Certificate of
Incorporation.

     THIRD: That said Restated Certificate of Incorporation
<PAGE>   16
was duly adopted in accordance with the provisions of Sections 242 and 245 of
the General Corporation Law of the State of Delaware.

     IN WITNESS WHEREOF, said Fieldcrest Mills International, Inc. has caused
this Certificate to be signed by Johnstone H.R. Walker, its President, and 
M. Kenneth Doss, its Secretary, this 31st day of July, 1991.


                                   By:  /s/  JOHNSTONE H.R. WALKER
                                        ---------------------------
                                        Johnstone H.R. Walker


                                   ATTEST:


                                        /s/  M. KENNETH DOSS
                                        ---------------------------
                                        M. Kenneth Doss
                                        Secretary



(CORPORATE SEAL)



                                       2

<PAGE>   1
                                                                    EXHIBIT 3.23

                                    RESTATED
                          CERTIFICATE OF INCORPORATION
                                       of
                      FIELDCREST MILLS INTERNATIONAL, INC.

                   -----------------------------------------
                   Adopted in accordance with the provisions
                         of Section 242 and 245 of the
                        Delaware General Corporation Law
                   -----------------------------------------


The original Certificate of Incorporation of FIELDCREST MILLS INTERNATIONAL,
INC. (hereafter known as the "Corporation") was filed with the Secretary of
State of Delaware on February 24, 1964. This Restated Certificate of
Incorporation was proposed to the Stockholders of the Corporation by the Board
of Directors on July 29, 1991, and duly adopted in accordance with the
provisions of Sections 242 and 245 of the Delaware General Corporation Law, as
amended, by an affirmative vote of the holder of all outstanding stock entitled
to vote at a Meeting of Stockholders of the Corporation held at the offices of
Amoskeag Company, Boston, Massachusetts, on July 29, 1991. The Restated
Certificate of Incorporation as herewith amended is hereby restated to read in
its entirety as follows:

     FIRST: The name of the corporation is

                     FIELDCREST CANNON INTERNATIONAL, INC.
    
     SECOND: The principal office of the Corporation is to be located in the
City of Dover, in the County of Kent, in the State of Delaware. The name of its
resident agent is the UNITED STATES CORPORATION COMPANY, whose address is 32
Loockerman Square, Suite L-100, Dover, DE 19901.





 
<PAGE>   2
     THIRD: The nature of the business of the Corporation and the objects or 
purposes proposed to be transacted, promoted or carried on by it are:

     To design, develop, experiment with, manufacture, produce, buy, lease or 
otherwise acquire, hold, own, use, store, process, convert, treat, finish,
import, export, sell, lease or otherwise dispose of and generally to deal in 
and with (as principal, agent or otherwise) any and all kinds of textiles, 
cloth and fabrics whether made from natural or synthetic fibers or other 
material and all raw materials which may be used in the manufacturing, 
converting, treating, processing, or finishing of such textiles, cloth and 
fabrics.

     To build, erect, construct, purchase, hold or otherwise acquire, own,
provide, manage, maintain, establish, lease and operate, and to buy, sell,
exchange or otherwise dispose of, mills, factories, laboratories, warehouses,
agencies, buildings, structures, stores and offices, with suitable machinery
and equipment, and all things of whatsoever kind and nature suitable,
necessary, useful, advisable or convenient in connection with the pursuit of
any or all of the objects herein set forth.

     To manufacture, buy, sell, deal in, and to engage in, conduct and carry on
the business of manufacturing, buying, selling and dealing in goods, wares and
merchandise of every class and description necessary or useful for the
operations of this corporation.

     To improve, manage, develop, sell, assign, transfer, lease, mortgage,
pledge, or otherwise dispose of or turn to account or deal with all or any part
of the property of the corporation and from time to time to vary any investment
or employment of capital of the corporation.

     To borrow money, and to make and issue notes, bonds, debentures,
obligations and evidences of indebtedness of all kinds, whether secured by 
mortgage, pledge or otherwise, without limit as to amount, and to secure the 
same by mortgage, pledge or otherwise; and generally to make and perform 
agreements and contracts of every kind and description.




                                       2
<PAGE>   3


     To the same extent as natural persons might or could do, to purchase or
otherwise acquire, and to hold, own, maintain, work, develop, sell, lease,
exchange, hire, convey, mortgage or otherwise dispose of and deal in, lands and
leaseholds, and any interest, estate and rights in real property, and any
personal or mixed property, and any franchises, rights, licenses or privileges
necessary, convenient or appropriate for any of the purposes herein expressed.

     To apply for, obtain, register, purchase, lease or otherwise to acquire
and to hold, own, use, develop, operate and introduce, and to sell, assign,
grant licenses or territorial rights in respect to, or otherwise to turn to
account or dispose of, any copyrights, trade marks, trade names, brands,
labels, patent rights, letters patent of the United States or of any other
country or government, inventions, improvements and processes, whether used in
connection with or secured under letters patent or otherwise.

     To do all and everything necessary, suitable and proper for the
accomplishment of any of the purposes or the attainment of any of the objects
or the furtherance of any of the powers hereinbefore set forth, either alone or
in association with other corporations, firms or individuals, and to do every
other act or acts, thing or things incidental or appurtenant to or growing out
of or connected with the aforesaid business or powers or any part or parts
thereof, provided the same be not inconsistent with the laws under which this
corporation is organized.

     To acquire by purchase, subscription or otherwise, and to hold for
investment or otherwise and to use, sell, assign, transfer, mortgage, pledge or
otherwise deal with or dispose of stocks, bonds or any other obligations or
securities of any corporation or corporations; to merge or consolidate with any
corporations; to merge or consolidate with any corporation in such manner as
may be permitted by law; to aid in any manner any corporation whose stocks,
bonds or other obligations are held or in any manner guaranteed by this
corporation, or in which this corporation is in any way interested; and to do
any other acts or things for the preservation, protection, improvement or
enhancement of the value of any such stock, bonds or other obligations; and
while owner of any such stock, bonds or other obligations to exercise all


                                       3
<PAGE>   4
     the rights, powers and privileges of ownership thereof, and to exercise any
     and all voting powers thereon; to guarantee the payment of dividends upon
     any stock, or the principal or interest or both, of any bonds or other
     obligations, and the performance of any contracts.

          The business or purpose of the corporation is from time to time to do
     any one or more of the acts and things hereinabove set forth, and its shall
     have power to conduct and carry on its said business, or any part thereof,
     and to have one or more offices, and to exercise any or all of its
     corporate powers and rights, in the State of Delaware, and in the various
     other states, territories, colonies and dependencies of the United States,
     in the District of Columbia, and in all or any foreign countries.

          The enumeration herein of the objects and purposes of this corporation
     shall be construed as powers as well as objects and purposes and shall not
     be deemed to exclude by inference any powers, objects or purposes which
     this corporation is empowered to exercise, whether expressly by force of
     the laws of the State of Delaware now or hereafter in effect or implied by
     the reasonable construction of the said laws.

     FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is two hundred (200), and the par value of each of such
shares is One Hundred Dollars ($100.00).

     FIFTH: The corporation is to have perpetual existence.

     SIXTH: The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.

     SEVENTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of this corporation, and for
further definition, limitation and regulation of the powers of this corporation
and of its

                                       4
<PAGE>   5
directors and stockholders:

     (1) The number of directors of the corporation shall be such as from time
to time shall be fixed by, or in the manner provided in the Bylaws, but shall
not be less than three. Election of directors need not be by ballot unless the
Bylaws so provide.

     (2) The Board of Directors shall have power

          (a) Without the assent or vote of the stockholders, to make, alter,
     amend, change, add to, or repeal the Bylaws of this corporation; to fix and
     vary the amount to be reserved for any proper purpose; to authorize and
     cause to be executed mortgages and liens upon any part of the property of
     the corporation provided it be less than substantially all; to determine
     the use and disposition of any surplus or net profits and to fix the times
     for the declaration and payment of dividends.

          (b) To determine from time to time whether, and to what extent, and at
     what times and places, and under what conditions and regulations, the
     accounts and books of the corporation (other than the stock ledger) or any
     of them, shall be open to the inspection of the stockholders.

     (3) The directors in their discretion may submit any contract or act for
approval or ratification at any annual meeting of the stockholders or at any
meeting of the stockholders called for the purpose of considering any such act
or contract, and any contract or act that shall be approved or be ratified by
the vote of the holders of a majority of the stock of the corporation which is
represented in person or by proxy at such meeting and entitled to vote thereat
(provided that a lawful quorum of stockholders be there represented in person
or by proxy) shall be as valid and

                                       5
<PAGE>   6
as binding upon the corporation and upon all the stockholders, as though it had
been approved or ratified by every stockholder of the corporation, whether or
not the contract or act would otherwise be open to legal attack because of
directors' interest or for any other reason.

     (4)  In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the corporation; subject, nevertheless, to the provisions of the statutes of
Delaware, of this certificate, and to any Bylaws from time to time made by the
stockholders; provided, however, that no Bylaw so made shall invalidate any
prior act of the directors which would have been valid if such Bylaw had not
been made.

     EIGHTH:    No contract or other transaction between the corporation and any
other corporation and no other act of the corporation shall, in the absence of
fraud, in any way be affected or invalidated by the fact that any of the
directors of the corporation are pecuniarily or otherwise interested in, or are
directors or officers of, such other corporation. Any director of the
corporation individually or any firm or association of which any director may
be a member, may be a party to, or may be pecuniarily or otherwise interested
in, any contract or transaction of the corporation, provided that the fact that
he individually or such firm or association is




                                       6
<PAGE>   7
so interested shall be disclosed or shall have been known to the Board of
Directors or a majority of such members thereof as shall be present at any
meeting of the Board of Directors at which action upon any such contract or
transaction shall be taken. Any director of the corporation who is also a
director or officer of such other corporation or who is so interested may be
counted in determining the existence of a quorum at any meeting of the Board of
Directors which shall authorize any such contract or transaction and may vote
thereat to authorize any such contract or transaction, with like force and
effect as if he were not such director or officer of such other corporation or
not so interested. Any director of the corporation may vote upon any contract
or other transaction between the corporation and any subsidiary or affiliated
corporation without regard to the fact that he is also a director of such
subsidiary or affiliated corporation.

     NINTH:    Any person made a party to any action, suit or proceeding by
reason of the fact that he, his testator or intestate, is or was a director,
officer or employee of this corporation or of any corporation which he served
as such at the request of this corporation, shall be indemnified by the
corporation against the reasonable expenses, including attorneys' fees,
actually and necessarily incurred by him in connection with the defense of such
action, suit or proceeding, or in connection with any appeal therein, except in
relation to matters as to which it shall be adjudged in

                                       7
<PAGE>   8
such action, suit or proceeding that such officer, director or employee
is liable for negligence or misconduct in the performance of his duties. Such
right of indemnification shall not be deemed exclusive of any other rights to
which such director, officer or employee may be entitled by law.

     TENTH:    The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation
in the manner now or hereafter prescribed by law, and all rights and powers
conferred herein on stockholders, directors and officers are subject to this
reserved power.

     IN WITNESS WHEREOF, Fieldcrest Mills International, Inc. has caused this
Restated Certificate of Incorporation to be executed by Johnstone H.R. Walker,
its President, and M. Kenneth Doss, its Secretary, this 31st day of July, 1991.


                              By: /s/ JOHNSTONE H.R. WALKER
                                  ---------------------------
                                  Johnstone H.R. Walker

                              
                              ATTEST:


                                  /s/ M. KENNETH DOSS 
                                  ---------------------------
                                  M. Kenneth Doss
                                  Secretary


(CORPORATE SEAL)

                                       8
<PAGE>   9



STATE OF NORTH CAROLINA )
                        )  SS.:
COUNTY OF GUILFORD      )


     BE IT REMEMBERED that on this 31st day of July, A.D., 1991, personally
came before me, Janice W. Robertson, a Notary Public in and for the County and
State aforesaid, Johnstone H.R. Walker and M. Kenneth Doss, parties to the
foregoing Restated Certificate of Incorporation, known to me personally to be
such, and severally acknowledged the said Certificate to be the act and deed of
the signers respectively, and that the facts therein stated are truly set forth.

     GIVEN under my hand and seal of office the day and year aforesaid.

                              
                              /s/ JANICE W. ROBERTSON
                              --------------------------
                                     Notary Public

                              My Commission Expires:

                                       2-22-1995
                              --------------------------

<PAGE>   1

                                                                    EXHIBIT 3.24

                                     BYLAWS

                                       OF

                     FIELDCREST CANNON INTERNATIONAL, INC.

                         (As Amended to July 29, 1991)

                                 ----------

                                   ARTICLE I

                                    OFFICES

         SECTION 1. PRINCIPAL OFFICE -- The principal office shall be
established and maintained at the office of the United States Corporation
Company, in the City of Dover, in the County of Kent, in the State of Delaware,
and said corporation shall be the resident agent of this corporation in charge
thereof.

         SECTION 2. OTHER OFFICES -- The corporation may have other offices,
either within or outside of the State of Delaware, at such place or places as
the Board of Directors may from time to time appoint or the business of the
corporation may require.

                                   Article II

                            MEETINGS OF STOCKHOLDERS

         SECTION 1. PLACE OF MEETINGS -- The annual meeting of stockholders
shall be held in the City of New York, New York, at the place therein
determined by the directors and set forth in the notice thereof, but other
meetings of the stockholders may be held at such place or places as shall be
fixed by the directors and stated in the notice of the meeting.

         SECTION 2. ANNUAL ELECTION OF DIRECTORS -- The annual meeting of
stockholders for the election of directors and the transaction of other
business shall be held, in each year, commencing in 1965, on the last Tuesday
in April.

         If this date shall fall upon a legal holiday, the meeting shall be
held on the next succeeding business day. At each annual meeting the
stockholders entitled to vote shall elect a Board of Directors and they may
transact such other corporate business as shall be stated in the notice of the
meeting.

         No change of the time or place of a meeting for the election of
directors, as fixed by the Bylaws, shall be made
<PAGE>   2
within sixty (60) days next before the day on which such election is to be
held. in case of any change in such time or place for such election of
directors, notice thereof shall be given to each stockholder entitled to vote,
in person, or by letter mailed to his last known post office address, twenty
days before the election is held.

         SECTION 3. VOTING -- Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation and in accordance with the
provisions of these Bylaws shall be entitled to one vote, in person or by
proxy, for each share of stock entitled to vote held by such stockholder, but
no proxy shall be voted after three years from its date unless such proxy
provides for a longer period. After the first election of directors, except
where the transfer books of the corporation shall have been closed or a date
shall have been fixed as the record date for the determination of its
stockholders entitled to vote, no share of stock shall be voted on at any
election for directors which shall have been transferred on the books of the
corporation within twenty days next preceding such election. Upon the demand of
any stockholder, the vote for directors and the vote upon any question before
the meeting, shall be by ballot. All elections for directors shall be decided
by plurality vote; all other questions shall be decided by majority vote except
as otherwise provided by the Certificate of Incorporation or the laws of the
State of Delaware.

         A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the residence of each, and the
number of voting shares held by each, shall be prepared by the Secretary and
filed in the office where the election is to be held, at least ten days
before every election, and shall at all times during the usual hours for
business, and during the whole time of said election, be open to examination of
any stockholder.

         SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation or by these Bylaws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present.   At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to




                                      2
<PAGE>   3
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.

         SECTION 5. SPECIAL MEETINGS -- Special meetings of the stockholders
for any purpose or purposes may be called by the President or Secretary, and
shall be called upon a requisition in writing therefor, stating the purpose or
purposes thereof, delivered to the President or Secretary, signed by a majority
of the directors, or by twenty-five per cent in interest of the stockholders
entitled to vote, or by resolution of the directors.

         SECTION 6. NOTICE OF MEETINGS -- Written or printed notice, stating
the place and time of the meeting, and the general nature of the business to be
considered, shall be given by the Secretary to each stockholder entitled to
vote thereat at his last known post office address, at least ten days before
the meeting in the case of an annual meeting and five days before the meeting
in the case of a special meeting.

         No business other than that stated in the notice shall be transacted
at any meeting without the unanimous consent of all the stockholders entitled
to vote thereat.

         SECTION 7. ACTION WITHOUT MEETING -- Whenever the vote of stockholders
at a meeting thereof is required or permitted to be taken in connection with
any corporate action by any provisions of the statutes or of the Certificate of
Incorporation or of these Bylaws, the meeting and vote of stockholders may be
dispensed with if all the stockholders, who would have been entitled to vote
upon the action if such meeting were held, shall consent in writing to such
corporate action being taken.

                                  ARTICLE III

                                   DIRECTORS

         SECTION 1. NUMBER AND TERM -- The number of directors shall be three
(3). The directors shall be elected at the annual meeting of the stockholders
and each director shall be elected to serve until his successor shall be
elected and shall qualify. Directors need not be stockholders.

         SECTION 2. RESIGNATIONS -- Any director, member of a committee or
other officer may resign at any time. Such resignation shall be made in writing,
and shall take effect at the time specified therein, and if no time be
specified, at the time of its receipt by the President or Secretary.  The
acceptance of a resignation shall not be necessary to make it effective.





                                       3
<PAGE>   4
         SECTION 3. VACANCIES -- If the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office,
by a majority vote, may appoint any qualified person to fill such vacancy, who
shall hold office for the unexpired term and until his successor shall be duly
chosen.

         SECTION 4. REMOVAL -- Any director or directors may be removed, either
for or without cause, at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for that purpose.

         SECTION 5. INCREASE OF NUMBER -- The number of directors may be
increased by amendment of these Bylaws by the affirmative vote of a majority of
the directors, though less than a quorum, or, by the affirmative vote of a
majority in interest of the stockholders, at the annual meeting or at a special
meeting called for that purpose, and by like vote the additional directors may
be chosen at such meeting to hold office until the next annual election and
until their successors are elected and qualify.

         SECTION 6. POWERS -- The Board of Directors shall exercise all of the
powers of the corporation except such as are by law, or by the Certificate of
Incorporation of the corporation, or by these Bylaws conferred upon or reserved
to the stockholders.

         SECTION 7. COMMITTEES -- The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board, designate one or more
committees, each committee to consist of two or more of the directors of the
corporation, which, to the extent provided in said resolution or resolutions or
in these Bylaws, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the corporation, and
may have power to authorize the seal of the corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be stated in these Bylaws or as may be determined from time to
time by resolution adopted by the Board of Directors. The committees shall keep
regular minutes of their proceedings and report the same to the Board when
required.

         SECTION 8. MEETINGS -- The newly elected directors may hold their
first meeting for the purpose of organization and the transaction of business,
if a quorum be present, immediately after the annual meeting of the
stockholders; or the time and place of such meeting may be fixed by consent in
writing of all the directors.





                                       4
<PAGE>   5
         Regular meetings of the directors may be held without notice at such
places and times as shall be determined from time to time by resolution of the
directors.

         Special meetings of the Board may be called by the President or by the
Secretary on the written request of any two directors on at least two days'
notice to each director and shall be held at such place or places as may be
determined by the directors, or as shall be stated in the call of the meeting.

         SECTION 9. QUORUM -- A majority of the directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board there
shall be less than a quorum present, a majority of those present may adjourn
the meeting from time to time until a quorum is obtained, and no further notice
thereof need be given other than by announcement at the meeting which shall be
so adjourned.

         SECTION 10. COMPENSATION -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board, a fixed fee and expense of attendance may be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity, as an
officer, agent or otherwise, and receiving compensation therefor.

                                   ARTICLE IV

                                    OFFICERS

         SECTION 1. OFFICERS -- The officers of the corporation shall be a
President, one or more Vice-Presidents, a Treasurer, and a Secretary, and such
Assistant Treasurers and Assistant Secretaries as the Board of Directors may
deem proper. In addition, the Board of Directors may elect a Chairman of the
Board of Directors.  All of such officers shall be elected by the Board of
Directors. None of the officers, except the Chairman of the Board of Directors
and the President, need be directors. The officers shall be elected at the
first meeting of the Board of Directors after each annual meeting. Any two
offices, other than those of President and Vice-President, may be held by the
same person. More than two offices, other than those of President and
Secretary, may be held by the same person.

         SECTION 2. OTHER OFFICERS AND AGENTS -- The Board of Directors may
appoint such other officers and agents as it may deem advisable, who shall hold
their offices for such terms





                                       5
<PAGE>   6
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors.

         SECTION 3. CHAIRMAN -- The Chairman of the Board of Directors, if one
be elected, shall preside at all meetings of the Board of Directors and he
shall have and perform such other duties as from time to time may be assigned
to him by the Board of Directors or the Executive Committee.

         SECTION 4. PRESIDENT -- The President shall be the chief executive
officer of the corporation and shall have the general powers and duties of
supervision and management usually vested in the office of President of a
corporation.  He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the corporation. Except
as the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages and other contracts in behalf of the
corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed, the seal shall be attested by the signature of the
Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer.

         SECTION 5.  VICE-PRESIDENT -- Each Vice-President shall have such
powers and shall perform such duties as shall be assigned to him by the
Directors.

         SECTION 6.  TREASURER -- The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation.   He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositaries as may be designated by the Board of
Directors.

         The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, or the President, taking proper vouchers for
such disbursements.  He shall render to the President and Board of Directors
at the regular meetings of the Board of Directors, or whenever they may request
it, an account of all his transactions as Treasurer and of the financial
condition of the corporation. If required by the Board of Directors, he shall
give the corporation a bond for the faithful discharge of his duties in such
amount and with such surety as the Board shall prescribe.

         SECTION 7. SECRETARY -- The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and





                                       6
<PAGE>   7
directors, and all other notices required by law or by these Bylaws, and in
case of his absence or refusal or neglect so to do, any such notice may be
given by any person thereunto directed by the President, or by the directors,
or stockholders, upon whose requisition the meeting is called as provided in
these Bylaws. He shall record all the proceedings of the meetings of the
corporation and of the directors in a book to be kept for that purpose, and
shall perform such other duties as may be assigned to him by the directors or
the President. He shall have the custody of the seal of the corporation and
shall affix the same to all instruments requiring it, when authorized by the
directors or the President, and attest the same.

         SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES -- Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.

                                   ARTICLE V

                                 MISCELLANEOUS

         SECTION 1. CERTIFICATES OF STOCK -- Certificates of stock, numbered
and with the seal of the corporation affixed, signed by the President or
Vice-President, and the Treasurer or an Assistant Treasurer, or Secretary or an
Assistant Secretary, shall be issued to each stockholder certifying the number
of shares owned by him in the corporation.  When such certificates are signed
by a transfer agent or an assistant transfer agent or by a transfer clerk
acting on behalf of the corporation and a registrar, the signatures of such
officers may be facsimiles.

         SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be
issued in the place of any certificate theretofore issued by the corporation,
alleged to have been lost or destroyed, and the directors may, in their
discretion, require the owner of the lost or destroyed certificate, or his
legal representatives, to give the corporation a bond, in such sum as they may
direct, not exceeding double the value of the stock, to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.

         SECTION 3. TRANSFER OF SHARES -- The shares of stock of the
corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the corporation by





                                       7
<PAGE>   8
the delivery thereof to the person in charge of the stock and transfer books
and ledgers, or to such other person as the directors may designate, by whom
they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer, and a duplicate thereof mailed to the
Delaware office, and whenever a transfer shall be made for collateral security,
and not absolutely, it shall be so expressed in the entry of the transfer.

         SECTION 4. CLOSING OF TRANSFER BOOKS -- The Board of Directors shall
have power to close the stock transfer books of the corporation for a period
not exceeding fifty days preceding the date of any meeting of stockholders or
the date for payment of any dividend or the date for the allotment of rights or
the date when any change or conversion or exchange of capital stock shall go
into effect; provided, however, that in lieu of closing the stock transfer
books as aforesaid, the Board of Directors may fix in advance a date, not
exceeding fifty days preceding the date of any meeting of stockholders or the
date for the payment of any dividend or the date for the allotment of rights or
the date when any change or conversion or exchange of capital stock shall go
into effect, as a record date for the determination of the stockholders
entitled to notice of, and to vote at, any such meeting, or entitled to receive
payment of any such dividends or to any such allotment of rights or to exercise
the rights in respect of any such change, conversion or exchange of capital
stock, and in such case such stockholders only as shall be stockholders of
record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting, or to receive payment of such dividend or to receive such
allotment of rights or to exercise such rights, as the case may be,
notwithstanding any transfer of any stock on the books of the corporation after
any such record date fixed as aforesaid.

         SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate
of Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.

         SECTION 6. SEAL -- The corporate seal shall be circular in form and
shall contain the name of the corporation, the year of its creation and the
words "CORPORATE SEAL DELAWARE." Said seal may be used by causing it or a
facsimile thereof to





                                       8
<PAGE>   9
be impressed or affixed or reproduced or otherwise.

         SECTION 7. FISCAL YEAR -- The fiscal year of the corporation shall be
the calendar year.

         SECTION 8. CHECKS -- All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name
of the corporation shall be signed by such officer or officers, agent or agents
of the corporation, and in such manner as shall be determined from time to time
by resolution of the Board of Directors.

         SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required by these Bylaws to be given, personal notice is not meant unless
expressly so stated, and any notice so required shall be deemed to be
sufficient if given by depositing the same in a post office box in a sealed
post-paid wrapper, addressed to the person entitled thereto at his last known
post office address, and such notice shall be deemed to have been given on the
day of such mailing.  Stockholders not entitled to vote shall not be entitled
to receive notice of any meetings except as otherwise provided by Statute.

         Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Certificate of
Incorporation of the corporation or these Bylaws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.

                                   ARTICLE VI

                                   AMENDMENTS

         These Bylaws may be altered or repealed and Bylaws may be made at any
annual meeting of the stockholders or at any special meeting thereof if notice
of the proposed alteration or repeal or Bylaw or Bylaws to be made be contained
in the notice of such special meeting, by the affirmative vote of a majority of
the stock issued and outstanding and entitled to vote thereat, or by the
affirmative vote of a majority of the Board of Directors, at any regular
meeting of the Board of Directors, or at any special meeting of the Board of
Directors, if notice of the proposed alteration or repeal, or Bylaw or Bylaws
to be made, be contained in the notice of such special meeting.





                                       9

<PAGE>   1
                                                                    EXHIBIT 3.25

                          CERTIFICATE OF INCORPORATION
                                       OF
                       FIELDCREST CANNON LICENSING, INC.

     The undersigned, being of the age of eighteen years or more, does hereby
make and acknowledge this Certificate of Incorporation for the purpose of
forming a business corporation under and by virtue of the State of Delaware.

                                       I.

     The name of the corporation is Fieldcrest Cannon Licensing, Inc.

                                      II.

     The address of the initial registered office of the corporation in the
State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover, Delaware
19904, County of Kent, and the name of the initial registered agent at such
address is The Prentice-Hall Corporation System, Inc.

                                      III.

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

                                      IV.

     The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000) shares of Common Stock, no par value
per share.

                                       V.

     The name and address of the sole incorporator are Joyce Kotzker, 200 West
Second Street, 1600 Southern National Financial Center, Winston-Salem, NC 27101.

                                      VI.

     No person who is serving or has served as director of the corporation
shall be liable to the corporation or to any stockholder for monetary damages
for breach of any fiduciary 
<PAGE>   2
this article becomes effective. Nothing herein shall be deemed to limit or 
eliminate the liability of any person (i) for any breach of such person's duty
of loyalty as a director to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law; (iii) for the unlawful payment of a dividend by
the corporation or the unlawful purchase or redemption of the corporation's
capital stock by the corporation; (iv) for any transaction from which such
person derived an improper personal benefit; or (v) to any extent that such
liability may not be limited or eliminated by virtue of the provisions of
Section 102(b)(7) of the General Corporation Law of the State of Delaware or
any successor statute.

     The undersigned incorporator hereby acknowledges that the foregoing
certificate of incorporation is her act and deed and that the facts stated
therein are true.

     IN WITNESS WHEREOF, the undersigned sole incorporator of the corporation
has hereunto set her hand this 8th day of December, 1994.
                                                 
                                                        /s/ JOYCE KOTZKER      
                                                   -----------------------------
                                                    Joyce Kotzker, Incorporator

<PAGE>   1
                                                                    EXHIBIT 3.26

                                     BYLAWS

                                       OF

                        FIELDCREST CANNON LICENSING INC.

                           EFFECTIVE DECEMBER 8, 1994

                                   ARTICLE I

                                    Offices

                 Section 1.  Principal and Registered Offices. The principal
office of the Corporation shall be located at such place as the Board of
Directors may specify from time to time.  The registered office of the
Corporation shall be located at 306 South State Street, Kent County, Dover,
Delaware.

                 Section 2.  Other Offices. The Corporation may have offices
at such other places, either within or without the State of Delaware, as the
Board of Directors may from time to time determine.


                                   ARTICLE II

                            Meetings of Stockholders

                 Section 1.  Place of Meeting. Meetings of stockholders shall
be held at the principal office of the Corporation or at such other place or
places, either within or without the State of Delaware, as shall either (i) be
designated in the notice of the meeting or (ii) be agreed upon at or before the
meeting by a majority of the stockholders entitled to vote at the meeting.

                 Section 2.  Annual Meetings. The annual meeting of
stockholders shall be at such time as determined by the Board of Directors for
the purpose of electing directors of the Corporation and the transaction of such
other business as may be properly brought before the meeting.

                 Section 3.  Substitute Annual Meetings. If the annual
meeting is not held on the day designated by these bylaws, a substitute annual
meeting may be called in accordance with Section 4 of this Article II.  A
meeting so called shall be designated and treated for all purposes as the
annual meeting.

                 Section 4.  Special Meetings. Special meetings of the
stockholders for any purpose or purposes may be called at any time by the
President or by order of the Board of Directors, and shall be called by the
President or by order of the Board of Directors upon the written request of any
member of the Board of Directors or the holder or holders of at least 10% of
all the shares of capital stock entitled to vote at the meeting.
<PAGE>   2
                 Section 5.    Notice of Meetings.  Written or printed notice,
stating the time and place of the meeting and, in the case of a special
meeting, briefly describing the purpose or purposes of the meeting, shall be
given not less than ten nor more than sixty days before the date of the
meeting, to each stockholder of record entitled to vote at the meeting, by
delivering a written notice thereof to him personally, or by mailing such
notice in a postage prepaid envelope directed to him at his last address as it
appears on the stock records of the Corporation.  It shall be the primary
responsibility of the Secretary to give the notice, but notice may be given by
or at the direction of the President or other person or persons calling the
meeting. If a matter (other than the election of directors) is to be considered
at an annual meeting on which a vote of stockholders is required by law or
otherwise, notice shall be given as if the meeting were a special meeting. If
any stockholder shall, in person or by attorney thereunto authorized, waive in
writing notice of any meeting of the stockholders, whether prior to or after
such meeting, notice thereof need not be given to him.  Notice of any adjourned
meeting of the stockholders shall not be required to be given, except where
expressly required by law.

                 Section 6.    Proxies. A stockholder may attend, represent,
and vote his shares at any meeting in person, or be represented and have his
shares voted for by a proxy which such stockholder has duly executed in
writing.  No proxy shall be valid after eleven (11) months from the date of its
execution unless a longer period is expressly provided in the proxy. Each
proxy shall be revocable unless otherwise expressly provided therein or unless
otherwise made irrevocable by law.

                 Section 7.    Quorum. Except as otherwise provided by law, the
holders of a majority of the shares entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of stockholders. In the
absence of a quorum, any officer entitled to preside at, or act as Secretary
of, such meeting, shall have the power to adjourn the meeting from time to time
until a quorum shall be constituted.  At any such adjourned meeting at which a
quorum shall be present any business may be transacted which might have been
transacted at the meeting as originally called. When a quorum is once present
to organize a meeting, the stockholders present may continue to do business at
the meeting or at any adjournment thereof notwithstanding the withdrawal of
enough stockholders to leave less than a quorum.

                 Section 8.    Voting of Shares. Each outstanding share of
voting capital stock of the Corporation shall be entitled to one vote on each
matter submitted to a vote at a meeting of the stockholders, except as
otherwise provided in the certificate of incorporation. The vote by the holders
of a majority of the shares voted on any matter at a meeting of stockholders at
which a quorum is present shall be the act of the stockholders on that matter,
unless the vote of a greater number is required by law, by the certificate of
incorporation, or by these bylaws of the Corporation. Voting on all matters
shall be by voice vote or by a show of hands, unless the holders of 10% of the
shares represented at the meeting shall demand a vote by written ballot on a
particular matter.

               Section 9.     Action Without Meeting. Any action which the
stockholders could take at a meeting may be taken without a meeting if a consent
in writing, setting forth the action taken, shall be signed by the holders of
outstanding stock having not less than the minimum.

                                      -2-
<PAGE>   3
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
The consent shall be filed with the Secretary of the Corporation as part of the
corporate records.  Such written consent shall have the same force and effect
as a vote of stockholders, and may be stated as such in any articles,
certificates or documents filed with the Secretary of State of Delaware, or any
other state wherein the Corporation may do business.

                 Section 10.     Meeting by Use of Conference Telephone.
Subject to the requirement for notice of meetings and if permitted by
applicable law, stockholders may participate in and hold a meeting of such
stockholders by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a meeting shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.

                 Section 11.     Record Date. The Board of Directors may fix,
in advance, a date as the record date for the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders,
or stockholders entitled to receive payment of any dividend or the allotment of
any rights, or in order to make a determination of stockholders for any other
proper purpose. Such date, in any case, shall be not more than sixty days, and
in case of a meeting of stockholders not less ten days, prior to the date on
which the particular action requiring such determination of stockholders is to
be taken. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting
unless the Board of Directors fixes a new record date for the adjourned
meeting. If the stock transfer books are not closed, and no record date is
fixed for the determination of stockholders, or of stockholders entitled to
receive payment of a dividend, the date on which notice of the meeting is
mailed, or the date on which the resolution of the Board of Directors declaring
the dividend is adopted, as the case may be, shall be the record date for the
determination of stockholders.

                 Section 12.     List of Stockholders. It shall be the duty of
the Secretary or other officer of the Corporation who shall have charge of the
stock records, either directly or through a transfer agent appointed by the
Board of Directors, to prepare and make, at least ten days before every
stockholders meeting, a complete list of stockholders entitled to vote at such
meeting arranged in alphabetical order. Such list shall be open to the
examination of any stockholder at the principal office of the Corporation for
said ten days before such meeting, and shall be produced and kept at the time
and place of the meeting during the whole time thereof and shall be subject to
the inspection of any stockholder who may be present. The stock records of the
Corporation shall be the only evidence of who are the stockholders entitled to
examine such list or the books of the Corporation or to vote in person or by
proxy at such meeting.

                                      -3-
<PAGE>   4
                                  ARTICLE III

                               Board of Directors

                 Section 1.    General Powers. The business and affairs of the
Corporation shall be managed by the Board of Directors except as otherwise
provided by law, by the certificate of incorporation of the Corporation or by
these bylaws.

                 Section 2.    Number, Term and Qualification. The Board of
Directors of the Corporation shall consist of one or more members, the number
of which shall be set each year by the stockholders of the Corporation.  Tne
initial number of directors shall be four. Each director shall hold office
until the next annual meeting of stockholders and until a successor is elected
and qualified, or until his death, resignation or removal pursuant to these
bylaws.  Directors need not be residents of the State of Delaware or
stockholders of the Corporation.

                Section 3.    Removal. Directors may be removed from office
with or without cause by a vote of stockholders who hold shares entitled to
vote at an election of directors that constitute a majority of the aggregate
voting power of the outstanding capital stock of the Corporation. If any
directors are so removed, new directors may be elected at the same meeting.

                 Section 4.    Resignation. Any director of the Corporation may
resign at any time by giving written notice to the President or the Secretary
of the Corporation. The resignation of any director shall take effect upon
receipt of notice thereof or at such later time as shall be specified therein.
The acceptance of such resignation shall not be necessary to make it effective.

                 Section 5.    Vacancies. Any vacancy in the Corporation's
Board of Directors may be filled by a majority of the remaining directors (or
the sole remaining director). Any vacancy created by an increase in the
authorized number of directors shall be filled only by election at an annual
meeting or at a special meeting of stockholders called for that purpose. The
stockholders may elect a director at any time to fill a vacancy not filled by
the directors.

                 Section 6.    Compensation. The directors shall not receive
compensation for their services as such, except that the directors shall be
entitled to be reimbursed for any reasonable expenses paid by them by reason of
their attendance at any regular or special meeting of the Board of Directors or
any of its committees, and by resolution of the Board of Directors, the
directors may be paid fees, which may include but are not restricted to fees
for attendance at meetings of the Board or any of its committees. Any director
may serve the Corporation in any other capacity and receive compensation
therefor.

                                      -4-
<PAGE>   5
                                   ARTICLE IV

                             Meetings of Directors

                 Section 1.    Annual and Regular Meetings. The annual meeting
of the Board of Directors for the purpose of electing officers and transacting
such other business as may be brought before the meeting shall be held
immediately following the annual meeting of the stockholders. The Board of
Directors may by resolution provide for the holding of regular meetings of the
Board on specified dates and at specified times. If any date for which a
regular meeting is scheduled shall be a legal holiday, the meeting shall be
held on the next business day that is not a legal holiday or on a date
designated in the notice of the meeting during either the same week in which
the regularly scheduled date falls or during the preceding or following week.
Regular meetings of the Board shall be held at the principal office of the
Corporation or at such other place as may be designated in the notice of the
meeting.  Notice of annual meetings or any regular meetings held at the
principal office of the Corporation and at the usual scheduled time shall not
be required.

                 Section 2.    Special Meetings. Special meetings of the Board
of Directors may be called by or at the request of the Chairman of the Board,
the President or any one director. Such meetings may be held at the time and
place designated in the notice of the meeting.

                 Section 3.    Notice of Meetings. The Secretary or other
person or persons calling a meeting for which notice is required shall give
notice by mail or telegram at least five days before the meeting, or by
telephone at least twenty-four hours before the meeting. Oral notice may be
substituted for such written notice if given not less than five days before the
meeting. Notice of the time, place and purpose of such meeting may be waived in
writing before or after such meeting, and shall be equivalent to the giving of
the notice.  Attendance by a director at a meeting for which notice is required
shall constitute a waiver of notice, except where a director attends the
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called.  Except as otherwise herein
provided, neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in this
notice of such meeting.

                 Section 4.    Quorum. A majority of the directors in office
shall constitute a quorum for the transaction of business at a meeting of the
Board of Directors, but a smaller number may adjourn the meeting from time to
time until a quorum shall be present. Any regular or special directors' meeting
may be adjourned from time to time by those present, whether a quorum is
present or not.

                 Section 5.    Manner of Acting. Except as otherwise provided
by law, these bylaws or the certificate of incorporation of the Corporation or
otherwise, the act of the majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.

                 Section 6.    Action Without Meeting. Action taken by a
majority of the directors or of a committee of directors without a meeting is
nevertheless Board or committee

                                      -5-
<PAGE>   6
action, if written consent to the action is signed by all the director or
members of the committee, as the case may be, and filed with the minutes of the
proceedings of the Board or committee, whether done before or after the action
is taken.  Such unanimous written consent shall have the same force and effect
as a unanimous vote at a meeting, and may be stated as such in any articles,
certificates or documents filed with the Secretary of State of Delaware, or any
other state wherein the corporation may do business.

                 Section 7.    Meetings by Use of Conference Telephone. Any one
or more directors or members of a committee may participate in a meeting of the
Board or any of its committees by means of a conference telephone or similar
communications device which allows all persons participating in the meeting to
hear each other, and such participation in a meeting shall be deemed presence
in person at such meeting, except where a person participates in the meeting
for the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.


                                   ARTICLE V

                                   Committees

                 Section 1.     Designation of Committees. The Board of
Directors may, by resolution passed by a majority of the whole Board of
Directors, designate one or more committees, each committee to consist of one
or more of the directors of the Corporation. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Any
such committee, to the extent provided in these bylaws or in the resolution of
the Board of Directors establishing the same, shall have and may exercise all
the powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation. Such committees or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the Board of Directors.

                 Section 2.     Executive Committee. There may be an Executive
Committee of not more than three directors designated by resolution passed by a
majority of the whole Board of Directors.  Such committee may meet at stated
times, or on notice to all by any of their own number. During intervals between
meetings of the Board of Directors, the Executive Committee shall have and may
exercise the powers of the Board of Directors in the management of the business
and affairs of the Corporation, except that the Executive Committee shall not
have authority to authorize or approve the following matters:

                          (a)     The dissolution, merger or consolidation of
                 the Corporation or the sale, lease or exchange of all or
                 substantially all the property or assets of the Corporation.

                          (b)     The designation of an Executive Committee or
                 any other committee of directors having power to exercise any
                 of the authority of the Board of Directors in the management
                 of the Corporation or the filling of vacancies in the Board of
                 Directors or in such committee.

                                      -6-
<PAGE>   7
                          (c)     Fixing of compensation of the directors
                 for serving on the Board or on such committee.

                          (d)     The amendment or repeal of the bylaws, or the
                 adoption of new bylaws.

                          (e)     The amendment or repeal of any resolution of
                 the Board of Directors which by its terms shall not be so
                 amendable or repealable.

Vacancies in the membership of the Executive Committee shall be filled by a
majority of the whole Board of Directors at a regular meeting or at a special
meeting called for that purpose.

                 Section 3.     Minutes. Each committee shall keep minutes of
its proceedings and shall report thereon to the Board of Directors at or before
the next meeting of the Board.

                 Section 4.     Action Without Meeting Telephonic Meeting.
Action may be taken by each committee in the manner allowed by the Board of
Directors pursuant to Sections 6 and 7 of Article IV.

                                   ARTICLE VI

                                    Officers

                 Section 1.     The officers of the Corporation shall be 
elected by the Board of Directors and shall consist of a President, a Secretary
and a Treasurer.  The Board of Directors may also elect a Chairman of the Board
of Directors, an Executive Vice President, one or more additional Vice
Presidents, a Controller, one or more Assistant Secretaries, one or more
Assistant Treasurers, one or more Assistant Controllers, and such other
officers as it shall deem necessary. Except as otherwise provided in these
bylaws, the additional officers shall have the authority and perform the duties
as from time to time may be prescribed by the Board of Directors.  Any two or
more offices may be held by the same individual, but no officer may act in more
than one capacity where action of two or more officers is required.

                 Section 2.     Election and Term. The officers of the
Corporation shall be elected by the Board of Directors at the regular meeting
of the Board held each year immediately following the annual meeting of the
stockholders.  Each officer shall hold office until the next regular meeting at
which officers are to be elected and until a successor is elected and qualifies
or until his death, resignation, or removal pursuant to these bylaws.

                 Section 3.     Removal. Any officer or agent elected or
appointed by the Board of Directors may be removed by the Board whenever in its
judgment the best interests of the Corporation will be served, but removal
shall be without prejudice to any contract rights of the individual removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.

                 Section 4.     Vacancies. Vacancies among the officers may be
created and filled by the Board of Directors.

                                      -7-
<PAGE>   8
                 Section 5.     Compensation. The compensation and all other
terms of employment of the officers shall be fixed by the disinterested members
of the Board of Directors. No officer shall be prevented from receiving such
compensation by reason of the fact that such officer is also a director of the
Corporation.

                 Section 6.     Chairman of the Board of Directors. The
Chairman of the Board of Directors, if such officer is elected, shall preside
at meetings of the Board of Directors and shall have such other authority and
perform such other duties as the Board of Directors shall designate.

                 Section 7.     President. The President shall be in general
charge of the affairs of the Corporation in the ordinary course of its
business, and shall preside at meetings of the stockholders. The President may
perform such acts, not inconsistent with the applicable law or the provisions
of these bylaws, as may be performed by the president of a corporation and may
sign and execute all authorized notes, bonds, contracts and other obligations
in the name of the Corporation. The President shall have such other powers and
perform such other duties as the Board of Directors shall designate or as may
be provided by applicable law or elsewhere in these bylaws.

                 Section 8.     Vice Presidents. The Executive Vice President,
if such, officer is elected, shall exercise the powers of the President during
that officer's absence or inability to act. In default of both the President
and the Executive Vice President, any other Vice President may exercise the
powers of the President. Any action taken by a Vice President in the
performance of the duties of the President shall be presumptive evidence of the
absence or inability to act of the President at the time the action was taken.
The Vice Presidents shall have such other powers and perform such other duties
as may be assigned by the Board of Directors.

                 Section 9.     Treasurer. The Treasurer shall have custody of
all funds and securities belonging to the Corporation and shall receive,
deposit or disburse the same under the direction of the Board of Directors.
The treasurer shall keep full and accurate accounts of the finances of the
Corporation and shall cause a true statement of the assets and liabilities of
the Corporation as of the close of each fiscal year and of the results of its
operations and of changes in surplus, all in reasonable detail, to be made and
filed at the principal office of the Corporation within four months after the
end of the fiscal year.  The statement shall be available for inspection by any
stockholder for a period of ten years, and the Treasurer shall mail or
otherwise deliver a copy of the latest statement to any stockholder upon
written request. The Treasurer shall in general perform all duties incident to
the office and such other duties as may be assigned from time to time by the
President or by the Board of Directors.

                 Section 10.     Assistant Treasurers. Each Assistant Treasurer
shall have such powers and perform such duties as may be assigned by the Board
of Directors, and the Assistant Treasurers shall exercise the powers of the
Treasurer during that officer's absence or inability to act.

                 Section 11.      Controller and Assistant Controllers. The
Controller shall have charge of the accounting  affairs of the Corporation and
shall have such other powers and

                                      -8-
<PAGE>   9
perform such other duties as the Board of Directors shall designate. Each
Assistant Controller shall have such powers and perform such duties as may be
assigned by the Board of Directors and the Assistant Controllers shall exercise
the powers of the Controller during that officer's absence or inability to act.

                 Section 12.    Secretary. The Secretary shall keep accurate
records of the acts and proceedings of all meetings of stockholders and of the
Board of Directors and shall give all notices required by law and by these
bylaws. Tne Secretary shall have general charge of the corporate books and
records and of the corporate seal and shall affix the corporate seal to any
lawfully executed instrument requiring it. The Secretary shall have general
charge of the stock transfer books of the Corporation and shall keep at the
principal office of the Corporation a record of stockholders, showing the name
and address of each stockholder and the number and class of the shares held by
each. The Secretary shall sign such instruments as may require the signature
of the Secretary, and in general shall perform the duties incident to the
office of Secretary and such other duties as may be assigned from time to time
by the President or by the Board of Directors.

                 Section 13.    Assistant Secretaries. Each Assistant Secretary
shall have such powers and perform such duties as may be assigned by the Board
of Directors, and the Assistant Secretaries shall exercise the powers of the
Secretary during that officer's absence or inability to act.

                 Section 14.    Voting Upon Stocks. Unless otherwise ordered by
the Board of Directors, the President shall have full power and authority in
behalf of the Corporation to attend, act and vote at meetings of the
stockholders of any Corporation in which this Corporation may hold stock, and
at such meetings shall possess and may exercise any and all rights and powers
incident to the ownership of such stock and which, as the owner, the
Corporation might have possessed and exercised if present. The Board of
Directors may by resolution from time to time confer such power and authority
upon any other person or persons.


                                  ARTICLE VII

                                 Capital Stock

                 Section 1.      Certificates. Certificates for shares of the
capital stock of the Corporation shall be in such form not inconsistent with
the certificate of incorporation of the Corporation as shall be approved by the
Board of Directors. The certificates shall be consecutively numbered or
otherwise identified.  The name and address of the persons to whom they are
issued, with the number of shares and date of issue, shall be entered on the
stock transfer records of the Corporation. Each certificate shall be signed by
the President or any Vice President and by the Secretary, Assistant Secretary,
Treasurer or Assistant Treasurer; provided, that where a certificate is signed
by a transfer agent or assistant transfer agent of the Corporation, the
signatures of such officers of the Corporation upon the certificate may be by
facsimile, engraved or printed. Each certificate shall be sealed with the seal
of the Corporation or a facsimile thereof.


                                      -9-
<PAGE>   10
                 Section 2.    Transfer of Shares. Transfer of shares shall be
made on the stock transfer books of the Corporation only upon surrender of the
certificate for the shares sought to be transferred by the record holder or by
a duly authorized agent, transferee or legal representative. All certificates
surrendered for transfer shall be cancelled before new certificates for the
transferred shares shall be issued.

                 Section 3.    Transfer Agent and Registrar. The Board of
Directors may appoint one or more transfer agents and one or more registrars of
transfers and may require all stock certificates to be signed or countersigned
by the transfer agent and registered by the registrar of transfers.

                 Section 4.    Regulations. The Board of Directors shall have
power and authority to make rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
capital stock of the Corporation.

                 Section 5.    Lost Certificates. The Board of Directors may
authorize the issuance of a new certificate in place of a certificate claimed
to have been lost or destroyed, upon receipt of an affidavit from the person
explaining the loss or destruction. When authorizing issuance of a new
certificate, the Board may require the claimant to give the Corporation a bond
in a sum as it may direct to indemnify the Corporation against loss from any
claim with respect to the certificate claimed to have been lost or destroyed;
or the Board may, by resolution reciting that the circumstances justify such
action, authorize the issuance of the new certificate without requiring a bond.


                                  ARTICLE VIII

                               General Provisions

                 Section 1.    Dividends. The Board of Directors may from
time to time declare, and the Corporation may pay, dividends out of its earned
surplus on its outstanding shares in the manner and upon the terms and
conditions provided by law.

                 Section 2.    Seal. The seal of the Corporation shall have
inscribed thereon the name of the Corporation and "Delaware" around the
perimeter, and the words "Corporate Seal" in the center.

                 Section 3.    Waiver of Notice. Whenever notice is required
to be given to a stockholder, director or other person under the provisions of
these bylaws, the certificate of incorporation of the Corporation or by
applicable law, a waiver in writing signed by the person or persons entitled to
the notice, whether before or after the time stated in the notice, shall be
equivalent to giving the notice.

                 Section 4.    Depositories and Checks. All funds of the
Corporation shall be deposited in the name of the Corporation in such bank,
banks, or other financial institutions as the Board of Directors may from time
to time designate and shall be drawn out on checks, drafts

                                      -10-
<PAGE>   11
or other orders signed on behalf of the Corporation by such person or persons
as the Board of Directors may from time to time designate.

                 Section 5.       Bond. The Board of Directors may by
resolution require any or all officers, agents and employees of the Corporation
to give bond to the Corporation, with sufficient sureties, conditioned on the
faithful performance of the duties of their respective offices or positions,
and to comply with such other conditions as may from time to time be required
by the Board.

                 Section 6.       Loan. No loans shall be contracted on behalf
of the Corporation and no evidence of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors. Such authority
may be general or confined to specific instances.

                 Section 7.       Taxable Year. The taxable year of the
Corporation shall be the period ending on December 31 of each year or such
other period as the Board of Directors shall from time to time determine.

                  Section 8.      Indemnification of Directors and Officers.

                 (a)      Right to Indemnification. Each person who was or is
                 made a party to or is threatened to be made a party to or is
                 otherwise involved in any action, suit or proceeding, whether
                 civil, criminal, administrative or investigative (hereinafter
                 a "proceeding"), by reason of the fact that he or she is or
                 was a director, officer or employee of the Corporation or is
                 or was serving at the request of the Corporation as a
                 director, officer, employee or agent of another corporation or
                 of a partnership, joint venture, trust or other enterprise,
                 including service with respect to employee benefit plans
                 (hereinafter an "indemnitee"), whether the basis of such
                 proceeding is alleged action in an official capacity as a
                 director, officer, employee or agent, shall be indemnified and
                 held harmless by the Corporation to the fullest extent
                 authorized by the Delaware General Corporation Law, as the
                 same exists or may hereafter be amended (but, in the case of
                 any such amendment, only to the extent that such amendment
                 permits the Corporation to provide broader indemnification
                 rights than such law permitted the Corporation to provide
                 prior to such amendment), against all expense, liability and
                 loss (including attorneys' fees, judgments, finds, ERISA
                 excise taxes or penalties and amounts paid in settlement)
                 reasonably incurred or suffered by such indemnitee in
                 connection therewith and such indemnification shall continue
                 as to an indemnitee who has ceased to be a director, officer,
                 employee or agent and shall inure to the benefit of the
                 indemnitee's heirs, executors and administrators; provided,
                 however, that, except as provided in paragraph (b) hereof with
                 respect to proceedings to enforce rights to indemnification,
                 the Corporation shall indemnify any such indemnitee in
                 connection with a proceeding (or part thereof) initiated by
                 such indemnitee only if such proceeding (or part thereof) was
                 authorized by the Board of Directors of the Corporation. The
                 right to indemnification conferred in this Section shall be a
                 contract right and shall include the right to be paid by the
                 Corporation the expenses incurred in defending any such
                 proceeding in advance of its final disposition (hereinafter an
                 "advancement of expenses"); provided, however, that if the
                 Delaware General Corporation Law requires, an advancement of
                 expenses

                                      -11-
<PAGE>   12
                 incurred by an indemnitee in his or her capacity as a director
                 or officer (and not in any other capacity in which service was
                 or is rendered by such indemnitee, including without
                 limitation, service to an employee benefit plan) shall be made
                 only upon delivery to the Corporation of an undertaking, by or
                 on behalf of such indemnitee, to repay all amounts so advanced
                 if it shall ultimately be determined by final judicial decision
                 from which there is no further right to appeal that such
                 indemnitee is not entitled to be indemnified for such expenses
                 under this Section or otherwise (hereinafter and
                 "undertaking").

                          (b)     Right of Indemnitee to Bring Suit. If a claim
                 under paragraph (a) of this Section is not paid in full by the
                 Corporation within sixty days after a written claim has been
                 received by the Corporation, except in the case of a claim for
                 an advancement of expenses, in which case the applicable
                 period shall be twenty days, the indemnitee may at any time
                 thereafter bring suit against the Corporation to recover the
                 unpaid amount of the claim. If successful in whole or in part
                 in any such suit or in a suit brought by the Corporation to
                 recover an advancement of expenses pursuant to the terms of an
                 undertaking, the indemnitee shall be entitled to be paid also
                 the expense of prosecuting or defending such suit.  In (i) any
                 suit brought by the indemnitee to enforce a right to
                 indemnification hereunder (but not in a suit brought by the
                 indemnitee to enforce a right to an advancement of expenses)
                 it shall be a defense that, and (ii) any suit by the
                 Corporation to recover an advancement of expenses pursuant to
                 the terms of an undertaking the Corporation shall be entitled
                 to recover such expenses upon a final adjudication that, the
                 indemnitee has not met the applicable standard of conduct set
                 forth in the Delaware General Corporation Law. Neither the
                 failure of the Corporation (including its Board of Directors,
                 independent legal counsel or its stockholders) to have made a
                 determination prior to the commencement of such suit that
                 indemnification of the indemnitee is proper in the
                 circumstances, because the indemnitee has met the applicable
                 standard of conduct set forth in the Delaware General
                 Corporation Law, nor an actual determination by the
                 Corporation (including its Board of Directors, independent
                 legal counsel or its stockholders) that the indemnitee has not
                 met such applicable standard of conduct, shall create a
                 presumption that the indemnitee has not met the applicable
                 standard of conduct or, in the case of such a suit brought by
                 the indemnitee, be a defense to such suit.  In any suit
                 brought by the indemnitee to enforce a right hereunder, or by
                 the Corporation to recover an advancement of expenses pursuant
                 to the terms of an undertaking, the burden of proving that the
                 indemnitee is not entitled to be indemnified or to such
                 advancement of expenses under this Section or otherwise shall
                 be on the Corporation.

                          (c)     Non-Exclusivity of Right. The rights to
                 indemnification and to the advancement of expenses conferred
                 in this Section shall not be exclusive of any other right
                 which any person may have or hereafter acquire under any
                 statute, this certificate of incorporation, these bylaws, by
                 agreement, by vote of stockholders or disinterested directors
                 or otherwise.

                          (d)     Insurance.  The Corporation may maintain
                 insurance, at its expense, to protect itself and any director,
                 officer, employee or agent of the Corporation or another


                                      -12-
<PAGE>   13
                 corporation, partnership, joint venture, trust or other
                 enterprise against any expense, liability or loss under the
                 Delaware General Corporation Law.

                          (e)     Indemnification of Agents of the Corporation.
                 The Corporation may, to the extent authorized from time to
                 time by the Board of Directors, grant rights to
                 indemnification and to the advancement of expenses, to any
                 agent of the Corporation to the fullest extent of the
                 provisions of the Section with respect to the indemnification
                 and advancement of expenses of directors, officers and
                 employees of the Corporation.

                 Section 9.       Amendments.  Except as otherwise provided
herein, these bylaws may be amended or repealed and new bylaws may be adopted
by the affirmative vote of the holders of shares of the Corporation then issued
and entitled to vote at any annual meeting or at any special meeting of
stockholders called for the purpose of considering such action that constitute
at least a majority of the aggregate voting power of the outstanding capital
stock of the Corporation.

                 Section 10.      Stockholders Agreement. To the extent that
the provisions of these bylaws are inconsistent with any stockholders agreement
subsequently entered into by the holders of the Corporation's capital stock,
the stockholders agreement shall control.




               THIS IS TO CERTIFY that the above bylaws of Fieldcrest Cannon
Licensing, Inc. were duly adopted by the Board of Directors of the Corporation
by action taken by unanimous written consent effective the 8th day of December,
1994.

               This 8th day of December, 1994.


                                                 /s/ [ILLEGIBLE]
                                                 ----------------------------
                                                 Secretary



[Corporate Seal]





                                      -13-

<PAGE>   1
                                                                    EXHIBIT 3.27


                          CERTIFICATE OF INCORPORATION
                                       OF
                        FIELDCREST CANNON SURE FIT, INC.

     The undersigned, being of the age of eighteen years or more, does hereby
make and acknowledge this Certificate of Incorporation for the purpose of
forming a business corporation under and by virtue of the laws of the State of
Delaware.

                                       I.

     The name of the corporation is Fieldcrest Cannon Sure Fit, Inc.

                                      II.

     The address of the initial registered office of the corporation in the
State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover, Delaware
19904, County of Kent, and the name of the initial registered agent at such
address is the The Prentice-Hall Corporation System, Inc. 

                                      III.

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

                                      IV.

     The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000) shares of Common Stock, no par value
per share.

                                       V.

     The name and address of the sole incorporator are Sheri L. Crockett, 2100
First Union Capital Center, 150 Fayetteville Street Mall, Raleigh, North
Carolina 27601.

                                      VI.

     No person who is serving or has served as a director of the corporation
shall be liable to the corporation or to any stockholder for monetary damages
for breach of any fiduciary


<PAGE>   2
duty of such person as a director by reason of any act or omission occurring on
or after the date this article becomes effective.  Nothing herein shall be 
deemed to limit or eliminate the liability of any person (i) for any breach of
such person's duty of loyalty as a director to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law; (iii) for the unlawful
payment of a dividend by the corporation or the unlawful purchase or redemption
of the corporation's capital stock by the corporation; (iv) for any transaction
from which such person derived an improper personal benefit; or (v) to any
extent that such liability may not be limited or eliminated by virtue of the
provisions of Section 102(b)(7) of the General Corporation Law of the State of
Delaware or any successor statute.

     The undersigned incorporator hereby acknowledges that the foregoing
certificate of incorporation is her act and deed and that the facts stated
therein are true.

     IN WITNESS WHEREOF, the undersigned sole incorporator of the corporation
has hereunto set her hand this 6th day of January, 1995.



                                        /s/ SHERI L. CROCKETT
                                        ---------------------------------
                                        Sheri L. Crockett, Incorporator



 

<PAGE>   1
                                                                    EXHIBIT 3.28

                                     BYLAWS
                                        
                                       OF
                                        
                        FIELDCREST CANNON SURE FIT, INC.
                                        
                                        
                           EFFECTIVE JANUARY 6, 1995
                                        
                                   ARTICLE I
                                        
                                    Offices


         Section 1. Principal and Registered Offices. The principal office of
the Corporation shall be located at such place as the Board of Directors may
specify from time to time. The registered office of the Corporation shall be
located at 306 South State Street, Kent County, Dover, Delaware.

         Section 2. Other Offices.  The Corporation may have offices at such
other places, either within or without the State of Delaware, as the Board of
Directors may from time to time determine.

                                   ARTICLE II

                            Meetings of Stockholders

         Section 1. Place of Meeting.  Meetings of stockholders shall be held
at the principal office of the Corporation or at such other place or places,
either within or without the State of Delaware, as shall either (i) be
designated in the notice of the meeting or (ii) be agreed upon at or before the
meeting by a majority of the stockholders entitled to vote at the meeting.

         Section 2. Annual Meeting.  The annual meeting of stockholders shall
be at such time as determined by the Board of Directors for the purpose of
electing directors of the Corporation and the transaction of such other business
as may be properly brought before the meeting.

         Section 3. Substitute Annual Meeting.  If the annual meeting is not
held on the day designated by these bylaws, a substitute annual meeting may he
called in accordance with Section 4 of this Article A meeting so called shall be
designated and treated for all purposes as the annual meeting.

         Section 4. Special Meetings.  Special meetings of the stockholders for
any purpose or purposes may be called at any time by the Chief Executive Officer
or by order of the Board of Directors, and shall be called by the Chief
Executive Officer or by order of the Board of Directors upon the written request
of any member of the Board of Directors or the holder or holders of at least 10%
of all the shares of capital stock entitled to vote at the meeting.

         Section 5. Notice of Meetings.  Written or printed notice, stating the
time and place of the meeting and, in the case of a special meeting, briefly
describing the purpose or
<PAGE>   2
purposes of the meeting, shall be given not less than ten nor more than sixty
days before the date of the meeting, to each stockholder of record entitled to
vote at the meeting, by delivering a written notice thereof to him personally,
or by mailing such notice in a postage prepaid envelope directed to him at his
last address as it appears on the stock records of the Corporation. It shall be
the primary responsibility of the Secretary to give the notice, but notice may
be given by or at the direction of the Chief Executive Officer or other person
or persons calling the meeting. If a matter (other than the election of
directors) is to be considered at an annual meeting on which a vote of
stockholders is required by law or otherwise, notice shall be given as if the
meeting were a special meeting. If any stockholder shall, in person or by
attorney thereunto authorized, waive in writing notice of any meeting of the
stockholders; whether prior to or after such meeting, notice thereof need not
be given to him. Notice of any adjourned meeting of the stockholders shall not
be required to be given, except where expressly required by law.

         Section 6. Proxies.  A stockholder may attend, represent, and vote his
shares at any meeting in person, or be represented and have his shares voted for
by a proxy which such stockholder has duly executed in writing. No proxy shall
be valid after eleven (11) months from the date of its execution unless a longer
period is expressly provided in the proxy. Each proxy shall be revocable unless
otherwise expressly provided therein or unless otherwise made irrevocable by
law.

         Section 7. Quorum.   Except as otherwise provided by law, the holders
of a majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of stockholders. In the absence of a
quorum, any officer entitled to preside at, or act as Secretary of, such
meeting, shall have the power to adjourn the meeting from time to time until a
quorum shall be constituted. At any such adjourned meeting at which a quorum
shall be present any business may be transacted which might have been transacted
at the meeting as originally called. When a quorum is once present to organize a
meeting, the stockholders present may continue to do business at the meeting or
at any adjournment thereof notwithstanding the withdrawal of enough stockholders
to leave less than a quorum.

         Section 8. Voting of Shares.  Each outstanding share of voting capital
stock of the Corporation shall be entitled to one vote on each matter submitted
to a vote at a meeting of the stockholders, except as otherwise provided in the
certificate of incorporation. The vote by the holders of a majority of the
shares voted on any matter at a meeting of stockholders at which a quorum is
present shall be the act of the stockholders on that matter, unless the vote of
a greater number is required by law, by the certificate of incorporation, or by
these bylaws of the Corporation Voting on all matters shall be by voice vote or
by a show of hands, unless the holders of 10% of the shares represented at the
meeting shall demand a vote by written ballot on a particular matter.

         Section 9. Action Without Meeting.  Any action which the stockholders
could take at a meeting may be taken without a meeting if a consent in writing,
setting forth the action taken, shall be signed by the holders of outstanding
stock having not less than the number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted. The consent shall be filed with the





                                      -2-
<PAGE>   3
Secretary of the Corporation as part of the corporate records. Such written
consent shall have the same force and effect as a vote of stockholders, and may
be stated as such in any articles, certificates or documents filed with the
Secretary of State of Delaware, or any other state wherein the Corporation may
do business.

         Section 10. Meeting by Use of Conference Telephone.  Subject to the
requirement for notice of meetings and if permitted by applicable law,
stockholders may participate in and hold a meeting of such stockholders by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in such a meeting shall constitute presence in person at such meeting, except
where a person participates in the meeting for the express purpose of objecting
to the transaction of any business on the ground that the meeting is not
lawfully called or convened.

         Section 11. Record Date.  The Board of Directors may fix, in advance,
a date as the record date for the purpose of determining stockholders entitled
to notice of or to vote at any meeting of stockholders, or stockholders entitled
to receive payment of any dividend or the allotment of any rights, or in order
to make a determination of stockholders for any other proper purpose. Such date,
in any case, shall be not more than sixty days, and in case of a meeting of
stockholders not less ten days, prior to the date on which the particular action
requiring such determination of stockholders is to be taken. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting unless the Board of
Directors fixes a new record date for the adjourned meeting. If the stock
transfer books are not closed, and no record date is fixed for the determination
of stockholders, or of stockholders entitled to receive payment of a dividend,
the date on which notice of the meeting is mailed, or the date on which the
resolution of the Board of Directors declaring the dividend is adopted, as the
case may be, shall be the record date for the determination of stockholders.

         Section 12. List of Stockholders.  It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
records, either directly or through a transfer agent appointed by the Board of
Directors, to prepare and make, at least ten days before every stockholders
meeting, a complete list of stockholders entitled to vote at such meeting
arranged in alphabetical order. Such list shall be open to the examination of
any stockholder at the principal office of the Corporation for said ten days
before such meeting, and shall be produced and kept at the time and place of the
meeting during the whole time thereof and shall be subject to the inspection of
any stockholder who may be present. The stock records of the Corporation shall
be the only evidence of who are the stockholders entitled to examine such list
or the books of the Corporation or to vote in person or by proxy at such
meeting.





                                      -3-
<PAGE>   4
                                  ARTICLE III

                               Board of Directors


         Section 1. General Powers. The business and affairs of the Corporation
shall be managed by the Board of Directors except as otherwise provided by law,
by the certificate of incorporation of the Corporation or by these bylaws.

         Section 2. Number, Term and Qualification.  The Board of Directors of
the Corporation shall consist of one or more members, the number of which shall
be set each year by the stockholders of the Corporation. The initial number of
directors shall be four. Each director shall hold office until the next annual
meeting of stockholders and until a successor is elected and qualified, or until
his death, resignation or removal pursuant to these bylaws. Directors need not
be residents of the State of Delaware or stockholders of the Corporation.

         Section 3. Removal.  Directors may be removed from office with or
without cause by a vote of stockholders who hold shares entitled to vote at an
election of directors that constitute a majority of the aggregate voting power
of the outstanding capital stock of the Corporation. If any directors are so
removed, new directors may be elected at the same meeting.

         Section 4. Resignation.  Any director of the Corporation may resign at
any time by giving written notice to the Chief Executive Officer or the
Secretary of the Corporation. The resignation of any director shall take effect
upon receipt of notice thereof or at such later time as shall be specified
therein. The acceptance of such resignation shall not be necessary to make it
effective.

         Section 5. Vacancies.  Any vacancy in the Corporation's Board of
Directors may be filled by a majority of the remaining directors (or the sole
remaining director). Any vacancy created by an increase in the authorized number
of directors shall be filled only by election at an annual meeting or at a
special meeting of stockholders called for that purpose. The stockholders may
elect a director at any time to fill a vacancy not filled by the directors.

         Section 6. Compensation.  The directors shall not receive compensation
for their services as such, except that the directors shall be entitled to be
reimbursed for any reasonable expenses paid by them by reason of their
attendance at any regular or special meeting of the Board of Directors or any of
its committees, and by resolution of the Board of Directors, the directors may
be paid fees, which may include but are not restricted to fees for attendance at
meetings of the Board or any of its committees. Any director may serve the
Corporation in any other capacity and receive compensation therefor.





                                      -4-
<PAGE>   5
                                   ARTICLE TV

                             Meetings of Directors


         Section 1. Annual and Regular Meetings.  The annual meeting of the 
Board of Directors for the purpose of electing officers and transacting such
other business as may be brought before the meeting shall be held immediately
following the annual meeting of the stockholders. The Board of Directors may by
resolution provide for the holding of regular meetings of the Board on specified
dates and at specified times. If any date for which a regular meeting is
scheduled shall be a legal holiday, the meeting shall be held on the next
business day that is not a legal holiday or on a date designated in the notice
of the meeting during either the same week in which the regularly scheduled date
falls or during the preceding or following week. Regular meetings of the Board
shall be held at the principal office of the Corporation or at such other place
as may be designated in the notice of the meeting. Notice of annual meetings or
any regular meetings held at the principal office of the Corporation and at the
usual scheduled time shall not be required.

         Section 2. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman of the Board, the
Chief Executive Officer or any one director. Such meetings may be held at the
time and place designated in the notice of the meeting.

         Section 3. Notice of Meetings. The Secretary or other person or
persons calling a meeting for which notice is required shall give notice by mail
or telegram at least five days before the meeting, or by telephone at least
twenty-four hours before the meeting. Oral notice may be substituted for such
written notice if given not less than five days before the meeting. Notice of
the time, place and purpose of such meeting may be waived in writing before or
after such meeting, and shall be equivalent to the giving of the notice.
Attendance by a director at a meeting for which notice is required shall
constitute a waiver of notice, except where a director attends the meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called. Except as otherwise herein provided, neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in this notice of such meeting

         Section 4. Quorum.  A majority of the directors in office shall
constitute a quorum for the transaction of business at a meeting of the Board of
Directors, but a smaller number may adjourn the meeting from time to time until
a quorum shall be present. Any regular or special directors' meeting may be
adjourned from time to time by those present, whether a quorum is present or
not.

         Section 5. Manner of Acting.  Except as otherwise provided by law,
these bylaws or the certificate of incorporation of the Corporation or
otherwise, the act of the majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.





                                      -5-
<PAGE>   6
         Section 6. Action Without Meeting.  Action taken by a majority of the
directors or of a committee of directors without a meeting is nevertheless Board
or committee action, if written consent to the action is signed by all the
director or members of the committee, as the case may be, and filed with the
minutes of the proceedings of the Board or committee, whether done before or
after the action is taken. Such unanimous written consent shall have the same
force and effect as a unanimous vote at a meeting, and may be stated as such in
any articles, certificates or documents filed with the Secretary of State of
Delaware, or any other state wherein the corporation may do business.

         Section 7. Meetings by Use of Conference Telephone.  Any one or more
directors or members of a committee may participate in a meeting of the Board or
any of its committees by means of a conference telephone or similar
communications device which allows all persons participating in the meeting to
hear each other, and such participation in a meeting shall be deemed presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.

                                   ARTICLE V

                                   Committees

         Section 1. Designation of Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more of the directors of
the Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. Any such committee, to the extent
provided in these bylaws or in the resolution of the Board of Directors
establishing the same, shall have and may exercise all the powers and authority
of the Board of Directors in the management of the business and affairs of the
Corporation. Such committees or committees shall have such name or names as may
be determined from time to time by resolution adopted by the Board of Directors.

         Section 2. Executive Committee. There may be an Executive Committee of
not more than three directors designated by resolution passed by a majority of
the whole Board of Directors. Such committee may meet at stated times, or on
notice to all by any of their own number. During intervals between meetings of
the Board of Directors, the Executive Committee shall have and may exercise the
powers of the Board of Directors in the management of the business and affairs
of the Corporation, except that the Executive Committee shall not have authority
to authorize or approve the following matters:

                 (a)      The dissolution, merger or consolidation  of the
         Corporation or the sale, lease or exchange of all or substantially all
         the property or assets of the Corporation

                 (b)      The designation of an Executive Committee or any
         other committee of directors having power to exercise any of the
         authority of the Board of Directors in the management of the
         Corporation or the filling of vacancies in the Board of Directors or
         in such committee.





                                      -6-
<PAGE>   7
                 (c)      The fixing of compensation of the directors for
         serving on the Board or on such committee.

                 (d)      The amendment or repeal of the bylaws, or the
         adoption of new bylaws.

                 (e)      The amendment or repeal of any resolution of the
         Board of Directors which by its terms shall not be so amendable or
         repealable.

Vacancies in the membership of the Executive Committee shall be filled by a
majority of the whole Board of Directors at a regular meeting or at a special
meeting called for that purpose.

         Section 3. Minutes.  Each committee shall keep minutes of its
proceedings and shall report thereon to the Board of Directors at or before the
next meeting of the Board.

         Section 4. Action Without Meeting: Telephonic Meeting. Action may be
taken by each committee in the manner allowed by the Board of Directors pursuant
to Sections 6 and 7 of Article IV.

                                   ARTICLE VI

                                    Officers

         Section 1. Titles.  The officers of the Corporation shall be elected
by the Board of Directors and shall consist of a Chief Executive Officer, a
President, a Secretary, a Chief Financial Officer and a Treasurer. The Board of
Directors may also elect a Chairman of the Board of Directors, an Executive Vice
President, one or more additional Vice Presidents, a Controller, one or more
Assistant Secretaries, one or more Assistant Treasurers, one or more Assistant
Controllers, and such other officers as it shall deem necessary. Except as
otherwise provided in these bylaws, the additional officers shall have the
authority and perform the duties as from time to time may be prescribed by the
Board of Directors. Any two or more offices may be held by the same individual,
but no officer may act in more than one capacity where action of two or more
officers is required.

