ROSES STORES INC, 8-A12G, 1995-03-27

ROSES STORES INC
8-A12G, 1995-03-27
VARIETY STORES

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FORM 8-A

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934

ROSE'S STORES, INC.
(Exact name of registrant as specified in its charter)

Delaware 56-0382475
(State of incorporation (I.R.S. Employer
or organization) Identification No.)

218 S. Garnett Street
Henderson, North Carolina 27536
(Address of principal executive offices, including zip code)

Securities to be registered pursuant to Section 12(b) of the Act:

Title of each class to be so registered: None

Name of each exchange on which each class is to be registered: N/A

Securities to be registered pursuant to Section 12(g) of the Act:

Title of class: Common Stock, no par value

Title of class: Warrants (to purchase Common Stock)

Item 1. Description of Registrant's Securities to be Registered.

On September 5, 1993, Rose's Stores, Inc. (the "Registrant" or the
"Company") filed a voluntary Petition for Relief under Chapter 11, Title 11 of
the United States Code (the "Bankruptcy Code") with the United States Bankruptcy
Court for the Eastern District of North Carolina, Raleigh Division(the"Court").
The Company's First Amended Joint Plan of Reorganization (the "Plan") was filed
with the Court on October 4, 1994, was voted on and accepted by the various
classes of creditors and equity holders entitled to vote thereon and was
confirmed by the Court on December 14, 1994. Two technical amendments have been
made to the Plan. The first amendment, which was approved by the Court on
February 3, 1995, relates to the terms of a subscription offering to the holders
of existing stock of the Company. The second amendment, which was approved by
the Court on February 13, 1995, relates to the dates to be used for determina-
tion of distributions to be made under the Plan.

Under the terms of and in accordance with the Plan, as amended<F1>, the
Company is to emerge from Chapter 11 no earlier than March 31, 1995 and no later
than April 30, 1995 (the "Effective Date")<F2>. The Plan, as amended, provides
that on the Effective Date, the Company shall be authorized to issue shares of
Common Stock and Warrants to purchase Common Stock, which shares shall be issued
and distributed, on and after the Effective Date, in accordance with the terms
of the Plan, as amended.

The Plan, as amended, provides that distributions of Common Stock or
Warrants are to made to certain of the Company's management employees, to
unsecured creditors who hold claims in Class 3, and to the holders of equity
interests in the Voting Common Stock and Non-Voting Class B Stock (collectively,
the "Old Stock") who hold claims in Class 5. The Old Stock is to be cancelled
and extinguished as of the Effective Date.

The following information will become effective upon the Effective Date.

A. Common Stock

Under its Amended and Restated Certificate of Incorporation, to be filed
and to become effective as of the Effective Date (the "Restated Certificate"),
the Registrant is authorized to issue up to 50,000,000 shares of Common Stock
with no par value, under such terms and conditions as are set forth in the Plan,
as amended.

The Registrant has applied to have the Common Stock listed for quotation
on the Nasdaq National Market System. There can be no assurance, however, that
such application will be granted.

Holders of Common Stock are entitled to one vote for each share held on
all matters submitted to a vote of stockholders; provided, however, that shares
of Common Stock issued or reserved for issuance under the Plan, as amended, may
not be voted in any election of directors of the Company, or any other matter
requiring the vote of stockholders, by a holder of an Allowed Claim (as defined
in the Plan, as amended), an equity interest in the Old Stock on the Effective
Date or an employee of the Company entitled under the Plan, as amended, to
receive shares of Common Stock under the incentive and retention program
provided to certain of the Company's management employees, or by the holder of a
Disputed Claim (as defined in the Plan, as amended), until such shares have

[FN]
<F1> Any discussion contained herein of provisions of the Plan, as amended, is
qualified in its entirety by the Plan, as amended, to which reference is made
for a more complete description of the provisions herein discussed.
<F2> The emergence of the Company from bankruptcy and the discussion which
follows assume that the Company will be able to comply satisfactorily with the
conditions precedent to the effectiveness of the Plan, as amended. The Plan,
as amended, provides that in the event that either the conditions precedent are
not met or certain Alternative Treatment Events (as defined in the Plan, as
amended) occur and are not waived, the Company's operations will cease and the
assets of the Company will be sold and disposed of as provided in the Plan, as
amended.
[/FN]
<PAGE>
actually been distributed to such persons, or, with respect to holders of
Disputed Claims, until such time as the Disputed Claim has become an Allowed
Claim and the shares have been distributed to such persons.

The right of holders of Common Stock to vote to select the initial
directors of the Company is limited by the Plan, as amended, as described in the
section entitled "Certain Charter and Bylaw Provisions" below, to which
reference is hereby made.

Holders of Common Stock are entitled to receive ratably such dividends,
if any, as may be declared by the Board of Directors out of funds legally
available therefor, subject to any preferential dividend rights of Preferred
Stock that may be issued in the future. Delaware law prohibits the payment of
dividends or other distributions to holders of shares of Common Stock out of its
net profits if the capital of the corporation, computed in accordance with the
Delaware General Corporation Law, has been diminished to an amount less than the
aggregate amount of capital represented by the issued and outstanding stock
having a preference on distribution of assets. In addition, the Company may be
prohibited from paying dividends under the terms of loan agreements or other
contracts. The Company expects that the loan required to enable the Company to
emerge from bankruptcy will contain restrictions which directly or indirectly
limit the Company's ability to pay dividends.

Upon the liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to receive ratably the net assets of the
Company available after the payment of all debts and other liabilities and
subject to the prior rights of any shares of Preferred Stock that may be
issued in the future. Holders of Common Stock have no preemptive, subscription
or conversion rights. The shares of Common Stock will, when issued and paid for
(if payment is required under the terms of the Plan, as amended), be fully paid
and nonassessable.

The rights, preferences and privileges of holders of Common Stock are
subject to the rights of the holders of shares of any class or series of
Preferred Stock that the Company may designate and issue in the future, and
except for such rights, preferences and privileges as the holders of Preferred
Stock may have, the holders of Common Stock have all powers, preferences and
rights conferred upon owners of shares of capital stock under the laws of the
State of Delaware.

Preferred Stock. Under the Restated Certificate, the Registrant has an
authorized class of 10,000,000 shares of undesignated Preferred Stock with no
par value. The Board of Directors is authorized, subject to any limitations
prescribed by law or under the Plan, as amended, without further stockholder
approval, to issue from time to time such shares of Preferred Stock, in one or
more classes or series. Each class or series of Preferred Stock shall have such
number of shares, designations, preferences, voting powers, qualifications and
special or relative rights or privileges as shall be determined by the Board of
Directors, which may include, among others, dividend rights, voting rights,
redemption and sinking fund provisions, liquidation preferences, conversion
rights and preemptive rights. If, upon the liquidation, dissolution or winding
up of the Company, the assets available for distribution to holders of shares
of Preferred Stock of all classes or series are insufficient to pay such holders
the full preferential amount to which they are entitled, such assets are to be
<PAGE>
distributed ratably among the shares of all classes or series of Preferred Stock
in accordance with their respective liquidation preferences.

Notwithstanding the foregoing, to the extent and for so long as is
required by Section 1123(a)(6) of the Bankruptcy Code, the Company may not issue
any shares of non-voting equity securities and is required to provide, as to the
several classes or series of securities possessing voting power, a distribution
of such power among such classes and series determined by the Board of Directors
to be appropriate for such classes and series. In the case of any class or
series of Preferred Stock having a preference over any other class or series of
Preferred Stock or over Common Stock with respect to dividends, the Company is
required to provide for the election of directors representing such class or
series in the event of default by the Company in the payment of such dividends.

The stockholders of the Company have granted the Board of Directors
authority to issue the Preferred Stock and to determine its rights and
preferences to eliminate delays associated with a stockholder vote on specific
issuances. The rights of the holders of Common Stock will be subject to the
rights of holders of any Preferred Stock issued in the future. The issuance of
Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, or deterring a third party from paying a premium to
acquire a majority of the outstanding voting stock of the Company.

The Company has no present plans to issue any shares of Preferred Stock.

Certain Charter and Bylaw Provisions. The Registrant's Restated
Certificate includes provisions eliminating the personal liability of the
Company's directors for monetary damages resulting from breaches of their
fiduciary duty to the extent permitted by the Delaware General Corporation Law.
The Registrant's Restated Certificate and Bylaws include provisions indemnifying
the Company's directors and officers to the fullest extent permitted by Delaware
law, including under circumstances in which indemnification is otherwise
discretionary, and permitting the Board of Directors to grant indemnification
to employees and agents to the fullest extent permitted by Delaware law.

The Registrant's Restated Certificate and Bylaws contain provisions which
provide for a classified Board of Directors consisting of three classes with
directors serving staggered three-year terms. Therefore, only one third of the
directors are subject to election by the stockholders each year. Under Delaware
law, if a Board of Directors is classified, a director may not be removed except
for cause unless the corporation's certificate of incorporation otherwise
provides. The Registrant's Restated Certificate contains a provision permitting,
in addition to removal for cause in accordance with Delaware law, the removal
without cause of any director or the entire Board of Directors by the affirma-
tive vote of the holders of at least 66 2/3% of the outstanding shares of
capital stock entitled to vote in elections of directors. If a director is
elected by a separate voting group representing the holders of any one or more
classes or series of Preferred Stock, however, only the members of that voting
group may participate in the vote to remove him or her. Such director or
directors may be removed with or without cause by the affirmative vote of the
<PAGE>
holders of a majority of the outstanding shares of such class or series entitled
to vote in the election of such director or directors. A super-majority vote of
the holders of shares entitled to cast 66 2/3% of the votes entitled to be cast
by all outstanding shares is required to change the provisions of the Restated
Certificate and Bylaws relating to the classified Board of Directors.

Notwithstanding the foregoing, the Restated Certificate and the terms of
the Plan, as amended, provide that the committees representing the unsecured
creditors (the "Unsecured Committee") and the equity holders ("the "Equity
Committee") of the Registrant are entitled to select the directors to serve on
the initial Board of Directors as of the Effective Date, with the directors to
be divided into three classes with terms of office expiring at the first, second
and third annual meetings of stockholders following their election, respective-
ly. The Unsecured Committee has the right to designate each director as a
member of one of the three classes of directors, except that the director
selected by the Equity Committee must be a member of the third class having a
term expiring at the third annual meeting of stockholders following the
selection of such director.

Under the Restated Certificate and the terms of the Plan, as amended, in
the event the Company receives proceeds totalling $25 million or more from the
Subscription Rights, the Equity Committee shall have the right to select a total
of three directors to serve on the Board of Directors, one in class one and one
in class two. These directors will either be additional directors, increasing
the size of the Board (not to exceed a total of thirteen directors) or will
replace two of the directors initially selected by the Unsecured Committee. In
the event that the Company receives proceeds from the Subscription Rights
totalling more than fifty percent (50%) of the amount of the subscription price
per share times 10,000,000, the number of Effective Date Shares, the Unsecured
Committee is required to cause a sufficient number of the directors it selected
to resign in order to permit the Equity Committee to select a majority of the
directors on the Board of Directors.

In the event the Company receives proceeds totalling $25 million or more
from the Subscription Rights<F3>, the Restated Certificate and the terms of the
Plan, as amended, provide that an annual or special meeting of the stockholders
be held within 180 days of the Effective Date, or as soon as practicable
thereafter, for the purpose of electing a full new Board of Directors. As of
the date of such meeting, should it be required, the terms of all of the initial
directors selected as stated above will expire, and the Board of Directors will
again be divided into three classes.

The Registrant's Restated Certificate also provides that the stockholders
may not take action by written consent as Delaware law would otherwise permit,
but may act only at a meeting of the stockholders. A super-majority vote of the
holders of shares entitled to cast 66 2/3% of the aggregate number of votes
entitled to be cast by all holders of outstanding shares is required to change
[FN]
<F3> The Subscription Rights entitle the record holders of claims in Class 5
as of February 7, 1995, to purchase shares of Common Stock at a subscription
price of $6.50 per share, with each record holder receiving one right for each
1.8758 shares owned as of February 7, 1995.
[/FN]
<PAGE>
the provision of the Restated Certificate relating to the action of the
stockholders by written consent.

The Company's Bylaws include provisions requiring the vote of the holders
of not less than 75% of the outstanding shares of stock of the Company entitled
to vote to effect (i) any merger or consolidation of the Company with any
person, corporation or entity which is the record or beneficial owner of more
than five percent (5%) of the Company's outstanding voting securities (an
"Affiliate"), (ii) any sale, lease or exchange or other disposition of a sub-
stantial part of the assets of the Company to any Affiliate, (iii) any issuance
of voting securities of the Company to any Affiliate, or (iv) any issuance of
voting securities of the Company in exchange or payment for the securities or
assets of any Affiliate. In addition, the provisions of the Bylaws with
respect to rights of dissenting stockholders to receive compensation for their
shares must be complied with in order for any Affiliate Transaction to be
consummated, despite approval of such Affiliate Transaction by the stockholders
of the Company as required above. The above provisions do not apply, and the
provisions of Delaware law otherwise applicable do apply, to any Affiliate
Transaction if the Merger Committee of the Board of Directors approves the
Affiliate Transaction by majority vote.

The provisions of the Restated Certificate and Bylaws discussed above
would make more difficult or discourage a proxy contest or the acquisition of
control by a holder of a substantial block of the Company's stock or the removal
of the incumbent Board of Directors. Such provisions could also have the effect
of discouraging a third party from making a tender offer or otherwise attempting
to obtain control of the Company, even though such an attempt might be benefi-
cial to the Company and its stockholders. In addition, since these provisions
are designed to discourage accumulations of large blocks of the Company's stock
by purchasers whose objective is to have such stock repurchased by the Company
at a premium, such provisions could tend to reduce the temporary fluctuations in
the market price of the Company's stock which are caused by such accumulations.
Accordingly, stockholders could be deprived of certain opportunities to sell
their stock at a temporarily higher market price.

B. Warrants

Under its Restated Certificate, the Registrant is authorized to issue
4,285,714 Warrants to purchase an aggregate of 4,285,714 shares of Common
Stock. The Plan, as amended, provides that the Warrants are to be distributed
on a pro-rata basis to all record holders of the Company's Old Stock as of the
Effective Date. The Old Stock will be cancelled and extinguished on the Effec-
tive Date, and the Warrants will be issued and distributed on or within thirty
(30) days after the Effective Date, in accordance with the terms of the Plan, as
amended. The Company and the warrant agent will execute, on or before the Effec-
tive Date, a Warrant Agreement, a draft of which is attached as Exhibit I-3
hereto, which will detail the procedures for issuance, distribution, exchange
and transfer of the Warrants.

Each Warrant entitles the holder thereof to purchase one share of Common
Stock from the date the Warrants are issued until the seventh anniversary of the
Effective Date. No Warrants to purchase fractional shares will be issued. The
Warrants are transferable. Prior to the exercise of the Warrants, the
<PAGE>
registered holders thereof are not entitled to vote or be deemed the holders of
Common Stock for any purpose.

The initial exercise price of the Warrants is equal to the amount of the
unsecured creditors' allowed claims in Class 3 plus the total amount reserved
for disputed Class 3 claims (the "Class 3 Full Recovery Target Amount") as of
the Effective Date, divided by 10,000,000, the number of shares to be issued on
the Effective Date. The exercise price will be adjusted on each of the first
three anniversaries of the Effective Date to reflect the Class 3 Full Recovery
Target Amount on each of these three dates. The exercise price will be adjusted
on the fourth, fifth and sixth anniversaries of the Effective Date to equal
105%, 110% and 115%, respectively, of the Class 3 Full Target Recovery Amount
divided by 10,000,000.

In addition to the adjustments described above, the number of shares
purchasable or assets or property payable upon the exercise of each Warrant and
the exercise price of the Warrants are subject to adjustment, on the terms and
conditions contained in the warrant agreement entered into between the Company
and the warrant agent pursuant to the terms of the Plan, as amended, in the
event of (i) a stock dividend or distribution to holders of Common Stock, (ii)
a subdivision, combination or reclassification of the Common Stock, (iii) the
issuance for no consideration, other than as required under the Plan as amended,
of rights, options or warrants to holders of Common Stock, and (iv) a
distribution, other than as required under the Plan, as amended, to holders of
Common Stock or any other capital stock issued with respect to the Common Stock
of any asset, property or security (other than cash dividends payable from
current earnings and those distributions referred to in (i) through (iii)
above).

Item 2. Exhibits.

I-1 Form of Common Stock Certificate.

I-2 Form of Warrant Certificate.

I-3 Form of Warrant Agreement between Rose's Stores, Inc. and the warrant
agent, as filed with the United States Bankruptcy Court, Eastern
District of North Carolina, Raleigh Division, on December 14, 1994.

I-4 Form of Amended and Restated Certificate of Incorporation of the
Registrant, to be filed and become effective upon the Registrant's
emergence from Chapter 11.

I-5 Form of Bylaws of the Registrant, as amended and restated, to be
filed and become effective upon the Registrant's emergence from
Chapter 11.

I-6 First Amended Joint Plan of Reorganization dated October 14, 1994, filed
as an exhibit to the Registrant's Form 8-K dated October 5, 1994, and
incorporated herein by reference.

I-7 First Amended Disclosure Statement Related to First Amended Joint Plan
of Reorganization dated October 4, 1994, filed as an exhibit to the
Registrant's Form 8-K dated October 5, 1994, and incorporated herein by
reference.
<PAGE>
I-8 Order of United States Bankruptcy Court, Eastern District of North
Carolina, Raleigh Division, dated December 14, 1994.

I-9 Consent Order of United States Bankruptcy Court, Eastern District of
North Carolina, Raleigh Division, Approving Motion of Debtor, Official
Committee of Equity Security Holders and the Official Committee of
Unsecured Creditors to Set Class 5 Subscription Price and Make Technical
Modifications to Plan of Reorganization, dated February 3, 1995.

I-10 Consent Order of United States Bankruptcy Court, Eastern District of
North Carolina, Raleigh Division, Approving Motion for Order Authorizing
Technical Modifications to Joint Plan of Reorganization Regarding Record
Dates for Distributions to Class 5, dated February 13, 1995.