         Section 2. Election and Term.  The officers of the Corporation shall
be elected by the Board of Directors at the regular meeting of the Board held
each year immediately following the annual meeting of the stockholders. Each
officer shall hold office until the next regular meeting at which officers are
to be elected and until a successor is elected and qualifies or until his death,
resignation, or removal pursuant to these bylaws.

         Section 3. Removal.  Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board whenever in its judgment the best
interests of the Corporation will be saved, but removal shall be without
prejudice to any contract rights of the individual removed. Election or
appointment of an officer or agent shall not of itself create contract rights.





                                      -7-
<PAGE>   8
         Section 4. Vacancies.  Vacancies among the officers may be created and
filled by the Board of Directors.

         Section 5. Compensation.  The compensation and all other terms of
employment of the officers shall be fixed by the disinterested members of the
Board of Directors. No officer shall be prevented from receiving such
compensation by reason of the fact that such officer is also a director of the
Corporation.

         Section 6. Chairman of the Board of Directors.  The Chairman of the
Board of Directors, if such officer is elected, shall preside at meetings of the
Board of Directors and shall have such other authority and perform such other
duties as the Board of Directors shall designate.

         Section 7. Chief Executive Officer.  The Chief Executive Officer shall
be in general charge of the affairs of the Corporation in the ordinary course of
its business, and shall preside at meetings of the stockholders. The Chief
Executive Officer may perform such acts, not inconsistent with the applicable
law or the provisions of these bylaws, as may be performed by the chief
executive officer of a corporation and may sign and execute all authorized
notes, bonds, contracts and other obligations in the name of the Corporation.
The Chief Executive Officer shall have such other powers and perform such other
duties as the Board of Directors shall designate or as may be provided by
applicable law or elsewhere in these bylaws.

         Section 8. President.  The President shall be in general charge of the
affairs of the Corporation in the ordinary course of its business, and shall
preside at meetings of the stockholders, each in the absence of the Chief
Executive Officer. The President may perform such acts, not inconsistent with
the applicable law or the provisions of these bylaws, as may be performed by the
president of a corporation and may sign and execute all authorized notes, bonds,
contracts and other obligations in the name of the Corporation. The President
shall have such other powers and perform such other duties as the Board of
Directors shall designate or as may be provided by applicable law or elsewhere
in these bylaws.

         Section 9. Vice Presidents.  The Executive Vice President if such
officer is elected, shall exercise the powers of the Chief Executive Officer or
President during that officer's absence or inability to act.  In default of the
Chief Executive Officer, the President and the Executive Vice President, any
other Vice President may exercise the powers of the Chief Executive Officer.
Any action taken by a Vice President in the performance of the duties of the
Chief Executive Officer shall be presumptive evidence of the absence or
inability to act of the Chief Executive Officer at the time the action was
taken. The Vice Presidents shall have such other powers and perform such other
duties as may be assigned by the Board of Directors.

         Section 10. Chief Financial Officer/Treasurer.  The Chief Financial
Officer/Treasurer shall have custody of all funds and securities belonging to
the Corporation and shall receive, deposit or disburse the same under the
direction of the Board of Directors.  The





                                      -8-
<PAGE>   9
chief financial officer/treasurer shall keep full and accurate accounts of the
finances of the Corporation and shall cause a true statement of the assets and
liabilities of the Corporation as of the close of each fiscal year and of the
results of its operations and of changes in surplus, all in reasonable detail,
to be made and filed at the principal office of the Corporation within four
months after the end of the fiscal year. The statement shall be available for
inspection by any stockholder for a period of ten years, and the Chief
Financial Officer/Treasurer shall mail or otherwise deliver a copy of the
latest statement to any stockholder upon written request. The Chief Financial
Officer/Treasurer shall in general perform all duties incident to the office
and such other duties as may be assigned from time to time by the Chief
Executive Officer or by the Board of Directors.

         Section 11. Assistant Treasurers.  Each Assistant Treasurer shall have
such powers and perform such duties as may be assigned by the Board of
Directors, and the Assistant Treasurers shall exercise the powers of the
Treasurer during that officer's absence or inability to act.

         Section 12. Controller and Assistant Controllers.  The Controller
shall have charge of the accounting affairs of the Corporation and shall have
such other powers and perform such other duties as the Board of Directors shall
designate. Each Assistant Controller shall have such powers and perform such
duties as may be assigned by the Board of Directors and the Assistant
Controllers shall exercise the powers of the Controller during that officer's
absence or inability to act.

         Section 13. Secretary.  The Secretary shall keep accurate records of
the acts and proceedings of all meetings of stockholders and of the Board of
Directors and shall give all notices required by law and by these bylaws.  The
Secretary shall have general charge of the corporate books and records and of
the corporate seal and shall affix the corporate seal to any lawfully executed
instrument requiring it. The Secretary shall have general charge of the stock
transfer books of the Corporation and shall keep at the principal office of the
Corporation a record of stockholders, showing the name and address of each
stockholder and the number and class of the shares held by each. The Secretary
shall sign such instruments as may require the signature of the Secretary, and
in general shall perform the duties incident to the office of Secretary and such
other duties as may be assigned from time to time by the Chief Executive Officer
or by the Board of Directors.

         Section 14. Assistant Secretaries. Each Assistant Secretary shall have
such powers and perform such duties as may be assigned by the Board of
Directors, and the Assistant Secretaries shall exercise the powers of the
Secretary during that officer's absence or inability to act.

         Section 15. Voting Upon Stocks. Unless otherwise ordered by the Board
of Directors, the Chief Executive Officer shall have full power and authority in
behalf of the Corporation to attend, act and vote at meetings of the
stockholders of any Corporation in which this Corporation may hold stock, and at
such meetings shall possess and may exercise any and all rights and powers
incident to the ownership of such stock and which, as the owner, the Corporation
might have possessed and exercised if present. The Board of Directors may by
resolution from time to time confer such power and authority upon any other
person or persons.





                                      -9-
<PAGE>   10
                                  ARTICLE VII

                                 Capital Stock

         Section 1. Certificates.  Certificates for shares of the capital stock
of the Corporation shall be in such form not inconsistent with the certificate
of incorporation of the Corporation as shall be approved by the Board of
Directors. The certificates shall be consecutively numbered or otherwise
identified. The name and address of the persons to whom they are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
records of the Corporation. Each certificate shall be signed by the Chief
Executive Officer or any Vice President and by the Secretary, Assistant
Secretary, Treasurer or Assistant Treasurer; provided, that where a certificate
is signed by a transfer agent or assistant transfer agent of the Corporation,
the signatures of such officers of the Corporation upon the certificate may be
by facsimile, engraved or printed. Each certificate shall be seated with the
seal of the Corporation or a facsimile thereof.

         Section 2. Transfer of Shares.  Transfer of shares shall be made on
the stock transfer books of the Corporation only upon surrender of the
certificate for the shares sought to be transferred by the record holder or by a
duly authorized agent, transferee or legal representative. All certificates
surrendered for transfer shall be cancelled before new certificates for the
transferred shares shall be issued.

         Section 3. Transfer Agent and Registrar.  The Board of Directors may
appoint one or more transfer agents and one or more registrars of transfers and
may require all stock certificates to be signed or countersigned by the transfer
agent and registered by the registrar of transfers.

         Section 4. Regulations.  The Board of Directors shall have power and
authority to make rules and regulations as it may deem expedient concerning the
issue, transfer and registration of certificates for shares of capital stock of
the Corporation.

         Section 5. Lost Certificates.  The Board of Directors may authorize
the issuance of a new certificate in place of a certificate claimed to have been
lost or destroyed, upon receipt of an affidavit from the person explaining the
loss or destruction. When authorizing issuance of a new certificate, the Board
may require the claimant to give the Corporation a bond in a sum as it may
direct to indemnify the Corporation against loss from any claim with respect to
the certificate claimed to have been lost or destroyed; or the Board may, by
resolution reciting that the circumstances justify such action, authorize the
issuance of the new certificate without requiring a bond.





                                      -10-
<PAGE>   11
                                  ARTICLE VIII

                               General Provisions

         Section 1. Dividends.  The Board of Directors may from time to time
declare, and the Corporation may pay, dividends out of its earned surplus on its
outstanding shares in the manner and upon the terms and conditions provided by
law.

         Section 2. Seal.  The seal of the Corporation shall have inscribed
thereon the name of the Corporation and "Delaware" around the perimeter, and the
words "Corporate Seal" in the center.

         Section 3. Waiver of Notice.  Whenever notice is required to be given
to a stockholder, director or other person under the provisions of these bylaws,
the certificate of incorporation of the Corporation or by applicable law, a
waiver in writing signed by the person or persons entitled to the notice,
whether before or after the time stated in the notice, shall be equivalent to
giving the notice.

         Section 4. Depositories and Checks.  All funds of the Corporation
shall be deposited in the name of the Corporation in such bank, banks, or other
financial institutions as the Board of Directors may from time to time designate
and shall be drawn out on checks, drafts or other orders signed on behalf of the
Corporation by such person or persons as the Board of Directors may from time to
time designate.

         Section 5. Bond.  The Board of Directors may by resolution require any
or all officers, agents and employees of the Corporation to give bond to the
Corporation, with sufficient sureties, conditioned on the faithful performance
of the duties of their respective offices or positions, and to comply with such
other conditions as may from time to time be required by the Board.

         Section 6. Loans.  No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.

         Section 7. Taxable Year.  The taxable year of the Corporation shall be
the period ending on December 31 of each year or such other period as the Board
of Directors shall from time to time determine.

         Section 8. Indemnification of Directors and Officers

                 (a)      Right to Indemnification. Each person who was or is
         made a party to or is threatened to be made a party to or is otherwise
         involved in any action, suit or proceeding, whether civil, criminal,
         administrative or investigative (hereinafter a "proceeding"), by
         reason of the fact that he or she is or was a director, officer or
         employee of the Corporation or is or was serving at the request of the
         Corporation as a director officer, employee or agent of another
         corporation or of a partnership, joint





                                      -11-
<PAGE>   12
         venture, trust or other enterprise, including service with respect to
         employee benefit plans (hereinafter an "indemnitee"), whether the
         basis of such proceeding is alleged action in an official capacity as
         a director, officer, employee or agent, shall be indemnified and held
         harmless by the Corporation to the fullest extent authorized by the
         Delaware General Corporation Law, as the same exists or may hereafter
         be amended (but, in the case of any such amendment, only to the extent
         that such amendment permits the Corporation to provide broader
         indemnification rights than such law permitted the Corporation to
         provide prior to such amendment), against all expense, liability and
         loss (including attorneys' fees, judgments, finds, ERISA excise taxes
         or penalties and amounts paid in settlement) reasonably incurred or
         suffered by such indemnitee in connection therewith and such
         indemnification shall continue as to an indemnitee who has ceased to
         be a director, officer, employee or agent and shall inure to the
         benefit of the indemnitee's heirs, executors and administrators;
         provided, however, that, except as provided in paragraph (b) hereof
         with respect to proceedings to enforce rights to indemnification, the
         Corporation shall indemnify any such indemnitee in connection with a
         proceeding (or part thereof initiated by such indemnitee only if such
         proceeding (or part thereof was authorized by the Board of Directors
         of the Corporation. The right to indemnification conferred in this
         Section shall be a contract right and shall include the right to be
         paid by the Corporation the expenses incurred in defending any such
         proceeding in advance of its final disposition (hereinafter an
         "advancement, of expenses"); provided, however, that if the Delaware
         General Corporation Law requires, an advancement of expenses incurred
         by an indemnitee in his or her capacity as a director or officer (and
         not in any other capacity in which service was or is rendered by such
         indemnitee, including without limitation, service to an employee
         benefit plan) shall be made only upon delivery to the Corporation of
         an undertaking, by or on behalf of such indemnitee, to repay all
         amounts so advanced if it shall ultimately be determined by final
         judicial decision from which there is no further right to appeal that
         such indemnitee is not entitled to be indemnified for such expenses
         under this Section or otherwise (hereinafter an undertaking

                 (b)      Right of Indemnitee to Bring Suit.  If a claim under
         paragraph (a) of this Section is not paid in full by the Corporation
         within sixty days after a written claim has been received by the
         Corporation, except in the case of a claim for an advancement of
         expenses, in which case the applicable period shall be twenty days,
         the indemnitee may at any time thereafter bring suit against the
         Corporation to recover the unpaid amount of the claim. If successful
         in whole or in part in any such suit or in a suit brought by the
         Corporation to recover an advancement of expenses pursuant to the
         terms of an undertaking, the indemnitee shall be entitled to be paid
         also the expense of prosecuting or defending such suit. In (i) any
         suit brought by the indemnitee to enforce a right to indemnification
         hereunder (but not in a suit brought by the indemnitee to enforce a
         right to an advancement of expenses) it shall be a defense that, and
         (ii) any suit by the Corporation to recover an advancement of expenses
         pursuant to the terms of an undertaking the Corporation shall be
         entitled to recover such expenses upon a final adjudication that, the
         indemnitee has not met the applicable standard of conduct set forth in
         the Delaware General Corporation Law. Neither the failure of the 
         Corporation (including its Board of Directors, independent legal
         counsel or its stockholders) to have made a determination prior to the
         commencement of such suit that indemnification of





                                      -12-
<PAGE>   13
         the indemnitee is proper in the circumstances because applicable
         standard of conduct set forth in the Delaware General Corporation Law,
         nor an actual determination by the Corporation (including its Board of
         Directors, independent legal counsel or its stockholders) that the
         indemnitee has not met such applicable standard of conduct, shall
         create a presumption that the indemnitee has not met the applicable
         standard of conduct or, in the case of such a suit brought by the
         indemnitee, be a defense to such suit. In any suit brought by the
         indemnitee to enforce a right hereunder, or by the Corporation to
         recover an advancement of expenses pursuant to the terms of an
         undertaking, the burden of proving that the indemnitee is not entitled
         to be indemnified or to such advancement of expenses under this
         Section or otherwise shall be on the Corporation.

                 (c)      Non-Exclusivity of Rights.  The rights to
         indemnification and to the advancement of expenses conferred in this
         Section shall not be exclusive of any other right which any person may
         have or hereafter acquire under any statute, this certificate of
         incorporation, these bylaws, by agreement, by vote of stockholders or
         disinterested directors or otherwise.

                 (d)      Insurance.  The Corporation may maintain insurance,
         at its expense, to protect itself and any director, officer, employee
         or agent of the Corporation or another corporation, partnership, joint
         venture, trust or other enterprise against any expense, liability or
         loss under the Delaware General Corporation Law.

                 (e)      Indemnification of Agents of the Corporation.  The
         Corporation may, to the extent authorized from time to time by the
         Board of Directors, grant rights to indemnification and to the
         advancement of expenses, to any agent of the Corporation to the
         fullest extent of the provisions of the Section with respect to the
         indemnification and advancement of expenses of directors, officers and
         employees of the Corporation.

         Section 9. Amendments.  Except as otherwise provided herein, these
bylaws may be amended or repealed and new bylaws may be adopted by the
affirmative vote of the holders of shares of the Corporation then issued and
entitled to vote at any annual meeting or at any special meeting of stockholders
called for the purpose of considering such action that constitute at least a
majority of the aggregate voting power of the outstanding capital stock of the
Corporation.

         Section 10. Stockholders Agreement.  To the extent that the provisions
of these bylaws are inconsistent with any stockholders agreement subsequently
entered into by the holders of the Corporation's capital stock, the stockholders
agreement shall control.





                                      -13-
<PAGE>   14
         THIS IS TO CERTIFY that the above bylaws of Fieldcrest Cannon Sure
Fit, Inc. were duly adopted by the Board of Directors of the Corporation by
action taken by unanimous written consent effective the 6th day of January,
1995.

         This 16th day of January, 1995.

                                       /s/ M. KENNETH DOSS
                                       ----------------------------------------
                                       Secretary

[Corporate Seal]





                                    -14-

<PAGE>   1
                                                                    EXHIBIT 3.29

                          CERTIFICATE OF INCORPORATION
                                       OF
                     FIELDCREST CANNON TRANSPORTATION, INC.

     The undersigned, being of the age of eighteen years or more, does hereby
make and acknowledge this Certificate of Incorporation for the purpose of
forming a business corporation under and by virtue of the laws of the State of
Delaware.

                                       I.

     The name of the corporation is Fieldcrest Cannon Transportation, Inc.

                                      II.
     The address of the initial registered office of the corporation in the
State of Delaware is 32 Loockerman Square, Suite L-100, City of Dover, Delaware
19904, County of Kent, and the name of the initial registered agent at such
address is The Prentice-Hall Corporation System, Inc.

                                      III.

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

                                      IV.

     The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000) shares of Common Stock, no par value
per share.

                                       V.

     The name and address of the sole incorporator are Joyce Kotzker, 200 West
Second Street, 1600 Southern National Financial Center, Winston-Salem, NC 27101.

                                      VI.

     No person who is serving or has served as a director of the corporation
shall be liable to the corporation or to any stockholder for monetary damages
for breach of any fiduciary
<PAGE>   2


this article becomes effective. Nothing herein shall be deemed to limit or
eliminate the liability of any person (i) for any breach of such person's duty
of loyalty as a director to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law; (iii) for the unlawful payment of a dividend by
the corporation or the unlawful purchase or redemption of the corporation's
capital stock by the corporation; (iv) for any transaction from which such
person derived an improper personal benefit; or (v) to any extent that such
liability may not be limited or eliminated by virtue of the provisions of
Section 102(b)(7) of the General Corporation Law of the State of Delaware or
any successor statute.

     The undersigned incorporator hereby acknowledges that the foregoing
certificate of incorporation is her act and deed and that the facts stated
therein are true.

     IN WITNESS WHEREOF, the undersigned sole incorporator of the corporation
has hereunto set her hand this 8th day of December, 1994.


                                   /s/  JOYCE KOTZKER
                                   --------------------------------
                                   Joyce Kotzker, Incorporator

<PAGE>   1
                                                                    EXHIBIT 3.30

                                     BYLAWS

                                       OF

                     FIELDCREST CANNON TRANSPORTATION, INC.

                           EFFECTIVE DECEMBER 8, 1994

                                     ARTICLE

                                     Offices

          Section 1. Principal and Registered Offices. The principal office of
the Corporation shall be located at such place as the Board of Directors may
specify from time to time. The registered office of the Corporation shall be
located at 306 South State Street, Kent County, Dover, Delaware.

          Section 2. Other Offices. The Corporation may have offices at such
other places, either within or without the State of Delaware, as the Board of
Directors may from time to time determine.


                                   ARTICLE II

                            Meetings of Stockholders

          Section 1. Place of Meting. Meetings of stockholders shall be held at
the principal office of the Corporation or at such other place or places, either
within or without the State of Delaware, as shall either (i) be designated in
the notice of the meeting or (ii) be agreed upon at or before the meeting by a
majority of the stockholders entitled to vote at the meeting.

          Section 2. Annual Meetings. The annual meeting of stockholders shall
be at such time as determined by the Board of Directors for the purpose of
electing directors of the Corporation and the transaction of such other business
as may be properly brought before the meeting.

          Section 3. Substitute Annual Meeting. If the annual meeting is not
held on the day designated by these bylaws, a substitute annual meeting may be
called in accordance with Section 4 of this Article II. A meeting so called
shall be designated and treated for all purposes as the annual meeting.

          Section 4. Special Meetings. Special meetings of the stockholders for
any purpose or purposes may be called at any time by the President or by order
of the Board of Directors, and shall be called by the President or by order of
the Board of Directors upon the written request of any member of the Board of
Directors or the holder or holders of at least 10% of all the shares of capital
stock entitled to vote at the meeting.



<PAGE>   2
          Section 5. Notice of Meetings. Written or printed notice, stating the
time and place of the meeting and, in the case of a special meeting, briefly
describing the purpose or purposes of the meeting, shall be given not less than
ten nor more than sixty days before the date of the meeting, to each stockholder
of record entitled to vote at the meeting, by delivering a written notice
thereof to him personally, or by mailing such notice in a postage prepaid
envelope directed to him at his last address as it appears on the stock records
of the Corporation. It shall be the primary responsibility of the Secretary to
give the notice, but notice may be given by or at the direction of the President
or other person or persons calling the meeting. If a matter (other than the
election of directors) is to be considered at an annual meeting on which a vote
of stockholders is required by law or otherwise, notice shall be given as if the
meeting were a special meeting. If any stockholder shall, in person or by
attorney thereunto authorized, waive in writing notice of any meeting of the
stockholders, whether prior to or after such meeting, notice thereof need not be
given to him. Notice of any adjourned meeting of the stockholders shall not be
required to be given, except where expressly required by law.

          Section 6. Proxies. A stockholder may attend, represent, and vote his
shares at any meeting in person, or be represented and have his shares voted for
by a proxy which such stockholder has duly executed in writing. No proxy shall
be valid after eleven (11) months from the date of its execution unless a
longer period is expressly provided in the proxy. Each proxy shall be revocable
unless otherwise expressly provided therein or unless otherwise made irrevocable
by law.

          Section 7. Ouorum. Except as otherwise provided by law, the holders of
a majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of stockholders. In the absence of a
quorum, any officer entitled to preside at, or act as Secretary of, such
meeting, shall have the power to adjourn the meeting from time to time until a
quorum shall be constituted. At any such adjourned meeting at which a quorum
shall be present any business may be transacted which might have been transacted
at the meeting as originally called. When a quorum is once present to organize a
meeting, the stockholders present may continue to do business at the meeting or
at any adjournment thereof notwithstanding the withdrawal of enough stockholders
to leave less than a quorum.

          Section 8. Voting of Shares. Each outstanding share of voting capital
stock of the Corporation shall be entitled to one vote on each matter submitted
to a vote at a meeting of the stockholders, except as otherwise provided in the
certificate of incorporation. The vote by the holders of a majority of the
shares voted on any matter at a meeting of stockholders at which a quorum is
present shall be the act of the stockholders on that matter, unless the vote of
a greater number is required by law, by the certificate of incorporation, or by
these bylaws of the Corporation. Voting on all matters shall be by voice vote or
by a show of hands, unless the holders of 10% of the shares represented at the
meeting shall demand a vote by written ballot on a particular matter.

          Section 9. Action Without Meeting. Any action which the stockholders
could take at a meeting may be taken without a meeting if a consent in writing,
setting forth the action taken, shall be signed by the holders of outstanding
stock having not less than the minimum



                                       -2-
<PAGE>   3
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted. The
consent shall be filed with the Secretary of the Corporation as part of the
corporate records. Such written consent shall have the same force and effect as
a vote of stockholders, and may be stated as such in any articles, certificates
or documents filed with the Secretary of State of Delaware, or any other state
wherein the Corporation may do business.

          Section 10. Meeting by Use of Conference Telephone. Subject to the
requirement for notice of meetings and if permitted by applicable law,
stockholders may participate in and hold a meeting of such stockholders by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in such a meeting shall constitute presence in person at such meeting, except
where a person participates in the meeting for the express purpose of objecting
to the transaction of any business on the ground that the meeting is not
lawfully called or convened.

          Section 11. Record Date. The Board of Directors may fix, in advance, a
date as the record date for the purpose of determining stockholders entitled to
notice of or to vote at any meeting of stockholders, or stockholders entitled to
receive payment of any dividend or the allotment of any rights, or in order to
make a determination of stockholders for any other proper purpose. Such date, in
any case, shall be not more than sixty days, and in case of a meeting of
stockholders not less ten days, prior to the date on which the particular action
requiring such determination of stockholders is to be taken. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting unless the Board of
Directors fixes a new record date for the adjourned meeting. If the stock
transfer books are not closed, and no record date is fixed for the determination
of stockholders, or of stockholders entitled to receive payment of a dividend,
the date on which notice of the meeting is mailed, or the date on which the
resolution of the Board of Directors declaring the dividend is adopted, as the
case may be, shall be the record date for the determination of stockholders.

          Section 12. List of Stockholders. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of the stock
records, either directly or through a transfer agent appointed by the Board of
Directors, to prepare and make, at least ten days before every stockholders
meeting, a complete list of stockholders entitled to vote at such meeting
arranged in alphabetical order. Such list shall be open to the examination of
any stockholder at the principal office of the Corporation for said ten days
before such meeting, and shall be produced and kept at the time and place of the
meeting during the whole time thereof and shall be subject to the inspection of
any stockholder who may be present. The stock records of the Corporation shall
be the only evidence of who are the stockholders entitled to examine such list
or the books of the Corporation or to vote in person or by proxy at such
meeting.



                                       -3-
<PAGE>   4
                                   ARTICLE III

                               Board of Directors

          Section 1. General Powers. The business and affairs of the Corporation
shall be managed by the Board of Directors except as otherwise provided by law,
by the certificate of incorporation of the Corporation or by these bylaws.

          Section 2. Number, Term and Qualification The Board of Directors of
the Corporation shall consist of one or more members, the number of which shall
be set each year by the stockholders of the Corporation. The initial number of
directors shall be four. Each director shall hold office until the next annual
meeting of stockholders and until a successor is elected and qualified, or until
his death, resignation or removal pursuant to these bylaws. Directors need not
be residents of the State of Delaware or stockholders of the Corporation.

          Section 3. Removal. Directors may be removed from office with or
without cause by a vote of stockholders who hold shares entitled to vote at an
election of directors that constitute a majority of the aggregate voting power
of the outstanding capital stock of the Corporation. If any directors are so
removed, new directors may be elected at the same meeting.

          Section 4. Resignation. Any director of the Corporation may resign at
any time by giving written notice to the President or the Secretary of the
Corporation. The resignation of any director shall take effect upon receipt of
notice thereof or at such later time as shall be specified therein. The
acceptance of such resignation shall not be necessary to make it effective.

          Section 5. Vacancies. Any vacancy in the Corporation's Board of
Directors may be filled by a majority of the remaining directors (or the sole
remaining director). Any vacancy created by an increase in the authorized number
of directors shall be filled only by election at an annual meeting or at a
special meeting of stockholders called for that purpose. The stockholders may
elect a director at any time to fill a vacancy not filled by the directors.

          Section 6. Compensation. The directors shall not receive compensation
for their services as such, except that the directors shall be entitled to be
reimbursed for any reasonable expenses paid by them by reason of their
attendance at any regular or special meeting of the Board of Directors or any of
its committees, and by resolution of the Board of Directors, the directors may
be paid fees, which may include but are not restricted to fees for attendance at
meetings of the Board or any of its committees. Any director may serve the
Corporation in any other capacity and receive compensation therefor.



                                       -4-
<PAGE>   5
                                   ARTICLE IV

                              Meetings of Directors

          Section 1. Annual and Regular Meetings. The annual meeting of the
Board of Directors for the purpose of electing officers and transacting such
other business as may be brought before the meeting shall be held immediately
following the annual meeting of the stockholders. The Board of Directors may by
resolution provide for the holding of regular meetings of the Board on specified
dates and at specified times. If any date for which a regular meeting is
scheduled shall be a legal holiday, the meeting shall be held on the next
business day that is not a legal holiday or on a date designated in the notice
of the meeting during either the same week in which the regularly scheduled date
falls or during the preceding or following week. Regular meetings of the Board
shall be held at the principal office of the Corporation or at such other place
as may be designated in the notice of the meeting. Notice of annual meetings or
any regular meetings held at the principal office of the Corporation and at the
usual scheduled time shall not be required.

          Section 2. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the Chairman of the Board, the
President or any one director. Such meetings may be held at the time and place
designated in the notice of the meeting.

          Section 3. Notice of Meetings. The Secretary or other person or
persons calling a meeting for which notice is required shall give notice by mail
or telegram at least five days before the meeting, or by telephone at least
twenty-four hours before the meeting. Oral notice may be substituted for such
written notice if given not less than five days before the meeting. Notice of
the time, place and purpose of such meeting may be waived in writing before or
after such meeting, and shall be equivalent to the giving of the notice.
Attendance by a director at a meeting for which notice is required shall
constitute a waiver of notice, except where a director attends the meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called. Except as otherwise herein provided, neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in this notice of such meeting.

          Section 4. Ouorum. A majority of the directors in office shall
constitute a quorum for the transaction of business at a meeting of the Board of
Directors, but a smaller number may adjourn the meeting from time to time until
a quorum shall be present. Any regular or special directors' meeting may be
adjourned from time to time by those present, whether a quorum is present or
not.

          Section 5. Manner of Acting. Except. as otherwise provided by law,
these bylaws or the certificate of incorporation of the Corporation or
otherwise, the act of the majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors.

          Section 6. Action Without Meeting. Action taken by a majority of the
directors or of a committee of directors without a meeting is nevertheless Board
or committee



                                      -5-
<PAGE>   6
action, if written consent to the action is signed by all the director or
members of the committee, as the case may be, and filed with the minutes of the
proceedings of the Board or committee, whether done before or after the action
is taken. Such unanimous written consent shall have the same force and effect as
a unanimous vote at a meeting, and may be stated as such in any articles,
certificates or documents filed with the Secretary of State of Delaware, or any
other state wherein the corporation may do business.

          Section 7. Meeting by Use of Conference Telephone. Any one or more
directors or members of a committee may participate in a meeting of the Board or
any of its committees by means of a conference telephone or similar
communications device which allows all persons participating in the meeting to
hear each other, and such participation in a meeting shall be deemed presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.


                                    ARTICLE V

                                   Committees

          Section 1. Designation of Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more of the directors of
the Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. Any such committee, to the extent
provided in these bylaws or in the resolution of the Board of Directors
establishing the same, shall have and may exercise all the powers and authority
of the Board of Directors in the management of the business and affairs of the
Corporation. Such committees or committees shall have such name or names as may
be determined from time to time by resolution adopted by the Board of Directors.

          Section 2. Executive Committee. There may be an Executive Committee of
not more than three directors designated by resolution passed by a majority of
the whole Board of Directors. Such committee may meet at stated times, or on
notice to all by any of their own number. During intervals between meetings of
the Board of Directors, the Executive Committee shall have and may exercise the
powers of the Board of Directors in the management of the business and affairs
of the Corporation, except that the Executive Committee shall not have authority
to authorize or approve the following matters:

          (a) The dissolution, merger or consolidation of the Corporation or the
     sale, lease or exchange of all or substantially all the property or assets
     of the Corporation.

          (b) The designation of an Executive Committee or any other committee
     of directors having power to exercise any of the authority of the Board of
     Directors in the management of the Corporation or the filling of vacancies
     in the Board of Directors or in such committee.



                                       -6-
<PAGE>   7
          (c) The fixing of compensation of the directors for serving on the
     Board or on such committee.

          (d) The amendment or repeal of the bylaws, or the adoption of new
     bylaws.

          (e) The amendment or repeal of any resolution of the Board of
     Directors which by its terms shall not be so amendable or repealable.

Vacancies in the membership of the Executive Committee shall be filled by a
majority of the whole Board of Directors at a regular meeting or at a special
meeting called for that purpose.

          Section 3. Minutes. Each committee shall keep minutes of its
proceedings and shall report thereon to the Board of Directors at or before the
next meeting of the Board.

          Section 4. Action Without Meeting: Telephonic Meeting. Action may be
taken by each committee in the manner allowed by the Board of Directors pursuant
to Sections 6 and 7 of Article IV.

                                   ARTICLE VI

                                    Officers

          Section 1. Titles. The officers of the Corporation shall be elected by
the Board of Directors and shall consist of a President, a Secretary and a
Treasurer. The Board of Directors may also elect a Chairman of the Board of
Directors, an Executive Vice President, one or more additional Vice Presidents,
a Controller, one or more Assistant Secretaries, one or more Assistant
Treasurers, one or more Assistant Controllers, and such other officers as it
shall deem necessary. Except as otherwise provided in these bylaws, the
additional officers shall have the authority and perform the duties as from time
to time may be prescribed by the Board of Directors. Any two or more offices may
be held by the same individual, but no officer may act in more than one capacity
where action of two or more officers is required.

          Section 2. Election and Term. The officers of the Corporation shall be
elected by the Board of Directors at the regular meeting of the Board held each
year immediately following the annual meeting of the stockholders. Each officer
shall hold office until the next regular meeting at which officers are to be
elected and until a successor is elected and qualifies or until his death,
resignation, or removal pursuant to these bylaws.

          Section 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board whenever in its judgment the best
interests of the Corporation will be served, but removal shall be without
prejudice to any contract rights of the individual removed. Election or
appointment of an officer or agent shall not of itself create contract rights.

          Section 4. Vacancies. Vacancies among the officers may be created and
filled by the Board of Directors.



                                       -7-
<PAGE>   8
          Section 5. Compensation. The compensation and all other terms of
employment of the officers shall be fixed by the disinterested members of the
Board of Directors. No officer shall be prevented from receiving such
compensation by reason of the fact that such officer is also a director of the
Corporation.

          Section 6. Chairman of the Board of Directors. The Chairman of the
Board of Directors, if such officer is elected, shall preside at meetings of the
Board of Directors and shall have such other authority and perform such other
duties as the Board of Directors shall designate.

          Section 7. President. The President shall be in general charge of the
affairs of the Corporation in the ordinary course of its business, and shall
preside at meetings of the stockholders. The President may perform such acts,
not inconsistent with the applicable law or the provisions of these bylaws, as
may be performed by the president of a corporation and may sign and execute all
authorized notes, bonds, contracts and other obligations in the name of the
Corporation. The President shall have such other powers and perform such other
duties as the Board of Directors shall designate or as may be provided by
applicable law or elsewhere in these bylaws.

          Section 8. Vice Presidents. The Executive Vice President, if such,
officer is elected, shall exercise the powers of the President during that
officer's absence or inability to act. In default of both the President and the
Executive Vice President, any other Vice President may exercise the powers of
the President. Any action taken by a Vice President in the performance of the
duties of the President shall be presumptive evidence of the absence or
inability to act of the President at the time the action was taken. The Vice
Presidents shall have such other powers and perform such other duties as may be
assigned by the Board of Directors.

          Section 9. Treasurer. The Treasurer shall have custody of all funds
and securities belonging to the Corporation and shall receive, deposit or
disburse the same under the direction of the Board of Directors. The treasurer
shall keep full and accurate accounts of the finances of the Corporation and
shall cause a true statement of the assets and liabilities of the Corporation as
of the close of each fiscal year and of the results of its operations and of
changes in surplus, all in reasonable detail, to be made and filed at the
principal office of the Corporation within four months after the end of the
fiscal year. The statement shall be available for inspection by any stockholder
for a period of ten years, and the Treasurer shall mail or otherwise deliver a
copy of the latest statement to any stockholder upon written request. The
Treasurer shall in general perform all duties incident to the office and such
other duties as may be assigned from time to time by the President or by the
Board of Directors.

          Section 10. Assistant Treasurers. Each Assistant Treasurer shall have
such powers and perform such duties as may be assigned by the Board of
Directors, and the Assistant Treasurers shall exercise the powers of the
Treasurer during that officer's absence or inability to act.

          Section 11. Controller and Assistant Controllers. The Controller shall
have charge of the accounting affairs of the Corporation and shall have such
other powers and



                                       -8-
<PAGE>   9
perform such other duties as the Board of Directors shall designate. Each
Assistant Controller shall have such powers and perform such duties as may be
assigned by the Board of Directors and the Assistant Controllers shall exercise
the powers of the Controller during that officer's absence or inability to act.

          Section 12. Secretary. The Secretary shall keep accurate records of
the acts and proceedings of all meetings of stockholders and of the Board of
Directors and shall give all notices required by law and by these bylaws. The
Secretary shall have general charge of the corporate books and records and of
the corporate seal and shall affix the corporate seal to any lawfully executed
instrument requiring it. The Secretary shall have general charge of the stock
transfer books of the Corporation and shall keep at the principal office of the
Corporation a record of stockholders, showing the name and address of each
stockholder and the number and class of the shares held by each. The Secretary
shall sign such instruments as may require the signature of the Secretary, and
in general shall perform the duties incident to the office of Secretary and such
other duties as may be assigned from time to time by the President or by the
Board of Directors.

          Section 13. Assistant Secretaries. Each Assistant Secretary shall have
such powers and perform such duties as may be assigned by the Board of
Directors, and the Assistant Secretaries shall exercise the powers of the
Secretary during that officer's absence or inability to act.

          Section 14. Voting Upon Stocks. Unless otherwise ordered by the Board
of Directors, the President shall have full power and authority in behalf of the
Corporation to attend, act and vote at meetings of the stockholders of any
Corporation in which this Corporation may hold stock, and at such meetings shall
possess and may exercise any and all rights and powers incident to the ownership
of such stock and which, as the owner, the Corporation might have possessed and
exercised if present. The Board of Directors may by resolution from time to time
confer such power and authority upon any other person or persons.


                                   ARTICLE VII

                                  Capital Stock

          Section 1. Certificates. Certificates for shares of the capital stock
of the Corporation shall he in such form not inconsistent with the certificate
of incorporation of the Corporation as shall be approved by the Board of
Directors. The certificates shall be consecutively numbered or otherwise
identified. The name and address of the persons to whom they are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
records of the Corporation. Each certificate shall be signed by the President or
any Vice President and by the Secretary, Assistant Secretary, Treasurer or
Assistant Treasurer; provided, that where a certificate is signed by a transfer
agent or assistant transfer agent of the Corporation, the signatures of such
officers of the Corporation upon the certificate may be by facsimile, engraved
or printed. Each certificate shall be sealed with the seal of the Corporation or
a facsimile thereof.



                                       -9-
<PAGE>   10
          Section 2. Transfer of Shares. Transfer of shares shall be made on the
stock transfer books of the Corporation only upon surrender of the certificate
for the shares sought to be transferred by the record holder or by a duly
authorized agent, transferee or legal representative. All certificates
surrendered for transfer shall be cancelled before new certificates for the
transferred shares shall be issued.

          Section 3. Transfer Agent and Registrar. The Board of Directors may
appoint one or more transfer agents and one or more registrars of transfers and
may require all stock certificates to be signed or countersigned by the transfer
agent and registered by the registrar of transfers.

          Section 4. Regulations. The Board of Directors shall have power and
authority to make rules and regulations as it may deem expedient concerning the
issue, transfer and registration of certificates for shares of capital stock of
the Corporation.

          Section 5. Lost Certificates. The Board of Directors may authorize the
issuance of a new certificate in place of a certificate claimed to have been
lost or destroyed, upon receipt of an affidavit from the person explaining the
loss or destruction. When authorizing issuance of a new certificate, the Board
may require the claimant to give the Corporation a bond in a sum as it may
direct to indemnify the Corporation against loss from any claim with respect to
the certificate claimed to have been lost or destroyed; or the Board may, by
resolution reciting that the circumstances justify such action, authorize the
issuance of the new certificate without requiring a bond.


                                  ARTICLE VIII

                               General Provisions

          Section 1. Dividends. The Board of Directors may from time to time
declare, and the Corporation may pay, dividends out of its earned surplus on its
outstanding shares in the manner and upon the terms and conditions provided by
law.

          Section 2. Seal. The seal of the Corporation shall have inscribed
thereon the name of the Corporation and "Delaware" around the perimeter, and the
words "Corporate Seal" in the center.

          Section 3. Waiver of Notice. Whenever notice is required to be given
to a stockholder, director or other person under the provisions of these bylaws,
the certificate of incorporation of the Corporation or by applicable law, a
waiver in writing signed by the person or persons entitled to the notice,
whether before or after the time stated in the notice, shall be equivalent to
giving the notice.

          Section 4. Depositories and Checks. All funds of the Corporation shall
be deposited in the name of the Corporation in such bank, banks, or other
financial institutions as the Board of Directors may from time to time designate
and shall be drawn out on checks, drafts



                                      -1O-
<PAGE>   11
or other orders signed on behalf of the Corporation by such person or persons as
the Board of Directors may from time to time designate.

          Section 5. Bond. The Board of Directors may by resolution require any
or all officers, agents and employees of the Corporation to give bond to the
Corporation, with sufficient sureties, conditioned on the faithful performance
of the duties of their respective offices or positions, and to comply with such
other conditions as may from time to time be required by the Board.

          Section 6. Loans. No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.

          Section 7. Taxable Year. The taxable year of the Corporation shall be
the period ending on December 31 of each year or such other period as the Board
of Directors shall from time to time determine.

          Section 8. Indemnification of Directors and Officers.

          (a) Right to Indemnification. Each person who was or is made a party
     to or is threatened to be made a party to or is otherwise involved in any
     action, suit or proceeding, whether civil, criminal, administrative or
     investigative (hereinafter a "proceeding"), by reason of the fact that he
     or she is or was a director, officer or employee of the Corporation or is
     or was serving at the request of the Corporation as a director, officer,
     employee or agent of another corporation or of a partnership, joint
     venture, trust or other enterprise, including service with respect to
     employee benefit plans (hereinafter an "indemnitee"), whether the basis of
     such proceeding is alleged action in an official capacity as a director,
     officer, employee or agent, shall be indemnified and held harmless by the
     Corporation to the fullest extent authorized by the Delaware General
     Corporation Law, as the same exists or may hereafter be amended (but, in
     the case of any such amendment, only to the extent that such amendment
     permits the Corporation to provide broader indemnification rights than such
     law permitted the Corporation to provide prior to such amendment), against
     all expense, liability and loss (including attorneys' fees, judgments,
     finds, ERISA excise taxes or penalties and amounts paid in settlement)
     reasonably incurred or suffered by such indemnitee in connection therewith
     and such indemnification shall continue as to an indemnitee who has ceased
     to be a director, officer, employee or agent and shall inure to the benefit
     of the indemnitee's heirs, executors and administrators; provided, however,
     that, except as provided in paragraph (b) hereof with respect to
     proceedings to enforce rights to indemnification, the Corporation shall
     indemnify any such indemnitee in connection with a proceeding (or part
     thereof) initiated by such indemnitee only if such proceeding (or part
     thereof) was authorized by the Board of Directors of the Corporation. The
     right to indemnification conferred in this Section shall be a contract
     right and shall include the right to be paid by the Corporation the
     expenses incurred in defending any such proceeding in advance of its final
     disposition (hereinafter an "advancement of expenses"); provided, however,
     that if the Delaware General Corporation Law requires, an advancement of
     expenses



                                      -11-
<PAGE>   12
     incurred by an indemnitee in his or her capacity as a director or officer
     (and not in any other capacity in which service was or is rendered by such
     indemnitee, including without limitation, service to an employee benefit
     plan) shall be made only upon delivery to the Corporation of an
     undertaking, by or on behalf of such indemnitee, to repay all amounts so
     advanced if it shall ultimately be determined by final judicial decision
     from which there is no further right to appeal that such indemnitee is not
     entitled to be indemnified for such expenses under this Section or
     otherwise (hereinafter an "undertaking").

          (b) Right of Indemnitee to Bring Suit. If a claim under paragraph (a)
     of this Section is not paid in full by the Corporation within sixty days
     after a written claim has been received by the Corporation, except in the
     case of a claim for an advancement of expenses, in which case the
     applicable period shall be twenty days, the indemnitee may at any time
     thereafter bring suit against the Corporation to recover the unpaid amount
     of the claim. If successful in whole or in part in any such suit or in a
     suit brought by the Corporation to recover an advancement of expenses
     pursuant to the terms of an undertaking, the indemnitee shall be entitled
     to be paid also the expense of prosecuting or defending such suit. In (i)
     any suit brought by the indemnitee to enforce a right to indemnification
     hereunder (but not in a suit brought by the indemnitee to enforce a right
     to an advancement of expenses) it shall be a defense that, and (ii) any
     suit by the Corporation to recover an advancement of expenses pursuant to
     the terms of an undertaking the Corporation shall be entitled to recover
     such expenses upon a final adjudication that, the indemnitee has not met
     the applicable standard of conduct set forth in the Delaware General
     Corporation Law. Neither the failure of the Corporation (including its
     Board of Directors, independent legal counsel or its stockholders) to have
     made a determination prior to the commencement of such suit that
     indemnification of the indemnitee is proper in the circumstances because
     the indemnitee has met the applicable standard of conduct set forth in the
     Delaware General Corporation Law, nor an actual determination by the
     Corporation (including its Board of Directors, independent legal counsel or
     its stockholders) that the indemnitee has not met such applicable standard
     of conduct, shall create a presumption that the indemnitee has not met the
     applicable standard of conduct or, in the case of such a suit brought by
     the indemnitee, be a defense to such suit. In any suit brought by the
     indemnitee to enforce a right hereunder, or by the Corporation to recover
     an advancement of expenses pursuant to the terms of an undertaking, the
     burden of proving that the indemnitee is not entitled to be indemnified or
     to such advancement of expenses under this Section or otherwise shall be on
     the Corporation.

          (c) Non-Exclusivity of Rights. The rights to indemnification and to
     the advancement of expenses conferred in this Section shall not be
     exclusive of any other right which any person may have or hereafter acquire
     under any statute, this certificate of incorporation, these bylaws, by
     agreement, by vote of stockholders or disinterested directors or otherwise.

          (d) Insurance. The Corporation may maintain insurance, at its expense,
     to protect itself and any director, officer, employee or agent of the
     Corporation or another



                                      -12-
<PAGE>   13
     corporation, partnership, joint venture, trust or other enterprise against
     any expense, liability or loss under the Delaware General Corporation Law.

          (e) Indemnification of Agents of the Corporation. The Corporation may,
     to the extent authorized from time to time by the Board of Directors, grant
     rights to indemnification and to the advancement of expenses, to any agent
     of the Corporation to the fullest extent of the provisions of the Section
     with respect to the indemnification and advancement of expenses of
     directors, officers and employees of the Corporation.

          Section 9. Amendments. Except as otherwise provided herein, these
bylaws may be amended or repealed and new bylaws may be adopted by the
affirmative vote of the holders of shares of the Corporation then issued and
entitled to vote at any annual meeting or at any special meeting of stockholders
called for the purpose of considering such action that constitute at least a
majority of the aggregate voting power of the outstanding capital stock of the
Corporation.

          Section 10. Stockholders Agreement. To the extent that the provisions
of these bylaws are inconsistent with any stockholders agreement subsequently
entered into by the holders of the Corporation's capital stock, the stockholders
agreement shall control.




          THIS IS TO CERTIFY that the above bylaws of Fieldcrest Cannon
Transportation, Inc. were duly adopted by the Board of Directors of the
Corporation by action taken by unanimous written consent effective the 8th day
of December, 1994.

          This 8th day of December, 1994.


                                             /s/ M. K. DOSS
                                             ---------------------------------
                                             Secretary



[Corporate Seal]



                                      -13-

<PAGE>   1
                                                                    EXHIBIT 3.31


                            State of North Carolina
                      Department of the Secretary of State

                           ARTICLES OF INCORPORATION

Pursuant to Section 55-2-02 of the General Statutes of North Carolina, the
undersigned does hereby submit these Articles of Incorporation for the purpose
of forming a business corporation.

1.   The name of the corporation is: Man-Mill Acquisition, Inc.

2.   The corporation is authorized to issue 100,000 shares, all of one class,
     designated as common stock.

3.   The street address, mailing address, and county of the initial registered
     office of the corporation is:

     Number and Street: 225 Hillsborough Street
    
     City, State, Zip Code: Raleigh, North Carolina 27603        County: Wake

4.   The name of the initial registered agent is: CT Corporation System

5.   The names and addresses of the persons who are to serve as the initial
     Board of Directors until the first meeting of shareholders or until their
     successors be elected and qualified are as follows:

     Charles M. Hansen, Jr.
     4111 Mint Way
     Dallas, Texas 75237

     Jeffrey D. Cordes
     4111 Mint Way
     Dallas, Texas 75237

     Stephen P. Richman
     4111 Mint Way
     Dallas, Texas 75237

6.   To the full extent from time to time permitted by law, no person who is
serving or who has served as a director of the corporation shall be personally
liable in any action for monetary damages for breach of his or her duty as a
director, whether such action is brought by or in the right of the corporation
or otherwise. Neither the amendment or repeal of this Article, nor the adoption
of any provision of these Articles of Incorporation inconsistent with this
Article, shall eliminate or reduce the protection afforded by this Article to a
director of the corporation with respect to any matter which occurred, or any

     
<PAGE>   2
     cause of action, suit or claim which but for this Article would have
     accrued or risen, prior to such amendment, repeal or adoption.

7.   The name and address of the incorporator is:

     Sheri Crockett, Legal Assistant
     Womble Carlyle Sandridge & Rice
     2100 First Union Capitol Center
     Raleigh, NC 27602

8.   These articles will be effective upon filing.

This the 24th day of August, 1993.

                                   /s/ SHERI CROCKETT
                                   -------------------------------
                                   Sheri Crockett, Incorporator
<PAGE>   3


                            State of North Carolina
                      Department of the Secretary of State

                             ARTICLES OF AMENDMENT

Pursuant to Section 55-10-06 of the General Statutes of North Carolina, the
undersigned corporation hereby submits the following Articles of Amendment for
the purposes of amending its Articles of Incorporation:

     1.   The name of the corporation is: Man-Mill Acquisition, Inc.

     2.   The text of each amendment adopted is as follows:

          RESOLVED, that Article I of the Articles of Incorporation of the
          corporation is amended to read as follows:

          The name of the corporation shall be Manetta Home Fashions, Inc.

     3.   If an amendment provides for an exchange, reclassification, or
          cancellation of issued shares, provisions for implementing the
          amendment, if not contained in the amendment itself, are as follows:
          n/a

     4.   The date of adoption of each amendment was as follows: September 14,
          1993

     5.   The amendment was approved by shareholder action.
          Shareholder approval for the Articles of Amendment were obtained as
          required by Chapter 55 of the North Carolina General Statutes.

     6.   These articles will be effective upon filing.

     This the 30th day of September, 1993.

                                             MAN-MILL ACQUISITION, INC.


                                             By: /s/ JEFFREY D. CORDES
                                                 ---------------------------
                                                 Jeffrey D. Cordes
                                                 Vice President

<PAGE>   1
                                                                    EXHIBIT 3.32

                          TABLE OF CONTENTS TO BYLAWS
                                       OF
                           MAN-MILL ACQUISITION, INC.

                           EFFECTIVE AUGUST 24, 1993

<TABLE>
<CAPTION>
                                                                                                                     Page
                                                                                                                     ----
<S>                                                                                                                <C>  
ARTICLE 1 - OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
         Section 1. Principal and Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
         Section 2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

ARTICLE 2 - MEETINGS OF SHAREHOLDERS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
         Section 1. Place of Meeting  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
         Section 2. Annual Meeting  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
         Section 3. Substitute Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
         Section 4. Special Meetings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
         Section 5. Notice of Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
         Section 6. Quorum  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
         Section 7. Shareholders' List. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
         Section 8. Voting of Shares  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
         Section 9. Action Without Meeting  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3

ARTICLE 3 - BOARD OF DIRECTORS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
         Section 1. General Powers..  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
         Section 2. Number, Term and Qualification  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
         Section 3. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
         Section 4. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
         Section 5. Compensation..  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4

ARTICLE 4 - MEETINGS OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
         Section 1. Annual and Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
         Section 2. Special Meetings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
         Section 3. Notice of Meetings... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
         Section 4. Quorum  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
         Section 5. Manner of Acting  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
         Section 6. Presumption of Assent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
         Section 7. Action Without Meeting  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
         Section 8. Meeting by Communications Device..  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5

ARTICLE 5 - COMMITTEES    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
         Section 1. Election and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
         Section 2. Removal; Vacancies  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
</TABLE>





                                       i
<PAGE>   2
<TABLE>
<S>                                                                                                                 <C>
         Section 3. Meetings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
         Section 4. Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6

ARTICLE 6 - OFFICERS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
         Section 1. Titles  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
         Section 2. Election; Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
         Section 3. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
         Section 4. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
         Section 5. Compensation... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
         Section 6. Chairman and Vice Chairman of the Board of Directors... . . . . . . . . . . . . . . . . . . . .  7
         Section 7. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
         Section 8. Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
         Section 9. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
         Section 10. Assistant Secretaries..  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
         Section 11. Treasurer... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
         Section 12. Assistant Treasurers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
         Section 13. Controller and Assistant Controllers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
         Section 14. Voting Upon Stocks.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8

ARTICLE 7 - CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
         Section 1. Certificates  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
         Section 2. Transfer of Shares  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
         Section 3. Transfer Agent and Registrar  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
         Section 4. Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
         Section 5. Fixing Record Date  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
         Section 6. Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10

ARTICLE 8 - INDEMNIFICATION OF DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
         Section 1. Indemnification Provisions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
         Section 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
         Section 3. Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
         Section 4. Litigation Expense Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
         Section 5. Approval of Indemnification Payments  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
         Section 6. Suits by Claimant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
         Section 7. Consideration; Personal Representatives and Other Remedies  . . . . . . . . . . . . . . . . .   11
         Section 8. Scope of Indemnification Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12

ARTICLE 9 - GENERAL PROVISIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
         Section 1. Dividends and other Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
         Section 2. Seal  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
         Section 3. Waiver of Notice  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
         Section 4. Checks  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
         Section 5. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
         Section 6. Amendments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
         Section 7. Shareholders' Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
</TABLE>





                                       ii
<PAGE>   3
                                     BYLAWS

                                       OF

                           MAN-MILL ACQUISITION, INC.

                              ARTICLE 1 - OFFICES

         Section 1. Principal and Registered Office. The principal office of
the corporation shall be located at 4111 Mint Way, Dallas, Texas 75237. The
registered office of the corporation shall be located at 225 Hillsborough
Street, Raleigh, North Carolina 27603.

         Section 2. Other Offices. The corporation may have offices at such
other places, either within or without the State of North Carolina, as the
board of directors may from time to time determine.

                      ARTICLE 2 - MEETINGS OF SHAREHOLDERS

         Section 1. Place of Meeting. Meetings of shareholders shall be held at
the principal office of the corporation, or at such other place, either within
or without the State of North Carolina, as shall be designated in the notice of
the meeting.

         Section 2. Annual Meeting. The annual meeting of shareholders shall be
held at such time as determined by resolution of the board of directors for the
purpose of electing directors of the corporation and the transaction of such
other business as may be properly brought before the meeting.

         Section 3. Substitute Annual Meeting. If the annual meeting is not
held in accordance with these bylaws, a substitute annual meeting may be called
in accordance with Section 4 of this Article. A meeting so called shall be
designated and treated for all purposes as the annual meeting.

         Section 4. Special Meetings. Special meetings of the shareholders may
be called at any time by the president or the board of directors, and must be
called and held within thirty days of demand therefor, if the holders of at
least ten percent of all the votes entitled to be cast on any issue proposed to
be considered at the proposed special meeting sign, date and deliver to the
corporation's secretary one or more written demands for the meeting describing
the purpose or purposes for which it is to be held.

         Section 5. Notice of Meetings. At least 10 and no more than 60 days
prior to any annual or special meeting of shareholders, the corporation shall
notify shareholders of the date, time and place of the meeting and, in the case
of a special or substitute annual meeting or where otherwise required by law,
shall briefly describe the purpose or purposes of the meeting. Only business
within the purpose or purposes described in the notice may be conducted at a
special





<PAGE>   4
meeting. Unless otherwise required by the articles of incorporation or by law
(for example, in the event of a meeting to consider the adoption of a plan of
merger or share exchange, a sale of assets other than in the ordinary course of
business or a voluntary dissolution), the corporation shall be required to give
notice only to shareholders entitled to vote at the meeting. If an annual or
special shareholders' meeting is adjourned to a different date, time or place,
notice thereof need not be given if the new date, time or place is announced at
the meeting before adjournment. If a new record date for the adjourned meeting
is fixed pursuant to Article 7, Section 5 hereof, notice of the adjourned
meeting shall be given to persons who are shareholders as of the new record
date. It shall be the primary responsibility of the secretary to give the
notice, but notice may be given by or at the direction of the president or
other person or persons calling the meeting. If mailed, such notice shall be
deemed to be effective when deposited in the United States mail with postage
thereon prepaid, correctly addressed to the shareholder's address shown in the
corporation's current record of shareholders.

         Section 6. Quorum. A majority of the votes entitled to be cast by a
voting group on a matter, represented in person or by proxy at a meeting of
shareholders, shall constitute a quorum for that voting group for any action on
that matter, unless quorum requirements are otherwise fixed by a court of
competent jurisdiction acting pursuant to Section 55-7-03 of the General
Statutes of North Carolina. Once a share is represented for any purpose at a
meeting, it is deemed present for quorum purposes for the remainder of the
meeting and any adjournment thereof, unless a new record date is or must be set
for the adjournment. Action may be taken by a voting group at any meeting at
which a quorum of that voting group is represented, regardless of whether
action is taken at that meeting by any other voting group. In the absence of a
quorum at the opening of any meeting of shareholders, such meeting may be
adjourned from time to time by a vote of the majority of the shares voting on
the motion to adjourn.

         Section 7. Shareholders' List. After a record date is fixed for a
meeting, the secretary of the corporation shall prepare an alphabetical list of
the names of all its shareholders who are entitled to notice of the
shareholders' meeting. Such list shall be arranged by voting group (and within
each voting group by class or series of shares) and shall show the address of
and number of shares held by each shareholder. The shareholders' list shall be
made available for inspection by any shareholder beginning two business days
after notice of the meeting is given for which the list was prepared and
continuing through the meeting, at the corporation's principal office or at
such other place identified in the meeting notice in the city where the meeting
will be held. The corporation shall make the shareholders' list available at
the meeting, and any shareholder or his agent or attorney is entitled to
inspect the list at any time during the meeting or any adjournment.

         Section 8. Voting of Shares. Except as otherwise provided by the
articles of incorporation or by law, each outstanding share of voting capital
stock of the corporation shall be entitled to one vote on each matter submitted
to a vote at a meeting of the shareholders. Unless otherwise provided in the
articles of incorporation or by law, cumulative voting for directors shall not
be allowed. Action on a matter by a voting group for which a quorum is present
is approved if the votes cast within the voting group favoring the action
exceed the votes cast opposing the action, unless the vote of a greater number
is required by law or by the articles of incorporation. Voting on all matters
shall be by voice vote or by a show of hands, unless the



                                     -2-
<PAGE>   5
holders of one-tenth of the shares represented at the meeting shall demand a
ballot vote on a particular matter. Absent special circumstances, the shares of
the corporation are not entitled to vote if they are owned, directly or
indirectly, by a second corporation, domestic or foreign, and the corporation
owns, directly or indirectly, a majority of the shares entitled to vote for
directors of the second corporation, except that this provision shall not limit
the power of the corporation to vote shares held by it in a fiduciary capacity.

         Section 9. Action Without Meeting. Any action which the shareholders
could take at a meeting may be taken without a meeting if one or more written
consents, setting forth the action taken, shall be signed, before or after such
action, by all the shareholders who would be entitled to vote upon the action
at a meeting. The consent shall be delivered to the corporation for inclusion
in the minutes or filing with the corporate records. If by law, the corporation
is required to give its nonvoting shareholders written notice of the proposed
action, it shall do so at least 10 days before the action is taken, and such
notice must contain or be accompanied by the same material that would have been
required by law to be sent to nonvoting shareholders in a notice of meeting at
which the proposed action would have been submitted to the shareholders for
action.

                         ARTICLE 3 - BOARD OF DIRECTORS

         Section 1. General Powers. The business and affairs of the corporation
shall be managed under the direction of the board of directors except as
otherwise provided by the articles of incorporation or by a valid shareholders'
agreement.

         Section 2. Number, Term and Qualification. The number of directors of
the corporation shall consist of one or more individuals. The shareholders at
any annual meeting may by resolution fix the number of directors to be elected
at the meeting; but in the absence of such resolution, the number of directors
elected at the meeting shall constitute the number of directors of the
corporation until the next annual meeting of shareholders, unless the number is
changed prior to such meeting by action of the shareholders. The Board of
Directors shall have the authority to increase or decrease by thirty percent
within any twelve-month period the number of directors. Each director's term
shall expire at the annual meeting next following the director's election as a
director, provided, that notwithstanding the expiration of the term of the
director, the director shall continue to hold office until a successor is
elected and qualifies or until his death, resignation, removal or
disqualification or until there is a decrease in the number of directors.
Directors need not be residents of the State of North Carolina or shareholders
of the corporation unless the articles of incorporation so provide.

         Section 3. Removal. Directors may be removed from office with or
without cause (unless the articles of incorporation provide that directors may
be removed only for cause) provided the notice of the shareholders' meeting at
which such action is to be taken states that a purpose of the meeting is
removal of the director and the number of votes cast to remove the director
exceeds the number of votes cast not to remove him.





                                      -3-
<PAGE>   6
         Section 4. Vacancies. Except as otherwise provided in the articles
of incorporation, a vacancy occurring in the board of directors, including,
without limitation, a vacancy resulting from an increase in the number of
directors or from the failure by the shareholders to elect the full authorized
number of directors, may be filled by a majority of the remaining directors or
by the sole director remaining in office. The shareholders may elect a director
at any time to fill a vacancy not filled by the directors. A director elected
to fill a vacancy shall be elected for the unexpired term of his predecessor in
office.

         Section 5. Compensation. The directors shall not receive compensation
for their services as such, except that by resolution of the board of
directors, the directors may be paid fees, which may include but are not
restricted to fees for attendance at meetings of the board or of a committee,
and they may be reimbursed for expenses of attendance.  Any director may serve
the corporation in any other capacity and receive compensation therefor.

                       ARTICLE 4 - MEETINGS OF DIRECTORS

         Section 1. Annual and Regular Meetings. The annual meeting of the
board of directors shall be held immediately following the annual meeting of
the shareholders. The board of directors may by resolution provide for the
holding of regular meetings of the board on specified dates and at specified
times. Notice of regular meetings held at the principal office of the
corporation and at the usual scheduled time shall not be required. If any date
for which a regular meeting is scheduled shall be a legal holiday, the
meeting shall be held on a date designated in the notice of the meeting, if
any, during either the same week in which the regularly scheduled date falls or
during the preceding or following week. Regular meetings of the board shall be
held at the principal office of the corporation or at such other place as may
be designated in the notice of the meeting.

         Section 2. Special Meetings. Special meetings of the board of
directors may be called by or at the request of the chairman of the board, the
president or any two directors. Such meetings may be held at the time and place
designated in the notice of the meeting.

         Section 3. Notice of Meetings. Unless the articles of incorporation
provide otherwise, the annual and regular meetings of the board of directors
may be held without notice of the date, time, place or purpose of the meeting.
The secretary or other person or persons calling a special meeting shall give
notice by any usual means of communication to be sent at least two days before
the meeting if notice is sent by means of telephone, telecopy or personal
delivery and at least five days before the meeting if notice is sent by mail. A
director's attendance at, or participation in, a meeting for which notice is
required shall constitute a waiver of notice, unless the director at the
beginning of the meeting (or promptly upon arrival) objects to holding the
meeting or transacting business at the meeting and does not thereafter vote for
or assent to action taken at the meeting.

         Section 4. Quorum. Except as otherwise provided in the articles of
incorporation, majority of the directors in office shall constitute a quorum
for the transaction of business at a meeting of the board of directors.





                                      -4-
<PAGE>   7
         Section 5. Manner of Acting. Except as otherwise provided in the
articles of incorporation, the affirmative vote of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.

         Section 6. Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken is deemed to have assented to the action taken unless he
objects at the beginning of the meeting (or promptly upon arrival) to holding,
or transacting business at, the meeting, or unless his dissent or abstention is
entered in the minutes of the meeting or unless he shall file written notice of
his dissent or abstention to such action with the presiding officer of the
meeting before its adjournment or with the corporation immediately after
adjournment of the meeting. The right of dissent or abstention shall not apply
to a director who voted in favor of such action.

         Section 7. Action Without Meeting. Unless otherwise provided in the
articles of incorporation, action required or permitted to be taken at a
meeting of the board of directors may be taken without a meeting if the action
is taken by all members of the board. The action must be evidenced by one or
more written consents signed by each director before or after such action,
describing the action taken, and included in the minutes or filed with the
corporate records. Action taken without a meeting is effective when the last
director signs the consent, unless the consent specifies a different effective
date.

         Section 8. Meeting by Communications Device. Unless otherwise provided
in the articles of incorporation, the board of directors may permit any or all
directors to participate in a regular or special meeting by, or conduct the
meeting through the use of, any means of communication by which all directors
participating may simultaneously hear each other during the meeting. A director
participating in a meeting by this means is deemed to be present in person at
the meeting.

                                 ARTICLE 5 - COMMITTEES

         Section 1. Election and Powers. Unless otherwise provided by the
articles of incorporation or the bylaws, a majority of the board of directors
may create one or more committees and appoint two or more directors to serve at
the pleasure of the board on each such committee. To the extent specified by
the board of directors or in the articles of incorporation, each committee
shall have and may exercise the powers of the board in the management of the
business and affairs of the corporation, except that no committee shall have
authority to do the following:

         (a)     Authorize distributions.

         (b)     Approve or propose to shareholders action required to be 
approved by shareholders.

         (c)     Fill vacancies on the board of directors or on any of its
committees.





                                      -5-
<PAGE>   8
         (d)     Amend the articles of incorporation.

         (e)     Adopt, amend or repeal the bylaws.

         (f)     Approve a plan of merger not requiring shareholder approval.

         (g)     Authorize or approve the reacquisition of shares, except 
according to a formula or method prescribed by the board of directors.

         (h)     Authorize or approve the issuance, sale or contract for sale
of shares, or determine the designation and relative rights, preferences and
limitations of a class or series of shares, except that the board of directors
may authorize a committee (or a senior executive officer of the corporation) to
do so within limits specifically prescribed by the board of directors.

         Section 2. Removal; Vacancies. Any member of a committee may be
removed at any time with or without cause, and vacancies in the membership of a
committee by means of death, resignation, disqualification or removal shall be
filled by a majority of the whole board of directors.

         Section 3. Meetings. The provisions of Article 4 governing meetings of
the board of directors, action without meeting, notice, waiver of notice and
quorum and voting requirements shall apply to the committees of the board and
its members.

         Section 4. Minutes. Each committee shall keep minutes of its
proceedings and shall report thereon to the board of directors at or before the
next meeting of the board.

                              ARTICLE 6 - OFFICERS

         Section 1. Titles. The officers of the corporation shall be a 
president and a secretary and may include a chairman and vice chairman of the
board of directors, an executive vice president, a treasurer, one or more
additional vice presidents, a controller, one or more assistant secretaries,
one or more assistant treasurers, one or more assistant controllers, and such
other officers as shall be deemed necessary. The officers shall have the
authority and perform the duties as set forth herein or as from time to time
may be prescribed by the board of directors or by the president (to the extent
that the president is authorized by the board of directors to prescribe the
authority and duties of officers). Any two or more offices may be held by the
same individual, but no officer may act in more than one capacity where action
of two or more officers is required.

         Section 2. Election; Appointment. The officers of the corporation
shall be elected from time to time by the board of directors or appointed from
time to time by the president (to the extent that the president is authorized
by the board to appoint officers).





                                      -6-
<PAGE>   9
         Section 3. Removal. Any officer may be removed by the board at any
time with or without cause whenever in its judgment the best interests of the
corporation will be served, but removal shall not itself affect the officer's
contract rights, if any, with the corporation.

         Section 4. Vacancies. Vacancies among the officers may be filled and
new offices may be created and filled by the board of directors, or by the
president (to the extent authorized by the board).

         Section 5. Compensation. The compensation of the officers shall be
fixed by, or under the direction of, the board of directors.

         Section 6. Chairman and Vice Chairman of the Board of Directors. The
chairman of the board of directors, if such officer is elected, shall preside
at meetings of the board of directors and shall have such other authority and
perform such other duties as the board of directors shall designate. The vice
chairman, if elected, shall preside at meetings of the board in the absence of
the chairman and shall have such other authority and perform such other duties
as the board of directors shall designate.

         Section 7. President. The president shall be in general charge of the
affairs of the corporation in the ordinary course of its business and shall
preside at meetings of the shareholders. The president may perform such acts,
not inconsistent with applicable law or the provisions of these bylaws, as may
be performed by the president of a corporation and may sign and execute all
authorized notes, bonds, contracts and other obligations in the name of the
corporation. The president shall have such other powers and perform such other
duties as the board of directors shall designate or as may be provided by
applicable law or elsewhere in these bylaws.

         Section 8. Vice Presidents. The executive vice president, if such
officer is elected or appointed, shall exercise the powers of the president
during that officer's absence or inability to act. In default of both the
president and the executive vice president, any other vice president may
exercise the powers of the president. Any action taken by a vice president in
the performance of the duties of the president shall be presumptive evidence of
the absence or inability to act of the president at the time the action was
taken. The vice presidents shall have such other powers and perform such other
duties as may be assigned by the board of directors or by the president (to the
extent that the president is authorized by the board of directors to prescribe
the authority and duties of other officers).

         Section 9. Secretary. The secretary shall keep accurate records of the
acts and proceedings of all meetings of shareholders and of the board of
directors and shall give all notices required by law and by these bylaws. The
secretary shall have general charge of the corporate books and records and
shall have the responsibility and authority to maintain and authenticate such
books and records. The secretary shall have general charge of the corporate
seal and shall affix the corporate seal to any lawfully executed instrument
requiring it. The secretary shall have general charge of the stock transfer
books of the corporation and shall keep at the principal office of the
corporation a record of shareholders, showing the name and address of each
shareholder and the number and class of the shares held by each. The secretary
shall





                                      -7-
<PAGE>   10
sign such instruments as may require the signature of the secretary, and in
general shall perform the duties incident to the office of secretary and such
other duties as may be assigned from time to time by the board of directors or
the president (to the extent that the president is authorized by the board of
directors to prescribe the authority and duties of other officers).

         Section 10. Assistant Secretaries. Each assistant secretary, if such
officer is elected, shall have such powers and perform such duties as may be
assigned by the board of directors or the president (if authorized by the board
of directors to prescribe the authority and duties of other officers), and the
assistant secretaries shall exercise the powers of the secretary during that
officer's absence or inability to act.

         Section 11. Treasurer. The treasurer shall have custody of all funds
and securities belonging to the corporation and shall receive, deposit or
disburse the same under the direction of the board of directors. The treasurer
shall keep full and accurate accounts of the finances of the corporation, which
may be consolidated or combined statements of the corporation and one or more
of its subsidiaries as appropriate, that include a balance sheet as of the end
of the fiscal year, an income statement for that year, and a statement of cash
flows for the year unless that information appears elsewhere in the financial
statements. If financial statements are prepared for the corporation on the
basis of generally accepted accounting principles, the annual financial
statements must also be prepared on that basis. The corporation shall mail the
annual financial statements, or a written notice of their availability, to each
shareholder within 120 days of the close of each fiscal year. The treasurer
shall in general perform all duties incident to the office and such other
duties as may be assigned from time to time by the board of directors or the
president (to the extent that the president is authorized by the board of
directors to prescribe the authority and duties of other officers).

         Section 12. Assistant Treasurers. Each assistant treasurer, if such
officer is elected, shall have such powers and perform such duties as may be
assigned by the board of directors or the president (to the extent that the
president is authorized by the board of directors to prescribe the authority
and duties of other officers), and the assistant treasurers shall exercise the
powers of the treasurer during that officer's absence or inability to act.

         Section 13. Controller and Assistant Controllers. The controller, if
such officer is elected, shall have charge of the accounting affairs of the
corporation and shall have such other powers and perform such other duties as
the board of directors or the president (to the extent that the president is
authorized by the board of directors to prescribe the authority and duties of
other officers) shall designate. Each assistant controller shall have such
powers and perform such duties as may be assigned by the board of directors or
the president (to the extent that the president is authorized by the board of
directors to prescribe the authority and duties of other officers), and the
assistant controllers shall exercise the powers of the controller during that
officer's absence or inability to act.

         Section 14. Voting Upon Stocks. Unless otherwise ordered by the board
of directors, the president shall have full power and authority in behalf of
the corporation to attend, act and vote at meetings of the shareholders of any
corporation in which this corporation may hold stock, and at such meetings
shall possess and may exercise any and all rights and powers





                                      -8-
<PAGE>   11
incident to the ownership of such stock and which, as the owner, the
corporation might have possessed and exercised if present. The board of
directors may by resolution from time to time confer such power and authority
upon any other person or persons.

                           ARTICLE 7 - CAPITAL STOCK

         Section 1. Certificates. Shares of the capital stock of the
corporation shall be represented by certificates.  The name and address of the
persons to whom shares of capital stock of the corporation are issued, with the
number of shares and date of issue, shall be entered on the stock transfer
records of the corporation. Certificates for shares of the capital stock of the
corporation shall be in such form not inconsistent with the articles of
incorporation of the corporation as shall be approved by the board of
directors. Each certificate shall be signed (either manually or by facsimile)
by (a) the president or any vice president and by the secretary, assistant
secretary, treasurer or assistant treasurer or (b) any two officers designated
by the board of directors. Each certificate may be sealed with the seal of the
corporation or a facsimile thereof.

         Section 2. Transfer of Shares. Transfer of shares shall be made on the
stock transfer records of the corporation, and transfers shall be made only
upon surrender of the certificate for the shares sought to be transferred by
the recordholder or by a duly authorized agent, transferee or legal
representative. All certificates surrendered for transfer or reissue shall be
cancelled before new certificates for the shares shall be issued.

         Section 3. Transfer Agent and Registrar. The board of directors may
appoint one or more transfer agents and one or more registrars of transfers and
may require all stock certificates to be signed or countersigned by the
transfer agent and registered by the registrar of transfers.

         Section 4. Regulations. The board of directors may make rules and
regulations as it deems expedient concerning the issue, transfer and
registration of shares of capital stock of the corporation.

         Section 5. Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders,
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other purpose, the board of directors may
fix in advance a date as the record date for the determination of shareholders.
The record date shall be not more than 70 days before the meeting or action
requiring a determination of shareholders. A determination of shareholders
entitled to notice of or to vote at a shareholders' meeting shall be effective
for any adjournment of the meeting unless the board of directors fixes a new
record date, which it shall do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting. If no record date is
fixed for the determination of shareholders, the record date shall be the day
the notice of the meeting is mailed or the day the action requiring a
determination of shareholders is taken. If no record date is fixed for action
without a meeting, the record date for determining





                                      -9-
<PAGE>   12
shareholders entitled to take action without a meeting shall be the date the
first shareholder signs a consent to the action taken.

         Section 6. Lost Certificates. The board of directors must authorize the
issuance of a new certificate in place of a certificate claimed to have been
lost, destroyed or wrongfully taken, upon receipt of (a) an affidavit from the
person explaining the loss, destruction or wrongful taking, and (b) a bond from
the claimant in a sum as the corporation may reasonably direct to indemnify the
corporation against loss from any claim with respect to the certificate claimed
to have been lost, destroyed or wrongfully taken. The board of directors may, in
its discretion, waive the affidavit and bond and authorize the issuance of a new
certificate in place of a certificate claimed to have been lost, destroyed or
wrongfully taken.

             ARTICLE 8 - INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Section 1. Indemnification Provisions. Any person who at any time
serves or has served as a director or officer of the corporation or of any
wholly owned subsidiary of the corporation, or in such capacity at the request
of the corporation for any other foreign or domestic corporation, partnership,
joint venture, trust or other enterprise, or as a trustee or administrator under
any employee benefit plan of the corporation or of any wholly owned subsidiary
thereof (a "Claimant"), shall have the right to be indemnified and held harmless
by the corporation to the fullest extent from time to time permitted by law
against all liabilities and litigation expenses (as hereinafter defined) in the
event a claim shall be made or threatened against that person in, or that person
is made or threatened to be made a party to, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, and whether or not brought by or on behalf of the corporation,
including all appeals therefrom (a "proceeding"), arising out of such service;
provided, that such indemnification shall not be effective with respect to (a)
that portion of any liabilities or litigation expenses with respect to which the
Claimant is entitled to receive payment under any insurance policy or (b) any
liabilities or litigation expenses incurred on account of any of the Claimant's
activities which were at the time taken known or believed by the Claimant to be
clearly in conflict with the best interests of the corporation.

         Section 2.  Definitions. As used in this Article, (a) "liabilities"
shall include, without limitation, (1) payments in satisfaction of any judgment,
money decree, excise tax, fine or penalty for which Claimant had become liable
in any proceeding and (2) payments in settlement of any such proceeding subject,
however, to Section 3 of this Article 8; (b) "litigation expenses" shall
include, without limitation, (1) reasonable costs and expenses and attorneys'
fees and expenses actually incurred by the Claimant in connection with any
proceeding and (2) reasonable costs and expenses and attorneys' fees and
expenses in connection with the enforcement of rights to the indemnification
granted hereby or by applicable law, if such enforcement is successful in whole
or in part; and (c) "disinterested directors" shall mean directors who are not
party to the proceeding in question.

         Section 3. Settlements. The corporation shall not be liable to
indemnify the Claimant for any amounts paid in settlement of any proceeding
effected without the





                                      -10-
<PAGE>   13
corporation's written consent. The corporation will not unreasonably withhold
its consent to any proposed settlement.

         Section 4. Litigation Expense Advances.

         (a)     Except as provided in subsection (b) below, any litigation
expenses shall be advanced to any Claimant within 30 days of receipt by the
secretary of the corporation of a demand therefor, together with an undertaking
by or on behalf of the Claimant to repay to the corporation such amount unless
it is ultimately determined that the Claimant is entitled to be indemnified by
the corporation against such expenses. The secretary shall promptly forward
notice of the demand and undertaking immediately to all directors of the
corporation.

         (b)     Within 10 days after mailing of notice to the directors
pursuant to subsection (a) above, any disinterested director may, if desired,
call a meeting of all disinterested directors to review the reasonableness of
the expenses so requested. No advance shall be made if a majority of the
disinterested directors affirmatively determines that the item of expense is
unreasonable in amount; but if the disinterested directors determine that a
portion of the expense item is reasonable, the corporation shall advance such
portion.

         (c)     Without limiting the rights contained in subsection (a) above,
the board of directors may take action to advance any litigation expenses to a
Claimant upon receipt of an undertaking by or on behalf of the Claimant to
repay to the corporation such amount unless it is ultimately determined that
the Claimant is entitled to be indemnified by the corporation against such
expenses.

         Section 5. Approval of Indemnification Payments. Except as provided in
Section 4 of this Article, the board of directors of the corporation shall take
all such action as may be necessary and appropriate to authorize the
corporation to pay the indemnification required by Section 1 of this Article,
including, without limitation, making a good faith evaluation of the manner in
which the Claimant acted and of the reasonable amount of indemnity due the
Claimant. In taking any such action, any Claimant who is a director of the
corporation shall not be entitled to vote on any matter concerning such
Claimant's right to indemnification.

         Section 6. Suits by Claimant. No Claimant shall be entitled to bring
suit against the corporation to enforce his rights under this Article until
sixty days after a written claim has been received by the corporation, together
with any undertaking to repay as required by Section 4 of this Article. It
shall be a defense to any such action that the Claimant's liabilities or
litigation expenses were incurred on account of activities described in clause
(b) of Section 1, but the burden of proving this defense shall be on the
corporation. Neither the failure of the corporation to determine that
indemnification of the Claimant is proper, nor determination by the corporation
that indemnification is not due because of application of clause (b) of Section
1 shall be a defense to the action or create a presumption that the Claimant
has not met the applicable standard of conduct.

         Section 7. Consideration; Personal Representatives and Other
Remedies. Any Claimant who during such time as this Article or corresponding
provisions of predecessor bylaws





                                      -11-
<PAGE>   14
is or has been in effect serves or has served in any of the capacities
described in Section 1 shall be deemed to be doing so or to have done so in
reliance upon, and as consideration for, the right of indemnification provided
herein or therein. The right of indemnification provided herein or therein
shall inure to the benefit of the legal representatives of any Claimant
hereunder, and the right shall not be exclusive of any other rights to which
the Claimant or legal representative may be entitled apart from this Article.

         Section 8. Scope of Indemnification Rights. The rights granted herein
shall not be limited by the provisions of Section 55-8-51 of the General
Statutes of North Carolina or any successor statute.

                         ARTICLE 9 - GENERAL PROVISIONS

         Section 1. Dividends and other Distributions. The board of directors
may from time to time declare and the corporation may pay dividends or make
other distributions with respect to its outstanding shares in the manner and
upon the terms and conditions provided by law.

         Section 2. Seal. The seal of the corporation shall be any form
approved from time to time or at any time by the board of directors.

         Section 3. Waiver of Notice. Whenever notice is required to be given
to a shareholder, director or other person under the provisions of these
bylaws, the articles of incorporation or applicable law, a waiver in writing
signed by the person or persons entitled to the notice, whether before or after
the date and time stated in the notice, and delivered to the corporation shall
be equivalent to giving the notice.

         Section 4. Checks. All checks, drafts or orders for the payment of
money shall be signed by the officer or officers or other individuals that the
board of directors may from time to time designate.

         Section 5. Fiscal Year. The fiscal year of the corporation shall be
fixed by the board of directors.

         Section 6. Amendments.  Unless otherwise provided in the articles of
incorporation or a bylaw adopted by the shareholders or by law, these bylaws
may be amended or repealed by the board of directors, except that a bylaw
adopted, amended or repealed by the shareholders may not be readopted, amended
or repealed by the board of directors if neither the articles of incorporation
nor a bylaw adopted by the shareholders authorizes the board of directors to
adopt, amend or repeal that particular bylaw or the bylaws generally. These
bylaws may be amended or repealed by the shareholders even though the bylaws
may also be amended or repealed by the board of directors. A bylaw that fixes a
greater quorum or voting requirement for the board of directors may be amended
or repealed (a) if originally adopted by the shareholders, only by the
shareholders, unless such bylaw as originally adopted by the shareholders
provides that such bylaw may be amended or repealed by the board of directors
or





                                      -12-
<PAGE>   15
(b) if originally adopted by the board of directors, either by the shareholders
or by the board of directors. A bylaw that fixes a greater quorum or voting
requirement may not be adopted by the board of directors by a vote less than a
majority of the directors then in office and may not itself be amended by a
quorum or vote of the directors less than the quorum or vote prescribed in such
bylaw or prescribed by the shareholders.

         Section 7. Shareholders' Agreement. In the event of a conflict
between these bylaws and a valid shareholders' agreement, the shareholders'
agreement shall control.


                                     ----


         THIS IS TO CERTIFY that the above bylaws of Man-Mill Acquisition,
Inc., were adopted by the board of directors of the corporation by action taken
without a meeting effective as of August 24, 1993.

         This 30 day of August 1993.



                                                    /s/ JEFFREY D. CORDES
                                                    ----------------------------
                                                    Jeffrey D. Cordes, Secretary


[Corporate Seal]








                                      -13-
<PAGE>   16



STATE OF DELAWARE     )
                      ) ss:
COUNTY OF NEW CASTLE  )


     BE IT REMEMBERED that on this 8th day of March A.D., 1971, personally 
came before me, the subscriber, a Notary Public for the State of Delaware, 
W. J. Reif, known to be personally to be such, and acknowledged the said 
certificate to be his act and deed and that the facts therein stated are truly 
set forth.

     GIVEN under my hand and seal of office the day and year aforesaid.

                                             A. Dana Atwell
                                        -----------------------
                                             Notary Public


(NOTARY SEAL)

<PAGE>   1
                                                                    EXHIBIT 3.33


                          CERTIFICATE OF INCORPORATION
                                       OF
                           MOORE'S FALLS CORPORATION

        The undersigned, in order to form a corporation under and
pursuant to the provisions of the General Corporation Law of the State of
Delaware, do hereby certify as follows:

        FIRST:      The name of the corporation is 
                    MOORE'S FALLS CORPORATION

        SECOND:     The registered office of the corporation in
the State of Delaware is located at 100 West 10th Street, in the City of
Wilmington, County of New Castle. The name and address of its registered agent
is The Corporation Trust Company, 100 West 10th Street, Wilmington, Delaware.

        THIRD:      The nature of the business to be conducted or
promoted and the purposes of the corporation are to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.

        FOURTH:     The total number of shares of all classes of
stock which the corporation shall have the authority to issue is One Thousand
(1,000) shares, all of which shall be of a single class, without par value.
<PAGE>   2
     The Board of Directors is hereby authorized within the limitations and
restrictions stated in this Article Fourth, to fix by resolution or resolutions
the powers, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions of each of the
authorized classes of stock, including, without limiting the generality of the
foregoing, such provisions as may be desired concerning the voting, redemption,
dividends, dissolution or the distribution of assets, conversion or exchange,
and other subjects or matters as may be fixed by resolution or resolutions of
the Board of Directors under the General Corporation Law of Delaware.

     FIFTH:  The name and mailing address of the Incorporator is as follows:

          NAME                  MAILING ADDRESS

     W. J. Reif               100 West Tenth Street
                              Wilmington, Delaware

     SIXTH:  The powers of the incorporator are to terminate upon the filing of
this certificate of incorporation with the Secretary of State of the State of
Delaware. The names and mailing addresses of the persons who are to



                                      -2-
<PAGE>   3
serve as directors of the corporation until the first annual meeting of
stockholders or until their successors are elected and qualified are as
follows:

<TABLE>
<CAPTION>
              NAMES                                 MAILING ADDRESSES
              -----                                 -----------------
          <S>                                 <C>
          F. C. Dumaine                       Suite 4500 Prudential Center
                                              Boston, Massachusetts    02199

          Dudley B. Dumaine                   Suite 4500 Prudential Center
                                              Boston, Massachusetts    02199

          Henry T. Wiggin                     Suite 4500 Prudential Center
                                              Boston, Massachusetts    02199

          Joseph B. Ely, II                   Suite 4500 Prudential Center
                                              Boston, Massachusetts    02199

          Alan L. Lefkowitz                   Room 1200, 225 Franklin Street
                                              Boston, Massachusetts   02110
</TABLE>

        SEVENTH:  (a) Except as otherwise required by law, by the
Certificate of Incorporation or by the by-laws of the corporation, as from time
to time amended, the business of the corporation shall be managed by its Board
of Directors, which shall have and may exercise all the powers of the
corporation. The Board of Directors of the corporation is hereby specifically
authorized and





                                     -3-
<PAGE>   4
empowered from time to time in its discretion to determine the extent, if any,
to which and the time and place at which, and the conditions under which any
stockholder of the corporation may examine books and records of the
corporation, other than the books and records now or hereafter required by
statute to be kept open for inspection of stockholders of the corporation. The
Board of Directors is expressly authorized to make, alter or repeal the by-laws
of the corporation.

          (b)         Any vote or votes authorizing liquidation of the
corporation or proceedings for its dissolution may provide, subject to the
rights of creditors and rights expressly provided for particular classes or
series of stocks, for the distribution pro rata among the stockholders of the
corporation of the assets of the corporation wholly or in part in kind, whether
such assets be in cash or other property, and may authorize the Board of
Directors of the corporation to determine the valuation of the different assets
of the corporation for the purpose of such liquidation and may divide or
authorize the Board of Directors to divide such assets or any part thereof
among the stockholders of the corporation, in such manner that every
stockholder will receive a proportionate amount in value (determined as
aforesaid) of cash or property of





                                     -4-
<PAGE>   5
the corporation upon such liquidation or dissolution even though each
stockholder may not receive a strictly proportionate part of each such asset.

          (c)  Election of directors need not be by ballot.

        EIGHTH:     The number of directors of the corporation shall be such
as from time to time shall be fixed by or in the manner provided by the
by-laws, but at no time shall the number of directors be fixed at less than
three.

        NINTH:      The corporation reserves the right to amend, alter,
change or repeal any provisions contained in this certificate of incorporation
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders are granted subject to this reservation.

        TENTH:      No contract or transaction between the corporation and
one or more of its directors or officers, or between the corporation and any
other corporation, partnership, association, or other organization in which one
or more of its directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the Board or committee thereof which authorizes the contract or transaction, or
solely because his





                                     -5-
<PAGE>   6
or their votes are counted for such purpose if:

        (1)  The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith authorized
the contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or

        (2)  The material facts as to his relationship or interest and to the
contract or transaction are disclosed or are known to the stockholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or

        (3)  The contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified, by the Board of Directors, a
committee thereof, or the stockholders.

        Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.

        ELEVENTH:   1. The corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,





                                     -6-
<PAGE>   7
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to be the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.

        (2) The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to





                                     -7-
<PAGE>   8
any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorney's fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only to
the extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper.





                                     -8-

<PAGE>   9
        (3) To the extent that any person referred to in sections 1 and 2 of
this paragraph Eleventh has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to therein or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection therewith.

        (4) Any indemnification under sections 1 and 2 of this paragraph
Eleventh (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in sections 1 and 2 of
this paragraph Eleventh. Such determination shall be made (a) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (b) if such quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion or (c) by the
stockholders.

        (5) Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the corporation in advance of the final
disposition of such action,





                                     -9-


<PAGE>   10
suit or proceeding as authorized by the Board of Directors in the specific case
upon receipt of an undertaking by or on behalf of the directors, officer,
employee or agent to repay such amount unless it shall ultimately be determined
that he is entitled to be indemnified by the corporation as provided in this
paragraph Eleventh.

        (6) The indemnification provided by this paragraph Eleventh shall not
be deemed exclusive of any other rights to which those seeking indemnification
may be entitled under any statute, by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.

        (7) The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as





                                    -10-

<PAGE>   11
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this paragraph Eleventh.

        The UNDERSIGNED, hereby declaring and certifying the facts stated in
this certificate of incorporation are true, hereunto sets his hand and seal
this 8th day of March, 1971.





                                   W. J. Reif
                            -------------------------
                                  Incorporator





                                    -11-
<PAGE>   12
                               AGREEMENT OF MERGER
                                       OF

                            MOORE'S FALLS CORPORATION

                          (a New Hampshire Corporation)
                                      INTO

                            MOORE'S FALLS CORPORATION
                            (a Delaware Corporation)

     AGREEMENT OF MERGER, dated this 26th day of April, 1971, by and between
MOORE'S FALLS CORPORATION, a Delaware corporation, and MOORE'S FALLS
CORPORATION, a New Hampshire corporation. 

                                WITNESSETH THAT:

     WHEREAS, said MOORE'S FALLS CORPORATION (New Hampshire) is a corporation
organized on January 19, 1921 under the laws of the State of New Hampshire,
having an authorized capital stock consisting of 30,000 shares of common stock
without par value, of which 3,010 are presently issued and outstanding, all held
by Amoskeag Company, a Delaware corporation; and

     WHEREAS, said MOORE'S FALLS CORPORATION (Delaware) is a corporation
organized on March 8, 1971 under the laws of the State of Delaware, having an
authorized capital stock consisting of 1,000 shares of common stock without par
value, of which 10 shares are presently issued and outstanding, all held by
Amoskeag Company, a Delaware corporation and shall remain issued and 
outstanding; and

     WHEREAS, The board of directors, officers and stockholder of each of said
corporations deem it advisable and to the benefit of each of said corporations
respectively that MOORE'S FALLS CORPORATION (New Hampshire) be merged into
MOORE'S FALLS CORPORATION (Delaware).



<PAGE>   13
     NOW, THEREFORE, the corporations, parties to this agreement have agreed and
do hereby agree each with the other that said MOORE'S FALLS CORPORATION (New
Hampshire) shall be merged into said MOORE'S FALLS CORPORATION (Delaware), and
do hereby agree upon and prescribe the terms and conditions of the merger, the
mode of carrying the same into effect and the amount of the capital stock of
said MOORE'S FALLS CORPORATION (Delaware) to be issued to the present holder of
the issued and outstanding capital stock of MOORE's FALLS CORPORATION (New
Hampshire), as follows:

                                   ARTICLE I.

     The certificate of incorporation and by-laws of MOORE'S FALLS CORPORATION
(Delaware), as they shall exist on the effective date of this agreement shall be
and remain the certificate of incorporation and the by-laws of the continuing
corporation, until the same may be altered, amended or repealed as therein
provided or otherwise in accordance with the laws of the State of Delaware. The
purposes of the continuing corporation shall be as set forth in said certificate
of incorporation, and the total authorized capital stock shall be as therein set
forth, namely 1,000 shares of common stock, without par value.

                                   ARTICLE II.

     The principal place of business of the continuing corporation is and shall
be located at Suite 4500, Prudential Center in the City of Boston, County of
Suffolk, Commonwealth of Massachusetts.

                                  ARTICLE III.

     The first board of directors of the continuing corporation after the filing
of this Agreement of Merger shall consist of those




                                     - 2 -
<PAGE>   14
persons who are now directors of MOORE'S FALLS CORPORATION (Delaware); their
respective names and addresses are as follows:

<TABLE>
<CAPTION>
          NAMES                                   ADDRESSES
          -----                                   ---------
<S>                                          <C>
     F. C. Dumaine                           Suite 4500, Prudential Center
                                             Boston, Massachusetts  02199

     Dudley B. Dumaine                       Suite 4500, Prudential Center
                                             Boston, Massachusetts  02199

     Henry T. Wiggin                         Suite 4500, Prudential Center
                                             Boston, Massachusetts  02199

     Joseph B. Ely, II                       Suite 4500, Prudential Center
                                             Boston, Massachusetts  02199

     Alan L. Lefkowitz                       Room 1200, 225 Franklin Street
                                             Boston, Massachusetts  02110
</TABLE>

     The officers of the continuing corporation after the filing of this
Agreement of Merger shall consist of those persons who are holders of the same
respective offices of MOORE'S FALLS CORPORATION (Delaware); their respective
names, addresses and offices are as follows:

<TABLE>
<CAPTION>
   OFFICE                     NAMES                    ADDRESSES
   ------                     -----                    ---------
<S>                      <C>                      <C>                    
President                Joseph B. Ely, II        Suite 4500, Prudential Center
                                                  Boston, Massachusetts  02199

Treasurer                Henry T. Wiggin          Suite 4500, Prudential Center
                                                  Boston, Massachusetts  02199

Secretary                Dudley B. Dumaine        Suite 4500, Prudential Center
                                                  Boston, Massachusetts  02199

Assistant                Alan L. Lefkowitz        Room 1200, 225 Franklin Street
Secretary                                         Boston, Massachusetts  02110
</TABLE>

                                  ARTICLE IV.

     The amount of the capital stock of the continuing corporation to be issued
to the present holder of the issued and outstanding capital stock of MOORE'S
FALLS CORPORATION (New Hampshire), is One



                                     - 3 -
<PAGE>   15
hundred (100) shares of common stock without par value, and the consideration
for the issuance of the shares of said common stock of the continuing
corporation to the holder of the issued and outstanding capital stock of said
MOORE'S FALLS CORPORATION (New Hampshire), is the surrender by it of the
certificates representing shares of the common stock, without par value, of said
MOORE'S FALLS CORPORATION (New Hampshire) now held by them, at the ratio of 30.1
share for each one (1) share of the common stock of the continuing corporation
to be issued to it.

     The total number of issued shares of the continuing corporation after this
agreement of merger is filed is 110. 

                                   ARTICLE V.

     Upon the effective date of the merger, the continuing corporation namely
MOORE'S FALLS CORPORATION (Delaware), shall be possessed of all the rights,
privileges, powers and franchises as well of a public as of a private nature,
and shall be subject to all the restrictions, disabilities and duties of MOORE'S
FALLS CORPORATION (New Hampshire), and all and singular, the rights, privileges,
powers and franchises of said corporation and all property, real, personal and
mixed owned and possessed by said corporation and all debts due to said
corporation on whatever account, as well as all other things in action or
belonging to said corporation, shall be vested in the continuing corporation;
and all property, rights and privileges, powers and franchises and all and every
other interest of said MOORE'S FALLS CORPORATION (New Hampshire), shall be
thereafter as effectually the property of the continuing corporation, and the
title to any real estate, whether by deed or otherwise, vested in said



                                     - 4 -
<PAGE>   16
MOORE'S FALLS CORPORATION (New Hampshire), shall not revert or be in any way
impaired by reason of the said merger, provided that all rights of creditors,
and all mortgages and other liens upon the property of said MOORE'S FALLS
CORPORATION (New Hampshire), shall be preserved unimpaired, and all debts,
liabilities and duties of MOORE'S FALLS CORPORATION (New Hampshire), shall
thenceforth attach to the continuing corporation, and may be enforced against it
to the same extent as if said debts, liabilities and duties had been incurred or
contracted by it.

                                   ARTICLE VI.

     If at any time the continuing corporation, namely MOORE'S FALLS CORPORATION
(Delaware), shall consider or be advised that any further assignments or
assurances in law or any things are necessary or desirable to vest in said
continuing corporation, according to the terms of this agreement, the title to
any property or rights of MOORE'S FALLS CORPORATION (New Hampshire), the proper
officers and directors of said MOORE'S FALLS CORPORATION (New Hampshire) shall
execute and make all such proper assignments and assurances and do all things
necessary or proper to vest title in such property or rights in the continuing
corporation, and otherwise to carry out the purposes of this agreement of
merger.

     The continuing corporation shall pay all expenses of carrying this
agreement into effect and accomplishing the merger. 

                                  ARTICLE VII.

     If this agreement is approved by the vote of the holders of two-thirds of
each class of stock entitled to vote on a proposal of merger of each
corporation party to this agreement, present in



                                     - 5 -
<PAGE>   17
person or represented by proxy at separate meetings duly called for the
purposes, or acting by written consent where allowed by law, this agreement
shall be executed, submitted for approval of the Attorney General or Assistant
Attorney General of the State of New Hampshire, and filed with the Secretary of
State of New Hampshire and with the Secretary of State of Delaware. It shall
become effective upon such filing. As soon as practicable after the effective
date of merger, this agreement shall be recorded in the office of the Recorder
of Deeds of New Castle County, Delaware, and with the register of deeds for each
county in New Hampshire in which MOORE'S FALLS CORPORATION (New Hampshire) owned
real estate prior to the merger.

     IN WITNESS WHEREOF, we have hereto signed our names, and affixed the seal
of each respective corporation, this 26th day of April, 1971.


                                        MOORE'S FALLS CORPORATION
                                        (A Delaware corporation)
                                        
                                        By  /s/ JOSEPH B. ELY, II
                                          -------------------------------
                                          Joseph B. Ely, II, President

[CORPORATE SEAL]

ATTEST:

/s/ ALAN L. LEFKOWITZ
- ---------------------------------------
Alan L. Lefkowitz, Assistant Secretary


                                        MOORE'S FALLS CORPORATION
                                        (a New Hampshire corporation)

                                        By  /s/ JOSEPH B. ELY, II
                                          --------------------------------
                                          Joseph B. Ely, II, President

[CORPORATE SEAL]

ATTEST:

/s/ ALAN L. LEFKOWITZ
- ----------------------------------------
Alan L. Lefkowitz, Assistant Secretary




                                     - 6 -
<PAGE>   18
     WE, THE UNDERSIGNED, being the Treasurer and a majority of the Board of
Directors of MOORE'S FALLS CORPORATION, a New Hampshire corporation with its
principal place of business in Manchester, County of Hillsborough and State of
New Hampshire, do hereby certify that at a meeting of the stockholders duly
called for the purpose, held on April 26, 1971, in Manchester, New Hampshire,
the following vote was unanimously adopted by a vote of all shares entitled to
vote on the subject, namely:

VOTED:    That this corporation merge with MOORE'S FALLS CORPORATION, a
          corporation duly organized and existing under the laws of the State of
          Delaware, in accordance with the provisions of Chapter 294, section
          42, of the New Hampshire Revised Statutes Annotated and of Section 252
          of the General Corporation laws of Delaware, and enter into an
          agreement of merger upon such terms and conditions all as provided in
          said agreement, a copy of which is attached hereto and made a part of
          the records of this meeting; and

          That the President of MOORE'S FALLS CORPORATION (New Hampshire), be 
          and he hereby is authorized and directed on behalf of said corporation
          to make, execute, and deliver said agreement of merger and that the
          treasurer and a majority of the board of directors of the corporation
          be and they hereby are authorized and directed on behalf of said
          corporation to cause the agreement of merger to be submitted for the
          approval of the Attorney General or Assistant Attorney General of the
          State of New Hampshire the Secretary of State of the State of
          Delaware, and subject to such approval to be filed and recorded in the
          office of the Secretary of State of the State of New Hampshire and the
          Secretary of State of the State of Delaware, and further to take all
          such other action as they may deem necessary or convenient to
          effectuate such agreement under the laws of the State of New Hampshire
          and the State of Delaware.

     We further certify that the agreement of merger, a copy of which is
attached hereto, is the agreement referred to in the preceding vote; and that
said agreement was executed by the respective



                                      - 7 -
<PAGE>   19
officers of the aforesaid corporation as indicated thereon.

Dated:     April 27, 1971
                                         /s/ HENRY T. WIGGIN
                                        --------------------------------
                                        Henry T. Wiggin, Treasurer

                                        Directors:

                                         /s/ HENRY T. WIGGIN
                                        --------------------------------
                                        H. T. Wiggin

                                         /s/ JOSEPH B. ELY, II
                                        --------------------------------
                                        Joseph B. Ely, II

                                         /s/ ALAN L. LEFKOWITZ
                                        --------------------------------
                                        Alan L. Lefkowitz

COMMONWEALTH OF MASSACHUSETTS)
                             )
                             )   SS:           April 27, 1971
COUNTY OF SUFFOLK            )


     Then personally appeared the above-named Henry T. Wiggin (Treasurer and
Director), Joseph B. Ely, II and Alan L. Lefkowitz, a majority of the Directors
of MOORE'S FALLS CORPORATION,, a New Hampshire corporation, and made oath that
the foregoing affidavit by them subscribed is true. 

     Before me,

                                        /s/  ELIZABETH W. HITCHCOCK
                                        --------------------------------
                                        Notary Public

         [NOTARIAL SEAL]
                                        My Commission Expires Feb. 23, 1972
                                                            


                                     - 8 -
<PAGE>   20
     I, ALAN L. LEFKOWITZ, Assistant Secretary of MOORE'S FALLS CORPORATION, a
corporation organized and existing under the laws of the State of Delaware,
hereby certify, as such Assistant Secretary and under the seal of the said
corporation, that the Agreement of Merger to which this certificate is attached,
after having been first duly signed on behalf of the said corporation and having
been signed on behalf of MOORE'S FALLS CORPORATION, a corporation of the State
of New Hampshire, was duly adopted pursuant to Section 288 of Title 8 of the
Delaware Code of 1953, as amended, by the unanimous written consent of the
stockholder holding all of the issued and outstanding capital stock of the
corporation, which Plan and Agreement of Merger thereby was adopted as the act
of the stockholder of said MOORE'S FALLS CORPORATION (Delaware), and the duly
adopted agreement and act of the said corporation.

     WITNESS my hand and the seal of said MOORE'S FALLS CORPORATION on this 27th
day of April, 1971.

                                       /s/ ALAN L. LEFKOWITZ
                                       --------------------------------------
   [CORPORATE SEAL]                    Alan L. Lefkowitz, Assistant Secretary

COMMONWEALTH OF MASSACHUSETTS)
                             )
                             )   SS:               April 27, 1971
COUNTY OF SUFFOLK            )

     Then personally appeared the above-named Alan L. Lefkowitz, Assistant
Secretary of MOORE'S FALLS CORPORATION, a Delaware corporation, and made oath
that the foregoing affidavit by him subscribed is true.

     Before me,

                                       /s/  ELIZABETH W. HITCHCOCK
                                       --------------------------------------
     [NOTARIAL SEAL]                   Notary Public
                                       My Commission Expires Feb. 23, 1972


                                      - 9 -
<PAGE>   21
     THE ABOVE AGREEMENT OF MERGER, having been executed on behalf of each
corporate party thereto, and having been adopted separately by each corporate
party thereto, in accordance with the provisions of the General Corporation Law
of the State of Delaware, the President of MOORE'S FALLS CORPORATION (New
Hampshire) and the President of MOORE FALL'S CORPORATION (Delaware) now hereby
do execute the said Agreement of Merger and the Assistant Secretary of each
corporate party thereto now hereby does attest the said Agreement of Merger
under the seal of their respective corporations, by authority of the directors
and stockholders thereof, as the respective act, deed and agreement of said
corporations, on this 27th day of April, 1971.

                                       MOORE'S FALLS CORPORATION
[CORPORATE SEAL]                             (New Hampshire)

                                       By  /s/ JOSEPH B. ELY, II
                                         ------------------------------------
                                           Joseph B. Ely, II, President


ATTEST:

/s/ ALAN L. LEFKOWITZ
- --------------------------------------
Alan L. Lefkowitz, Assistant Secretary

                                       MOORE'S FALLS CORPORATION
 [CORPORATE SEAL]                             (Delaware)

                                       By  /s/ JOSEPH B. ELY, II
                                         ------------------------------------
                                           Joseph B. Ely, II, President

ATTEST:

/s/ ALAN L. LEFKOWITZ
- --------------------------------------
Alan L. Lefkowitz, Assistant Secretary



                                     - 10 -
<PAGE>   22

                                 ACKNOWLEDGMENT

Commonwealth of Massachusetts )   ss.
County of Suffolk             )

     BE IT REMEMBERED, that on this 27th day of April, 1971, personally came
before me, a Notary Public, in and for the aforesaid County and Commonwealth,
Joseph B. Ely, II, President of MOORE'S FALLS CORPORATION, a Delaware
corporation, and he duly executed said Plan and Agreement of Merger before me
and acknowledged said Plan and Agreement of Merger to be his act and deed and
the act and deed of said corporation and the facts stated therein are true; and
that the seal affixed to said Plan and Agreement of Merger and attested by the
Secretary of said corporation is the common corporate seal of said corporation.


                                        /s/ ELIZABETH W. HITCHCOCK
                                        --------------------------------
                                        Notary Public

     NOTARIAL SEAL
                                        My commission expires: Feb. 23, 1972

<PAGE>   23
                            CERTIFICATE OF AMENDMENT

                                       OF

                          CERTIFICATE OF INCORPORATION

                                       OF

                           MOORE'S FALLS CORPORATION

                            Pursuant to Section 242

     It is hereby CERTIFIED for and in behalf of MOORE'S FALLS CORPORATION, a
corporation organized and existing under the laws of the State of Delaware that:

     FIRST: The Board of Directors of said corporation, at a meeting duly held
on November 7, 1972, adopted the following resolution setting forth an
amendment to the certificate of incorporation and declared the advisability
thereof:

     RESOLVED: That the certificate of incorporation of this corporation
     be amended by striking out the first paragraph only of Article 
     FOURTH and inserting in place thereof -

     "FOURTH: The total number of shares of all classes of stock which
     the corporation shall have authority to issue is Seven Thousand 
     (7,000) shares, of which 6,000 shares shall be 8% Preferred Stock
     with a par value of $100 each, and One Thousand (1,000) shares 
     shall be Common Stock without par value."
     
     SECOND: That in lieu of a meeting and vote by the stockholder entitled to
vote with respect to such amendment, the holder of all of the outstanding
capital stock entitled to vote thereon, consisting
<PAGE>   24
of 110 shares of common stock presently outstanding, has consented in
writing on November 7, 1972 to the adoption of the resolution and effecting
said amendment.

     THIRD: That the amendment to the certificate of incorporation of MOORE'S
FALLS CORPORATION provided herein is to become effective on January 2, 1973.

     IN WITNESS WHEREOF, MOORE'S FALLS CORPORATION has caused its corporate
seal to be hereunto affixed and this certificate to be signed by Joseph B. Ely,
II, its President, and attested by Frederic P. Melzar, its Secretary, this 11th
day of December, 1972.


                              MOORE'S FALLS CORPORATION


                              By: /s/ Joseph B. Ely II
                                  -----------------------------
                                  President

Attest:

By /s/ FREDERIC P. MELZAR
   --------------------------

COMMONWEALTH OF MASSACHUSETTS  )
                               )   ss:
COUNTY OF SUFFOLK              )

     BE IT REMEMBERED that on this 11th day of December, 1972, personally
came before me, a Notary Public in and for the County and State aforesaid,
Joseph B. Ely, II, President of Moore's Falls Corporation, a corporation of the
State of Delaware, and he duly executed said certificate before me and
acknowledged the said 
<PAGE>   25
certificate to be his act and deed and the act and deed of said corporation and
the facts stated therein are true; and that the seal affixed to said certificate
and attested by the Assistant Secretary of said corporation is the common or
corporate seal of said corporation.

     IN WITNESS WHEREOF, I have hereunto set my hand the seal of office the 
day and year aforesaid.


                                       /s/ ALAN L. LEFKOWITZ      
                                       --------------------------------
                                               Notary Public

NOTARIAL SEAL                          My commission expires: May 4, 1973
                                                                
<PAGE>   26
                          CERTIFICATE OF REDUCTION

                                 OF CAPITAL

                                 * * * * * *

         MOORE'S FALLS CORPORATION, a corporation organized and existing under
the General Corporation Law of the State of Delaware,

         DOES HEREBY CERTIFY:

         FIRST: That at a meeting of the Board of Directors of Moore's Falls
Corporation duly held on August 21, 1974, resolutions were adopted setting
forth a proposed reduction of the capital of said corporation in the manner and
to the extent hereinafter set forth.

         RESOLVED: That it is hereby declared advisable for this corporation to
         call for redemption and redeem the 5,120 shares of 8% Preferred Stock
         of this corporation now held by Amoskeag Company for a price of $100
         per share together with all dividends accrued thereon up to and
         including August 31, 1974, the date for which said call is hereby
         made, and that an amount sufficient to pay the dividends accrued to
         such date be set aside forthwith for the payment thereof. Said
         redemption shall be in consideration of the issuance of a promissory
         note of this corporation in the principal amount of $512,000,
         payable on demand, with interest at 8% per annum.

         RESOLVED: That it is hereby declared advisable to eliminate the
         capital of this corporation represented by the 6,000 shares of 8%
         Preferred Stock with a par value of $100 each presently authorized,
         including the 5,120 of such shares issued and outstanding but to be
         redeemed pursuant to the foregoing resolution, and that the capital of
         this corporation shall be so reduced after such redemption.
<PAGE>   27
         SECOND: That pursuant to the provisions of Section 244 of The General
Corporation Law of the State of Delaware a reduction of the capital of the
corporation by the amount of Five Hundred Twelve Thousand Dollars ($512,000)
was authorized in the following manner:

         By eliminating the capital represented by the shares of capital stock
         which have been redeemed and retired pursuant to the foregoing
         resolutions, and the shares of capital stock of the corporation, which
         are retired in connection with the reduction of capital, are
         identified as being Five Thousand One Hundred Twenty (5,120) shares of
         the 8% Preferred Stock with a par value of One Hundred Dollars ($100)
         per share.

         THIRD: That the assets of the corporation remaining after such
reduction are sufficient to pay any debts, the payment of which has not been
otherwise provided for.

         IN WITNESS WHEREOF, said MOORE'S FALLS CORPORATION has caused its
corporate seal to be hereunto affixed and this certificate to be signed by
Joseph B. Ely, II, its President, and attested by Frederic P. Melzar, its
Secretary this 12th day of September, 1974.


CORPORATE SEAL                             MOORE'S FALLS' CORPORATION


Attest:                                    By /s/ JOSEPH B. ELY, II
                                              -------------------------
                                                     President
By: /s/ FREDERIC P. MELZAR
    -------------------------------
         Secretary


                                      -2-
<PAGE>   28
         COMMONWEALTH OF MASSACHUSETTS     )
                                           ) ss:
         COUNTY OF SUFFOLK                 )


             BE IT REMEMBERED that on this 12th day of September, 1974, 
personally came before me, a Notary Public in and for the County and State
aforesaid, Joseph B. Ely, II, President of Moore's Falls Corporation, a
corporation of the State of Delaware, and he duly executed said certificate
before me and acknowledged the said certificate to be his act and deed and the
act and deed of said corporation and the facts stated therein are true; and
that the seal affixed to said certificate and attested by the Secretary of said 
corporation is the common or corporate seal of said corporation.

         IN WITNESS WHEREOF, I have hereunto set my hand the seal of office
the day and year aforesaid.


                                           /s/ HELEN C. FREDRICKSON
                                           -----------------------------------
                                                   Notary Public

         NOTARIAL SEAL                     My commission expires: Dec. 17, 1976


                                     -3-
<PAGE>   29
                            CERTIFICATE OF AMENDMENT

                                       OF

                          CERTIFICATE OF INCORPORATION

                                       OF

                           MOORE'S FALLS CORPORATION


                 It is hereby CERTIFIED for and in behalf of MOORE'S FALLS
CORPORATION, a corporation organized and existing under the laws of the State
of Delaware that: 

         FIRST: The Board of Directors of said corporation, at a meeting duly 
held on August 21, 1974, adopted the following resolution setting forth an 
amendment to the certificate of incorporation and declared the advisability 
thereof:

         RESOLVED: That the Certificate of Incorporation of this corporation be
         amended by striking out the first paragraph only of Article FOURTH and
         inserting in place thereof -

         "FOURTH: The total number of shares of all classes of stock which the
         corporation shall have authority to issue is One Thousand (1,000)
         shares, all of which shall be a single class of Common Stock, without
         par value."

<PAGE>   30
         SECOND: That in lieu of a meeting and vote by the stockholder 
entitled to vote with respect to such amendment, the holder of all of the
outstanding capital stock entitled to vote thereon, consisting of 110 shares of
common stock without par value and 5,120 shares of 8% Preferred Stock with a
par value of $100 per share, then presently outstanding, has consented in
writing on August 21, 1974 to the adoption of the resolution and effecting said
amendment.

         THIRD: That said amendment was duly adopted in accordance with the 
provisions of Section 242 of the General Corporation Law of the State of
Delaware.

         FOURTH: That a Certificate of Reduction of Capital pursuant to 
Section 244(c) of the General Corporation Law of the State of Delaware is
being filed with this Certificate of Amendment.

         IN WITNESS WHEREOF, MOORE'S FALLS CORPORATION has caused its
corporate seal to be hereunto affixed and this certificate to be signed by
Joseph B. Ely, II, its President, and attested by Frederic P. Melzar, its
Secretary, this 12th day of September, 1974.


                                                   MOORE'S FALLS CORPORATION


                                                   By  /s/ JOSEPH B. ELY, II
                                                      -----------------------
                                                            President
Attest:


/s/ FREDERIC P. MELZAR
- ----------------------------
                                                          [CORPORATE SEAL]


                                      -2-
<PAGE>   31
COMMONWEALTH OF MASSACHUSETTS      )
                                   )    ss: 
COUNTY OF SUFFOLK                  )


         BE IT REMEMBERED that on this 12th day of September, 1974, 
personally came before me, a Notary Public in and for the County and State
aforesaid, Joseph B. Ely, II, President of Moore's Falls Corporation, a
corporation of the State of Delaware, and he duly executed said certificate
before me and acknowledged the said certificate to be his act and deed and the
act and deed of said corporation and the facts stated therein are true; and
that the seal affixed to said certificate and attested by the Secretary of said
corporation is the common or corporate seal of said corporation.

         IN WITNESS WHEREOF, I have hereunto set my hand the seal of office the
day and year aforesaid.

                                           /s/ HELEN C. FREDRICKSON      
                                           ------------------------------
                                                   Notary Public

                                           My commission expires: Dec. 17, 1976


                                                  [NOTARIAL SEAL]

                                     -3-

<PAGE>   1
                                                                    EXHIBIT 3.34


                                    BY-LAWS

                                       OF

                           MOORE'S FALLS CORPORATION

                                   ARTICLE I.

                          Certificate of Incorporation

         These by-laws, the powers of the corporation and of its directors and
stockholders, and all matters concerning the conduct and regulation of
the business of the corporation shall be subject to such provisions in regard
thereto as are set forth in the certificate of incorporation filed pursuant to
the General Corporation Law of Delaware which is hereby made a part of these
by-laws.

         The term "certificate of incorporation" in these by-laws, unless the 
context requires otherwise, includes not only the original certificate of
incorporation filed to create the corporation but also all other certificates,
agreements of merger or consolidation, plans of reorganization, or other
instruments, howsoever designated, filed pursuant to the General Corporation Law
of Delaware which have the effect of amending or supplementing in some respect
the corporation's original certificate of incorporation.

                                  ARTICLE II.

                                 Annual Meeting

         An annual meeting of stockholders shall be held for the election of 
directors and for the transaction of any other business for the transaction of
which the meeting shall have been properly convened on the second Tuesday of
March in each year at such place, within or without the State of Delaware, and
at such time as shall be fixed by the board of directors and specified in the
notice of the meeting, if such date is not a legal holiday and if a legal
holiday, then at the same hour on the next succeeding day not a legal holiday.
Any other proper business may be transacted at the annual meeting. If the
annual meeting for election of directors shall not be held on the date
designated therefor, the directors shall cause the meeting to be held as soon
thereafter as convenient.
<PAGE>   2
                                  ARTICLE III.

                       Special Meetings of Stockholders

         Special meetings of the stockholders may be held either within or 
without the State of Delaware, at such time and place and for such purposes as
shall be specified in a call for such meeting made by the board of directors or
by a writing filed with the secretary signed by the president or by a majority
of the directors.

                                  ARTICLE IV.

                        Notice of Stockholders' Meetings

         Whenever stockholders are required or permitted to take any action at 
a meeting, a written notice of the meeting shall be given which shall state the
place, date and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, which notice shall be
given not less than ten nor more than fifty days before the date of the
meeting, except where longer notice is required by law, to each stockholder
entitled to vote at such meeting, by leaving such notice with him or by mailing
it, postage prepaid, directed to him at his address as it appears upon the
records of the corporation. In case of the death, absence, incapacity or
refusal of the secretary, such notice may be given by a person designated
either by the secretary or by the person or persons calling the meeting or by
the board of directors. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken. At the
adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.

         An affidavit of the secretary or an assistant secretary or of the 
transfer agent of the corporation that the notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.

                                   ARTICLE V.

                    Quorum of Stockholders; Stockholder List

         At any meeting of the stockholders, a majority of all shares issued 
and outstanding and entitled to vote upon a question





                                      -2-
<PAGE>   3
to be considered at the meeting shall constitute a quorum for the consideration
of such question when represented at such meeting by the holders thereof in
person or by their duly constituted and authorized attorney, but a less
interest may adjourn any meeting from time to time, and the meeting may be held
as adjourned without further notice. When a quorum is present at any meeting a
majority of the stock so represented thereat and entitled to vote shall, except
where a larger vote is required by law, by the certificate of incorporation or
by these by-laws, decide any question brought before such meeting.

         The secretary or other officer having charge of the stock ledger shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours for a period of at least ten days prior to the
meeting, either at a place within the city or town where the meeting is to be
held, which place shall have been specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. Said list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof and may be inspected by any stockholder who is present. The
stock ledger shall be the only evidence as to who are the stockholders entitled
to examine the stock ledger, the list of stockholders required by this Article
or the books of the corporation, or the stockholders entitled to vote in
person or by proxy at any meeting of stockholders.

                                  ARTICLE VI.

                               Proxies and Voting

         Except as otherwise provided in the certificate of incorporation, each
stockholder shall at every meeting of the stockholders be entitled to one vote
for each share of the capital stock held by such stockholder. Each stockholder
entitled to vote at a meeting of stockholders or to express consent or dissent
to corporate action in writing without a meeting may authorize another person
or persons to act for him by proxy but (except as otherwise expressly permitted
by law) no proxy shall be voted or acted upon after three years from its date,
unless the proxy provides for a longer period or so long as it is coupled with
an interest sufficient in law to support an irrevocable power.

         Unless otherwise provided in the certificate of incorporation, any 
action required by law to, or which may, be taken at any annual or special
meeting of stockholders may be taken without a meeting, without prior notice
and without a vote, if a consent in





                                      -3-
<PAGE>   4
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote therein were present and voted. Prompt notice of the taking of
such action without a meeting by less than unanimous written consent shall be
given to those stockholders who have not consented in writing.

                                  ARTICLE VII.

                           Stockholders' Record Date

         In order that the corporation may determine the stockholders entitled 
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock or for the purpose of any other
lawful action, the board of directors may fix, in advance, a record date, which
shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action.

         If no record date is fixed:

         (1)      The record date for determining stockholders entitled to 
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.

         (2)      The record date for determining stockholders entitled to 
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the day on which the
first written consent is expressed.

         (3)      The record date for determining stockholders for any other 
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.

         A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting, provided, however, that the board of directors may fix a new record
date for the adjourned meeting.





                                      -4-
<PAGE>   5
                                 ARTICLE VIII.

                               Board of Directors

         Except as otherwise provided by law or by the certificate of
incorporation, the business and affairs of the corporation shall be managed by
the board of directors.

         The number of directors shall be such number, not fewer than one nor 
more than fifteen, as may be fixed for any corporate year and elected by the
stockholders at the annual meeting. During any year the board of directors may
be enlarged and additional directors elected to complete the enlarged number,
to not more than the maximum number above specified, by the stockholders at any
meeting or by a vote of a majority of the directors then in office.  The
stockholders may, at any meeting held for the purpose during such year,
decrease, to not fewer than the minimum number above specified, the number of
directors as thus fixed or enlarged and remove directors to the decreased
number.  Each director shall hold office until his successor is elected and
qualified or until his earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. No director need be a
stockholder.

                                  ARTICLE IX.

                                   Committees

         The board of directors may, by resolution passed by a majority of the 
whole board, designate one or more committees, each committee to consist of one
or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee who may replace any absent
or disqualified member at any meeting of the committee and may define the
number and qualifications which shall constitute a quorum of such committee. 
Except as otherwise limited by law, any such committee, to the extent provided
in the resolution appointing such committee, shall have and may exercise the
powers of the board of directors in the management of the business and affairs
of the corporation, and may authorize the seal of the corporation to be affixed
to all papers which may require it. In the absence or disqualification of a
member of committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.

                                   ARTICLE X.

              Meetings of the Board of Directors and of Committees

         Regular meetings of the board of directors may be held without call or 
formal notice at such places either within or without the State of Delaware
and at such times as the board may by vote from time to time determine.





                                      -5-
<PAGE>   6
         Special meetings of the board of directors may be held at any place 
either within or without the State of Delaware at any time when called by the
president, treasurer, secretary or two or more directors, reasonable notice of
the time and place thereof being given to each director. A waiver of such
notice in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent to
such notice. In any case it shall be deemed sufficient notice to a director to
send notice by mail at least forty-eight hours, or to deliver personally or to
send notice by telegram at least twenty-four hours, before the meeting,
addressed to him at his usual or last known business or residence address.

         Unless otherwise restricted by the certificate of incorporation or by 
other provisions of these by-laws, (a) any action required or permitted to be
taken at any meeting of the board of directors or of any committee thereof may
be taken without a meeting if all members of the board or of such committee, as
the case may be, consent thereto in writing and such writing or writings are
filed with the minutes of proceedings of the board or committee, and (b)
members of the board of directors or of any committee designated by the board
may participate in a meeting thereof by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation shall constitute
presence in person at such meeting.

                                  ARTICLE XI.

                        Quorum of the Board of Directors

         Except as otherwise expressly provided in the certificate of
incorporation or in these by-laws, a majority of the total number of directors
at the time in office shall constitute a quorum for the transaction of
business, but a less number may adjourn any meeting from time to time. Except
as otherwise so expressly provided, the vote of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
board of directors, provided, that the affirmative vote in good faith of a
majority of the disinterested directors, even though the disinterested
directors shall be fewer than a quorum, shall be sufficient to authorize a
contract or transaction in which one or more directors have interest if the
material facts as to such interest and the relation of the interested directors
to the contract or transaction have been disclosed or are known to the
directors.

                                  ARTICLE XII.

                          Waiver of Notice of Meetings

         Whenever notice is required to be given under any provision of law or 
the certificate of incorporation or by-laws, a





                                      -6-
<PAGE>   7
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be
specified in any written waiver of notice unless so required by the certificate
of incorporation or the by-laws.

                                 ARTICLE XIII.

                              Officers and Agents

         The corporation shall have a president, secretary and treasurer, who 
shall be chosen by the directors, each of whom shall hold his office until his
successor has been chosen and qualified or until his earlier resignation or
removal. The corporation may have such other officers and agents as are
desired, each of whom shall be chosen by the board of directors and shall hold
his office for such term and have such authority and duties as shall be
determined by the board of directors. The board of directors may secure the
fidelity of any or all of such officers or agents by bond or otherwise. Any
number of offices may be held by the same person. Each officer shall, subject
to these by-laws, have in addition to the duties and powers herein set forth,
such duties and powers as the board of directors shall from time to time
designate. In all cases where the duties of any officer, agent or employee are
not specifically prescribed by the by-laws, or by the board of directors, such
officer, agent or employee shall obey the orders and instructions of the
president. Any officer may resign at any time upon written notice to the
corporation.

                                  ARTICLE XIV.

                                   President

         The president shall, subject to the direction and under the 
supervision of the board of directors, be the chief executive officer of the
corporation and shall have general and active control of its affairs and
business and general supervision over its officers, agents and employees.
Except as otherwise voted by the board he shall preside at all meetings of the
stockholders and of the board of directors at which he is present. The
president shall have custody of the treasurer's bond, if any.





                                      -7-
<PAGE>   8
                                  ARTICLE XV.

                                   Secretary

         The secretary shall record all the proceedings of the meetings of the 
stockholders and directors in a book, which shall be the property of the
corporation, to be kept for that purpose; and perform such other duties as
shall be assigned to him by the board of directors. In the absence of the
secretary from any such meeting, a temporary secretary shall be chosen, who
shall record the proceedings of such meeting in the aforesaid book.

                                  ARTICLE XVI.

                                   Treasurer

         The treasurer shall, subject to the direction and under the 
supervision of the board of directors, have the care and custody of the funds
and valuable papers of the corporation, except his own bond, and he shall,
except as the board of directors shall generally or in particular cases
authorize the endorsement thereof in some other manner, have power to endorse
for deposit or collection all notes, checks, drafts and other obligations for
the payment of money to the corporation or its order. He shall keep, or cause
to be kept, accurate books of account, which shall be the property of the
corporation.

                                 ARTICLE XVII.

                                    Removals

         The stockholders may, at any meeting called for the purpose, by vote 
of a majority of the capital stock issued and outstanding and entitled to vote
thereon, remove any director from office.

         The board of directors may, at any meeting called for the purpose, by 
vote of a majority of their entire number remove from office any officer or
agent of the corporation or any member of any committee appointed by the board
of directors or by any committee appointed by the board of directors or by any
officer or agent of the corporation.

                                 ARTICLE XVIII.

                                   Vacancies

         Any vacancy occurring in any office of the corporation by death, 
resignation, removal or otherwise and newly created





                                      -8-
<PAGE>   9
directorships resulting from any increase in the authorized number of
directors, may be filled by a majority of the directors then in office (though
less than a quorum) or by a sole remaining director and each of the incumbents
so chosen shall hold office for the unexpired term in respect of which the
vacancy occurred and until his successor shall have been duly elected and
qualified or for such shorter period as shall be specified in the filling of
such vacancy or, if such vacancy shall have occurred in the office of director,
until such a successor shall have been chosen by the stockholders.

                                  ARTICLE XIX.

                             Certificates of Stock

         Every holder of stock in the corporation shall be entitled to have a 
certificate signed by, or in the name of the corporation by the chairman or
vice-chairman of the board of directors (if one shall be incumbent) or the
president or a vice-president and by the treasurer or an assistant treasurer,
or the secretary or an assistant secretary, certifying the number of shares
owned by him in the corporation. If such certificate is countersigned (1) by a
transfer agent other than the corporation or its employee, or (2) by a
registrar other than the corporation or its employee, any other signatures on
the certificate may be facsimile. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of
issue.

         If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights shall be set forth in full or summarized on the
face or back of the certificates which the corporation shall issue to represent
such class or series of stock or there shall be set forth on the face or back
of the certificates which the corporation shall issue to represent such class
or series of stock, a statement that the corporation will furnish, without
charge to each stockholder who so requests, the designations, preferences and
relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights. Any restriction imposed upon the transfer of
shares or registration of transfer of shares shall be noted conspicuously on
the certificate representing the shares subject to such restriction.





                                      -9-
<PAGE>   10
                                   ARTICLE XX.

                              Loss of Certificate

         The corporation may issue a new certificate of stock in place of any 
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the directors may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it
on account of the alleged loss, theft or destruction of any such certificate or
the issuance of such new certificate in its place and upon such other terms or
without any such bond which the board of directors shall prescribe.

                                  ARTICLE XXI.

                                      Seal

         The corporate seal shall, subject to alteration by the board of 
directors, consist of a flat-faced circular die with the word "Delaware"
together with the name of the corporation and the year of its organization cut
or engraved thereon. The corporate seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.

                                 ARTICLE XXII.

                              Execution of Papers

         Except as otherwise provided in these by-laws or as the board of 
directors may generally or in particular cases authorize the execution thereof
in some other manner, all deeds, leases, transfers, contracts, bonds, notes,
checks, drafts and other obligations made, accepted or endorsed by the
corporation, shall be signed by the president or by the treasurer.

                                 ARTICLE XXIII.

                                  Fiscal Year

                 Except as from time to time otherwise provided by the board of
directors, the fiscal year of the corporation shall end on the last day of
December of each year.





                                      -10-
<PAGE>   11
                                 ARTICLE XXIV.

                                   Amendments

         Except as otherwise provided by law or by the certificate of
incorporation, these by-laws, as from time to time altered or amended, may be
made, altered or amended at any annual or special meeting of the stockholders
called for the purpose, of which the notice shall specify the subject matter of
the proposed alteration or amendment or new by-law or the article or articles
to be affected thereby. If the certificate of incorporation so provides, these
by-laws may also be made, altered or amended by a majority of the whole number
of directors. Such action may be taken at any meeting of the board of
directors, of which notice shall have been given as for a meeting of
stockholders.





                                      -11-

<PAGE>   1
                                                                    EXHIBIT 3.35

                          CERTIFICATE OF INCORPORATION
                               OF PILLOWTEX, INC.

     I, the undersigned, acting as incorporator of Pillowtex, Inc., under the
General Corporation Law of Delaware, do hereby adopt the following Certificate
of Incorporation for such corporation.

First:    The name of the corporation is Pillowtex, Inc.

Second:   The address of the corporation's registered office in the State of
          Delaware is Corporation Trust Center, 1209 Orange Street, City of
          Wilmington, County of New Castle, Delaware, and the name of the its
          registered agent at such address is The Corporation Trust Company.

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

Fourth:   The total number of shares that the corporation shall have authority
          to issue is 3,000 shares of common stock with a par value of $.01 per
          share. 

Fifth:    No stockholder of this corporation shall, by reason of such person's
          holding stock of any class, have any preemptive or preferential right
          to purchase or subscribe to any stock of any class of this
          corporation, now or hereafter to be authorized, nor for any of its
          notes, debentures, bonds, or other securities, whether or not the
          issuance of such stock, or such notes, debentures, bonds, or other
          securities would adversely affect the dividend or voting rights of
          such stockholder, other than such rights, if any, as the board of
          directors, in its discretion, may grant to the stockholders to
          purchase such additional securities; and the board of directors may
          issue treasury shares of any class of this corporation, or any notes,
          debentures, bonds, or other securities convertible into or of any
          class without offering the same in whole or in part to existing
          stockholders of any class.

Sixth:    Elections of directors need not be by written ballot except and to the
          extent provided otherwise in the bylaws of the corporation. Cumulative
          voting for the election of directors shall not be permitted.
   
Seventh:  The name and mailing address of the incorporator is T. L. Ford,
          Corporation Trust Center, 1209 Orange Street, County of New Castle,
          Wilmington, Delaware 19801.

Eighth:   The number of directors constituting the initial board of directors is
          three and the names and addresses of such persons serving as directors
          until the first annual meeting of stockholders or until such persons'
          successors shall be elected and qualified are:



<PAGE>   2
            Charles M. Hansen, Jr.           4111 Mint Way, Dallas, Texas 75237
            Jeffrey D. Cordes                4111 Mint Way, Dallas, Texas 75237
            Charles H. Slaybaugh             222 Delaware Ave., 17th Floor,
                                             Wilmington, Delaware 19801

Ninth:      The corporation shall have perpetual existence.

Tenth:      The board of directors is expressly authorized to make, alter, or
            repeal the bylaws of the corporation.

Eleventh:   A director of the corporation shall not be personally liable to the
            corporation or its stockholders for monetary damages for breach of
            fiduciary duty as a director, except for liability (i) for any
            breach of the director's duty of loyalty to the corporation or its
            stockholders, (ii) for acts or omissions not in good faith or that
            involve international misconduct or a knowing violation of 
            law, (iii) under Section 174 of the Delaware General Corporation
            Law, as the same exists or hereafter may be amended, or (iv) for
            any transaction from which the director derived an improper
            personal benefit. If the Delaware General Corporation Law hereafter
            is amended to authorize the further elimination or limitation of
            the liability of directors, then the liability of a director of the
            corporation, in addition to the limitation on personal liability
            provided herein, shall be limited to the fullest extent permitted by
            the amended Delaware General Corporation Law.  Any repeal or
            modification of this paragraph by the stockholders of the
            corporation shall be prospective only, and shall not adversely
            affect any limitation on the personal liability of a director of
            the corporation existing at the time of such repeal or
            modification.

Twelfth:    The undersigned incorporator, for the purpose of forming a
            corporation pursuant to the General Corporation Law of Delaware,
            does hereby declare and certify that the foregoing Certificate of
            Incorporation is such person's act and deed and that the facts
            herein stated are true, and accordingly, has hereunto set such
            person's hand this 20th day of March, 1996.



                                        /s/ T. L. FORD
                                        ---------------------------
                                            T. L. Ford





                                       2



<PAGE>   1
                                                                    EXHIBIT 3.36

                                     BYLAWS
                                       OF
                                 PILLOWTEX,INC.

                                   ARTICLE I

                               OFFICES AND AGENT

         1.01    Registered Office and Agent. The registered office of the
corporation shall be located at Corporation Trust Center, 1209 Orange Street,
City of Wilmington, County of New Castle, Delaware, and the name of the
registered agent of the corporation at such address is The Corporation Trust
Company.

         1.02    Other Offices. The corporation may also have offices at such
other places within and without the State of Delaware as the board of directors
may from time to time determine or the business of the corporation may require.

                                    ARTICLE II

                            MEETINGS OF SHAREHOLDERS

         2.01    Annual Meetings. An annual meeting of the shareholders shall
be held on the first Monday of the third month following the close of each
fiscal year of the corporation if not a legal holiday, and if a legal holiday,
then on the next day following that is not a legal holiday. At each annual
meeting the shareholders shall elect a board of directors and shall transact
such other business as may properly be brought before the meeting.

         2.02    Call for Special Meetings. Special meetings of the
shareholders, for any purpose or purposes may be held at such time and place,
within or without the State of Delaware as shall be stated in the notice of the
meeting or in a duly executed waiver of notice. Unless otherwise prescribed by
statute or by the Certificate of Incorporation, or by these bylaws, special
meetings of the shareholders may be called by the President, the board of
directors, or by one or more shareholders, the aggregate of whose shares
comprise not less than one-tenth of all shares entitled to vote at the
meetings. Business transacted at all special meetings shall be confined to the
subjects stated in the notice of the meeting, unless such notice shall have
been waived.

         2.03    Notice. Unless notice is waived, written or printed notice
stating the place, date, and time of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of the

                                     - 1 -
<PAGE>   2
President, the Secretary, or the officer or person calling the meeting, to each
shareholder of record entitled to vote at the meeting.

         2.04    Quorum; Majority Vote. The holders of a majority of the shares
issued and outstanding and entitled to vote, present in person or represented
by proxy, shall be requisite and shall constitute a quorum at all meetings of
the shareholders for the transaction of business except as otherwise provided
by law, the Certificate of Incorporation, or these bylaws. When a quorum is
present at any meeting, the vote of the holders of a majority of the shares
having voting power present in person or represented by proxy shall decide any
question before such meeting, unless the question is one upon which, by express
provision of law, the Certificate of Incorporation, or these bylaws, a
different vote is required, in which case such express provision shall govern.
The shareholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.

         2.05    Voting. Unless otherwise provided in the Certificate of
Incorporation, at every election of directors, each shareholder shall have the
right to vote the number of voting shares that such shareholder owns for as
many persons as there are directors to be elected. Unless otherwise provided in
the Certificate of Incorporation, no shareholder shall be entitled to cumulate
such shareholder's votes, and cumulative voting is prohibited.

                                  ARTICLE III

                                   DIRECTORS

         3.01    Powers. The business and affairs of the corporation shall be
managed by its board of directors who may exercise all such powers of the
corporation and do all such lawful acts and things as are not by law, the
Certificate of Incorporation, or these bylaws directed or required to be
exercised or done by the shareholders.

         3.02    Number and Election. The board of directors shall consist of
not less than one director; no director need be a shareholder, however, at
least one director shall be a resident of the State of Delaware. At each annual
meeting of the shareholders, the shareholders may change the number of
directors who shall serve for the ensuing year and each such determination
shall be a continuing determination of the number of directors until a change
by a vote of the shareholders. The directors shall be elected at the annual
meeting of the shareholders, except as hereinafter provided, and each director
elected shall hold office until such director's successor shall be elected and
shall qualify. Any vacancy occurring in the board of directors may be filled by
the affirmative vote of a majority of the remaining directors, notwithstanding 
that the remaining directors constitute less than a quorum of the board of 
directors, or by the holders of a majority of the shares then entitled to vote 
in election of directors. A director elected to fill a vacancy shall be elected 
for the unexpired term of such director's predecessor in office. Any 
directorship to be filled by reason of an increase in the number of directors 
may be filled by election at an annual


                                      -2-
<PAGE>   3
meeting or a special meeting of the shareholders called for that purpose, or
may be filled by the board of directors for a term of office continuing only
until the next election of one or more of the directors by the shareholders.

         3.03    Removal. Any director may be removed, with or without cause,
at any duly constituted meeting of shareholders called expressly for that
purpose, by the affirmative vote of the holders of a majority of the shares
then entitled to vote in elections of directors.

         3.04    First Meeting of New Board. The first meeting of each newly
elected board of directors shall be held without further notice immediately
following the annual meeting of the shareholders.

         3.05    Meetings. Regular meetings of the board of directors may be
held without notice at such time and place as shall be determined by the board.
Special meetings of the board of directors may be called by or at the direction
of the President on 24 hours' notice to each director, either personally or by
mail or by telegram, or by facsimile. The purpose or purposes of such meeting
need not be stated in the notice thereof, except as is specifically provided in
section 11.01 of these bylaws.

         3.06    Quorum: Majority Vote. At all meetings of the board of
directors, the presence of a majority of the number of directors fixed in the
manner provided in these bylaws shall be necessary and sufficient to constitute
a quorum for the transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the board of directors, except as may be otherwise specifically provided by
law, the Certificate of Incorporation, or these bylaws. If a quorum shall not
be present at any meeting, the directors present at the meeting may adjourn the
meeting from time to time without notice other than announcement at the
meeting, until a quorum shall be present.

         3.07    Compensation as Directors. Directors, as such, shall not
receive any stated salary for their services, but, by resolution of the board,
a fixed sum and expenses of attendance, if any, may be allowed for attendance
at each regular or special meeting of the board; provided that nothing
contained in these bylaws shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation for
such service.

         3.08    Committees. The board of directors, by resolution adopted by a
majority of the full board of directors, may designate from among its members
an executive committee and one or more other committees, each of which shall be
comprised of one or more members and, to the extent provided in such
resolution, shall have and may exercise all of the authority of the board of
directors, except that no such committee shall have the authority of the board
of directors in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation under Section 251 or Section
252 of the Delaware General Corporation Law, recommending to the shareholders
the sale, lease, or exchange

                                      -3-
<PAGE>   4
of all or substantially all of the property and assets of the corporation,
recommending to the shareholders a voluntary dissolution of the corporation or
a revocation thereof, amending, altering or repealing the bylaws of the
corporation or adopting new bylaws for the corporation, altering or repealing
any resolution of the board of directors that by its terms provide that it
shall not be so amendable or repealable; and, unless the resolution expressly
so provides, no committee shall have the power or authority to declare a
dividend, or to authorize the issuance of shares of the corporation, or to
adopt a merger pursuant to Section 253 of the Delaware General Corporation Law.
The designation of such committee and the delegation of authority to such
committee shall not operate to relieve the board of directors, or any member of
the board, of any responsibility imposed by law.

                                   ARTICLE IV

                                    NOTICES

         4.01    Formalities of Notices. Whenever, under the provisions of law,
the Certificate of Incorporation, or these bylaws, notice is required to be
given to any director or shareholder and no provision is made as to how such
notice shall be given, personal notice shall not be required, but any such
notice may be given in writing, by mail, postage prepaid, addressed to such
director or shareholder at such address as appears on the books of the
corporation. Any notice required or permitted to be given by mail shall be
deemed to be given at the time when such notice shall have been deposited in
the United States mails as aforesaid.

         4.02    Waiver of Notices. Whenever any notice is required to be given
to any shareholder or director of the corporation under the provisions of law,
the Certificate of Incorporation, or these bylaws, a waiver of such notice in
writing signed by the person or persons entitled to such notice, whether before
or after the time stated in such notice, shall be deemed equivalent to giving
such notice.

                                   ARTICLE V

                                    OFFICERS

         5.01    Offices. The officers of the corporation shall be elected by
the directors and may include a chairman of the board of directors, a
president, one or more vice presidents, a secretary, and a treasurer. The
board of directors may also elect or appoint one or more assistant secretaries
and assistant treasurers. Any two or more offices may be held by the same
person.

         5.02    Election of Officers; Term; Removal; Salary. The board of
directors at its first meeting after each annual meeting of shareholders shall
elect the officers, none of whom need be members of the board. Each officer of
the corporation shall hold office until such officer's successor is chosen and
qualified or until such officer's death, resignation, or

                                      -4-
<PAGE>   5
removal from office. Any officer or agent elected or appointed by the board of
directors may be removed at any time by the board of directors, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. If the office of any officer becomes vacant for any reason,
the vacancy may be filled by the board of directors. The salaries of all
officers and agents of the corporation shall be fixed by the board of
directors.

         5.03    The President. The President shall be the chief executive
officer of the corporation; the President shall preside at all meetings of the
shareholders, shall have general and active management of the business and
affairs of the corporation, shall see that all orders and resolutions of the
board are carried into effect, and shall perform such other duties as the board
of directors shall prescribe.

         5.04    The Vice Presidents. If the corporation elects or appoints one
or more Vice Presidents, then each Vice President shall have such power and
perform such duties as the board of directors may from time to time prescribe
or as the President may from time to time delegate.

         5.05    The Secretary and Assistant Secretaries. The Secretary shall
attend all sessions of the board of directors and all meetings of the
shareholders and record all votes and the minutes of all proceedings in a book
to be kept for that purpose, and shall perform like duties for the Executive
Committee when required. The Secretary shall give, or cause to be given, notice
of all meetings of the shareholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the
board of directors or President, under whose supervision the Secretary shall
be. The Secretary shall keep in safe custody the seal of the corporation and,
when authorized by the board, affix the same to any instrument requiring it
and, when so affixed, it shall be attested by the Secretary's signature or by
the signature of the Treasurer or an Assistant Secretary. If the corporation
does not elect or appoint a person to the office of Treasurer or Assistant
Treasurer, then the Secretary shall assume all duties of the Treasurer, as
described in paragraph 5.06. Each Assistant Secretary shall have such powers
and perform such duties as the board of directors may from time to time
prescribe or as the President may from time to time delegate.

         5.06    The Treasurer and Assistant Treasurers. The Treasurer shall
have the custody of the corporate funds and securities, shall keep full and
accurate accounts of receipts and disbursements of the corporation, and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as the board of directors may designate.
The Treasurer shall disburse the funds of the corporation as the board of
directors may order, taking proper vouchers for such disbursements, shall
render to the President and directors, at the regular meetings of the board or
whenever the board may require it, an account of all the Treasurer's 
transactions and of the financial condition of the corporation, and shall
perform such other duties as the board of directors may prescribe. If the board
of directors requires, then the Treasurer shall give the corporation a bond in
such form, in such sum, and with such surety or sureties as shall be
satisfactory to the board for the faithful performance of the duties of the
Treasurer's office

                                      -5-
<PAGE>   6
and for the restoration to the corporation, in case of the Treasurer's death,
resignation, retirement, or removal from office, of all books, papers,
vouchers, money, and other property of whatever kind in the Treasurer's
possession or under the Treasurer's control belonging to the corporation. If no
person is elected or appointed to fill the office of Treasurer, then the duties
described in this paragraph shall be assumed by the Secretary.

                                   ARTICLE VI

                        CERTIFICATES REPRESENTING SHARES

         6.01    Delivery, Form and Content. The board of directors shall cause
to be delivered to the shareholders certificates in such form as the board of
directors may determine representing all shares to which such shareholders are
entitled. Certificates shall be consecutively numbered by classes and shall be
entered in the books of the corporation as they are issued. Each certificate
shall state on its face the holder's name, the number and class of shares, and
the par value of such shares or a statement that such shares are without par
value. Each certificate shall be signed by the President or a Vice President
and the Secretary or an Assistant Secretary and may be sealed with the seal of
the corporation or a facsimile. If any certificate is countersigned by a
transfer agent, or an assistant transfer agent, or registered by a registrar,
other than the corporation or an employee of the corporation, then the
signature of any officer may be a facsimile.

         6.02    Lost Certificates. The board of directors may direct a new
certificate representing shares to be issued in place of any certificate
theretofore issued by the corporation alleged to have been lost or destroyed,
upon receiving an affidavit of that fact from the person claiming the
certificate to be lost or destroyed. When authorizing the issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance of a new certificate, may require the owner of such
lost or destroyed certificate, or such person's legal representative, to
advertise the same in such manner as the board shall require and/or give the
corporation a bond in such form, in such sum, and with such surety or sureties
as the board may direct as indemnity against any claim that may be made against
the corporation with respect to the certificate alleged to have been lost or
destroyed and/or agree to indemnify the corporation against any such claim.

         6.03    Transfer. Shares of stock shall be transferable only on the
books of the corporation by the holder in person or by such person's duly
authorized attorney. Upon surrender to the corporation of the certificate
representing shares duly endorsed or accompanied by proper evidence of
succession, assignment, or authority to transfer, the Corporation shall be
obligated to issue a new certificate to the person entitled to the new
certificate, cancel the old certificate, and record the transaction upon its
books.

         6.04    Record Holder. The corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in fact of such
stock and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or

                                      -6-
<PAGE>   7
shares on the part of any other person, or any limitation upon the ownership,
power, or authority of such holder, whether or not the corporation shall have
express or other notice, except as otherwise provided by law.

                                  ARTICLE VII

                                   DIVIDENDS

         7.01    Dividends. Dividends on the outstanding shares of the
corporation, subject to the provisions of the Certificate of Incorporation, may
be declared by the board of directors at any regular or special meeting.
Dividends may be paid in cash, in property, or in shares of the corporation,
subject to the provisions of law and the Certificate of Incorporation. The
board of directors may fix in advance a record date of such dividend, or the
board of directors may close the stock transfer books for such purpose for a
period of not more than thirty days prior to the payment date of such dividend.
In the absence of any action by the board of directors, the date upon which the
board of directors adopts the resolution declaring such dividend shall be the
record date.