<PAGE>
<PAGE>
SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized, this the 27th day of
March, 1995.

Rose's Stores, Inc.

By: _/s/Jeanette R. Peters________________
Jeanette R. Peters
Senior Vice President and
Chief Financial Officer

<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description

I-1 Form of Common Stock Certificate.

I-2 Form of Warrant Certificate.

I-3 Form of Warrant Agreement between Rose's
Stores, Inc. and the warrant agent, as
filed with the United States Bankruptcy Court,
Eastern District of North Carolina, Raleigh
Division, on December 14, 1994.

I-4 Form of Amended and Restated Certificate of
Incorporation of the Registrant, to become
effective upon the Registrant's emergence
from Chapter 11.

I-5 Form of Bylaws of the Registrant, as amended and
restated, to become effective upon the
Registrant's emergence from Chapter 11.

I-6 First Amended Joint Plan of Reorganization dated
October 14, 1994, filed as an exhibit to the
Registrant's Form 8-K dated October 5, 1994, and
incorporated herein by reference.

I-8 Order of United States Bankruptcy Court, Eastern
District of North Carolina, Raleigh Division,
dated December 14, 1994.

I-9 Consent Order of United States Bankruptcy Court,
Eastern District of North Carolina, Raleigh
Division, Approving Motion of Debtor, Official
Committee of Equity Security Holders and the
Official Committee of Unsecured Creditors to Set
Class 5 Subscription Price and Make Technical
Modifications to Plan of Reorganization, dated
February 3, 1995.

I-10 Consent Order of United States Bankruptcy Court,
Eastern District of North Carolina, Raleigh
Division, Approving Motion for Order Authorizing
Technical Modifications to Joint Plan of
Reorganization Regarding Record Dates for
Distributions to Class 5, dated February 13, 1995.

<PAGE>
<TABLE>
<S><C>
TO BE PRINTED ON FRONT SIDE OF COMMON STOCK CERTIFICATE

NO. RC SHARES

COMMON STOCK SEE REVERSE FOR
CERTAIN DEFINITIONS
ROSE'S STORES, INC. CUSIP 777764 30 9
This certifies that

is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, NO PAR VALUE, OF
ROSE'S STORES, INC.
(hereinafter called the Corporation) transferable on the books of the Corporation in person, or by duly authorized
attorney, upon surrender of the certificate, properly endorsed. The share represented hereby as issued and shall
be held subject to all of the provisions of the Certificate of Incorporation of the Corporation, as amended and
restated, to all of which the holder by acceptance hereof assents. This certificate is not valid unless countersigned
by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.

Dated:

(CORPORATE SEAL)
Secretary President and Chief Executive Officer
COUNTERSIGNED:

By:

Transfer Agent

Authorized Signature
<PAGE>
<PAGE>
TO BE PRINTED ON REVERSE SIDE OF COMMON STOCK CERTIFICATE

ROSE'S STORES, INC.

The Corporation shall furnish without charge to each stockholder who so requests the powers, 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.

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or regulations:

TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act
in common ( State)

Additional abbreviations may also be used though not in the above list.

For value received, hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)

of the common stock represented by the within certificate, and do hereby

irrevocably constitute and appoint

Attorney

to transfer the said stock on the books of the within-named Corporation with

full power of substitution in the premises.

Dated,

NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF
THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

SIGNATURE(S) GUARANTEED:
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM) PURSUANT TO S.E.C. RULE 17Ad-15.

KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
TO BE PRINTED ON FRONT SIDE OF WARRANT CERTIFICATE
<S><C>
NO. A- WARRANTS

CUSIP 777764 11 9
WARRANT CERTIFICATE FOR PURCHASE OF
COMMON STOCK OF
ROSE'S STORES, INC.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, ON ,2002

This certifies that, for value received,

, or registered assigns, is the owner of the number of Warrants set forth above, each of which entities the owner to purchase,
subject to the terms and conditions hereof and of the Warrant Agreement mentioned below, at any time
after the date hereof and prior to the Expiration Date (as herein defined), one share of the common stock, no par value per share
(the "Common Stock"), of Rose's Stores, Inc., a Delaware corporation (the "Company"), at the
exercise price determined pursuant to 6.2.5 of the Plan (the "Exercise Price") payable in lawful money of the United States of
America by money order or certified or official bank check payable to the Company, upon surrender of
this Warrant Certificate with the form of Election to Exercise on the reverse hereof duly completed and executed together with
payment of the Exercise Price at the office or agency of the Warrant Agent (as defined in the Warrant
Agreement referred to below) in the City of ______________, State of ___________.
This Warrant Certificate and each Warrant represented hereby are issued pursuant to, and are subject to all of the terms,
provisions and conditions of, that certain Warrant Agreement dated as of _________________, 1995
(hereinafter called the "Warrant Agreement"), between the Company and the Warrant Agent, to all of which terms, provisions and
conditions the registered holder of this Warrant Certificate consents by acceptance hereof. The
Warrant Agreement and the summary of its terms set forth on the reverse side of this Warrant Certificate are hereby incorporated
into this Warrant Certificate by reference and made a part of this Warrant Certificate. The Warrant
Agreement sets forth the terms and conditions under which the exercise price of a Warrant, the type of shares or other consideration
to be received upon exercise of the Warrant, and/or the number of shares to be received upon
exercise of a Warrant are or may be adjusted. Reference is hereby made to the Warrant Agreement for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of the Warrant Agent, the
Company and the holders of the Warrant Certificates or Warrants. In the event of any conflict between the provisions of this
Warrant Certificate and the Warrant Agreement, the provisions of the Warrant Agreement shall control.
In the event of any conflict between the provisions of the Plan and the Warrant Agreement, the provisions of the Plan shall
control.
Copies of the Plan and the Warrant Agreement are available for inspection at the ____________ office of the Warrant Agent,
___________________________________, or may be obtained upon written request addressed to the
Secretary, Rose's Stores, Inc., _____________________, Henderson, North Carolina 27536. The Company shall not be required upon the
exercise of the Warrants evidenced by this Warrant Certificate to issue fractions of Warrants
or shares, but shall round such fractional share to the nearest whole share (up or down), with half shares being rounded down, and
will deliver the additional share if rounded up.
The Warrants evidenced by this Warrant Certificate shall expire at 5:00 p.m., New York City time, on _________________, 2002.
The day and time of expiration are referred to herein as the "Expiration Date".
This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent.
Witness the facsimile seal of the Company and the facsimile signatures of its duly authorized officers.

ROSE'S STORES, INC.
DATED:
(CORPORATE SEAL)
By:
COUNTERSIGNED:

By: President and Chief Executive Officer
as Warrant Agent
Attest:

Secretary

Authorized Signature

<PAGE>
<PAGE>
TO BE PRINTED ON REVERSE SIDE OF WARRANT CERTIFICATE

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE
ISSUED PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY 11 U.S.C. Section 1145, UNDER AN ORDER DATED
DECEMBER 14, 1994 CONFIRMING THE FIRST AMENDED JOINT PLAN OF REORGANIZATION OF ROSE'S STORES, INC. DATED OCTOBER
4, 1994 (THE "PLAN"). THE HOLDER OF THIS CERTIFICATE IS REFERRED TO 11 U.S.C. Section 1145 FOR GUIDANCE AS TO THE SALE
OF THESE SECURITIES OR THE NEW ROSE'S COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE WARRANTS REPRESENTED BY
THIS CERTIFICATE.

Summary of Terms of Warrant Agreement

The Warrant Agreement provides that if the purchase price as determined pursuant to Section 6.2.5 of the Plan is adjusted
from time to time for reasons enumerated in the Warrant Agreement, the number of shares
purchasable upon the exercise of each Warrant represented by this Warrant Certificate are subject to modification or adjustment.
The Warrants evidenced by this Warrant Certificate shall be exercisable until 5:00 p.m., New York City time, on ________, 2002.
In the event that upon any exercise the number of Warrants exercised shall be fewer than the total number of Warrants represented
hereby, there shall be issued to the holder hereof or his assignee a new Warrant certificate evidencing the Warrants not so
exercised.
No payment or adjustment shall be made for any cash dividends, whether paid or declared, on any shares issuable upon exercise of
a Warrant. The Company shall not be required to issue fractions of shares or any certificates which evidence fractional shares. In
lieu of a fractional share the Company shall round such fractional share to the nearest whole share (up or down), with half shares
being rounded down, and will deliver the additional share if rounded up.
The Company and the Warrant Agent may deem and treat the registered holder of this Warrant Certificate as the absolute owner
hereof and of the Warrants represented by this Warrant Certificate (notwithstanding any notation of ownership or other writing
hereon made by anyone) for the purpose of any exercise of such Warrants and for all other purposes. Neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary or be bound to recognize, or make any inquiries with respect to, any
equitable or other claim to or interest in this Warrant Certificate on the part of any other person and shall not be liable for any
registration or transfer of a Warrant Certificate which is registered or to be registered in the name of a fiduciary or the nominee
of a fiduciary unless made with the actual knowledge that a fiduciary or nominee is committing a breach of trust in requesting such
registration or transfer, or with knowledge of such facts such that its participation therein amounts to bad faith.
Prior to the exercise of the Warrants represented hereby, the registered holder of this Warrant Certificate, as such, shall not
be entitled to vote on or be deemed the holder of Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, and nothing contained in the Warrant Agreement or herein shall be construed to
confer upon the holder of this Warrant Certificate, as such, any of the rights of a stockholder of the Company, including, without
limitation, the right to vote, or to receive dividends or to consent to or receive notice as stockholders in respect of any meeting
of stockholders for the election of directors of the Company or in any other matter or to receive notice of any proceedings of the
Company (except as provided in the Warrant Agreement).
Each Warrant entitles the holder thereof to purchase one share at any time during hours of regular business operations from the
date the Warrants are issued until 5:00 P.M., New York City time, on the seventh anniversary of the Effective Date (the "Expiration
Date") at the exercise price per Warrant determined pursuant to Section 6.2.5 of the Plan, subject to adjustment as set forth here-
in (the "Exercise Price"). Each Warrant not exercised prior to the Expiration Date shall expire. The Exercise Price and the
number and kind of shares purchasable upon the exercise of each Warrant are subject to adjustment upon the occurrence of certain
events pursuant to the provisions of Section 11 of the Warrant Agreement. Each holder of a Warrant Certificate shall have the
right to exercise the Warrants evidenced thereby in whole or in part at any time prior to the Expiration Date upon surrender of
the Warrant Certificate, with the form of Election to Exercise below duly completed, to the Warrant Agent at the office of the
Warrant Agent designated for such purpose, together with payment of the Exercise Price, as adjusted in accordancewith the provi-
sions of this Agreement, for the number of shares in respect of which such Warrants are then exercised. Payment of such Exercise
Price may be made by money order or by certified or official bank check in lawful money of the United States of America. In case
the holder of any Warrant Certificate shall exercise fewer than all the Warrants evidenced thereby, a new Warrant Certificate
evidencing Warrants equivalent to the Warrants remaining unexercised shall be issued by the Warrant Agent and delivered to the
holder of such Warrant Certificate.
Upon surrender of this Warrant Certificate with the form of Assignment below duly completed, accompanied by payment of an amount
equal to any applicable transfer tax, at the office or agency of the Warrant Agent indicated on the face of this Warrant Certifi-
cate, a new Warrant Certificate or Certificates representing the Warrants represented by this Warrant Certificate shall be issued
to the transferee; provided, however, that if the registered holder of this Warrant Certificate elects to transfer fewer than all
of the Warrants represented by this Warrant Certificate, a new Warrant Certificate for the Warrants not so transferred shall be
issued to such registered holder. This Warrant Certificate, together with other Warrant Certificates, may be exchanged by the
registered holder for another Warrant Certificate or Certificates of different denominations, of like tenor and representing in
the aggregate Warrants equal in number to the same full number of Warrants represented by this Warrant Certificate and any other
Warrant Certificate so exchanged with the form of Assignment duly completed and executed. Certificates for fractions of a Warrant
will not be issued upon any exchange or transfer.
If the day of receipt of this Warrant Certificate with the form of Election to Exercise duly filled in and executed, accompanied
by payment of the Exercise Price for the shares specified in the form of Election to Exercise and of an amount equal to any
applicable taxes or governmental charges), shall occur within any period during, which the transfer books for the Company's Common
Stock or other class of stock purchasable upon the exercise of the Warrants evidenced by this Warrant Certificate are closed for
any purpose, the Warrant Agent and the Company shall not be required to make delivery of certificates for shares
purchasable upon such exercise, and the person entitled to receive delivery of such certificates shall not be deemed to have become
a holder of record of such shares, until the next succeeding business day on which the transfer books of the Company are open.

FORM OF ELECTION TO EXERCISE

The undersigned hereby irrevocably elects to exercise _________ Warrants evidenced by this Warrant Certificate, and to purchase
an equal number of full shares (the "Shares") of the common stock, no par value per share (the "Common Stock"), of Rose's Stores,
Inc., a Delaware corporation (the "Company"), issuable upon exercise of such Warrants, and herewith tenders payment for such
Shares in the amount of $________________ in accordance with the terms hereof. The undersigned requests that a certificate for
such Shares be registered in the name of______________________________________________________________________________________
whose address is _____________________________________________________________________________________________
and whose social security number of other identifying number is __________________________________________________,
and that such certificate be delivered to _______________________________________________________________________
whose address is ________________________. If said number of Shares is less than all of the Shares purchasable hereunder, the
undersigned requests that a new Warrant Certificate evidencing the right to purchase the remaining balance of the Shares of Rose's
Common Stock for which this Warrant Certificate is exercisable be registered in the name of ___________________________________
whose address is _____________________________________________________________________________________________________________
and whose social security number or other identifying number is _______________________________________________________________,
and that such certificate be delivered to _____________________________________________________________________________________
whose address is ______________________________________________________________________________________________________________
Name of registered holder of Warrant:__________________________________________________________________________________________
Address:_______________________________________________________________________________________________________________________
(Please print)
Signature:___________________________________________________________________________________________
NOTE: The above signature(s) must correspond with the name written upon the face of this Warrant
Certificate in every particular, without alteration or enlargement or any change whatever.
If this Warrant is held of record by two or more joint owners, all such owners must sign.

Dated:________________________________

Signature Guarantee:

________________________________________________________________
(Signature must be guaranteed by an
eligible guarantor institution which is
a participant in a Securities Transfer
Association recognized program.)

</TABLE>
<PAGE>

Warrant Agreement

between

Rose's Stores, Inc.

and

_____________________________________,
as Warrant Agent

______________

Dated as of , 1995

______________

<PAGE>
<PAGE>
TABLE OF CONTENTS

PAGE

1. Appointment of Warrant Agent; Issuance of Warrants; Form of
Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

3. Exchange of Warrant Certificates. . . . . . . . . . . . . . . . . . 2

4. Registration of Transfers and Exchanges of Warrants . . . . . . . . 2

5. Term of Warrants; Exercise of Warrants; Compliance with
Government Regulations. . . . . . . . . . . . . . . . . . . . . . . 3
5.1 Term of Warrants; Exercise of Warrants . . . . . . . . . . . 3
5.2 Compliance with Government Regulations . . . . . . . . . . . 4

6. Cancellation and Destruction of Warrant Certificates. . . . . . . . 4

7. Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 5

8. Mutilated or Missing Warrants . . . . . . . . . . . . . . . . . . . 5

9. Reservation and Availability of Shares; Purchase of Warrants. . . . 5
9.1 Reservation and Availability of Shares . . . . . . . . . . . 5
9.2 Purchase of Warrants by the Company. . . . . . . . . . . . . 5

10. New Rose's Common Stock Record Date . . . . . . . . . . . . . . . . 5

11. Adjustment of Exercise Price and Number of Shares . . . . . . . . . 6
11.1 Mechanical Adjustments . . . . . . . . . . . . . . . . . . . 6
11.2 Voluntary Adjustment by the Company. . . . . . . . . . . . . 8
11.3 Notice of Exercise Price and Adjustment. . . . . . . . . . . 8
11.4 No Other Adjustment for Dividends. . . . . . . . . . . . . . 8
11.5 Preservation of Purchase Rights Upon Merger, Consolidation,
etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
11.6 Statement on Warrant Certificates. . . . . . . . . . . . . . 8

12. Fractional Interests. . . . . . . . . . . . . . . . . . . . . . . . 9

13. Agreements of Holders . . . . . . . . . . . . . . . . . . . . . . . 9

14. Concerning the Warrant Agent. . . . . . . . . . . . . . . . . . . . 9

15. Merger or Consolidation or Change of Name of Warrant Agent. . . . . 10
<PAGE>

<PAGE>
PAGE
16. Duties of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . 10

17. Change of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . 12

18. Issuance of New Warrant Certificates. . . . . . . . . . . . . . . . 13

19. Notice of Certain Events. . . . . . . . . . . . . . . . . . . . . . 13

20. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

21. Supplements and Amendments. . . . . . . . . . . . . . . . . . . . . 15

22. Determination and Actions by the Board of Directors, etc. . . . . . 15

23. No Rights as Stockholders . . . . . . . . . . . . . . . . . . . . . 16

24. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

25. Benefits of this Agreement. . . . . . . . . . . . . . . . . . . . . 16

26. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 16

27. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

28. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

29. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . . . 16

30. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

31. Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
<PAGE>
<PAGE>
WARRANT AGREEMENT, dated as of ___________________, 1995, between
Rose's Stores, Inc., a Delaware corporation (the "Company"), and
_________________________________, as Warrant Agent (the "Warrant Agent").