                                  ARTICLE VIII

                          ACTION BY UNANIMOUS CONSENT
                           OR BY CONFERENCE TELEPHONE

         8.01    Action by Unanimous Consent. Any action required by the
Certificate of Incorporation, these bylaws, or Delaware law to be taken at a
meeting of the board of directors of the corporation, or any action that may be
taken at any such meeting may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all the
directors entitled to vote with respect to the subject matter of the action,
and such consent is filed in the minute book of the corporation.

         8.02    Action by Consent of Shareholders in Lieu of Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required to
be taken at any annual or special meeting of the shareholders of the
corporation, or any action which may be taken at any annual meeting or special
meeting of the shareholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent in writing, setting forth the action
so taken, shall be signed by the holders of outstanding stock having not less
than the minimum of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote on the action were
present and voted. Prompt notice that corporate action was taken without a
meeting by less than unanimous written consent shall be given to the
stockholders who have not consented in writing. In lieu of any statement
regarding a shareholders vote required to be set forth in any document or
certificate to be filed with the Delaware Secretary of State, a statement that
a written consent and written notice have been given in accordance with the
provisions of Section 228 of the Delaware General Corporation Law may be given.

                                      -7-
<PAGE>   8
         8.03    Actions by Conference Telephone. Subject to any notice of
meeting requirements in these bylaws or under Delaware law, the board of
directors, or members of any committee designated by such board, may
participate in and hold a meeting of such board or committee by means of a
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in such
a meeting shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened. Minutes of any such meeting shall be promptly prepared by
the Secretary, circulated to all directors entitled to vote at the meeting
(whether they participated or not), placed in the regular corporate records
containing similar meeting minutes, and called to the attention of such board
of directors or committee at its next regular meeting.

                                   ARTICLE IX

                                INDEMNIFICATION

         9.01    Persons. The corporation may indemnify, to the extent
permitted in this article, and shall indemnify as required by this article:

                          (a)     any person who is or was a director, officer,
         agent, or employee of the corporation, and

                          (b)     any person who serves or served at the
         corporation's request as a director, officer, partner, venturer,
         proprietor, trustee, agent, employee, or similar functionary of
         another corporation or of a partnership, joint venture, sole
         proprietorship, trust, employee benefit plan, or other enterprise.

         9.02    Derivative Suits. In case of a suit or action by or in the
right of the corporation to procure a judgment in its favor against a person
named in paragraph 9.01 by reason of such person holding a position named in
paragraph 9.01, the corporation may indemnify such person if the standard in
paragraph 9.04 is satisfied, for reasonable expenses actually and reasonably
incurred by such person (including attorney's fees) in connection with the
defense or settlement of the suit or action and, additionally, for judgments
and fines if such person is found liable for negligence in the performance of
duties to the corporation.

         9.03    Nonderivative Suits. In case of a suit, action, or proceeding
(whether civil, criminal, administrative, or investigative), other than a suit
by or in behalf of the corporation, collectively hereinafter referred to as a
nonderivative suit, against a person named in paragraph 9.01 by reason of such
person holding a position named in Paragraph 9.01, the corporation may
indemnify such person if the standard in Paragraph 9.04 is satisfied for
amounts actually and reasonably incurred by such person in connection with the
defense or settlement of the nonderivative suit as follows:

                                      -8-
<PAGE>   9
                          (a)     Judgments;

                          (b)     Penalties, including excise and similar taxes;

                          (c)     Fines;

                          (d)     Settlements; and

                          (e)     Reasonable expenses actually incurred
                                  (including attorney's fees).

         9.04    Standard. In case of a derivative suit, a person named in
paragraph 9.01 may be indemnified if such person acted in good faith in the
transaction that is the subject of the suit, and in a manner reasonably
believed to be in or not opposed to the corporation's best interest; provided
that no indemnification shall be made in respect to any claim, issue, or matter
as to which such person shall have been adjudged to be liable to the
corporation unless, and only to the extent that, the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper. In the case of nonderivative suit, a person named in
paragraph 9.01 may be indemnified if such person acted in good faith and in a
manner reasonably believed to be in or not opposed to the corporation's best
interest. With respect to any criminal action or proceeding, the person must
have had no reasonable cause to believe that the conduct that is the subject of
such action was unlawful. The termination of a nonderivative proceeding by
judgment, order, settlement, conviction, or on a plea of NOLO CONTENDERE or its
equivalent, does not of itself create a presumption that the person does not
meet the standards set forth in this paragraph.

         9.05    Mandatory Indemnification. The corporation shall indemnify a
person named in paragraph 9.01 against expenses (including attorney's fees)
actually and reasonably in connection with a proceeding in which such person is
a party by reason of such person holding a position named in paragraph 9.01 to
the extent such person has been successful, on the merits or otherwise, in the
defense of the proceeding.

         9.06    Determination that Standard Has Been Met. A determination that
the standard of paragraph 9.04 has been satisfied shall be made by:

                 (a)   a majority vote of the directors of the corporation 
        who at the time of the vote are not parties to the
        action, suit, or proceeding even though less than a quorum; or

                 (b)   if there are no such directors, or if such directors so 
        direct, by independent legal counsel in a written opinion; or

                                      -9-
<PAGE>   10
                 (c)   the shareholders of the corporation.

         9.07    Advance Payments. The corporation may pay in advance any
expense (including attorney's fees) that may become subject to indemnification
under paragraphs 9.01-9.06 if the person receiving the payment affirms in
writing that in good faith the person believes the standards set forth in
paragraph 9.04 have been met, and undertakes to repay any advance payments if
it is ultimately determined that such person has not met those standards.

         9.08    Insurance. The corporation may purchase and maintain insurance
on behalf of any person who holds or who has held any position named in
paragraph 9.01, against any liability asserted against or incurred by such
person in any such position, or arising out of such person's status as such,
whether or not the corporation would have power to indemnify such person
against such liability under paragraphs 9.01-9.07.

         9.09    Additional Indemnification. The rights of indemnification
provided in this article IX shall be in addition to any other rights to which
any person named in paragraph 9.01 may otherwise be entitled by contract, under
the Delaware General Corporation Law or as a matter of law; and if any such
person dies, then such rights shall extend to such person's heirs and legal
representatives. The provisions of this article IX are separable, and if any
provision be held invalid, all other provisions shall only be curtailed to the
extent necessary to make such provision enforceable, it being the intent of
this article that the corporation indemnify each person named in paragraph 9.01
to the maximum extent permitted by law.

                                   ARTICLE X

                               GENERAL PROVISIONS

         10.01   Seal and Official Records. The seal of the corporation, if
adopted by the board of directors, the stock certificate book, the minute book,
and the corporation's financial records shall be of the type that the board of
directors determines and establishes and may be changed from time to time in
the board's discretion.

         10.02   Invalid Provisions. If any part of these bylaws shall be held
invalid or inoperative, for any reason, the remaining parts, so far as possible
and reasonable, shall be valid and operative.

         10.03   Headings. The headings used in these bylaws have been inserted
for administrative convenience only and do not constitute matter to be
construed in interpretation.

                                      -10-
<PAGE>   11
                                   ARTICLE XI

                                   AMENDMENTS

         11.01   Alteration, Amendment, or Repeal. The power to alter, amend,
or repeal these bylaws or adopt new bylaws, subject to repeal or change by
action of the shareholders, shall be vested in the board of directors. The
board of directors may make such alteration, amendment, or repeal at any
meeting at which a quorum is present, by the affirmative vote of a majority of
the directors present at such meeting, provided notice of the proposed
alteration, amendment or repeal contained in the notice of such meeting (or
such notice shall have been waived).



                                      -11-

<PAGE>   1
                                                                    EXHIBIT 3.37

                              CERTIFICATE OF TRUST
                                       OF
                     PILLOWTEX MANAGEMENT SERVICES COMPANY

          The undersigned trustees of Pillowtex Management Services Company
acting pursuant to the Delaware Business Trust Act hereby state that:

          1) the name of the business trust is Pillowtex Management Services
Company;

          2) the name and address of the trustee satisfying the requirements of
Section 3807 of the Delaware Business Trust Act is: PNC Bank, Delaware, 222
Delaware Avenue, 17th Floor, Wilmington, Delaware 19801;

          3) this certificate of trust is to be effective upon its filing.

          Executed this 27th day of March, 1996.



          /s/ CHRISTOPHER N. BAKER
          -----------------------------
          Christopher N. Baker, Trustee


          /s/ JEFFREY D. CORDES
          -----------------------------
          Jeffrey D. Cordes, Trustee


          /s/ SCOTT SHIMIZU
          -----------------------------
          Scott Shimizu, Trustee


          PNC Bank, Delaware, Trustee

          By: /s/ W. B. McCARTHY
          Its: Vice President
          -----------------------------




<PAGE>   1
                                                                    EXHIBIT 3.38

                              DECLARATION OF TRUST
                                       OF
                   PILLOWTEX MANAGEMENT SERVICES COMPANY
                          (A DELAWARE BUSINESS TRUST)
                                        
                               TABLE OF CONTENTS
                                        
<TABLE>
<S>                <C>                                                                              <C>
                                                       ARTICLE 1
                                        
                                                      ORGANIZATION

          1.1       PURPOSE; NAME. ................................................................  1
          1.2       PLACES OF BUSINESS. ...........................................................  1
          1.3       LEGAL TITLE. ..................................................................  1
          1.4       CLASSIFICATION. ...............................................................  2

                                                       ARTICLE 2

                                                        TRUSTEES

          2.1       MANAGING TRUSTEES. ............................................................  2
          2.2       RESIDENT TRUSTEE. .............................................................  2
          2.3       RESIGNATION OR REMOVAL OF A MANAGING TRUSTEE. .................................  3
          2.4       POWERS OF MANAGING TRUSTEES. ..................................................  3
          2.5       LIMITATIONS ON POWERS OF MANAGING TRUSTEES. ...................................  5
          2.6       MEETINGS OF MANAGING TRUSTEES. ................................................  5

                                                       ARTICLE 3

                                              BENEFICIAL INTEREST HOLDERS

          3.1       INTEREST IN TRUST ESTATE. .....................................................  6
          3.2       ISSUE OF SHARES. ..............................................................  6
          3.3       ACQUISITION AND STATUS OF SHARES ACQUIRED BY THE TRUST. .......................  6
          3.4       SHARE REGISTERS. ..............................................................  6
          3.5       SHARE CERTIFICATES. ...........................................................  6
          3.6       TRANSFERS OF SHARES. ..........................................................  6
          3.7       TRANSFERS OF SHARES BY OPERATION OF LAW. ......................................  7
          3.8       NATURE OF SHARES. .............................................................  7

                                                       ARTICLE 4

                             LIABILITY OF BENEFICIAL INTEREST HOLDERS, TRUSTEES, OFFICERS,
                                  EMPLOYEES AND AGENTS AND RELATED PARTY TRANSACTIONS

          4.1       LIMITATION OF BENEFICIAL INTEREST HOLDER LIABILITY. ...........................  7
          4.2       LIMITATION OF TRUSTEE LIABILITY. ..............................................  7
          4.3       EXCULPATORY CLAUSES. ..........................................................  8
</TABLE>
<PAGE>   2
<TABLE>
<S>                 <C>                                                                             <C>
          4.4       INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. ..................................  8
          4.5       RELATED PARTY TRANSACTIONS. ...................................................  9

                                                       ARTICLE 5

                                                 SURPLUS AND DIVIDENDS

          5.1       DECLARATION OF DIVIDENDS AND DETERMINATION OF NET PROFITS, EARNINGS AND
                    SURPLUS. ......................................................................  9
          5.2       FIXING OF RECORD DATES. .......................................................  9

                                                       ARTICLE 6

                                                         NOTICE

          6.1       WHEN NOTICE UNNECESSARY. ...................................................... 10
          6.2       METHOD OF GIVING NOTICE. ...................................................... 10
          6.3       EVIDENCE OF NOTICE. ........................................................... 10

                                                       ARTICLE 7

                                               AMENDMENT AND TERMINATION

          7.1       TERMINATION OF TRUST. ......................................................... 10
          7.2       EFFECT OF DEATH, BANKRUPTCY OR INCAPACITY OF BENEFICIAL INTEREST HOLDER         
                    OR TRUSTEE. ................................................................... 10
          7.3       VOLUNTARY TERMINATION OR AMENDMENT OF TRUST. .................................. 10
          7.4       FILING OF ACTION AUTHORIZING TERMINATION OR AMENDMENT. ........................ 11
          7.5       SALE OF TRUST ESTATE. ......................................................... 11

                                                       ARTICLE 8

                                                     MISCELLANEOUS

          8.1       POWER TO CONSTRUE DECLARATION OF TRUST. ....................................... 11
          8.2       HEADINGS. ..................................................................... 11
          8.3       EFFECT OF PARTIAL INVALIDITY OF DECLARATION OF TRUST. ......................... 11
          8.4       DELAWARE LAW CONTROLLING. ..................................................... 11
          8.5       COUNTERPARTS. ................................................................. 11
          8.6       FISCAL YEAR. .................................................................. 12
</TABLE>
<PAGE>   3

                              DECLARATION OF TRUST

         This DECLARATION OF TRUST by and among Pillowtex Corporation, a Texas
corporation (the "Grantor") and Jeffrey D. Cordes, an individual, Christopher
N. Baker, an individual and Scott E. Shimizu, an individual (hereafter
sometimes jointly referred to as the "Managing Trustees") and PNC Bank,
Delaware, a Delaware state chartered bank (the "Resident Trustee") is effective
as of March 27, 1996. The Managing Trustees and the Resident Trustee are
hereafter sometimes jointly referred to as the "Trustees".

         WHEREAS, the Grantor and the Trustees desire to form a business trust
in accordance with the provisions of the Delaware Business Trust Act, 12 Del.C.
Section 3801 et. seq., (the "Act"); and

         WHEREAS, the Trust (as hereinafter defined) shall acquire certain
property of Grantor as set forth on Exhibit A and incorporated herein by
reference, and shall manage the same, and all other property which the Trust
may hereafter acquire (the "Trust Estate"), in the manner hereinafter provided.

         NOW, THEREFORE, the Trustees hereby agree to hold the Trust Estate, as
well as all other property which the Trust may acquire, together with the
proceeds thereof, in trust, to manage and dispose of the same for the benefit
of the holders, from time to time, of the certificates of shares issued and to
be issued hereunder in the manner and subject to the Act and this Declaration
of Trust.

                                   ARTICLE I

                                  ORGANIZATION

         1.1     PURPOSE; NAME. The Trust is organized to carry on any lawful
business or activity. So far as may be practicable, the business of the trust
shall be conducted and transacted under the name of Pillowtex Management
Services Company or such other name as the Managing Trustees may from time to
time determine (the "Trust"), which name (and the words "the Trust," wherever
used in this Declaration of Trust, except where the context otherwise requires)
shall refer to the Trustees as Trustees, but not personally, and shall not
refer to the officers, agents or Beneficial Interest Holders (as hereafter
defined) of the Trust.

         1.2     PLACES OF BUSINESS. The Trust shall have a Trustee resident,
or with its principal place of business, in the State of Delaware as required
by Section 3807(a) of the Act and shall have its principal place of business in
such places as the Managing Trustees (as hereafter defined) may from time to
time select. The Trust may also have offices at such other places as the
Managing Trustees may from time to time designate or the business of the Trust
may require. The original of this Declaration of Trust and the minutes of the
Trust shall be kept at the principal place of business of the Trust, and shall,
at all times, be open to the inspection of any Trustee or Beneficial Interest
Holder.

         1.3     LEGAL TITLE. Legal title to the Trust Estate shall be vested
in the Trust, except that the Managing Trustees may cause legal title to any
Trust property to be held by or in the name





                                       1
<PAGE>   4
of any Managing Trustee or any other person as nominee. If the Managing
Trustees cause legal title in any of the Trust Estate to be held in their
names, the right, title and interest of the Managing Trustees in and to such
property shall automatically vest in successor and additional Managing Trustees
upon their qualification and acceptance of election or appointment as Managing
Trustees, and they shall thereupon have all the rights and obligations of
Managing Trustees, whether or not conveyancing documents have been executed and
delivered pursuant to this Declaration of Trust or otherwise. Written evidence
of the qualification and acceptance of election or appointment of successor and
additional Trustees may be filed with the records of the Trust and in such
other offices, agencies or places as the Managing Trustees may deem necessary
or desirable.

         1.4     CLASSIFICATION. This Declaration of Trust is intended to
create a business trust under the Act and not a partnership or joint stock
association for state law purposes. However, in accordance with the Act,
classification of the Trust as a Delaware business trust is not controlling for
the classification of the Trust for Federal income tax purposes. In that
regard, this Declaration of Trust shall be construed such that the Trust
qualify as an "association" under the Internal Revenue Code of 1986, as
amended.

                                   ARTICLE 2

                                    TRUSTEES

         2.1     MANAGING TRUSTEES.

                 (a)      NUMBER. The number of Managing Trustees initially
         shall be three (3), which number may be increased or decreased by the
         Managing Trustees then in office from time to time; however, the total
         number of Managing Trustees shall be not less than two (2) nor more
         than five (5). Any vacancy created by an increase in the number of
         Managing Trustees shall be filled by the Grantor acting through its
         duly authorized officer.

                 (b)      INITIAL MANAGING TRUSTEES. The names of the initial
         Managing Trustees shall be: Jeffrey D. Cordes, Christopher N. Baker
         and Scott E. Shimizu. The Managing Trustees shall hold office until
         the death, resignation or removal as Managing Trustee pursuant to the
         Act or this Declaration of Trust.

         2.2     RESIDENT TRUSTEE.

                 (a)      INITIAL RESIDENT TRUSTEE. There shall be one (1)
         Resident Trustee. The initial Resident Trustee shall be: PNC Bank,
         Delaware (the "Resident Trustee"). The Resident Trustee shall serve
         until such time as a successor is appointed by the Grantor acting
         through its duly authorized officer. Notwithstanding the foregoing,
         the Resident Trustee may resign at any time upon the giving of at
         least sixty (60) days advance written notice to the Managing Trustees;
         provided, however, that such resignation shall not become effective
         unless and until a successor Resident Trustee shall have been
         appointed by the Managing Trustees. If the Managing Trustees do not
         act within such sixty (60) day period, the Resident Trustee may apply
         to the Court of Chancery of the State of Delaware for the appointment
         of a successor Resident Trustee.





                                       2
<PAGE>   5
                 (b)      POWERS OF RESIDENT TRUSTEE. The Resident Trustee
         shall constitute the Trustee required pursuant to Section 3807(a) of
         the Act, shall have only the rights, obligations and liabilities
         specifically provided for in the Declaration of Trust and the Act, and
         shall have no implied rights, obligations and liabilities with respect
         to the affairs of the Trust. Notwithstanding any other provision
         contained herein, unless specifically directed by the Managing
         Trustees and consented to by the Resident Trustee, the Resident
         Trustee shall not participate in any decisions relating to, or possess
         any authority independently to manage or control, the business of the
         Trust. In no event shall the Resident Trustee have any liability for
         the acts or omissions of the Managing Trustees. Upon direction by the
         Managing Trustees, the Resident Trustee shall have the power and
         authority to execute, deliver, acknowledge and file all necessary
         documents and to maintain all necessary records of the Trust as
         required by the Act. The Resident Trustee shall provide prompt notice
         to the Managing Trustees of its performance of any of the foregoing.
         The Managing Trustees shall reasonably keep the Resident Trustee
         informed of any actions taken by the Managing Trustees with respect to
         the Trust that affect the rights, obligations or liabilities of the
         Resident Trustee under the Act.

                 (c)      COMPENSATION OF RESIDENT TRUSTEE. The Resident
         Trustee shall be entitled to receive from the Trust reasonable
         compensation for its services hereunder, as shall be agreed to from
         time to time by the Trust and the Resident Trustee, and shall be
         reimbursed for extraordinary expenses including reasonable attorney
         fees as incurred.

         2.3     RESIGNATION OR REMOVAL OF A MANAGING TRUSTEE. Any Managing
Trustee may resign by written notice to the remaining Managing Trustees,
effective upon execution and delivery to the Trust of such written notice or
upon any future date specified in the notice. A Managing Trustee may be removed
by the Grantor acting through its duly authorized officer. Upon the resignation
or removal of any Managing Trustee, or upon any Managing Trustee otherwise
ceasing to be a Managing Trustee, such Managing Trustee shall automatically
cease to have any right, title or interest in and to the Trust Estate held in
his name, which property shall automatically vest in the remaining Managing
Trustees, or, if none, their successors as the same may be appointed hereunder;
provided that any Managing Trustee ceasing to be such shall account to the
remaining Managing Trustees as they require for all property that he formerly
held as Managing Trustee.  Any vacancy that is created by any Managing Trustee
who resigns or is removed may be filled by the Grantor acting through its duly
authorized officer.

         2.4     POWERS OF MANAGING TRUSTEES. The Managing Trustees, subject
only to the specific limitations in this Declaration of Trust and the Act,
shall control and manage the Trust Estate and conduct or cause to be conducted
the business and affairs of the Trust. Except as otherwise limited by this
Declaration of Trust and the Act, the Managing Trustees shall have the power
and authority to do all things, to take all actions and to execute and deliver
all agreements, instruments, contracts, deeds and documents as may be necessary
or appropriate in connection with the management and conduct of the business
and affairs of the Trust, including, without limitation the power and authority
to:

                          A.  Sell, lease, exchange, transfer, pledge, mortgage
                 or otherwise dispose of the assets of the Trust and to enter
                 into contracts therefor.





                                       3
<PAGE>   6
                          B.  Appoint, elect or engage, either as agents,
                 independent contractors, officers, employees or managers of
                 the Trust, such persons as the Managing Trustees may determine
                 from time to time are necessary and appropriate to manage the
                 business and affairs of the Trust. Such persons shall have
                 such titles and relative powers, rights and duties as the
                 Managing Trustees shall determine from time to time.

                          C.  Vote any securities of any entity that
                 constitutes all or a part of the Trust Estate.

                          D.  Loan or borrow money, guarantee the debts of
                 others and issue Shares (as hereinafter defined) of the Trust
                 as provided herein.

                          E.  Fix the compensation of the agents,
                 independent contractors, officers, employees or managers of
                 the Trust and establish in favor of said officers and
                 employees (including officers and employees who may be
                 Trustees), and the officers and employees of any company which
                 may be a subsidiary of or affiliated with the Trust, any plan
                 of profit sharing or other benefit plan providing for any
                 payment for services rendered or to be rendered to the Trust
                 or to such subsidiary or affiliated company out of or based
                 upon the net profits of the Trust or otherwise.

                          F.  Sue and be sued, and compromise, settle,
                 arbitrate, abandon or terminate all suits, proceedings,
                 disputes, claims, and demands relating to the Trust Estate
                 arising out of or in connection with the business of the Trust
                 or the administration of the Trust Estate, whether in the name
                 of the Trust or of the Trustees or of the Beneficial Interest
                 Holders or otherwise, before any court, or administrative or
                 other body, or otherwise.

                          G.  Delegate to one or more Managing Trustees,
                 officers, employees or other persons engaged or employed by
                 the Trust, the performance of any and all acts or other
                 things, the making of decisions and the execution of such
                 agreements, contracts, deeds, documents or other instruments,
                 either in the names of the Trust or the Managing Trustees, as
                 the Managing Trustees may determine.

                          H.  Establish such committees with such powers as
                 the Managing Trustees deem appropriate.

                          I.  Purchase and pay for out of the Trust Estate
                 insurance policies insuring the Trust and the Trust Estate
                 against any and all risks, and insuring the Beneficial
                 Interest Holders, Trustees, officers, employees and agents of
                 the Trust individually against all claims and liabilities of
                 any nature arising by reason of holding or having held any
                 such status, office or position or by reason of any action
                 alleged to have been taken or omitted (including those alleged
                 to constitute misconduct, gross negligence, reckless disregard
                 of duty or bad faith) by any such person in such capacity,
                 whether or not the Trust would have the power to indemnify
                 such person against such claim or liability.





                                       4

<PAGE>   7
         The powers conferred upon the Managing Trustees by this Section and
elsewhere in this Declaration of Trust may be delegated to committees, officers
and agents of the Trust, and shall not be deemed to be mandatory, but shall,
together with any and all implied powers and discretions, be exercised by the
Managing Trustees from time to time to the extent deemed by them to be
advantageous to the Trust. The acts of the committees, officers and agents,
within the scope of their respective authorities, shall be deemed to be the
acts of the Managing Trustees and not of the Beneficial Interest Holders.

         2.5     LIMITATIONS ON POWERS OF MANAGING TRUSTEES.

         Notwithstanding anything in this Agreement to the contrary, the
Managing Trustees shall not have the power or authority to do any of the
following or to cause the Trust to do any of the following without the prior
written consent of Grantor:

                          A.  Sell, lease or exchange all, or substantially
                 all, of the property and assets of the Trust.

                          B.  Merge or consolidate the Trust with or into one
                 or more business trusts, common-law trusts, unincorporated
                 businesses, corporations or partnerships.

                          C.  Dissolve the Trust and wind-up its affairs.

                          D.  Amend or terminate this Declaration of Trust.

         2.6     MEETINGS OF MANAGING TRUSTEES.

                 (a)      Meetings may be called at any time by any of the
         Managing Trustees upon 24 hours' written notice to each of the
         Managing Trustees. Notice of such meetings shall be given to each of
         the Managing Trustees as provided in Section 6.2 of this Declaration
         of Trust. At any meeting of the Managing Trustees, the presence of a
         majority of the Managing Trustees then in office shall be necessary
         and sufficient to constitute a quorum for the transaction of business.
         Any meeting may be adjourned from time to time by a majority of the
         votes cast upon the question, whether or not a quorum is present, and
         the meeting may be held as adjourned without further notice.

                 (b)      Subject to the notice of meeting requirements in this
         Declaration of Trust, the Managing Trustees may participate in and hold
         a meeting of the Managing Trustees by means of a conference telephone
         or similar communications equipment by means of which all persons
         participating in the meeting can hear each other. Participation in such
         a meeting shall constitute presence in person at such meeting except
         where a person participates in the meeting solely for the express
         purpose of objecting to the transaction of any business on the ground
         that the meeting is not lawfully called or convened.

                 (c)      When a quorum is present at any meeting, a majority
         of the Managing Trustees present may take any action except as
         otherwise expressly provided in this Declaration of Trust.





                                       5
<PAGE>   8
                 (d)      Unless otherwise restricted by this Declaration of
         Trust, any action required or permitted by law to be taken at any
         meeting of the Managing Trustees, may be taken without a meeting if a
         written consent thereto, setting forth the action so taken, is signed
         by all Managing Trustees and such written consent is filed at the
         principal place of business of the Trust.

                                   ARTICLE 3

                          BENEFICIAL INTEREST HOLDERS

         3.1     INTEREST IN TRUST ESTATE. The beneficial interest in the Trust
Estate shall be in the holders ("Beneficial Interest Holders") from time to
time of non-voting, transferrable shares of beneficial interest (the "Shares").
The authorized Shares of beneficial interest shall consist of three thousand
(3,000) Shares, $.01 par value.

         3.2     ISSUE OF SHARES. Authorized Shares of the Trust may be issued
from time to time in such amounts as the Managing Trustees may determine,
either for cash, services, securities, property or other value, or in exchange
for other Shares of the Trust at the time outstanding, as full paid or part
paid Shares and at such price and upon such terms as to valuation of services,
securities, property or other value or other Shares and otherwise, as the
Managing Trustees may in their absolute discretion see fit and irrespective of
the par value thereof, if any.

         3.3     ACQUISITION AND STATUS OF SHARES ACQUIRED BY THE TRUST. Shares
of this Trust may, in the discretion of the Managing Trustees, be acquired by
the Trust either out of surplus or out of capital. If so determined by the
Managing Trustees Shares so acquired shall be canceled without, however,
thereby reducing the number of authorized Shares; otherwise such Shares shall
be held in the treasury as an asset of the Trust and may be sold or otherwise
disposed of for such consideration and on such terms as shall from time to time
be determined by the Managing Trustees, but such Shares while so held in the
treasury shall not be entitled to any dividends and shall not be deemed
outstanding for any purpose.

         3.4     SHARE REGISTERS. A register or registers shall be kept under
the direction of the Managing Trustees which shall contain the names of the
Beneficial Interest Holders and their addresses, and the number of Shares held
by them respectively, and a record of all transfers thereof. No Beneficial
Interest Holder shall be entitled to recognition as such unless his name and
address appears on said register.

         3.5     SHARE CERTIFICATES. Every Beneficial Interest Holder shall be
entitled to receive a certificate in such form as the Managing Trustees shall
from time to time approve specifying the number of Shares held by such
Beneficial Interest Holder. In case a certificate shall be lost, stolen or
destroyed, or become mutilated, the Managing Trustees, upon submission of
evidence satisfactory to them of such fact, may issue a new certificate and in
that connection may require a bond of indemnity satisfactory to them.
Certificates of Shares shall be executed as the Managing Trustees shall from
time to time designate.

         3.6     TRANSFERS OF SHARES. Every transfer of any Shares (otherwise
than by operation of law) shall be in writing under the hand of the transferor,
or his agent thereunto duly authorized





                                       6
<PAGE>   9
in writing, and upon delivery thereof to the Managing Trustees or to a transfer
officer or agent of the Trust, accompanied by the existing certificate for such
Shares and such evidence of the genuineness of such transfer, authorization and
other matters as may reasonably be required, shall be recorded in the register,
and a new certificate representing such Shares shall be issued to the
transferee; and in case of a transfer of only a part of the Shares mentioned in
any certificate a new certificate for the residue thereof shall be issued to
the transferor. Until any transfer shall be so made and recorded, the
transferor shall be deemed to be the holder of the Shares purported to be
transferred thereby and neither the Managing Trustees nor any transfer agent or
registrar nor any officer or agent of the Trust shall be affected by any notice
of such purported transfer. After a transfer shall be made and recorded as
above provided the transferee shall be deemed to be a Beneficial Interest
Holder and no consent of the other Beneficial Interest Holders shall be
necessary in respect thereof.

         3.7     TRANSFERS OF SHARES BY OPERATION OF LAW. Any person becoming
entitled to any Shares in consequence of the death, bankruptcy or insolvency of
any Beneficial Interest Holder, or otherwise by operation of law, shall be
recorded in the register as the holder of the said Shares, and receive a new
certificate for the same, upon production of the proper evidence of his right
thereto and delivery of the existing certificate to the Managing Trustees or a
transfer officer or agent of the Trust. But until such record is made, the
Beneficial Interest Holder of record shall be deemed to be the holder of such
Shares for all purposes, and neither the Managing Trustees nor any transfer
agent or registrar nor any officer or agent of the Trust shall be affected by
any notice of such death, bankruptcy, insolvency or other event.

         3.8     NATURE OF SHARES. Shares of the Trust shall be personal
property entitling the holders only to the rights and interest in the Trust
Estate conferred by the law of Delaware and by this Declaration of Trust, and
shall not give to the holders any right to possess specific property of the
Trust for any purpose.

                                   ARTICLE 4

         LIABILITY OF BENEFICIAL INTEREST HOLDERS, TRUSTEES, OFFICERS,
              EMPLOYEES AND AGENTS AND RELATED PARTY TRANSACTIONS

         4.1     LIMITATION OF BENEFICIAL INTEREST HOLDER LIABILITY. No
Beneficial Interest Holder shall be liable for any debt, claim, demand,
judgment or obligation of any kind of, against or with respect to the Trust by
reason of being a Beneficial Interest Holder, nor shall any Beneficial Interest
Holder, by reason of such status, be subject to any personal liability
whatsoever, in tort, contract or otherwise, to any person in connection with
the Trust Estate or the affairs of the Trust.

         4.2     LIMITATION OF TRUSTEE LIABILITY. A Trustee, when acting in such
capacity, shall not be personally liable to any person other than the Trust or a
Beneficial Interest Holder for any act, omission or obligation of the Trust or
any Trustee. To the maximum extent that Delaware law in effect from time to time
permits limitation of the liability of trustees of a business trust, no Trustee
shall be liable to the Trust or to any Beneficial Interest Holder for monetary
damages for





                                       7
<PAGE>   10
breach of any duty (including, without limitation, fiduciary duty) as a
Trustee, except (i) for acts or omissions which involve actual fraud or willful
misconduct or (ii) for any transaction from which the Trustee derived improper
personal benefit. Neither the amendment nor repeal of this Section 4.2, nor the
adoption or amendment of any other provision of this Declaration of Trust
inconsistent with this Section 4.2, shall apply to or affect in any respect the
applicability of the preceding sentence with respect to any act or failure to
act which occurred prior to such amendment, repeal or adoption.

         4.3     EXCULPATORY CLAUSES. Neither the Beneficial Interest Holders
nor the Trustees, officers, employees or agents of the Trust shall be liable
under any written instrument creating an obligation of the Trust, and all
persons shall look solely to the Trust Estate for the payment of any claim
under or for the performance of that instrument. All such written instruments
may contain an express exculpatory clause to the foregoing effect. The omission
of the foregoing exculpatory language from any instrument shall not affect the
validity or enforceability of such instrument and shall not render any
Beneficial Interest Holder, Trustee, officer, employee or agent liable
thereunder to any third party, nor shall the Trustee or any officer, employee
or agent of the Trust be liable to anyone for such omission.

         4.4     INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.

                 (a)      The Trust shall indemnify and hold harmless each
         Trustee and officer of the Trust (including any persons who, while a
         Trustee or officer of the Trust, is or was serving at the request of
         the Trust as a director, officer, partner, trustee, employee or agent
         of another foreign or domestic corporation, partnership, joint
         venture, trust, other enterprise or employee benefit plan) to the
         maximum extent permitted by law, except to the extent that the
         indemnitee is found liable for (i) an act or omission involving actual
         fraud or willful misconduct or (ii) a transaction in which the
         indemnitee received an improper personal benefit. The Trust shall,
         upon request by the concerned Trustee or officer assume the defense of
         any claim made against such Trustee or officer and (i) whether or not
         such request is made, pay in advance of any final disposition of such
         claims all costs of defense upon an undertaking by or on behalf of
         such Trustee or officer to repay such amount if it shall be ultimately
         determined that such Trustee or officer is not entitled to
         indemnification by the Trust under this Section, and (ii) satisfy any
         judgment thereon from the assets of the Trust.

                 (b)      In the event any Beneficial Interest Holder or former
         Beneficial Interest Holder shall be held to be personally liable for
         any obligation of the Trust solely by reason of his or its being or
         having been a Beneficial Interest Holder and not because of his or its
         acts or omissions or some other reason, the Beneficial Interest Holder
         or former Beneficial Interest Holder (or his or its legal
         representatives or successors) shall be entitled to be indemnified and
         held harmless out of the Trust Estate against all loss and expenses
         arising from such liability. The Trust shall, upon request by the
         concerned Beneficial Interest Holder, assume the defense of any claim
         made against the Beneficial Interest Holder and (i) whether or not such
         request is made, pay in advance of any final disposition of such claims
         all costs of defense upon an undertaking by or on behalf of such
         Beneficial Interest Holder to repay such amount if it is ultimately
         determined that such Beneficial Interest





                                       8
<PAGE>   11
         Holder is not entitled to indemnification by the Trust under this
         Section, and (ii) satisfy any judgment thereon from the assets of the
         Trust.

         4.5     RELATED PARTY TRANSACTIONS. Subject to any express
restrictions in this Declaration of Trust or adopted by the Managing Trustees,
the Trust may enter into any contract or transaction of any kind (including
without limitation, for the purchase or sale of property or for any type of
services, including those in connection with underwriting or the offer of sale
of securities of the Trust) with any person, including any Trustee, officer,
employee or agent of the Trust or any person affiliated with a Trustee,
officer, employee or agent of the Trust, whether or not any of them has a
financial interest in such transaction.

                                   ARTICLE 5

                             SURPLUS AND DIVIDENDS

         5.1.    DECLARATION OF DIVIDENDS AND DETERMINATION OF NET PROFITS,
EARNINGS AND SURPLUS. Subject to the provisions of this Section, the Managing
Trustees, in their discretion may from time to time declare dividends payable
at any date fixed by them out of the net profits or surplus (whether paid-in or
otherwise) of the Trust, in cash or property, including without limitation of
the generality of the foregoing, securities of the Trust; but no Beneficial
Interest Holder shall have any right to any dividends, whether in cash,
property or securities of the Trust, except when and as such dividends shall be
paid or notice shall have been given to all the Beneficial Interest Holders who
are to receive such dividends that the same have been declared as aforesaid;
and no Beneficial Interest Holder or Trustee of the Trust shall be liable
personally for any such dividend, and every Beneficial Interest Holder entitled
thereto shall look only to the Trust Estate for the payment of any such
dividend. The net profits and surplus of the Trust may be determined for any
and all purposes on the basis of an income statement and a balance sheet of the
Trust in accordance with proper accounting practices.

         5.2     FIXING OF RECORD DATES. The Managing Trustees may fix a date,
which date shall not precede the date upon which the Managing Trustees fix such
date and which date shall not be more than sixty days preceding the date for
the payment of any dividend or the date for the allotment of rights or the date
when any change or conversion or exchange of share capital shall go into
effect, and the date so fixed by the Managing Trustees shall be the record date
for the determination of the Beneficial Interest Holders entitled to receive
payment of any such dividend or to any such allotment of rights or to exercise
the rights in respect of any such change, conversion or exchange of share
capital, and in such case such Beneficial Interest Holders and only such
Beneficial Interest Holders as shall be Beneficial Interest Holders of record
on such record date shall be entitled to receive payment of such dividend or to
receive such allotment of rights or to exercise such rights, as the case may
be, notwithstanding any transfer of any Shares on the share register of the
Trust after any such record date. If no record date is fixed by the Managing
Trustees, the record date for determining Beneficial Interest Holders for any
such purpose shall be at the close of business on the day on which the Managing
Trustees adopt a resolution relating thereto.





                                       9
<PAGE>   12
                                   ARTICLE 6

                                     NOTICE

         6.1     WHEN NOTICE UNNECESSARY. Whenever any notice is required to be
given under the provisions of this Declaration of Trust, a waiver thereof in
writing, signed by the person entitled to such notice, either before or after
the time stated therein, shall be deemed equivalent thereto. Any meeting of
Managing Trustees may be held at any time without previous notice if each of
the Managing Trustees shall have signed or shall thereafter sign such a waiver
or shall be present in person.

         6.2     METHOD OF GIVING NOTICE. Whenever any notice is required or
permitted to be given under the provisions of this Declaration of Trust, such
notice may be given by delivering the same in writing to such party in person,
by facsimile transmission, by Federal Express or other reputable courier
service, or by sending the same by registered or certified mail, return receipt
requested, and shall be deemed given upon delivery if by personal delivery, or
upon confirmation of facsimile transmission if sent by facsimile transmission,
or upon delivery if sent by Federal Express or other reputable courier service,
or four (4) business days after deposit in the United States mail, postage
prepaid, in all cases addressed to the person entitled to such notice at his
address (or in the case of facsimile transmission, telecopied to such person at
the facsimile number for such person) as such address (or facsimile number, as
the case may be) appears in the records of the Trust.

         6.3     EVIDENCE OF NOTICE. The certificate of any person entitled to
give any such notice to the effect that such notice has been given shall be
sufficient evidence thereof and shall protect all persons acting in good faith
in reliance on such certificate.

                                   ARTICLE 7

                           AMENDMENT AND TERMINATION

         7.1     TERMINATION OF TRUST. Unless sooner terminated as provided in
Section 7.3, the Trust shall continue perpetually.

         7.2     EFFECT OF DEATH, BANKRUPTCY OR INCAPACITY OF BENEFICIAL
INTEREST HOLDER OR TRUSTEE. The death, bankruptcy or legal incapacity of a
Beneficial Interest Holder or of a Trustee, or any or all of them, or the
dissolution of a company that is a Beneficial Interest Holder, or the transfer
of Shares by a Beneficial Interest Holder shall not operate to terminate the
Trust nor entitle any such Trustee or Beneficial Interest Holder or their legal
representatives to an accounting or to take any action in the courts or
otherwise.

         7.3     VOLUNTARY TERMINATION OR AMENDMENT OF TRUST. The Trust may be
terminated or amended at any time by the Grantor; provided, however, nothing
contained in this Declaration of Trust shall permit the amendment of this
Declaration of Trust to impair the exemption from personal liability of the
Beneficial Interest Holders, Trustees, officers and agents of the Trust.





                                       10
<PAGE>   13
         7.4     FILING OF ACTION AUTHORIZING TERMINATION OR AMENDMENT. A copy
of any action by the Grantor terminating or amending the terms of this
Declaration of Trust may be recorded or filed in the various public offices, if
any, in which this Declaration of Trust is then recorded or filed, and shall be
filed at the principal place of business of the Trust and in such other places
as may be required by law; but failure so to record or file any such resolution
shall not affect the validity thereof.

         7.5     SALE OF TRUST ESTATE. Upon the termination of the Trust or in
contemplation thereof, the Managing Trustees shall sell and convert into money
or into securities the whole or any part of the Trust Estate and after paying,
satisfying or discharging all debts, liabilities and obligations of the Trust
or after making adequate provision therefor, shall apportion the proceeds
thereof and any property forming part of the Trust Estate excepted from such
sale among all the Beneficial Interest Holders ratably according to the number
of Shares held by them respectively, or the Managing Trustees may upon such
termination, or in contemplation thereof, divide the whole or any part of the
Trust Estate in its actual state of investment among the Beneficial Interest
Holders ratably according to the number of Shares held by them respectively,
and for such purposes the Managing Trustees shall have power to determine the
values of the property so divided. The powers conferred on the Managing
Trustees in this Section shall continue as long as necessary for the
liquidation and winding up of the Trust and the distribution of its assets.

                                   ARTICLE 8

                                 MISCELLANEOUS

         8.1     POWER TO CONSTRUE DECLARATION OF TRUST. The Managing Trustees
shall have power to construe this Declaration of Trust and to act on any such
construction, and their construction of the same and any action taken pursuant
thereto by the Trustees, officers, or agents of the Trust in good faith shall
be final and conclusive.

         8.2     HEADINGS. The headings of the different articles and sections
of this Declaration of Trust are inserted for convenience of reference, and are
not to be taken as any part of this Declaration of Trust or to control or
affect the meaning, construction or effect of the same.

         8.3     EFFECT OF PARTIAL INVALIDITY OF DECLARATION OF TRUST. If any
part or parts of this Declaration of Trust shall be held invalid, such
invalidity shall not affect the remainder of this Declaration of Trust, which
shall be read as if such invalid part or parts did not exist.

         8.4     DELAWARE LAW CONTROLLING. This Declaration of Trust is
executed with reference to the laws of the State of Delaware, and the rights of
all parties and the validity, construction and effect of every provision hereof
shall be subject to and construed according to the laws of the State of
Delaware.

         8.5     COUNTERPARTS. This Declaration of Trust 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.





                                       11
<PAGE>   14
         8.6     FISCAL YEAR. The initial fiscal year of the Trust shall end on
the Saturday nearest to December 31, 1996, and each fiscal year of the Trust
thereafter shall consist of 52- or 53-week periods beginning on the first day
after the end of the immediately preceding fiscal year and ending on the
Saturday nearest to the December 31 following that first day.

         IN WITNESS WHEREOF, the Grantor and Trustees have hereunto set their
hands to be effective on the day and year first above written.



                                        GRANTOR:


                                        PILLOWTEX CORPORATION


                                        BY:  /s/ JEFFREY D. CORDES
                                             -----------------------------------
                                        ITS: Executive Vice President & CFO
                                             -----------------------------------


                                        RESIDENT TRUSTEE:



                                        PNC BANK, DELAWARE


                                        BY:  /s/ W. B. McCARTHY
                                             -----------------------------------
                                        ITS: VICE-PRESIDENT
                                             -----------------------------------


                                        MANAGING TRUSTEES:

                                        /s/ JEFFREY D. CORDES
                                        ----------------------------------------
                                        Jeffrey D. Cordes

                                        /s/  CHRISTOPHER N. BAKER
                                        ----------------------------------------
                                        Christopher N. Baker

                                        /s/ SCOTT E. SHIMIZU
                                        ----------------------------------------
                                        Scott E. Shimizu





                                       12
<PAGE>   15
                                   EXHIBIT A

                  PROPERTY OF GRANTOR TO BE ACQUIRED BY TRUST

         The "Management Assets" and the "Management Liabilities" (as those
terms are defined in that certain Restructuring Agreement that is to be entered
into as of the 31st day of March, 1996, by and among Pillowtex Corporation, a
Texas corporation, Manetta Home Fashions, Inc., a North Carolina corporation,
Tennessee Woolen Mills, Inc., a Tennessee corporation, Beacon Manufacturing
Company, a North Carolina corporation, Pillowtex, Inc., a Delaware corporation,
PTEX Holding Company, a Delaware corporation, and the Trust) shall constitute
the initial Trust Estate.





                                       13

<PAGE>   1
                                                                    EXHIBIT 3.39

                          CERTIFICATE OF INCORPORATION
                                       OF
                              PTEX HOLDING COMPANY

     I, the undersigned, acting as incorporator of PTEX Holding Company, under
the General Corporation Law of Delaware, do hereby adopt the following
Certificate of Incorporation for such corporation.

First:    The name of the corporation is PTEX Holding Company.

Second:   The address of the corporation's registered office in the State of
          Delaware is Corporation Trust Center, 1209 Orange Street, City of
          Wilmington, County of New Castle, Delaware, and the name of its 
          registered agent at such address is The Corporation Trust Company.

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

Fourth:   The total number of shares that the corporation shall have authority
          to issue is 3,000 shares of common stock with a par value of $.01 per
          share.

Fifth:    No stockholder of this corporation shall, by reason of such person's
          holding stock of any class, have any preemptive or preferential right
          to purchase or subscribe to any stock of any class of this
          corporation, now or hereafter to be authorized, nor for any of its
          notes, debentures, bonds, or other securities, whether or not the
          issuance of such stock, or such notes, debentures, bonds, or other
          securities would adversely affect the dividend or voting rights of
          such stockholder, other than such rights, if any, as the board of 
          directors, in its discretion, may grant to the stockholders to
          purchase such additional securities; and the board of directors may
          issue treasury shares of any class of this corporation, or any notes,
          debentures, bonds, or other securities convertible into or of any
          class without offering the same in whole or in part to existing
          stockholders of any class.

Sixth:    Elections of directors need not be by written ballot except and to the
          extent provided otherwise in the bylaws of the corporation. Cumulative
          voting for the election of directors shall not be permitted.

Seventh:  The name and mailing address of the incorporator is T.L. Ford,
          Corporation Trust Center, 1209 Orange Street, County of New Castle,
          Wilmington, Delaware 19801.

Eighth:   The number of directors constituting the initial board of directors is
          three and the names and addresses of such persons serving as directors
          until the first annual meeting of stockholders or until such persons'
          successors shall be elected and qualified are:
<PAGE>   2
            Charles M. Hansen, Jr.        4111 Mint Way, Dallas, Texas 75237
            Ronald M. Wehtje              4111 Mint Way, Dallas, Texas 75237
            Charles H. Slaybaugh          222 Delaware Ave., 17th Floor,
                                          Wilmington, Delaware 19801


Ninth:      The corporation shall have perpetual existence.

Tenth:      The board of directors is expressly authorized to make, alter, or
            repeal the bylaws of the corporation.

Eleventh:   A director of the corporation shall not be personally liable to the
            corporation or its stockholders for monetary damages for breach of
            fiduciary duty as a director, except for liability (i) for any
            breach of the director's duty of loyalty to the corporation or its
            stockholders, (ii) for acts or omissions not in good faith or that
            involve intentional misconduct or a knowing violation of law, (iii)
            under Section 174 of the Delaware General Corporation Law, as the
            same exists or hereafter may be amended, or (iv) for any transaction
            from which the director derived an improper personal benefit. If the
            Delaware General Corporation Law hereafter is amended to authorize
            the further elimination or limitation of the liability of directors,
            then the liability of a director of the corporation, in addition to
            the limitation on personal liability provided herein, shall be
            limited to the fullest extent permitted by the amended Delaware
            General Corporation Law. Any repeal or modification of this
            paragraph by the stockholders of the corporation shall be 
            prospective only, and shall not adversely affect any limitation on
            the personal liability of a director of the corporation existing at
            the time of such repeal or modification.

Twelfth:    The undersigned incorporator, for the purpose of forming a
            corporation pursuant to the General Corporation Law of Delaware,
            does hereby declare and certify that the foregoing Certificate of
            Incorporation is such person's act and deed and that the facts
            herein stated are true, and accordingly, has hereunto set such
            person's hand this 20th day of March, 1996.


                                        /s/  T. L. FORD
                                        --------------------
                                        T. L. Ford


                                       2

<PAGE>   1
                                                                    EXHIBIT 3.40

                                     BYLAWS
                                       OF
                              PTEX HOLDING COMPANY

                                   ARTICLE I

                               OFFICES AND AGENT


         1.01    Registered Office and Agent.  The registered office of the
corporation shall be located at Corporation Trust Center, 1209 Orange Street,
City of Wilmington, County of New Castle, Delaware, and the name of the
registered agent of the corporation at such address is The Corporation Trust
Company.

         1.02    Other Offices. The corporation may also have offices at such
other places within and without the State of Delaware as the board of directors
may from time to time determine or the business of the corporation may require.

                                   ARTICLE II

                            MEETINGS OF SHAREHOLDERS

         2.01    Annual Meetings. An annual meeting of the shareholders shall
be held on the first Monday of the third month following the close of each
fiscal year of the corporation if not a legal holiday, and if a legal holiday,
then on the next day following that is not a legal holiday. At each annual
meeting the shareholders shall elect a board of directors and shall transact
such other business as may properly be brought before the meeting.

         2.02    Call for Special Meetings. Special meetings of the
shareholders, for any purpose or purposes may be held at such time and place,
within or without the State of Delaware as shall be stated in the notice of the
meeting or in a duly executed waiver of notice. Unless otherwise prescribed by
statute or by the Certificate of Incorporation, or by these bylaws, special
meetings of the shareholders may be called by the President, the board of
directors, or by one or more shareholders, the aggregate of whose shares
comprise not less than one-tenth of all shares entitled to vote at the
meetings. Business transacted at all special meetings shall be confined to the
subjects stated in the notice of the meeting, unless such notice shall have
been waived.

         2.03    Notice. Unless notice is waived, written or printed notice
stating the place, date, and time of the meeting and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
delivered not less than ten nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of the





                                      -1-
<PAGE>   2
President, the Secretary, or the officer or person calling the meeting, to each
shareholder of record entitled to vote at the meeting.

         2.04    Quorum Majority Vote. The holders of a majority of the shares
issued and outstanding and entitled to vote, present in person or represented
by proxy, shall be requisite and shall constitute a quorum at all meetings of
the shareholders for the transaction of business except as otherwise provided
by law, the Certificate of Incorporation, or these bylaws. When a quorum is
present at any meeting, the vote of the holders of a majority of the shares
having voting power present in person or represented by proxy shall decide any
question before such meeting, unless the question is one upon which, by express
provision of law, the Certificate of Incorporation, or these bylaws, a
different vote is required, in which case such express provision shall govern.
The shareholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.

         2.05    Voting. Unless otherwise provided in the Certificate of
Incorporation, at every election of directors, each shareholder shall have the
right to vote the number of voting shares that such shareholder owns for as
many persons as there are directors to be elected. Unless otherwise provided
in the Certificate of Incorporation, no shareholder shall be entitled to
cumulate such shareholder's votes, and cumulative voting is prohibited.

                                  ARTICLE III

                                   DIRECTORS

         3.01    Powers. The business and affairs of the corporation shall be
managed by its board of directors who may exercise all such powers of the
corporation and do all such lawful acts and things as are not by law, the
Certificate of Incorporation, or these bylaws directed or required to be
exercised or done by the shareholders.

         3.02    Number and Election. The board of directors shall consist of
not less than one director; no director need be a shareholder, however, at
least one director shall be a resident of the State of Delaware. At each annual
meeting of the shareholders, the shareholders may change the number of
directors who shall serve for the ensuing year and each such determination
shall be a continuing determination of the number of directors until a change
by a vote of the shareholders. The directors shall be elected at the annual
meeting of the shareholders, except as hereinafter provided, and each director
elected shall hold office until such director's successor shall be elected and
shall qualify. Any vacancy occurring in the board of directors may be filled by
the affirmative vote of a majority of the remaining directors, notwithstanding
that the remaining directors constitute less than a quorum of the board of
directors, or by the holders of a majority of the shares then entitled to vote
in election of directors. A director elected to fill a vacancy shall be elected
for the unexpired term of such director's predecessor in office. Any
directorship to be filled by reason of an increase in the number of directors
may be filled by election at an annual





                                      -2-
<PAGE>   3
meeting or a special meeting of the shareholders called for that purpose, or
may be filled by the board of directors for a term of office continuing only
until the next election of one or more of the directors by the shareholders.

         3.03    Removal. Any director may be removed, with or without cause,
at any duly constituted meeting of shareholders called expressly for that
purpose, by the affirmative vote of the holders of a majority of the shares
then entitled to vote in elections of directors.

         3.04    First Meeting of New Board. The first meeting of each newly
elected board of directors shall be held without further notice immediately
following the annual meeting of the shareholders.

         3.05    Meetings. Regular meetings of the board of directors may be
held without notice at such time and place as shall be determined by the board.
Special meetings of the board of directors may be called by or at the direction
of the President on 24 hours' notice to each director, either personally or by
mail or by telegram, or by facsimile. The purpose or purposes of such meeting
need not be stated in the notice thereof, except as is specifically provided in
section 11.01 of these bylaws.

         3.06    Quorum; Majority Vote. At all meetings of the board of
directors, the presence of a majority of the number of directors fixed in the
manner provided in these bylaws shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the act of a majority
of the directors present at any meeting at which there is a quorum shall be the
act of the board of directors, except as may be otherwise specifically provided
by law, the Certificate of Incorporation, or these bylaws. If a quorum shall
not be present at any meeting, the directors present at the meeting may adjourn
the meeting from time to time without notice other than announcement at the
meeting, until a quorum shall be present.

         3.07    Compensation as Directors. Directors, as such, shall not
receive any stated salary for their services, but, by resolution of the board,
a fixed sum and expenses of attendance, if any, may be allowed for attendance
at each regular or special meeting of the board; provided that nothing
contained in these bylaws shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation for
such service.

         3.08    Committees. The board of directors, by resolution adopted by a
majority of the full board of directors, may designate from among its members
an executive committee and one or more other committees, each of which shall be
comprised of one or more members and, to the extent provided in such
resolution, shall have and may exercise all of the authority of the board of
directors, except that no such committee shall have the authority of the board
of directors in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation under Section 251 or Section
252 of the Delaware General Corporation Law, recommending to the shareholders
the sale, lease, or exchange





                                      -3-
<PAGE>   4
of all or substantially all of the property and assets of the corporation,
recommending to the shareholders a voluntary dissolution of the corporation or
a revocation thereof, amending, altering or repealing the bylaws of the
corporation or adopting new bylaws for the corporation, altering or repealing
any resolution of the board of directors that by its terms provide that it
shall not be so amendable or repealable; and, unless the resolution expressly
so provides, no committee shall have the power or authority to declare a
dividend, or to authorize the issuance of shares of the corporation, or to
adopt a merger pursuant to Section 253 of the Delaware General Corporation Law.
The designation of such committee and the delegation of authority to such
committee shall not operate to relieve the board of directors, or any member of
the board, of any responsibility imposed by law.

                                   ARTICLE IV

                                    NOTICES

         4.01    Formalities of Notices. Whenever, under the provisions of law,
the Certificate of Incorporation, or these bylaws, notice is required to be
given to any director or shareholder and no provision is made as to how such
notice shall be given, personal notice shall not be required, but any such
notice may be given in writing, by mail, postage prepaid, addressed to such
director or shareholder at such address as appears on the books of the
corporation.  Any notice required or permitted to be given by mail shall be
deemed to be given at the time when such notice shall have been deposited in
the United States mails as aforesaid.

         4.02    Waiver of Notices. Whenever any notice is required to be given
to any shareholder or director of the corporation under the provisions of law,
the Certificate of Incorporation, or these bylaws, a waiver of such notice in
writing signed by the person or persons entitled to such notice, whether
before or after the time stated in such notice, shall be deemed equivalent to
giving such notice.

                                   ARTICLE V

                                    OFFICERS

         5.01    Offices. The officers of the corporation shall be elected by
the directors and may include a chairman of the board of directors, a
president, one or more vice presidents, a secretary, and a treasurer. The board
of directors may also elect or appoint one or more assistant secretaries and
assistant treasurers. Any two or more offices may be held by the same person.

         5.02    Election of Officers; Term; Removal; Salary. The board of
directors at its first meeting after each annual meeting of shareholders shall
elect the officers, none of whom need be members of the board. Each officer of
the corporation shall hold office until such officer's successor is chosen and
qualified or until such officer's death, resignation, or





                                      -4-
<PAGE>   5
removal from office. Any officer or agent elected or appointed by the board of
directors may be removed at any time by the board of directors, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. If the office of any officer becomes vacant for any reason,
the vacancy may be filled by the board of directors. The salaries of all
officers and agents of the corporation shall be fixed by the board of
directors.

         5.03    The President. The President shall be the chief executive
officer of the corporation; the President shall preside at all meetings of the
shareholders, shall have general and active management of the business and
affairs of the corporation, shall see that all orders and resolutions of the
board are carried into effect, and shall perform such other duties as the board
of directors shall prescribe.

         5.04    The Vice Presidents. If the corporation elects or appoints one
or more Vice Presidents, then each Vice President shall have such power and
perform such duties as the board of directors may from time to time prescribe
or as the President may from time to time delegate.

         5.05    The Secretary and Assistant Secretaries. The Secretary shall
attend all sessions of the board of directors and all meetings of the
shareholders and record all votes and the minutes of all proceedings in a book
to be kept for that purpose, and shall perform like duties for the Executive
Committee when required. The Secretary shall give, or cause to be given,
notice of all meetings of the shareholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the
board of directors or President, under whose supervision the Secretary shall
be. The Secretary shall keep in safe custody the seal of the corporation and,
when authorized by the board, affix the same to any instrument requiring it
and, when so affixed, it shall be attested by the Secretary's signature or by
the signature of the Treasurer or an Assistant Secretary. If the corporation
does not elect or appoint a person to the office of Treasurer or Assistant
Treasurer, then the Secretary shall assume all duties of the Treasurer, as
described in paragraph 5.06. Each Assistant Secretary shall have such powers
and perform such duties as the board of directors may from time to time
prescribe or as the President may from time to time delegate.

         5.06    The Treasurer and Assistant Treasurers. The Treasurer shall
have the custody of the corporate funds and securities, shall keep full and
accurate accounts of receipts and disbursements of the corporation, and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as the board of directors may designate.
The Treasurer shall disburse the funds of the corporation as the board of
directors may order, taking proper vouchers for such disbursements, shall
render to the President and directors, at the regular meetings of the board or
whenever the board may require it, an account of all the Treasurer's
transactions and of the financial condition of the corporation, and shall
perform such other duties as the board of directors may prescribe. If the board
of directors requires, then the Treasurer shall give the corporation a bond in
such form, in such sum, and with such surety or sureties as shall be
satisfactory to the board for the faithful performance of the duties of the
Treasurer's office





                                      -5-
<PAGE>   6
and for the restoration to the corporation, in case of the Treasurer's death,
resignation, retirement, or removal from office, of all books, papers,
vouchers, money, and other property of whatever kind in the Treasurer's
possession or under the Treasurer's control belonging to the corporation. If no
person is elected or appointed to fill the office of Treasurer, then the duties
described in this paragraph shall be assumed by the Secretary.

                                   ARTICLE VI

                        CERTIFICATES REPRESENTING SHARES

         6.01    Delivery, Form and Content. The board of directors shall cause
to be delivered to the shareholders certificates in such form as the board of
directors may determine representing all shares to which such shareholders are
entitled. Certificates shall be consecutively numbered by classes and shall be
entered in the books of the corporation as they are issued. Each certificate
shall state on its face the holder's name, the number and class of shares, and
the par value of such shares or a statement that such shares are without par
value. Each certificate shall be signed by the President or a Vice President
and the Secretary or an Assistant Secretary and may be sealed with the seal of
the corporation or a facsimile. If any certificate is countersigned by a
transfer agent, or an assistant transfer agent, or registered by a registrar,
other than the corporation or an employee of the corporation, then the
signature of any officer may be a facsimile.

         6.02    Lost Certificates. The board of directors may direct a new
certificate representing shares to be issued in place of any certificate
theretofore issued by the corporation alleged to have been lost or destroyed,
upon receiving an affidavit of that fact from the person claiming the
certificate to be lost or destroyed. When authorizing the issue of a new
certificate, the board of directors, in its discretion and as a condition
precedent to the issuance of a new certificate, may require the owner of such
lost or destroyed certificate, or such person's legal representative, to
advertise the same in such manner as the board shall require and/or give the
corporation a bond in such form, in such sum, and with such surety or sureties
as the board may direct as indemnity against any claim that may be made against
the corporation with respect to the certificate alleged to have been lost or
destroyed and/or agree to indemnify the corporation against any such claim.

         6.03    Transfer. Shares of stock shall be transferable only on the
books of the corporation by the holder in person or by such person's duly
authorized attorney. Upon surrender to the corporation of the certificate
representing shares duly endorsed or accompanied by proper evidence of
succession, assignment, or authority to transfer, the Corporation shall be
obligated to issue a new certificate to the person entitled to the new
certificate, cancel the old certificate, and record the transaction upon its
books.

         6.04    Record Holder. The corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in fact of such
stock and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or





                                      -6-
<PAGE>   7
shares on the part of any other person, or any limitation upon the ownership,
power, or authority of such holder, whether or not the corporation shall have
express or other notice, except as otherwise provided by law.

                                  ARTICLE VII

                                   DIVIDENDS

         7.01    Dividends. Dividends on the outstanding shares of the
corporation, subject to the provisions of the Certificate of Incorporation, may
be declared by the board of directors at any regular or special meeting.
Dividends may be paid in cash, in property, or in shares of the corporation,
subject to the provisions of law and the Certificate of Incorporation. The
board of directors may fix in advance a record date of such dividend, or the
board of directors may close the stock transfer books for such purpose for a
period of not more than thirty days prior to the payment date of such dividend.
In the absence of any action by the board of directors, the date upon which the
board of directors adopts the resolution declaring such dividend shall be the
record date.

                                  ARTICLE VIII

                          ACTION BY UNANIMOUS CONSENT
                           OR BY CONFERENCE TELEPHONE

         8.01    Action by Unanimous Consent. Any action required by the
Certificate of Incorporation, these bylaws, or Delaware law to be taken at a
meeting of the board of directors of the corporation, or any action that may be
taken at any such meeting may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all the
directors entitled to vote with respect to the subject matter of the action,
and such consent is filed in the minute book of the corporation.

         8.02    Action by Consent of Shareholders in Lieu of Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required to
be taken at any annual or special meeting of the shareholders of the
corporation, or any action which may be taken at any annual meeting or special
meeting of the shareholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote on the action were
present and voted. Prompt notice that corporate action was taken without a
meeting by less than unanimous written consent shall be given to the
stockholders who have not consented in writing. In lieu of any statement
regarding a shareholders vote required to be set forth in any document or
certificate to be filed with the Delaware Secretary of State, a statement that a
written consent and written notice have been given in accordance with the
provisions of Section 228 of the Delaware General Corporation Law may be given.





                                      -7-
<PAGE>   8
         8.03    Actions by Conference Telephone. Subject to any notice of
meeting requirements in these bylaws or under Delaware law, the board of
directors, or members of any committee designated by such board, may
participate in and hold a meeting of such board or committee by means of a
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in such
a meeting shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened. Minutes of any such meeting shall be promptly prepared by
the Secretary, circulated to all directors entitled to vote at the meeting
(whether they participated or not), placed in the regular corporate records
containing similar meeting minutes, and called to the attention of such board
of directors or committee at its next regular meeting.

                                   ARTICLE IX

                                INDEMNIFICATION

         9.01    Persons. The corporation may indemnify, to the extent
permitted in this article, and shall indemnify as required by this article:

                 (a)  any person who is or was a director, officer, agent,
         or employee of the corporation, and

                 (b)  any person who serves or served at the corporation's
         request as a director, officer, partner, venturer, proprietor,
         trustee, agent, employee, or similar functionary of another
         corporation or of a partnership, joint venture, sole proprietorship,
         trust, employee benefit plan, or other enterprise.

         9.02    Derivative Suits. In case of a suit or action by or in the
right of the corporation to procure a judgment in its favor against a person
named in paragraph 9.01 by reason of such person holding a position named in
paragraph 9.01, the corporation may indemnify such person if the standard in
paragraph 9.04 is satisfied, for reasonable expenses actually and reasonably
incurred by such person (including attorney's fees) in connection with the
defense or settlement of the suit or action and, additionally, for judgments
and fines if such person is found liable for negligence in the performance of
duties to the corporation.

         9.03    Nonderivative Suits. In case of a suit, action, or proceeding
(whether civil, criminal, administrative, or investigative), other than a suit
by or in behalf of the corporation, collectively hereinafter referred to as a
nonderivative suit, against a person named in paragraph 9.01 by reason of such
person holding a position named in paragraph 9.01, the corporation may
indemnify such person if the standard in paragraph 9.04 is satisfied for
amounts actually and reasonably incurred by such person in connection with the
defense or settlement of the nonderivative suit as follows:





                                      -8-
<PAGE>   9
                 (a)      Judgments;

                 (b)      Penalties, including excise and similar taxes;

                 (c)      Fines;

                 (d)      Settlements; and

                 (e)      Reasonable expenses actually incurred (including
                          attorney's fees).

         9.04    Standard. In case of a derivative suit, a person named in
paragraph 9.01 may be indemnified if such person acted in good faith in the
transaction that is the subject of the suit, and in a manner reasonably
believed to be in or not opposed to the corporation's best interest; provided
that no indemnification shall be made in respect to any claim, issue, or matter
as to which such person shall have been adjudged to be liable to the
corporation unless, and only to the extent that, the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper. In the case of nonderivative suit, a person named in
paragraph 9.01 may be indemnified if such person acted in good faith and in a
manner reasonably believed to be in or not opposed to the corporation's best
interest. With respect to any criminal action or proceeding, the person must 
have had no reasonable cause to believe that the conduct that is the subject of
such action was unlawful. The termination of a nonderivative proceeding by
judgment, order, settlement, conviction, or on a plea of nolo contendere or its
equivalent, does not of itself create a presumption that the person does not
meet the standards set forth in this paragraph.

         9.05    Mandatory Indemnification. The corporation shall indemnify a
person named in paragraph 9.01 against expenses (including attorney's fees)
actually and reasonably incurred in connection with a proceeding in which such
person is a party by reason of such person holding a position named in
paragraph 9.01 to the extent such person has been successful, on the merits or
otherwise, in the defense of the proceeding.

         9.06    Determination that Standard Has Been Met. A determination that
the standard of paragraph 9.04 has been satisfied shall be made by:

                 (a)      a majority vote of the directors of the corporation 
         who at the time of the vote are not parties to the action, suit, or
         proceeding even though less than a quorum; or

                 (b)      if there are no such directors, or if such directors
         so direct, by independent legal counsel in a written opinion; or

                 (c)      the shareholders of the corporation.





                                      -9-
<PAGE>   10
         9.07    Advance Payments. The corporation may pay in advance any
expense (including attorney's fees) that may become subject to indemnification
under paragraphs 9.01-9.06 if the person receiving the payment affirms in
writing that in good faith the person believes the standards set forth in
paragraph 9.04 have been met, and undertakes to repay any advance payments if
it is ultimately determined that such person has not met those standards.

         9.08    Insurance. The corporation may purchase and maintain insurance
on behalf of any person who holds or who has held any position named in
paragraph 9.01, against any liability asserted against or incurred by such
person in any such position, or arising out of such person's status as such,
whether or not the corporation would have power to indemnify such person
against such liability under paragraphs 9.01-9.07.

         9.09    Additional Indemnification. The rights of indemnification
provided in this article IX shall be in addition to any other rights to which
any person named in paragraph 9.01 may otherwise be entitled by contract, under
the Delaware General Corporation Law or as a matter of law; and if any such
person dies, then such rights shall extend to such person's heirs and legal
representatives. The provisions of this article IX are separable, and if any
provision be held invalid, all other provisions shall only be curtailed to the
extent necessary to make such provision enforceable, it being the intent of
this article that the corporation indemnify each person named in paragraph 9.01
to the maximum extent permitted by law.

                                   ARTICLE X

                               GENERAL PROVISIONS

         10.01   Seal and Official Records. The seal of the corporation, if
adopted by the board of directors, the stock certificate book, the minute book,
and the corporation's financial records shall be of the type that the board of
directors determines and establishes and may be changed from time to time in
the board's discretion.

         10.02   Invalid Provisions. If any part of these bylaws shall be held
invalid or inoperative, for any reason, the remaining parts, so far as possible
and reasonable, shall be valid and operative.

         10.03   Headings. The headings used in these bylaws have been inserted
for administrative convenience only and do not constitute matter to be
construed in interpretation.





                                      -10-
<PAGE>   11
                                   ARTICLE XI

                                   AMENDMENTS

         11.01   Alteration, Amendment, or Repeal. The power to alter, amend,
or repeal these bylaws or adopt new bylaws, subject to repeal or change by
action of the shareholders, shall be vested in the board of directors. The
board of directors may make such alteration, amendment, or repeal at any
meeting at which a quorum is present, by the affirmative vote of a majority of
the directors present at such meeting, provided notice of the proposed
alteration, amendment or repeal contained in the notice of such meeting (or
such notice shall have been waived).





                                      -11-

<PAGE>   1
                                                                    EXHIBIT 3.41

                          CERTIFICATE OF INCORPORATION
                                        
                                      -of-
                                        
                                ST. MARYS, INC.
                                        
                                  -----------

          I, THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, do hereby certifies as follows:

          FIRST:    The name of the corporation is

                                ST. MARYS, INC.

          SECOND:   The registered office of the corporation is to be located at
306 South State Street, in the City of Dover, in the County of Kent, in the
State of Delaware. The name of its registered agent at that address is the
United States Corporation Company.

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

          Without limiting in any manner the scope and generality of the
foregoing, it is hereby provided that the corporation shall have the following
purposes, objects and powers:

                    To purchase, manufacture, produce, assemble, receive, lease
          or in any manner acquire, hold, own, use, operate, install, maintain,
          service, repair, process, alter, improve, import, export, sell, lease,
          assign, transfer and generally

<PAGE>   2
          to trade and deal in and with raw materials, natural or manufactured
          articles or products, machinery, equipment, devices, systems, parts,
          supplies, apparatus, goods, wares, merchandise and personal property
          of every kind, nature or description, tangible or intangible, used or
          capable of being used for any purpose whatsoever; and to engage and 
          participate in any mercantile, manufacturing or trading business of
          any kind or character.

                    To improve, manage, develop, sell, assign, transfer, lease,
          mortgage, pledge or otherwise dispose of or turn to account or deal
          with all or any part of the property of the corporation and from time
          to time to vary any investment or employment of capital of the 
          corporation.

                    To borrow money, and to make and issue notes, bonds, 
          debentures, obligations and evidences of indebtedness of all kinds,
          whether secured by mortgage, pledge or otherwise, without limit as to
          amount, and to secure the same by mortgage, pledge or otherwise; and
          generally to make and perform agreements and contracts of every kind
          and description, including contracts of guaranty and suretyship.

                    To lend money for its corporate purposes, invest and
          reinvest its funds, and take, hold and deal with real and personal
          property as security for the payment of funds so loaned or invested.

                    To the same extent as natural persons might or could do, to
          purchase or otherwise acquire, and to hold, own, maintain, work,
          develop, sell, lease, exchange, hire, convey, mortgage or otherwise
          dispose of and deal in lands and leaseholds, and any interest, estate
          and rights in real property, and any personal or mixed property, and 
          any franchises, rights, licenses or privileges necessary, convenient
          or appropriate for any of the purposes herein expressed.

                    To apply for, obtain, register, purchase, lease or otherwise
          to acquire and to hold, own, use, develop, operate and introduce and
          to sell, assign, grant licenses or territorial rights in respect to,
          or otherwise to turn to account or dispose of, any copyrights, trade
          marks, trade names, brands, labels, patent rights, letters patent of
          the United States or of any other country or government, inventions,
          improvements and processes, whether used in connection with or secured
          under letters patent or otherwise.




<PAGE>   3
                    To participate with others in any corporation, partnership,
          limited partnership, joint venture, or other association of any kind,
          or in any transaction, undertaking or arrangement which the
          participating corporation would have power to conduct by itself,
          whether or not such participation involves sharing or delegation of
          control with or to others; and to be an incorporator, promoter
          or manager of other corporations of any type or kind.

                    To pay pensions and establish and carry out pension, 
          profit sharing, stock option, stock purchase, stock bonus,
          retirement, benefit, incentive and commission plans, trusts and
          provisions for any or all of its directors, officers and employees,
          and for any or all of the directors, officers and employees of its
          subsidiaries; and to provide insurance for its benefit on the life of
          any of its directors, officers or employees, or on the life of any
          stockholder for the purpose of acquiring at his death shares of its
          stock owned by such stockholders.

                    To acquire by purchase, subscription or otherwise, and to
          hold for investment or otherwise and to use, sell, assign, transfer,
          mortgage, pledge or otherwise deal with or dispose of stocks, bonds or
          any other obligations or securities of any corporation or
          corporations; to merge or consolidate with any corporation in such
          manner as may be permitted by law; to aid in any manner any
          corporation whose stocks, bonds or other obligations are held or in
          any manner guaranteed by this corporation, or in which this
          corporation is in any way interested; and to do any other acts or
          things for the preservation, protection, improvement or enhancement
          of the value of any such stock, bonds or other obligations; and while
          owner of any such stock, bonds or other obligations to exercise all
          the rights, powers and privileges of ownership thereof, and to
          exercise any and all voting powers thereon; and to guarantee the
          payment of dividends upon any stock, the principal or interest or
          both, of any bonds or other obligations, and the performance of any
          contracts.

                    To do all and everything necessary, suitable and proper for
          the accomplishment of any of the purposes or the attainment of any of
          the objects or the furtherance of any of the powers hereinbefore set
          forth, either alone or in association with other corporations, firms
          or individuals, and to do every other
<PAGE>   4
          act or acts, thing or things incidental or appurtenant to or 
          growing out of or connected with the aforesaid business or powers 
          or any part or parts thereof, provided the same be not inconsistent 
          with the laws under which this corporation is organized.

                    The business or purpose of the corporation is from time to
          time to do any one or more of the acts and things hereinabove set
          forth, and it shall have power to conduct and carry on its said
          business, or any part thereof, and to have one or more offices,
          and to exercise any or all of its corporate powers and rights, in the
          State of Delaware, and in the various other states, territories,
          colonies and dependencies of the United States, in the District of
          Columbia, and in all or any foreign countries.

                    The enumeration herein of the objects and purposes of the
          corporation shall be construed as powers as well as objects and
          purposes and shall not be deemed to exclude by inference any powers,
          objects or purposes which the corporation is empowered to exercise,
          whether expressly by force of the laws of the State of Delaware now or
          hereafter in effect, or impliedly by the reasonable construction of
          the said laws.

          FOURTH:   The total number of shares of stock which the corporation
is authorized to issue is one thousand (1,000) shares, all of which are without
par value.                    

          FIFTH:    The name and address of the incorporator are as follows:

                NAME                               ADDRESS
                ----                               -------
          Leif A. Tonnessen          60 Wall Street, New York, N.Y. 10005

          SIXTH:    The following provisions are inserted for the management of
the business and for the conduct of the affairs of the corporation, and for
further definition, limitation and regulation of the powers of the corporation
and of its directors and stockholders:
<PAGE>   5
          (1) The number of directors of the corporation shall be such as from
time to time shall be fixed by, or in the manner provided in the by-laws.
Election of directors need not be by ballot unless the by-laws so provide.

          (2) The Board of Directors shall have power without the assent or
vote of the stockholders

              (a) To make, alter, amend, change, add to or repeal the By-Laws of
          the corporation; to fix and vary the amount to be reserved for any
          proper purpose; to authorize and cause to be executed mortgages and
          liens upon all or any part of the property of the corporation; to
          determine the use and disposition of any surplus or net profits; and 
          to fix the times for the declaration and payment of dividends.

              (b) To determine from time to time whether, and to what extent,
          and at what times and places, and under what conditions and
          regulations, the accounts and books of the corporation (other than the
          stock ledger) or any of them, shall be open to the inspection of the
          stockholders.

          (3) The directors in their discretion may submit any contract or act
for approval or ratification at any annual meeting of the stockholders or at
any meeting of the stockholders called for the purpose of considering any such
act or contract, and any contract or act that shall be approved or be ratified
by the vote of the holders of a majority of the stock of the corporation which
is represented in person or by proxy at such meeting and entitled to vote
thereat (provided that a lawful quorum of stockholders be there represented in
person or by proxy) shall be as valid and as binding upon the corporation and
upon all the stockholders as though it had been approved or ratified by every
<PAGE>   6
stockholder of the corporation, whether or not the contract or act would
otherwise be open to legal attack because of directors' interest, or for
any other reason.

          (4)  In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the corporation; subject, nevertheless, to the provisions of the
statutes of Delaware, of this certificate, and to any by-laws from time to time
made by the stockholders; provided, however, that no by-laws so made shall
invalidate any prior act of the directors which would have been valid if such
by-law had not been made.

          SEVENTH:  The corporation shall, to the full extent permitted by
Section 145 of the Delaware General Corporation Law, as amended from time to
time, indemnify all persons whom it may indemnify pursuant thereto.

          EIGHTH:  Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 29, of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this corporation under
<PAGE>   7
the provisions of Section 279 of Title 8 of the Delaware Code, after a
meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of this corporation, as the case may be, to be summoned
in such manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as consequences of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.

          NINTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power.

          IN WITNESS WHEREOF, I have hereunto set my hand and seal, the 3rd day
of January, 1973.


                                                  /s/ LEIF A. TONNESSEN (L.S.)
                                                  ----------------------------
                                                  Leif A. Tonnessen           

<PAGE>   1
                                                                    EXHIBIT 3.42

                                  B Y - L A W S

                                       OF

                                 ST. MARYS, INC.

                                  ------------
                                    ARTICLE I
 
                                     OFFICES
       
     SECTION 1. REGISTERED OFFICE.--The registered office shall be established
and maintained at the office of the United States Corporation Company, in the
City of Dover, in the County of Kent, in the State of Delaware, and said
corporation shall be the registered agent of this corporation in charge
thereof.

     SECTION 2. OTHER OFFICES.--The corporation may have other offices, either
within or without the State of Delaware, at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require.

                                   ARTICLE II

                            MEETINGS OF STOCKHOLDERS

     SECTION 1. ANNUAL MEETINGS.--Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the State
of Delaware, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting. In the event the
Board of Directors fails to so determine the time, date and place of meeting,
the annual meeting of stockholders shall be held at the registered office of the
corporation in Delaware on the second Wednesday of September.

     If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
they may transact such other corporate business as shall be stated in the notice
of the meeting.

     SECTION 2. OTHER MEETINGS.--Meetings of stockholders for any purpose other
than the election of directors may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice of the meeting.



<PAGE>   2
     SECTION 3. VOTING.--Each Stockholder entitled to vote in accordance with
the terms of the Certificate of Incorporation and, in accordance with the
provisions of these By-Laws shall be entitled to one vote, in person or by
proxy, for each share of stock entitled to vote held by such stockholder, but no
proxy shall be voted after three years from its date unless such proxy provides
for a longer period. Upon the demand of any stockholder, the vote for directors
and the vote upon any question before the meeting, shall be by ballot. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of the State of Delaware.

     A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the address of each, and the
number of shares held by each, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.

     SECTION 4. QUORUM.--Except as otherwise required by Law, by the Certificate
of Incorporation or by these By-Laws, the presence, in person or by proxy, of
stockholders holding a majority of the stock of the corporation entitled to vote
shall constitute a quorum at all meetings of the stockholders. In case a quorum
shall not be present at any meeting, a majority in interest of the stockholders
entitled to vote thereat, present in person or by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until the requisite amount of stock entitled to vote shall be
present. At any such adjourned meeting at which the requisite amount of stock
entitled to vote shall be represented, any business may be transacted which
might have been transacted at the meeting as originally noticed; but only those
stockholders entitled to vote at the meeting as originally noticed shall be
entitled to vote at any adjournment or adjournments thereof.

     SECTION 5. SPECIAL MEETINGS.--Special meetings of the stockholders for any
purpose or purposes may be called by the President or Secretary, or by
resolution of the directors.

     SECTION 6. NOTICE OF MEETINGS.--Written notice, stating the place, date and
time of the meeting, and the general nature of the business to be considered,
shall be given to each stockholder entitled to vote thereat at his address as it
appears on the records of the corporation, not less than ten nor more than sixty
days before the date of the meeting. No business other than that stated in the
notice shall be transacted at any meeting without the unanimous consent of all
the stockholders entitled to vote thereat.



<PAGE>   3
     SECTION 7. ACTION WITHOUT MEETING.--Unless otherwise provided by the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.

                                   ARTICLE III

                                    DIRECTORS

     SECTION 1. NUMBER AND TERM.--The number of directors shall be four (4). The
directors shall be elected at the annual meeting of the stockholders and each
director shall be elected to serve until his successor shall be elected and
shall qualify. Directors need not be stockholders.

     SECTION 2. RESIGNATIONS.--Any director, member of a committee or other
officer may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.

     SECTION 3. VACANCIES.--If the office of any director, member of a committee
or other officer becomes vacant, the remaining directors in office, though less
than a quorum by a majority vote, may appoint any qualified person to fill such
vacancy, who shall hold office for the unexpired term and until his successor
shall be duly chosen.

     SECTION 4. REMOVAL.--Any director or directors may be removed either for or
without cause at any time by the affirmative vote of the holders of a majority
of all the shares of stock outstanding and entitled to vote, at a special
meeting of the stockholders called for the purpose and the vacancies thus
created may be filled at the meeting held for the purpose of removal, by the
affirmative vote of a majority in interest of the stockholders entitled to vote.

     SECTION 5. INCREASE OF NUMBER.--The number of directors may be increased by
amendment of these By-Laws by the affirmative vote of a majority of the
directors, though less than a quorum, or, by the affirmative vote of a
majority in interest of the stockholders, at the annual meeting or at a special
meeting called for that purpose, and by like vote the additional directors may
be chosen at such meeting to hold office until the next annual election and
until their successors are elected and qualify.



<PAGE>   4
     SECTION 6. POWERS.--The Board of Directors shall exercise all of the powers
of the corporation except such as are by law, or by the Certificate of
Incorporation of the corporation or by these By-Laws conferred upon or reserved
to the stockholders.

     SECTION 7. COMMITTEES.--The Board of Directors may, by resolution or
resolutions passed by a majority of the whole board, designate one or more
committees, each committee to consist of two or more of the directors of the
corporation. The board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of any member of
such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.

     Any such committee, to the extent provided in the resolution of the Board
of Directors, or in these By-Laws, shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
By-Laws of the corporation; and, unless the resolution, these By-Laws, or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.

     SECTION 8. MEETINGS.--The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders; or
the time and place of such meeting may be fixed by consent in writing of all the
directors.

     Regular meetings of the directors may be held without notice at such places
and times as shall be determined from time to time by resolution of the
directors.

     Special meetings of the board may be called by the President or by the
Secretary on the written request of any two directors



<PAGE>   5
on at least two days' notice to each director and shall be held at such place or
places as may be determined by the directors, or as shall be stated in the call
of the meeting.

     SECTION 9. QUORUM.--A majority of the directors shall constitute a quorum
for the transaction of business. If at any meeting of the board there shall be
less than a quorum present, a majority of those present may adjourn the meeting
from time to time until a quorum is obtained, and no further notice thereof need
be given other than by announcement at the meeting which shall be so adjourned.

     SECTION 10. COMPENSATION --Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the board a fixed fee and expenses of attendance may be allowed for
attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.

     SECTION 11. ACTION WITHOUT MEETING.--Any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof, may
be taken without a meeting, if prior to such action a written consent thereto
is signed by all members of the board, or of such committee as the case may be,
and such written consent is filed with the minutes of proceedings of the board
or committee.

                                   ARTICLE IV

                                    OFFICERS

     SECTION 1. OFFICERS.--The officers of the corporation shall be a President,
a Treasurer, and a Secretary, all of whom shall be elected by the Board of
Directors and who shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman, one or more
Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as they
may deem proper. None of the officers of the corporation need be directors. The
officers shall be elected at the first meeting of the Board of Directors after
each annual meeting. More than two offices may be held by the same person.

     SECTION 2. OTHER OFFICERS AND AGENT.--The Board of Directors may appoint
such other officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.

     SECTION 3. CHAIRMAN.--The Chairman of the Board of Directors, if one be
elected, shall preside at all meetings of the



<PAGE>   6
Board of Directors and he shall have and perform such other duties as from time
to time may be assigned to him by the Board Of Directors.

     SECTION 4. PRESIDENT.--The President shall be the chief executive officer
of the corporation and shall have the general powers and duties of supervision
and management usually vested in the office of President of a corporation. He
shall preside at all meetings of the stockholders if present thereat, and in the
absence or non-election of the Chairman of the Board of Directors, at all
meetings of the Board of Directors, and shall have general supervision,
direction and control of the business of the corporation. Except as the Board of
Directors shall authorize the execution thereof in some other manner, he shall
execute bonds, mortgages and other contracts in behalf of the corporation, and
shall cause the seal to be affixed to any instrument requiring it and when so
affixed the seal shall be attested by the signature of the Secretary or the
Treasurer or an Assistant Secretary or an Assistant Treasurer.

     SECTION 5. VICE-PRESIDENT.--Each Vice-President shall have such powers and
shall perform such duties as shall be assigned to him by the directors.

     SECTION 6. TREASURER.--The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositaries as may be designated by the Board of Directors.

     The Treasurer shall disburse the funds of the corporation on as may be
ordered by the Board of Directors, or the President, taking proper vouchers for
such disbursements. He shall render to the President and Board of Directors at
the regular meetings of the Board of Directors, or whenever they may request it,
an account of all his transactions as Treasurer and of the financial condition
of the corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the board shall prescribe.

     SECTION 7. SECRETARY.--The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the President, or by the directors, or stockholders, upon whose requisition
the meeting is called as provided in these By-Laws. He shall record all the
proceedings of the meetings of the corporation and of the directors in a book to
be kept for that purpose, and shall perform



<PAGE>   7
such other duties as may be assigned to him by the directors or the President.
He shall have the custody of the seal of the corporation and shall affix the
same to all instruments requiring it, when authorized by the directors or the
President, and attest the same.

     SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES.--Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.

                                   ARTICLE V
                                        
                                 MISCELLANEOUS

     SECTION 1. CERTIFICATES OF STOCK.--Certificate of stock, signed by the
Chairman or Vice Chairman of the Board of Directors, if they be elected,
President or Vice-President, and the Treasurer or an Assistant Treasurer, or
Secretary or an Assistant Secretary, shall be issued to each stockholder
certifying the number of shares owned by him in the corporation. Any of or all
the signatures may be facsimiles.

     SECTION 2. LOST CERTIFICATES.--A new certificate of stock may be issued in
the place of any certificate theretofore issued by the corporation, alleged to
have been lost or destroyed, and the directors may, in their discretion, require
the owner of the lost or destroyed certificate, or his legal representatives, to
give the corporation a bond, in such sum as they may direct, not exceeding
double the value of the stock, to indemnify the corporation against any claim
that may be made against it on account of the alleged loss of any such
certificate, or the issuance of any such new certificate.

     SECTION 3. TRANSFER OF SHARES.--The shares of stock of the corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the corporation by the delivery
thereof to the person in charge of the stock and transfer books and ledgers, or
to such other person as the directors may designate, by whom they shall be
cancelled, and new certificates shall thereupon be issued. A record shall be
made of each transfer and whenever a transfer shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer.

     SECTION 4. STOCKHOLDERS RECORD DATE.--In order that the corporation may
determine the stockholders entitled to notice of or



<PAGE>   8
to vote at any meeting of stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or entitled to receive
payment of any dividend or other distribution or allotment of any rights, or
entitled to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty nor less
than ten days before the date of such meeting, nor more than sixty days prior to
any other action. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.

     SECTION 5. DIVIDENDS.--Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.

     SECTION 6. SEAL.--The corporate seal shall be circular in form and shall
contain the name of the corporation, the year of its creation and the words
"CORPORATE SEAL DELAWARE". Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.

     SECTION 7. FISCAL YEAR.--The fiscal year of the corporation shall be the
calendar year.

     SECTION 8. CHECKS.--All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.

     SECTION 9. NOTICE AND WAIVER OF NOTICE--Whenever any notice is required by
these By-Laws to be given, personal notice is not meant unless expressly so
stated, and any notice so required shall be deemed to be sufficient if given by
depositing the same in the United States mail, postage prepaid, addressed to the
person entitled thereto at his address as it appears on the records of the
corporation, and such notice shall be deemed to have been given on the day of
such mailing. Stockholders not entitled to vote shall not be entitled to receive
notice of any meetings except as otherwise provided by Statute.



<PAGE>   9
     Whenever any notice whatever is required to be given under the provisions
of any law, or under the provisions of the Certificate of Incorporation of the
corporation or these By-Laws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.

                                   ARTICLE VI

                                   AMENDMENTS

     These By-Laws may be altered or repealed and By-Laws may be made at any
annual meeting of the stockholders or at any special meeting thereof if notice
of the proposed alteration or repeal or By-Law or By-Laws to be made be
contained in the notice of such special meeting, by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat, or by
the affirmative vote of a majority of the Board of Directors, at any regular
meeting of the Board of Directors, or at any special meeting of the Board of
Directors, if notice of the proposed alteration or repeal, or By-Law or By-Laws
to be made, be contained in the notice of such special meeting.

<PAGE>   1
                                                                    EXHIBIT 3.43


                                    CHARTER

                                       OF

                          TENNESSEE WOOLEN MILLS, INC.


     The undersigned natural person or persons, having capacity to contract and
acting as the incorporator or incorporators of a corporation organized under
the Tennessee General Corporation Act, adopt the following charter for such
corporation:

     1.   The name of the corporation is Tennessee Woolen Mills, Inc.

     2.   The duration of the corporation shall be perpetual.

     3.   The address of the principal office of the corporation in the State
of Tennessee shall be North Maple Street, Wilson County, Lebanon, Tennessee
37087.

     4.   The corporation is for profit.

     5.   The purpose or purposes for which the corporation is organized are to
engage in all facets of the textile business including but not limited to the
purchase, manufacture, distribution and sale of various textile products and to
engage in any lawful act or activity for which corporations for profit may be
organized under the laws of the State of Tennessee; and the corporation shall
have all powers necessary to conduct such business and engage in such
activities, including, but not limited to, the powers enumerated in the
Tennessee General Corporation Act or any amendment thereto.

     6.   The maximum number of shares that the corporation shall have the
authority to issue is 1,000 common shares without par value and 900 shares of 8%
cumulative redeemable preferred shares with $1,000.00 par value per share.

     7.   The corporation shall not commence business until consideration of
not less than $1,000.00 has been received for the issuance of its shares.

     8.   Shareholders of the corporation shall have the pre-emptive rights set
forth in the Tennessee General Corporation Act.

     9.   Subject to the provisions of Section 48-512 of the Tennessee General
corporation Act, the Board of Directors of the corporation, shall have the
power to distribute a portion of the assets of the corporation, in cash or in
property, to holders of shares of the corporation out of the capital surplus of
the corporation, and such power may be exercised without the vote of the
shareholders.

     10.  Whenever the Directors of the corporation are required or permitted
to take any action by vote, such action may be taken without a meeting on
written consent, setting forth action so taken, signed by all of the Directors
entitled to vote thereon.
    

 
<PAGE>   2





     11.  The Board of Directors of the corporation may adopt, amend or repeal
the By-laws or any By-law of the corporation by the vote of a majority of the
members of the entire Board.


     Dated this 18th day of May, 1984.


                                                   /s/ RUSSELL H. HIPPE, JR.
                                                   --------------------------
                                                   Russell H. Hippe, Jr.
                                                   Incorporator
     

<PAGE>   3

                       DESIGNATION, REVOCATION OR CHANGE

                                       OF

                                REGISTERED AGENT

                                       OF

                          TENNESSEE WOOLEN MILLS, INC.


To the Secretary of State of the State of Tennessee:

     Pursuant to the provisions of Section 48-1201 of the Tennessee General
Corporation Act, the undersigned foreign or domestic corporation or the
incorporators of a domestic corporation being organized under the Act submit
the following statement for the purpose of designating, revoking, or changing,
as the case may be, the registered agent for the corporation in the State of
Tennessee:

     1.   The name of the corporation is Tennessee Woolen Mills, Inc.
     
     2.   The address of the corporation is P.O. Box 728, Lebanon, Tennessee
          37087.

     3.   The name and street address of its registered agent in the State of
Tennessee shall be Russell H. Hippe, Jr., TRABUE, STURDIVANT & DEWITT, 25th
Floor, Life & Casualty Tower, Nashville, TN  37219.

Dated this 18th day of May, 1984.

                                             TENNESSEE WOOLEN MILLS, INC.

                                             By:  /s/ RUSSELL H. HIPPE, JR.
                                                 --------------------------
                                                  Russell H. Hippe, Jr.
                                                  Incorporator 
<PAGE>   4

                                    RESTATED
                                    CHARTER
                                       OF
                          TENNESSEE WOOLEN MILLS, INC.


     Pursuant to the provisions of Section 48-20-107 of the Tennessee Business
Corporation Act, the undersigned corporation adopts the following restated
charter:

     1.  The name of the corporation is Tennessee Woolen Mills, Inc.

     2.  The corporation is for profit.

     3.  The street address of the corporation's principal office is:

               North Maple Street
               Lebanon, Tennessee  37087
               County of Wilson.

     4.  (a)  The name of the corporation's registered agent is Jim Brubaker.

         (b)  The address of the corporation's registered office in Tennessee
              is:

               North Maple Street
               Lebanon, Tennessee  37087
               County of Wilson.

     5.   The number of shares of stock the corporation is authorized to issue
is one million (1,000,000) shares of common stock, with no par value and 900
shares of 8% cumulative redeemable preferred shares, $1,000 per share par value.

     6.   The shareholders of the corporation shall not have preemptive rights.

     7.   To the fullest extent permitted by the Tennessee Business Corporation
Act as in effect on the date hereof and as hereafter amended from time to time,
a director of the corporation shall not be liable to the corporation or its
shareholders for monetary damages for breach of fiduciary duty as a director.
If the Tennessee Business Corporation Act or any successor statute is amended
after adoption of this provision to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the corporation shall be eliminated or limited to the fullest
extent permitted by the Tennessee Business Corporation Act, as so amended from
time to time.  Any repeal or modification of this Paragraph 7 by the
shareholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification or with respect to events occurring prior to such time.

Dated:  February 23, 1988
                       
                                        TENNESSEE WOOLEN MILLS, INC.

                                        By: /s/ [ILLEGIBLE]
                                           -------------------------
                                           Title: [ILLEGIBLE]
                                                 -------------------
<PAGE>   5


                  CERTIFICATE OF TENNESSEE WOOLEN MILLS, INC.


     Pursuant to the provisions of Section 48-20-107(d) of the Tennessee
Business Corporation Act, the undersigned corporation hereby certifies that:

     1.   The attached Restated Charter of Tennessee Woolen Mills, Inc. (the
"Company") contains amendments to the Charter of the Company requiring
shareholder approval.

     2.   The Restated Charter was duly adopted by the shareholders pursuant to
Action Taken on Written Consent on February 23, 1988.
                                            
     IN WITNESS WHEREOF, this certificate has been duly executed and delivered
by a duly authorized officer of the Company on this 23rd day of February, 1988.



                                   TENNESSEE WOOLEN MILLS, INC.

                                   By: /s/ 
                                      -----------------------------
                                        Title: 
                                              ---------------------
<PAGE>   6
                 ARTICLES OF AMENDMENT TO THE RESTATED CHARTER
                                        
                                       OF
                                        
                          TENNESSEE WOOLEN MILLS, INC.

     Pursuant to the provisions of Section 48-20-106 of the Tennessee Business
Corporation Act, the undersigned corporation adopts the following articles of
amendment to its restated charter:

1.   The name of the corporation is Tennessee Woolen Mills, Inc.

2.   The text of the amendment adopted is:

          "Paragraph 5 of the corporation's restated charter is
     deleted in its entirety and replaced with the following:

          5.   The number of shares of stock the
          Corporation is authorized to issue is:

          (A)  One million (1,000,000) shares of Common
          Stock, no par value; and

          (B)  One hundred (100) shares of Series A Stock,
          no par value.  The Series A Stock shall have all
          the rights and privileges of the Corporation's
          Common Stock, except that the Series A Stock shall
          not be entitled to vote on matters submitted to
          the Corporation's shareholders."

3.   The corporation is a for-profit corporation.

4.   The amendment was duly adopted on January __, 1989 by the shareholders.


January      , 1989                             TENNESSEE WOOLEN MILLS, INC.
- ---------------------------                     ----------------------------
Signature Date                                  Name of Corporation



- ---------------------------                     ----------------------------
Signer's Capacity                               Signature


                                                ----------------------------
                                                Name (typed or printed)

<PAGE>   1
                                                                    EXHIBIT 3.44

                                     BY LAWS

                                       OF

                           TENNESSEE WOOLEN MILLS, INC.

                                    ARTICLE I

                                     OFFICES


The executive offices of the corporation shall be in Wilson County, Tennessee,
but the corporation may have other offices at such places as the Board of
Directors may from time to time decide or as the business of the corporation may
require.

                                   ARTICLE II

                            MEETINGS OF SHAREHOLDERS

          Section 1.  Annual Meeting. The annual meeting of the shareholders
shall be held at the call of the Chairman of the Board during the month of April
of each year on a date and at such time and place, either within or without the
State of Tennessee, as may be selected by the Chairman of the Board or the Board
of Directors and designated in the call of the meeting.

          Section 2.  Special Meeting. Special meetings of the shareholders may
be called at any time by the Chairman of the Board, the Board of Directors or
the holder or holders of not less than one tenth (1/10) of all the shares
entitled to vote at such meeting, to be held at such time and place, either
within or without the State of Tennessee, as may be designated in the call of
the meeting.

          Section 3.  Notice of Meeting. Written notice stating the place, day
and hour of annual and special meetings of shareholders shall be given to each
shareholder, either personally or by mail to his last address of record with the
Corporation, not less than ten (10) nor more than sixty (60) days before the
date of meeting. Notice of any special meeting of shareholders shall state the
purpose or purposes for which the meeting is called and the person or persons
calling the meeting. Notice of any annual or special meeting of shareholders may
be waived by the person or persons entitled thereto by signing a written waiver
of notice at any time before or after the meeting is completed, which waiver may
be signed by a shareholder or by his attorney-in-fact or proxy holder.

          Section 4.  Voting. At all meetings of shareholders, all shareholders
of record shall be entitled to one vote for each share of stock standing in
their name and may vote either in person or by proxy. Proxies shall be filed
with the Secretary of the meeting before being voted or counted for the purpose
of determining the presence of a quorum.





<PAGE>   2

          Section 5.  Quorum. At all meetings of shareholders, a majority of the
outstanding shares of stock entitled to vote, represented in person or by proxy,
shall constitute a quorum for the transaction of business; and the vote or
authorization of a majority of the shares represented at any meeting at which a
quorum is present or represented shall determine the action taken on any matter
that may come before the meeting unless otherwise specifically required by law
or by express provision of the charter or by-laws of the corporation.

          Section 6.  Action by Consent. Whenever the shareholders of the
corporation are required or permitted to take any action by vote, such action
may be taken without a meeting on written consent, setting forth the action so
taken, signed by all of the persons or entities entitled to vote thereon.

                                   ARTICLE III

                                    DIRECTORS

                      
          Section 1.  Number and Qualifications. The business and affairs of the
corporation shall be managed and controlled by a Board of Directors, who shall
be three in number; provided that if all the shares of the corporation are owned
of record by less than three shareholders, the number of Directors may be less
than three but not less than the number of shareholders of record. Directors
need not be shareholders of the corporation.

          Section 2.  Election and Term of Office. The Directors shall be
elected at the first meeting of shareholders and thereafter at the annual
meetings of shareholders; but if any such annual meeting is not held or if the
Directors are not elected at any such annual meeting, the Directors may be
elected at any special meeting of the shareholders. Directors shall be elected
by a plurality of the votes cast. The Directors shall hold office until the next
annual meeting of shareholders and thereafter until their respective successors
have been elected and qualified.

          Section 3.  Meetings. Regular meetings of the Directors shall be held
annually following the annual meeting of the shareholders. Special meetings of
the Directors may be called at any time by the Chairman of the Board or by any
two Directors on at least two days notice sent by any usual means of
communication. Notice of any such meeting may be waived by the person or 
persons entitled thereto by signing a written waiver of notice at any time
before or after the meeting is completed. Attendance of a Director at a meeting
shall constitute a waiver of notice thereof unless such attendance is for the
express purpose of objecting to such meeting. Any meeting of the board of
Directors may be held within or without the State of Tennessee at such place as
may be determined by the person or persons calling the meeting.


          Section 4.  Quorum. A majority of the total number of Directors then
in office shall constitute a quorum for the transaction of business; and the
vote or action of a majority of the Directors present at any meeting at which a
quorum is had shall decide any matter that may come before the meeting and shall
be the act of the Board unless otherwise specifically required by law or by
express provision of the charter or by-laws of the corporation.



                                       -2-

<PAGE>   3
          Section 5. Action by Consent. Any action required or permitted to be
taken by the Directors of the corporation may be taken without a meeting on
written consent, setting forth the action so taken, signed by all the Directors
entitled to vote thereon.

          Section 6. Vacancies. Vacancies in the Board of Directors occurring
for any reason, including an increase in the number of Directors, resignation,
or the removal of any Director with or without cause, may be filled by vote of a
majority of the Directors then in office although less than a quorum exists; but
if the offices of a majority of the entire Board of Directors shall be vacant at
the same time, such vacancies shall be filled only by vote of the shareholders.
A director elected to fill any vacancy shall hold office until the next annual
meeting of shareholders and thereafter until his successor has been elected and
qualified.

          Section 7. Removal and Resignation. Any or all of the Directors may be
removed with or without cause, at any time, by vote of the shareholders. Any
director may resign at any time, such resignation to be made in writing and to
take effect immediately or on such later date as may be specified therein
without acceptance.

          Section 8. Committees. From time to time, a majority of the entire
Board of Directors may by resolution appoint an executive committee or any other
committee or committees for any purpose or purposes to the extent permitted by
law, which committee or committees shall have such powers as shall be specified
in the resolution of appointment.

          Section 9. Participation in Meetings. The members of the Board of
Directors, or any committee appointed by the Board, may participate in a meeting
of the Board or of such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to such
means shall constitute presence in person at such meeting. The Directors shall
be promptly furnished a copy of the minutes of the Board of Directors' meetings.

                                   ARTICLE IV

                                    OFFICERS



          Section 1. Designation. The officers of the corporation shall be a
Chairman of the Board, a President, one or more Vice Presidents, a Secretary and
a Treasurer. Any two or more of such offices may be held by the same person
except the offices of President and Secretary.

          Section 2. Chairman of the Board of Directors. The Chairman of the
Board shall be the chief executive officer of the corporation and shall exercise
all the powers and duties customarily exercised by the chief executive officer
of business corporations. He shall preside at all meetings of the shareholders
and the Board of Directors, and he shall call regular and special meetings of
the shareholders and Board of Directors in accordance with these by-laws. He
shall perform such other duties as may be prescribed by the Board.

                                     -3-
<PAGE>   4

          Section 3.  President. The President shall have general supervision of
the affairs and property of the corporation, subject to the direction of the
Board of Directors and the Chairman of the Board. He shall manage and control
the regular business of the corporation; and he may appoint agents and employees
of the corporation, other than the officers elected or appointed by the Board,
subject to the approval of the Board. In the absence of the Chairman of the
Board, the President shall preside at any meeting of the shareholders or the
Board of Directors. He shall perform such other duties as may from time to time
be prescribed by the Board.

          Section 4.  Vice President. The Vice President or Vice Presidents
shall assist the President in the management of the corporation and shall have
such other powers and perform such other duties as may from time to time be
prescribed by the Board. In the absence, disqualification or incapacity of the
President, the senior Vice President shall perform the duties and exercise the
powers of the President.

          Section 5.  Secretary. The Secretary shall keep the minutes of all
meetings of the shareholders and the Board of Directors in appropriate books,
and he shall attend to the giving of all notices for the corporation. He shall
have charge of the seal and stock books of the corporation and such other books
and papers as the Board may direct, and he shall in general perform all duties
incident to the office of Secretary of the corporation. He shall perform such
other duties as may from time to time be prescribed by the Board.

          Section 6.  Treasurer. The Treasurer shall have the care and custody
of all funds and securities of the corporation, and he shall in general perform
all duties incident to the office of Treasurer of the corporation. He shall
perform such other duties as may from time to time be prescribed by the Board.

          Section 7.  Other Officers. The Board of Directors may appoint, or may
authorize the President to appoint, assistant secretaries and assistant
treasurers and such other officers as the Board may from time to time decide,
who shall have such authority and perform such duties as may from time to time
be prescribed by the Board or designated by the President.

          Section 8.  Election and Term of Office. The officers shall be elected
or appointed at the regular meeting of the Board of Directors following the
annual meeting of shareholders, provided that any vacancy or newly created
office may be filled at a special meeting of the Board. The officers shall hold
office at the pleasure of the Board, and any officer may be removed at any time
by a majority of the entire Board. Unless otherwise determined by the Board,
each officer shall hold office until the next regular meeting of the Board
following the annual meeting of shareholders and thereafter until his successor
has been elected or appointed and qualified.

                                    ARTICLE V

                                     SHARES

          Section 1.  Certificates. The shares of the corporation shall be
represented by certificates in such form as the Board of Directors may from time
to

                                       -4-

<PAGE>   5

time prescribe. Such certificates shall be numbered consecutively in the order
in which they are issued, which numbering system may be separated by class or
series if there shall be more than one class or series of shares. The
certificates shall be signed by the Chairman of the Board and Secretary unless
the Board of Directors shall otherwise designate any two officers of the
corporation for such purpose.

          Section 2. Record. The name and address of all persons to whom the
shares of the corporation are issued, the number of shares, and the date of
issue shall be entered on the books of the corporation. It shall be the duty of
each shareholder to notify the corporation of his address.

          Section 3. Transfers. The shares of the corporation are transferrable
only on the books of the corporation by the registered holder thereof, either in
person or by power of attorney, and upon delivery and surrender of the
certificate representing such shares properly endorsed for transfer.
Certificates exchanged or surrendered shall be cancelled by the Secretary and
placed in the corporate records.

          Section 4. Loss of Certificates. In case of the loss, mutilation or
destruction of a certificate representing shares of the corporation, a duplicate
certificate may be issued on such terms as the Board of Directors shall
prescribe.

                                   ARTICLE VI

                                      SEAL


          Section 1. Authority to Adopt. The corporation may have a seal in such
form as the Board of Directors may adopt, and the Board of Directors may from
time to time change the form of the seal of the corporation.

          Section 2. Scroll Seal. In the event the Board shall not have adopted
a seal or if it is inconvenient to use the adopted seal at any time, an
authorized signature made in the name of and on behalf of the corporation
followed by the word "Seal" enclosed in parentheses or scroll shall be deemed
the seal of the corporation.

                                   ARTICLE VII

                                   FISCAL YEAR

          The fiscal year of the corporation shall end on December of each year,
but the Board of Directors may from time to time change the fiscal year of the
corporation.

                                  ARTICLE VIII

                                    INDEMNITY

          Any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action suit or proceeding, whether
civil,


                                       -5-



<PAGE>   6

criminal, administrative or investigative (including any action by or in the
right of the corporation) by reason of the fact that he is or was serving as an
officer or director of the corporation or is or was serving at the request of
the corporation as a Director or officer of another corporation, partnership,
joint venture, trust or other enterprise, shall be indemnified by the
corporation against expenses (including reasonable attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith for a purpose which he reasonably believed to be in the best
interest of the corporation, and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his conduct was unlawful, to
the maximum extent permitted by, and in the manner provided by, the Tennessee
General Corporation Act.

                                   ARTICLE IX

                                   AMENDMENTS


          The shareholders of the corporation may adopt new by-laws and may
amend or repeal any or all of these by-laws at any annual or special meeting;
and also the Board of Directors may adopt new by-laws and may amend or repeal
any or all of these by-laws by the vote of a majority of the entire Board,
provided that the Board shall make no amendment changing the number of
Directors, and provided further that any by-law adopted by the Board may be
amended or repealed by the shareholders.


                                  CERTIFICATION
             

          I certify that the foregoing by-laws were adopted by the Incorporator
of this corporation on the 18th day of May, 1984.


                                  /s/ JAMES R. BRUBAKER
                                  ----------------------------------------------
                                      James R. Brubaker
                                      Chairman of the Board



                                       -6-


<PAGE>   1


                                                                     EXHIBIT 4.1

================================================================================

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

                            PILLOWTEX CORPORATION

                            SERIES A AND SERIES B
                    9% SENIOR SUBORDINATED NOTES DUE 2007
                                  INDENTURE

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

                        Dated as of December 18, 1997



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

                Norwest Bank Minnesota, National Association

                                   Trustee

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


================================================================================



                                       1
<PAGE>   2
                             PILLOWTEX CORPORATION
                                        
                   Reconciliation and Cross-reference between
                        Trust Indenture Act of 1939 and
                    Indenture dated as of December 18, 1997

<TABLE>
<CAPTION>

Trust Indenture
Act Section                              Indenture Section
- -----------------                        -----------------
<S>                                      <C>
Section 310 (a)(1)....................................7.10
            (a)(2)....................................7.10
            (a)(3)..........................Not applicable
            (a)(4)..........................Not applicable
            (a)(5)....................................7.10
            (b).................................7.03, 7.10
Section 311 (a).......................................7.11
            (b).......................................7.11
            (c).............................Not applicable
Section 312 (a).......................................2.05
            (b)......................................12.03
            (c)......................................12.05
Section 313 (a).......................................7.06
            (b).......................................7.06
            (c).......................................7.06
            (d).......................................7.06
Section 314 (a).................................4.03, 4.04
            (b).............................Not applicable
            (c)................................4.04, 12.04
            (d).............................Not applicable
            (e)...............................12.04, 12.05
Section 315 (a).......................................7.01
            (b).......................................7.05
            (c).......................................7.01
            (d).......................................7.01
            (e).......................................6.11
Section 316 (a).................................6.04, 6.05
            (b).................................6.06, 6.07
            (c).......................................6.10
Section 317 (a).................................6.07, 6.08
            (b).......................................2.04
Section 318 (a)......................................12.01
</TABLE> 
<PAGE>   3
                               TABLE OF CONTENTS

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

   Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

   Section 1.02. Other Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17

   Section 1.03.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18

   Section 1.04. Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18

ARTICLE 2. THE NOTES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19

   Section 2.01. Form and Dating  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19

   Section 2.02. Execution and Authentication.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20

   Section 2.03. Registrar and Paying Agent.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20

   Section 2.04. Paying Agent to Hold Money in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21

   Section 2.05. Holder Lists.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21

   Section 2.06 . Transfer and Exchange.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21

   Section 2.07. Replacement Notes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32

   Section 2.08. Outstanding Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32

   Section 2.09. Treasury Notes.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33

   Section 2.10. Temporary Notes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33

   Section 2.11. Cancellation.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33

   Section 2.12. Defaulted Interest.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33

ARTICLE 3. REDEMPTION AND PREPAYMENT  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34

   Section 3.01. Notices to Trustee.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34

   Section 3.02. Selection of Notes to Be Redeemed  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34

   Section 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34

   Section 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35

   Section 3.05. Deposit of Redemption Price  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
</TABLE>

                                      i
<PAGE>   4
<TABLE>
<S>                                                                                                                    <C>
   Section 3.06. Notes Redeemed in Part.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36

   Section 3.07. Optional Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36

   Section 3.08. Mandatory Redemption.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36

   Section 3.09. Offer to Purchase by Application of Excess Proceeds. . . . . . . . . . . . . . . . . . . . . . . . .  36

   Section 3.10. Special Redemption.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38

ARTICLE 4. COVENANTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38

   Section 4.01. Payment of Notes.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38

   Section 4.02. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38

   Section 4.03. Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39

   Section 4.04. Compliance Certificate.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39

   Section 4.05. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40

   Section 4.06. Stay, Extension and Usury Laws.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40

   Section 4.07. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40

   Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted  Subsidiaries.  . . . . . . . . . . . .  42

   Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.  . . . . . . . . . . . . . . . . . . . .  43

   Section 4.10. Asset Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45

   Section 4.11. Transactions with Affiliates.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46

   Section 4.12. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47

   Section 4.13. Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47

   Section 4.14. Offer to Repurchase Upon Change of Control.  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47

   Section 4.15. No Senior Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  48

   Section 4.16. Limitation on Issuances of Guarantees of Indebtedness. . . . . . . . . . . . . . . . . . . . . . . .  48

   Section 4.17. Payments for Consent.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  49

   Section 4.18. Additional Note Guarantees.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  49

   Section 4.19. Deposit of Proceeds with Trustee Pending Consummation of the Merger. . . . . . . . . . . . . . . . .  49
</TABLE>

                                      ii
<PAGE>   5
<TABLE>
<S>                                                                                                                    <C>
ARTICLE 5. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51

   Section 5.01. Merger, Consolidation, or Sale of Assets.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51

   Section 5.02. Successor Corporation Substituted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51

ARTICLE 6. DEFAULTS AND REMEDIES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  51

   Section 6.01. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  53

   Section 6.02. Acceleration.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54

   Section 6.03. Other Remedies.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54

   Section 6.04. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  54

   Section 6.05. Control by Majority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55

   Section 6.06. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55

   Section 6.07. Rights of Holders of Notes to Receive Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . .  55

   Section 6.08. Collection Suit by Trustee.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55

   Section 6.09. Trustee May File Proofs of Claim.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  55

   Section 6.10. Priorities.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  56

   Section 6.11. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  56

ARTICLE 7. TRUSTEE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  56

   Section 7.01. Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  56

   Section 7.02. Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  57

   Section 7.03. Individual Rights of Trustee.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  58

   Section 7.04. Trustee's Disclaimer.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  58

   Section 7.05. Notice of Defaults.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  58

   Section 7.06. Reports by Trustee to Holders of the Notes.  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  59

   Section 7.07. Compensation and Indemnity.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  59

   Section 7.08. Replacement of Trustee.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  60

   Section 7.09. Successor Trustee by Merger, etc.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  61

   Section 7.10. Eligibility; Disqualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  61

   Section 7.11. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . . . . . .  61
</TABLE>

                                     iii
<PAGE>   6
<TABLE>
<S>                                                                                                                    <C>
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  61

   Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.  . . . . . . . . . . . . . . . . . . . . .  61

   Section 8.02. Legal Defeasance and Discharge.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  61

   Section 8.03. Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  62

   Section 8.04. Conditions to Legal or Covenant Defeasance.  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  62

   Section 8.05. Deposited Money and Government Securities to be Held in Trust;  Other Miscellaneous Provisions.  . .  63

   Section 8.06. Repayment to Company.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  64

   Section 8.07. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  64

ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  64

   Section 9.01. Without Consent of Holders of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  64

   Section 9.02. With Consent of Holders of Notes.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  65

   Section 9.03. Compliance with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  67

   Section 9.04. Revocation and Effect of Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  67

   Section 9.05. Notation on or Exchange of Notes.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  67

   Section 9.06. Trustee to Sign Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  67

ARTICLE 10. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  67

   Section 10.01. Agreement to Subordinate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  67

   Section 10.02. Liquidation; Dissolution; Bankruptcy  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  68

   Section 10.03. Default on Designated Senior Debt.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  68

   Section 10.04. Acceleration of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  69

   Section 10.05. When Distribution Must Be Paid Over.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  69

   Section 10.06. Notice by Company.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  69

   Section 10.07. Subrogation.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  69

   Section 10.08. Relative Rights.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  69

   Section 10.09. Subordination May Not Be Impaired by Company. . . . . . . . . . . . . . . . . . . . . . . . . . . .  70

   Section 10.10. Distribution or Notice to Representative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  70
</TABLE>

                                      iv
<PAGE>   7
<TABLE>
<S>                                                                                                                    <C>
   Section 10.11. Rights of Trustee and Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  70

   Section 10.12. Authorization to Effect Subordination.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  71

   Section 10.13. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  71

ARTICLE 11. NOTE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  71

   Section 11.01. Guarantee.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  71

   Section 11.02. Subordination of Note Guarantee.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  72

   Section 11.03. Limitation on Guarantor Liability.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  72

   Section 11.04. Execution and Delivery of Note Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  72

   Section 11.05. Guarantors May Consolidate, etc., on Certain Terms. . . . . . . . . . . . . . . . . . . . . . . . .  73

   Section 11.06. Releases  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  74

ARTICLE 12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  74

   Section 12.01. Trust Indenture Act Controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  74

   Section 12.02. Notices.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  74

   Section 12.03. Communication by Holders of Notes with Other Holders of  Notes. . . . . . . . . . . . . . . . . . .  75

   Section 12.04. Certificate and Opinion as to Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . . .  75

   Section 12.05. Statements Required in Certificate or Opinion.  . . . . . . . . . . . . . . . . . . . . . . . . . .  76

   Section 12.06. Rules by Trustee and Agents.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  76

   Section 12.07. No Personal Liability of Directors, Officers, Employees and  Stockholders.  . . . . . . . . . . . .  76

   Section 12.08. Governing Law.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  76

   Section 12.09. No Adverse Interpretation of Other Agreements.  . . . . . . . . . . . . . . . . . . . . . . . . . .  76

   Section 12.10. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  77

   Section 12.11. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  77

   Section 12.12. Counterpart Originals.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  77

   Section 12.13. Table of Contents, Headings, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  77
</TABLE>

                                      v
<PAGE>   8

EXHIBITS

EXHIBIT A    FORM OF NOTE
EXHIBIT B    FORM OF CERTIFICATE OF TRANSFER
EXHIBIT C    FORM OF CERTIFICATE OF EXCHANGE
EXHIBIT D    FORM OF CERTIFICATE OF ACQUIRING IAI
EXHIBIT E    FORM OF NOTE GUARANTEE
EXHIBIT F    FORM OF SUPPLEMENTAL INDENTURE

                                      vi
<PAGE>   9
                 INDENTURE dated as of December 18, 1997 between Pillowtex
Corporation, a Texas corporation (the "Company"), each of the existing domestic
subsidiaries of the Company listed on the signature page of this Indenture
(together, the "Initial Guarantors") and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee").

                 The Company, the Initial Guarantors and the Trustee agree as
follows for the benefit of each other and for the equal and ratable benefit of
the Holders of the 9% Series A Senior Subordinated Notes due 2007 (the "Series
A Notes") and the 9% Series B Senior Subordinated Notes due 2007 (the "Series B
Notes" and, together with the Series A Notes, the "Notes"):

                                   ARTICLE 1.
                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.    DEFINITIONS.

                 "144A Global Note" means a global note in the form of Exhibit
A1 hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.

                 "Acquired Indebtedness" means, with respect to any specified
Person, (i) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Restricted Subsidiary of such
specified Person that was not incurred in connection with, or in contemplation
of, such other Person merging with or into or becoming a Restricted Subsidiary
of such specified Person, and (ii) Indebtedness secured by a Lien encumbering
any asset acquired by such specified Person.

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

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

                 "Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer
or exchange.

                 "Asset Sale" means the sale, lease, conveyance or other
disposition of any assets (including; without limitation, by way of a sale and
leaseback) whether in a single transaction or a series of related transactions
that (a) have a fair market value in excess of $1,000,000 or (b) net proceeds
in excess of $1,000,000; provided that, the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole will be governed by the provisions of
this Indenture described in Section 4.15 herein and/or the provisions described
in Section 5.01 herein and shall not be deemed to be "Asset Sales."
Notwithstanding the foregoing, the following transactions shall not constitute
Asset Sales: (i) the conveyance, sale, transfer,
<PAGE>   10
assignment or other disposition of inventory and other property in the ordinary
course of business; (ii) the sale or disposition of damaged, worn out or other
obsolete personal property in the ordinary course of business so long as such
property is no longer necessary for the proper conduct of the business of the
Company or such Restricted Subsidiary, as applicable; (iii) the surrender or
waiver of contract rights or the settlement, release or surrender of contract,
tort or other claims of any kind; (iv) the granting of Liens not prohibited by
this Indenture; (v) sales of accounts receivable and related assets customarily
transferred in an asset securitization transaction involving accounts
receivable to a Receivables Subsidiary or by a Receivables Subsidiary in
connection with a Qualified Receivables Transaction; (vi) a transfer of assets
by the Company to a Wholly Owned Restricted Subsidiary (other than a
Receivables Subsidiary) or by a Wholly Owned Restricted Subsidiary (other than
a Receivables Subsidiary) to the Company or to another Wholly Owned Restricted
Subsidiary (other than a Receivables Subsidiary); (vii) an issuance of Equity
Interests by a Wholly Owned Restricted Subsidiary (other than a Receivables
Subsidiary) to the Company or to another Wholly Owned Subsidiary (other than a
Receivables Subsidiary); (viii) a Restricted Payment that is permitted by
Section 4.07 herein; and (ix) the execution of contracts to provide
manufacturing consideration and other services, including in connection with
Asset Sales.

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

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

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

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

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

                 "Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than 12 months from the date of acquisition, (iii) United States
dollar or Canadian dollar denominated (or foreign currency fully hedged) time
deposits, certificates of deposit, Eurodollar time deposits or Eurodollar
certificates of deposit of (a) any domestic commercial bank of recognized
standing having capital and surplus in excess of $500 million or (b) any bank
whose short term commercial paper rating from Standard & Poor's is at least A-1
or the equivalent thereof or from Moody's is at least A-l or the equivalent
thereof (any such bank being an "Approved Lender"), in each ease with
maturities of not more than 12 months from the date of acquisition; and (iv)
commercial paper issued by any Approved Lender (or by the parent company
thereof) or any variable rate notes issued by, or guaranteed by, any domestic
corporation rated A-2 (or the equivalent thereof) or better by Standard &
Poor's or P-2 (or the equivalent thereof) or better by Moody's and maturing
within 12 months of the date of acquisition.


                                      2
<PAGE>   11
                 "Cedel" means Cedel Bank, SA.

                 "Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Restricted Subsidiaries, taken as a whole to any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than the Principals or their
Related Parties, (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company, (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of
which is that any "person" (as defined above), other than the Principals and
their Related Parties, becomes the "beneficial owner" (as such term is defined
in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly,
of more than 50% of the Voting Stock of the Company or (iv) the first day on
which a majority of the members of the Board of Directors of the Company are
not Continuing Directors; provided, however, the Merger shall not constitute a
Change of Control.

                 "Collateral" means (i) the Collateral Account and the Mutual
Fund Account, (ii) the Special Redemption Amount and all other cash or Cash
Equivalents deposited in the Collateral Account and the Mutual Fund Account
from time to time pursuant to Section 4.19 hereof, (iii) all rights and
privileges of the Company with respect to the Collateral Account, the Mutual
Fund Account and such Cash and Cash Equivalents, (iv) all dividends, interest
and other payments and distributions made on or with respect to such Cash
Equivalents, the Collateral Account or the Mutual Fund Account and (v) all
proceeds of any of the foregoing.

                 "Company" means Pillowtex Corporation, and any and all
successors thereto.

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

                                      3
<PAGE>   12
was included in calculating the Consolidated Net Income of such Person and only
if a corresponding amount would be permitted at the date of determination to be
dividend to the Company by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction 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.

                 "Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that (i) the Net Income (but not loss) of any
Person that is not a Restricted Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid in cash to the referent Person or a Wholly
Owned Restricted Subsidiary thereof, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Restricted Subsidiary or its shareholders, (iii) the Net Income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded, (iv) the cumulative effect of a
change in accounting principles shall be excluded, and (v) the Net Income of
any Unrestricted Subsidiary shall be excluded.

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

                 "Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of
such Board of Directors on the Issue Date or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.

                 "Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 12.02 hereof or such other address
as to which the Trustee may give notice to the Company.

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


                                      4
<PAGE>   13
                 "Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.

                 "Definitive Note" means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 2.06 hereof,
in the form of Exhibit A1 hereto except that such Note shall not bear the
Global Note Legend and shall not have the "Schedule of Exchanges of Interests
in the Global Note" attached thereto.

                 "Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to
the applicable provision of this Indenture.

                 "Designated Senior Indebtedness" means (i) so long as Senior
Indebtedness is outstanding under the New Senior Credit Facilities, all Senior
Indebtedness outstanding under the New Senior Credit Facilities and (ii)
thereafter, any other Senior Indebtedness permitted under this Indenture the
principal amount of which is $50.0 million or more and that has been designated
by the Company as "Designated Senior Indebtedness."

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

                 "Eligible Inventory" means, as of any date, all inventory of
the Company and any of its Subsidiaries, wherever located, valued in accordance
with GAAP and shown on the balance sheet of the Company for the quarterly
period most recently ended prior to such date for which financial statements of
the Company are available.

                 "Eligible Receivables" means, as of any date, all accounts
receivable of the Company and any of its Restricted Subsidiaries arising out of
the sale of inventory in the ordinary course of business, valued in accordance
with GAAP and shown on the balance sheet of the Company for the quarterly
period most recently ended prior to such date for which financial statements of
the Company are available.

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

                 "Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.

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

                 "Exchange Notes" means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.

                 "Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.


                                      5
<PAGE>   14
                 "Exchange Offer Registration Statement" has the meaning set
forth in the Registration Rights Agreement.

                 "Existing Indebtedness" means (i) Indebtedness of the Company
and its Restricted Subsidiaries in existence on the Issue Date and (ii)
Indebtedness of Fieldcrest and its Subsidiaries outstanding on the effective
date of the Merger; provided that immediately following the consummation of the
Merger all Indebtedness of Fieldcrest outstanding under its existing credit
facilities shall be refinanced with the proceeds of borrowings under the New
Senior Credit Facility and Fieldcrest's obligations under its 11.25% Senior
Subordinated Debentures shall have been satisfied and discharged in accordance
with the terms of the Indenture governing such securities.

                 "Fieldcrest" means Fieldcrest Cannon, Inc., a Delaware
corporation.

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

                 "Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period.  In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guarantee or redemption
of Indebtedness, or such issuance or redemption of preferred stock, as if the
same had occurred at the beginning of the applicable four-quarter reference
period.  In addition, for purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall


                                      6
<PAGE>   15
be excluded, and (iii) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but only to the
extent that the obligations giving rise to such Fixed Charges will not be
obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.

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

                 "Global Notes" means, individually and collectively, each of
the Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.

                 "Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.

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

                 "Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.

                 "Guarantor" means each of (i) PTEX Holding Company, a Delaware
corporation; Pillowtex Management Services Company, a Delaware business trust;
Pillowtex, Inc., a Delaware corporation; Manetta Home Fashions, Inc., a North
Carolina corporation; Beacon Manufacturing Company, a North Carolina
corporation; and Tennessee Woolen Mills, Inc., a Tennessee corporation;  (ii)
upon consummation of the Merger, Fieldcrest Cannon, Inc., a Delaware
corporation; Crestfield Cotton Company, a Tennessee corporation; Encee, Inc., a
Delaware corporation; Fieldcrest Cannon Financing, Inc., a Delaware
corporation; Fieldcrest Cannon Licensing, Inc., a Delaware corporation;
Fieldcrest Cannon Sure Fit, Inc., a Delaware corporation; Fieldcrest Cannon
Transportation, Inc., a Delaware corporation; St. Marys, Inc., a Delaware
corporation: Amoskeag Company, a Delaware corporation; Amoskeag Management
Corporation, a Delaware corporation; Bangor Investment Company, a Delaware
corporation; Moore's Falls Corporation, a Delaware corporation; and Downeast
Securities Corporation, a Delaware corporation; and (iii) any other Subsidiary
that executes and delivers to the Trustee a Supplemental Indenture in
substantially the form of Exhibit F hereto in accordance with the provisions of
this Indenture, and their respective successors and assigns.

                 "Guarantor Senior Indebtedness" means, with respect to any
Guarantor, (i) the guarantee of such Guarantor of the Company's Obligations
under the New Senior Credit Facilities and (ii) any other Indebtedness
permitted to be incurred by such Guarantor under the terms of the Indenture,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of payment to the
Guarantee of such Guarantor.  Notwithstanding anything to the contrary in the
foregoing, Guarantor Senior Indebtedness will not include (u) any Indebtedness
of such Guarantor representing a guarantee of Indebtedness of the Company or
any other Guarantor which Indebtedness is subordinate or junior to, or pari
passu with, the Notes or the Guarantee of such other

                                      7
<PAGE>   16
Guarantor, as the case may be, (v) any Indebtedness that is expressly
subordinate or junior in right of payment to any other Indebtedness of such
Guarantor, (w) any liability for federal, state, local or other taxes owed or
owing by such Guarantor, (x) any Indebtedness of such Guarantor to any of its
Subsidiaries or other Affiliates, (y) any trade payables or (z) that portion of
any Indebtedness that is incurred in violation of the Indenture.

                 "Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates, the value of foreign currencies and the value of commodities
purchased by the Company or any of its Restricted Subsidiaries in the ordinary
course of business.

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

                 "IAI Global Note" means the global Note in the form of Exhibit
A1 hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.

                 "Indebtedness" means, with respect to any Person, (a) any
indebtedness of such Person, whether or not contingent, (i) in respect of
borrowed money; (ii) evidenced by bonds, notes, debentures or similar
instruments; (iii) evidenced by letters of credit (or reimbursement agreements
in respect thereof) or banker's acceptances; (iv) representing Capital Lease
Obligations; (v) representing the balance deferred and unpaid of the purchase
price of any property; or (vi) representing any net obligations under Hedging
Obligations, if and only to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging Obligations) would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP, and
excluding therefrom any portion of any indebtedness constituting an accrued
expense or trade payable; (b) all indebtedness of others secured by a Lien on
any asset of such Person (whether or not such indebtedness is assumed by such
Person) and, (c) to the extent not otherwise included, the guarantee by such
Person of any indebtedness of any other Person.

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

                 "Independent" means, with respect to the Company and its
Subsidiaries, any person who (i) is in fact independent, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Company or any of its Subsidiaries, or in any Affiliate of the Company or any
of its Subsidiaries (other than as a result of holding securities of the
Company) and (iii) is not an officer, employee, promoter, underwriter, trustee,
partner or person performing similar functions for the Company or any of its
Subsidiaries.

                 "Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.

                 "Initial Purchasers" means NationsBanc Montgomery Securities,
Inc. and Bear, Stearns & Co. Inc.

                 "Institutional Accredited Investor" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act, who are not also QIBs.

                                      8
<PAGE>   17
                 "Investment Assets" means assets and property of the Company
and its Restricted Subsidiaries held for investment on the effective date of
the Merger with an aggregate fair market value not exceeding $25.0 million.

                 "Investments'' means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including guarantees of Indebtedness or other
obligations), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP; provided that an acquisition of assets, Equity Interests or other
securities by the Company for consideration consisting of common equity
securities of the Company shall not be deemed to be an Investment.

                 "Issue Date'' means the date of this Indenture.

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

                 "Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.

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

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

                 "Merger" means the merger of a wholly-owned subsidiary of the
Company with and into Fieldcrest.

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


                                      9
<PAGE>   18
                 "Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting, and investment banking fees, and sales commissions), any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness (other than Indebtedness under the New Senior
Credit Facilities) secured by a Lien on the asset or assets that were the
subject of such Asset Sale, and any reserve for adjustment in respect of the
sale price of such asset or assets established in accordance with GAAP.

                 "New Senior Credit Facilities" means the credit agreements to
be entered into on or prior to the Issue Date by and among the Company,
NationsBanc Montgomery Securities, Inc., as arranger and syndication agent,
certain lending parties thereto and NationsBank of Texas, N.A., as agent,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, as such credit agreements and/or
related documents may be amended, restated, supplemented, renewed, replaced or
otherwise modified from time to time whether or not with the same agent,
trustee, representative lenders or holders, and, subject to the proviso to the
next succeeding sentence, irrespective of any changes in the terms and
conditions thereof.  Without limiting the generality of the foregoing, the term
"New Senior Credit Facilities" shall include any amendment, amendment and
restatement, renewal, extension, restructuring, supplement or modification to
any New Senior Credit Facilities and all refundings, refinancings and
replacements of any New Senior Credit Facilities, including any agreement (i)
extending the maturity of any Indebtedness incurred thereunder or contemplated
thereby, (ii) adding or deleting borrowers or guarantors thereunder, so long as
borrowers and issuers include one or more of the Company and its Subsidiaries
and their respective successors and assigns, or (iii) increasing the amount of
Indebtedness incurred thereunder or available to be borrowed thereunder.

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

                 "Non-U.S. Person" means a Person who is not a U.S. Person.

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

                 "Note Guarantee" means the Guarantee by each Guarantor of the
Company's payment obligations under this Indenture and the Notes, executed
pursuant to the provisions of this Indenture.

                 "Notes" has the meaning assigned to it in the preamble to this
Indenture.


                                      10
<PAGE>   19
                 "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

                 "Offering" means the offering of the Notes by the Company.

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

                 "Officers' Certificate" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the
principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of the Company, that meets the requirements of
Section 11.06 hereof.

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

                 "Pari Passu Indebtedness" means Indebtedness ranking part
passu in right of payment with the Notes.

                 "Participant" means, with respect to the Depositary, Euroclear
or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).

                 "Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.

                 "Permitted Investment" means (i) Investments by the Company or
any Guarantor in any person that is or immediately after such Investment
becomes a Guarantor, or immediately after such Investment merges or
consolidates into the Company or any Guarantor in compliance with the terms of
the Indenture, provided that such Person is engaged in all material respects in
Related Business; (ii) Investments in the Company by any Guarantor; provided
that in the case of Indebtedness constituting any such Investment, such
Indebtedness shall be unsecured and subordinated in all respects to the
Company's obligations under the Notes; (iii) Hedging Obligations entered into
in the ordinary course of the Company's or its Subsidiaries' businesses and
otherwise in compliance with the Indenture; (iv) Investments in securities of
trade creditors or customers received in settlement of obligations that arose
in the ordinary course of business or pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such trade creditors
or customers; (v) Investments made by the Company or any of its Subsidiaries as
a result of non-cash consideration received in connection with an Asset Sale
made in compliance with Section 4.10 hereof; (vi) any Investment by the Company
or a Subsidiary of the Company in a Receivables Subsidiary or any Investment by
a Receivables Subsidiary in any other person or assets in connection with a
Qualified Receivables Transaction; provided, that the foregoing Investment in
any such person is in the form of a Purchase Money Note, an equity interest or
interests in accounts receivable generated by the Company or a Subsidiary of
the Company and transferred to any person in connection with a Qualified
Receivables Transaction or any such person owning such accounts receivable;
(vii) Investments by the Company outstanding on the Issue Date; (viii)
acquisitions by the Company of assets, Equity Interests or other securities for
consideration consisting


                                      11
<PAGE>   20
solely of Capital Stock (other than Disqualified Stock) of the Company; and
(ix) Investments in Cash Equivalents or money market funds which invest solely
in Cash Equivalents.

                 "Permitted Junior Securities" means common equity securities
or debt securities of the Company or any Guarantor that are subordinated at
least to the same extent as the Notes Senior Indebtedness and any securities
issued in exchange for Senior Indebtedness.

                 "Permitted Lien" means (i) Liens existing on the Issue Date;
(ii) Liens securing Senior Indebtedness and Liens on assets of Restricted
Subsidiaries securing Guarantor Senior Indebtedness permitted to be incurred
under the Indenture; (iii) Liens securing Permitted Refinancing Indebtedness
which is incurred to refinance any Indebtedness which has been secured by a
Lien permitted under the Indenture and which has been incurred in accordance
with the provisions of the Indenture, provided, however, that such Liens (a)
are not materially less favorable to the Holders and are not materially more
favorable to the lienholders with respect to such Liens than the Liens in
respect of the Indebtedness being refinanced and (b) do not extend to or cover
any property or assets of the Company or any of its Restricted Subsidiaries not
securing the Indebtedness so refinanced; (iv) Liens securing the Notes; (v)
Liens securing Indebtedness of a Person existing at the time such Person
becomes a Subsidiary, provided that such liens were in existence prior to the
contemplation of such acquisition, merger or consolidation, were not incurred
in anticipation thereof, and do not extend to any other assets; (vi) Liens
arising from Indebtedness permitted to be incurred under clause (iii) of
Section 4.09 hereof, provided such Liens relate solely to the property, plant
or equipment which is purchased, constructed or improved pursuant to such
financing; (vii) Liens imposed by governmental authorities for taxes,
assessments or other charges or claims either (a) not delinquent or (b)
contested in good faith by appropriate proceedings and as to which the Company
or any of its Subsidiaries shall have set aside on its books such reserves as
may be required pursuant to GAAP; (viii) statutory Liens of landlords,
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other
like Liens arising by operation of law in the ordinary course of business for
sums not yet delinquent or being contested in good faith, if such reserves or
other appropriate provisions, if any, as shall be required by GAAP shall have
been made in respect thereof; (ix) Liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security or similar
obligations, including any Lien securing letters of credit issued in the
ordinary course of business in connection therewith, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money) incurred in the ordinary course of business; (x) judgment Liens not
giving rise to an Event of Default so long as such Lien is adequately bonded
and any appropriate legal proceedings which may have been duly initiated for
the review of such judgment shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have expired;
(xi) easements, rights-of-way, zoning restrictions, minor defects or
irregularities with title and other similar charges or encumbrances in respect
of real property not materially detracting from the value of the property
subject thereto and not interfering in any material respect with the ordinary
conduct of business of the Company or any of its Subsidiaries; (xii) Liens upon
specific items of inventory or other goods and proceeds of any person securing
such person's obligations in respect of banker's acceptances issued or created
for the account of such person to facilitate the purchase, shipment or storage
of such inventory or other goods in the ordinary course of business; (xiii)
Liens in favor of the Company or a Guarantor; (xiv) leases or subleases granted
to others not interfering in any material respect with the business of the
Company or its Subsidiaries; (xv) Liens arising out of consignment or similar
arrangements for the sale of goods entered into by the Company or any of its
Subsidiaries in the ordinary course of business; and (xvi) Liens on assets of a
Receivables Subsidiary securing Indebtedness incurred in connection with a
Qualified Receivables Transaction.


                                      12
<PAGE>   21
                 "Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund other Indebtedness of the Company or any of its Restricted
Subsidiaries; provided that: (i) the aggregate principal amount (or accreted
value, if applicable) of such Permitted Refinancing Indebtedness does not
exceed the aggregate principal amount (or accreted value, if applicable) of the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (ii)
such Permitted Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and has a Weighted Average Life to Maturity equal
to or greater than the Weighted Average Life to Maturity of, the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final
maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either
by the Company or by the Restricted Subsidiary that is the obliger on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.

                 "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or agency or political subdivision thereof (including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business).

                 "Principals" means Charles M.  Hansen, Jr., his spouse and any
of his lineal descendants.

                 "Private Placement Legend" means the legend set forth in
Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.

                 "Purchase Money Note" means a promissory note evidencing a
line of credit, which may be irrevocable, from, or evidencing other
Indebtedness owed to, the Company or any Subsidiary of the Company in
connection with a Qualified Receivables Transaction, which note shall be repaid
from cash available to the maker of such note, other than amounts required to
be established as reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors, and
amounts paid in connection with the purchase of newly generated receivables.

                 "QIB" means a "qualified institutional buyer" as defined in
Rule 144A.

                 "Qualified Receivables Transaction" means any transaction or
series of transactions that may be entered into by the Company or any
Subsidiary pursuant to which the Company or any Subsidiary may sell, convey or
otherwise transfer to (i) a Receivables Subsidiary (in the case of a transfer
by the Company or any Subsidiary) and (ii) any other person (in the case of a
transfer by a Receivables Subsidiary), or may grant a security interest in, any
accounts receivable (whether now existing or arising in the future) of the
Company or any Subsidiary of the Company, and any assets related thereto,
including, without limitation, all collateral securing such accounts
receivable, all contracts and all guarantees or other obligations in respect of
such accounts


                                      13
<PAGE>   22
receivable, proceeds of such 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.

                 "Receivables Subsidiary" means a Wholly Owned Restricted
Subsidiary of the Company (other than a Subsidiary Guarantor) which engages in
no activities other than in connection with the financing or sale of accounts
receivable and which is designated by the Board of Directors of the Company (as
provided below) as a Receivables Subsidiary (i) no portion of any Indebtedness
or any other Obligations (contingent or otherwise) of which (a) is guaranteed
by the Company or any other Restricted Subsidiary of the Company (excluding
guarantees of obligations (other than the principal of and interest on,
Indebtedness) pursuant to Standard Securitization Undertakings, (b) is recourse
to or obligates the Company or any other Restricted Subsidiary of the Company
in any way other than pursuant to Standard Securitization Undertakings, or (c)
subjects any property or asset of the Company or any other Subsidiary of the
Company, directly or indirectly, contingently or otherwise, to the satisfaction
thereof, other than pursuant to Standard Securitization Undertakings, (ii) with
which neither the Company nor any other Restricted Subsidiary of the Company
has any material contract, agreement, arrangement or understanding (except in
connection with a Purchase Money Note or Qualified Receivables Transaction)
other than on terms no less favorable to the Company or such other Restricted
Subsidiary of the Company than those that might be obtained at the time from
persons that are not Affiliates of the Company, other than fees payable in the
ordinary course of business in connection with servicing accounts receivable;
and (iii) to which neither the Company nor any of its other Restricted
Subsidiaries has any obligation to maintain or preserve such entity's financial
condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by the filing with the Trustee a certified copy of the
resolution of the Board of Directors of the Company giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.

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

                 "Regulation S" means Regulation S promulgated under the
Securities Act.

                 "Regulation S Global Note" means a global Note bearing the
Private Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.

                 "Related Business" means the business conducted (or proposed
to be conducted) by the Company and its Subsidiaries as of the Issue Date and
any and all businesses that in the good faith judgment of the Board of
Directors of the Company are materially related businesses.

                 "Related Party" with respect to any Principal means any trust,
corporation, partnership or other entity, the beneficiaries, shareholders,
partners, owners, or Persons beneficially holding a 50% or more controlling
interest of which consist of such Principal.

                 "Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Indebtedness.


                                      14
<PAGE>   23
                 "Responsible Officer," when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.

                 "Restricted Definitive Note" means a Definitive Note bearing
the Private Placement Legend.

                 "Restricted Global Note" means a Global Note bearing the
Private Placement Legend.

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

                 "Restricted Period" means the 40-day restricted period as
defined in Regulation S.

                 "Restricted Subsidiary" means each Subsidiary of the Company
that is not designated as a Unrestricted Subsidiary in accordance with the
provisions of the Indenture.

                 "Rule 144" means Rule 144 promulgated under the Securities
Act.

                 "Rule 144A" means Rule 144A promulgated under the Securities
Act.

                 "Rule 903" means Rule 903 promulgated under the Securities
Act.

                 "Rule 904" means Rule 904 promulgated the Securities Act.

                 "SEC" means the Securities and Exchange Commission.

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

                 "Senior Indebtedness" means (i) Indebtedness under the New
Senior Credit Facilities (including interest in respect thereof accruing after
the commencement of any bankruptcy or similar proceeding to the extent that
such interest is allowable as a bankruptcy claim in such proceeding) and (ii)
any other Indebtedness permitted to be incurred by the Company under the terms
of the Indenture, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or subordinated in
right of payment to the Notes.  Notwithstanding anything to the contrary in the
foregoing, Senior Indebtedness will not include (v) any Indebtedness that is
expressly subordinate or junior in right of payment to any other Indebtedness
of the Company, (w) any liability for federal, state, local or other taxes owed
or owing by the Company (x) any Indebtedness of the Company to any of its
Subsidiaries or other Affiliates, (y) any trade payables or (z) that portion of
Indebtedness that is incurred in violation of the Indenture.

                 "Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.

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

                 "Special Redemption Amount" has the meaning provided in
Section 4.19.


                                      15
<PAGE>   24
                 "Special Redemption Date" means February 16, 1998.

                 "Standard Securitization Undertaking" means representations,
warranties, covenants, and indemnities entered into by the Company or any
Subsidiary of the Company that are reasonably customary in an accounts
receivable transaction.

                 "Stated Maturity" means, with respect to any payment of
interest on or principal of any Indebtedness, the date on which such payment
was scheduled to be made in the documentation governing such Indebtedness,
without regard to the occurrence of any subsequent event or contingency.

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

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

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

                 "Unrestricted Global Note" means a permanent global Note in
the form of Exhibit A1 attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.

                 "Unrestricted Definitive Note" means one or more Definitive
Notes that do not bear and are not required to bear the Private Placement
Legend.

                 "Unrestricted Subsidiary" means any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to
a Board Resolution; but only to the extent that such Subsidiary: (i) has no
Indebtedness other than Non-Recourse Debt; (ii) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (iii) is a Person with respect
to which neither the Company nor any of its Restricted Subsidiaries has any
direct or indirect obligations (x) to subscribe for additional Equity Interests
or (y) to maintain or preserve such Person's financial condition or to cause
such Person to achieve any specified levels of operating results; and (iv) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries.  Any
such designation by the Board of Directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the board resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by Section
4.07 hereof.  If, at any time, any Unrestricted Subsidiary would fail to meet
the foregoing


                                      16
<PAGE>   25
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
the Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant described under the caption
"Incurrence of Indebtedness and Issuance of Preferred Stock," the Company shall
be in default of such covenant).  The Board of Directors of the Company may at
any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.09 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, and (ii) no Default or Event of
Default would be in existence following such designation.

                 "U.S. Person" means a U.S. person as defined in Rule 902(o)
under the Securities Act.

                 "Voting Stock" means, with respect to any Person as of any
date, the Capital Stock of such Person that is at the time entitled to vote in
the election of the Board of Directors of such Person.

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

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

SECTION 1.02.    OTHER DEFINITIONS.