WHEREAS, the Company proposes to issue 4,285,714 New Rose's Warrants
as hereinafter described (the "Warrants") to purchase up to an aggregate of
4,285,714 shares (the "Shares"), subject to adjustment as hereinafter provided,
of the Company's common stock, no par value per share ("New Rose's Common
Stock"). The Warrants are being issued pursuant to Sections 5.4 and 6.2.5 of
the Joint Plan of Reorganization of Rose's Stores dated October 4, 1994 (the
"Plan"). Each Warrant entitles the holder thereof to purchase one share of New
Rose's Common Stock, subject to adjustment as hereinafter provided. As used
herein, "Shares" shall include any asset, property or other security of the
Company or any successor to which each Holder (as hereinafter defined) shall be
entitled upon exercise of the Warrants. Capitalized terms not defined herein
have the meanings given them in the Plan.

WHEREAS, the Company wishes the Warrant Agent to act as Warrant Agent
on behalf of the Company in connection with the issuance, division, transfer,
exchange and exercise of the Warrants, and the Warrant Agent is willing to so
act.

NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein and for good and valuable consideration, the parties
hereto agree as follows:

1. Appointment of Warrant Agent; Issuance of Warrants; Form of
Warrants. The Company hereby appoints the Warrant Agent to act as agent for the
Company in accordance with the instructions set forth in this Agreement, and the
Warrant Agent hereby accepts such appointment. The Warrant Agent shall maintain
the Warrant Register described in Section 2 and shall countersign, issue and
deliver the Warrants under the terms of this Agreement and the written
instructions of the Chairman of the Board, the President, the Chief Executive
Officer, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company.

The Warrants shall be issued to the Holders within thirty days of the
Effective Date (as defined in the Plan). The Warrants shall be evidenced by
certificates ("Warrant Certificates" or "Certificates") substantially in the
form attached hereto as Exhibit A. The Warrants shall be executed on behalf of
the Company by the manual or facsimile signature of the Chairman of the Board,
the President, the Chief Executive Officer, any Vice President, the Treasurer or
any Assistant Treasurer of the Company, under its corporate seal, affixed or in
facsimile and attested by the manual or facsimile signature of the Secretary or
any Assistant Secretary of the Company.

Each Warrant shall be countersigned by the manual signature of the
Warrant Agent (or any successor to the Warrant Agent then acting as warrant
agent under this Agreement) and shall not be valid for any purpose unless so
countersigned. Warrants shall be dated as of the date of countersignature
thereof by the Warrant Agent upon initial issuance and upon division, exchange,
substitution or transfer.
<PAGE>
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer of the Company before
countersignature by the Warrant Agent, such Warrant Certificates may,
nevertheless, be issued and delivered with the same force and effect as though
the person who signed such Warrant Certificates had not ceased to be such
officer of the Company. Any Warrant Certificates may be signed on behalf of the
Company by any person who, at the actual date of execution of such Warrant
Certificates, shall be a proper officer of the Company to sign such Warrant
Certificates, even if such person did not hold such office on the date of this
Agreement.

2. Registration. The Warrants shall be numbered and shall be
registered in a warrant register (the "Warrant Register") as they are issued,
which register shall be kept at one of the Warrant Agent's offices in
___________________. The Warrant Register shall show the names and addresses
of the respective Holders of the Warrants, the number of Shares purchasable on
the face of each Warrant so held and the date of such Warrant. The Company and
the Warrant Agent may deem and treat the registered holder of any Warrant on the
Warrant Register (the "Holder," which term shall also refer to the registered
holder of any shares) as the absolute owner thereof(notwithstanding any notation
of ownership or other writing thereon made by anyone) for the purpose of any
exercise of such Warrants and for all other purposes. Neither the Company nor
the Warrant Agent shall be affected by any notice to the contrary or be bound
to recognize, or make any inquiries with respect to, any equitable or other
claim to or interest in such Warrant on the part of any other person and
shall not be liable for any registration or transfer of Warrants which are
registered or are to be registered in the name of a fiduciary or the nominee of
a fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with knowledge of such facts such that its participation therein amounts to bad
faith.

3. Exchange of Warrant Certificates. Subject to any restriction
upon transfer set forth in this Agreement, each Warrant Certificate may be
exchanged for another Certificate or Certificates entitling the Holder thereof
to purchase a like aggregate number of Shares as the Certificate or Certificates
surrendered then entitle such Holder to purchase. No fractional Warrant
Certificates shall be issued. Any Holder desiring to exchange a Warrant
Certificate or Certificates shall make such request in writing delivered to the
Warrant Agent and shall surrender, properly endorsed, the Certificate or
Certificates to be so exchanged at the office of the Warrant Agent designated
for such purpose. Thereupon, the Warrant Agent shall countersign and deliver
to the person entitled thereto a new Warrant Certificate or Certificates, as the
case may be, as so requested.

4. Registration of Transfers and Exchanges of Warrants. The
Warrants shall be transferable only on the Warrant Register upon delivery
thereof duly endorsed by the Holder or by his duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment or
authority to transfer. In all cases of transfer by an attorney, the original
power of attorney, duly approved, or copy thereof, duly certified, shall be
deposited and remain with the Warrant Agent. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
<PAGE>
evidence of their authority shall be produced, and may be required to be
deposited with the Warrant Agent in its discretion. Upon any registration of
transfer, the Warrant Agent shall countersign and deliver a new Warrant or
Warrants to the persons entitled thereto. Subject to the provisions of this
Agreement, including the payment of any tax or governmental charge that may be
imposed on a Holder pursuant to Section 7 in connection with any exchange of
Warrant Certificates, the Warrants may thereafter be exchanged at the option of
the Holder thereof for another Warrant, or other Warrants of different denomina-
tions, of like tenor and representing in the aggregate the right to purchase a
like number of Shares upon surrender to the Warrant Agent. The Holder of such
Warrants shall pay any tax or governmental charge that may be imposed on a
Holder pursuant to Section 7 of this Agreement and other reasonable charges as
the Company may prescribe, in connection with such transfer.

5. Term of Warrants; Exercise of Warrants; Compliance with
Government Regulations.

5.1 Term of Warrants; Exercise of Warrants.

(a) Each Warrant entitles the Holder thereof to purchase one Share
at any time during hours of regular business operations from the date the
Warrants are issued to Holders under the Plan until 5:00 P.M., New York City
time, on the seventh anniversary of the Effective Date (the "Expiration Date")
at the exercise price per Warrant determined pursuant to Section 6.2.5 the Plan,
subject to adjustment as set forth herein (the "Exercise Price"). Each Warrant
not exercised prior to the Expiration Date shall expire without recourse, and
shall no longer be of any force or effect.

(b) The Exercise Price and the number and kind of Shares purchas-
able upon the exercise of each Warrant are subject to adjustment upon the
occurrence of certain events, pursuant to the provisions of Section 11 of this
Agreement. Subject to the provisions of this Agreement, each Holder of a
Warrant Certificate shall have the right to exercise the Warrants evidenced
thereby in whole or in part at any time and from time to time prior to 5:00 p.m.
New York City time, on the Expiration Date upon surrender of the Warrant Certi-
ficate, with the form of election to exercise on the reverse side thereof duly
executed, to the Warrant Agent at the office of the Warrant Agent designated for
such purpose, together with payment of the Exercise Price, as adjusted in
accordance with the provisions of this Agreement, for the number of Shares in
respect of which such Warrants are then exercised. Payment of such Exercise
Price may be made by money order or by certified or official bank check in
lawful money of the United States of America in accordance with paragraph (c)
below. The date and time of exercise of any Warrant shall be deemed to be the
date and time of its receipt by the Warrant Agent duly filled in and signed and
accompanied by proper payment as herein provided. The method of delivery of any
Warrant Certificates to the Warrant Agent is at the option and risk of the
Holder thereof.

(c) Upon receipt of a Warrant Certificate representing an exercisable
Warrant, with the appropriate form of election to exercise duly executed,
accompanied by payment of the Exercise Price for the Shares to be purchased and
an amount equal to any applicable transfer tax (as determined by the Warrant
Agent) in cash, or by certified or official bank check or money order payable
<PAGE>
to the order of the Company, the Warrant Agent shall thereupon promptly (i)
requisition from any transfer agent of the Shares (or make available, if the
Warrant Agent is the transfer agent) certificates for the number of Shares to
be purchased, and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, (ii) after receipt of such Exercise Price,
deliver such amount paid upon exercise to the Company and (iii) after receipt
of such certificates, cause the same to be delivered to or upon the order of the
Holder of such Warrant Certificate, registered in such name or names as may be
designated by such Holder. In the event that the Company is obligated to issue
other securities of the Company upon the exercise of a Warrant, the Company
shall make all arrangements necessary so that such other securities are avail-
able for distribution by the Warrant Agent, if and when appropriate.

(d) In case the Holder of any Warrant Certificate shall exercise
fewer than all the Warrants evidenced thereby, a new Warrant Certificate
evidencing Warrants equivalent to the Warrants remaining unexercised shall be
issued by the Warrant Agent and delivered to the Holder of such Warrant
Certificate or to his duly authorized assigns.

(e) In case any Holder desiring to exercise a Warrant Certificate or
Certificates makes such request to exercise within any period during which the
transfer books for the Company's New Rose's Common Stock or other class of stock
purchasable upon the exercise of the Warrants evidenced by such Warrant
Certificate or Certificates are closed for any purpose, the Warrant Agent and
the Company shall not be required to make delivery of certificates for Shares
purchasable upon such exercise, and the person entitled to receive delivery of
such certificates shall not be deemed to have become a holder of record of such
Shares, until the next succeeding business day on which the transfer books of
the Company are open.

5.2 Compliance with Government Regulations. The Company covenants
that if any Shares require, under any United States federal or state law or
applicable governing rule or regulation of any national securities exchange,
registration with or approval of any United States federal or state governmental
authority, or listing on any such national securities exchange before such
Shares may be issued to a Holder upon exercise, the Company shall in good faith
and as promptly as practicable endeavor to cause such stock to be duly register-
ed, approved or listed on the relevant national securities exchange, as the case
may be; provided, however, that, in no event shall any Shares be issued, and the
Company is hereby authorized to suspend the exercise of all Warrants, for the
period during which such registration, approval or listing is required but not
in effect, in which event the Expiration Date shall be extended for any such
period of suspension.

6. Cancellation and Destruction of Warrant Certificates. All
Warrant Certificates surrendered for the purpose of exercise, transfer or
exchange shall be surrendered and delivered to the Warrant Agent for cancelation
and shall be canceled by it, or delivered to the Warrant Agent in canceled form,
and no Warrant Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Warrant Agent for cancellation and retirement, and the Warrant Agent
shall so cancel and retire, any other Warrant Certificate purchased or acquired
<PAGE>
by the Company otherwise than upon the exercise thereof. The Warrant Agent
shall deliver all canceled Warrant Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Warrant Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company,
or, if required by law, shall retain such canceled Warrant Certificates in the
manner required by law.

7. Payment of Taxes. The Company shall pay all federal and state
transfer taxes, documentary stamp taxes, and charges, if any, attributable to
the initial issuance of Warrants and of Shares initially issued upon the exer-
cise of Warrants; provided, however, that the Company shall not be required to
pay any tax or taxes which may be payable in respect of any transfer involved in
the issue or delivery of any Warrant Certificates or any certificates for Shares
in a name other than that of the Holder of such Warrants or to issue or deliver
any certificates for Shares in a name other than that of the Holder upon the
exercise of any Warrants until such tax shall have been paid (any such tax being
payable by the Holder of such Warrant Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax is
due.

8. Mutilated or Missing Warrants. Upon receipt by the Company and
the Warrant Agent of evidence reasonably satisfactory to them of the loss,theft,
destruction or mutilation of a Warrant Certificate and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to the Company,
and reimbursement to the Company and the Warrant Agent of all reasonable
expenses incidental thereto, and upon surrender to the Warrant Agent and cancel-
lation of the Warrant Certificate if mutilated, the Company shall execute and
deliver a new Warrant Certificate of like tenor to the Warrant Agent for
countersignature and delivery to the Holder in lieu of the Warrant Certificate
so lost, stolen, destroyed or mutilated.

9. Reservation and Availability of Shares; Purchase of Warrants.

9.1 Reservation and Availability of Shares. The Company covenants
and agrees that it shall at all times cause to be reserved and kept available,
free from preemptive rights, out of the authorized and unissued Shares, a number
of Shares that shall be sufficient to permit the exercise in full of the rights
of purchase represented by the Warrants.

The Company covenants and agrees that it shall take all such action as
may be necessary to ensure that all Shares that may be issued upon exercise of
Warrants shall, at the time of delivery of the certificates for such Shares
(subject to the payment of the Exercise Price and any applicable transfer
taxes), be duly and validly authorized and issued, fully paid and nonassessable
outstanding Shares of the Company.

9.2 Purchase of Warrants by the Company. The Company shall have the
right, except as limited by law, other agreements, or herein, to purchase, or
otherwise acquire, Warrants at such times, in such manner and for such
consideration as it may deem appropriate.

10. New Rose's Common Stock Record Date. Each person in whose name
any certificate for Shares is issued upon the exercise of Warrants shall for all
<PAGE>
purposes be deemed to have become the holder of the Shares represented thereby
on, and such certificate shall be dated, the date upon which the Warrant
Certificate evidencing such Warrants was duly presented and payment of the
Exercise Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such presentation and payment is a date upon which the
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such Shares on, and such certificate shall be dated,
the next succeeding business day on which the transfer books of the Company are
open; provided further, that unless otherwise provided by law or as contemplated
by Section 5.2, such transfer books shall not be closed at any one time for a
period of longer than five calendar days. Except as provided elsewhere herein,
prior to the date a Holder of Warrants becomes a Holder of Shares pursuant to
the exercise of such Warrants, the Holder of a Warrant Certificate, as such,
shall not be entitled to any rights of a stockholder of the Company with respect
to Shares for which the Warrants shall be exercisable, including, without
limitation, the right to vote upon any matter submitted to the stockholders of
the Company, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company.

11. Adjustment of Exercise Price and Number of Shares. The number
and kind of securities or other property purchasable upon the exercise of each
Warrant and the Exercise Price shall be subject to adjustment from time to time
as set forth in this Section 11.

11.1 Mechanical Adjustments. The number of Shares purchasable upon
the exercise of each Warrant and the Exercise Price shall be subject to
adjustment as follows:

(a) In case the Company shall at any time after the date of this
Agreement and prior to the Expiration Date (i) declare or pay a dividend, or
make a distribution, in shares of New Rose's Common Stock to holders of New
Rose's Common Stock, (ii) subdivide the outstanding New Rose's Common Stock into
a greater number of shares, (iii) combine the outstanding New Rose's Common
Stock into a smaller number of shares, (iv) issue any shares of its capital
stock in a reclassification of the New Rose's Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing entity) or (v) make a distribution on its New Rose's
Common Stock in shares of its capital stock other than New Rose's Common Stock,
then the kind and number of Shares purchasable upon exercise of each Warrant
immediately prior thereto shall be adjusted so that the Holder of each Warrant
shall be entitled to receive the kind and number of Shares or other securities
of the Company which he would have owned or have been entitled to receive after
the happening of any of the events described above, had such Warrants been
exercised immediately prior to the happening of such event or any record date
with respect thereto and at a time when the transfer books of the Company were
open. An adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event. Notwithstanding the
foregoing, no distribution of New Rose's Common Stock required to be made
pursuant to the Plan will require an adjustment pursuant to this
Section 11.1(a).
<PAGE>
(b) In case the Company at any time after the date of this Agreement
and prior to the Expiration Date shall issue other than as required pursuant to
the Plan (without payment of consideration) rights, options or warrants to
holders of its outstanding New Rose's Common Stock entitling them to subscribe
for or purchase shares of New Rose's Common Stock or securities convertible into
or exchangeable for New Rose's Common Stock, then the Company shall reserve for
distribution, and shall distribute upon payment of the Exercise Price, such
rights, options, warrants or securities to the Holders of the Warrants as if the
Warrants had been exercised immediately prior to the record date for such
distribution; provided, that no such rights, options, warrants or securities
shall be reserved after the expiration date, if any, of any such rights,
options, warrants or securities.

(c) In case the Company at any time after the date of this Agreement
and prior to the Expiration Date shall make a distribution other than as
required pursuant to the Plan to all holders of New Rose's Common Stock or any
other capital stock issued with respect to the New Rose's Common Stock of any
asset, property or security (other than (i) cash dividends payable out of
current earnings and (ii) those distributions referred to in subsection (a) or
(b) above), then, and in each such case, the Holders, upon the exercise of the
Warrants, shall be entitled to receive in addition to the Shares, the amount of
assets, property or securities to which such Holder would have been entitled as
a Holder of New Rose's Common Stock if such Holder had exercised his Warrant
immediately prior to the record date for such distribution. At the time of any
such distribution, the Company shall, at its election, either (x) deposit the
assets, property or securities payable to Holders pursuant hereto in trust for
the Holders with the Warrant Agent or an institution eligible to act as trustee
under an indenture qualified under the Trust Indenture Act of 1939, as amended,
with instructions as to the investment of such property and any proceeds
therefrom so as to protect the value of such property for the Holders or (y)
distribute to the Holders the assets, property or securities to which they would
be entitled upon exercise. Such election by the Company shall be made by the
Company by giving written notice thereof to the Holders. In the event that the
Company elects to deposit the assets, property or securities payable to Holders
pursuant hereto in trust for the Holders, the trust indenture shall provide that
any assets, property or securities deposited in such trust shall revert to the
Company upon the expiration of the term of the Warrants.

(d) No adjustment in the number of Shares purchasable hereunder shall
be required unless such adjustments would require an increase or decrease of at
least one percent (1%) in the number of Shares purchasable upon the exercise of
each Warrant; provided, however, that any adjustments which by reason of this
paragraph (d) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations shall be made to
the nearest one thousandth (.001) of a share.

(e) Whenever the number of Shares purchasable upon the exercise of
each Warrant is adjusted, as herein provided, the Exercise Price payable upon
exercise of each Warrant shall be adjusted by multiplying such Exercise Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of Shares purchasable upon the exercise of each Warrant
<PAGE>
immediately prior to such adjustment, and of which the denominator shall be the
number of Shares so purchasable immediately thereafter.

11.2 Voluntary Adjustment by the Company. The Company may at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company or extend the Expiration Date of the
Warrants.

11.3 Notice of Exercise Price and Adjustment. Whenever the initial
Exercise Price is set or the number of Shares purchasable upon the exercise of
each Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall (a) promptly prepare a certificate setting forth such initial Exercise
Price or adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Warrant Agent and with each transfer
agent for the New Rose's Common Stock a copy of such certificate and (c) mail
or, at its option, cause the Warrant Agent to mail, a brief summary thereof to
each Holder of a Warrant Certificate in accordance with Section 20 hereof. The
Warrant Agent shall be fully protected in relying on any such certificate and
on any adjustment therein contained and shall not be deemed to have knowledge
of any such adjustment unless and until it shall have received such certificate.

11.4 No Other Adjustment for Dividends. Except as provided in
subsection 11.1, no adjustment or payment in respect of any dividends shall be
made during the term of a Warrant or upon the exercise or conversion of a
Warrant.

11.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc.
In case of any consolidation of the Company with, or merger of the Company into,
any other person (including, without limitation, any corporation, partnership,
joint venture or association) or merger of any other person with or into the
Company or in case of any sale, transfer or lease to any other person of all or
substantially all the property of the Company, the Company or such successor or
purchasing person, as the case may be, shall execute with the Warrant Agent an
agreement that each Holder shall have the right thereafter upon payment of the
Exercise Price in effect immediately prior to such action to purchase upon
exercise of each Warrant solely the kind and amount of shares or other securi-
ties and property and any proceeds therefrom which he would have owned or have
been entitled to receive after the happening of such consolidation, merger,
sale, transfer or lease had such Warrant been exercised immediately prior to
such action. Such agreement shall provide for adjustments, which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 11. The provisions of this subsection 11.5 shall similarly apply to
successive consolidations, mergers, sales, transfers or leases.

11.6 Statement on Warrant Certificates. Irrespective of any
adjustments in the Exercise Price or the number or kind of securities purchas-
able upon the exercise of the Warrants, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
Shares as are stated in the Warrant Certificates initially issuable pursuant to
this Agreement.
<PAGE>
12. Fractional Interests. The Company shall not be required to issue
fractional Shares on the exercise of Warrants. If more than one Warrant shall
be presented for exercise in full at the same time by the same Holder, the
number of full Shares which shall be issuable upon the exercise thereof shall be
computed on the basis of the aggregate number of Shares purchasable on exercise
of the Warrants so presented. If any fraction of a Share would, except for the
provisions of this Section 12, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company shall round such fraction to the nearest
whole Share (up or down), with half Shares being rounded down, and will deliver
the additional Share if rounded up.

13. Agreements of Holders. Every Holder of a Warrant by accepting
the same consents and agrees with the Company and the Warrant Agent and with
every other holder of a Warrant that:

(a) the Warrant Certificates are transferable only on the Warrant
Register if surrendered at the office of the Warrant Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of transfer, and

(b) the Company and the Warrant Agent may deem and treat the person
in whose name a Warrant Certificate is registered as the absolute owner thereof
and of the Warrants evidenced thereby (notwithstanding any notations of owner-
ship or writing on the Warrant Certificates made by anyone other than the
Company or the Warrant Agent) for all purposes whatsoever, and neither the
Company nor the Warrant Agent shall be affected by any notice to the contrary.

14. Concerning the Warrant Agent. The Company agrees to pay to the
Warrant Agent reasonable compensation as set forth in an agreement between the
parties for all services rendered by it hereunder and, from time to time, on
demand of the Warrant Agent, its reasonable expenses and counsel fees and
disbursements and other reasonable disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Warrant Agent for, and to
hold it harmless against, any liability incurred without negligence, bad faith
or willful misconduct on the part of the Warrant Agent, for anything done or
omitted by the Warrant Agent in connection with the acceptance and administra-
tion of this Agreement, including the reasonable costs and expenses of defending
against any claim of liability arising therefrom, directly or indirectly. The
indemnification provided for hereunder shall survive the expiration of the
Warrants and the termination of this Agreement.

The Warrant Agent shall be protected and shall incur no liability for,
or in respect of, any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Warrant Certificate
or certificate for New Rose's Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it, after proper inquiry or examination, to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons.
<PAGE>
15. Merger or Consolidation or Change of Name of Warrant Agent. Any
corporation into which the Warrant Agent or any successor Warrant Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Warrant Agent or any successor Warrant
Agent shall be a party, or any corporation succeeding to the corporate trust or
stock transfer business of the Warrant Agent or any successor Warrant Agent,
shall be the successor to the Warrant Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Warrant Agent under the provisions of Section 17 hereof. In case
at the time such successor Warrant Agent shall succeed to the agency created by
this Agreement any of the Warrant Certificates shall have been countersigned but
not delivered, any such successor Warrant Agent may adopt the countersignature
of the predecessor Warrant Agent and deliver such Warrant Certificates so
countersigned; and, in case at that time any of the Warrant Certificates shall
not have been countersigned, any successor Warrant Agent may countersign such
Warrant Certificate either in the name of the predecessor or in the name of the
successor Warrant Agent; and in all such cases such Warrant Certificates shall
have the full force provided in the Warrant Certificates in this Agreement.

In case at any time the name of the Warrant Agent shall be changed, and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent may adopt the countersignature under its prior
name and deliver Warrant Certificates so countersigned; and, in case at that
time any of the Warrant Certificates shall not have been countersigned, the
Warrant Agent may countersign such Warrant Certificates either in its prior name
or in its changed name; and in all such cases such Warrant Certificates shall
have the full force provided in the Warrant Certificates and in this Agreement.

16. Duties of Warrant Agent. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, all of which the Company, by its acceptance hereof, and the Holders
of Warrant Certificates, by their acceptance thereof, shall be bound:

(a) The Warrant Agent may consult with legal counsel selected by it
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Warrant Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion, provided that such counsel, if not legal counsel for the Company, shall
be reasonably acceptable to the Company.

(b) Whenever in the performance of its duties under this Agreement
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed on behalf of the Company by a person
reasonably believed by the Warrant Agent to be the Chairman of the Board, the
President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Warrant
Agent; and such certificate shall be full authorization to the Warrant Agent for
<PAGE>
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.

(d) The Warrant Agent shall not be liable for, or by reason of, any
of the statements of fact or recitals contained in this Agreement or in the
Warrant Certificates (except as to the fact that it has countersigned the
Warrant Certificates) or be required to verify the same, but all such statements
and recitals are and shall be deemed to have been made by the Company only.

(e) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Warrant Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Warrants evidenced by
Warrant Certificates after receipt of the certificate described in Section 11.
3 hereof); nor shall it by any act hereunder be deemed to make any representa-
tion or warranty as to the authorization or reservation of any shares of New
Rose's Common Stock or other securities to be issued under this Agreement or any
Warrant Certificate or as to whether any shares of New Rose's Common Stock or
other securities shall, when so issued, be validly authorized and issued, fully
paid and nonassessable.

(f) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any person
reasonably believed by the Warrant Agent to be the Chairman of the Board, the
President, the Chief Executive Officer, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company,
and is authorized to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such person. Any application by the Warrant Agent for written instructions from
the Company may, at the option of the Warrant Agent, set forth in writing any
action proposed to be taken or omitted by the Warrant Agent under this Agreement
and the date on and/or after which such action shall be taken or such omission
shall be effective. The Warrant Agent shall not be liable for any action taken
by, or omission of, the Warrant Agent in accordance with a proposal included in
such application on or after the date specified in such application (which date
shall not be less than five (5) business days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to any earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the Warrant Agent
shall have received written instructions in response to such application
specifying the action to be taken or omitted.
<PAGE>
(g) The Warrant Agent and any stockholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Warrant Agent under this Agreement to the extent lawfully permitted to so act.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.

(h) The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents (which shall not include its employees), and the
Warrant Agent shall not be answerable or accountable for any act, omission,
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company or to the holders of the Warrants resulting from any such act,
omission, default, neglect or misconduct, provided reasonable care was exercised
in the selection and continued employment thereof.

(i) No provision of this Agreement shall require the Warrant Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
if there shall be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.

(j) If, with respect to any Warrant Certificate surrendered to the
Warrant Agent for exercise or transfer, the form of election to purchase or
transfer, as the case may be, has not been completed, the Warrant Agent shall
not take any further action with respect to such requested exercise or transfer
without first consulting with the Company.

(k) The Warrant Agent shall not be required to take notice of, or be
deemed to have notice of, any fact, event or determination under this Agreement
unless and until the Warrant Agent shall be specifically notified in writing by
the Company of such fact, event or determination.

17. Change of Warrant Agent. The Warrant Agent or any successor
Warrant Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company and to each
transfer agent of the New Rose's Common Stock by registered or certified mail.
The Company may remove the Warrant Agent or any successor Warrant Agent upon
thirty (30) days' notice in writing mailed to the Warrant Agent or successor
Warrant Agent, as the case may be, and to each transfer agent of the New Rose's
Common Stock by registered or certified mail. If the Warrant Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Warrant Agent. If the Company shall fail to make
such appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Warrant Agent, then the Holder of
any Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new Warrant Agent. Notwithstanding any provision to the
<PAGE>
contrary contained herein, the removal or resignation of the Warrant Agent will
not be effective until such time as a successor Warrant Agent has been appointed
in accordance with the terms of this Agreement. Any successor Warrant Agent,
whether appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or of any state
thereof, in good standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Warrant Agent a combined capital and surplus of at least fifty
million dollars ($50,000,000) or (b) an affiliate of a corporation described in
clause (a) of this sentence. After appointment, the successor Warrant Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Warrant Agent without further act or deed; but
the predecessor Warrant Agent shall deliver and transfer to the successor
Warrant Agent any property at the time held by it hereunder and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Warrant Agent and each
transfer agent of the New Rose's Common Stock and mail a notice thereof in
writing to the Holders of the Warrant Certificates. Failure to give any notice
provided for in this Section 17, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Warrant Agent or the
appointment of the successor Warrant Agent, as the case may be.

18. Issuance of New Warrant Certificates. Notwithstanding any of the
provisions of this Agreement or of the Warrants to the contrary, the Company
may, at its option, issue new Warrant Certificates evidencing Warrants in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Exercise Price per Share and the number or kind or class of shares
or other securities or property purchasable under the Warrant Certificates made
in accordance with the provisions of this Agreement.

19. Notice of Certain Events. In case the Company shall propose,
except as contemplated by the Plan, (a) to declare or pay a dividend, or make
a distribution, to Holders of New Rose's Common Stock in shares of New Rose's
Common Stock, to subdivide the outstanding New Rose's Common Stock, to combine
the outstanding New Rose's Common Stock into a smaller number of shares, to
issue any shares of its capital stock in a reclassification of the New Rose's
Common Stock or to make a distribution on its New Rose's Common Stock in shares
of its capital stock other than New Rose's Common Stock or (b) to issue (without
payment of consideration), or sell, rights, options or warrants to all holders
of New Rose's Common Stock entitling them to subscribe for or to purchase shares
of New Rose's Common Stock or securities convertible into or exchangeable for
New Rose's Common Stock, or (c) to make a distribution to all holders of New
Rose's Common Stock of any asset, property or security (other than (1) cash
dividends payable out of current earnings, (2) distributions referred to in (a)
or (b) above and (3) in connection with the total liquidation, dissolution or
winding up of the Company), or (d) to effect any consolidation or merger into or
with, or to effect any sale or other transfer, in one or more transactions, of
all or substantially all of the assets of the Company and its subsidiaries taken
as a whole to any other person, or (e) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
<PAGE>
each Holder of a Warrant Certificate, in accordance with Section 20 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, subdivision, reclassification, distribution of
rights, options, warrants, assets, property or security, or the date on which
such consolidation, merger, sale, transfer, liquidation, dissolution, or winding
up is to take place and the date of participation therein by the Holders of the
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (a) or (b) above at least ten (10) days
prior to the record date for determining Holders of the Shares for purposes of
such action, and in the case of any such other action, at least ten (10) days
prior to the date of the taking of such proposed action or the date of partici-
pation therein by the Holders of the Shares, whichever shall be the earlier.
Failure to publish, mail or receive such notice or any defect therein or in the
publication or mailing thereof shall not affect the validity of any action taken
in connection with such stock dividend, subdivision, reclassification, distribu-
tion, consolidation, merger, sale, transfer, liquidation, dissolution, or
winding up. Except as specifically required herein, the Company shall not be
required to provide notice to Holders of Warrant Certificates of any events of
which it is not required to provide notice to Holders of New Roses Common Stock.
Where the Company is required to give notice of an event to its stockholders, it
shall not be required to give greater notice of such event to Warrant Holders.

20. Notices. Notices or demands authorized by this Agreement to be
given or made by the Warrant Agent or by the Holder of any Warrant Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Warrant Agent) as follows:

Rose's Stores, Inc.
_____________________
Henderson, North Carolina 27536
Attn: ______________

with a copy to:
_____________________
_____________________
_____________________
_____________________

Subject to the provisions of Section 15, any notice or demand
authorized by this Agreement to be given or made by the Company or by the Holder
of any Warrant Certificate to or on the Warrant Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:

_____________________
_____________________
_____________________
Attn: _______________
<PAGE>
Notices or demands authorized by this Agreement to be given or made by
the Company or the Warrant Agent to the Holder of any Warrant Certificate shall
be sufficiently given or made if sent by mail, postage prepaid, addressed to
such Holder at the address of such Holder as shown on the registry books of the
Company or the Warrant Register maintained by the Warrant Agent.

21. Supplements and Amendments.

(a) The Company and the Warrant Agent may from time to time
supplement or amend this Agreement without approval of any Holders of Warrant
Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with any
provisions of the Plan or any other provisions herein or (iii) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable, provided, in each case described in clauses (i) through
(iii), the addition or amendment does not adversely affect the interests of the
holders of Warrant Certificates.

(b) In addition, this Warrant Agreement may be supplemented or
amended to the extent provided in paragraph (a) of this Section 21 by the
written consent of the Company and the Holders of Warrant Certificates
representing more than 50% of the Shares obtainable upon the exercise of the
Warrants outstanding at the time of such consent.

(c) Upon the delivery of a certificate from an appropriate officer
of the Company and an opinion of counsel reasonably acceptable to the Warrant
Agent which states that the proposed supplement or amendment is in compliance
with the terms of this Section 21, the Warrant Agent shall execute such
supplement or amendment unless the Warrant Agent shall have determined in good
faith that such supplement or amendment would adversely affect its interests
under this Agreement.

22. Determination and Actions by the Board of Directors, etc. The
Board of Directors of the Company shall have the exclusive power and authority
(which may be delegated to any committee of such Board or to the appropriate
officers of the Company) to administer this Agreement and to exercise all rights
and powers specifically granted to the Board of Directors, or the Company, or
as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including a determination
to amend this Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors (or
its delegates) in good faith, shall (x) be final, conclusive and binding on the
Company, the Warrant Agent, the Holders of the Warrant Certificates and all
other parties, and (y) not subject the Board of Directors (or its delegates) to
any liability to the Holders of the Warrant Certificates. In exercising its
power and authority to administer this Agreement, in connection with any amend-
ment to this Agreement or through reorganization, consolidation, merger, dis-
solution, reclassification, issue or sale of securities, sale of assets or any
<PAGE>
other voluntary action, the Board of Directors shall at all times act in good
faith in performance of its fiduciary duties to Holders of Warrants.

23. No Rights as Stockholders. Nothing contained in this Agreement
or in any of the Warrants shall be construed as conferring upon the Holders or
their transferees any rights whatsoever as stockholders of the Company,
including, without limitation, the right to vote or to receive dividends (except
as specifically provided herein) or to consent to or to receive notice as
stockholders in respect of any meeting of stockholders for the election of
directors of the Company or on any other matter.

24. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company, the Warrant Agent or the Holders shall
bind and inure to the benefit of their respective successors and assigns here-
under, whether by transfer, merger or otherwise. Upon becoming a successor to
the Company, such successor shall be deemed to be the Company for purposes of
this Agreement.

25. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Warrant Agent and the Holders of the Warrants any legal or equitable right,
remedy or claim under this Agreement, and this Agreement shall be for the sole
and exclusive benefit of the Company, the Warrant Agent and such Holders.

26. Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to its costs and expenses and any
other available remedy.

27. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.

28. Governing Law. This Agreement, each Warrant and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and to be performed entirely within such State.

29. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

30. Counterparts. This Agreement may be executed in any number of
counterparts each of which so executed shall be deemed to be an original; but
such counterparts together shall constitute but one and the same instrument.

31. Conflict. In the event of any conflict between the provisions
of the Plan and the Warrant Agreement, the provisions of the Plan shall
control.

<PAGE>

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day, month and year first above written.

ROSE'S STORES, INC.

By:

Name:
Title:

_____________________, as Warrant Agent

By:

Name:
Title:
<PAGE>
<PAGE>
EXHIBIT A

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND WERE ISSUED PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY 11 U.S.C. Section 1145, UNDER AN ORDER DATED ________,
1994 CONFIRMING THE JOINT PLAN OF REORGANIZATION OF ROSE'S STORES, INC. DATED
OCTOBER 4, 1994 (THE "PLAN"). THE HOLDER OF THIS CERTIFICATE IS REFERRED TO
11 U.S.C. Section 1145 FOR GUIDANCE AS TO THE SALE OF THESE SECURITIES OR THE
NEW ROSE'S COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE WARRANTS REPRESENTED
BY THIS CERTIFICATE.

VOID AFTER 5:00 P.M.
NEW YORK CITY TIME, ON
_____________, 2002

No. A- Warrants

WARRANT CERTIFICATE FOR PURCHASE OF
NEW COMMON STOCK OF
ROSE'S STORES, INC.