<TABLE>
<CAPTION>
                                                                                   Defined in
                  Term                                                               Section
       <S>                                                                             <C>
       "Affiliate Transaction"  . . . . . . . . . . . . . . . . . . . . . . . . . . .  4.11
       "Asset Sale Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3.09
       "Authentication Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2.02
       "Change of Control Offer"  . . . . . . . . . . . . . . . . . . . . . . . . . .  4.14
       "Change of Control Payment"  . . . . . . . . . . . . . . . . . . . . . . . . .  4.14
       "Change of Control Payment Date" . . . . . . . . . . . . . . . . . . . . . . .  4.14
       "Collateral Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4.19
       "Collateral Funds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4.19
       "Covenant Defeasance"  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8.03
       "Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6.01
       "Excess Proceeds"  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4.10
       "incur"  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4.09
       "Legal Defeasance"   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8.03
       "Mutual Fund Account"  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4.19
       "Net Offering Proceeds"  . . . . . . . . . . . . . . . . . . . . . . . . . . .  4.19
       "Offer Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3.09
</TABLE>


                                      17
<PAGE>   26
<TABLE>
       <S>                                                                             <C>
       "Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3.09
       "Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2.03
       "Productive Assets"  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4.10
       "Purchase Date"  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3.09
       "Registrar"  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2.03
       "Restricted Payments"  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4.07
       "Special Redemption" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3.01
       "Special Redemption Amount"  . . . . . . . . . . . . . . . . . . . . . . . . .  4.19
</TABLE>

SECTION 1.03.

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

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

                 "indenture securities" means the Notes;

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

                 "indenture to be qualified" means this Indenture;

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

                 "obligor" on the Notes and the Note Guarantees means the
Company and the Guarantors, respectively, and any successor obligor upon the
Notes and the Note Guarantees, respectively.

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

SECTION 1.04.    RULES OF CONSTRUCTION.

                 Unless the context otherwise requires:

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

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

                    (3)   "or" is not exclusive;

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

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

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


                                      18
<PAGE>   27
                                   ARTICLE 2.
                                   THE NOTES

SECTION 2.01.FORM AND DATING.

                 (a)      General.

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

                 The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company, the Guarantors and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and provisions and to be bound
thereby.  However, to the extent any provision of any Note conflicts with the
express provisions of this Indenture, the provisions of this Indenture shall
govern and be controlling.

                 (a)      Global Notes.

                 Notes issued in global form shall be substantially in the form
of Exhibit A1 attached hereto (including the Global Note Legend thereon and the
"Schedule of Exchanges of Interests in the Global Note" attached thereto).
Notes issued in definitive form shall be substantially in the form of Exhibit
A1 attached hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto).
Each Global Note shall represent such of the outstanding Notes as shall be
specified therein and each shall provide that it shall represent the aggregate
principal amount of outstanding Notes from time to time endorsed thereon and
that the aggregate principal amount of outstanding Notes represented thereby
may from time to time be reduced or increased, as appropriate, to reflect
exchanges and redemptions.  Any endorsement of a Global Note to reflect the
amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.

                 (b)      Temporary Global Notes.

                 Notes offered and sold in reliance on Regulation S shall be
issued initially in the form of the Regulation S Temporary Global Note, which
shall be deposited on behalf of the purchasers of the Notes represented thereby
with the Trustee, at its New York office, as custodian for the Depositary, and
registered in the name of the Depositary or the nominee of the Depositary for
the accounts of designated agents holding on behalf of Euroclear or Cedel Bank,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided.  The Restricted Period shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Cedel Bank certifying that they have
received certification of non-United States beneficial ownership of 100% of the
aggregate principal amount of the Regulation S Temporary Global Note (except to
the extent of any beneficial owners thereof who acquired an interest therein
during the Restricted Period pursuant to another exemption from registration
under the Securities Act and who will take delivery of a beneficial ownership
interest in a 144A Global Note or an IAI Global Note bearing a Private
Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii)
an Officers' Certificate from the Company.  Following the termination of the
Restricted Period, beneficial interests in


                                      19
<PAGE>   28
the Regulation S Temporary Global Note shall be exchanged for beneficial
interests in Regulation S Permanent Global Notes pursuant to the Applicable
Procedures. Simultaneously with the authentication of Regulation S Permanent
Global Notes, the Trustee shall cancel the Regulation S Temporary Global Note.
The aggregate principal amount of the Regulation S Temporary Global Note and
the Regulation S Permanent Global Notes may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.

                 (c)      Euroclear and Cedel Procedures Applicable.

                 The provisions of the "Operating Procedures of the Euroclear
System" and "Terms and Conditions Governing Use of Euroclear" and the "General
Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall
be applicable to transfers of beneficial interests in the Regulation S Global
Notes that are held by Participants through Euroclear or Cedel Bank.

SECTION 2.02.    EXECUTION AND AUTHENTICATION.

                 One Officer shall sign the Notes for the Company by manual or
facsimile signature.  The Company's seal may be reproduced on the Notes and may
be in facsimile form.

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

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

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

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

SECTION 2.03.    REGISTRAR AND PAYING AGENT.

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


                                      20
<PAGE>   29
                 The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.

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

SECTION 2.04.    PAYING AGENT TO HOLD MONEY IN TRUST.

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

SECTION 2.05.    HOLDER LISTS.

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

SECTION 2.06 .   TRANSFER AND EXCHANGE.

                 (a)      Transfer and Exchange of Global Notes.

                 A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to
the Depositary or to another nominee of the Depositary, or to the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary.  All Global Notes will be exchanged by the Company for Definitive
Notes if (i) the Company delivers to the Trustee notice from the Depositary
that it is unwilling or unable to continue to act as Depositary or that it is
no longer a clearing agency registered under the Exchange Act and, in either
case, a successor Depositary is not appointed by the Company within 120 days
after the date of such notice from the Depositary or (ii) the Company in its
sole discretion determines that the Global Notes (in whole but not in part)
should be exchanged for Definitive Notes and delivers a written notice to such
effect to the Trustee.  Upon the occurrence of either of the preceding events
in (i) or (ii) above, Definitive Notes shall be issued in such names as the
Depositary shall instruct the Trustee.  Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or
2.10 hereof, shall be authenticated and delivered in the form of, and shall be,
a Global Note.  A Global Note may not be exchanged for another Note other


                                      21
<PAGE>   30
than as provided in this Section 2.06(a), however, beneficial interests in a
Global Note may be transferred and exchanged as provided in Section 2.06(b),(c)
or (f) hereof.

                 (b)      Transfer and Exchange of Beneficial Interests in the
Global Notes.

                 The transfer and exchange of beneficial interests in the
Global Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures.  Beneficial
interests in the Restricted Global Notes shall be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act.  Transfers of beneficial interests in the Global Notes also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs, as
applicable:

         (i)     Transfer of Beneficial Interests in the Same Global Note.
    Beneficial interests in any Restricted Global Note may be transferred to
    Persons who take delivery thereof in the form of a beneficial interest in
    the same Restricted Global Note in (ii)         accordance with the
    transfer restrictions set forth in the Private Placement Legend; provided,
    however, that prior to the expiration of the Restricted Period, transfers
    of beneficial interests in the Regulation S Global Note may not be made to
    a U.S. Person or for the account or benefit of a U.S. Person (other than
    Initial Purchaser).  Beneficial interests in any Unrestricted Global Note
    may be transferred to Persons who take delivery thereof in the form of a
    beneficial interest in an Unrestricted Global Note.  No written orders or
    instructions shall be required to be delivered to the Registrar to effect
    the transfers described in this Section 2.06(b)(i).

         (iii)   All Other Transfers and Exchanges of Beneficial Interests in
    Global Notes.  In connection with all transfers and exchanges of beneficial
    interests that are not subject to Section 2.06(b)(i) above, the transferor
    of such beneficial interest must deliver to the Registrar either (A) (1) a
    written order from a Participant or an Indirect Participant given to the
    Depositary in accordance with the Applicable Procedures directing the
    Depositary to credit or cause to be credited a beneficial interest in
    another Global Note in an amount equal to the beneficial interest to be
    transferred or exchanged and (2) instructions given in accordance with the
    Applicable Procedures containing information regarding the Participant (iv)
    account to be credited with such increase or (B) (1) a written order from a
    Participant or an Indirect Participant given to the Depositary in
    accordance with the Applicable Procedures directing the Depositary to cause
    to be issued a Definitive Note in an amount equal to the beneficial
    interest to be transferred or exchanged and (2) instructions given by the
    Depositary to the Registrar containing information regarding the Person in
    whose name such Definitive Note shall be registered to effect the transfer
    or exchange referred to in (1) above.  Upon consummation of an Exchange
    Offer by the Company in accordance with Section 2.06(f) hereof, the
    requirements of this Section 2.06(b)(ii) shall be deemed to have been
    satisfied upon receipt by the Registrar of the instructions contained in
    the Letter of Transmittal delivered by the Holder of such beneficial
    interests in the Restricted Global Notes.  Upon satisfaction of all of the
    requirements for transfer or exchange of beneficial interests in Global
    Notes contained in this Indenture and the Notes or otherwise applicable
    under the Securities Act, the Trustee shall adjust the principal amount of
    the relevant Global Note(s) pursuant to Section 2.06(h) hereof.

         (v)     Transfer of Beneficial Interests to Another Restricted Global
    Note.  A beneficial interest in any Restricted Global Note may be
    transferred to a Person who takes delivery thereof in the form of a
    beneficial interest in another Restricted Global Note if the transfer
    complies with the requirements of Section 2.06(b)(ii) above and the
    Registrar receives the following:


                                      22
<PAGE>   31
                 (A)      if the transferee will take delivery in the form of a
             beneficial interest in the 144A Global Note, then the transferor
             must deliver a certificate in the form of Exhibit B hereto,
             including the certifications in item (1) thereof;

                 (B)      if the transferee will take delivery in the form of a
             beneficial interest in the Regulation S Global Note, then the
             transferor must deliver a certificate in the form of Exhibit B
             hereto, including the certifications in item (2) thereof; and

                 (C)      if the transferee will take delivery in the form of a
             beneficial interest in the IAI Global Note, then the transferor
             must deliver a certificate in the form of Exhibit B hereto,
             including the certifications and certificates and Opinion of
             Counsel required by item (3) thereof, if applicable.

         (vi)    Transfer and Exchange of Beneficial Interests in a Restricted
    Global Note for Beneficial Interests in the Unrestricted Global Note.  A
    beneficial interest in any Restricted Global Note may be exchanged by any
    holder thereof for a beneficial interest in an Unrestricted Global Note or
    transferred to a Person who takes delivery thereof in the form of a
    beneficial interest in an Unrestricted Global Note if the exchange or
    transfer complies with the requirements of Section 2.06(b)(ii) above and:

                 (A)      such exchange or transfer is effected pursuant to the
             Exchange Offer in accordance with the Registration Rights
             Agreement and the holder of the beneficial interest to be
             transferred, in the case of an exchange, or the transferee, in the
             case of a transfer, certifies in the applicable Letter of
             Transmittal that it is not (1) a broker-dealer, (2) a Person
             participating in the distribution of the Exchange Notes or (3) a
             Person who is an affiliate (as defined in Rule 144) of the
             Company;

                 (B)      such transfer is effected pursuant to the Shelf
             Registration Statement in accordance with the Registration Rights
             Agreement;

                 (C)      such transfer is effected by a Participating
             Broker-Dealer pursuant to the Exchange Offer Registration
             Statement in accordance with the Registration Rights Agreement; or

                 (D)      the Registrar receives the following:

                    (1)   if the holder of such beneficial interest in a
                 Restricted Global Note proposes to exchange such beneficial
                 interest for a beneficial interest in an Unrestricted Global
                 Note, a certificate from such holder in the form of Exhibit C
                 hereto, including the certifications in item (1)(a) thereof;
                 or

                    (2)   if the holder of such beneficial interest in a
                 Restricted Global Note proposes to transfer such beneficial
                 interest to a Person who shall take delivery thereof in the
                 form of a beneficial interest in an Unrestricted Global Note,
                 a certificate from such holder in the form of Exhibit B
                 hereto, including the certifications in item (4) thereof;

                 and, in each such case set forth in this subparagraph (D), if
         the Registrar so requests or if the Applicable Procedures so require,
         an Opinion of Counsel in form reasonably acceptable to the Registrar
         to the effect that such exchange or transfer is in compliance with the
         Securities Act


                                      23
<PAGE>   32
         and that the restrictions on transfer contained herein and in the
         Private Placement Legend are no longer required in order to maintain
         compliance with the Securities Act.

                 Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.

                 (c)      Transfer or Exchange of Beneficial Interests for
Definitive Notes.

                 (vii)    Beneficial Interests in Restricted Global Notes to
         Restricted Definitive Notes.  If any holder of a beneficial interest
         in a Restricted Global Note proposes to exchange such beneficial
         interest for a Restricted Definitive Note or to transfer such
         beneficial interest to a Person who takes delivery thereof in the form
         of a Restricted Definitive Note, then, upon receipt by the Registrar
         of the following documentation:

                          (A)     if the holder of such beneficial interest in
                 a Restricted Global Note proposes to exchange such beneficial
                 interest for a Restricted Definitive Note, a certificate from
                 such holder in the form of Exhibit C hereto, including the
                 certifications in item (2)(a) thereof;

                          (B)     if such beneficial interest is being
                 transferred to a QIB in accordance with Rule 144A under the
                 Securities Act, a certificate to the effect set forth in
                 Exhibit B hereto, including the certifications in item (1)
                 thereof;

                          (C)     if such beneficial interest is being
                 transferred to a Non-U.S. Person in an offshore transaction in
                 accordance with Rule 903 or Rule 904 under the Securities Act,
                 a certificate to the effect set forth in Exhibit B hereto,
                 including the certifications in item (2) thereof;

                          (D)     if such beneficial interest is being
                 transferred pursuant to an exemption from the registration
                 requirements of the Securities Act in accordance with Rule 144
                 under the Securities Act, a certificate to the effect set
                 forth in Exhibit B hereto, including the certifications in
                 item (3)(a) thereof;

                          (E)     if such beneficial interest is being
                 transferred to an Institutional Accredited Investor in
                 reliance on an exemption from the registration requirements of
                 the Securities Act other than those listed in subparagraphs
                 (B) through (D) above, a certificate to the effect set forth
                 in Exhibit B hereto, including the certifications,
                 certificates and Opinion of Counsel required by item (3)
                 thereof, if applicable;

                          (F)     if such beneficial interest is being
                 transferred to the Company or any of its Subsidiaries, a
                 certificate to the effect set forth in Exhibit B hereto,
                 including the certifications in item (3)(b) thereof; or

                          (G)     if such beneficial interest is being
                 transferred pursuant to an effective registration statement
                 under the Securities Act, a certificate to the effect set
                 forth in Exhibit B hereto, including the certifications in
                 item (3)(c) thereof,

                 the Trustee shall cause the aggregate principal amount of the
         applicable Global Note to be reduced accordingly pursuant to Section
         2.06(h) hereof, and the Company shall execute and


                                      24
<PAGE>   33
         the Trustee shall authenticate and deliver to the Person designated in
         the instructions a Definitive Note in the appropriate principal
         amount.  Any Definitive Note issued in exchange for a beneficial
         interest in a Restricted Global Note pursuant to this Section 2.06(c)
         shall be registered in such name or names and in such authorized
         denomination or denominations as the holder of such beneficial
         interest shall instruct the Registrar through instructions from the
         Depositary and the Participant or Indirect Participant.  The Trustee
         shall deliver such Definitive Notes to the Persons in whose names such
         Notes are so registered.  Any Definitive Note issued in exchange for a
         beneficial interest in a Restricted Global Note pursuant to this
         Section 2.06(c)(i) shall bear the Private Placement Legend and shall
         be subject to all restrictions on transfer contained therein.

                 (viii)   Beneficial Interests in Restricted Global Notes to
         Unrestricted Definitive Notes. A holder of a beneficial interest in a
         Restricted Global Note may exchange such beneficial interest for an
         Unrestricted Definitive Note or may transfer such beneficial interest
         to a Person who takes delivery thereof in the form of an Unrestricted
         Definitive Note only if:

                          (A)     such exchange or transfer is effected
                 pursuant to the Exchange Offer in accordance with the
                 Registration Rights Agreement and the holder of such
                 beneficial interest, in the case of an exchange, or the
                 transferee, in the case of a transfer, certifies in the
                 applicable Letter of Transmittal that it is not (1) a
                 broker-dealer, (2) a Person participating in the distribution
                 of the Exchange Notes or (3) a Person who is an affiliate (as
                 defined in Rule 144) of the Company;

                          (B)     such transfer is effected pursuant to the
                 Shelf Registration Statement in accordance with the
                 Registration Rights Agreement;

                          (C)     such transfer is effected by a Participating
                 Broker-Dealer pursuant to the Exchange Offer Registration
                 Statement in accordance with the Registration Rights
                 Agreement; or

                          (D)     the Registrar receives the following:

                                  (1)      if the holder of such beneficial
                          interest in a Restricted Global Note proposes to
                          exchange such beneficial interest for a Definitive
                          Note that does not bear the Private Placement Legend,
                          a certificate from such holder in the form of Exhibit
                          C hereto, including the certifications in item (1)(b)
                          thereof; or

                                  (2)      if the holder of such beneficial
                          interest in a Restricted Global Note proposes to
                          transfer such beneficial interest to a Person who
                          shall take delivery thereof in the form of a
                          Definitive Note that does not bear the Private
                          Placement Legend, a certificate from such holder in
                          the form of Exhibit B hereto, including the
                          certifications in item (4) thereof;

                          and, in each such case set forth in this subparagraph
                 (D), if the Registrar so requests or if the Applicable
                 Procedures so require, an Opinion of Counsel in form
                 reasonably acceptable to the Registrar to the effect that such
                 exchange or transfer is in compliance with the Securities Act
                 and that the restrictions on transfer contained herein


                                      25
<PAGE>   34
                 and in the Private Placement Legend are no longer required in
                 order to maintain compliance with the Securities Act.

                 (ix)     Beneficial Interests in Unrestricted Global Notes to
         Unrestricted Definitive Notes.  If any holder of a beneficial interest
         in an Unrestricted Global Note proposes to exchange such beneficial
         interest for a Definitive Note or to transfer such beneficial interest
         to a Person who takes delivery thereof in the form of a Definitive
         Note, then, upon satisfaction of the conditions set forth in Section
         2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal
         amount of the applicable Global Note to be reduced accordingly
         pursuant to Section 2.06(h) hereof, and the Company shall execute and
         the Trustee shall authenticate and deliver to the Person designated in
         the instructions a Definitive Note in the appropriate principal
         amount.  Any Definitive Note issued in exchange for a beneficial
         interest pursuant to this Section 2.06(c)(iii) shall be registered in
         such name or names and in such authorized denomination or
         denominations as the holder of such beneficial interest shall instruct
         the Registrar through instructions from the Depositary and the
         Participant or Indirect Participant.  The Trustee shall deliver such
         Definitive Notes to the Persons in whose names such Notes are so
         registered.  Any Definitive Note issued in exchange for a beneficial
         interest pursuant to this Section 2.06(c)(iii) shall not bear the
         Private Placement Legend.

                 (d)      Transfer and Exchange of Definitive Notes for
Beneficial Interests.

                 (x)      Restricted Definitive Notes to Beneficial Interests
         in Restricted Global Notes.  If any Holder of a Restricted Definitive
         Note proposes to exchange such Note for a beneficial interest in a
         Restricted Global Note or to transfer such Restricted Definitive Notes
         to a Person who takes delivery thereof in the form of a beneficial
         interest in a Restricted Global Note, then, upon receipt by the
         Registrar of the following documentation:

                          (A)     if the Holder of such Restricted Definitive
                 Note proposes to exchange such Note for a beneficial interest
                 in a Restricted Global Note, a certificate from such Holder in
                 the form of Exhibit C hereto, including the certifications in
                 item (2)(b) thereof;

                          (B)     if such Restricted Definitive Note is being
                 transferred to a QIB in accordance with Rule 144A under the
                 Securities Act, a certificate to the effect set forth in
                 Exhibit B hereto, including the certifications in item (1)
                 thereof;

                          (C)     if such Restricted Definitive Note is being
                 transferred to a Non-U.S. Person in an offshore transaction in
                 accordance with Rule 903 or Rule 904 under the Securities Act,
                 a certificate to the effect set forth in Exhibit B hereto,
                 including the certifications in item (2) thereof;

                          (D)     if such Restricted Definitive Note is being
                 transferred pursuant to an exemption from the registration
                 requirements of the Securities Act in accordance with Rule 144
                 under the Securities Act, a certificate to the effect set
                 forth in Exhibit B hereto, including the certifications in
                 item (3)(a) thereof;

                          (E)     if such Restricted Definitive Note is being
                 transferred to an Institutional Accredited Investor in
                 reliance on an exemption from the registration requirements of
                 the Securities Act other than those listed in subparagraphs
                 (B) through (D) above, a


                                      26
<PAGE>   35
                 certificate to the effect set forth in Exhibit B hereto,
                 including the certifications, certificates and Opinion of
                 Counsel required by item (3) thereof, if applicable;

                          (F)     if such Restricted Definitive Note is being
                 transferred to the Company or any of its Subsidiaries, a
                 certificate to the effect set forth in Exhibit B hereto,
                 including the certifications in item (3)(b) thereof; or

                          (G)     if such Restricted Definitive Note is being
                 transferred pursuant to an effective registration statement
                 under the Securities Act, a certificate to the effect set
                 forth in Exhibit B hereto, including the certifications in
                 item (3)(c) thereof,

                 the Trustee shall cancel the Restricted Definitive Note,
         increase or cause to be increased the aggregate principal amount of,
         in the case of clause (A) above, the appropriate Restricted Global
         Note, in the case of clause (B) above, the 144A Global Note, in the
         case of clause (c) above, the Regulation S Global Note, and in all
         other cases, the IAI Global Note.

                 (xi)     Restricted Definitive Notes to Beneficial Interests
         in Unrestricted Global Notes. A Holder of a Restricted Definitive Note
         may exchange such Note for a beneficial interest in an Unrestricted
         Global Note or transfer such Restricted Definitive Note to a Person
         who takes delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note only if:

                          (A)     such exchange or transfer is effected
                 pursuant to the Exchange Offer in accordance with the
                 Registration Rights Agreement and the Holder, in the case of
                 an exchange, or the transferee, in the case of a transfer,
                 certifies in the applicable Letter of Transmittal that it is
                 not (1) a broker-dealer, (2) a Person participating in the
                 distribution of the Exchange Notes or (3) a Person who is an
                 affiliate (as defined in Rule 144) of the Company;

                          (B)     such transfer is effected pursuant to the
                 Shelf Registration Statement in accordance with the
                 Registration Rights Agreement;

                          (C)     such transfer is effected by a Participating
                 Broker-Dealer pursuant to the Exchange Offer Registration
                 Statement in accordance with the Registration Rights
                 Agreement; or

                          (D)     the Registrar receives the following:

                                  (1)      if the Holder of such Definitive
                          Notes proposes to exchange such Notes for a
                          beneficial interest in the Unrestricted Global Note,
                          a certificate from such Holder in the form of Exhibit
                          C hereto, including the certifications in item (1)(c)
                          thereof; or

                                  (2)      if the Holder of such Definitive
                          Notes proposes to transfer such Notes to a Person who
                          shall take delivery thereof in the form of a
                          beneficial interest in the Unrestricted Global Note,
                          a certificate from such Holder in the form of Exhibit
                          B hereto, including the certifications in item (4)
                          thereof;

                                  and, in each such case set forth in this
                          subparagraph (D), if the Registrar so requests or if
                          the Applicable Procedures so require, an Opinion of
                          Counsel in form reasonably acceptable to the
                          Registrar to the effect that such


                                      27
<PAGE>   36
                          exchange or transfer is in compliance with the
                          Securities Act and that the restrictions on transfer
                          contained herein and in the Private Placement Legend
                          are no longer required in order to maintain
                          compliance with the Securities Act.

                                  Upon satisfaction of the conditions of any of
                          the subparagraphs in this Section 2.06(d)(ii), the
                          Trustee shall cancel the Definitive Notes and
                          increase or cause to be increased the aggregate
                          principal amount of the Unrestricted Global Note.

                          (xii)   Unrestricted Definitive Notes to Beneficial
                 Interests in Unrestricted Global Notes.  A Holder of an
                 Unrestricted Definitive Note may exchange such Note for a
                 beneficial interest in an Unrestricted Global Note or transfer
                 such Definitive Notes to a Person who takes delivery thereof
                 in the form of a beneficial interest in an Unrestricted Global
                 Note at any time.  Upon receipt of a request for such an
                 exchange or transfer, the Trustee shall cancel the applicable
                 Unrestricted Definitive Note and increase or cause to be
                 increased the aggregate principal amount of one of the
                 Unrestricted Global Notes.

                 (e)      Transfer and Exchange of Definitive Notes for
Definitive Notes.

                 Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Notes.  Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing.  In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).

                 (i)      Restricted Definitive Notes to Restricted Definitive
         Notes.  Any Restricted Definitive Note may be transferred to and
         registered in the name of Persons who take delivery thereof in the
         form of a Restricted Definitive Note if the Registrar receives the
         following:

                          (A)     if the transfer will be made pursuant to Rule
                 144A under the Securities Act, then the transferor must
                 deliver a certificate in the form of Exhibit B hereto,
                 including the certifications in item (1) thereof;

                          (B)     if the transfer will be made pursuant to Rule
                 903 or Rule 904, then the transferor must deliver a
                 certificate in the form of Exhibit B hereto, including the
                 certifications in item (2) thereof; and

                          (C)     if the transfer will be made pursuant to any
                 other exemption from the registration requirements of the
                 Securities Act, then the transferor must deliver a certificate
                 in the form of Exhibit B hereto, including the certifications,
                 certificates and Opinion of Counsel required by item (3)
                 thereof, if applicable.

                 (ii)     Restricted Definitive Notes to Unrestricted
         Definitive Notes.  Any Restricted Definitive Note may be exchanged by
         the Holder thereof for an Unrestricted Definitive Note or transferred
         to a Person or Persons who take delivery thereof in the form of an
         Unrestricted Definitive Note if:


                                      28
<PAGE>   37
                          (A)     such exchange or transfer is effected
                 pursuant to the Exchange Offer in accordance with the
                 Registration Rights Agreement and the Holder, in the case of
                 an exchange, or the transferee, in the case of a transfer,
                 certifies in the applicable Letter of Transmittal that it is
                 not (1) a broker-dealer, (2) a Person participating in the
                 distribution of the Exchange Notes or (3) a Person who is an
                 affiliate (as defined in Rule 144) of the Company;

                          (B)     any such transfer is effected pursuant to the
                 Shelf Registration Statement in accordance with the
                 Registration Rights Agreement;

                          (C)     any such transfer is effected by a
                 Participating Broker-Dealer pursuant to the Exchange Offer
                 Registration Statement in accordance with the Registration
                 Rights Agreement; or

                          (D)     the Registrar receives the following:

                                  (1)      if the Holder of such Restricted
                          Definitive Notes proposes to exchange such Notes for
                          an Unrestricted Definitive Note, a certificate from
                          such Holder in the form of Exhibit C hereto,
                          including the certifications in item (1)(d) thereof;
                          or

                                  (2)      if the Holder of such Restricted
                          Definitive Notes proposes to transfer such Notes to a
                          Person who shall take delivery thereof in the form of
                          an Unrestricted Definitive Note, a certificate from
                          such Holder in the form of Exhibit B hereto,
                          including the certifications in item (4) thereof;

                 and, in each such case set forth in this subparagraph (D), if
         the Registrar so requests, an Opinion of Counsel in form reasonably
         acceptable to the Company to the effect that such exchange or transfer
         is in compliance with the Securities Act and that the restrictions on
         transfer contained herein and in the Private Placement Legend are no
         longer required in order to maintain compliance with the Securities
         Act.

                 (iii)    Unrestricted Definitive Notes to Unrestricted
         Definitive Notes.  A Holder of Unrestricted Definitive Notes may
         transfer such Notes to a Person who takes delivery thereof in the form
         of an Unrestricted Definitive Note.  Upon receipt of a request to
         register such a transfer, the Registrar shall register the
         Unrestricted Definitive Notes pursuant to the instructions from the
         Holder thereof.

                 (f)      Exchange Offer.

                 Upon the occurrence of the Exchange Offer in accordance with
the Registration Rights Agreement, the Company shall issue and, upon receipt of
an Authentication Order in accordance with Section 2.02, the Trustee shall
authenticate (i) one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of the beneficial interests in
the Restricted Global Notes tendered for acceptance by Persons that certify in
the applicable Letters of Transmittal that (x) they are not broker-dealers, (y)
they are not participating in a distribution of the Exchange Notes and (z) they
are not affiliates (as defined in Rule 144) of the Company, and accepted for
exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate
principal amount equal to the principal amount of the Restricted Definitive
Notes accepted for exchange in the Exchange Offer.  Concurrently with the
issuance of such


                                      29
<PAGE>   38
Notes, the Trustee shall cause the aggregate principal amount of the applicable
Restricted Global Notes to be reduced accordingly, and the Company shall
execute and the Trustee shall authenticate and deliver to the Persons
designated by the Holders of Definitive Notes so accepted Definitive Notes in
the appropriate principal amount.

                 (g)      Legends.

                 The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.

                 (i)      Private Placement Legend.

                          (A)     Except as permitted by subparagraph (B)
                 below, each Global Note and each Definitive Note (and all
                 Notes issued in exchange therefor or substitution thereof)
                 shall bear the legend in substantially the following form:

                          "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
                 SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
                 THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
                 TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
                 STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM
                 THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT
                 TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE
                 INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN
                 ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
                 THE UNITED STATES OR ANY OTHER JURISDICTION.  EACH PURCHASER
                 OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
                 SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
                 SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 1444A
                 THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT.  THE
                 HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT
                 OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED
                 OR OTHERWISE TRANSFERRED ONLY (1)(A) TO A PERSON WHO THE
                 SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
                 (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
                 TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (B) IN A
                 TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
                 SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN
                 PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
                 UNDER THE SECURITIES ACT OR (D) IN ACCORDANCE WITH ANOTHER
                 EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
                 ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
                 REQUESTS), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A
                 CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO
                 THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
                 SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN
                 EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
                 ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
                 THE UNITED STATES OR ANY OTHER


                                      30
<PAGE>   39
                 APPLICABLE JURISDICTION AND (B) THE HOLDER WILL AND EACH
                 SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM IT
                 OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET
                 FORTH IN (A) ABOVE."

                          (B)     Notwithstanding the foregoing, any Global
                 Note or Definitive Note issued pursuant to subparagraphs
                 (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii),
                 (e)(iii) or (f) to this Section 2.06 (and all Notes issued in
                 exchange therefor or substitution thereof) shall not bear the
                 Private Placement Legend.

                 (ii)     Global Note Legend.  Each Global Note shall bear a
         legend in substantially the following form:

                          "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS
                 DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE
                 IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF,
                 AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
                 EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
                 MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE,
                 (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN
                 PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
                 GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
                 PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
                 NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
                 PRIOR WRITTEN CONSENT OF THE COMPANY."

                 (h)      Cancellation and/or Adjustment of Global Notes.

                 At such time as all beneficial interests in a particular
Global Note have been exchanged for Definitive Notes or a particular Global
Note has been redeemed, repurchased or cancelled in whole and not in part, each
such Global Note shall be returned to or retained and cancelled by the Trustee
in accordance with Section 2.11 hereof.  At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note or for Definitive Notes, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or by the Depositary at the direction of the Trustee to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Note, such other Global Note shall be increased accordingly and
an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

                 (i)      General Provisions Relating to Transfers and
         Exchanges.

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

                 (ii)     No service charge shall be made to a holder of a
         beneficial interest in a Global Note or to a Holder of a Definitive
         Note for any registration of transfer or exchange, but the


                                      31
<PAGE>   40
         Company may require payment of a sum sufficient to cover any transfer
         tax or similar governmental charge payable in connection therewith
         (other than any such transfer taxes or similar governmental charge
         payable upon exchange or transfer pursuant to Sections 2.10, 3.06,
         3.09, 4.10, 4.15 and 9.05 hereof).

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

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

                 (v)      The Company shall not be required (A) to issue, to
         register the transfer of or to exchange any Notes during a period
         beginning at the opening of business 15 days before the day of any
         selection of Notes for redemption under Section 3.02 hereof and ending
         at the close of business on the day of selection, (B) to register the
         transfer of or to exchange any Note so selected for redemption in
         whole or in part, except the unredeemed portion of any Note being
         redeemed in part or (C) to register the transfer of or to exchange a
         Note between a record date and the next succeeding Interest Payment
         Date.

                 (vi)     Prior to due presentment for the registration of a
         transfer of any Note, the Trustee, any Agent and the Company may deem
         and treat the Person in whose name any Note is registered as the
         absolute owner of such Note for the purpose of receiving payment of
         principal of and interest on such Notes and for all other purposes,
         and none of the Trustee, any Agent or the Company shall be affected by
         notice to the contrary.

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

                 (viii)   All certifications, certificates and Opinions of
         Counsel required to be submitted to the Registrar pursuant to this
         Section 2.06 to effect a registration of transfer or exchange may be
         submitted by facsimile.

SECTION 2.07.    REPLACEMENT NOTES

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

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


                                      32
<PAGE>   41
SECTION 2.08.    OUTSTANDING NOTES.

                 The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding.  Except as set forth in Section
2.09 hereof, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note; however, Notes held by the Company or
a Subsidiary of the Company shall not be deemed to be outstanding for purposes
of Section 3.07(b) hereof.

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

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

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

SECTION 2.09.    TREASURY NOTES.

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

SECTION 2.10.    TEMPORARY NOTES

                 Until certificates representing Notes are ready for delivery,
the Company may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Notes.  Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that
the Company considers appropriate for temporary Notes and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Notes in exchange
for temporary Notes.

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

SECTION 2.11.    CANCELLATION.

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


                                      33
<PAGE>   42
SECTION 2.12.    DEFAULTED INTEREST.

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

                                   ARTICLE 3.
                           REDEMPTION AND PREPAYMENT

SECTION 3.01.    NOTICES TO TRUSTEE.

                 If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date (other than
a redemption pursuant to Paragraph 6 of the Notes ("Special Redemption") and,
in the event of a Special Redemption, five Business Days before notice of the
Special Redemption is to be mailed to Holders (unless a shorter notice period
shall be satisfactory to the Trustee), an Officers' Certificate setting forth
(i) the clause of this Indenture pursuant to which the redemption shall occur,
(ii) the redemption date, (iii) the principal amount of Notes to be redeemed
and (iv) the redemption price.

SECTION 3.02.    SELECTION OF NOTES TO BE REDEEMED

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

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

SECTION 3.03.    NOTICE OF REDEMPTION

                 Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date (other than in
connection with a Special Redemption), the Company


                                      34
<PAGE>   43
shall mail or cause to be mailed, by first class mail, a notice of redemption
to each Holder whose Notes are to be redeemed at its registered address.  In
the event of a Special Redemption, at least 5 Business Days before mailing of
Notice of Special Redemption, the Company shall mail or cause to be mailed a
notice of redemption by first class mail, postage prepaid, to each Holder, with
a copy to the Trustee.  In the event of a Special Redemption on the Special
Redemption Date the Company shall provide the Trustee with notice on or prior
to 9:30 a.m. New York City time on the Business Day immediately preceding the
Special Redemption Date to effect such Special Redemption.

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

                 (a)      the redemption date;

                 (b)      the redemption price;

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

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

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

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

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

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

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

SECTION 3.04.    EFFECT OF NOTICE OF REDEMPTION

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

SECTION 3.05.    DEPOSIT OF REDEMPTION PRICE

                 One Business Day prior to the redemption date (other than in
connection with a Special Redemption), the Company shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price
of and accrued interest on all Notes to be redeemed on that date.  The Trustee


                                      35
<PAGE>   44
or the Paying Agent shall promptly return to the Company any money deposited
with the Trustee or the Paying Agent by the Company in excess of the amounts
necessary to pay the redemption price of, and accrued interest on, all Notes to
be redeemed.

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

SECTION 3.06.    NOTES REDEEMED IN PART.

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

SECTION 3.07.    OPTIONAL REDEMPTION.

                 (a)      The Notes shall not be redeemable (other than a
Special Redemption) at the Company's option prior to December 15, 2002.
Thereafter, the Notes shall be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages thereon
to the applicable redemption date, if redeemed during the 12-month period,
beginning on December 15 of the years indicated below:

<TABLE>
<CAPTION>
         Year                                                                        Percentage
         ----                                                                        ----------
         <S>                                                                          <C>
         2002   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     104.500%
         2003   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     103.000%
         2004   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     101.500%
         2005   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     100.000%
</TABLE>

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

SECTION 3.08.    MANDATORY REDEMPTION.

                 The Company shall not be required to make mandatory redemption
payments with respect to the Notes (other than a Special Redemption).

SECTION 3.09.    OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.

                 In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an Asset Sale Offer, it shall follow the
procedures specified below.


                                      36
<PAGE>   45
                 The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period").  No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount")
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer.  Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.

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

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

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

                 (b)      the Offer Amount, the purchase price and the Purchase
Date;

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

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

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

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

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

                 (g)      that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company shall select the
Notes to be purchased on a pro rata basis (with such


                                      37
<PAGE>   46
adjustments as may be deemed appropriate by the Company so that only Notes in
denominations of $1,000, or integral multiples thereof, shall be purchased);
and

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

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

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

SECTION 3.10.    SPECIAL REDEMPTION.

                 On the Special Redemption Date, the Notes shall be subject to
mandatory redemption at a redemption price equal to 101% of the principal
amount of the Notes, plus accrued interest to the date of redemption, if the
Merger is not consummated prior to the Special Redemption Date.  The Company
shall have the option to redeem the Notes at any time on or prior to the
Special Redemption Date if the Merger has not been consummated on or prior to
such date at a redemption price equal to 101% of the principal amount thereof
plus accrued and unpaid interest to the date of redemption.

                                   ARTICLE 4.
                                   COVENANTS

SECTION 4.01.    PAYMENT OF NOTES.

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

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


                                      38
<PAGE>   47
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages (without regard to any applicable grace period)
at the same rate to the extent lawful.

SECTION 4.02.    MAINTENANCE OF OFFICE OR AGENCY.

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

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

                 The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 4.03.

SECTION 4.03.    REPORTS.

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

                 (b)      For so long as any Notes remain outstanding, the
Company and the Guarantors shall furnish to the Holders and to securities
analysts and prospective investors, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.


                                      39
<PAGE>   48
SECTION 4.04.    COMPLIANCE CERTIFICATE.

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

                 (b)      So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03(a) above shall
be accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial
statements, nothing has come to their attention that would lead them to believe
that the Company has violated any provisions of Article 4 or Article 5 hereof
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to obtain knowledge
of any such violation.

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

SECTION 4.05.    TAXES.

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

SECTION 4.06.    STAY, EXTENSION AND USURY LAWS.

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


                                      40
<PAGE>   49
SECTION 4.07.    RESTRICTED PAYMENTS.

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

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

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

                 (c)      such Restricted Payment, together with the aggregate
         of all other Restricted Payments made by the Company and its
         Subsidiaries after the date of the Indenture (excluding Restricted
         Payments permitted by clauses (v) and (y) of the next succeeding
         paragraph), is less than the sum of (i) 50% of the Consolidated Net
         Income of the Company for the period (taken as one accounting period)
         commencing on the effective date of the Merger to the end of the
         Company's most recently ended fiscal quarter for which internal
         financial statements are available at the time of such Restricted
         Payment (or, if such Consolidated Net Income for such period is a
         deficit, less 100% of such deficit), plus (ii) 100% of the aggregate
         net cash proceeds received by the Company from the issue or sale
         subsequent to the date of the Indenture of Equity Interests of the
         Company or of debt securities of the Company that have been converted
         into such Equity Interests (other than Equity Interests (or
         convertible debt securities) sold to a Subsidiary of the Company and
         other than Disqualified Stock or debt securities that have been
         converted into Disqualified Stock), plus (iii) to the extent that any
         Restricted Investment that was made after the date of the Indenture is
         sold for cash or otherwise liquidated or paid for cash, the lesser of
         (A) the cash return of capital with respect to such Restricted
         Investment (less the cost of disposition, if any) and (B) the initial
         amount of such Restricted Investment, plus (iv) $20.0 million.


                                      41
<PAGE>   50
                 The foregoing provisions will not prohibit (v) the payment of
any dividend within 60 days after the date of declaration thereof, if at said
date of declaration such payment would have complied with the provisions of
this Indenture; (w) the making of any Restricted Investment, or the redemption,
repurchase, retirement or other acquisition of any Equity Interests of the
Company, in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Restricted Subsidiary of the Company) of other
Equity Interests of the Company (other than any Disqualified Stock); provided
that the amount of any such net cash proceeds that are utilized for any such
Restricted Investment, redemption, repurchase, retirement or other acquisition
shall be excluded from clause (c) (ii) of the preceding paragraph; (x) the
defeasance, redemption or repurchase of pari passu or subordinated Indebtedness
with the net cash proceeds from an incurrence of Permitted Refinancing
Indebtedness or the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c) (ii) of the preceding paragraph;
(y) the repurchase, redemption or other acquisition or retirement for value of
any Equity Interests of the Company or any Restricted Subsidiary of the Company
held by any member of the Company's (or any of its Subsidiaries') management
pursuant to any management equity subscription agreement or stock option
agreement in effect as of the date of the Indenture; provided that (A) the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $1.0 million in any 12-month period plus the
aggregate cash proceeds received by the Company during such 12-month period
from any reissuance of Equity Interests by the Company to members of management
of the Company and its Restricted Subsidiaries, and (B) no Default or Event of
Default shall have occurred and be continuing immediately after such
transaction; and (z) so long as no Default or Event of Default shall have
occurred and be continuing, ordinary dividends paid by the Company in respect
of its Common Stock in an aggregate amount not to exceed $6.0 million since the
date of the Indenture.

                 The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would not cause a Default.
For purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated shall be deemed to be Restricted Payments at
the time of such designations and shall reduce the amount available for
Restricted Payments under the first paragraph of this Section 4.07.  All such
outstanding Investments shall be deemed to constitute Investments in an amount
equal to the fair market value of such Investments at the time of such
designation.  Such designation shall only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.

                 The amount of all Restricted Payments (other than cash) shall
be the fair market value (evidenced by a resolution of the Board of Directors
or a committee of the Board of Directors having at least one Independent
director and set forth in an Officers' Certificate delivered to the Trustee) on
the date of the Restricted Payment of the asset(s) proposed to be transferred
by the Company or such Restricted Subsidiary, as the case may be, pursuant to
the Restricted Payment.  Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this Section 4.07 were computed, which
calculations may be based upon the Company's latest available financial
statements.

                 The Merger (including the payment of the Merger consideration)
shall not constitute a Restricted Payment under this Section 4.07.


                                      42
<PAGE>   51
SECTION 4.08.    DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
                 SUBSIDIARIES.

                 The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (i) (a) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any Indebtedness owed to the Company or
any of its Restricted Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) transfer any of its properties
or assets to the Company or any of its Restricted Subsidiaries.  The foregoing
shall not apply to encumbrances or restrictions existing under or by reason of
(a) applicable law, (b) any instrument governing Indebtedness or Capital Stock
of a Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties
or assets of any Person, other than the Person, or the property or assets of
the Person, so acquired, (c) customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, (d) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, or (e) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive than
those contained in the agreements governing the Indebtedness being refinanced
or (f) any Purchase Money Note, or other Indebtedness or contractual
requirements of a Receivables Subsidiary, in each case, incurred in connection
with a Qualified Receivables Transaction, provided that such restrictions apply
only to such Receivables Subsidiary.

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

                 The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Indebtedness) and that the Company shall not issue any Disqualified
Stock, and shall not permit any of its Subsidiaries to issue any shares of
preferred stock; provided, however, that (x) the Company and the Guarantors may
incur Indebtedness (including Acquired Indebtedness) and (y) the Company may
issue shares of Disqualified Stock, in each case if the Fixed Charge Coverage
Ratio for the Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least 2.0 to 1.0, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.

                 The foregoing provisions will not apply to:

                 (i)      the incurrence by the Company of Indebtedness under
         the New Senior Credit Facilities (and guarantees thereof by the
         Guarantors) in an aggregate principal amount at any time outstanding
         (with letters of credit being deemed to have a principal amount equal
         to the maximum potential liability of the Company and its Subsidiaries
         thereunder) not to exceed the greater of (x) $600.0 million and (y)
         the sum of 80% of Eligible Receivables and 65% of Eligible Inventory,
         less, in the case of each of clause (x) and clause (y), the aggregate
         amount of all Net


                                      43
<PAGE>   52
         Proceeds of Asset Sales applied to permanently reduce the commitments
         with respect to such Indebtedness pursuant to Section 4.10 hereof;

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

                 (iii)    the incurrence by the Company or any of its
         Subsidiaries of Indebtedness represented by Capital Lease Obligations
         (whether or not incurred pursuant to sale and leaseback transactions),
         mortgage financing or purchase money obligations, in each case
         incurred for the purpose of financing all or any part of the purchase
         price or cost of construction or improvement of property, plant or
         equipment used in the business of the Company or such Restricted
         Subsidiary, in an aggregate principal amount not to exceed $15.0
         million at any time outstanding;

                 (iv)     the incurrence by the Company or any of its
         Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
         the net proceeds of which are used to extend, refinance, renew,
         replace, defease or refund, Existing Indebtedness or Indebtedness that
         was permitted by the Indenture to be incurred (other than any such
         Indebtedness incurred pursuant to clause (i), (iii), (v), (vi), (vii)
         (viii) or (xiii) of this paragraph );

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

                 (vi)     the incurrence by the Company or any Subsidiary of
         Hedging Obligations that are incurred for the purpose of fixing or
         hedging interest rate risk that is permitted by the terms of the
         Indenture to be incurred;

                 (vii)    the incurrence by the Company of Hedging Obligations
         under commodity hedging and currency exchange agreements; provided
         that, such agreements were entered into in the ordinary course of
         business for the purpose of limiting risks that arise in the ordinary
         course of business;

                 (viii)   the incurrence of Indebtedness of a Guarantor
         represented by guarantees of Indebtedness of the Company that has been
         incurred in accordance with the terms of the Indenture;

                 (ix)     the incurrence of Indebtedness by the Company and its
         Subsidiaries solely in respect of performance bonds, workers'
         compensation claims, payment obligations in connection with
         self-insurance and other similar requirements (to the extent that such
         incurrence does not result in the incurrence of any obligation to
         repay any obligation relating to borrowed money of


                                      44
<PAGE>   53
         others) in the ordinary course of business in accordance with
         customary industry practices, in amounts and for the purpose customary
         in the Company's industry;

                 (x)      Existing Indebtedness;

                 (xi)     the incurrence of Indebtedness arising from
         agreements providing for indemnification, adjustment of purchase price
         or similar obligations, or from guarantees or letters of credit,
         surety bonds or performance bonds securing any such obligations of the
         Company or any such Subsidiary pursuant to such agreements, in each
         case incurred in connection with the disposition of any business,
         assets or Subsidiary of the Company, other than Guarantees of
         Indebtedness incurred by any Person acquiring all or any portion of
         such business, assets or Subsidiary for the purpose of financing such
         acquisition, provided that none of the foregoing results in
         Indebtedness required to be reflected as indebtedness on the balance
         sheet of the Company or any such Subsidiary in accordance with GAAP
         and the maximum aggregate liability in respect of all such
         Indebtedness shall at no time exceed 100% of the gross proceeds
         actually received by the Company and its Subsidiaries in connection
         with such disposition;

                 (xii)    the incurrence of Indebtedness by a Receivables
         Subsidiary that is not recourse to the Company or to any other
         Subsidiary of the Company (other than Standard Securitization
         Undertakings) incurred in connection with a Qualified Receivables
         Transaction;

                 (xiii)   the incurrence by the Company of Indebtedness (in
         addition to Indebtedness permitted by any other clause of this
         paragraph) in an aggregate principal amount (or accreted value, as
         applicable) at any time outstanding not to exceed $20.0 million; and

                 (xiv)    the incurrence by the Company's Unrestricted
         Subsidiaries of Non-Recourse Debt, provided, however, that if any such
         Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
         Subsidiary, such event shall be deemed to constitute an incurrence of
         Indebtedness by a Restricted Subsidiary of the Company that was not
         permitted by this clause (xiv).

SECTION 4.10.    ASSET SALES.

                 The Company shall not, and shall not permit any of its
Restricted Subsidiaries to consummate an Asset Sale unless (i) the Company (or
the Restricted Subsidiary, as the case may be) receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors or a committee of the Board of Directors,
having at least one Independent director, and set forth in an officers'
certificate delivered to the Trustee, or by an independent appraisal by an
accounting, appraisal or investment banking firm of national standing or, in
the case of Investment Assets, an officer's certificate) of the assets or
Equity Interests issued or sold or otherwise disposed of and (ii) at least 75%
of the consideration therefor (or 50%, in the case of any Investment Assets)
received by the Company or such Restricted Subsidiary is in the form of cash;
provided that (a) the amount of any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet) of the Company or any
such Restricted Subsidiary (other than contingent liabilities and liabilities
that by their terms are subordinated to the Notes or any guarantee thereof)
that are assumed by the transferee of any such assets (pursuant to a customary
novation agreement that releases the Company and its Restricted Subsidiaries
from all obligations in respect thereof) shall be deemed to be cash for
purposes of this provision and (b) any notes or other obligations received by
the Company or such Restricted Subsidiary from such transferee in exchange for
any such


                                      45
<PAGE>   54
assets that are promptly converted into cash (to the extent of cash received)
shall be deemed to be cash for purposes of this provision.

                 Within 365 days after the receipt of any Net Proceeds from an
Asset Sale, the Company may apply all such Net Proceeds, at its option, (i) to
permanently reduce Senior Indebtedness (and correspondingly reduce commitments
with respect thereto in the case of any reduction of borrowings under the New
Senior Credit Facilities), (ii) to the acquisition of a controlling interest in
another business, the making of a capital expenditure or the acquisition of
other long-term assets ("Productive Assets"), in each case, in the same or a
similar line of business as the Company was engaged in on the Issue Date, or
(iii) to reimburse the Company or its Subsidiaries for expenditures made, and
costs incurred, to repair, rebuild, replace or restore property subject to
loss, damage or taking to the extent that the net proceeds consist of insurance
proceeds received on account of such loss, damage or taking.  Pending the final
application of any such Net Proceeds, the Company may temporarily reduce Senior
Indebtedness or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture.  Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company shall be required to make an offer
to all Holders of Notes and, to the extent required by the terms of any Pari
Passu Indebtedness, to all holders of such Pari Passu Indebtedness (an "Asset
Sale Offer") to repurchase the maximum principal amount of Notes and any such
Pari Passu Indebtedness that may be repurchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date of purchase, in accordance with the procedures set forth in
this Indenture or such Pari Passu Indebtedness, as applicable.  To the extent
that the aggregate amount of Notes and any such Pari Passu Indebtedness
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds for general corporate purposes.
If the aggregate principal amount of Notes and any Pari Passu Indebtedness
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be repurchased on a pro rata basis.  Upon
completion of such offer to repurchase, the amount of Excess Proceeds shall be
reset at zero.

                 The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Sale Offer.

                 Notwithstanding the foregoing, the Company and its
Subsidiaries shall be permitted to consummate one or more Asset Sales with
respect to assets or properties with an aggregate fair market value not in
excess of $10.0 million in the aggregate subsequent to the Issue Date without
complying with clause (ii) of the first paragraph of this Section 4.10;
provided that (x) at least 75% of the consideration for such Asset Sale
constitutes either Productive Assets or cash, and (y) any Net Proceeds received
by the Company or any of its Restricted Subsidiaries in connection with any
Asset Sale permitted to be consummated under this paragraph shall be subject to
the provisions of the second paragraph of this Section 4.10.

SECTION 4.11.    TRANSACTIONS WITH AFFILIATES.

                 The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing,


                                      46
<PAGE>   55
an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms
that are no less favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person, (ii) with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $2.0 million the
Company delivers to the Trustee, a resolution of the Board of Directors set
forth in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors
and (ii) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $5.0
million, the Company delivers to the Trustee, an opinion as to the fairness to
the Holders of Notes of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing; provided that (v) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans approved
by the Board of Directors or the payment of fees and indemnities to directors
of the Company and its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of the Company or such
Restricted Subsidiary, (w) loans or advances to employees in the ordinary
course of business, (x) transactions between or among the Company and/or its
Restricted Subsidiaries (other than a Receivables Subsidiary) or between
Restricted Subsidiaries (other than Receivables Subsidiaries), (y) Restricted
Payments (other than Investments) that are permitted by the provisions of
Section 4.07 hereof and (z) sales or other transfers or dispositions of
accounts receivable and other related assets customarily transferred in an
asset securitization transaction involving accounts receivable to a Receivables
Subsidiary in a Qualified Receivables Transaction, in each case, shall not be
deemed Affiliate Transactions.

SECTION 4.12.    LIENS.

                 The Company shall not, and shall not permit any of its 
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien securing Indebtedness on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens, unless all payments
due under this Indenture and the Notes are secured on an equal and ratable basis
with the Indebtedness so secured until such time as such is no longer secured by
a Lien; provided that if such Indebtedness is by its terms expressly
subordinated to the Notes or any Guarantee, the Lien securing such Indebtedness
shall be subordinate and junior to the Lien securing the Notes and the
Guarantees with the same relative priority as such subordinate or junior
Indebtedness shall have with respect to the Notes and the Guarantees.

SECTION 4.13.    CORPORATE EXISTENCE.

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



                                      47
<PAGE>   56
SECTION 4.14.    OFFER TO REPURCHASE UPON CHANGE OF CONTROL.

                 (a)      Upon the occurrence of a Change of Control, each
Holder of Notes shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest, if any, and Liquidated Damages thereon to the
date of repurchase (the "Change of Control Payment"). Within 10 days following
any Change of Control, the Company shall mail a notice to each Holder stating:
(1) that the Change of Control Offer is being made pursuant to this Section
4.14 and that all Notes tendered will be accepted for payment; (2) the purchase
price and the purchase date, which shall be no later than 30 business days from
the date such notice is mailed (the "Change of Control Payment Date"); (3) that
any Note not tendered will continue to accrue interest; (4) that, unless the
Company defaults in the payment of the Change of Control Payment, all Notes
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Payment Date; (5) that Holders
electing to have any Notes purchased pursuant to a Change of Control Offer will
be required to surrender the Notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date; (6) that Holders
will be entitled to withdraw their election if the Paying Agent receives, not
later than the close of business on the second Business Day preceding the
Change of Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing his
election to have the Notes purchased; and (7) that Holders whose Notes are
being purchased only in part will be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered, which unpurchased portion
must be equal to $1,000 in principal amount or an integral multiple thereof.
The Company shall comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of Notes
in connection with a Change of Control.

                 (b)      On the Change of Control Payment Date, the Company
shall, to the extent lawful, (1) accept for payment all Notes or portions
thereof properly tendered pursuant to the Change of Control Offer, (2) deposit
with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Notes or portions thereof so tendered and (3) deliver or cause
to be delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Notes or portions thereof
being purchased by the Company.  The Paying Agent will promptly mail to each
Holder of Notes so tendered the Change of Control Payment for such Notes, and
the Trustee will promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided that each such
new Note will be in a principal amount of $1,000 or an integral multiple
thereof.  Prior to complying with the provisions of this Section 4.14, but in
any event within 90 days following a Change of Control, the Company shall
either repay all outstanding Senior Indebtedness or obtain the requisite
consents, if any, under all agreements governing outstanding Senior
Indebtedness to permit the repurchase of Notes required by this Section 4.14.
The Company shall publicly announce the results of the Change of Control Offer
on or as soon as practicable after the Change of Control Payment Date.

                 (c)      Notwithstanding anything to the contrary in this
Section 4.14, the Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements


                                      48
<PAGE>   57
set forth in this Section 4.14 and Section 3.09 hereof and purchases all Notes
validly tendered and not withdrawn under such Change of Control Offer.

SECTION 4.15.    NO SENIOR SUBORDINATED DEBT.

                 Notwithstanding the provisions of Section 4.09 hereof, (i) the
Company shall not incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment
to any Indebtedness of the Company and senior in any respect in right of
payment to the Notes, and (ii) no Guarantor shall incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness of such Guarantor
that is subordinate or junior in right of payment to any Indebtedness of such
Guarantor and senior in any respect in right of payment to the Guarantee of
such Guarantor.

SECTION 4.16.    LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS.

                 The Company shall not permit any of its Subsidiaries that is
not a Guarantor to incur, guarantee or secure through the granting of Liens the
payment of any Senior Indebtedness and the Company shall not and shall not
permit any of its Subsidiaries to pledge any intercompany notes representing
obligations of any of its Subsidiaries, to secure the payment of any Senior
Indebtedness, in each case unless such Subsidiary, the Company and the Trustee
execute and deliver a supplemental indenture to this Indenture evidencing such
Subsidiary's Guarantee (providing for the unconditional guarantee by such
Subsidiary, on a senior subordinated basis, of the Notes).

SECTION 4.17.    PAYMENTS FOR CONSENT.

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

SECTION 4.18.    ADDITIONAL NOTE GUARANTEES.

                 If the Company or any of its Subsidiaries shall acquire or
create another Subsidiary after the date of this Indenture, then such newly
acquired or created Subsidiary shall become a Guarantor by executing a
Supplemental Indenture in the form attached hereto as Exhibit F and deliver an
Opinion of Counsel to the Trustee to the effect that such Supplemental
Indenture has been duly authorized, executed and delivered by such Subsidiary
and constitutes a valid and binding obligation of such Subsidiary, enforceable
against such Subsidiary in accordance with its terms (subject to customary
exceptions).  The provisions of this Section 4.18 shall not apply to (i) any
Subsidiary organized outside of the United States and its territories or (ii)
any Subsidiary that has properly been designated as an Unrestricted Subsidiary
in accordance with this Indenture for so long as it continues to constitute an
Unrestricted Subsidiary.

SECTION 4.19.    DEPOSIT OF PROCEEDS WITH TRUSTEE PENDING CONSUMMATION OF THE
                 MERGER.

                 (a)      On the Issue Date, the Company shall deposit with
Nations Fund Treasury Reserves Capital Class #082 for the benefit of the
Trustee as hereinafter provided the net proceeds


                                      49
<PAGE>   58
from the issuance of the Notes (the "Net Offering Proceeds") and such other
amount as, when added to the Net Offering Proceeds, equals $186,850,000 plus an
amount equal to the interest that would accrue on $185,000,000 from the Issue
Date to the Special Redemption Date at an interest rate of 9.00% per annum (the
"Special Redemption Amount").

                 (b)      In order to secure the full and punctual payment and
performance of the Company's obligation to redeem the Notes upon a Special
Redemption, the Company hereby grants to the Trustee, for the benefit of the
Holders, a continuing security interest in and to the Collateral, whether now
owned or existing or hereafter acquired or arising.  The Trustee shall have no
obligation to file any financing statement.

                 (c)      At all times until the earlier to occur of (i)
receipt by the Trustee of (x) an Officers' Certificate stating that the Merger
is to be consummated on a date specified therein which shall be on or before
the Special Redemption Date on the terms and conditions described in the
Offering Memorandum of the Company dated December 15, 1997 relating to the
Notes in all material respects and requesting the Trustee to release the
Collateral to the order of the Company for application in connection with the
Merger and (y) an Opinion of Counsel to the effect that all conditions
precedent described in the precedent clause (x) have been satisfied in all
material respects and (ii) receipt by the Trustee of notice from the Company
pursuant to Section 3.03 hereof to effect a Special Redemption, there shall be
maintained with Nations Fund on behalf of the Trustee an account (the
"Collateral Account") designated "Pillowtex Corporate Account Pledged to
Norwest Bank Minnesota, National Association, as Trustee" which account shall
be under the sole dominion and control of the Trustee.  On the Issue Date, the
Company shall cause the Special Redemption Amount to be deposited in the
Collateral Account.  Amounts on Deposit in the Collateral Account shall be
invested and reinvested from time to time in shares of The Nations Fund
Treasury Reserves Capital Class #082 (in an account at the Fund in the name of
"Norwest Bank Minnesota, National Association, Trustee" (subject to a security
interest in the name of Norwest Bank Minnesota, National Association, as
Trustee) (the "Mutual Fund Account")), which shares shall be held in the
Collateral Account.  Any income received with respect to the balance from time
to time standing to the credit of the Collateral Account, including any
interest or capital gains on Cash Equivalents, shall remain, or be deposited,
in the Collateral Account.  The Trustee shall not be liable or accountable for
any losses resulting without negligence on the part of the Trustee from the
sale or depreciation in the market value of any investment of amounts on
deposit in the Collateral Account.  Subject to Article Seven hereof, the
Trustee solely in its individual capacity hereby waives any rights it may have
in such individual capacity to the Collateral Account and all funds and
investments therein including, without limitation, any such rights arising
through any counterclaim, defense, recoupment, charge, lien or right of
set-off.

                 (d)      Upon notice from the Company to the Trustee pursuant
to subsection (c) (i) above, the security interests in the Collateral shall
terminate and all funds in the Collateral Account (the "Collateral Funds")
shall be released as follows:  (i) $186,500,000.00 plus interest deposited to
the Company to an account previously designated by the Company by wire transfer
of immediately available funds and (ii) any income with respect to Collateral
Funds shall be distributed to the Company as set forth in clause (i).  Upon
notice from the Company to the Trustee pursuant to subsection (c)(ii) above,
the Trustee shall apply Collateral Funds to fund the Special Redemption and the
Trustee shall pay  to the Company any amount in the Collateral Account in
excess of the amount needed to fund the Special Redemption.  Section 314(d) of
the TIA shall not apply to the release of Collateral pursuant to this provision
if such release occurs prior to the filing of the Exchange Offer Registration
Statement pursuant to the Registration Rights Agreement, after which time this
sentence shall be deemed deleted from this Indenture.


                                      50
<PAGE>   59
                                   ARTICLE 5.
                                   SUCCESSORS

SECTION 5.01.    MERGER, CONSOLIDATION, OR SALE OF ASSETS.

                 The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Notes and this Indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; and
(iv) except in the case of a merger of the Company with or into a Wholly Owned
Subsidiary of the Company (other than a Receivables Subsidiary), the Company or
the entity or Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (A) will have
Consolidated Net Worth immediately after the transaction equal to or greater
than 95% of the Consolidated Net Worth of the Company immediately preceding the
transaction and (B) will, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of
the applicable fourth quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.09 hereof.

SECTION 5.02.    SUCCESSOR CORPORATION SUBSTITUTED.

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

                                   ARTICLE 6.
                             DEFAULTS AND REMEDIES

SECTION 6.01.    EVENTS OF DEFAULT.

                 An "Event of Default" occurs if:

                 (1)      the Company defaults in the payment of interest on,
         or Liquidated Damages with respect to, the Notes when the same becomes
         due and payable and the Default continues


                                      51
<PAGE>   60
         for a period of 30 days, whether or not such payment is prohibited by
         the provisions of Article 10 hereof;

                 (2)      the Company defaults in the payment of the principal
         of or premium, if any, on the Notes when the same becomes due and
         payable at maturity, upon redemption or otherwise, whether or not such
         payment is prohibited by the provisions of Article 10 hereof;

                 (3)      the Company fails to observe or perform any covenant,
         condition or agreement on the part of the Company to be observed or
         performed pursuant to Sections 4.07, 4.09, 4.10, 4.14, 4.19 and 5.01
         hereof;

                 (4)      the Company fails to comply with any of its other
         agreements or covenants in, or provisions of, the Notes or this
         Indenture and the Default continues for a period of 60 days and after
         notice;

                 (5)      a default occurs under any mortgage, indenture or
         instrument under which there may be issued or by which there may be
         secured or evidenced any Indebtedness for money borrowed by the
         Company or any of its Restricted Subsidiaries (or the payment of which
         is Guaranteed by the Company or any of its Restricted Subsidiaries),
         whether such Indebtedness or Guarantee now exists or shall be created
         hereafter, which default (a) is caused by a failure to pay principal
         of or premium, if any, or interest on such Indebtedness at its final
         stated maturity (a "Payment Default") or (b) results in the
         acceleration of such Indebtedness prior to its maturity and, in each
         case, the principal amount of such Indebtedness, together with the
         principal amount of any other Indebtedness as to which there has been
         a Payment Default or the maturity of which has been so accelerated,
         aggregates $10.0 million or more;

                 (6)      a final judgment or final judgments for the payment
         of money are entered by a court or courts of competent jurisdiction
         against the Company or any of its Subsidiaries and such judgment or
         judgments remain undischarged for a period (during which execution
         shall not be effectively stayed) of 60 days, provided that the
         aggregate of all such undischarged judgments exceeds $10.0 million;

                 (7)      the Company or any of its Subsidiaries 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 all substantially all of its
                                  property,

                          (d)     makes a general assignment for the benefit of
                                  its creditors, or

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

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


                                      52
<PAGE>   61
                          (a)     is for relief against the Company or any
                                  Subsidiary in an involuntary case,

                          (b)     appoints a Custodian of the Company or any
                                  Subsidiary or for all or substantially all of
                                  the property of the Company or any
                                  Subsidiary, or

                          (c)     orders the liquidation of the Company or any
                                  Subsidiary,

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

                 (9)      The Guarantee of any Guarantor is held in judicial
proceedings to be unenforceable or invalid or ceases for any reason to be in
full force and effect (other than in accordance with the terms of this
Indenture) or any Guarantor or any Person acting on behalf of any Guarantor
denies or disaffirms such Guarantor's obligations under its Guarantee (other
than by reason of a release of such Guarantor from its Guarantee in accordance
with the terms of this Indenture.

                 An Event of Default shall not be deemed to have occurred under
clause (3), (5) or (6) until the Trustee shall have received written notice
from the Company or any of the Holders or unless a Responsible Officer shall
have knowledge of such Event of Default.  A Default under clause (4) is not an
Event of Default until the Trustee notifies the Company, or the Holders of at
least 25% in principal amount of the then outstanding Securities notify the
Company and the Trustee, of the Default and the Company does not cure the
Default within 60 days after receipt of the notice.  The notice must specify
the Default, demand that it be remedied and state that the notice is a "Notice
of Default."

SECTION 6.02.    ACCELERATION.

                 If an Event of Default (other than an Event of Default
specified in clauses (7) and (8) of Section 6.01 relating to the Company, any
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount of
the then outstanding Securities by written notice to the Company and the
Trustee may declare the unpaid principal of and any accrued interest on all the
Securities to be due and payable.  Upon such declaration the principal and
interest shall be due and payable immediately (together with the premium
referred to in Section 6.01, if applicable); provided however, that if any
Senior Indebtedness is outstanding under the New Senior Credit Facilities, upon
a declaration of acceleration, the Notes shall be payable upon the earlier of
(x) the day which is five Business Days after the provision to the Company and
the agent under the New Credit Senior Facilities of written notice of such
declaration and (y) the date of acceleration of any Indebtedness under the New
Senior Credit Facilities.  If an Event of Default specified in clause (7) or
(8) of Section 6.01 relating to the Company, any Significant Subsidiary or any
group of Subsidiaries that, taken together, would constitute a Significant
Subsidiary occurs, such an amount shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
may rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal or interest that has become due solely because
of the acceleration) have been cured or waived.

                 If an Event of Default occurs on or after December 15, 2002 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent


                                      53
<PAGE>   62
premium shall also become and be immediately due and payable, to the extent
permitted by law, anything in this Indenture or in the Notes to the contrary
notwithstanding. If an Event of Default occurs prior to December 15, 2002  by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding the prohibition on redemption of
the Notes prior to such date, then, upon acceleration of the Notes, an
additional premium shall also become and be immediately due and payable in an
amount, for each of the years beginning on December 15 of the years set forth
below, as set forth below :

<TABLE>
<CAPTION>
                 Year                                                                Percentage
                 ----                                                                ----------
                 <S>                                                                  <C>
                 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109.000%
                 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108.000%
                 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107.000%
                 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.000%
                 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.000%
</TABLE>

SECTION 6.03.    OTHER REMEDIES.

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

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

SECTION 6.04.    WAIVER OF PAST DEFAULTS.

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

SECTION 6.05.    CONTROL BY MAJORITY.

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


                                      54
<PAGE>   63
SECTION 6.06.    LIMITATION ON SUITS.

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

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

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

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

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

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

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

SECTION 6.07.    RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.

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

SECTION 6.08.    COLLECTION SUIT BY TRUSTEE.

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

SECTION 6.09.    TRUSTEE MAY FILE PROOFS OF CLAIM.

                 The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders of the Notes allowed in any judicial proceedings relative to
the Company (or any other obligor upon the Notes), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the


                                      55
<PAGE>   64
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise.  Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.

SECTION 6.10.    PRIORITIES.

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

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

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

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

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

SECTION 6.11.    UNDERTAKING FOR COSTS.

                 In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant.  This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.

                                   ARTICLE 7.
                                    TRUSTEE

SECTION 7.01.    DUTIES OF TRUSTEE.

                 (a)      If an Event of Default has occurred and is
         continuing, the Trustee shall exercise such of the rights and powers
         vested in it by this Indenture, and use the same degree


                                      56
<PAGE>   65
         of care and skill in its exercise, as a prudent man would exercise or
         use under the circumstances in the conduct of his own affairs.

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

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

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

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

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

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

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

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

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

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

SECTION 7.02.    RIGHTS OF TRUSTEE.

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

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


                                      57
<PAGE>   66
         Counsel.  The Trustee may consult with counsel and the written advice
         of such counsel or any Opinion of Counsel shall be full and complete
         authorization and protection from liability in respect of any action
         taken, suffered or omitted by it hereunder in good faith and in
         reliance thereon.

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

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

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

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

SECTION 7.03.    INDIVIDUAL RIGHTS OF TRUSTEE.

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

SECTION 7.04.    TRUSTEE'S DISCLAIMER.

                 The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes,
it shall not be accountable for the Company's use of the proceeds from the
Notes or any money paid to the Company or upon the Company's direction under
any provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its 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 Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs.
Except in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice
if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of
the Notes.


                                      58
<PAGE>   67
SECTION 7.06.    REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.

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

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

SECTION 7.07.    COMPENSATION AND INDEMNITY.

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

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

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

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

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


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<PAGE>   68
                 The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.

SECTION 7.08.    REPLACEMENT OF TRUSTEE.

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

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

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

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

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

                 (d)      the Trustee becomes incapable of acting.

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

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

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

                 A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company.  Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture.  The successor Trustee shall mail a notice of its
succession to Holders of the Notes.  The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof.  Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.


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SECTION 7.09.    SUCCESSOR TRUSTEE BY MERGER, ETC.

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

SECTION 7.10.    ELIGIBILITY; DISQUALIFICATION.

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

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

SECTION 7.11.    PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

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

                                   ARTICLE 8.
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

SECTION 8.01.    OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.

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

SECTION 8.02.    LEGAL DEFEASANCE AND DISCHARGE.

                 Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding Notes
on the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance").  For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive payments in respect of the principal
of, premium, if any, and accrued and unpaid interest and Liquidated Damages on
such Notes when such payments are due from the trust referred to below,(b) the
Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and
the maintenance of an office or agency for payment and money for security
payments held in trust, (c) the rights, powers, trusts, duties and immunities
of the Trustee, and the


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<PAGE>   70
Company's obligations in connection therewith and (d) this Article Eight.
Subject to compliance with this Article Eight, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 hereof.

SECTION 8.03.    COVENANT DEFEASANCE.

                 Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Sections 4.07, 4.08,
4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17 and 14.8, hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes).  For this purpose, Covenant Defeasance means that, with respect to
the outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and
such Notes shall be unaffected thereby.  In addition, upon the Company's
exercise under Section 8.01 hereof of the option applicable to this Section
8.03 hereof, subject to the satisfaction of the conditions set forth in Section
8.04 hereof, Sections 6.01(3) through 6.01(6) hereof shall not constitute
Events of Default.

SECTION 8.04.    CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.

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

In order to exercise either Legal Defeasance or Covenant Defeasance:

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

                          (b) in the case of Legal Defeasance, the Company
         shall have delivered to the Trustee an opinion of counsel in the
         United States reasonably acceptable to the Trustee confirming 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 Holders of the outstanding
         Notes will not recognize income, gain or loss for federal income tax
         purposes as a result of such Legal Defeasance and


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<PAGE>   71
         will be subject to federal income tax on the same amounts, in the same
         manner and at the same times as would have been the case if such Legal
         Defeasance had not occurred;

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

                          (d) no Default or Event of Default shall have
         occurred and be continuing on the date of such deposit (other than a
         Default or Event of Default resulting from the borrowing of funds to
         be applied to such deposit) or insofar as Events of Default from
         bankruptcy or insolvency events are concerned, at any time in the
         period ending on the 91st day after the date of deposit;

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

                          (f) the Company must have delivered to the Trustee an
         opinion of counsel to the effect that after the 91st day following the
         deposit, the trust funds will not be subject to the effect of any
         applicable bankruptcy, insolvency, reorganization or similar laws
         affecting creditors' rights generally;

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

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

SECTION 8.05.    DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
                 OTHER MISCELLANEOUS PROVISIONS.

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

                 The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to


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<PAGE>   72
Section 8.04 hereof or the principal and interest received in respect thereof
other than any such tax, fee or other charge which by law is for the account of
the Holders of the outstanding Notes.

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

SECTION 8.06.    REPAYMENT TO COMPANY.

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

SECTION 8.07.    REINSTATEMENT.

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

                                   ARTICLE 9.
                        AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.01.    WITHOUT CONSENT OF HOLDERS OF NOTES.