This certifies that, for value received, _________________, or registered
assigns, is the owner of the number of Warrants set forth above, each of which
entities the owner to purchase, subject to the terms and conditions hereof and
of the Warrant Agreement mentioned below, at any time after the date hereof and
prior to the Expiration Date (as herein defined), one share of the common stock,
no par value per share (the "New Common Stock"), of Rose's Stores, Inc., a
Delaware corporation (the "Company"), at the exercise price determined pursuant
to 6.2.5 of the Plan (the "Exercise Price") payable in lawful money of the
United States of America by money order or certified or official bank check
payable to the Company, upon surrender of this Warrant Certificate with the form
of Election to Exercise on the reverse hereof duly completed and executed
together with payment of the Exercise Price at the office or agency of the
Warrant Agent (as defined in the Warrant Agreement referred to below) in the
City of ______________, State of ___________.

This Warrant Certificate and each Warrant represented hereby are issued
pursuant to, and are subject to all of the terms, provisions and conditions of,
that certain Warrant Agreement dated as of _________________, 1995 (hereinafter
called the "Warrant Agreement"), between the Company and the Warrant Agent, to
all of which terms, provisions and conditions the registered holder of this
Warrant Certificate consents to by acceptance hereof. The Warrant Agreement and
the summary of its terms set forth on the reverse side of this Warrant
Certificate are hereby incorporated into this Warrant Certificate by reference
and made a part of this Warrant Certificate. The Warrant Agreement sets forth
the terms and conditions under which the exercise price of a Warrant, the type
of shares or other consideration to be received upon exercise of the Warrant,
and/or the number of shares to be received upon exercise of a Warrant are or may
be adjusted. Reference is hereby made to the Warrant Agreement for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Warrant Agent, the Company and the holders of the
Warrant Certificates or Warrants. In the event of any conflict between the
provisions of this Warrant Certificate and the Warrant Agreement, the provisions
<PAGE>
of the Warrant Agreement shall control. In the event of any conflict between
the provisions of the Plan and the Warrant Agreement, the provisions of the Plan
shall control.

Copies of the Plan and the Warrant Agreement are available for inspection
at the ____________ office of the Warrant Agent,
___________________________________, or may be obtained upon written request
addressed to the Secretary, Rose's Stores, Inc., _____________________,
Henderson, North Carolina 27536. The Company shall not be required upon the
exercise of the Warrants evidenced by this Warrant Certificate to issue
fractions of Warrants or shares, but shall round such fractional share to the
nearest whole share (up or down), with half shares being rounded down, and will
deliver the additional share if rounded up.

The Warrants evidenced by this Warrant Certificate shall expire at 5:00
p.m., New York City time, on _________________, 2002. The day and time of
expiration are referred to herein as the "Expiration Date".

This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent.

Witness the facsimile seal of the Company and the facsimile signatures of
its duly authorized officers.

DATED:

ROSE'S STORES, INC.

By:

President

Attest:
Secretary

COUNTERSIGNED:

____________________________________,
as Warrant Agent

By:
Authorized Signature

Attest:
Secretary

Summary of Terms of Warrant Agreement

The Warrants evidenced by this Warrant Certificate shall be exercisable
until 5:00 p.m., New York City time, on _________________, 2002.

In the event that upon any exercise the number of Warrants exercised shall
be fewer than the total number of Warrants represented hereby, there shall be
issued to the holder hereof or his assignee a new Warrant Certificate evidencing
the Warrants not so exercised.

No payment or adjustment shall be made for any cash dividends, whether
paid or declared, on any shares issuable upon exercise of a Warrant. The
Company shall not be required to issue fractions of shares or any certificates
which evidence fractional shares. In lieu of a fractional share the Company
shall round such fractional share to the nearest whole share (up or down), with
half shares being rounded down, and will deliver the additional share if rounded
up.

The Company and the Warrant Agent may deem and treat the registered holder
of this Warrant Certificate as the absolute owner hereof and of the Warrants
represented by this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone) for the purpose of any exer-
cise of such Warrants and for all other purposes. Neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary or be bound to
recognize, or make any inquiries with respect to, any equitable or other claim
to or interest in this Warrant Certificate on the part of any other person and
shall not be liable for any registration or transfer of a Warrant Certificate
which is registered or to be registered in the name of a fiduciary or the
nominee of a fiduciary unless made with the actual knowledge that a fiduciary or
nominee is committing a breach of trust in requesting such registration or
transfer, or with knowledge of such facts such that its participation therein
amounts to bad faith.

Prior to the exercise of the Warrants represented hereby, the registered
holder of this Warrant Certificate, as such, shall not be entitled to vote on
or be deemed the holder of New Common Stock or any other securities of the
Company which may at any time be issuable on the exercise hereof for any pur-
pose, and nothing contained in the Warrant Agreement or herein shall be con-
strued to confer upon the holder of this Warrant Certificate, as such, any of
the rights of a stockholder of the Company, including, without limitation, the
right to vote, or to receive dividends or to consent to or receive notice as
stockholders in respect of any meeting of stockholders for the election of
directors of the Company or in any other matter or to receive notice of any
proceedings of the Company (except as provided in the Warrant Agreement).

Each Warrant entitles the holder thereof to purchase one share at any time
during hours of regular business operations from the date the Warrants are
issued until 5:00 P.M., New York City time, on the seventh anniversary of the
Effective Date (the "Expiration Date") at the exercise price per Warrant
determined pursuant to Section 6.2.5 of the Plan, subject to adjustment as set
forth herein (the "Exercise Price"). Each Warrant not exercised prior to the
Expiration Date shall expire. The Exercise Price and the number and kind of
shares purchasable upon the exercise of each Warrant are subject to adjustment
upon the occurrence of certain events pursuant to the provisions of Section 11
<PAGE>
of the Warrant Agreement. Each holder of a Warrant Certificate shall have the
right to exercise the Warrants evidenced thereby in whole or in part at any time
prior to the Expiration Date upon surrender of the Warrant Certificate, with the
form of Election to Exercise below duly completed, to the Warrant Agent at the
office of the Warrant Agent designated for such purpose, together with payment
of the Exercise Price, as adjusted in accordance with the provisions of this
Agreement, for the number of shares in respect of which such Warrants are then
exercised. Payment of such Exercise Price may be made by money order or by
certified or official bank check in lawful money of the United States of
America. In case the holder of any Warrant Certificate shall exercise fewer
than all the Warrants evidenced thereby, a new Warrant Certificate evidencing
Warrants equivalent to the Warrants remaining unexercised shall be issued by the
Warrant Agent and delivered to the holder of such Warrant Certificate.

Upon surrender of this Warrant Certificate with the form of Assignment
below duly completed, accompanied by payment of an amount equal to any applic-
able transfer tax, at the office or agency of the Warrant Agent indicated on the
face of this Warrant Certificate, a new Warrant Certificate or Certificates
representing the Warrants represented by this Warrant Certificate shall be
issued to the transferee; provided, however, that if the registered holder of
this Warrant Certificate elects to transfer fewer than all of the Warrants
represented by this Warrant Certificate, a new Warrant Certificate for the
Warrants not so transferred shall be issued to such registered holder. This
Warrant Certificate, together with other Warrant Certificates, may be exchanged
by the registered holder for another Warrant Certificate or Certificates of
different denominations, of like tenor and representing in the aggregate
Warrants equal in number to the same full number of Warrants represented by this
Warrant Certificate and any other Warrant Certificate so exchanged with the form
of Assignment duly completed and executed. Certificates for fractions of a
Warrant will not be issued upon any exchange or transfer.

If the day of receipt of this Warrant Certificate with the form of Election
to Exercise duly filled in and executed, accompanied by payment of the Exercise
Price for the shares specified in the form of Election to Exercise (and of an
amount equal to any applicable taxes or governmental charges), shall occur with-
in any period during,which the transfer books for the Company's New Common
Stock or other class of stock purchasable upon the exercise of the Warrants
evidencedby this Warrant Certificate are closed for any purpose, the Warrant
Agent and the Company shall not be required to make delivery of certificates for
shares purchasable upon such exercise, and the person entitled to receive
delivery of such certificates shall not be deemed to have become a holder of
record of such shares, until the next succeeding business day on which the
transfer books of the Company are open.

<PAGE>
<PAGE>
To be printed on reverse side of Warrant Certificate

FORM OF ELECTION TO EXERCISE

Name of registered holder of Warrant:_______________________________________

Address:____________________________________________________________________
(Please print)
Signature:_____________________________________________
NOTE: The above signature(s) must correspond with the
name written upon the face of this Warrant
Certificate in every particular, without
alteration or enlargement or any change
whatever. If this Warrant is held of record by
two or more joint owners, all such owners must
sign.

Dated:________________________________

Signature Guarantee:

_____________________________________
(Signature must be guaranteed by an
eligible guarantor institution which is
a participant in a Securities Transfer
Association recognized program.)<PAGE>
<PAGE>
FORM OF ASSIGNMENT

(To be signed only upon assignment of Warrant Certificate)

FOR VALUE RECEIVED, ____________________________ hereby sells and transfers
unto _________________________ whose address is ____________________ and whose
social security number of other identifying number is ___________________, the
within Warrant Certificate, together with all right, title and interest therein
and to the Warrants represented thereby, and does hereby irrevocably constitute
and appoint __________________, attorney, to transfer said Warrant Certificate
on the books of the within-named Company, with full power of substitution in the
premises.

Signature:__________________________________
NOTE: The above signature(s) must correspond with the name
written upon the face of this Warrant Certificate in
every particular, without alteration or enlargement or
any change whatever. If this Warrant is held of record
by two or more joint owners, all such owners must sign.

Dated:________________________________

Signature Guarantee:

CERTIFICATE OF INCORPORATION

ROSE'S STORES, INC.

ROSE'S STORES, INC., a corporation duly incorporated on the
5th day of May, 1927 (the "Corporation") and existing under and by
virtue of the General Corporation Law of the State of Delaware,
does hereby certify that the Restated Certificate of Incorporation
of the Corporation, as amended, is hereby amended and restated in
its entirety as herein set forth in full:

FIRST: The name of the Corporation is: ROSE'S STORES, INC.

SECOND: The address of the Corporation's registered office
in the State of Delaware is 1209 Orange Street, Wilmington, County
of New Castle, Delaware 19801, and the name of its registered agent
at such address is Corporation Trust Company.

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 the State of Delaware.

FOURTH: The Corporation shall have the authority to issue an
aggregate of Sixty Million (60,000,000) shares of capital stock.
The authorized capital shall be divided into common stock (the
"Common Stock") and preferred stock (the "Preferred Stock"). The
Common Stock of the Corporation shall consist of Fifty Million
(50,000,000) shares with no par value. The Preferred Stock of the
Corporation shall consist of Ten Million (10,000,000) shares with
no par value.

FIFTH: The Corporation shall have the authority to issue
secured promissory notes (the "Secured Notes") on such terms and
conditions as set forth in the Corporation's Plan of Reorganization
(the "Plan") under Chapter 11 of the Bankruptcy Code and the
Disclosure Statement related to such Plan (the "Disclosure
Statement") approved by the United States Bankruptcy Court or
United States District Court for the Eastern District of North
Carolina to the Pre-Petition Lenders. Capitalized terms used
herein that are not otherwise defined in this Certificate of
Incorporation shall have the meanings ascribed to them in the Plan
and/or the Disclosure Statement. The Secured Notes shall not be
deemed to be shares of stock of the Corporation for any purpose.
With respect to the Secured Notes, the holders of the Secured Notes
shall not be deemed to be stockholders for any purpose and shall
not be entitled to any rights or incidents of stock ownership,
including but not limited to, voting, dividends and distributions
on stock, or the right of inspection.
<PAGE>

SIXTH: The Common Stock and Preferred Stock shall each have
the powers, preferences, rights, qualifications, limitations and
restrictions set forth below.

(a) Common Stock.

(i) Powers. The Corporation shall issue shares of
Common Stock and New Rose's Warrants on such terms
and conditions as set forth in the Plan and the
Disclosure Statement and pursuant to the Management
Incentive and Retention Program. The Board of
Directors is authorized, subject to limitations
prescribed by law and the provisions of Article
FOURTH, to provide for the issuance of the shares
of Common Stock in one or more classes or series,
and by filing a certificate pursuant to the
applicable law of the State of Delaware, to
establish from time to time the number of shares to
be included in each such series, and subject to the
provisions of this Article SIXTH, to fix the
designation, powers, preferences and rights of the
shares of each such class or series and the
qualifications, limitations or restrictions thereof.

(ii) Voting Rights. The holders of shares of Common
Stock shall be entitled to one vote for each share
so held with respect to all matters voted on by the
stockholders of the Corporation; provided, however,
that shares of Common Stock issued or reserved for
issuance under the Plan shall not be voted in any
election of directors of the Corporation, or any
other matter requiring the vote of stockholders, by
a holder of an Allowed Claim or Common Stock
Interest, or by an employee of the Corporation
entitled to receive shares of Common Stock under
the Management Incentive and Retention Program,
until such shares of Common Stock shall have
actually been distributed to such person; provided,
further, that a holder of a Disputed Claim shall not
be entitled to vote in any election of directors of
the Corporation, or any other matter requiring the
vote of stockholders, until such time as the
Disputed Claim has become an Allowed Claim, and
until the holder of such Allowed Claim has received
its distribution and become a stockholder of record
of the Corporation.

(iii) Dividends. Dividends may be paid on the Common
Stock as and when declared by the Board of
Directors.

(iv) Liquidation Rights. Subject to the prior and
superior right of the Preferred Stock, upon any
voluntary or involuntary liquidation, dissolution
or winding up of affairs of the Corporation, the
holders of Common Stock shall be entitled to receive
of the funds to be distributed such amount as
remains after distribution of all amounts, if any,
required to be distributed to holders of any
Preferred Stock. Such funds shall be paid to the
holders of Common Stock on the basis of the number
of shares of Common Stock held by each of them.

(v) Reserve Powers. The holders of shares of Common
Stock shall have all other powers, preferences and
rights conferred upon owners of shares of capital
stock under the laws of the State of Delaware,
except insofar as such powers, preferences and
rights are expressly restricted by the provisions
of Paragraph 1(b) of this Article SIXTH.
<PAGE>
(b) Preferred Stock.

(i) Powers. The Board of Directors is authorized,
subject to limitations prescribed by law and the
provisions of Article FOURTH, to provide for the
issuance of the shares of Preferred Stock in one or
more classes or series, and by filing a certificate
pursuant to the applicable law of the State of
Delaware, to establish from time to time the number
of shares to be included in each such series, and
to fix the designation, powers, preferences and
rights of the shares of each such class or series
and the qualifications, limitations or restrictions
thereof.

(ii) Liquidation Rights. If upon any voluntary or
involuntary liquidation, dissolution or winding up
of the Corporation, the assets available for
distribution to holders of shares of Preferred Stock
of all classes or series shall be insufficient to
pay such holders the full preferential amount to
which they are entitled, then such assets shall be
distributed ratably among the shares of all classes
or series of Preferred Stock in accordance with the
respective liquidation preferences (including unpaid
cumulative dividends, if any) payable with respect
thereto.

(c) Notwithstanding anything to the contrary contained
herein, to the extent, and only for so long as is,
required by Section 1123(a)(6) of Title 11, United States
Code, 11 U.S.C. Sections 101 et seq. (the "Bankruptcy Code"),
the Corporation (i) shall not issue any shares of non-
voting equity securities, (ii) shall provide, as to the
several classes or series of securities having voting
power, a distribution of such power determined by the
Board of Directors to be appropriate for such classes and
series, and (iii) in the case of any class or series of
Preferred Stock having a preference over any other class
or series of Preferred Stock or over Common Stock with
respect to dividends, shall provide, in a manner
determined by the Board of Directors to be adequate, for
the election of directors representing such class or
series in the event of default by the Corporation in the
payment of such dividends.

(d) No stockholder of the Corporation shall by reason of his
holding of shares of any class or series have any
preemptive or preferential right to purchase or subscribe
to any shares of any class or series of stock of the
Corporation, now or hereafter authorized, or any
securities convertible into or carrying options or
warrants to purchase any shares of any class or series
of stock of the Corporation, now or hereafter authorized,
other than such rights, if any, as the Board of
Directors, in its discretion from time to time may grant
and at such price as the Board of Directors may fix.

SEVENTH:

(a) The number of directors constituting the entire Board of
Directors shall be not less than seven nor more than
thirteen, the exact number to be fixed from time to time
by vote of a majority of the entire Board of Directors;
provided, however, that the number of directors shall not
be reduced so as to shorten the term of any director at
the time in office.
<PAGE>
(b) The Board of Directors, excluding directors elected by
the holders of shares of any class or series of stock
having a preference over the Common Stock of the
Corporation as to dividends or upon liquidation as
provided in Article SIXTH hereto, shall be divided into
three classes, as nearly equal in numbers as the then
total number of directors constituting the entire Board
of Directors permits, with the term of office of one
class expiring each year. Except as otherwise provided
in Paragraphs (c) and (d) below, directors in the first
class shall hold office for a term expiring at the first
annual meeting of stockholders following their election,
directors in the second class shall hold office for a
term expiring at the second annual meeting of
stockholders following their election, and directors in
the third class shall hold office for a term expiring at
the third annual meeting of stockholders following their
election, and, in each case, until their successors shall
be elected and qualified. Subject to the foregoing, at
each annual meeting of stockholders the successors to the
class of directors whose term shall then expire shall be
elected to hold office for a term expiring at the third
succeeding annual meeting. Voting for directors shall
not be cumulative. Except as otherwise provided in this
Article SEVENTH, any vacancies in the Board of Directors
for any reason, and any directorships resulting from any
increase in the number of directors, may be filled by the
Board of Directors, acting by a majority of the directors
then in office, although less than a quorum. Any
director chosen to fill a vacancy shall hold office until
the next election of the class for which such director
shall have been chosen and until his successor shall be
elected and qualified. Notwithstanding the foregoing,
and except as otherwise required by law, whenever the
holders of any one or more series of Preferred Stock
shall have the right, voting separately as a class, to
elect one or more directors of the Corporation, the terms
of the director or directors elected by such holders
shall expire at the next succeeding annual meeting of
stockholders.

(c) Pursuant to and as of the effective date (the "Effective
Date") of the Plan, the Unsecured Committee shall have,
in its sole discretion, the right to select all but one
director to serve on the initial Board of Directors of
the Corporation (the "Initial Board") and the Equity
Committee shall have, in its sole discretion, the right
to select one director to serve on the Initial Board.
The Unsecured Committee in its sole discretion shall
divide the Initial Board into three classes and designate
each director as a member of one such class; provided,
that, the director selected by the Equity Committee shall
be a member of the third class having a term expiring at
the third annual meeting of stockholders following the
selection of such director by the Equity Committee. In
the event that Subscription Proceeds total $25 million
or more, the Equity Committee in its sole discretion
immediately shall have the right to elect one director
in class one and one director in class two (in addition
to the directors elected by it in class three), and such
directors will either be additional directors and the
total number of directors shall automatically be
increased (subject to there not being more than thirteen
directors) or shall fill vacancies created by the
resignation or removal of two directors selected by the
Unsecured Committee. In the event that Subscription
Proceeds total more than 50% of the amount of the Class
5 Subscription Price times 10,000,000, the number of
Effective Date Shares, as of March 31, 1995, within five
(5) business days thereafter, the Unsecured Committee
<PAGE>
shall select and cause such number of directors
originally selected by it to resign so as to permit the
Equity Committee in its sole discretion to fill a
majority (including all directors previously selected by
the Equity Committee) of the positions on the Initial
Board as equally distributed among the three classes as
possible. After appointment of the Initial Board as
provided in this Paragraph (c), the election of directors
shall be pursuant to the vote of the stockholders of the
Corporation at an annual or special meeting called for
such purpose.

(d) In the event that Subscription Proceeds total $25 million
or more, the Chairman of the Board or the President of
the Corporation shall call an annual or special meeting
of the stockholders to be held within one hundred eighty
(180) days of the Effective Date, or as soon as
practicable thereafter, for the purpose of electing a new
Board of Directors. As of the date of such annual or
special meeting, the terms of all of the Initial
Directors selected pursuant Paragraph (c) above, as well
as all directors subsequently elected to fill vacancies,
shall expire when such directors' successors are elected
and qualified. At such annual or special meeting, the
Board of Directors again shall be divided into three
classes as provided in Paragraph (b) of this Article
SEVENTH, each nominee for directorship shall be
designated to be a member of one such class, and the
stockholders shall elect a new full Board of Directors.

(e) Except as otherwise provided in Paragraph (c) of this
Article SEVENTH and notwithstanding any other provision
of this Certificate of Incorporation or the by-laws of
the Corporation (and notwithstanding the fact that some
lesser percentage may be specified by law, this
Certificate of Incorporation or the by-laws of the
Corporation for stockholder action), any director or the
entire Board of Directors of the Corporation may be
removed at any time (i) without cause by the affirmative
vote of the holders of at least sixty-six and two-thirds
percent (66-2/3%) of the outstanding shares of capital
stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose
as one class) cast at an annual or special meeting of the
stockholders called for that purpose, and (ii) for cause
by such vote as is permissible under the General
Corporation Law of the State of Delaware.
Notwithstanding the foregoing, and except as otherwise
required by law, whenever the holders of any one or more
classes or series of Preferred Stock shall have the
right, voting separately as a class, to elect one or more
directors of the Corporation, the provisions of this
Paragraph (e) shall not apply with respect to the
director or directors elected by such holders of
Preferred Stock which directors may be removed with or
without cause by the affirmative vote of the holders of
a majority of the outstanding shares of such class or
series entitled to vote in the election of such
director(s).

(f) This Article SEVENTH may not be altered, amended or
repealed except by the affirmative vote of the holders
of shares of capital stock of the Corporation entitled
to cast sixty-six and two-thirds percent (66-2/3%) or more
of the aggregate number of votes entitled to be cast by
all holders of outstanding shares of the capital stock
of the Corporation.

EIGHTH: In furtherance of and not in limitation of powers
conferred by statute, it is further provided that:
<PAGE>
(a) Subject to the limitations and exceptions, if any,
contained in the by-laws of the Corporation, the Board
of Directors is expressly authorized to make, alter,
amend or repeal the by-laws of the Corporation by the
affirmative vote of a majority or more of the number of
directors then holding office; provided, however, that
the Board of Directors shall not have the power to alter,
amend or repeal any by-law provision which by its terms
requires a vote of the stockholders of the Corporation,
such provision(s) to be so designated in the by-laws of
the Corporation; and

(b) Elections of directors need not be by written ballot
unless, and only to the extent, otherwise provided in the
by-laws.

NINTH: All action by the stockholders shall be taken at a
duly called special or annual meeting of the stockholders of the
Corporation at which a quorum is present, and the stockholders of
the Corporation shall not have the right to act by written consent
as provided by Section 228 of the General Corporation Law of the
State of Delaware.

This Article NINTH may not be altered, amended or
repealed except by the affirmative vote of the holders of shares
of capital stock of the Corporation entitled to cast sixty-six and
two-thirds percent (66-2/3%) or more of the aggregate number of
votes entitled to be cast by all holders of outstanding shares of
the capital stock of the Corporation.

TENTH:

(a) The Corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any
threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right
of the Corporation) by reason of the fact that he 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, 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 interest of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.

(b) 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)
<PAGE>
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 interest 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
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
or such other court shall deem proper.

(c) 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 action, suit or proceeding
referred to in paragraphs (a) and (b) of this Article
TENTH, or in defense of any claim, issue or matter
therein, including the dismissal of an action without
prejudice, he shall, without limiting the provisions of
paragraph (a) above, be indemnified against expenses
(including attorneys' fees) actually and reasonably
incurred by him in connection therewith.

(d) Any indemnification under paragraphs (a) and (b) of this
Article TENTH (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 paragraphs (a) and (b) of this
Article TENTH. 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 proceedings, 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.

(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal,
administrative or investigative action, suit or
proceeding shall be paid by the Corporation in advance
of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if it
shall ultimately be determined that he is not entitled
to be indemnified by the Corporation pursuant to this
Article TENTH or as otherwise authorized by law. Such
expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems
appropriate.

(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this
Article TENTH shall not be deemed exclusive of any other
rights to which those seeking indemnification or
advancement of expenses 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.
<PAGE>
(g) The Corporation, at its expense, 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, 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 provisions of this Article TENTH
or under the provisions of the General Corporation Law
of the State of Delaware.

(h) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article TENTH 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
person.

(i) All rights to indemnification and advancement of expenses
under this Article TENTH shall be deemed to be provided
by contract between the Corporation and the director,
officer, employee or agent who serves in such capacity
at any time while this Certificate of Incorporation and
other relevant provisions of the General Corporation Law
of the State of Delaware and other applicable law, if
any, are in effect.

(j) Any repeal or modification of the foregoing paragraphs
by the stockholders of the Corporation shall not
adversely affect any right or protection of a director,
officer, employee or agent of the Corporation existing
at the time of such repeal or modification.

(k) If the General Corporation Law of the State of Delaware
is amended to authorize corporate action permitting the
Corporation to further indemnify or advance expenses to
directors, officers, employees or agents, then such
person, in addition to the circumstances in which he is
now entitled to indemnification and advancement of
expenses, shall be entitled to be indemnified and have
expenses advanced to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as so
amended.

(l) For purposes of this Article TENTH, references to
"Corporation" shall include, in addition to the resulting
Corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation
or merger which, if its separate existence had continued,
would have had power and authority to indemnify its
directors, officers, employees or agents, so that any
person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was
serving at the request of such constituent corporation
as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the
provisions of this Article TENTH with respect to the
resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate
existence had continued.

(m) For purposes of this Article TENTH, references to "other
enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit
plan; and references to "serving at the request of the
Corporation" shall include any service as a director,
<PAGE>
officer, employee or agent by the Corporation which
imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an
employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and
in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner
"not opposed to the best interests of the Corporation,"
as referred to in this Article TENTH.

(n) If this Article TENTH or any portion thereof shall be
invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless
indemnify each person as provided above as to expenses
(including attorneys' fees), judgments, fines and amounts
paid in settlement with respect to any action, suit or
proceeding, whether civil, criminal, administrative or
investigative, including a grand jury proceeding and an
action by the Corporation, to the fullest extent
permitted by any applicable portion of this Article TENTH
that shall not have been invalidated or by any other
applicable law.

ELEVENTH: 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 a 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.

TWELFTH: No director of the Corporation shall be personally
liable to the Corporation or to any of its stockholders for
monetary damages arising out of such director's breach of fiduciary
duty as a director of the Corporation, 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
which involve intentional misconduct or a knowing violation of law,
(iii) for unlawful payment of dividends or unlawful stock purchase
or redemption under Section 174 of the General Corporation Law of
the State of Delaware or any successor provision, or (iv) for any
transaction from which such director derived an improper personal
benefit. If the General Corporation Law of the State of Delaware
is amended after the effective date of this Restated Certificate
of Incorporation 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 General Corporation Law of the
State of Delaware, as so amended.
<PAGE>
Any amendment to or repeal or modification of this
Article TWELFTH (i) by the stockholders of the Corporation or (ii)
by an amendment to the General Corporation Law of the State of
Delaware (unless such statutory amendment specifically provides to
the contrary) shall not adversely affect any right or protection,
existing at the time of such repeal or modification with respect
to any acts or omissions occurring either before or after such
repeal or modification, or a person serving as a director at the
time of such repeal or modification.

THIRTEENTH: 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.

FOURTEENTH: Notwithstanding anything to the contrary in this
Certificate of Incorporation, as provided in Section 7.5 of the
Plan, until such time as all obligations owing to the Pre-Petition
Lenders shall be satisfied in full, neither the Corporation, nor
any director, officer, agent or professional thereof on behalf of
the Corporation, shall have the power or authority to cause the
Corporation to be subject to or to seek or obtain relief or file
or commence any proceeding under any chapter of the Bankruptcy Code
other than in Case No. 93-01365-5 (ATS) in the United States
Bankruptcy Court for the Eastern District of North Carolina to
effectuate the provisions of the Plan on and after the Effective
Date. This Certificate of Incorporation shall not be amended to
abrogate the foregoing without the consent of the Pre-Petition
Lenders, until such time as all obligations owing to the Pre-
Petition Lenders have been satisfied in full.

FIFTEENTH: All shares of stock of the Corporation issued and
outstanding pursuant to the Certificate of Incorporation of the
Corporation in effect prior to the effective date of this
Certificate of Incorporation, including all options, warrants and
other rights to acquire such shares, shall be cancelled, annulled
and extinguished pursuant to the Plan.

This Restated Certificate of Incorporation and the amendments
contained herein were duly adopted in accordance with the
provisions of Sections 103 and 303 of the General Corporation Law
of the State of Delaware pursuant to the Plan of Reorganization of
the Corporation which Plan was approved on ___________, 19__ by the
United States Bankruptcy Court or United States District Court for
the Eastern District of North Carolina with jurisdiction over
proceedings related to the reorganization of the Corporation
pursuant to Chapter 11 of the Bankruptcy Code.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, said Rose's Stores, Inc. has caused this
Amended and Restated Certificate of Incorporation to be signed by
its Vice President and attested to by its Assistant Secretary this
_____ day of_________________, 19__.

ROSE'S STORES, INC.

By:______________________
R. Edward Anderson,
President

Attest:

By:________________________
George T. Blackburn, II,
Secretary

BY-LAWS

ROSE'S STORES, INC.

(As Amended and Restated as of ________________, 1995)<PAGE>
<PAGE>

ROSE'S STORES, INC.

AMENDED AND RESTATED BY-LAWS

ARTICLE I - OFFICES

SECTION 1. PRINCIPAL EXECUTIVE OFFICE. The principal office of the
corporation for the transaction of its business shall be in the City of
Henderson, State of North Carolina. The board of directors is hereby granted
the power and authority to change the principal business and executive office
from one location to another.

SECTION 2. REGISTERED OFFICE. The registered office of the corporation
required by law to be maintained in the State of Delaware shall be at Corpora-
tion Trust Center, 1209 Orange Street, in the City of Wilmington, County New
Castle, State of Delaware, or such other place in the State of Delaware as
designated by the board of directors.

SECTION 3. OTHER OFFICES. The corporation may also have offices at such
other places both 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 STOCKHOLDERS

SECTION 1. ANNUAL MEETING. The annual meeting of the stockholders, for
the election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place on such date and at such time as the board of
directors shall each year fix; provided, however, that, if so required by Para-
graph (d) of Article SEVENTH of the certificate of incorporation, the chairman
of the board or the president of the corporation shall call an annual or special
meeting of the stockholders to be held within one hundred eighty (180) days of
the Effective Date of the Plan of Reorganization of the corporation, or as soon
thereafter as practicable, for the purpose of electing a new board of directors
as provided in Article SEVENTH of the certificate of incorporation. Failure by
the corporation to hold an annual or special meeting within such period shall
not cause any action of the corporation, or any of its officers, directors or
agents to become void, voidable or otherwise invalid.

SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes prescribed in the notice of the meeting, unless other-
wise prescribed by statute, may be called by the board of directors, the chair-
man of the board or the president of the Corporation and shall be held at such
place, date and time as the board of directors, the chairman of the board or the
president shall fix.

SECTION 3. NOTICE OF MEETINGS. Written notice of stockholder meetings
stating the place, date and time of the meeting shall be delivered either
<PAGE>
personally or by mail to each stockholder entitled to vote at such meeting not
less than ten (10) nor more than sixty (60) days before the date of the meet-
ing. If mailed, such notice shall be deemed to be delivered when deposited in
the United States mail addressed to the stockholder at his address as it appears
on the record of stockholders of the corporation, with postage prepaid thereon.
In the case of an annual meeting, the notice of meeting need not specifically
state the business to be transacted thereat unless it is a matter, other than
election of directors, on which the vote of the stockholders is expressly
required by statute. In the case of a special meeting, the notice of meeting
shall specifically state the purpose or purposes for which the meeting is
called.

SECTION 4. VOTING. Unless otherwise provided in the certificate of
incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder at the close of business on the
record date for the meeting fixed by the board of directors in advance of the
record date.

Except as otherwise provided in the certificate of incorporation, all
elections for directors shall be decided by a plurality of the votes cast and
such vote will be by ballot. All other questions shall be decided by the vote
of a majority of the shares voted on any matter except as otherwise provided by
the certificate of incorporation, these bylaws, or by statute.

Shares of its own stock owned by a corporation, directly or indirectly,
through a subsidiary or otherwise, shall not be voted and shall not be counted
in determining the total number of shares entitled to vote; except that shares
held in a fiduciary capacity may be voted and shall be counted to the extent
provided by law.

SECTION 5. STOCKHOLDER LIST. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten (10) 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 (10) 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 stock-
holder who is present.

SECTION 6. QUORUM. At any meeting of the stockholders, the holders of
a majority of all of the shares of the stock entitled to vote at the meeting,
present in person or by proxy, shall constitute a quorum for all purposes,
unless or except to the extent that the presence of a larger number may be
required by statute, these bylaws, or the certificate of incorporation. The
stockholders at a meeting at which a quorum is present may continue to do busi-
ness until adjournment notwithstanding the withdrawal of sufficient stockholders
to leave less than a quorum. In case a quorum shall not be present or re-
presented at any meeting, the board of directors or a majority in interest of
<PAGE>
the stockholders entitled to vote thereat, present in person or by proxy, shall
have the power to adjourn the meeting from time to time, until a quorum shall be
present or represented. At any such adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. When a meeting is adjourned
for thirty (30) days or more, or when a new record date is fixed for the
adjourned meeting after the adjournment, notice of the adjourned meeting shall
be given as in the case of an original meeting. When a meeting is adjourned for
less than thirty (30) days in any one adjournment, it is not necessary to give
any notice of the time and place of the adjourned meeting or of the business to
be transacted thereat other than by announcement at the meeting at which the
adjournment is taken.

SECTION 7. PROXIES. Shares may be voted in person or by one or more
agents authorized by a written proxy executed by the stockholder or by his duly
authorized attorney-in-fact. A proxy shall be valid for thirty-six (36) months
from the date of its execution, unless the person executing it specifies therein
the length of time for which it is to continue in force or limits its use to a
particular meeting or meetings.

SECTION 8. INSPECTORS OF ELECTION.

(a) In advance of any meeting of stockholders, the board of
directors may appoint any persons, other than nominees for office, as inspectors
of election to act at such meeting or any adjournment thereof. If inspectors
of election are not so appointed, the chairman of any such meeting may appoint
inspectors of election at the meeting. The number of inspectors shall be either
one or three. In case any person appointed as inspector fails to appear or
fails or refuses to act, the vacancy may be filled by appointment by the board
of directors in advance of the meeting or at the meeting by the person acting as
chairman.

(b) The inspectors of election shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, the authenticity, validity and effect of proxies,
receive votes, ballots or consents, hear and determine all challenges and
questions in any way arising in connection with the right to vote, count and
tabulate all votes or consents, determine the result and do such acts as may be
proper to conduct the election or vote with fairness to all stockholders. The
inspectors of election shall perform their duties impartially, in good faith,
to the best of their ability and as expeditiously as is practical.

(c) If there are three inspectors of election, the decision, act
or certificate of a majority shall be effective in all respects as the decision,
act or certificate of all.

(d) On request of the chairman of the meeting, the inspectors shall
make a report in writing of any challenge or question or matter determined by
them and shall execute a certificate of any fact found by them. Any report or
certificate made by them shall be a prima facie evidence of the facts stated
therein.
<PAGE>
SECTION 9. NOTICE OF NOMINATIONS.

(a) Notwithstanding any language in this Section 9 to the contrary,
the initial Board of Directors (the "Initial Board") shall be elected as
provided in Paragraph (c) of Article SEVENTH of the certificate of incorpora-
tion, and the board of directors may, in its sole discretion, prescribe alterna-
tive nomination notice requirements for any meeting called pursuant to Paragraph
(d) of Article SIXTH of the certificate of incorporation.