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

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


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<PAGE>   73
                 (b)      to provide for uncertificated Notes in addition to or
         in place of certificated Notes or to alter the provisions of Article 2
         hereof (including the related definitions) in a manner that does not
         materially adversely affect any Holder;

                 (c)      to provide for the assumption of the Company's or a
         Guarantor's obligations to the Holders of the Notes by a successor to
         the Company or a Guarantor pursuant to Article 5 or Article 10 hereof;

                 (d)      to make any change that would provide any additional
         rights or benefits to the Holders of the Notes or that does not
         adversely affect the legal rights hereunder of any Holder of the Note;
         or

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

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

SECTION 9.02.    WITH CONSENT OF HOLDERS OF NOTES.

                 Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture (including Section 3.09,
4.10 and 4.14 hereof), the Note Guarantees and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding voting as a single class
(including consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium, if any, or interest on
the Notes, except a payment default resulting from an acceleration that has
been rescinded) or compliance with any provision of this Indenture, the Note
Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes voting as a single
class (including consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Notes).  Section 2.08 hereof shall
determine which Notes are considered to be "outstanding" for purposes of this
Section 9.02.

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


                                      65
<PAGE>   74
                 It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.

                 After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver.  Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver.  Subject to Sections 6.04 and 6.07 hereof,
the Holders of a majority in aggregate principal amount of the Notes then
outstanding voting as a single class may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes.
However, without the consent of each Holder affected, an amendment or waiver
under this Section 9.02 may not (with respect to any Notes held by a non-
consenting Holder):

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

                 (b) reduce the principal of or change the fixed maturity of
         any Note or alter the provisions with respect to the redemption or
         repurchase of the Notes (other than provisions relating to Sections
         4.10 or 4.14 hereof),

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

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

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

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

                 (g) waive a redemption payment with respect to any Note (other
         than a payment required by Sections 4.10 or 4.14 hereof),

                 (h) release any Guarantor from any of its obligations under
         its Guarantee or the Indenture, except in accordance with the terms of
         this Indenture,

                 (i) make any change to the provisions of Section 4.19 of this
         Indenture, or

                 (j) make any change in the foregoing amendment and waiver
         provisions.  In addition, any amendment to the provisions of Article
         10 of this Indenture (which relate to subordination) or the related
         definitions will require the consent of the Holders of at least 75% in
         aggregate principal amount of the Notes then outstanding if such
         amendment would adversely affect the rights of Holders of Notes.


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SECTION 9.03.    COMPLIANCE WITH TRUST INDENTURE ACT.

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

SECTION 9.04.    REVOCATION AND EFFECT OF CONSENTS.

                 Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note.  However, any such Holder of a Note or subsequent
Holder of a Note may revoke the consent as to its Note if the Trustee receives
written notice of revocation before the date the waiver, supplement or
amendment becomes effective.  An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.

SECTION 9.05.    NOTATION ON OR EXCHANGE OF NOTES.

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

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

SECTION 9.06.    TRUSTEE TO SIGN AMENDMENTS, ETC.

                 The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it.  In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.

                                  ARTICLE 10.
                                 SUBORDINATION

SECTION 10.01.   AGREEMENT TO SUBORDINATE.

                 Prior to the Merger, the Notes will be senior obligations of
the Company pari passu with all other unsubordinated Indebtedness of the
Company and senior to all subordinated Indebtedness of the Company.  After the
Merger, the Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes is subordinated in right of payment, to
the extent and in the manner provided in this Article 10, to the prior payment
in full of all Senior Indebtedness (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Indebtedness.

                 A distribution may consist of cash, securities or other
property, by set-off or otherwise.


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SECTION 10.02.   LIQUIDATION; DISSOLUTION; BANKRUPTCY

                 Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities:

                 (1)      holders of Senior Indebtedness shall be entitled to
receive payment in full of all Obligations due in respect of such Senior
Indebtedness (including, in the case of Senior Indebtedness under the New
Senior Credit Facilities, interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Indebtedness) before
Holders of the Notes shall be entitled to receive any payment with respect to
the Notes

                 (2)      until all Obligations with respect to Senior
Indebtedness (as provided in subsection (1) above) are paid in full, any
distribution to which Holders would be entitled but for this Article 10 shall
be made to holders of Senior Indebtedness (except that Holders of Notes may
receive (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof), as their interests may appear.

SECTION 10.03.   DEFAULT ON DESIGNATED SENIOR DEBT.

                 The Company may not make any payment or distribution to the
Trustee or any Holder in respect of Obligations with respect to the Notes and
may not acquire from the Trustee or any Holder any Notes for cash or property
(other than (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof) until all principal and other Obligations with respect to the Senior
Indebtedness have been paid in full if:

         (i)      a default in the payment of the principal of, premium, if
    any, or interest on Designated Senior Indebtedness occurs and is continuing
    beyond any applicable period of grace; or

         (ii)    any other default occurs and is continuing with respect to
    Designated Senior Indebtedness that permits holders of the Designated
    Senior Indebtedness as to which such default relates to accelerate its
    maturity and the Trustee receives a notice of such default (a "Payment
    Blockage Notice") from the Company or the holders of any Designated Senior
    Indebtedness.  Payments on the Notes may and shall be resumed (a) in the
    case of a payment default, upon the date on which such default is cured or
    waived and (b) in case of a nonpayment default, the earlier of the date on
    which such nonpayment default is cured or waived or 179 days after the date
    on which the applicable Payment Blockage Notice is received, unless the
    maturity of any Designated Senior Indebtedness has been accelerated.  No
    new period of payment blockage may be commenced unless and until (i) 360
    days have elapsed since the effectiveness of the immediately prior Payment
    Blockage Notice and (ii) all scheduled payments of principal, premium, if
    any, and interest on the Notes that have come due have been paid in full in
    cash.  No nonpayment default that existed or was continuing on the date of
    delivery of any Payment Blockage Notice to the Trustee shall be, or be
    made, the basis for a subsequent Payment Blockage Notice unless such
    default shall have been waived for a period of not less than 90 days.


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SECTION 10.04.   ACCELERATION OF SECURITIES.

                 If payment of the Securities is accelerated because of an
Event of Default, the Company shall promptly notify holders of Senior
Indebtedness of the acceleration.

SECTION 10.05.   WHEN DISTRIBUTION MUST BE PAID OVER.

                 In the event that the Trustee or any Holder receives any
payment of any Obligations with respect to the Notes at a time when the Trustee
or such Holder, as applicable, has actual knowledge that such payment is
prohibited by Section 10.04 hereof, such payment shall be held by the Trustee
or such Holder, in trust for the benefit of, and shall be paid forthwith over
and delivered, upon written request, to, the holders of Senior Indebtedness as
their interests may appear or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Indebtedness may have been issued,
as their respective interests may appear, for application to the payment of all
Obligations with respect to Senior Indebtedness remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders
of Senior Indebtedness.

                 With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform only such obligations on the part of the Trustee
as are specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee.  The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
10, except if such payment is made as a result of the willful misconduct or
gross negligence of the Trustee.

SECTION 10.06.   NOTICE BY COMPANY.

                 The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of any
Obligations with respect to the Notes to violate this Article 10, but failure
to give such notice shall not affect the subordination of the Notes to the
Senior Indebtedness as provided in this Article 10.

SECTION 10.07.   SUBROGATION.

                 After all Senior Indebtedness is paid in full and until the
Notes are paid in full, Holders of Notes shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Notes) to the rights of
holders of Senior Indebtedness to receive distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to the Holders
of Notes have been applied to the payment of Senior Indebtedness.  A
distribution made under this Article 10 to holders of Senior Indebtedness that
otherwise would have been made to Holders of Notes is not, as between the
Company and Holders, a payment by the Company on the Notes.

SECTION 10.08.   RELATIVE RIGHTS.

                 This Article 10 defines the relative rights of Holders of
Notes and holders of Senior Indebtedness.  Nothing in this Indenture shall:


                                      69
<PAGE>   78
                 (1)      impair, as between the Company and Holders of Notes,
the obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;

                 (2)      affect the relative rights of Holders of Notes and
creditors of the Company other than their rights in relation to holders of
Senior Indebtedness; or

                 (3)      prevent the Trustee or any Holder of Notes from
exercising its available remedies upon a Default or Event of Default, subject
to the rights of holders and owners of Senior Indebtedness to receive
distributions and payments otherwise payable to Holders of Notes.

                 If the Company fails because of this Article 10 to pay
principal of or interest on a Note on the due date, the failure is still a
Default or Event of Default.

SECTION 10.09.   SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.

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

SECTION 10.10.   DISTRIBUTION OR NOTICE TO REPRESENTATIVE.

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

                 Upon any payment or distribution of assets of the Company
referred to in this Article 10, the Trustee and the Holders of Notes shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of Notes for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 10.

SECTION 10.11.   RIGHTS OF TRUSTEE AND PAYING AGENT.

                 Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10.   Only the Company or a
Representative may give the notice.  Nothing in this Article 10 shall impair
the claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof.

                 The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights.


                                      70
<PAGE>   79
SECTION 10.12.   AUTHORIZATION TO EFFECT SUBORDINATION.

                 Each Holder of Notes, by the Holder's acceptance thereof,
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination as provided
in this Article 10, and appoints the Trustee to act as such Holder's
attorney-in-fact for any and all such purposes.  If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.09 hereof at least 30 days before the expiration of
the time to file such claim, the Agent is hereby authorized to file an
appropriate claim for and on behalf of the Holders of the Notes.

SECTION 10.13.   AMENDMENTS.

                 The provisions of this Article 10 shall not be amended or
modified without the written consent of the holders of all Senior Indebtedness.

                                  ARTICLE 11.
                                NOTE GUARANTEES

SECTION 11.01.   GUARANTEE.

                 Subject to this Article 10, each of the Guarantors hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Company hereunder or thereunder,
that:  (a) the principal of and interest on the Notes will be promptly paid in
full when due, whether at maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal of and interest on the Notes, if any, if
lawful, and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other obligations,
that same will be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.  Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the Guarantors
shall be jointly and severally obligated to pay the same immediately.  Each
Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.

                 The Guarantors hereby agree that their obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice
and all demands whatsoever and covenant that this Note Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Notes and this Indenture.

                 If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company
or the Guarantors, any amount paid by either to the Trustee or such


                                      71
<PAGE>   80
Holder, this Note Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.

                 Each Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between the Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6
hereof for the purposes of this Note Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article 6 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Note Guarantee.  The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.

SECTION 11.02.   SUBORDINATION OF NOTE GUARANTEE.

                 Prior to the Merger, the Guarantees will be senior obligations
of the Guarantors, pari passu with all other unsubordinated Indebtedness of the
Guarantors and senior to all subordinated Indebtedness of the Guarantors.  From
and after the effective time of the Merger, the Obligations of each Guarantor
under its Note Guarantee pursuant to this Article 10 shall be junior and
subordinated to the Senior Debt of such Guarantor on the same basis as the
Notes are junior and subordinated to Senior Debt of the Company.  For the
purposes of the foregoing sentence, the Trustee and the Holders shall have the
right to receive and/or retain payments by any of the Guarantors only at such
times as they may receive and/or retain payments in respect of the Notes
pursuant to this Indenture, including Article 10 hereof.

SECTION 11.03.   LIMITATION ON GUARANTOR LIABILITY.

                 Each Guarantor, and by its acceptance of Notes, each Holder,
hereby confirms that it is the intention of all such parties that the Note
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Note Guarantee.  To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor under its Note Guarantee and this
Article 11 shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 11, result in the obligations of such Guarantor
under its Note Guarantee not constituting a fraudulent transfer or conveyance.

SECTION 11.04.   EXECUTION AND DELIVERY OF NOTE GUARANTEE.

                 To evidence its Note Guarantee set forth in Section 11.01,
each Guarantor hereby agrees that a notation of such Note Guarantee
substantially in the form included in Exhibit E shall be endorsed by an Officer
of such Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Guarantor by its
President or one of its Vice Presidents.


                                      72
<PAGE>   81
                 Each Guarantor hereby agrees that its Note Guarantee set forth
in Section 10.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.

                 If an Officer whose signature is on this Indenture or on the
Note Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Note Guarantee is endorsed, the Note
Guarantee shall be valid nevertheless.

                 The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Note
Guarantee set forth in this Indenture on behalf of the Guarantors.

                 In the event that the Company creates or acquires any new
Subsidiaries subsequent to the date of this Indenture, if required by Section
4.18 hereof, the Company shall cause such Subsidiaries to execute supplemental
indentures to this Indenture and Note Guarantees in accordance with Section
4.18 hereof and this Article 11, to the extent applicable.

SECTION 11.05.   GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.

                 No Guarantor may consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person) another Person whether
or not affiliated with such Guarantor unless:

                 (a)      subject to this Section 11.05 hereof, the Person
formed by or surviving any such consolidation or merger (if other than a
Guarantor or the Company) unconditionally assumes all the obligations of such
Guarantor, pursuant to a supplemental indenture in form and substance
reasonably satisfactory to the Trustee, under the Notes, the Indenture and the
Note Guarantee on the terms set forth herein or therein; and

                 (b)      immediately after giving effect to such transaction,
no Default or Event of Default exists.

                 In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Note Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor.  Such successor Person thereupon may cause to be signed
any or all of the Note Guarantees to be endorsed upon all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee.  All the Note Guarantees so issued shall in all
respects have the same legal rank and benefit under this Indenture as the Note
Guarantees theretofore and thereafter issued in accordance with the terms of
this Indenture as though all of such Note Guarantees had been issued at the
date of the execution hereof.

                 Except as set forth in Articles 4 and 5 hereof, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.


                                      73
<PAGE>   82
SECTION 11.06.   RELEASES

                 Upon the release by all holders of Senior Indebtedness and
Guarantor Senior Indebtedness of all guarantees issued by a Guarantor relating
to such Senior Indebtedness and Guarantor Senior Indebtedness and all Liens on
the property and assets of such Guarantor relating to Senior Indebtedness and
Guarantor Senior Indebtedness or in the event of a sale or other disposition of
all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the capital stock of any
Guarantor, then such Guarantor (in the event of clause (i) above or a sale or
other disposition, by way of such a merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) will be released and relieved of any
obligations under its Note Guarantee; provided that the Net Proceeds of such
sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof.
In the event the Company (i) designates a Restricted Subsidiary to be an
Unrestricted Subsidiary in accordance with this Indenture or (ii) designates a
Subsidiary as a Receivables Subsidiary in accordance with this Indenture, then
such newly designated Unrestricted Subsidiary or Receivables Subsidiary, as the
case may be, shall be released from its obligations under its Subsidiary
Guarantee.  Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof,
the Trustee shall execute any documents reasonably required in order to
evidence the release of any Guarantor from its obligations under its Note
Guarantee.

                 Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this
Indenture as provided in this Article 10.

                                  ARTICLE 12.
                                 MISCELLANEOUS

SECTION 12.01.   TRUST INDENTURE ACT CONTROLS.

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

SECTION 12.02.   NOTICES.

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

                 If to the Company and/or any Guarantor:

                 Pillowtex Corporation
                 4111 Mint Way
                 Dallas, Texas  75237
                 Attention:  Treasurer


                                      74
<PAGE>   83
                 If to the Trustee:

                 Norwest Bank Minnesota, National Association
                 6th Street and Marquette Avenue
                 Minneapolis, MN 55479-0069
                 Telecopier No.:  (612) 667-9825
                 Attention:  Corporate Trust

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

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

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

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

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

SECTION 12.03.   COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.

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

SECTION 12.04.   CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

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

                 (a)      an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and

                 (b)      an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 12.05 hereof) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been satisfied.


                                      75
<PAGE>   84
SECTION 12.05.   STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

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

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

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

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

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

SECTION 12.06.   RULES BY TRUSTEE AND AGENTS.

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

SECTION 12.07.   NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND  
                 STOCKHOLDERS.

                 No past, present or future director, officer, employee,
incorporator or stockholder of the Company or any Guarantor, as such, shall
have any liability for any obligations of the Company or such Guarantor under
the Notes, the Note Guarantees, this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation.  Each Holder
by accepting a Note waives and releases all such liability.  The waiver and
release are part of the consideration for issuance of the Notes.

SECTION 12.08.   GOVERNING LAW.

                 THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES 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 12.09.   NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

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


                                      76
<PAGE>   85
SECTION 12.10.   SUCCESSORS.

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

SECTION 12.11.   SEVERABILITY.

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

SECTION 12.12.   COUNTERPART ORIGINALS.

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

SECTION 12.13.   TABLE OF CONTENTS, HEADINGS, ETC.

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

                         [Signatures on following page]


                                      77
<PAGE>   86
                                   SIGNATURES

Dated as of December 18, 1997

                                          PILLOWTEX CORPORATION

                                          BY: /S/ JEFFREY D. CORDES           
                                             ---------------------------------
                                             Name: Jeffrey D. Cordes
                                             Title: Chief Operating Officer



                                          The Initial Guarantors:

                                          PTEX HOLDING COMPANY
                                          PILLOWTEX, INC.
                                          MANETTA HOME FASHIONS, INC.
                                          BEACON MANUFACTURING COMPANY
                                          PILLOWTEX MANAGEMENT SERVICES
                                            COMPANY
                                          TENNESSEE WOOLEN MILLS, INC.


                                          BY: /S/ JEFFREY D. CORDES           
                                             ---------------------------------
                                             Name: Jeffrey D. Cordes
                                             Title: Chief Operating Officer



                                          NORWEST BANK MINNESOTA, NATIONAL 
                                          ASSOCIATION

                                          BY: /S/ RAYMOND S. HAVERSTOCK       
                                             ---------------------------------
                                             Name:  Raymond S. Haverstock
                                             Title:  Vice President





<PAGE>   87
                                   EXHIBIT A1
                                 (Face of Note)

================================================================================

CUSIP/CINS 
          -------------------

          9% [Series A] [Series B] Senior Subordinated Notes due 2007

No.                                                             $
    -----                                                        --------------

                             PILLOWTEX CORPORATION

promises to pay to
                  ---------------------------------------------------

or registered assigns,

         the principal sum of
                             ------------------------------------------------

Dollars on December 15, 2007.

Interest Payment Dates:  June 15 and December 15

Record Dates:  June 1 and December 1

                                       DATED: DECEMBER 18, 1997

                                       PILLOWTEX CORPORATION

                                       BY:
                                          -----------------------------------
                                          Name: Charles M. Hansen, Jr.
                                          Title: Chief Executive Officer


This is one of the Global
Notes referred to in the
within-mentioned Indenture:

Norwest Bank Minnesota, National Association
as Trustee

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

                                                                                

================================================================================



                                      A1-1
<PAGE>   88
                                 (Back of Note)

          9% [Series A] [Series B] Senior Subordinated Notes due 2007

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY,
REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION.  EACH PURCHASER OF THE SECURITY EVIDENCED
HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 1444A
THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT.  THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(A) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENT OF RULE 144A, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (D) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE
TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF
THE RESALE RESTRICTION SET FORTH IN (A) ABOVE.





                                      A1-2
<PAGE>   89
                 Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.

                 1.       INTEREST.  Pillowtex Corporation, a Delaware
corporation (the "Company"), promises to pay interest on the principal amount
of this Note at 9% per annum from December 18, 1997 until maturity and shall
pay the Liquidated Damages payable pursuant to Section 5 of the Registration
Rights Agreement referred to below.  The Company will pay interest and
Liquidated Damages semi-annually on June 15 and December 15 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date").  Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date;
provided, further, that the first Interest Payment Date shall be June 15, 1998.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
and Liquidated Damages (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful.  Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

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

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

                 4.       INDENTURE .  The Company issued the Notes under an
Indenture dated as of December December 18, 1997 ("Indenture") between the
Company and the Trustee.  The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb).  The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms.  To the extent any provision of
this Note conflicts with the express provisions of the Indenture, the
provisions of the Indenture shall govern and be controlling.  The Notes are
obligations of the Company limited to





                                      A1-3
<PAGE>   90
$185,000,000 million in aggregate principal amount, plus amounts, if any,
issued to pay Liquidated Damages on outstanding Notes as set forth in Paragraph
2 hereof.

                 5.       OPTIONAL REDEMPTION.

                 The Notes shall not be redeemable at the Company's option
prior to December 15, 2002.  Thereafter, the Notes shall be subject to
redemption at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon to the applicable redemption date, if
redeemed during the 12- month period, beginning on December 15 of the years
indicated below:

<TABLE>
<CAPTION>
         Year                                                                        Percentage
         ----                                                                        ----------
         <S>                                                                          <C>
         2002   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     104.500%
         2003   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     103.000%
         2004   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     101.500%
         2005   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     100.000%
</TABLE>

                 6.       SPECIAL REDEMPTION.

                 On the Special Redemption Date, the Notes will be subject to
mandatory redemption at a redemption price equal to 101% of the principal
amount of the Notes, plus accrued interest to the date of redemption, if the
Merger is not consummated prior to the Special Redemption Date.  Pillowtex will
also have the option to redeem the Notes at any time on or prior to the Special
Redemption Date if the Merger has not been consummated on or prior to such date
at a redemption price equal to 101% of the principal amount thereof plus
accrued and unpaid interest to the date of redemption.

                 7.       MANDATORY REDEMPTION.

                 Except as set forth in paragraph 8 below, the Company shall
not be required to make mandatory redemption payments with respect to the
Notes.

                 8.       REPURCHASE AT OPTION OF HOLDER.

                 (a)      Upon the occurrence of a Change of Control, each
Holder of Notes shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest, if any, and Liquidated Damages thereon to the
date of repurchase (the "Change of Control Payment"). Within 10 days following
any Change of Control, the Company shall mail a notice to each Holder stating:
(1) that the Change of Control Offer is being made pursuant to Section 4.15 of
the Indenture and that all Notes tendered will be accepted for payment; (2) the
purchase price and the purchase date, which shall be no later than 30 business
days from the date such notice is mailed (the "Change of Control Payment
Date"); (3) that any Note not tendered will continue to accrue interest; (4)
that, unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date; (5)
that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment





                                      A1-4
<PAGE>   91
Date; (6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement that such
Holder is withdrawing his election to have the Notes purchased; and (7) that
Holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof.  The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of Notes in connection with a Change of Control.

                 (b)      If the Company or a Restricted Subsidiary consummates
any Asset Sales, within five days of each date on which the aggregate amount of
Excess Proceeds exceeds $10 million, the Company shall commence an offer to all
Holders of Notes and, to the extent required by the terms of any Pari Passu
Indebtedness, to all holders of such Pari Passu Indebtedness (as "Asset Sale
Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date fixed for the closing of such offer, in accordance with the
procedures set forth in the Indenture or such Pari Passu Indebtedness as
applicable.  To the extent that the aggregate amount of Notes and such Pari
Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes and any Pari Passu
Indebtedness surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be repurchased on a pro rata
basis.  Upon completion of such offer to repurchase, the amount of Excess
Proceeds shall be reset at zero. If the aggregate principal amount of Notes and
any Pari Passu Indebtedness surrendered by Holders thereof exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes to be repurchased on a
pro rata basis.  Upon completion of such offer to repurchase, the amount of
Excess Proceeds shall be reset at zero.

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

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

                 11.      PERSONS DEEMED OWNERS.  The registered Holder of a
Note may be treated as its owner for all purposes.





                                      A1-5
<PAGE>   92
                 12.      AMENDMENT, SUPPLEMENT AND WAIVER.  Subject to certain
exceptions, the Indenture, the Guarantees or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the then outstanding Notes voting as a single class, and
any existing default or compliance with any provision of the Indenture, the
Note Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes voting as a single
class.  Without the consent of any Holder of a Note, the Indenture, the Note
Guarantees or the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
or Guarantor's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act, or to allow any Guarantor to
execute a supplemental indenture to the Indenture and/or a Note Guarantee with
respect to the Notes.

                 13.      DEFAULTS AND REMEDIES.  Events of Default include:
(i) default for 30 days in the payment when due of interest on, or Liquidated
Damages with respect to, the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company to
comply with the provisions described under Sections 4.07, 4.09, 4.10, 4.14,
4.19 or 5.01 of the Indenture; (iv) failure by the Company for 60 days after
notice to comply with any of its other agreements in the Indenture or the
Notes; (v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists,
or is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness at its final stated maturity or (b) results in the acceleration of
such Indebtedness prior to its maturity and, in each case, the principal amount
of which Indebtedness, together with the principal amount of any other such
Indebtedness described in clauses (a) and (b) above, aggregates $10.0 million
or more; (vi) failure by the Company or any of its Subsidiaries to pay final
judgments aggregating in excess of $10.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; or (ix) the Note Guarantee of any Guarantor is held in judicial
proceedings to be unenforceable or invalid or ceases for any reason to be in
full force and effect (other than in accordance with the terms of this
Indenture) or any Guarantor or any Person acting on behalf of any Guarantor
denies or disaffirms such Guarantor's obligations under its Note Guarantee
(other than by reason of a release of such Guarantor from its Note Guarantee in
accordance with the terms of the Indenture).

                 If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding
Notes may declare all the Notes to be due and payable immediately, provided
however, that if any Senior Indebtedness is outstanding under the New Senior
Credit Facilities, upon a declaration of acceleration, the Notes shall be
payable upon the earlier of (x) the day which is five Business Days after the
provision to the Company and the agent under the New Credit Senior Facilities
of written notice of such declaration and (y) the date of acceleration of any
Indebtedness under the New Senior Credit Facilities.  Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute
a





                                      A1-6
<PAGE>   93
Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice.  Holders of Notes may not enforce the
Indenture or the Notes except as provided in the Indenture.  Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power.  The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default or Event of Default relating to the payment
of principal or interest) if it determines that withholding notice is in their
interest.

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

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

                 16.      AUTHENTICATION.  This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

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

                 18.      ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL
NOTES AND RESTRICTED DEFINITIVE NOTES.  In addition to the rights provided to
Holders of Notes under the Indenture, Holders of Restricted Global Notes and
Restricted Definitive Notes shall have all the rights set forth in the
Registration Rights Agreement dated as of December 18, 1997, between the
Company and the parties named on the signature pages thereof (the "Registration
Rights Agreement").

                 19.      CUSIP NUMBERS.  Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to Holders.  No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.





                                      A1-7
<PAGE>   94
                 The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement.  Requests may be made to:

                 Pillowtex Corporation
                 4111 Mint Way
                 Dallas, Texas  75237
                 Attention:  Treasurer





                                      A1-8
<PAGE>   95
                                ASSIGNMENT FORM

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


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

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

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

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

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

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

Date:
     ---------------
                                  Your Signature:
                                                 ---------------------------
                                  (Sign exactly as your name appears on the 
                                  face of this Note)

Signature Guarantee.





                                     A1-9
<PAGE>   96
                       OPTION OF HOLDER TO ELECT PURCHASE

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

                 [ ]    Section 4.10        [ ]    Section 4.15

                 If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state
the amount you elect to have purchased: $________


Date:                                    Your Signature:                      
     ------------                                      -----------------------
                                         (Sign exactly as your name appears on
                                         the Note)

                                         Tax Identification Number:
                                                                   ------------

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

SIGNATURE GUARANTEE.





                                     A1-10
<PAGE>   97
             SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

                 The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a
part of another Global Note or Definitive Note for an interest in this Global
Note, have been made:

<TABLE>
<CAPTION>
                                                                     Principal
                                                                    Amount of this
                       Amount of               Amount of              Global Note          Signature of                      
                      decrease in             increase in           following such       authorized officer
                   Principal Amount of      Principal Amount         decrease (or        of Trustee or Note                      
Date of Exchange     this Global Note      of this Global Note        increase)             Custodian   
- ----------------     ----------------      -------------------        ---------             ---------

<S>                <C>                     <C>                      <C>                     <C>

</TABLE>




                                     A1-11
<PAGE>   98
                                   EXHIBIT A2
                      (Face of Regulation S Global Note)

================================================================================
CUSIP/CINS
           ---------------

          9% [Series A] [Series B] Senior Subordinated Notes due 2007

No.                                                           $
    -----                                                      ---------------

                             PILLOWTEX CORPORATION

promises to pay to
                  ----------------------------------------------

or registered assigns,

the principal sum of
                    --------------------------------------------

Dollars on December 15, 2007

Interest Payment Dates: June 15, and December 15

Record Dates: June 1, and December 1

                                             Dated: December 18, 1997



                                             PILLOWTEX CORPORATION

                                             By:                              
                                                ------------------------------
                                                Name:  Charles M. Hansen, Jr.
                                                Title: Chief Executive Officer

This is one of the Regulation S Global
Notes referred to in the
within-mentioned Indenture:

Norwest Bank Minnesota, National Association,
as Trustee

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



================================================================================

                                      A2-1
<PAGE>   99
                       (Back of Regulation S Global Note)

          9% [Series A] [Series B] Senior Subordinated Notes due 2007

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE
TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.  UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), 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 MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

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

                 Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.





                                      A2-2
<PAGE>   100
                 1.       INTEREST.  Pillowtex Corporation, a Delaware
corporation (the "Company"), promises to pay interest on the principal amount
of this Note at 9% per annum from December 18, 1997 until maturity and shall
pay the Liquidated Damages payable pursuant to Section 5 of the Registration
Rights Agreement referred to below.  The Company will pay interest and
Liquidated Damages semi-annually on June 15 and December 15 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date").  Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date;
provided, further, that the first Interest Payment Date shall be June 15, 1998.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
and Liquidated Damages (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful.  Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

                 Until this Regulation S Temporary Global Note is exchanged for
one or more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Senior Subordinated Notes under the Indenture.

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

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

                 4.       INDENTURE .  The Company issued the Notes under an
Indenture dated as of December 18, 1997 ("Indenture") between the Company and
the Trustee.  The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code Sections
 77aaa-77bbbb).  The Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms.  To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of





                                      A2-3
<PAGE>   101
the Indenture shall govern and be controlling.  The Notes are obligations of
the Company limited to $185,000,000 million in aggregate principal amount, plus
amounts, if any, issued to pay Liquidated Damages on outstanding Notes as set
forth in Paragraph 2 hereof.

                 5.       OPTIONAL REDEMPTION.

                 The Notes shall not be redeemable at the Company's option
prior to December 15, 2002.  Thereafter, the Notes shall be subject to
redemption at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon to the applicable redemption date, if
redeemed during the 12- month period, beginning on December 15 of the years
indicated below:

<TABLE>
<CAPTION>
         Year                                                                        Percentage
         ----                                                                        ----------
         <S>                                                                          <C>
         2002   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     104.500%
         2003   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     103.000%
         2004   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     101.500%
         2005   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     100.000%
</TABLE>

                 6.       SPECIAL REDEMPTION.

                 On the Special Redemption Date, the Notes will be subject to
mandatory redemption at a redemption price equal to 101% of the principal
amount of the Notes, plus accrued interest to the date of redemption, if the
Merger is not consummated prior to the Special Redemption Date.  Pillowtex will
also have the option to redeem the Notes at any time on or prior to the Special
Redemption Date if the Merger has not been consummated on or prior to such date
at a redemption price equal to 101% of the principal amount thereof plus
accrued and unpaid interest to the date of redemption.

                 7.       MANDATORY REDEMPTION.

                 Except as set forth in paragraph 8 below, the Company shall
not be required to make mandatory redemption payments with respect to the
Notes.

                 8.       REPURCHASE AT OPTION OF HOLDER.

                 (a)      Upon the occurrence of a Change of Control, each
Holder of Notes shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest, if any, and Liquidated Damages thereon to the
date of repurchase (the "Change of Control Payment"). Within 10 days following
any Change of Control, the Company shall mail a notice to each Holder stating:
(1) that the Change of Control Offer is being made pursuant to Section 4.15 of
the Indenture and that all Notes tendered will be accepted for payment; (2) the
purchase price and the purchase date, which shall be no later than 30 business
days from the date such notice is mailed (the "Change of Control Payment
Date"); (3) that any Note not tendered will continue to accrue interest; (4)
that, unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date; (5)
that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the





                                      A2-4
<PAGE>   102
notice prior to the close of business on the third Business Day preceding the
Change of Control Payment Date; (6) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have the Notes
purchased; and (7) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof.  The Company shall comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of Notes in
connection with a Change of Control.

                 (b)      If the Company or a Restricted Subsidiary consummates
any Asset Sales, within five days of each date on which the aggregate amount of
Excess Proceeds exceeds $10 million, the Company shall commence an offer to all
Holders of Notes and, to the extent required by the terms of any Pari Passu
Indebtedness, to all holders of such Pari Passu Indebtedness (as "Asset Sale
Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date fixed for the closing of such offer, in accordance with the
procedures set forth in the Indenture or such Pari Passu Indebtedness as
applicable.  To the extent that the aggregate amount of Notes and such Pari
Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes and any Pari Passu
Indebtedness surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be repurchased on a pro rata
basis.  Upon completion of such offer to repurchase, the amount of Excess
Proceeds shall be reset at zero. If the aggregate principal amount of Notes and
any Pari Passu Indebtedness surrendered by Holders thereof exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes to be repurchased on a
pro rata basis.  Upon completion of such offer to repurchase, the amount of
Excess Proceeds shall be reset at zero.

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

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

                 11.      PERSONS DEEMED OWNERS.  The registered Holder of a
Note may be treated as its owner for all purposes.





                                      A2-5
<PAGE>   103
                 12.      AMENDMENT, SUPPLEMENT AND WAIVER.  Subject to certain
exceptions, the Indenture, the Note Guarantees or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the then outstanding Notes voting as a single class, and
any existing default or compliance with any provision of the Indenture, the
Note Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes voting as a single
class.  Without the consent of any Holder of a Note, the Indenture, the Note
Guarantees or the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
or Guarantor's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act, or to allow any Guarantor to
execute a supplemental indenture to the Indenture and/or a Note Guarantee with
respect to the Notes.

                 13.      DEFAULTS AND REMEDIES.  Events of Default include:
(i) default for 30 days in the payment when due of interest on, or Liquidated
Damages with respect to, the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company to
comply with the provisions described under Sections 4.07, 4.09, 4.10, 4.14,
4.19 or 5.01 of the Indenture; (iv) failure by the Company for 60 days after
notice to comply with any of its other agreements in the Indenture or the
Notes; (v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists,
or is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness at its final stated maturity or (b) results in the acceleration of
such Indebtedness prior to its maturity and, in each case, the principal amount
of which Indebtedness, together with the principal amount of any other such
Indebtedness described in clauses (a) and (b) above, aggregates $10.0 million
or more; (vi) failure by the Company or any of its Subsidiaries to pay final
judgments aggregating in excess of $10.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; or (ix) the Note Guarantee of any Guarantor is held in judicial
proceedings to be unenforceable or invalid or ceases for any reason to be in
full force and effect (other than in accordance with the terms of this
Indenture) or any Guarantor or any Person acting on behalf of any Guarantor
denies or disaffirms such Guarantor's obligations under its Note Guarantee
(other than by reason of a release of such Guarantor from its Note Guarantee in
accordance with the terms of the Indenture).

                 If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding
Notes may declare all the Notes to be due and payable immediately, provided
however, that if any Senior Indebtedness is outstanding under the New Senior
Credit Facilities, upon a declaration of acceleration, the Notes shall be
payable upon the earlier of (x) the day which is five Business Days after the
provision to the Company and the agent under the New Credit Senior Facilities
of written notice of such declaration and (y) the date of acceleration of any
Indebtedness under the New Senior Credit Facilities.  Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute
a





                                      A2-6
<PAGE>   104
Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice.  Holders of Notes may not enforce the
Indenture or the Notes except as provided in the Indenture.  Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power.  The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default or Event of Default relating to the payment
of principal or interest) if it determines that withholding notice is in their
interest.

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

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

                 16.      AUTHENTICATION.  This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

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

                 18.      ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL
NOTES AND RESTRICTED DEFINITIVE NOTES.  In addition to the rights provided to
Holders of Notes under the Indenture, Holders of Restricted Global Notes and
Restricted Definitive Notes shall have all the rights set forth in the A/B
Exchange Registration Rights Agreement dated as of December 18, 1997, between
the Company and the parties named on the signature pages thereof (the
"Registration Rights Agreement").

                 19.      CUSIP NUMBERS.  Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to Holders.  No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.





                                      A2-7
<PAGE>   105
                 The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement.  Requests may be made to:

                 Pillowtex Corporation
                 4111 Mint Way
                 Dallas, Texas  75237
                 Attention:  Treasurer





                                      A2-8
<PAGE>   106
                                ASSIGNMENT FORM

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


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

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

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

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

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



Date: 
      -----------------

                                             Your Signature:                  
                                                           --------------------
                                             (Sign exactly as your name appears
                                             on the face of this Note)

SIGNATURE GUARANTEE.





                                      A2-9
<PAGE>   107
                       OPTION OF HOLDER TO ELECT PURCHASE

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

                 [ ]   Section 4.10         [ ]   Section 4.15

                 If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state
the amount you elect to have purchased: $________




Date:                                     Your Signature:                     
     ------------                                        ---------------------
                                          (Sign exactly as your name appears 
                                          on the Note)

                                          Tax Identification Number:
                                                                   -----------

SIGNATURE GUARANTEE.





                                     A2-10
<PAGE>   108
          SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE

                 The following exchanges of a part of this Regulation S
Temporary Global Note for an interest in another Global Note, or of other
Restricted Global Notes for an interest in this Regulation S Temporary Global
Note, have been made:



<TABLE>
<CAPTION>
                                                                     Principal
                                                                    Amount of this
                       Amount of               Amount of              Global Note          Signature of                      
                      decrease in             increase in           following such       authorized officer
                   Principal Amount of      Principal Amount         decrease (or        of Trustee or Note                      
Date of Exchange     this Global Note      of this Global Note        increase)             Custodian   
- ----------------     ----------------      -------------------        ---------             ---------
<S>                  <C>                   <C>                        <C>                   <C>

</TABLE>





                                     A2-11
<PAGE>   109
                                   EXHIBIT B

                        FORM OF CERTIFICATE OF TRANSFER

Pillowtex Corporation
4111 Mint Way
Dallas, Texas  75237

Norwest Bank Minnesota, National Association
6th Street and Marquette Avenue
Minnesota, MN 55479-0069

                 Re:      9% Senior Subordinated Notes due 2007

                 Reference is hereby made to the Indenture, dated as of
December 18, 1997 (the "Indenture"), between Pillowtex Corporation, as issuer
(the "Company"), and Norwest Bank Minnesota, National Association, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

                 ______________, (the "Transferor") owns and proposes to
transfer the Note[s] or interest in such Note[s] specified in Annex A hereto,
in the principal amount of $___________ in such Note[s] or interests (the
"Transfer"), to  __________ (the "Transferee"), as further specified in Annex A
hereto.  In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1.   [ ]      CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A.  The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Note for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and
such Person and each such account is a "qualified institutional buyer" within
the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A
and such Transfer is in compliance with any applicable blue sky securities laws
of any state of the United States.  Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the 144A Global Note
and/or the Definitive Note and in the Indenture and the Securities Act.

2.   [ ]      CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S.
The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a person in the
United States and (x) at the time the buy order was originated, the Transferee
was outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been





                                      B-1
<PAGE>   110
made in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S under the Securities Act, (iii) the transaction is not part of a
plan or scheme to evade the registration requirements of the Securities Act and
(iv) if the proposed transfer is being made prior to the expiration of the
Restricted Period, the transfer is not being made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser).  Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on Transfer enumerated in the Private Placement
Legend printed on the Regulation S Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.

3.    [ ]     CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S.  The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):

                 (a)     [ ]      such Transfer is being effected pursuant to
and in accordance with Rule 144 under the Securities Act;

                                       or

                 (b)     [ ]      such Transfer is being effected to the
Company or a subsidiary thereof;

                                       or


                 (c)     [ ]      such Transfer is being effected pursuant to
an effective registration statement under the Securities Act and in compliance
with the prospectus delivery requirements of the Securities Act;

                                       or

                 (d)     [ ]      such Transfer is being effected to an
Institutional Accredited Investor and pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A, Rule 144
or Rule 904, and the Transferor hereby further certifies that it has not
engaged in any general solicitation within the meaning of Regulation D under
the Securities Act and the Transfer complies with the transfer restrictions
applicable to beneficial interests in a Restricted Global Note or Restricted
Definitive Notes and the requirements of the exemption claimed, which
certification is supported by (1) a certificate executed by the Transferee in
the form of Exhibit D to the Indenture and (2) if such Transfer is in respect
of a principal amount of Notes at the time of transfer of less than $250,000,
an Opinion of Counsel provided by the Transferor or the Transferee (a copy of
which the Transferor has attached to this certification), to the effect that
such Transfer is in compliance with the Securities Act.  Upon consummation of
the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the IAI Global Note and/or the Definitive Notes and in the Indenture and the
Securities Act.

4.    [ ]        Check if Transferee will take delivery of a beneficial
interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.





                                      B-2
<PAGE>   111
                 (a)     [ ]      CHECK IF TRANSFER IS PURSUANT TO RULE 144.
(i) The Transfer is being effected pursuant to and in accordance with Rule 144
under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act.  Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.

                 (b)     [ ]      CHECK IF TRANSFER IS PURSUANT TO REGULATION
S.  (i) The Transfer is being effected pursuant to and in accordance with Rule
903 or Rule 904 under the Securities Act and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities
laws of any state of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act.  Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.

                 (c)     [ ]      CHECK IF TRANSFER IS PURSUANT TO OTHER
Exemption.  (i) The Transfer is being effected pursuant to and in compliance
with an exemption from the registration requirements of the Securities Act
other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities
laws of any State of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act.  Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will not be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes or Restricted Definitive Notes and in the
Indenture.

                 This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.



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

Dated:





                                      B-3
<PAGE>   112

                       ANNEX A TO CERTIFICATE OF TRANSFER

1.       The Transferor owns and proposes to transfer the following:

                           [CHECK ONE OF (a) OR (b)]

                 (a)     [ ]      a beneficial interest in the:

                         (i)      [ ]    144A Global Note (CUSIP _________), or

                         (ii)     [ ]    Regulation S Global Note 
                                         (CUSIP _________), or

                         (iii)    [ ]    IAI Global Note (CUSIP ________); or

                         (b)      [ ]    a Restricted Definitive Note.

                 2.      After the Transfer the Transferee will hold:

                                  [CHECK ONE]

                         (a)      [ ]    a beneficial interest in the:

                         (i)      [ ]    144A Global Note (CUSIP ________), or

                         (ii)     [ ]    Regulation S Global Note (CUSIP
                                         ________), or

                         (iii)    [ ]    IAI Global Note (CUSIP ________); or

                         (iv)     [ ]    Unrestricted Global Note (CUSIP __); or

                         (b)      [ ]    a Restricted Definitive Note; or

                         (c)      [ ]    an Unrestricted Definitive Note,

             in accordance with the terms of the Indenture.





                                      B-4
<PAGE>   113
                                   EXHIBIT C
                        FORM OF CERTIFICATE OF EXCHANGE



Pillowtex Corporation
4111 Mint Way
Dallas, Texas  75237

Norwest Bank Minnesota, National Association
6th Street and Marquette Avenue
Minnesota, MN 55479-0069

                 Re:      9% Senior Subordinated Notes due 2007

                             (CUSIP______________)



                 Reference is hereby made to the Indenture, dated as of
December 18, 1997 (the "Indenture"), between Pillowtex Corporation, as issuer
(the "Company"), and Pillowtex Corporation, as trustee.  Capitalized terms used
but not defined herein shall have the meanings given to them in the Indenture.

                 ____________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount
of $____________ in such Note[s] or interests (the "Exchange").  In connection
with the Exchange, the Owner hereby certifies that:

 1.      Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial
Interests in an Unrestricted Global Note

                 (a)     [ ]      Check if Exchange is from beneficial interest
in a Restricted Global Note to beneficial interest in an Unrestricted Global
Note.  In connection with the Exchange of the Owner's beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted Global Note
in an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Global Notes and pursuant to and in accordance with the
United States Securities Act of 1933, as amended (the "Securities Act"), (iii)
the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest in an Unrestricted Global Note
is being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.

                 (b)     [ ]      Check if Exchange is from beneficial interest
in a Restricted Global Note to Unrestricted Definitive Note.  In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global
Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the
Definitive Note is being acquired for the Owner's own account without transfer,
(ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with





                                      C-1

<PAGE>   114
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.

                 (c)    [ ]       CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE.  In
connection with the Owner's Exchange of a Restricted Definitive Note for a
beneficial interest in an Unrestricted Global Note, the Owner hereby certifies
(i) the beneficial interest is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and pursuant to
and in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.

                 (d)    [ ]       CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE.  In connection with the
Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive
Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted Definitive Note is
being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.

2.      EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES

                 (a)    [ ]       CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST
IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE.  In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global Note for
a Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer.  Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Definitive Note and
in the Indenture and the Securities Act.


                 (b)    [ ]       CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE.  In
connection with the Exchange of the Owner's Restricted Definitive Note for a
beneficial interest in the   144A Global Note,   Regulation S Global Note,
IAI Global Note with an equal principal amount, the Owner hereby certifies (i)
the beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any
applicable blue sky securities laws of any state of the United States.  Upon
consummation of the proposed Exchange in accordance with the terms of the
Indenture, the beneficial interest issued will be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the relevant
Restricted Global Note and in the Indenture and the Securities Act.





                                      C-2

<PAGE>   115
                   This certificate and the statements contained herein are 
made for your benefit and the benefit of the Company.

                                                  ----------------------------
                                                  [Insert Name of Owner]



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



Dated:                  , 
       ----------------  ----




                                      C-3

<PAGE>   116

                                   EXHIBIT D

                            FORM OF CERTIFICATE FROM
                  ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR



Pillowtex Corporation
4111 Mint Way
Dallas, Texas  75237

Norwest Bank Minnesota, National Association
6th Street and Marquette Avenue
Minnesota, MN 55479-0069

                 Re:      9% Senior subordinated Notes due 2007

                          Reference is hereby made to the Indenture, dated as
of December 18, 1997 (the "Indenture"), between Pillowtex Corporation, as
issuer (the "Company"), and Norwest Bank Minnesota, National Association, as
trustee.  Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.

                          In connection with our proposed purchase of
$____________ aggregate principal amount of:

                 (a)    [ ]       a beneficial interest in a Global Note, or

                 (b)    [ ]       a Definitive Note,

                 we confirm that:

                          1.      We understand that any subsequent transfer of
the Notes or any interest therein is subject to certain restrictions and
conditions set forth in the Indenture and the undersigned agrees to be bound
by, and not to resell, pledge or otherwise transfer the Notes or any interest
therein except in compliance with, such restrictions and conditions and the
United States Securities Act of 1933, as amended (the "Securities Act").

                          2.      We understand that the offer and sale of the
Notes have not been registered under the Securities Act, and that the Notes and
any interest therein may not be offered or sold except as permitted in the
following sentence.  We agree, on our own behalf and on behalf of any accounts
for which we are acting as hereinafter stated, that if we should sell the Notes
or any interest therein, we will do so only (A) to the Company or any
subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act
to a "qualified institutional buyer" (as defined therein), (c) to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to
you and to the Company a signed letter substantially in the form of this letter
and, if such transfer is in respect of a principal amount of Notes, at the time
of transfer of less than $250,000, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such transfer is in compliance
with the Securities Act, (D) outside the United States in accordance with Rule
904 of Regulation S under the Securities Act, (E) pursuant to the provisions of





                                      D-1

<PAGE>   117
Rule 144(k) under the Securities Act or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree to
provide to any person purchasing the Definitive Note or beneficial interest in
a Global Note from us in a transaction meeting the requirements of clauses (A)
through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.

                          3.      We understand that, on any proposed resale of
the Notes or beneficial interest therein, we will be required to furnish to you
and the Company such certifications, legal opinions and other information as
you and the Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions.  We further understand that the Notes
purchased by us will bear a legend to the foregoing effect.  We further
understand that any subsequent transfer by us of the Notes or beneficial
interest therein acquired by us must be effected through one of the Placement
Agents.

                          4.      We are an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) and 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 Notes, and we and any accounts for which we are acting are
each able to bear the economic risk of our or its investment.

                          5.      We are acquiring the Notes or beneficial
interest therein purchased by us for our own account or for one or more
accounts (each of which is an institutional "accredited investor") as to each
of which we exercise sole investment discretion.

                          You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.


                                        --------------------------------------
                                        Insert Name of Accredited Investor





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





Dated:                ,
      ---------------- -----




                                      D-2

<PAGE>   118
                                   EXHIBIT E
                         FORM OF NOTATION OF GUARANTEE



                 For value received, each Guarantor (which term includes any
successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and
subject to the provisions in the Indenture dated as of December 18, 1997 (the
"Indenture") among Pillowtex Corporation, the Guarantors listed on the
signature page thereto and Norwest Bank Minnesota, National Association, as
trustee (the "Trustee"), (a) the due and punctual payment of the principal of,
premium, if any, and interest on the Notes (as defined in the Indenture),
whether at maturity, by acceleration, redemption or otherwise, the due and
punctual payment of interest on overdue principal and premium, and, to the
extent permitted by law, interest, and the due and punctual performance of all
other obligations of the Company to the Holders or the Trustee all in
accordance with the terms of the Indenture and (b) in case of any extension of
time of payment or renewal of any Notes or any of such other obligations, that
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.  The obligations of the Guarantors to the Holders of
Notes and to the Trustee pursuant to the Note Guarantee and the Indenture are
expressly set forth in Article 10 of the Indenture and reference is hereby made
to the Indenture for the precise terms of the Note Guarantee.  Each Holder of a
Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder,
to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note Guarantee shall cease to be so subordinated
and subject in right of payment upon any defeasance of this Note in accordance
with the provisions of the Indenture.




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





                                     E-1
<PAGE>   119
                                   EXHIBIT F
                         FORM OF SUPPLEMENTAL INDENTURE
                    TO BE DELIVERED BY SUBSEQUENT GUARANTORS



                 SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated
as of ________________, among __________________ (the "Guaranteeing
Subsidiary"), a subsidiary of Pillowtex Corporation (or its permitted
successor), a ________ corporation (the "Company"), the Company, the other
Guarantors (as defined in the Indenture referred to herein) and Norwest Bank
Minnesota, National Association, as trustee under the indenture referred to
below (the "Trustee").

                              W I T N E S S E T H

                 WHEREAS, the Company has heretofore executed and delivered to
the Trustee an indenture (the "Indenture"), dated as of December 18, 1997
providing for the issuance of an aggregate principal amount of up to $
185,000,000 of 9% Senior Subordinated Notes due 2007 (the "Notes");

                 WHEREAS, the Indenture provides that under certain
circumstances the Guaranteeing Subsidiary shall execute and deliver to the
Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary
shall unconditionally guarantee all of the Company's Obligations under the
Notes and the Indenture on the terms and conditions set forth herein (the "Note
Guarantee"); and

                 WHEREAS, pursuant to Section 9.01 of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental Indenture.

                 NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

                 1.       CAPITALIZED TERMS.  Capitalized terms used herein
without definition shall have the meanings assigned to them in the Indenture.

                 2.       AGREEMENT TO GUARANTEE.  The Guaranteeing Subsidiary
hereby agrees as follows:

                          (a)     Along with all Guarantors named in the
                 Indenture, to jointly and severally Guarantee to each Holder
                 of a Note authenticated and delivered by the Trustee and to
                 the Trustee and its successors and assigns, irrespective of
                 the validity and enforceability of the Indenture, the Notes or
                 the obligations of the Company hereunder or thereunder, that:

                          (i)     the principal of and interest on the Notes
                                  will be promptly paid in full when due,
                                  whether at maturity, by acceleration,
                                  redemption or otherwise, and interest on the
                                  overdue principal of and interest on the
                                  Notes, if any, if lawful, and all other
                                  obligations of the Company to the Holders or
                                  the Trustee hereunder or thereunder will be
                                  promptly paid in full or performed, all in
                                  accordance with the terms hereof and thereof;
                                  and





                                      F-1
<PAGE>   120
                          (ii)    in case of any extension of time of payment
                                  or renewal of any Notes or any of such other
                                  obligations, that same will be promptly paid
                                  in full when due or performed in accordance
                                  with the terms of the extension or renewal,
                                  whether at stated maturity, by acceleration
                                  or otherwise.  Failing payment when due of
                                  any amount so guaranteed or any performance
                                  so guaranteed for whatever reason, the
                                  Guarantors shall be jointly and severally
                                  obligated to pay the same immediately.



                 (b)      The obligations hereunder shall be unconditional,
                          irrespective of the validity, regularity or
                          enforceability of the Notes or the Indenture, the
                          absence of any action to enforce the same, any waiver
                          or consent by any Holder of the Notes with respect to
                          any provisions hereof or thereof, the recovery of any
                          judgment against the Company, any action to enforce
                          the same or any other circumstance which might
                          otherwise constitute a legal or equitable discharge
                          or defense of a guarantor.

                 (c)      The following is hereby waived diligence
                          presentment, demand of payment, filing of claims with
                          a court in the event of insolvency or bankruptcy of
                          the Company, any right to require a proceeding first
                          against the Company, protest, notice and all demands
                          whatsoever.

                 (d)      This Note Guarantee shall not be discharged except by
                          complete performance of the obligations contained in
                          the Notes and the Indenture.

                 (e)      If any Holder or the Trustee is required by any court
                          or otherwise to return to the Company, the
                          Guarantors, or any Custodian, Trustee, liquidator or
                          other similar official acting in relation to either
                          the Company or the Guarantors, any amount paid by
                          either to the Trustee or such Holder, this Note
                          Guarantee, to the extent theretofore discharged,
                          shall be reinstated in full force and effect.

                 (f)      The Guaranteeing Subsidiary shall not be entitled to
                          any right of subrogation in relation to the Holders
                          in respect of any obligations guaranteed hereby until
                          payment in full of all obligations guaranteed hereby.

                 (g)      As between the Guarantors, on the one hand, and the
                          Holders and the Trustee, on the other hand, (x) the
                          maturity of the obligations guaranteed hereby may be
                          accelerated as provided in Article 6 of the Indenture
                          for the purposes of this Note Guarantee,
                          notwithstanding any stay, injunction or other
                          prohibition preventing such acceleration in respect
                          of the obligations guaranteed hereby, and (y) in the
                          event of any declaration of acceleration of such
                          obligations as provided in Article 6 of the
                          Indenture, such obligations (whether or not due and
                          payable) shall forthwith become due and payable by
                          the Guarantors for the purpose of this Note
                          Guarantee.

                 (h)      The Guarantors shall have the right to seek
                          contribution from any non-paying Guarantor so long as
                          the exercise of such right does not impair the rights
                          of the Holders under the Guarantee.





                                      F-2
<PAGE>   121
                 (i)      Pursuant to Section 10.02 of the Indenture, after
                          giving effect to any maximum amount and any other
                          contingent and fixed liabilities that are relevant
                          under any applicable Bankruptcy or fraudulent
                          conveyance laws, and after giving effect to any
                          collections from, rights to receive contribution from
                          or payments made by or on behalf of any other
                          Guarantor in respect of the obligations of such other
                          Guarantor under Article 10 of the Indenture shall
                          result in the obligations of such Guarantor under its
                          Note Guarantee not constituting a fraudulent transfer
                          or conveyance.

                 3        EXECUTION AND DELIVERY.  Each Guaranteeing Subsidiary
agrees that the Note Guarantees shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such Note
Guarantee.

                 4.       GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON
CERTAIN TERMS.

         (a)     The Guaranteeing Subsidiary may not consolidate with or merge
                 with or into (whether or not such Guarantor is the surviving
                 Person) another corporation, Person or entity whether or not
                 affiliated with such Guarantor unless:

                 (i)      subject to Section 11.05 of the Indenture, the Person
                          formed by or surviving any such consolidation or
                          merger (if other than a Guarantor or the Company)
                          unconditionally assumes all the obligations of such
                          Guarantor, pursuant to a supplemental indenture in
                          form and substance reasonably satisfactory to the
                          Trustee, under the Notes, the Indenture and the Note
                          Guarantee on the terms set forth herein or therein;
                          and

                 (ii)     immediately after giving effect to such transaction,
                          no Default or Event of Default exists.

         (b)     In case of any such consolidation, merger, sale or conveyance
                 and upon the assumption by the successor corporation, by
                 supplemental indenture, executed and delivered to the Trustee
                 and satisfactory in form to the Trustee, of the Note Guarantee
                 endorsed upon the Notes and the due and punctual performance
                 of all of the covenants and conditions of the Indenture to be
                 performed by the Guarantor, such successor corporation shall
                 succeed to and be substituted for the Guarantor with the same
                 effect as if it had been named herein as a Guarantor.  Such
                 successor corporation thereupon may cause to be signed any or
                 all of the Note Guarantees to be endorsed upon all of the
                 Notes issuable hereunder which theretofore shall not have been
                 signed by the Company and delivered to the Trustee.  All the
                 Note Guarantees so issued shall in all respects have the same
                 legal rank and benefit under the Indenture as the Note
                 Guarantees theretofore and thereafter issued in accordance
                 with the terms of the Indenture as though all of such Note
                 Guarantees had been issued at the date of the execution
                 hereof.

                 (c)      Except as set forth in Articles 4 and 5 of the
Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in
the Indenture or in any of the Notes shall prevent any consolidation or merger
of a Guarantor with or into the Company or another Guarantor, or shall prevent
any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.





                                      F-3

<PAGE>   122
                 5.       RELEASES.

         (a)     In the event of a sale or other disposition of all of the
                 assets of any Guarantor, by way of merger, consolidation or
                 otherwise, or a sale or other disposition of all to the
                 capital stock of any Guarantor, then such Guarantor (in the
                 event of a sale or other disposition, by way of merger,
                 consolidation or otherwise, of all of the capital stock of
                 such Guarantor) or the corporation acquiring the property (in
                 the event of a sale or other disposition of all or
                 substantially all of the assets of such Guarantor) will be
                 released and relieved of any obligations under its Note
                 Guarantee; provided that the Net Proceeds of such sale or
                 other disposition are applied in accordance with the
                 applicable provisions of the Indenture, including without
                 limitation Section 4.10 of the Indenture. Upon delivery by the
                 Company to the Trustee of an Officers' Certificate and an
                 Opinion of Counsel to the effect that such sale or other
                 disposition was made by the Company in accordance with the
                 provisions of the Indenture, including without limitation
                 Section 4.10 of the Indenture, the Trustee shall execute any
                 documents reasonably required in order to evidence the release
                 of any Guarantor from its obligations under its Note
                 Guarantee.

         (b)     Any Guarantor not released from its obligations under its Note
                 Guarantee shall remain liable for the full amount of principal
                 of and interest on the Notes and for the other obligations of
                 any Guarantor under the Indenture as provided in Article 10 of
                 the Indenture.

                 6.       NO RECOURSE AGAINST OTHERS.  No past, present or
future director, officer, employee, incorporator, stockholder or agent of the
Guaranteeing Subsidiary, as such, shall have any liability for any obligations
of the Company or any Guaranteeing Subsidiary under the Notes, any Note
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation.  Each
Holder of the Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.

                 7.       NEW YORK LAW TO GOVERN.  THE INTERNAL LAW OF THE
STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL
INDENTURE 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.

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

                 9.       EFFECT OF HEADINGS.  The Section headings herein are
for convenience only and shall not affect the construction hereof.

                 10.      THE TRUSTEE.  The Trustee shall not be responsible in
any manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary and the
Company.





                                      F-4

<PAGE>   123
           IN WITNESS WHEREOF, the parties hereto have caused this 
Supplemental Indenture to be duly executed and attested, all as of the date 
first above written.

Dated:                 ,
      ----------------- -----

                                           Pillowtex Corporation


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



                                           [Guaranteeing Subsidiary]


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


                                           Norwest Bank Minnesota, National 
                                              Association, as Trustee



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






<PAGE>   1
                                                                     EXHIBIT 4.2



                             SUPPLEMENTAL INDENTURE


                 SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated
December 19, 1997, among Fieldcrest Cannon, Inc., Crestfield Cotton Company,
Encee, Inc., Fieldcrest Cannon Financing, Inc., Fieldcrest Cannon Licensing,
Inc., Fieldcrest Cannon International, Inc., Fieldcrest Cannon Sure Fit, Inc.,
Fieldcrest Cannon Transportation, Inc., St. Marys Inc., Amoskeag Company,
Amoskeag Management Corporation, Bangor Investment Company, Moore's Falls
Corporation, Downeast Securities Corporation and FCC Canada Inc. (the
"Guaranteeing Subsidiary"), a subsidiary of Pillowtex Corporation (or its
permitted successor), a Texas corporation (the "Company"), the Company, the
other Guarantors (as defined in the Indenture referred to herein) and Norwest
Bank Minnesota, National Association, as trustee under the indenture referred
to below (the "Trustee").

                              W I T N E S S E T H

                 WHEREAS, the Company has heretofore executed and delivered to
the Trustee an indenture (the "Indenture"), dated December 18, 1997 providing
for the issuance of an aggregate principal amount of up to $ 185,000,000 of 9%
Senior Subordinated Notes due 2007 (the "Notes");

                 WHEREAS, the Indenture provides that under certain
circumstances the Guaranteeing Subsidiary shall execute and deliver to the
Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary
shall unconditionally guarantee all of the Company's Obligations under the
Notes and the Indenture on the terms and conditions set forth herein (the "Note
Guarantee"); and

                 WHEREAS, pursuant to Section 9.01 of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental Indenture.

                 NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

                 1.       CAPITALIZED TERMS.  Capitalized terms used herein
without definition shall have the meanings assigned to them in the Indenture.

                 2.       AGREEMENT TO GUARANTEE.  The Guaranteeing Subsidiary
hereby agrees as follows:

                 (a)      Along with all Guarantors named in the Indenture, to
                          jointly and severally Guarantee to each Holder of a
                          Note authenticated and delivered by the Trustee and
                          to the Trustee and its successors and assigns,
                          irrespective of the validity and enforceability of
                          the Indenture, the Notes or the obligations of the
                          Company hereunder or thereunder, that:
<PAGE>   2
                          (i)     the principal of and interest on the Notes
                                  will be promptly paid in full when due,
                                  whether at maturity, by acceleration,
                                  redemption or otherwise, and interest on the
                                  overdue principal of and interest on the
                                  Notes, if any, if lawful, and all other
                                  obligations of the Company to the Holders or
                                  the Trustee hereunder or thereunder will be
                                  promptly paid in full or performed, all in
                                  accordance with the terms hereof and thereof;
                                  and

                          (ii)    in case of any extension of time of payment
                                  or renewal of any Notes or any of such other
                                  obligations, that same will be promptly paid
                                  in full when due or performed in accordance
                                  with the terms of the extension or renewal,
                                  whether at stated maturity, by acceleration
                                  or otherwise.  Failing payment when due of
                                  any amount so guaranteed or any performance
                                  so guaranteed for whatever reason, the
                                  Guarantors shall be jointly and severally
                                  obligated to pay the same immediately.

                 (b)      The obligations hereunder shall be unconditional,
                          irrespective of the validity, regularity or
                          enforceability of the Notes or the Indenture, the
                          absence of any action to enforce the same, any waiver
                          or consent by any Holder of the Notes with respect to
                          any provisions hereof or thereof, the recovery of any
                          judgment against the Company, any action to enforce
                          the same or any other circumstance which might
                          otherwise constitute a legal or equitable discharge
                          or defense of a guarantor.

                 (c)      The following is hereby waived diligence
                          presentment, demand of payment, filing of claims with
                          a court in the event of insolvency or bankruptcy of
                          the Company, any right to require a proceeding first
                          against the Company, protest, notice and all demands
                          whatsoever.

                 (d)      This Note Guarantee shall not be discharged except by
                          complete performance of the obligations contained in
                          the Notes and the Indenture.

                 (e)      If any Holder or the Trustee is required by any court
                          or otherwise to return to the Company, the
                          Guarantors, or any Custodian, Trustee, liquidator or
                          other similar official acting in relation to either
                          the Company or the Guarantors, any amount paid by
                          either to the Trustee or such Holder, this Note
                          Guarantee, to the extent theretofore discharged,
                          shall be reinstated in full force and effect.

                 (f)      The Guaranteeing Subsidiary shall not be entitled to
                          any right of subrogation in relation to the Holders
                          in respect of any obligations guaranteed hereby until
                          payment in full of all obligations guaranteed hereby.

                 (g)      As between the Guarantors, on the one hand, and the
                          Holders and the Trustee, on the other hand, (x) the
                          maturity of the obligations guaranteed hereby may be
                          accelerated as provided in Article 6 of the Indenture
                          for the
<PAGE>   3
                          purposes of this Note Guarantee, notwithstanding any
                          stay, injunction or other prohibition preventing such
                          acceleration in respect of the obligations guaranteed
                          hereby, and (y) in the event of any declaration of
                          acceleration of such obligations as provided in
                          Article 6 of the Indenture, such obligations (whether
                          or not due and payable) shall forthwith become due
                          and payable by the Guarantors for the purpose of this
                          Note Guarantee.

                 (h)      The Guarantors shall have the right to seek
                          contribution from any non-paying Guarantor so long as
                          the exercise of such right does not impair the rights
                          of the Holders under the Guarantee.

                 (i)      Pursuant to Section 10.02 of the Indenture, after
                          giving effect to any maximum amount and any other
                          contingent and fixed liabilities that are relevant
                          under any applicable Bankruptcy or fraudulent
                          conveyance laws, and after giving effect to any
                          collections from, rights to receive contribution from
                          or payments made by or on behalf of any other
                          Guarantor in respect of the obligations of such other
                          Guarantor under Article 10 of the Indenture shall
                          result in the obligations of such Guarantor under its
                          Note Guarantee not constituting a fraudulent transfer
                          or conveyance.

                 3        EXECUTION AND DELIVERY.  Each Guaranteeing Subsidiary
agrees that the Note Guarantees shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such Note
Guarantee.

                 4.       GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON
CERTAIN TERMS.

         (a)     The Guaranteeing Subsidiary may not consolidate with or merge
                 with or into (whether or not such Guarantor is the surviving
                 Person) another corporation, Person or entity whether or not
                 affiliated with such Guarantor unless:

                 (i)      subject to Section 11.05 of the Indenture, the Person
                          formed by or surviving any such consolidation or
                          merger (if other than a Guarantor or the Company)
                          unconditionally assumes all the obligations of such
                          Guarantor, pursuant to a supplemental indenture in
                          form and substance reasonably satisfactory to the
                          Trustee, under the Notes, the Indenture and the Note
                          Guarantee on the terms set forth herein or therein;
                          and

                 (ii)     immediately after giving effect to such transaction,
                          no Default or Event of Default exists.

         (b)     In case of any such consolidation, merger, sale or conveyance
                 and upon the assumption by the successor corporation, by
                 supplemental indenture, executed and delivered to the Trustee
                 and satisfactory in form to the Trustee, of the Note Guarantee
                 endorsed upon the Notes and the due and punctual performance
                 of all of the covenants and conditions of the Indenture to be
                 performed by the Guarantor, such successor corporation shall
                 succeed to and be substituted for the Guarantor with the same
                 effect as if it had been named herein as a Guarantor.  Such
<PAGE>   4
                 successor corporation thereupon may cause to be signed any or
                 all of the Note Guarantees to be endorsed upon all of the
                 Notes issuable hereunder which theretofore shall not have been
                 signed by the Company and delivered to the Trustee.  All the
                 Note Guarantees so issued shall in all respects have the same
                 legal rank and benefit under the Indenture as the Note
                 Guarantees theretofore and thereafter issued in accordance
                 with the terms of the Indenture as though all of such Note
                 Guarantees had been issued at the date of the execution
                 hereof.

                 (c)      Except as set forth in Articles 4 and 5 of the
Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in
the Indenture or in any of the Notes shall prevent any consolidation or merger
of a Guarantor with or into the Company or another Guarantor, or shall prevent
any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.

                 5.       RELEASES.

         (a)     In the event of a sale or other disposition of all of the
                 assets of any Guarantor, by way of merger, consolidation or
                 otherwise, or a sale or other disposition of all to the
                 capital stock of any Guarantor, then such Guarantor (in the
                 event of a sale or other disposition, by way of merger,
                 consolidation or otherwise, of all of the capital stock of
                 such Guarantor) or the corporation acquiring the property (in
                 the event of a sale or other disposition of all or
                 substantially all of the assets of such Guarantor) will be
                 released and relieved of any obligations under its Note
                 Guarantee; provided that the Net Proceeds of such sale or
                 other disposition are applied in accordance with the
                 applicable provisions of the Indenture, including without
                 limitation Section 4.10 of the Indenture. Upon delivery by the
                 Company to the Trustee of an Officers' Certificate and an
                 Opinion of Counsel to the effect that such sale or other
                 disposition was made by the Company in accordance with the
                 provisions of the Indenture, including without limitation
                 Section 4.10 of the Indenture, the Trustee shall execute any
                 documents reasonably required in order to evidence the release
                 of any Guarantor from its obligations under its Note
                 Guarantee.

         (b)     Any Guarantor not released from its obligations under its Note
                 Guarantee shall remain liable for the full amount of principal
                 of and interest on the Notes and for the other obligations of
                 any Guarantor under the Indenture as provided in Article 10 of
                 the Indenture.

                 6.       NO RECOURSE AGAINST OTHERS.  No past, present or
future director, officer, employee, incorporator, stockholder or agent of the
Guaranteeing Subsidiary, as such, shall have any liability for any obligations
of the Company or any Guaranteeing Subsidiary under the Notes, any Note
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation.  Each
Holder of the Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
<PAGE>   5
                 7.       NEW YORK LAW TO GOVERN.  THE INTERNAL LAW OF THE
STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL
INDENTURE 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.

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

                 9.       EFFECT OF HEADINGS.  The Section headings herein are
for convenience only and shall not affect the construction hereof.

                 10.      THE TRUSTEE.  The Trustee shall not be responsible in
any manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary and the
Company.
<PAGE>   6
                 IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.


Dated:  December 19, 1997


                                         PILLOWTEX CORPORATION


                                         By: /s/  Jeffrey D. Cordes
                                            -----------------------------------
                                            Name:  Jeffrey D. Cordes
                                            Title: Chief Operating Officer



                                         FIELDCREST CANNON, INC.
                                         ENCEE, INC.
                                         FIELDCREST CANNON FINANCING, INC.
                                         FIELDCREST CANNON LICENSING, INC.
                                         FIELDCREST CANNON INTERNATIONAL, INC.
                                         FIELDCREST CANNON SURE FIT, INC.
                                         FIELDCREST CANNON TRANSPORTATION, INC.
                                         ST. MARYS, INC.
                                         AMOSKEAG COMPANY
                                         AMOSKEAG MANAGEMENT CORPORATION
                                         MOORE'S FALLS CORPORATION
                                         DOWNEAST SECURITIES CORPORATION
                                         CRESTFIELD COTTON COMPANY
                                         BANGOR INVESTMENT COMPANY
                                         FCC CANADA, INC.


                                         By: /s/ Jeffrey D. Cordes
                                            -----------------------------------
                                            Name:  Jeffrey D. Cordes
                                            Title: President


                                         NORWEST BANK MINNESOTA, NATIONAL
                                            ASSOCIATION
                                         as Trustee



                                         By: /s/ Raymond S. Haverstock        
                                            -----------------------------------
                                            Name:  Raymond S. Haverstock
                                            Title: Vice President

<PAGE>   1
                                                                     EXHIBIT 4.5

================================================================================

CUSIP/CINS 
          -------------------

          9% Series B Senior Subordinated Notes due 2007

No.                                                             $
    -----                                                        --------------

                             PILLOWTEX CORPORATION

promises to pay to
                  ---------------------------------------------------

or registered assigns,

         the principal sum of
                             ------------------------------------------------

Dollars on December 15, 2007.

Interest Payment Dates:  June 15 and December 15

Record Dates:  June 1 and December 1

                                       DATED: FEBRUARY __, 1998

                                       PILLOWTEX CORPORATION

                                       BY:
                                          -----------------------------------
                                          Name: Charles M. Hansen, Jr.
                                          Title: Chief Executive Officer


This is one of the Global
Notes referred to in the
within-mentioned Indenture:

Norwest Bank Minnesota, National Association
as Trustee

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

                                                                                

================================================================================



<PAGE>   2
                                 (Back of Note)

                9% Series B Senior Subordinated Notes due 2007

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY,
REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION.  EACH PURCHASER OF THE SECURITY EVIDENCED
HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 1444A
THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT.  THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(A) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENT OF RULE 144A, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (D) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE
TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF
THE RESALE RESTRICTION SET FORTH IN (A) ABOVE.





<PAGE>   3
                 Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.

                 1.       INTEREST.  Pillowtex Corporation, a Texas 
corporation (the "Company"), promises to pay interest on the principal amount
of this Note at 9% per annum from December 18, 1997 until maturity and shall
pay the Liquidated Damages payable pursuant to Section 5 of the Registration
Rights Agreement referred to below.  The Company will pay interest and
Liquidated Damages semi-annually on June 15 and December 15 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date").  Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date;
provided, further, that the first Interest Payment Date shall be June 15, 1998.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
and Liquidated Damages (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful.  Interest will be
computed on the basis of a 360-day year of twelve 30-day months.

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

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

                 4.       INDENTURE .  The Company issued the Notes under an
Indenture dated as of December December 18, 1997 ("Indenture") between the
Company and the Trustee.  The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb).  The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms.  To the extent any provision of
this Note conflicts with the express provisions of the Indenture, the
provisions of the Indenture shall govern and be controlling.  The Notes are
obligations of the Company limited to





<PAGE>   4
$185,000,000 million in aggregate principal amount, plus amounts, if any,
issued to pay Liquidated Damages on outstanding Notes as set forth in Paragraph
2 hereof.