(b) Nominations for the election of directors may be made by the
board of directors or by any stockholder entitled to vote for the election of
directors. Nominations by stockholders shall be made by notice in writing,
delivered by certified or registered mail, postage and fees prepaid, with a
return receipt addressed to the Secretary of the corporation not later than
January 1 of the calendar year in which the election is to be held and not
earlier than November 1 of the year preceding the calendar year in which the
election is to be held or within such time periods required by the Securities
and Exchange Commission or any national securities exchange or similar
organization to which the corporation is subject. No notice of nominations
which are proposed by the board of directors need be given.

(c) The notice under subsection (b) shall set forth (i) the name,
age, business address and residence address of each nominee proposed in such
notice, (ii) the principal occupation or employment of each such nominee, (iii)
the number of shares of stock of the corporation which are beneficially owned
by each such nominee, and (iv) information required by the rules and regulations
of the Securities and Exchange Commission or any national securities exchange
or similar organization to which the corporation is subject governing the
solicitation of proxies.

(d) The chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made in accord-
ance with the foregoing procedure, and if he should so determine, he shall so
declare to the meeting and the defective nomination shall be disregarded.

SECTION 10. REMOVAL OF OFFICERS. Stockholders shall have no right or
power to remove officers of the corporation or change their duties. Stock-
holders shall have no right or power to elect or appoint officers of the corp-
oration or to specify their duties.

SECTION 11. TRANSACTIONS WITH AFFILIATES.

(a) For purposes of this Section 11, the term "affiliate" shall
mean any person, corporation or entity (including any other person, other
corporation, or other entity, controlling, controlled by, under common control
with, or acting in concert with or under an agreement or understanding with, the
affiliate) which owns, of record or beneficially, directly or indirectly,
(including the right to acquire pursuant to any agreement or upon exercise of
conversion rights, warrants or options, or otherwise), more than five percent
(5%) of the corporation's outstanding voting securities.

(b) Any merger or consolidation of this corporation with any
affiliate, or any sale, lease, or exchange or other disposition of a substantial
part of the assets of this corporation to any affiliate or any issuance of
voting securities of this corporation to any affiliate or any issuance of voting
securities of this corporation in exchange or payment for the securities or
<PAGE>
assets of any affiliate, may not be effected (except as provided in sub-
paragraph (e) of this Section 11), unless a meeting of stockholders of this
corporation is held to act thereon and there is obtained the approval from the
holders of a percentage of all the shares entitled to be voted thereon equal to
seventy-five percent (75%).

(c) There shall be a committee (the "Merger Committee") of the
board of directors composed of (1) all directors holding office on the date on
which the clerk of the United States Bankruptcy Court or United States District
court for the Eastern District of North Carolina with jurisdiction over
proceedings relating to the reorganization of the corporation pursuant to Chap-
ter 11 of the United States Bankruptcy Code enters an order confirming the plan
of reorganization of the corporation pursuant to said Chapter 11 on the legal
docket for such proceedings, (2) those directors subsequently elected who have
held the office of director for a period of at least three years prior to the
date of the stockholders meeting called to vote on any transaction referred to
in subsection (b) of this Section 11, and (3) any other directors that the fore-
going directors by majority vote shall choose. The Merger Committee shall have
the power and duty to determine for the purposes of this Section 11 whether (i)
any corporation, person or other entity or group is an affiliate of the corpora-
tion, and (ii) any proposed sale, lease, exchange or other disposition of part
of the assets of the corporation involves a "substantial part" of the assets of
the corporation; provided that assets involved in any single transaction or
series of related transactions having an aggregate fair market value of more
than fifteen percent (15%) of the total consolidated assets of the corporation
shall always be deemed to constitute a "substantial part" solely for purposes of
this Article II, Section 11.

(d) In the event any transaction referred to in subsection (b) of
this Section 11 which requires the vote of the stockholders of the corporation
provided for therein is approved by the stockholders in accordance with the
provisions thereof, such transaction shall not be consummated unless each of the
corporation's stockholders who did not vote for such transaction and who, after
twenty (20) days written notice of such approval, shall have notified the
corporation in writing that such stockholder dissents from the consummation of
such transaction and elects the benefits of this subsection (d), shall receive,
incident to the consummation of such transaction, an amount in cash for the
shares of stock of the corporation owned by such stockholder which shall not be
less than the higher of (i) the highest price previously paid by the affiliate
referred to in subsection (b) for any of its shares of the corporation's stock,
or (ii) a price which includes the same or greater percentage premium over the
market price of the corporation's stock immediately prior to the announcement
of the subject transaction as the greatest percentage premium over market price
ever paid by such affiliate in the purchase of any shares of the corporation's
stock, or (iii) a price determined by the highest multiple of earnings per share
that the affiliate's stock sold for during the twelve (12) months immediately
preceding the effective date of such merger, consolidation or sale, based upon
the affiliate's most recently reported full year results, and applying said
multiple to this corporation's earnings for the preceding four quarters; or (iv)
book value per share of this corporation's stock. The benefits of this
subsection (d) may be elected by stockholders as set forth herein in lieu of any
dissenter's rights or appraisal rights provided by law. At the time of
submission of any transaction referred to in subsection (b) for stockholder
<PAGE>
consideration, all stockholders shall be advised of the provisions of this
subsection (d).

(e) Notwithstanding any language herein to the contrary, the
provisions of this Article II, Section 11 shall not apply to any transaction
described in subsection (b) of this Section 11 if such transaction has been
approved by majority vote of the Merger Committee of the board of directors.

ARTICLE III - DIRECTORS

SECTION 1. NUMBER AND TERM. Except as otherwise provided in the
certificate of incorporation or by applicable law, the number of directors which
shall constitute the entire board shall be no less than seven or more than
thirteen, the exact number to be determined from time to time by a vote of the
majority of the entire board of directors. The election of the Initial Board
as of the Effective Date of the corporation's Plan of Reorganization, and the
filling of any vacancies in the Initial Board, shall be governed by the
provisions of Article SEVENTH of the certificate of incorporation. Subject to
the provisions of the certificate of incorporation, the directors, other than
those who may be elected by the holders of shares of any class or series of
stock having a preference over the common stock of the corporation as to divi-
dends or upon liquidation pursuant to the terms of Article SIXTH of the certifi-
cate of incorporation, shall be classified, with respect to the time for which
they severally hold office, into three classes as nearly equal in number as
possible, with each class to hold office until its successors are elected and
qualified. Subject to the provisions of Article SEVENTH of the certificate of
incorporation, if the number of directors is changed, any newly created
directorships or any decrease in directorships shall be so apportioned among the
classes as to make all classes as nearly equal as possible; provided, however,
that no decrease in the number of directors shall shorten the term of any incum-
bent director. Subject to the foregoing and the provisions of the certificate of
incorporation, at each such annual meeting of the stockholders, the successors
of the class of directors whose term expires at that meeting shall be elected to
hold office for a term expiring at the annual meeting of stockholders held in
the third year following the year of their election; provided, however, that,
except as otherwise required by law, whenever the holders of any one or mores
classes or series having a preference over the common stock of the corporation
as to dividends or upon liquidation, shall have the right, voting as a separate
class, to elect one or more directors of the corporation, the terms of the
director or directors elected by such holders shall expire at the next
succeeding annual meeting of stockholders.

SECTION 2. VACANCIES. Except as otherwise provided in Article SEVENTH
of the certificate of incorporation, subject to the rights of the holders of any
class or series of stock having a preference over the common stock of the
corporation as to dividends or upon liquidation, any vacancies on the board of
directors resulting from death, resignation, removal or other cause, and the
creation of new directorships resulting from an increase in the number of
directors, may be filled by the board of directors by the affirmative vote of
a majority of the remaining directors then in office, even though less than a
quorum of the board of directors, or by a sole remaining director. If any
vacancy is not filled by the board of directors, the stockholders may elect a
director to fill the vacancy at the next annual or special meeting of the
stockholders. Any director elected in accordance with the preceding sentence
<PAGE>
of this Section 2 shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified.

SECTION 3. POWERS. The properties and business of the corporation shall
be managed by or under the direction of the board of directors, which may
exercise all such powers of the corporation and do all such lawful acts and
things as are not by statute or by the certificate of incorporation or by these
by-laws directed or required to be exercised or done by the stockholders. The
corporation may keep its books and records outside of the State of Delaware at
the Executive Office of the corporation, or at such other place as the board of
directors may from time to time direct.

SECTION 4. REGULAR MEETINGS. Regular meetings of the board of directors
shall be held at such place or places, on such date or dates, and at such time
or times as shall have been established by the board of directors and publicized
among all directors. A notice of each regular meeting shall not be required.

SECTION 5. SPECIAL MEETINGS. Special meetings of the board of directors
may be called by any two of the directors then in office, by the chairman of the
board or by the president of the corporation and shall be held at such place,
on such date, and at such time as such directors, the chairman of the board or
the president shall fix. Notice of the place, date, and time of each such
special meeting shall be sent by overnight delivery service, mail, telegraph,
facsimile transmission, telex or similar means, or be personally delivered, to
each director or to a location designated by each director for such notice not
later than 48 hours prior to the time at which the meeting is to be held, but
notice need not be given to any director who shall, either before or after the
meeting, submit a signed waiver of such notice or who shall attend such meeting
without protesting, prior to or at its commencement, the lack of such notice to
such director. Unless otherwise indicated in the notice thereof, any and all
business may be transacted at a special meeting.

SECTION 6. QUORUM AND ACTION.

(a) At any meeting of the board of directors, a majority of the
entire board of directors in office immediately before the meeting shall
constitute a quorum for all purposes. The vote of a majority of those directors
present at any meeting at which a quorum is present shall be necessary for the
passage of any resolution or act of the board of directors, unless a greater
number is otherwise required by law, the certificate of incorporation or these
by-laws.

(b) In the absence of a quorum for any such meeting, the chairman
of the board or a majority of the directors present thereat may adjourn such
meeting from time to time, without notice other than announcement at such
meeting, until a quorum shall be present. 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 noticed. Notice of an adjourned
meeting need not be given if the time and place are fixed at the meeting
adjourning and if the period of adjournment does not exceed ten (10) days in any
one adjournment.
<PAGE>
(c) 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, shall
be presumed to have assented to the action taken unless his contrary vote is
recorded or his dissent is otherwise entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the secretary of the corporation immediately
after the adjournment of the meeting. Such right of dissent shall not apply to
a director who voted in favor of such action.

(d) The vote of a majority of the number of directors then in office
shall be required to adopt a resolution constituting a committee of the board.
The vote of a majority of the directors then holding office shall be required
to adopt, amend or repeal a by-law, or to adopt a resolution dissolving the
corporation without action by the stockholders, in circumstances authorized by
law.

SECTION 7. ACTION BY WRITTEN CONSENT. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the board of directors or a committee thereof may
be taken without a meeting, if all members of the board of directors or commit-
tee consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board of directors or committee, whether before
or after the action so taken.

SECTION 8. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Members
of the board of directors or a committee thereof may participate in a meeting
of such board of directors or committee by means of conference telephone or
similar communications equipment that enables all persons participating in the
meeting to hear each other. Such participation shall constitute presence in
person at such meeting.

SECTION 9. CONDUCT OF BUSINESS. At any meeting of the board of directors,
business shall be transacted in such order and manner as the board may from time
to time determine, and all matters shall be determined by the vote of a majority
of the directors present, except as otherwise provided herein or as required by
law.

SECTION 10. REMOVAL OF DIRECTORS. Subject to the rights of the holders
of any class or series of stock having a preference over the common stock of the
corporation as to dividends or upon liquidation, unless otherwise provided in
the certificate of incorporation, directors may be removed without cause by the
affirmative vote of the holders of a not less than sixty-six and two-thirds
percent (66-2/3%) of all the shares of stock outstanding and entitled to vote
in the election of directors at an annual or special meeting of the stockholders
called for such purpose. Notwithstanding the foregoing, directors may be re-
moved for cause by such vote as is permissible under the General Corporation Law
of the State of Delaware. Vacancies created by removal of directors may be
filled at the stockholders meeting held for the purpose of removal.

SECTION 11. COMPENSATION. The board of directors shall have the authority
to fix the compensation, if any, of the directors for their services as such and
may provide for the payment of any and all expenses incurred by the directors
in connection with such services.
<PAGE>
SECTION 12. CHAIRMAN OF THE BOARD. The chairman of the board of
directors, if one is elected by the board of directors, shall, if present,
preside at meetings of the board of directors and, if present, preside at
meetings of the stockholders. The chairman of the board shall, when requested,
counsel with and advise the officers of the corporation and shall perform such
other duties as may from time to time be determined by the board of directors.
In the absence of a chairman of the board of directors, the president of the
corporation shall preside at the meetings of the board of directors and
stockholders.

ARTICLE IV - COMMITTEES OF THE BOARD OF DIRECTORS

SECTION 1. ESTABLISHMENT OF COMMITTEES OF THE BOARD OF DIRECTORS. The
board of directors may, in accordance with and subject to the General Corpora-
tion Law of the State of Delaware, from time to time establish committees of the
board of directors to exercise such powers and authorities of the board of
directors and to perform such other functions, as the board of directors may
from time to time determine.

SECTION 2. PROCEDURE; MEETINGS; QUORUM.

(a) Regular meetings of committees of the board of directors, of
which no notice shall be necessary, may be held at such times and places as
shall be fixed by resolution adopted by a majority of the members of such
committee.

(b) Special meetings of any committee of the board of directors
shall be called at the request of any member of such committee. Notice of each
special meeting of any committee of the board of directors shall be sent by
overnight delivery service, mail, telegraph, facsimile transmission, telex or
telephone, or be delivered personally, to each member thereof or to a location
designated by each member for such notice not later than 48 hours prior to the
time at which the meeting is to be held, but notice need not be given to any
member who shall, either before or after the meeting, submit a signed waiver of
such notice or who shall attend such meeting without protesting, prior to or at
its commencement, the lack of such notice to such member. Any special meeting
of any committee of the board of directors shall be a legal meeting without any
notice thereof having been given, if all the members thereof shall be present
thereat. Notice of any adjourned meeting of any committee of the board of
directors need not be given.

(c) Any such committee shall elect a presiding officer from among
its members and may adopt such rules and regulations not inconsistent with the
provisions of law, the certificate of incorporation, these by-laws or the
resolutions of the board of directors establishing such committee for the
conduct of its meetings as such committee of the board of directors may deem
proper.

(d) A majority of the members of any committee of the board of
directors shall constitute a quorum for the transaction of business at any
meeting, and the vote of a majority of the members thereof present at any
meeting at which a quorum is present shall be the act of such committee.
<PAGE>
(e) Each committee of the board of directors shall keep written
minutes of its proceedings and shall report on such proceedings to the board of
directors.

(f) Any resolutions adopted or other action taken by any such
committee within the scope of the authority delegated to it by the board of
directors shall be deemed for all purposes to be adopted or taken by the board
of directors. The designation of any committee and the delegation thereto of
authority shall not operate to relieve the board of directors, or any member
thereof, of any responsibility or liability imposed upon it or him by law.

(g) If a committee member is absent or disqualified, the qualified
members present at a meeting, even if not a quorum, may unanimously appoint
another board of directors member to act in the absent or disqualified member's
place.

(h) Any member of any such committee may be removed at any time with
or without cause by resolution adopted by a majority of the Board of Directors.

ARTICLE V - OFFICERS

SECTION 1. OFFICERS. The officers of the corporation shall consist of
a president, one or more vice presidents (any of whom may be designated as an
executive vice president, senior vice president or assistant vice president and
any of whom may be designated as a vice president with particular functions or
responsibilities), a treasurer, a secretary and such other officers as may from
time to time be elected by the board of directors or pursuant to its delegated
power. Officers shall be elected by the board of directors and shall hold
office until their successors are elected and qualified or until their earlier
death, resignation, retirement, removal or disqualification. None of the
officers of the corporation need be directors. The officers may be elected at
any regular or special meeting of the board of directors. Any number of offices
may be held by the same person; provided, however, that no officer may act in
more than one capacity where action of two or more officers is required. The
salaries of all officers of the corporation shall be fixed by the board of
directors. Any officer elected by the board of directors may be removed by the
board with or without cause; but such removal shall be without prejudice to the
contract rights, if any, of the person so removed.

SECTION 2. OTHER OFFICERS AND AGENTS. The board of directors may appoint
such other officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall exercise such power and perform such duties as
shall be determined from time to time by the board of directors.

SECTION 3. DELEGATED POWERS. The board of directors may delegate to the
president the power to grant titles of office in the corporation to employees
holding responsible positions in the corporation.

SECTION 4. PRESIDENT. The president shall have the general powers and
duties of supervision and management usually vested in the office of president
of a corporation, subject to the control of the board of directors. The
president shall, if present and in the absence of the chairman of the board,
preside at all meetings of the stockholders and, if a director and present, and
in the absence of the chairman of the board, preside at meetings of the board
<PAGE>
of directors. The president shall have general supervision, direction and
control of all of the other officers and agents of the corporation and of the
business of the corporation. The president shall have the power to sign and
execute in the name of the corporation deeds, mortgages, bonds, stock
certificates, contracts and other instruments of the corporation as authorized
by the board of directors.

SECTION 5. VICE-PRESIDENT. Each vice-president shall have such powers
and shall perform such duties as shall be assigned to him by the board of
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. The treasurer
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, taking proper vouchers for such
disbursements.

The treasurer 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. He shall keep full and accurate accounts of the finances of
the corporation in books especially provided for that purpose, 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. The treasurer shall, in general, perform all duties incident to his
office and such other duties as may be assigned to him from time to time by the
president or by the board of directors.

SECTION 7. SECRETARY. The secretary shall keep accurate records of the
acts and proceedings of all meetings of stockholders, directors and committees.
He shall give all notices required by law and by these by-laws. He shall have
general charge of the corporate books and records and of the corporate seal, and
he shall affix the corporate seal to any lawfully executed instrument requiring
it. He shall have general charge of the stock transfer books of the corporation
and shall keep, at the registered or 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. He shall sign such instruments as
may require his signature, and, in general, attest the signature or certify the
incumbency or signature of any other officer of the corporation and shall
perform all duties incident to the office of secretary and such other duties as
may be assigned him from time to time by the president or by the board of
directors.