                 5.       OPTIONAL REDEMPTION.

                 The Notes shall not be redeemable at the Company's option
prior to December 15, 2002.  Thereafter, the Notes shall be subject to
redemption at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon to the applicable redemption date, if
redeemed during the 12- month period, beginning on December 15 of the years
indicated below:

<TABLE>
<CAPTION>
         Year                                                                        Percentage
         ----                                                                        ----------
         <S>                                                                          <C>
         2002   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     104.500%
         2003   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     103.000%
         2004   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     101.500%
         2005   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     100.000%
</TABLE>

                 6.       SPECIAL REDEMPTION.

                 On the Special Redemption Date, the Notes will be subject to
mandatory redemption at a redemption price equal to 101% of the principal
amount of the Notes, plus accrued interest to the date of redemption, if the
Merger is not consummated prior to the Special Redemption Date.  Pillowtex will
also have the option to redeem the Notes at any time on or prior to the Special
Redemption Date if the Merger has not been consummated on or prior to such date
at a redemption price equal to 101% of the principal amount thereof plus
accrued and unpaid interest to the date of redemption.

                 7.       MANDATORY REDEMPTION.

                 Except as set forth in paragraph 8 below, the Company shall
not be required to make mandatory redemption payments with respect to the
Notes.

                 8.       REPURCHASE AT OPTION OF HOLDER.

                 (a)      Upon the occurrence of a Change of Control, each
Holder of Notes shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest, if any, and Liquidated Damages thereon to the
date of repurchase (the "Change of Control Payment"). Within 10 days following
any Change of Control, the Company shall mail a notice to each Holder stating:
(1) that the Change of Control Offer is being made pursuant to Section 4.15 of
the Indenture and that all Notes tendered will be accepted for payment; (2) the
purchase price and the purchase date, which shall be no later than 30 business
days from the date such notice is mailed (the "Change of Control Payment
Date"); (3) that any Note not tendered will continue to accrue interest; (4)
that, unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date; (5)
that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment





<PAGE>   5
Date; (6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement that such
Holder is withdrawing his election to have the Notes purchased; and (7) that
Holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof.  The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of Notes in connection with a Change of Control.

                 (b)      If the Company or a Restricted Subsidiary consummates
any Asset Sales, within five days of each date on which the aggregate amount of
Excess Proceeds exceeds $10 million, the Company shall commence an offer to all
Holders of Notes and, to the extent required by the terms of any Pari Passu
Indebtedness, to all holders of such Pari Passu Indebtedness (as "Asset Sale
Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date fixed for the closing of such offer, in accordance with the
procedures set forth in the Indenture or such Pari Passu Indebtedness as
applicable.  To the extent that the aggregate amount of Notes and such Pari
Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes and any Pari Passu
Indebtedness surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be repurchased on a pro rata
basis.  Upon completion of such offer to repurchase, the amount of Excess
Proceeds shall be reset at zero. If the aggregate principal amount of Notes and
any Pari Passu Indebtedness surrendered by Holders thereof exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes to be repurchased on a
pro rata basis.  Upon completion of such offer to repurchase, the amount of
Excess Proceeds shall be reset at zero.

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

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

                 11.      PERSONS DEEMED OWNERS.  The registered Holder of a
Note may be treated as its owner for all purposes.





<PAGE>   6
                 12.      AMENDMENT, SUPPLEMENT AND WAIVER.  Subject to certain
exceptions, the Indenture, the Guarantees or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the then outstanding Notes voting as a single class, and
any existing default or compliance with any provision of the Indenture, the
Note Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes voting as a single
class.  Without the consent of any Holder of a Note, the Indenture, the Note
Guarantees or the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
or Guarantor's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act, or to allow any Guarantor to
execute a supplemental indenture to the Indenture and/or a Note Guarantee with
respect to the Notes.

                 13.      DEFAULTS AND REMEDIES.  Events of Default include:
(i) default for 30 days in the payment when due of interest on, or Liquidated
Damages with respect to, the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company to
comply with the provisions described under Sections 4.07, 4.09, 4.10, 4.14,
4.19 or 5.01 of the Indenture; (iv) failure by the Company for 60 days after
notice to comply with any of its other agreements in the Indenture or the
Notes; (v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists,
or is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness at its final stated maturity or (b) results in the acceleration of
such Indebtedness prior to its maturity and, in each case, the principal amount
of which Indebtedness, together with the principal amount of any other such
Indebtedness described in clauses (a) and (b) above, aggregates $10.0 million
or more; (vi) failure by the Company or any of its Subsidiaries to pay final
judgments aggregating in excess of $10.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; or (ix) the Note Guarantee of any Guarantor is held in judicial
proceedings to be unenforceable or invalid or ceases for any reason to be in
full force and effect (other than in accordance with the terms of this
Indenture) or any Guarantor or any Person acting on behalf of any Guarantor
denies or disaffirms such Guarantor's obligations under its Note Guarantee
(other than by reason of a release of such Guarantor from its Note Guarantee in
accordance with the terms of the Indenture).

                 If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding
Notes may declare all the Notes to be due and payable immediately, provided
however, that if any Senior Indebtedness is outstanding under the New Senior
Credit Facilities, upon a declaration of acceleration, the Notes shall be
payable upon the earlier of (x) the day which is five Business Days after the
provision to the Company and the agent under the New Credit Senior Facilities
of written notice of such declaration and (y) the date of acceleration of any
Indebtedness under the New Senior Credit Facilities.  Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute
a





<PAGE>   7
Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice.  Holders of Notes may not enforce the
Indenture or the Notes except as provided in the Indenture.  Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power.  The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default or Event of Default relating to the payment
of principal or interest) if it determines that withholding notice is in their
interest.

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

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

                 16.      AUTHENTICATION.  This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

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

                 18.      ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL
NOTES AND RESTRICTED DEFINITIVE NOTES.  In addition to the rights provided to
Holders of Notes under the Indenture, Holders of Restricted Global Notes and
Restricted Definitive Notes shall have all the rights set forth in the
Registration Rights Agreement dated as of December 18, 1997, between the
Company and the parties named on the signature pages thereof (the "Registration
Rights Agreement").

                 19.      CUSIP NUMBERS.  Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to Holders.  No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.





<PAGE>   8
                 The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement.  Requests may be made to:

                 Pillowtex Corporation
                 4111 Mint Way
                 Dallas, Texas  75237
                 Attention:  Treasurer





<PAGE>   1
                                                                     EXHIBIT 4.6

                         FORM OF NOTATION OF GUARANTEE



                 For value received, each Guarantor (which term includes any
successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and
subject to the provisions in the Indenture dated as of December 18, 1997 (the
"Indenture") among Pillowtex Corporation, the Guarantors listed on the
signature page thereto and Norwest Bank Minnesota, National Association, as
trustee (the "Trustee"), (a) the due and punctual payment of the principal of,
premium, if any, and interest on the Notes (as defined in the Indenture),
whether at maturity, by acceleration, redemption or otherwise, the due and
punctual payment of interest on overdue principal and premium, and, to the
extent permitted by law, interest, and the due and punctual performance of all
other obligations of the Company to the Holders or the Trustee all in
accordance with the terms of the Indenture and (b) in case of any extension of
time of payment or renewal of any Notes or any of such other obligations, that
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.  The obligations of the Guarantors to the Holders of
Notes and to the Trustee pursuant to the Note Guarantee and the Indenture are
expressly set forth in Article 10 of the Indenture and reference is hereby made
to the Indenture for the precise terms of the Note Guarantee.  Each Holder of a
Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder,
to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note Guarantee shall cease to be so subordinated
and subject in right of payment upon any defeasance of this Note in accordance
with the provisions of the Indenture.




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






<PAGE>   1
                                                                     EXHIBIT 5.1

                    [JONES, DAY, REAVIS & POGUE LETTERHEAD]



                              February ____, 1998



Pillowtex Corporation
4111 Mint Way
Dallas, Texas  75237

Ladies and Gentlemen:

         We are acting as counsel to Pillowtex Corporation (the "Company"), a
corporation organized under the laws of the State of Texas, in connection with
the public offering of $185,000,000 aggregate principal amount of the Company's
9% Senior Subordinated Notes due 2007 (the "Series B Notes"), which are to be
guaranteed on a senior unsecured basis pursuant to guarantees (the "Guarantees"
and together with the Series B Notes, the "Securities") by each of Amoskeag
Company, a Delaware corporation, Amoskeag Management Corporation, a Delaware
corporation, Bangor Investment Company, a Maine corporation, Beacon
Manufacturing Company, a North Carolina corporation, Crestfield Cotton Company,
a Tennessee corporation, Downeast Securities Corporation, a Delaware
corporation, Encee, Inc., a Delaware corporation, FCC Canada, Inc., a Delaware
corporation, Fieldcrest Cannon Financing, Inc., a Delaware corporation,
Fieldcrest Cannon, Inc., a Delaware corporation, Fieldcrest Cannon
International, Inc., a Delaware corporation, Fieldcrest Cannon Licensing, Inc.,
a Delaware corporation, Fieldcrest Cannon Sure Fit, Inc., a Delaware
corporation, Fieldcrest Cannon Transportation, Inc., a Delaware corporation,
Mannetta Home Fashions, Inc., a North Carolina corporation, Moore's Falls
Corporation, a Delaware corporation, Pillowtex, Inc., a Delaware corporation,
Pillowtex Management Services Company, a Delaware corporation, PTEX Holding
Company, a Delaware corporation, St. Marys, Inc., a Delaware corporation, and
Tennessee Woolen Mills, Inc., a Tennessee corporation (collectively, the
"Guarantors") and in connection with the preparation of the prospectus (the
"Prospectus") contained in the registration statement on Form S-4 (the
"Registration Statement") (No.  333-________) filed with the Securities and
Exchange Commission by the Company for the purpose of registering the Series B
Notes and the Guarantees under the Securities Act of 1933, as amended (the
"Act").  The Series B Notes are to be issued pursuant to an exchange offer (the
"Exchange Offer") in exchange for a like principal amount of the issued and
outstanding 9% Senior Subordinated Notes due 2007 of the Company (the "Series A
Notes"), and are to be governed by an Indenture dated as of December 18, 1997
(the "Indenture") by and among the Company, the Guarantors, and Norwest Bank
Minnesota, National Association, as Trustee (the "Trustee").  Unless otherwise
defined herein, terms defined in the Prospectus are used herein as defined
therein.
<PAGE>   2
Pillowtex Corporation
February __, 1998
Page 2

         We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such corporate records, agreements,
documents, and other instruments and such certificates or comparable documents
of public officials and representatives of the Company and the Guarantors and
have made such other and further investigations as we have deemed relevant and
necessary as a basis for the opinion hereinafter set forth.  In such
examination, we have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity or all documents submitted to us
as originals, the conformity to original documents of all documents submitted
to us as certified or photostatic copies, and the authenticity of the originals
of such latter documents.  In making our examination of documents executed or
to be executed by parties other than the Guarantors that are also Delaware
corporations, we have assumed that such parties had or will have the power,
corporate or other, to enter into and perform all obligations hereunder and
have also assumed the due authorization by all requisite action, corporate or
other, and execution and delivery by such parties of such documents and the
validity and binding effect of such documents on such parties.

         Members of the firm are admitted to the bar in the States of New York
and Texas, and we do not express any opinion as to the laws of any other
jurisdiction other than the General Corporation Law of the State of Delaware.

         Based on the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that, assuming the Indenture
has been qualified under the Trust Indenture Act of 1939 (the "Trust Indenture
Act"), when the Series B Notes, substantially in the form set forth in an
exhibit to the Indenture filed as Exhibit 4.5 to the Registration Statement,
have been duly executed by the Company and authenticated by the Trustee in
accordance with the Indenture and duly delivered in exchange for the Series A
Notes in accordance with the Exchange Offer in the manner described in the
Registration Statement, the Series B Notes will constitute valid and legally
binding obligations of the Company enforceable in accordance with their terms,
and the Guarantees will constitute valid and legally binding obligations of the
Guarantors, enforceable against the Guarantors, in each case, in accordance
with their terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally and
general equitable principles (whether considered in a proceeding in equity or
at law.)

         We hereby consent to the use of our name under the caption "Legal
Matters" in the Prospectus forming part of the Registration Statement and to
the filing of this opinion as Exhibit 5 to the Registration Statement.

                                       Very truly yours,



                                       JONES, DAY, REAVIS & POGUE

<PAGE>   1
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote therein were present and voted. Prompt notice of the taking of
such action without a meeting by less than unanimous written consent shall be
given to those stockholders who have not consented in writing.

                                  ARTICLE VII.

                           Stockholders' Record Date

         In order that the corporation may determine the stockholders entitled 
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock or for the purpose of any other
lawful action, the board of directors may fix, in advance, a record date, which
shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action.

         If no record date is fixed:

         (1)      The record date for determining stockholders entitled to 
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.

         (2)      The record date for determining stockholders entitled to 
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the day on which the
first written consent is expressed.

         (3)      The record date for determining stockholders for any other 
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.

         A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting, provided, however, that the board of directors may fix a new record
date for the adjourned meeting.





                                      -4-
<PAGE>   2
                                 ARTICLE VIII.

                               Board of Directors

         Except as otherwise provided by law or by the certificate of
incorporation, the business and affairs of the corporation shall be managed by
the board of directors.

         The number of directors shall be such number, not fewer than one nor 
more than fifteen, as may be fixed for any corporate year and elected by the
stockholders at the annual meeting. During any year the board of directors may
be enlarged and additional directors elected to complete the enlarged number,
to not more than the maximum number above specified, by the stockholders at any
meeting or by a vote of a majority of the directors then in office.  The
stockholders may, at any meeting held for the purpose during such year,
decrease, to not fewer than the minimum number above specified, the number of
directors as thus fixed or enlarged and remove directors to the decreased
number.  Each director shall hold office until his successor is elected and
qualified or until his earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. No director need be a
stockholder.

                                  ARTICLE IX.

                                   Committees

         The board of directors may, by resolution passed by a majority of the 
whole board, designate one or more committees, each committee to consist of one
or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee who may replace any absent
or disqualified member at any meeting of the committee and may define the
number and qualifications which shall constitute a quorum of such committee. 
Except as otherwise limited by law, any such committee, to the extent provided
in the resolution appointing such committee, shall have and may exercise the
powers of the board of directors in the management of the business and affairs
of the corporation, and may authorize the seal of the corporation to be affixed
to all papers which may require it. In the absence or disqualification of a
member of committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.

                                   ARTICLE X.

              Meetings of the Board of Directors and of Committees

         Regular meetings of the board of directors may be held without call or 
formal notice at such places either within or without the State of Delaware
and at such times as the board may by vote from time to time determine.





                                      -5-

<PAGE>   1
                                                                    EXHIBIT 23.2

                         INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Pillowtex Corporation:

     We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus. 



                                             /s/ KPMG PEAT MARWICK LLP

Dallas, Texas
February 12, 1998

<PAGE>   1
                                                                    Exhibit 23.3


                        CONSENT OF INDEPENDENT AUDITORS


    We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 31, 1997, with respect to the financial
statements of Fieldcrest Cannon, Inc. incorporated by reference in the
Registration Statement (Form S-4) and related Prospectus of Pillowtex
Corporation for the registration of $185,000,000 of 9% Senior Subordinated
Notes due 2007.



                                        /s/ Ernst & Young LLP


Greensboro, North Carolina
February 11, 1998 


<PAGE>   1
                                                                    Exhibit 24.1


                               POWER OF ATTORNEY
                             PILLOWTEX CORPORATION



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Pillowtex Corporation, a Texas corporation (the "Corporation"), hereby
constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F.
Sterling the true and lawful attorney-in-fact, with full power of substitution
and resubstitution, for the Corporation to sign on the Corporation's behalf a
Registration Statement on Form S-4 (and any abbreviated registration statement
relating thereto permitted pursuant to Rule 462 under the Securities Act of
1933, as amended (the "Securities Act")), for the purpose of registering,
pursuant to the Securities Act, 9% Senior Subordinated Notes Due 2007 of the
Corporation, and to sign any or all amendments and any or all post-effective
amendments to the Registration Statement (and any such abbreviated registration
statement), and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney or attorneys-in-fact, each of them with or without
the others, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as it might or could do in person, hereby ratifying
and confirming all that said attorney or attorneys-in-fact or any of them or
their substitute or substitutes may lawfully do or cause to be done by virtue
hereof.

                                     PILLOWTEX CORPORATION



                                     By: /s/ CHARLES M. HANSEN, JR.,
                                        ------------------------------------
                                         Charles M. Hansen, Jr.,
                                         Chairman of the Board and
                                         Chief Executive Officer


Dated:  February 10, 1998
<PAGE>   2
                               POWER OF ATTORNEY
                             PILLOWTEX CORPORATION



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F.
Sterling the true and lawful attorney-in-fact, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, to
sign on his or her behalf, as a director or officer, or both, as the case may
be, of Pillowtex Corporation, a Texas corporation (the "Corporation"), a
Registration Statement on Form S-4 (and any abbreviated registration statement
relating thereto permitted pursuant to Rule 462 under the Securities Act of
1933, as amended (the "Securities Act")), for the purpose of registering,
pursuant to the Securities Act, 9% Senior Subordinated Notes Due 2007 of the
Corporation, and to sign any or all amendments and any or all post-effective
amendments to the Registration Statement (and any such abbreviated registration
statement), and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney or attorneys-in-fact, each of them with or without
the others, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorney or attorneys-in-fact or any of
them or their substitute or substitutes may lawfully do or cause to be done by
virtue hereof.




  /s/ CHARLES M. HANSEN, JR.                  /s/ SCOTT E. SHIMIZU
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                      Scott E. Shimizu


  /s/ JEFFREY D. CORDES                       /s/ PAUL G. GILLEASE
- ----------------------------------        -------------------------------------
      Jeffrey D. Cordes                           Paul G. Gillease


  /s/ CHRISTOPHER N. BAKER                    /s/ WILLIAM B. MADDEN
- ----------------------------------        -------------------------------------
      Christopher N. Baker                        William B. Madden


  /s/ MARY R. SILVERTHORNE                    /s/ M. JOSEPH MCHUGH
- ----------------------------------        -------------------------------------
      Mary R. Silverthorne                        M. Joseph McHugh


  /s/ RALPH W. LA ROVERE                      /s/ KEVIN M. FINLAY
- ----------------------------------        -------------------------------------
      Ralph W. La Rovere                          Kevin M. Finlay




Dated:  February 10, 1998
<PAGE>   3


                               POWER OF ATTORNEY
                                AMOSKEAG COMPANY



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Amoskeag Company, a Delaware corporation (the "Corporation"), hereby
constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F.
Sterling the true and lawful attorney-in-fact, with full power of substitution
and resubstitution, for the Corporation to sign on the Corporation's behalf a
Registration Statement on Form S-4 (and any abbreviated registration statement
relating thereto permitted pursuant to Rule 462 under the Securities Act of
1933, as amended (the "Securities Act")), for the purpose of registering,
pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated
Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and
any or all post-effective amendments to the Registration Statement (and any
such abbreviated registration statement), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.


  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   4


                               POWER OF ATTORNEY
                        AMOSKEAG MANAGEMENT CORPORATION



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Amoskeag Management Corporation, a Delaware corporation (the "Corporation"),
hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and
John F.  Sterling the true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for the Corporation to sign on the
Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated
registration statement relating thereto permitted pursuant to Rule 462 under
the Securities Act of 1933, as amended (the "Securities Act")), for the purpose
of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior
Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all
amendments and any or all post-effective amendments to the Registration
Statement (and any such abbreviated registration statement), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   5


                               POWER OF ATTORNEY
                           BANGOR INVESTMENT COMPANY



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Bangor Investment Company, a Maine corporation (the "Corporation"), hereby
constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F.
Sterling the true and lawful attorney-in-fact, with full power of substitution
and resubstitution, for the Corporation to sign on the Corporation's behalf a
Registration Statement on Form S-4 (and any abbreviated registration statement
relating thereto permitted pursuant to Rule 462 under the Securities Act of
1933, as amended (the "Securities Act")), for the purpose of registering,
pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated
Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and
any or all post-effective amendments to the Registration Statement (and any
such abbreviated registration statement), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes

  /s/ RONALD M. WEHTJE
- ----------------------------------
      Ronald M. Wehtje


Dated:  February 10, 1998                                             
<PAGE>   6


                               POWER OF ATTORNEY
                          BEACON MANUFACTURING COMPANY



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Beacon Manufacturing Company, a North Carolina corporation (the "Corporation"),
hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and
John F. Sterling the true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for the Corporation to sign on the
Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated
registration statement relating thereto permitted pursuant to Rule 462 under
the Securities Act of 1933, as amended (the "Securities Act")), for the purpose
of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior
Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all
amendments and any or all post-effective amendments to the Registration
Statement (and any such abbreviated registration statement), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   7


                               POWER OF ATTORNEY
                           CRESTFIELD COTTON COMPANY



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Crestfield Cotton Company, a Tennessee corporation (the "Corporation"), hereby
constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F.
Sterling the true and lawful attorney-in-fact, with full power of substitution
and resubstitution, for the Corporation to sign on the Corporation's behalf a
Registration Statement on Form S-4 (and any abbreviated registration statement
relating thereto permitted pursuant to Rule 462 under the Securities Act of
1933, as amended (the "Securities Act")), for the purpose of registering,
pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated
Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and
any or all post-effective amendments to the Registration Statement (and any
such abbreviated registration statement), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   8


                               POWER OF ATTORNEY
                        DOWNEAST SECURITIES CORPORATION



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Downeast Securities Corporation, a Delaware corporation (the "Corporation"),
hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and
John F. Sterling the true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for the Corporation to sign on the
Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated
registration statement relating thereto permitted pursuant to Rule 462 under
the Securities Act of 1933, as amended (the "Securities Act")), for the purpose
of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior
Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all
amendments and any or all post-effective amendments to the Registration
Statement (and any such abbreviated registration statement), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   9


                               POWER OF ATTORNEY
                                  ENCEE, INC.



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Encee, Inc., a Delaware corporation (the "Corporation"), hereby constitutes and
appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the
true and lawful attorney-in-fact, with full power of substitution and
resubstitution, for the Corporation to sign on the Corporation's behalf a
Registration Statement on Form S-4 (and any abbreviated registration statement
relating thereto permitted pursuant to Rule 462 under the Securities Act of
1933, as amended (the "Securities Act")), for the purpose of registering,
pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated
Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and
any or all post-effective amendments to the Registration Statement (and any
such abbreviated registration statement), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   10


                               POWER OF ATTORNEY
                                FCC CANADA, INC.



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of FCC
Canada, Inc., a Delaware corporation (the "Corporation"), hereby constitutes
and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling
the true and lawful attorney-in-fact, with full power of substitution and
resubstitution, for the Corporation to sign on the Corporation's behalf a
Registration Statement on Form S-4 (and any abbreviated registration statement
relating thereto permitted pursuant to Rule 462 under the Securities Act of
1933, as amended (the "Securities Act")), for the purpose of registering,
pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated
Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and
any or all post-effective amendments to the Registration Statement (and any
such abbreviated registration statement), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   11


                               POWER OF ATTORNEY
                       FIELDCREST CANNON FINANCING, INC.



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Fieldcrest Cannon Financing, Inc., a Delaware corporation (the "Corporation"),
hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and
John F. Sterling the true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for the Corporation to sign on the
Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated
registration statement relating thereto permitted pursuant to Rule 462 under
the Securities Act of 1933, as amended (the "Securities Act")), for the purpose
of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior
Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all
amendments and any or all post-effective amendments to the Registration
Statement (and any such abbreviated registration statement), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   12


                               POWER OF ATTORNEY
                            FIELDCREST CANNON, INC.



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Fieldcrest Cannon, Inc., a Delaware corporation (the "Corporation"), hereby
constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F.
Sterling the true and lawful attorney-in-fact, with full power of substitution
and resubstitution, for the Corporation to sign on the Corporation's behalf a
Registration Statement on Form S-4 (and any abbreviated registration statement
relating thereto permitted pursuant to Rule 462 under the Securities Act of
1933, as amended (the "Securities Act")), for the purpose of registering,
pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated
Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and
any or all post-effective amendments to the Registration Statement (and any
such abbreviated registration statement), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   13


                               POWER OF ATTORNEY
                     FIELDCREST CANNON INTERNATIONAL, INC.



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Fieldcrest Cannon International, Inc., a Delaware corporation (the
"Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey
D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full
power of substitution and resubstitution, for the Corporation to sign on the
Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated
registration statement relating thereto permitted pursuant to Rule 462 under
the Securities Act of 1933, as amended (the "Securities Act")), for the purpose
of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior
Subordinated Notes Due 2007 of Pillowtex  Corporation, and to sign any or all
amendments and any or all post-effective amendments to the Registration
Statement (and any such abbreviated registration statement), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.


  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


  /s/ RONALD M. WEHTJE
- ----------------------------------
      Ronald M. Wehtje

Dated:  February 10, 1998                                             
<PAGE>   14


                               POWER OF ATTORNEY
                       FIELDCREST CANNON LICENSING, INC.



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Fieldcrest Cannon Licensing, Inc., a Delaware corporation (the "Corporation"),
hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and
John F. Sterling the true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for the Corporation to sign on the
Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated
registration statement relating thereto permitted pursuant to Rule 462 under
the Securities Act of 1933, as amended (the "Securities Act")), for the purpose
of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior
Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all
amendments and any or all post-effective amendments to the Registration
Statement (and any such abbreviated registration statement), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   15


                               POWER OF ATTORNEY
                        FIELDCREST CANNON SURE FIT, INC.



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Fieldcrest Cannon Sure Fit, Inc., a Delaware corporation (the "Corporation"),
hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and
John F. Sterling the true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for the Corporation to sign on the
Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated
registration statement relating thereto permitted pursuant to Rule 462 under
the Securities Act of 1933, as amended (the "Securities Act")), for the purpose
of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior
Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all
amendments and any or all post-effective amendments to the Registration
Statement (and any such abbreviated registration statement), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   16


                               POWER OF ATTORNEY
                     FIELDCREST CANNON TRANSPORTATION, INC.



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Fieldcrest Cannon Transportation, Inc., a Delaware corporation (the
"Corporation"), hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey
D. Cordes, and John F. Sterling the true and lawful attorney-in-fact, with full
power of substitution and resubstitution, for the Corporation to sign on the
Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated
registration statement relating thereto permitted pursuant to Rule 462 under
the Securities Act of 1933, as amended (the "Securities Act")), for the purpose
of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior
Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all
amendments and any or all post-effective amendments to the Registration
Statement (and any such abbreviated registration statement), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   17


                               POWER OF ATTORNEY
                          MANETTA HOME FASHIONS, INC.



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Manetta Homes Fashions, Inc., a North Carolina corporation (the "Corporation"),
hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and
John F. Sterling the true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for the Corporation to sign on the
Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated
registration statement relating thereto permitted pursuant to Rule 462 under
the Securities Act of 1933, as amended (the "Securities Act")), for the purpose
of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior
Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all
amendments and any or all post-effective amendments to the Registration
Statement (and any such abbreviated registration statement), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   18


                               POWER OF ATTORNEY
                           MOORE'S FALLS CORPORATION



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Moore's Falls Corporation, a Delaware corporation (the "Corporation"), hereby
constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F.
Sterling the true and lawful attorney-in-fact, with full power of substitution
and resubstitution, for the Corporation to sign on the Corporation's behalf a
Registration Statement on Form S-4 (and any abbreviated registration statement
relating thereto permitted pursuant to Rule 462 under the Securities Act of
1933, as amended (the "Securities Act")), for the purpose of registering,
pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated
Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and
any or all post-effective amendments to the Registration Statement (and any
such abbreviated registration statement), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes

  /s/ RONALD M. WEHTJE
- ----------------------------------
      Ronald M. Wehtje

Dated:  February 10, 1998                                             
<PAGE>   19


                               POWER OF ATTORNEY
                                PILLOWTEX, INC.



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Pillowtex, Inc., a Delaware corporation (the "Corporation"), hereby constitutes
and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling
the true and lawful attorney-in-fact, with full power of substitution and
resubstitution, for the Corporation to sign on the Corporation's behalf a
Registration Statement on Form S-4 (and any abbreviated registration statement
relating thereto permitted pursuant to Rule 462 under the Securities Act of
1933, as amended (the "Securities Act")), for the purpose of registering,
pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated
Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and
any or all post-effective amendments to the Registration Statement (and any
such abbreviated registration statement), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.


  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes

  /s/ CHARLES H. SLAYBAUGH
- ----------------------------------
      Charles H. Slaybaugh

Dated:  February 10, 1998                                             
<PAGE>   20


                               POWER OF ATTORNEY
                     PILLOWTEX MANAGEMENT SERVICES COMPANY



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Pillowtex Management Services Company, a Delaware trust company (the "Trust"),
hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and
John F. Sterling the true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for the Corporation to sign on the
Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated
registration statement relating thereto permitted pursuant to Rule 462 under
the Securities Act of 1933, as amended (the "Securities Act")), for the purpose
of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior
Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all
amendments and any or all post-effective amendments to the Registration
Statement (and any such abbreviated registration statement), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ JEFFREY D. CORDES                          /s/ CHRISTOPHER N. BAKER
- ----------------------------------        -------------------------------------
      Jeffrey D. Cordes                              Christopher N. Baker

  /s/ SCOTT E. SHIMIZU
- ----------------------------------
      Scott E. Shimizu


Dated:  February 10, 1998                                             
<PAGE>   21


                               POWER OF ATTORNEY
                              PTEX HOLDING COMPANY



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
PTEX Holding Company, a Delaware corporation (the "Corporation"), hereby
constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F.
Sterling the true and lawful attorney-in-fact, with full power of substitution
and resubstitution, for the Corporation to sign on the Corporation's behalf a
Registration Statement on Form S-4 (and any abbreviated registration statement
relating thereto permitted pursuant to Rule 462 under the Securities Act of
1933, as amended (the "Securities Act")), for the purpose of registering,
pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated
Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and
any or all post-effective amendments to the Registration Statement (and any
such abbreviated registration statement), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes

  /s/ CHARLES H. SLAYBAUGH
- ----------------------------------
      Charles H. Slaybaugh


Dated:  February 10, 1998                                             
<PAGE>   22


                               POWER OF ATTORNEY
                                ST. MARY'S, INC.



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of St.
Marys, Inc., a Delaware corporation (the "Corporation"), hereby constitutes and
appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and John F. Sterling the
true and lawful attorney-in-fact, with full power of substitution and
resubstitution, for the Corporation to sign on the Corporation's behalf a
Registration Statement on Form S-4 (and any abbreviated registration statement
relating thereto permitted pursuant to Rule 462 under the Securities Act of
1933, as amended (the "Securities Act")), for the purpose of registering,
pursuant to the Securities Act, the Guarantees of the 9% Senior Subordinated
Notes Due 2007 of Pillowtex Corporation, and to sign any or all amendments and
any or all post-effective amendments to the Registration Statement (and any
such abbreviated registration statement), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             
<PAGE>   23


                               POWER OF ATTORNEY
                          TENNESSEE WOOLEN MILLS, INC.



         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Tennessee Woolen Mills, Inc., a Tennessee corporation (the "Corporation"),
hereby constitutes and appoints Charles M. Hansen, Jr., Jeffrey D. Cordes, and
John F. Sterling the true and lawful attorney-in-fact, with full power of
substitution and resubstitution, for the Corporation to sign on the
Corporation's behalf a Registration Statement on Form S-4 (and any abbreviated
registration statement relating thereto permitted pursuant to Rule 462 under
the Securities Act of 1933, as amended (the "Securities Act")), for the purpose
of registering, pursuant to the Securities Act, the Guarantees of the 9% Senior
Subordinated Notes Due 2007 of Pillowtex Corporation, and to sign any or all
amendments and any or all post-effective amendments to the Registration
Statement (and any such abbreviated registration statement), and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney or
attorneys-in-fact, each of them with or without the others, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as it might or could do in person, hereby ratifying and confirming all
that said attorney or attorneys-in-fact or any of them or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.



  /s/ CHARLES M. HANSEN, JR.                     /s/ JEFFREY D. CORDES
- ----------------------------------        -------------------------------------
      Charles M. Hansen, Jr.                         Jeffrey D. Cordes


Dated:  February 10, 1998                                             

<PAGE>   1
                                                                   EXHIBIT 25.1


 ===============================================================================
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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

                                    FORM T-1

                            STATEMENT OF ELIGIBILITY
                 UNDER THE TRUST INDENTURE ACT OF 1939 OF A
                  CORPORATION DESIGNATED TO ACT AS TRUSTEE

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

     CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
- ----                           SECTION 305(b)(2)

                  NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
              (Exact name of trustee as specified in its charter)

A U.S. NATIONAL BANKING ASSOCIATION                        41-1592157
(Jurisdiction of incorporation or                          (I.R.S. Employer
organization if not a U.S. national                        Identification No.)
bank)

SIXTH STREET AND MARQUETTE AVENUE
Minneapolis, Minnesota                                     55479
(Address of principal executive offices)                   (Zip code)

                       Stanley S. Stroup, General Counsel
                 NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
                       Sixth Street and Marquette Avenue
                          Minneapolis, Minnesota 55479
                                 (612) 667-1234
                              (Agent for Service)

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

                             PILLOWTEX CORPORATION
              (Exact name of obligor as specified in its charter)




TEXAS                                                      75-2147728         
(State or other jurisdiction of                            (I.R.S. Employer   
incorporation or organization)                             Identification No.)
                                                                              
4111 MINT WAY                                                                 
DALLAS, TEXAS                                              75237-1605         
(Address of principal executive offices)                   (Zip code)         


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

                     9% SENIOR SUBORDINATED NOTES DUE 2007
                     (Title of the indenture securities)

 ===============================================================================
<PAGE>   2
Item 1. General Information. Furnish the following information as to the 
trustee:

         (a)     Name and address of each examining or supervising authority to
                 which it is subject.

                 Comptroller of the Currency
                 Treasury Department
                 Washington, D.C.

                 Federal Deposit Insurance Corporation
                 Washington, D.C.

                 The Board of Governors of the Federal Reserve System
                 Washington, D.C.

         (b)     Whether it is authorized to exercise corporate trust powers.

                 The trustee is authorized to exercise corporate trust powers.

Item 2. Affiliations with Obligor. If the obligor is an affiliate of the
trustee, describe each such affiliation.

         None with respect to the trustee.

No responses are included for Items 3-14 of this Form T-1 because the obligor
is not in default as provided under Item 13.

Item 15. Foreign Trustee.         Not applicable.
         ----------------                       

Item 16. List of Exhibits.        List below all exhibits filed as a part of
         -----------------        this Statement of Eligibility.  Norwest Bank
                                  incorporates by reference into this Form T-1
                                  the exhibits attached hereto.

         Exhibit 1.       a.      A copy of the Articles of Association of the
                                  trustee now in effect.*

         Exhibit 2.       a.      A copy of the certificate of authority of the
                                  trustee to commence business issued June 28,
                                  1872, by the Comptroller of the Currency to
                                  The Northwestern National Bank of 
                                  Minneapolis.*

                          b.      A copy of the certificate of the Comptroller
                                  of the Currency dated January 2, 1934,
                                  approving the consolidation of The
                                  Northwestern National Bank of Minneapolis and
                                  The Minnesota Loan and Trust Company of
                                  Minneapolis, with the surviving entity being
                                  titled Northwestern National Bank and Trust
                                  Company of Minneapolis.*

                          c.      A copy of the certificate of the Acting
                                  Comptroller of the Currency dated January 12,
                                  1943, as to change of corporate title of
                                  Northwestern National Bank and Trust Company
                                  of Minneapolis to Northwestern National Bank
                                  of Minneapolis.*


<PAGE>   3
                          d.      A copy of the letter dated May 12, 1983 from
                                  the Regional Counsel, Comptroller of the
                                  Currency, acknowledging receipt of notice of
                                  name change effective May 1, 1983 from
                                  Northwestern National Bank of Minneapolis to
                                  Norwest Bank Minneapolis, National
                                  Association.*

                          e.      A copy of the letter dated January 4, 1988
                                  from the Administrator of National Banks for
                                  the Comptroller of the Currency certifying
                                  approval of consolidation and merger effective
                                  January 1, 1988 of Norwest Bank Minneapolis,
                                  National Association with various other banks
                                  under the title of "Norwest Bank Minnesota,
                                  National Association."*

         Exhibit 3.       A copy of the authorization of the trustee to exercise
                          corporate trust powers issued January 2, 1934, by the
                          Federal Reserve Board.*

         Exhibit 4.       Copy of By-laws of the trustee as now in effect.*

         Exhibit 5.       Not applicable.

         Exhibit 6.       The consent of the trustee required by Section 321(b)
                          of the Act.

         Exhibit 7.       A copy of the latest report of condition of the
                          trustee published pursuant to law or the
                          requirements of its supervising or examining
                          authority.**

         Exhibit 8.       Not applicable.

         Exhibit 9.       Not applicable.





*        Incorporated by reference to exhibit number 25 filed with registration
         statement number 33-66026.

**       Incorporated by reference to exhibit number 25 filed with registration
         statement number 333-43005.
<PAGE>   4
                                   SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 11th day of February 1998.



                                  NORWEST BANK MINNESOTA,
                                  NATIONAL ASSOCIATION


                                  /s/ JANE Y. SCHWEIGER            
                                  ---------------------------------
                                  Jane Y. Schweiger
                                  Corporate Trust Officer
<PAGE>   5
                                   EXHIBIT 6



February 11, 1998



Securities and Exchange Commission
Washington, D.C. 20549

Gentlemen:

In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.

                                  Very truly yours,

                                  NORWEST BANK MINNESOTA,
                                  NATIONAL ASSOCIATION


                                  /s/ JANE Y. SCHWEIGER            
                                  ---------------------------------
                                  Jane Y. Schweiger
                                  Corporate Trust Officer

<PAGE>   1
                                                                    EXHIBIT 99.1


 
                             LETTER OF TRANSMITTAL
 
                               OFFER TO EXCHANGE
 
                     9% SENIOR SUBORDINATED NOTES DUE 2007,
          WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
                          FOR ANY AND ALL OUTSTANDING
                     9% SENIOR SUBORDINATED NOTES DUE 2007
                                       OF
                             PILLOWTEX CORPORATION
 
        THE EXCHANGE OFFER WILL EXPIRE AT      P.M., NEW YORK CITY TIME,
         ON             , 1998 UNLESS EXTENDED (THE "EXPIRATION DATE").
 
                                  Deliver to:
          NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, EXCHANGE AGENT
 
<TABLE>
<C>                                <C>                                <C>
By Registered or Certified Mail:        By Overnight Delivery:                By Hand Delivery:
  Norwest Bank Minnesota, N.A.       Norwest Bank Minnesota, N.A.       Norwest Bank Minnesota, N.A.
   Corporate Trust Operations          Corporate Trust Services            Northstar East Building
          P.O. Box 1517               Sixth and Marquette Avenue        608 Second Avenue South, 12th
   Minneapolis, MN 55480-1517         Minneapolis, MN 55479-0113                    Floor
                                                                          Corporate Trust Services
                                                                               Minneapolis, MN
</TABLE>
 
                         Facsimile Transmission Number:
                        (For Eligible Institutions Only)
                                 (612) 667-4927
 
                          Confirm Receipt of Facsimile
                                 by Telephone:
                                 (612) 667-9764
 
     Delivery of this instrument to an address other than as set forth above or
transmission of instructions via a facsimile number other than the one listed
above will not constitute a valid delivery. The instructions accompanying this
Letter of Transmittal should be read carefully before this Letter of Transmittal
is completed. THIS INSTRUMENT SHOULD NOT BE DELIVERED TO THE COMPANY.
 
     The undersigned acknowledges that the undersigned has received and reviewed
the Prospectus dated February   , 1998 (the "Prospectus") of Pillowtex
Corporation (the "Company") and this Letter of Transmittal (the "Letter of
Transmittal"), which together constitute (i) the Company's offer (the "Exchange
Offer") to exchange $1,000 in principal amount at maturity of its newly issued
9% Senior Subordinated Notes due 2007 (the "Series B Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement of which the Prospectus is a part, for
$1,000 in principal amount at maturity of its outstanding 9% Senior Subordinated
Notes due 2007 (the "Series A Notes"), of which $185,000,000 in principal amount
at maturity are issued and outstanding. Other capitalized terms used but not
defined herein have the meaning given to them in the Prospectus.
 
     This Letter of Transmittal is to be completed by a Holder (as defined
herein) of Series A Notes either (i) if certificates are to be forwarded
herewith or (ii) if a tender of certificates for Series A Notes, if available,
is to be made by book-entry transfer to the account maintained by the Exchange
Agent at the Depository Trust Company (the "DTC") pursuant to the procedures set
forth in "The Exchange Offer -- Procedures for Tendering Series A Notes" section
of the Prospectus. Holders of Series A Notes whose certificates are not
immediately available, or who are unable to deliver their certificates or
confirmation of the book-entry tender of their Series A Notes into the Exchange
Agent's account at DTC (a "Book-Entry Confirmation") and all other documents
required by this Letter of Transmittal to the Exchange Agent on or prior to the
Expiration Date, must tender their Series A Notes according to the guaranteed
delivery procedures set forth in "The Exchange Offer -- Guaranteed Delivery
Procedures" section of the Prospectus. See Instruction 1. Delivery of documents
to DTC does not constitute delivery to the Exchange Agent.
 
     The term "Holder" with respect to the Exchange Offer means any person in
whose name Series A Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from the
registered Holder. The undersigned has completed, executed, and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. Holders who wish to tender their Series A
Notes must complete this Letter of Transmittal in its entirety.
<PAGE>   2
 
     PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE PROVIDING ANY
INFORMATION BELOW. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL
MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES
OF THE PROSPECTUS AND LETTER OF TRANSMITTAL SHOULD BE DIRECTED TO THE EXCHANGE
AGENT AT (612) 667-2344 OR AT ITS ADDRESS SET FORTH ABOVE.
 
     List below the Series A Notes to which this Letter of Transmittal relates.
 
                         DESCRIPTION OF SERIES A NOTES
- --------------------------------------------------------------------------------
 
<TABLE>
<S>                                     <C>                    <C>                          <C>
                                                                   AGGREGATE PRINCIPAL
        NAME(S) AND ADDRESS(ES)                                  AMOUNT OF SERIES A NOTES
         OF REGISTERED HOLDERS                                        REPRESENTED BY           PRINCIPAL AMOUNT OF
      (PLEASE COMPLETE, IF BLANK)       CERTIFICATE NUMBER(S)         CERTIFICATE(S)        SERIES A NOTES TENDERED*
- ---------------------------------------------------------------------------------------------------------------------
 
                                        -----------------------------------------------------------------------------
 
                                        -----------------------------------------------------------------------------
 
                                        -----------------------------------------------------------------------------
 
                                        -----------------------------------------------------------------------------
                                                TOTAL
- ---------------------------------------------------------------------------------------------------------------------
 * Unless indicated in the column labeled "Principal Amount of Series A Notes Tendered," any tendering Holder of
   Series A Notes will be deemed to have tendered the entire principal amount of Series A Notes represented by the
   column labeled "Aggregate Principal Amount of Series A Notes Represented by Certificate(s)."
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
 
If the space provided above is inadequate, list the certificate numbers and
principal amount of Series A Notes on a separate signed schedule and affix the
list to this Letter of Transmittal.
 
[ ] CHECK HERE IF TENDERED SERIES A NOTES ARE ENCLOSED HEREWITH.
 
[ ] CHECK HERE IF TENDERED SERIES A NOTES ARE BEING DELIVERED BY BOOK-ENTRY
    TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
    COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS HEREINAFTER
    DEFINED) ONLY):
 
Name of Tendering Institution:
- --------------------------------------------------------------------------------
 
Account Number:
- --------------------------------------------------------------------------------
 
Transaction Code Number:
- --------------------------------------------------------------------------------
 
[ ] CHECK HERE IF TENDERED SERIES A NOTES ARE BEING DELIVERED PURSUANT TO A
    NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING
    (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
 
Name(s) of Registered Holder(s) of Series A Notes:
- --------------------------------------------------------------------
 
Date of Execution of Notice of Guaranteed Delivery:
- --------------------------------------------------------------------
 
Window Ticket Number (if available):
- --------------------------------------------------------------------------------
 
Name of Institution that Guaranteed Delivery:
- ---------------------------------------------------------------------------
 
Account Number (if delivered by book-entry transfer):
- ------------------------------------------------------------------
 
                                        2
<PAGE>   3
 
                         SPECIAL ISSUANCE INSTRUCTIONS
 
                         (See Instructions 4, 5 and 6)
 
     To be completed ONLY (i) if certificates for Series A Notes not tendered,
or Series B Notes issued in exchange for Series A Notes accepted for exchange,
are to be issued in the name of someone other than the undersigned, or (ii) if
Series A Notes tendered by book-entry transfer that are not exchanged are to be
returned by credit to an account maintained at DTC.
 
Issue Certificate(s) to:
 
Name:
                                 (Please Print)
 
Address:
 
- ------------------------------------------------------
 
- ------------------------------------------------------
                               (Include Zip Code)
 
             ------------------------------------------------------
                (Taxpayer Identification or Social Security No.)
 
             ------------------------------------------------------
                   (Please Also Complete Substitute Form W-9)
 
                         SPECIAL DELIVERY INSTRUCTIONS
 
                         (See Instructions 4, 5 and 6)
 
     To be completed ONLY if certificates for Series A Notes not tendered, or
Series B Notes issued in exchange for Series A Notes accepted for exchange, are
to be sent to someone other than the undersigned, or to the undersigned at an
address other than that shown above.
 
Mail and deliver Certificate(s) to:
 
Name:
                                 (Please Print)
 
Address:
 
- ------------------------------------------------------
 
- ------------------------------------------------------
                               (Include Zip Code)
 
                                        3
<PAGE>   4
 
Ladies and Gentlemen:
 
     Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company the principal amount of Series A Notes indicated
above. Subject to and effective upon the acceptance for exchange of the
principal amount of Series A Notes tendered in accordance with this Letter of
Transmittal, the undersigned sells, assigns, and transfers to, or upon the order
of, the Company all right, title and interest in and to the Series A Notes
tendered hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent as its agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company) with respect to the
tendered Series A Notes with full power of substitution to (i) deliver
certificates for such Series A Notes, or transfer ownership of such Series A
Notes on the account books maintained by DTC, to the Company and deliver all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Company, and (ii) present such Series A Notes for transfer on the books of
the Company and receive all benefits and otherwise exercise all rights of
beneficial ownership of such Series A Notes, all in accordance with the terms of
the Exchange Offer. The power of attorney granted in this paragraph shall be
deemed to be irrevocable and coupled with an interest.
 
     The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign, and transfer the Series A Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges, and encumbrances
and not subject to any adverse claim, when the same are acquired by the Company.
The undersigned hereby further represents that (i) any Series B Notes acquired
in exchange for Series A Notes tendered hereby will have been acquired in the
ordinary course of business of the person receiving such Series B Notes, whether
or not such person is the undersigned, (ii) neither the undersigned nor any such
other person is engaging in or intends to engage in a distribution of the Series
B Notes, (iii) neither the Holder nor any such other person has an arrangement
or understanding with any person to participate in the distribution of such
Series B Notes, and (iv) neither the Holder nor any such other person is an
"affiliate" (as defined in Rule 405 under the Securities Act) of the Company.
 
     The undersigned also acknowledges that this Exchange Offer is being made in
reliance upon interpretations contained in letters issued to third parties by
the staff of the Securities and Exchange Commission (the "SEC") that the Series
B Notes issued in exchange for the Series A Notes pursuant to the Exchange Offer
may be offered for resale, resold, and otherwise transferred by Holders thereof
(other than any such Holder that is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Series B Notes are acquired in the ordinary course of such Holder's
business and such Holder is not engaging in and does not intend to engage in a
distribution of the Series B Notes and has no arrangement or understanding with
any person to participate in a distribution of such Series B Notes. If the
undersigned is not a broker-dealer, the undersigned represents that it is not
engaged in, and does not intend to engage in, a distribution of Series B Notes.
If the undersigned is a broker-dealer that will receive Series B Notes for its
own account in exchange for Series A Notes that were acquired as a result of
market-making activities or other trading activities (a "Participating
Broker-Dealer"), it acknowledges that it will deliver a prospectus in connection
with any resale of such Series B Notes; 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.
 
     The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the assignment, transfer, and purchase of the Series A
Notes tendered hereby.
 
     For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Series A Notes when, as and if the Company has given
oral or written notice thereof to the Exchange Agent.
 
     If any tendered Series A Notes are not accepted for exchange pursuant to
the Exchange Offer for any reason, certificates for any such unaccepted Series A
Notes will be returned, without expense, to the undersigned at the address shown
below or at a different address as may be indicated herein under "Special
Delivery Instructions" or, in the case of Series A Notes tendered by book-entry
transfer, such unaccepted Series A Notes will be credited to an account at DTC,
as promptly as practicable after the Expiration Date.
 
     All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors, and assigns.
 
     The undersigned understands that tenders of Series A Notes pursuant to the
procedures described under the caption "The Exchange Offer -- Procedures for
Tendering Series A Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Exchange Offer.
 
     Unless otherwise indicated under "Special Issuance Instructions," please
issue the certificates representing the Series B Notes issued in exchange for
the Series A Notes accepted for exchange and return any Series A Notes not
tendered or not exchanged in the name(s) of the undersigned. Similarly, unless
otherwise indicated under "Special Delivery Instructions," please send the
certificates representing the Series B Notes issued in exchange for the Series A
Notes accepted for exchange and any certificates for Series A Notes not tendered
or not exchanged (and accompanying documents, as appropriate) to the undersigned
at the address shown below the undersigned's signature(s). In the event that
both "Special Payment Instructions" and "Special Delivery Instructions" are
completed, please issue the certificates
 
                                        4
<PAGE>   5
 
representing the Series B Notes issued in exchange for the Series A Notes
accepted for exchange in the name(s) of, and return any Series A Notes not
tendered or not exchanged and send said certificates to, the person(s) so
indicated. The undersigned recognizes that the Company has no obligation
pursuant to the "Special Payment Instructions" and "Special Delivery
Instructions" to transfer any Series A Notes from the name of the registered
Holder(s) thereof if the Company does not accept for exchange any of the Series
A Notes so tendered.
 
     Holders of Series A Notes who wish to tender their Series A Notes and (i)
whose Series A Notes are not immediately available, or (ii) who cannot deliver
their Series A Notes, this Letter of Transmittal or any other documents required
hereby to the Exchange Agent prior to the Expiration Date (or who cannot comply
with the book-entry transfer procedures on a timely basis), may tender their
Series A Notes according to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures." See Instruction 1 regarding the completion of this Letter of
Transmittal.
 
                                        5
<PAGE>   6
 
                        PLEASE SIGN HERE WHETHER OR NOT
              SERIES A NOTES ARE BEING PHYSICALLY TENDERED HEREBY
 
<TABLE>
<S>                                                                <C>
X
 -------------------------------------------------------           -----------------------------------------------
                                                                                      (Date)
X
 -------------------------------------------------------           -----------------------------------------------
           (Signature(s) of Registered Holder(s)                                      (Date)
                  or Authorized Signatory)
</TABLE>
 
Area Code and Telephone Number(s):
                                   --------------------------------------------
Tax Identification or Social Security Number(s):
                                                -------------------------------
 
     The above lines must be signed by the registered Holder(s) of Series A
Notes as their name(s) appear(s) on the certificate for the Series A Notes or by
person(s) authorized to become registered Holder(s) by a properly completed bond
power from the registered Holder(s), a copy of which must be transmitted with
this Letter of Transmittal. If Series A Notes to which this Letter of
Transmittal relates are held of record by two or more joint Holders, then all
such Holders must sign this Letter of Transmittal. If signature is by trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, then such person
must (i) set forth his or her full title below and (ii) unless waived by the
Company, submit evidence satisfactory to the Company of such person's authority
so to act. See Instruction 4 regarding the completion of this Letter of
Transmittal.
 
Name(s):
        -----------------------------------       -----------------------------
                             (Please Print)
 
Capacity:
         ----------------------------------------------------------------------
 
Address:
        -----------------------------------------------------------------------

- -------------------------------------------------------------------------------
                               (Include Zip Code)
 
               SIGNATURE(S) GUARANTEED BY AN ELIGIBLE INSTITUTION
            (AS HEREINAFTER DEFINED): (IF REQUIRED BY INSTRUCTION 4)
 
<TABLE>
<S>                                                                <C>
- ------------------------------------------------------         -------------------------------------------
               (Authorized Signature)                                          (Title)


- ------------------------------------------------------         -------------------------------------------
                   (Name of Firm)                                               (Date)
</TABLE>
 
                                        6
<PAGE>   7
 
                   PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW.
<TABLE>
<S>                                                               <S>
- ------------------------------------------------------------------------------------------------------------------
                            PAYER'S NAME: NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
- ------------------------------------------------------------------------------------------------------------------
                           SUBSTITUTE                              PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT
                            FORM W-9                               RIGHT AND CERTIFY BY SIGNING AND DATING BELOW
                                                                  ------------------------------------------------
                   DEPARTMENT OF THE TREASURY                      PART 2 -- Check the box if you are exempt from
                    INTERNAL REVENUE SERVICE                       backup withholding.    [ ]
                                                                  ------------------------------------------------
 
                                                                   CERTIFICATION -- Under the penalties of
                                                                   perjury, I certify that (1) the number shown on
                                                                   this form is my correct taxpayer identification
                                                                   number (or I am waiting for a number to be
                                                                   issued to me) and (2) I am not subject to
                                                                   backup withholding either because I have not
                                                                   been notified by the Internal Revenue Service
                                                                   (the "IRS") that I am subject to backup
                                                                   withholding as a result of a failure to report
                                                                   all interest or dividends or the IRS has
                                                                   notified me that I am no longer subject to
                                                                   backup withholding. (You must cross out Item
                                                                   (2) above if you have been notified by the IRS
                                                                   that you are subject to backup withholding
                                                                   because of underreporting of interest or
                  PAYER'S REQUEST FOR TAXPAYER                     dividends on your return.)
                      IDENTIFICATION NUMBER                        Signature Date
                             ("TIN")
                          CERTIFICATION
- ------------------------------------------------------------------------------------------------------------------
 
<CAPTION>
<S>                                                                <C>                    <C>
 
                            PAYER'S NAME: NORWEST BANK MINNESOTA,
- ------------------------------------------------------------------------------------------------------------------
                           SUBSTITUTE                                            Social Security Number
                            FORM W-9                                   OR ----------------------------------------
 
                                                                                   Employer ID Number
                                                                  ------------------------------------------------
                   DEPARTMENT OF THE TREASURY
                    INTERNAL REVENUE SERVICE
 
                                                                  ------------------------------------------------
 
                  PAYER'S REQUEST FOR TAXPAYER
 
                      IDENTIFICATION NUMBER
                             ("TIN")
 
                          CERTIFICATION
 
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
 
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
      OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
      REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
      IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
 
             CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
     I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Center or Social Security Administration Office or (b) I intend
to mail or deliver an application in the near future. I understand that if I do
not provide a taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
 
<TABLE>
<S>                                                          <C>
- ------------------------------------------------------               ---------------------------------------------------
                         Signature                                                      Date
</TABLE>
 
                                        7
<PAGE>   8
 
                                  INSTRUCTIONS
         FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
 
     1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND SERIES A NOTES. The tendered
Series A Notes or any confirmation of a book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof and any other documents required by
this Letter of Transmittal must be received by the Exchange Agent at its address
set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date.
THE METHOD OF DELIVERY OF THE TENDERED SERIES A NOTES, THIS LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE
EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE HOLDER
USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE.
NO LETTER OF TRANSMITTAL OR SERIES A NOTES SHOULD BE SENT TO THE COMPANY.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES, OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
 
     Holders who wish to tender their Series A Notes and (i) whose Series A
Notes are not immediately available, or (ii) who cannot deliver their Series A
Notes, this Letter of Transmittal, or any other documents required hereby to the
Exchange Agent prior to the Expiration Date, or (iii) who are unable to complete
the procedure for book-entry transfer on a timely basis, must tender their
Series A Notes according to the guaranteed delivery procedures set forth in the
Prospectus. Pursuant to such procedure: (i) such tender must be made by or
through an Eligible Institution; (ii) prior to the Expiration Date, the Exchange
Agent must have received from the Eligible Institution a properly completed and
duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or
hand delivery) setting forth the name and address of the Holder of the Series A
Notes, the certificate number or numbers of such Series A Notes and the
aggregate principal amount of Series A Notes tendered, stating that the tender
is being made thereby and guaranteeing that, within three New York Stock
Exchange trading days after the Expiration Date, this Letter of Transmittal (or
facsimile hereof) together with the certificate(s) representing the Series A
Notes or a Book-Entry Confirmation and any other required documents will be
deposited by the Eligible Institution (as hereinafter defined) with the Exchange
Agent; and (iii) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all other documents required by this Letter of
Transmittal and the certificate(s) representing all tendered Series A Notes (or
a Book-Entry Confirmation) in proper form for transfer, must be received by the
Exchange Agent within three New York Stock Exchange trading days after the
Expiration Date, all as provided in the Prospectus under the caption "The
Exchange Offer -- Guaranteed Delivery Procedures." Any Holder of Series A Notes
who wishes to tender his Series A Notes pursuant to the guaranteed delivery
procedures described above must ensure that the Exchange Agent receives the
Notice of Guaranteed Delivery prior to 5:00 p.m., New York City time, on the
Expiration Date. Upon request of the Exchange Agent, a Notice of Guaranteed
Delivery will be sent to Holders who wish to tender their Series A Notes
according to the guaranteed delivery procedures set forth above.
 
     All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Series A Notes, and withdrawal of tendered
Series A Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all Series A Notes not properly tendered or any Series A Notes
the Company's acceptance of which would, in the opinion of counsel for the
Company, be unlawful. The Company also reserves the right to waive any
irregularities or conditions of tender as to particular Series A Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer,
including the instructions in this Letter of Transmittal and those set forth in
the Prospectus under the caption "The Exchange Offer -- Certain Conditions to
the Exchange Offer," shall be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of Series A Notes must
be cured within such time as the Company shall determine. Neither the Company,
the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Series A
Notes, nor shall any of them incur any liability for failure to give such
notification. Tenders of Series A Notes will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any Series A
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holders of Series A Notes,
unless otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date.
 
     2. TENDER BY HOLDER. Only a Holder of Series A Notes may tender such Series
A Notes in the Exchange Offer. Any beneficial holder of Series A Notes who is
not the registered Holder and who wishes to tender should arrange with the
registered Holder to execute and deliver this Letter of Transmittal on his
behalf or must, prior to completing and executing this Letter of Transmittal and
delivering his Series A Notes, either make appropriate arrangements to register
ownership of the Series A Notes in such holder's name, or obtain a properly
completed bond power from the registered Holder. The transfer of registered
ownership of Series A Notes may take considerable time.
 
     3. PARTIAL TENDERS. If less than the entire principal amount of Series A
Notes represented by a certificate is tendered, the tendering Holder should fill
in the aggregate principal amount tendered in the third column of the box
entitled "Description of Series A Notes" above. The entire principal amount of
Series A Notes set forth on the certificate delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated. If the entire
principal amount of all Series A Notes is not tendered, then a Series A Notes
certificate for the principal amount of Series A Notes not tendered and a
certificate or certificates representing Series B Notes issued in exchange for
any Series A Notes accepted will be sent to the Holder at his or her registered
address, unless a different address is provided in the appropriate box on this
Letter of Transmittal, promptly after the Series A Notes are accepted for
exchange, or in the case of Series A
 
                                        8
<PAGE>   9
 
Notes tendered by book-entry transfer, such indentured Series A Notes and Series
B Notes issued in exchange for any Series A Notes accepted will be credited to
accounts at DTC.
 
     4. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal (or facsimile hereof) is
signed by the record Holder(s) of the Series A Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the Series
A Notes without alteration, enlargement, or any change whatsoever.
 
     If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder or Holders of Series A Notes tendered and the certificate or
certificates for Series B Notes issued in exchange therefor are to be issued (or
if certificates representing the principal amount of Series A Notes not tendered
are to be reissued) to the registered Holder, the said Holder need not and
should not endorse any tendered Series A Notes, nor provide a separate bond
power. In any other case, such Holder must either properly endorse the Series A
Notes tendered or transmit a properly completed separate bond power with this
Letter of Transmittal, with the signatures on the endorsement or bond power
guaranteed by an Eligible Institution.
 
     If this Letter of Transmittal (or facsimile hereof) is signed by a person
other than the registered Holder or Holders of any Series A Notes listed, such
Series A Notes must be endorsed or accompanied by appropriate bond powers, in
each case signed as the name of the registered Holder or Holders appears on the
Series A Notes.
 
     If this Letter of Transmittal (or facsimile hereof) or any Series A Notes
or bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations, or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, evidence satisfactory to the Company of their
authority so to act must be submitted with this Letter of Transmittal.
 
     Endorsements on Series A Notes or signatures on bond powers required by
this Instruction 4 must be guaranteed by an Eligible Institution.
 
     Except as otherwise provided below, all signatures on this Letter of
Transmittal must be guaranteed by a participant in a Recognized Signature
Guarantee Medallion Program (an "Eligible Institution"). Signatures on this
Letter of Transmittal need not be guaranteed if (i) this Letter of Transmittal
is signed by the registered Holder(s) of the Series A Notes tendered herewith
and such Holder(s) have not completed the box set forth herein entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions," or
(ii) if such Series A Notes are tendered for the account of an Eligible
Institution.
 
     5. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. Tendering Holders should
indicate, in the applicable box or boxes, the name and address to which Series B
Notes or substitute Series A Notes for the principal amount of Series A Notes
not tendered or not accepted for exchange are to be issued or sent, if different
from the name and address of the person signing this Letter of Transmittal. In
the case of issuance in a different name, the taxpayer identification or social
security number of the person named must also be indicated.
 
     6. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Series A Notes pursuant to the Exchange Offer. If,
however, certificates representing Series B Notes or Series A Notes (for any
principal amount of Series A Notes not tendered or accepted for exchange) are to
be delivered to, or are to be registered or issued in the name of, any person
other than the registered Holder of the Series A Notes tendered hereby, or if
tendered Series A Notes are registered in the name of any person other than the
person signing this Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Series A Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered Holder or on any other persons) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with this Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering Holder.
 
     Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Series A Notes listed in this Letter of
Transmittal.
 
     7. FORM W-9. Any Holder who tenders his Series A Notes is required to
provide the Exchange Agent with a correct Taxpayer Identification Number ("TIN")
on the Form W-9 which is enclosed herewith. If such Holder is an individual, the
TIN is his or her social security number. Failure to provide the information on
the Form W-9 may subject the surrendering Holder to 31% Federal income tax
withholding on any payment made to Holders of the Series B Notes. Exempt Holders
(including, among others, all corporations and certain foreign individuals) are
not subject to these backup withholding and reporting requirements. For
additional information in this regard, please refer to the enclosed Guidelines
for Certification of TIN on Substitute Form W-9. In order to satisfy the
Exchange Agent that a foreign individual qualifies as an exempt recipient, the
Holder must submit a Form W-8, signed under penalties of perjury, attesting to
that individual's exempt status. A Form W-8 may be obtained from the Exchange
Agent.
 
     8. WAIVER OF CONDITIONS. The Company reserves the absolute right to amend,
waive, or modify specified conditions in the Exchange Offer, set forth in the
Prospectus under the caption "The Exchange Offer -- Certain Conditions to the
Exchange Offer," in the case of any Series A Notes tendered.
 
     9. MUTILATED, LOST, STOLEN OR DESTROYED SERIES A NOTES. Any tendering
Holder whose Series A Notes have been mutilated, lost, stolen, or destroyed
should contact the Exchange Agent at the address indicated herein for further
instructions.
 
     10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
specified in the Prospectus. Holders may also contact their broker, dealer,
commercial bank, trust company, or other nominee for assistance concerning the
Exchange Offer.
 
                                        9
<PAGE>   10
 
            GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
                         NUMBER ON SUBSTITUTE FORM W-9
 
     GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GUIDE THE
PAYER. -- Social Security Numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer Identification Numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the number
to give the payer.
- ---------------------------------------------------------------
                 ---------------------------------------------------------------
 
<TABLE>
<CAPTION>
                                              GIVE THE
                                          SOCIAL SECURITY
     FOR THIS TYPE OF ACCOUNT:              NUMBER OF --
- --------------------------------------------------------------
                                      GIVE THE EMPLOYER
                                      IDENTIFICATION
           FOR THIS TYPE OF ACCOUNT:  NUMBER OF --
- --------------------------------------------------------------
<C>  <S>                              <C>
 1.  An individual's account          The individual
 2.  Two or more individuals (joint   The actual owner of the
     account)                         account or, if combined
                                      funds, any one of the
                                      individuals (1)
 3.  Custodian account of a minor     The minor (2)
     (Uniform Gift to Minors Act)
 4.  (a) The usual revocable savings  The grantor- trustee (1)
     trust account (grantor is also
     trustee)
     (b) So-called trust account      The actual owner (1)
     that is not a legal or valid
     trust under State law
 5.  Sole proprietorship account      The owner (3)
 6.  A valid trust, estate, or        The legal entity (Do not
     pension trust                    furnish the identifying
                                      number of the personal
                                      representative or
                                      trustee unless the legal
                                      entity itself is not
                                      designated in the
                                      account title.) (4)
 7.  Corporate account                The corporation
 8.  Religious, charitable, or        The organization
     educational organization
     account
 9.  Partnership                      The partnership
10.  Association, club or other       The organization
     tax-exempt organization
11.  A broker or registered nominee   The broker or nominee
12.  Account with the Department of   The public entity
     Agriculture in the name of a
     public entity (such as a State
     or local government, school
     district, or prison) that
     receives agricultural program
     payments
</TABLE>
 
- ---------------------------------------------------------------
                 ---------------------------------------------------------------
 
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security Number.
(3) Show the name of the owner. You may also enter your business name. You may
    use your Social Security Number or Employer Identification Number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
      considered to be that of the first name listed.
 
                                       10
<PAGE>   11
 
            GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
                         NUMBER ON SUBSTITUTE FORM W-9
 
                                     PAGE 2
 
OBTAINING A NUMBER
 
If you don't have a Taxpayer Identification Number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
 
PAYEES EXEMPT FROM BACKUP WITHHOLDING
 
Payees specifically exempted from backup withholding on broker transactions
include the following:
 
- - A corporation.
 
- - A financial institution.
 
- - An organization exempt from tax under Section 501(a), or an individual
  retirement plan.
 
- - The United States or any agency or instrumentality thereof.
 
- - A State, the District of Columbia, a possession of the United States, or any
  subdivision or instrumentality thereof.
 
- - A foreign government, a political subdivision of a foreign government, or any
  agency or instrumentality thereof.
 
- - An international organization or any agency or instrumentality thereof.
 
- - A registered dealer in securities or commodities registered in the United
  States or a possession of the United States.
 
- - A real estate investment trust.
 
- - A common trust fund operated by a bank under Section 584(a).
 
- - An entity registered at all times under the Investment Company Act of 1940.
 
- - A foreign central bank of issue.
 
- - A person registered under the Investment Advisors Act of 1940 who regularly
  acts as a broker.
 
Payments of interest not generally subject to backup withholding include the
following:
 
- - Payments to nonresident aliens subject to withholding under Section 1441.
 
- - Payments to partnerships not engaged in a trade or business in the United
  States and which have at least one nonresident partner.
 
- - Payments made by certain foreign organizations.
 
Exempt payees described above should file Substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND
DATE THE FORM AND RETURN IT TO THE PAYER.
 
PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend,
interest, or other payments to give Taxpayer Identification Numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a Taxpayer Identification Number to a payer. Certain penalties may
also apply.
 
PENALTIES
 
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail
to furnish your Taxpayer IDENTIFICATION NUMBER to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
 
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
 
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
 
                    FOR ADDITIONAL INFORMATION CONTACT YOUR
                           TAX CONSULTANT OR THE IRS.
 
                                       11
<PAGE>   12
 
                         (DO NOT WRITE IN SPACE BELOW)
 
<TABLE>
<C>           <C>                                                          <C>
 CERTIFICATE                         SERIES A NOTES                         SERIES A NOTES
 SURRENDERED                            TENDERED                               ACCEPTED
</TABLE>
 
- --------------------------------------------------------------------------------
 
- --------------------------------------------------------------------------------
 
- --------------------------------------------------------------------------------
 
- --------------------------------------------------------------------------------
 
Delivery Prepared by:
- ----------------------------------
 
Checked by:
- --------------------------------------------
 
Date:
- -----------------------------------------------------
 
                                       12

<PAGE>   1
 
                       NOTICE OF GUARANTEED DELIVERY FOR
 
                              PILLOWTEX CORP. LOGO
 
     This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Pillowtex Corporation (the "Company") made pursuant to the
Prospectus, dated February   , 1998 (the "Prospectus"), if certificates for
Series A Notes of the Company are not immediately available or if the procedure
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Exchange Agent prior to 5:00 p.m, New
York City time, on the Expiration Date of the Exchange Offer. Such form may be
delivered or transmitted by facsimile transmission, mail, overnight courier or
hand delivery to Norwest Bank Minnesota, National Association (the "Exchange
Agent") as set forth below. In addition, in order to utilize the guaranteed
delivery procedure to tender Series A Notes pursuant to the Exchange Offer, a
completed, signed and dated Letter of Transmittal (or facsimile thereof) must
also be received by the Exchange Agent prior to 5:00 p.m., New York City time,
on the Expiration Date. Capitalized terms not defined herein are defined in the
Prospectus.
 
                                  Deliver to:
 
          NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, EXCHANGE AGENT
 
<TABLE>
<C>                                <C>                                <C>
 By Registered or Certified Mail:    By Hand or Overnight Delivery:           By Hand Delivery:
   Norwest Bank Minnesota, N.A.       Norwest Bank Minnesota, N.A.       Norwest Bank Minnesota, N.A.
    Corporate Trust Operations          Corporate Trust Services           Northstar East Building
          P.O. Box 1517                Sixth and Marquette Avenue       608 Second Avenue South, 12th
    Minneapolis, MN 55480-1517         Minneapolis, MN 55479-0113                   Floor
                                                                           Corporate Trust Services
                                                                               Minneapolis, MN
</TABLE>
 
                         Facsimile Transmission Number:
                        (For Eligible Institutions Only)
                                 (612) 667-4927
 
                          Confirm Receipt of Facsimile
                                 by Telephone:
                                 (612) 667-9764
 
     Delivery of this instrument to an address other than as set forth above or
transmission of instructions via a facsimile number other than the one listed
above will not constitute a valid delivery.
 
Ladies and Gentlemen:
 
     Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Series A Notes set forth below, pursuant to the
guaranteed delivery procedures described in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus. By so tendering, the undersigned
hereby does make, at and as of the date hereof, the representations and
warranties of a tendering Holder of Series A Notes set forth in the Letter of
Transmittal.
 
<TABLE>
<S>                                                    <C>
Principal Amount of Series A Notes Tendered:           If Series A Notes will be delivered by
- ------------------------------------------------       book-entry transfer to the Depository Trust
Certificate Nos. (if available):                       Company, provide account number:
- ------------------------------------------------       DTC Account Number:
Total Principal Amount Represented by Series A         ---------------------------------
  Notes Certificate(s):
- ------------------------------------------------
</TABLE>
<PAGE>   2
 
     ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE
DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED
HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS,
AND ASSIGNS OF THE UNDERSIGNED.
 
                                PLEASE SIGN HERE
 
<TABLE>
<S>                                                           <C>
- ------------------------------------------------------------  ------------------------------------------------
                                                                                   (Date)
 
- ------------------------------------------------------------  ------------------------------------------------
Signature(s) of Registered Holder(s) or Authorized Signatory                       (Date)
</TABLE>
 
Area Code and Telephone Number:
- ------------------------------------------------------
 
     Must be signed by the Holder(s) of Series A Notes as their name(s)
appear(s) on certificates for Series A Notes or by person(s) authorized to
become registered Holder(s) by endorsement and documents transmitted with this
Notice of Guaranteed Delivery. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer, or other person acting in a
fiduciary or representative capacity, such person must set forth his or her full
title below:
 
                      (Please print name(s) and addresses)
 
<TABLE>
<S>        <C>
Name(s):   ------------------------------------------------------------
           ------------------------------------------------------------
                                  (Please Print)
Capacity:  ------------------------------------------------------------
 
Address:   ------------------------------------------------------------
           ------------------------------------------------------------
                                (Include Zip Code)
</TABLE>
 
                                        2
<PAGE>   3
 
                                   GUARANTEE
 
     The undersigned, a member of a registered national securities exchange, or
a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an officer or correspondent in the
United States, hereby guarantees that the certificates representing the
principal amount of Series A Notes tendered hereby in proper form for transfer,
or timely confirmation of the book-entry transfer of such Series A Notes into
the Exchange Agent's account at DTC pursuant to the procedures set forth in "The
Exchange Offer -- Guaranteed Delivery Procedures" section of the Prospectus,
together with a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof) with any required signature guarantee and any
other documents required by the Letter of Transmittal, will be received by the
Exchange Agent at the address set forth above, within three New York Stock
Exchange trading days after the Expiration Date.
 
<TABLE>
<S>                                                       <C>
                      Name of Firm                                          Authorized Signature
                        Address                                                    Title
                                                                                   Name:
                        Zip Code                                           (Please Type or Print)
 
              Area Code and Telephone No.:                                         Dated:
</TABLE>
 
NOTE: DO NOT SEND CERTIFICATES FOR SERIES A NOTES WITH THIS FORM. CERTIFICATES
FOR SERIES A NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
 
                                        3


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