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 board of directors.

SECTION 9. BONDS. The board of directors, by resolution, may require any
or all officers, agents and employees of the corporation to give bond to the
<PAGE>
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 of directors.

ARTICLE VI - CONTRACTS, LOANS AND DEPOSITS

SECTION 1. CONTRACTS. The board of directors may authorize any officer
or officers, or agent or agents, to enter into any contract or execute and
deliver any instrument on behalf of the corporation, and such authority may be
general or confined to specific instances.

SECTION 2. 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 3. CHECKS AND DRAFTS. All checks, drafts or other orders for the
payment of money issued in the name of the corporation shall be signed by such
officer or officers, or agent or agents, of the corporation and in such manner
as shall from time to time be determined by resolution of the board of
directors.

SECTION 4. DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
depository or depositories as the board of directors shall direct.

ARTICLE VII - STOCK

SECTION 1. CERTIFICATES OF STOCK. The shares of the corporation shall
be represented by a certificate, in such form or forms as the board of directors
shall direct, or shall be uncertificated and shall be issued to every stock-
holder for the fully paid shares owned by him. Certificates shall be signed by,
or in the name of the corporation by, the chairman of the board of directors, or
the president or any vice-president of the corporation, and the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation, and sealed with the seal of the corporation or a facsimile there-
of. The certificates shall be consecutively numbered or otherwise identified;
and 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 books of the
corporation.

Any of or all the signatures on a certificate may be facsimile, or may be
engraved or printed or omitted if the certificate is countersigned by a transfer
agent, or registered by a registrar, other than the corporation itself or an
employee of the corporation. 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.

SECTION 2. TRANSFER OF STOCK. Transfers of stock shall be made only upon
the transfer books of the corporation kept at an office of the corporation or
by transfer agents designated to transfer shares of the stock of the corpora-
tion. Except where a certificate is issued in accordance with Section 5 of this
Article VII of these by-laws, an outstanding certificate for the number of
<PAGE>
shares involved shall be surrendered for cancellation before a new certificate
is issued therefor.

SECTION 3. TRANSFER AGENT AND REGISTRAR. The Board of Directors may
appoint one or more transfer agents and one or more registrars of transfer and
may require all stock certificates to be signed or countersigned by the transfer
agent and registered by the registrar of transfers.

SECTION 4. RECORD DATE.

(a) For the purpose of determining 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 (60)
nor less than ten (10) days before the date of such meeting. If no record date
is fixed by the board of directors, such record date 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. Such determination of stockholders of record 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.

(b) For the purpose of determining the stockholders (iii)
classifying and entitled to receive payment of any dividend or other distri-
bution 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 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 (60) 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.

SECTION 5. LOST CERTIFICATES. The board of directors may authorize the
issuance of a new share certificate in place of a certificate claimed to have
been lost or destroyed, upon receipt of an affidavit of such fact from the
person claiming the loss or destruction. When authorizing such issuance of a
new certificate, the board may require the claimant to give the corporation a
bond in such 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 such a bond.

SECTION 6. HOLDER OF RECORD. The corporation may treat as absolute owner
of the shares the person in whose name the shares stand of record on its books
just as if that person had full competency, capacity, and authority to exercise
all rights of ownership irrespective of any knowledge or notice to the contrary
or any description indicating a representative, pledge or other fiduciary
relation or any reference to any other instrument or to the rights of any other
person appearing upon its record or upon the share certificate; except that any
<PAGE>
person furnishing to the corporation proof of his appointment as a fiduciary
shall be treated as if he were a holder of record of the corporation's shares.

SECTION 7. REGULATIONS. The issue, transfer, conversion and registration
of certificates of stock shall be governed by such other regulations as the
board of directors may establish.

SECTION 8. 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. Dividends may be paid
in cash, in property, or in shares of capital stock.

SECTION 9. TREASURY SHARES. Treasury shares of the corporation shall
consist of such shares as have been issued and thereafter acquired but not
cancelled by the corporation. Treasury shares shall not carry voting or divi-
dend rights, except rights in share dividends.
<PAGE>
<PAGE>
ARTICLE VIII - GENERAL PROVISIONS

SECTION 1. SEAL. The corporate seal shall have the name of the
corporation inscribed thereon and shall be in such form of as may be approved
from time to time by the Board of Directors. Such seal may be an impression or
stamp and may be used by the officers of the corporation by causing it, or a
facsimile thereof, to be impressed or affixed or in any other manner reproduc-
ed. In addition to any form of seal adopted by the board of directors, the
officers of the corporation may use as the corporate seal a seal in the form of
a circle containing the name of the Corporation and the state of its incorpora-
tion (or an abbreviation thereof) on the circumference and the word "Seal" in
the center.

SECTION 2. FISCAL YEAR. The fiscal year of the corporation shall be
determined by resolution of the board of directors.

SECTION 3. FORM OF RECORDS. Any records maintained by the corporation
in the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device; provided that the records so kept can be converted into clearly legible
form within a reasonable time. The corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same. The directors
shall determine from time to time whether, and if allowed, when and under what
conditions and regulations the accounts and books of the corporation (except
such as may by statute be specifically open for inspection) or any of them shall
be open to the inspection of the stockholders, and the stockholders' rights in
this respect are and shall be restricted and limited accordingly.

SECTION 4. NOTICE AND WAIVER OF NOTICE. Whenever notice is required to
be given to any stockholder, director, officer or agent, such requirement shall
not be construed to mean personal notice. Any notice so required may in every
instance be effectively given by depositing the same in the United States mail,
postage prepaid, or by sending the same by overnight delivery service,telegraph,
facsimile transmission, telex or personal delivery, 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,
delivery or transmission. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by
statute.

Whenever any notice 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 written waiver thereof signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed proper notice. Neither the business nor the purpose of
any meeting need be specified in such a waiver.

SECTION 5. INDEMNIFICATION. (a) The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
<PAGE>
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, 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 interest of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.

(b) 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
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 interest 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 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 adjudica-
tion 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.

(c) 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
action, suit or proceeding referred to in paragraphs (a) and (b) of this Section
5, or in defense of any claim, issue or matter therein, including the dismissal
of an action without prejudice, he shall, without limiting the provisions of
paragraph (a) above, be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.

(d) Any indemnification under paragraphs (a) and (b) of this
Section 5 (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 paragraphs (a) and (b)
of this Section 5. 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 proceedings, 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.
<PAGE>
(e) Expenses (including attorneys' fees) incurred by an officer
or director in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation pursuant to this Section 5 or as otherwise authorized by law.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.

(f) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Section 5 shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses 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.

(g) The corporation, at its expense, 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, 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 provisions of this Section 5 or
under the provisions of the General Corporation Law of the State of Delaware.

(h) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 5 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 person.

(i) All rights to indemnification and advancement of expenses under
this Section 5 shall be deemed to be provided by contract between the corpora-
tion and the director, officer, employee or agent who serves in such capacity at
any time while these by-laws and other relevant provisions of the General Corp-
oration Law of the State of Delaware and other applicable law, if any, are in
effect.

(j) Any repeal or modification of the foregoing paragraphs by the
stockholders of the corporation shall not adversely affect any right or
protection of a director, officer, employee or agent of the corporation existing
at the time of such repeal or modification.

(k) If the General Corporation Law of the State of Delaware is
amended to authorize corporate action permitting the Corporation to further
indemnify or advance expenses to directors, officers, employees or agents, then
such person, in addition to the circumstances in which he is now entitled to
indemnification and advancement of expenses, shall be entitled to be indemnified
and have expenses advanced to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as so amended.

(l) For purposes of this Section 5, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
<PAGE>
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees or
agents, so that any person who is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Section 5 with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.

(m) For purposes of this Section 5, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee bene-
fit plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent by the corporation
which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he reason-
ably believed to be in the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a manner "not opposed to
the best interests of the corporation," as referred to in this Section 5.

(n) If this Section 5 or any portion thereof shall be invalidated
on any ground by any court of competent jurisdiction, then the corporation shall
nevertheless indemnify each person as provided above as to expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative, including a grand jury proceeding and an action by the
corporation, to the fullest extent permitted by any applicable portion of this
Section 5 that shall not have been invalidated or by any other applicable law.

ARTICLE IX - AMENDMENTS

SECTION 1. AMENDMENTS. Except as otherwise provided herein, these by-
laws may be altered, amended or rescinded and new by-laws may be adopted by the
affirmative vote of stockholders entitled to exercise a majority of voting power
of the corporation, or, if the certificate of incorporation of the corporation
so permits, by the affirmative vote of a majority of the directors then holding
office at any regular or special meeting of the board of directors, provided
that notice of such proposed alteration, amendment or rescission was given to
each director or to a location designated by each director for such notice at
least 48 hours prior to said meeting, or by unanimous written consent of the
directors.

Notwithstanding anything herein to the contrary, the board of directors
shall have no power to adopt a by-law: (i) changing the statutory requirement
for a quorum of directors or action by directors or changing the statutory
requirement for a quorum of stockholders or action by stockholders; (ii)
providing for the management of the corporation otherwise than by the board of
directors or the committees thereof; (iii) increasing or decreasing the number
of directors above or below the range provided in Section 1, Article III hereof,
or (iv) classifying and staggering, or declassifying and unstaggering, the
election of directors.
<PAGE>
The foregoing by-laws were adopted by the corporation pursuant to Section
303 of the General Corporation Law of the State of Delaware effective as of
_____________, 19__.

___________________________________
Secretary

<PAGE>
UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION

-----------------------------------X
:
In re: :
: Case No. 93-01365-5-ATS
ROSE'S STORES, INC., :
: Chapter 11
Debtor. :
:
-----------------------------------X

ORDER CONFIRMING DEBTOR'S FIRST AMENDED
JOINT PLAN OF REORGANIZATION UNDER
CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE
Rose's Stores, Inc., debtor and debtor-in-possession (the
"Debtor"), having proposed and filed its First Amended Joint Plan
of Reorganization dated October 4, 1994 (the "Plan") and First
Amended Disclosure Statement Relating to the Plan dated October 4,
1994 (the "Disclosure Statement") with the Bankruptcy Court (the
"Court") pursuant to Section 1121 of Chapter 11 of Title 11, United
States Code, 11 U.S.C. Sections 101 et seq. (the "Bankruptcy
Code")<F1>; and the Disclosure Statement having been approved as
containing "adequate information", as such term is defined in
Section 1125 of the Bankruptcy Code, by Order of this Court dated
October 5, 1994 (the "Disclosure Statement Approval Order"); and
the Disclosure Statement Approval Order having, inter alia: (i)
authorized the Debtor to solicit acceptances or rejections of the
Plan; (ii) approved the forms of ballot to be transmitted with the
Plan and Disclosure Statement for voting purposes; (iii) authorized
[FN]
<F1> Capitalized terms not otherwise defined in the Order
shall have the same meaning ascribed to them in the Plan,
first, or the Disclosure Statement, second.
[/FN]
<PAGE>
the Debtor to retain Federated Claims Services Group ("Federated")
as ballot agent; (iv) scheduled the hearing on confirmation of the
Plan for December 13, 1994 at 10:30 a.m. or as soon thereafter as
counsel can be heard (the "Confirmation Hearing"); (v) directed
that objections to confirmation of the Plan be filed with the Court
and served on certain specified parties no later than 5:00 p.m.
Eastern Standard Time on December 5, 1994; and (vi) directed that
all ballots be received on or before 5:00 p.m. Eastern Standard
Time on December 5, 1994 to be eligible to be counted in
determining whether the Plan is accepted or rejected; and the
Debtor having transmitted: (i) copies of the Disclosure Statement
(including the Plan); (ii) a ballot (where applicable); (iii) a
copy of the Disclosure Statement Approval Order; (iv) letters from
the Debtor's management and the Committees and (v) a notice of (w)
this Court's approval of the Disclosure Statement, (x) the time
within which acceptances or rejections of the Plan must be received
by Federated, (y) the Confirmation Hearing and (z) the time within
which to object to confirmation of the Plan upon (i) every entity
that was listed in the Debtor's schedules as a creditor, or as a
party to a pre-petition executory contract or unexpired lease with
the Debtor, (ii) every entity that, as of October 5, 1994, had
filed a proof of claim or interest with the Court against the
Debtor (which proof of claim or interest had not been disallowed
as of October 5, 1994 by Order of this Court), (iii) every holder
of record of securities of the Debtor determined as of the close
of business on October 5, 1994, (iv) the Bankruptcy Administrator,
<PAGE>
(v) the Securities and Exchange Commission, (vi) the District
Director, Internal Revenue Service, and (vii) the United States
Attorney for the Eastern District of North Carolina; and it
appearing that notice has been given in accordance with the
Disclosure Statement Approval Order except to the limited extent
set forth in the Declaration Of Linda B. Nestor Concerning Service
Of Solicitation Materials (the "Nestor Declaration") with respect
to Notice provided to 162 retirees and certain banks and brokers
with respect to holders in Class 5; and affidavits of service
having been filed with the Clerk of this Court with respect
thereto; and a statement in support of confirmation of the Plan
having been filed by the Bankruptcy Administrator; and objections
to confirmation of the Plan having been filed (i) collectively by
North Hills Properties, Inc., Cummings & Park Development Company
and CumPark Plaza, L.L.C., (ii) by Seaford Properties, Inc., (iii)
collectively by a group of lessors of non-residential real property
under leases with the Debtor, (iv) by Boney Wilson & Sons, Inc. and
(v) Lee A. Gifford, t/a Haygood Shopping Center; and all objections
to confirmation of the Plan having been resolved or overruled by
this Court; and a Certification of Ballots Accepting or Rejecting
the Plan prepared by Federated, as the Debtor's ballot agent,
having been filed with this Court; and the acceptances and
rejections of the Plan of those holders of Allowed Claims that
voted having been duly received and tabulated; and upon the entire
record of the Debtor's Chapter 11 case and the testimony of Mr. R.
Edward Anderson, the Debtor's Chairman, President and Chief
<PAGE>
Executive Officer, at the Confirmation Hearing held before this
Court on December 13, 1994; and after due deliberation; and
sufficient cause appearing therefor; and
IT HAVING BEEN FOUND AND DETERMINED by this Court, that:
A. Jurisdiction. This Court has jurisdiction over this
reorganization case pursuant to 28 U.S.C. Section 1334.
Confirmation of the Plan and the granting of all relief herein
related thereto is a "core proceeding" pursuant to 28 U.S.C.
Section 157(b)(2), and this Court has jurisdiction to enter this
Final Order with respect thereto.
B. Notice and Solicitation.
1. On or about October 26, 1994, the Debtor mailed
to all parties-in-interest except those specified in the Nestor
Declaration a notice advising them of the time and place of the
Confirmation Hearing and the procedure for objecting to the Plan.
The persons specified in the Nestor Declaration were mailed such
Notice as specified therein, so as to provide such persons with no
less than 30 days notice of the Confirmation Hearing.
2. All outstanding objections to confirmation of
the Plan are hereby overruled.
3. Any party-in-interest required to receive
notice of the Confirmation Hearing has received due, proper and
<PAGE>
adequate notice thereof. All parties-in-interest had the
opportunity to appear and be heard at the Confirmation Hearing.
C. Reasonable Classification of Claims (Section
1122(a)). The classification of Claims and Interests in Articles
IV and V of the Plan places Claims or Interests in a particular
Class where such Claim or Interest is substantially similar to the
other Claims or Interests of such Class, and therefore the Plan
satisfies the requirements of Section 1122(a) of the Bankruptcy
Code.
D. Designation of Classes (Section 1123(a)(1)).
Article II of the Plan designates all Classes of Claims and
Interests in accordance with the requirements of Section 1123(a)(1)
of the Bankruptcy Code.
E. Specific Unimpaired Classes (Section 1123(a)(2)).
Article IV of the Plan specifies those Classes of Claims which are
not impaired under the Plan in accordance with the requirements of
Section 1123(a)(2).
F. Specification of Treatment of Impaired Classes
(Section 1123(a)(3)). Article V of the Plan specifies the Classes
of Claims and Interests which are impaired and the treatment of
each such Class, and therefore the Plan satisfies the requirements
of Section 1123(a)(3).
G. No Discrimination (Section 1123(a)(4)). The Plan
provides the same treatment for each Claim or Interest in a
<PAGE>
particular Class, and therefore the Plan satisfies the requirements
of Section 1123(a)(4) of the Bankruptcy Code.
H. Implementation of the Plan (Section 1123(a)(5)).
Articles VI and VII of the Plan provide adequate means for
implementing the Plan, and therefore the Plan satisfies the
requirements of Section 1123(a)(5) of the Bankruptcy Code.
I. Equity Securities (Section 1123(a)(6)). The Plan
provides for the inclusion of a provision prohibiting the issuance
of non-voting equity securities in the charter of Reorganized
Rose's, and therefore the Plan satisfies the requirements of
Section 1123(a)(6) of the Bankruptcy Code.
J. Selection of Officers and Directors (Section
1123(a)(7)). The Plan provides for the management and governance
through a Reconstituted Board of Directors of Reorganized Rose's
in a manner that is consistent with the interests of creditors and
equity security holders and with public policy, and therefore the
Plan satisfies the requirements of Section 1123(a)(7) of the
Bankruptcy Code.
K. The Plan Complies with the Bankruptcy Code (Section
1129(a)(1)). The Plan complies with all applicable provisions of
the Bankruptcy Code and, as required pursuant to Rule 3016(b) of
the Federal Rules of Bankruptcy Procedure, is dated and identifies
the proponents of the Plan, and therefore the Plan satisfies the
requirements of Section 1129(a)(1) of the Bankruptcy Code.
<PAGE>
L. The Plan Proponents have Complied with the
Provisions of the Bankruptcy Code (Section 1129(a)(2)). The Plan
Proponents have complied with the applicable provisions of the
Bankruptcy Code, and therefore have satisfied the requirements of
Section 1129(a)(2) of the Bankruptcy Code.
M. Plan Proposed in Good Faith (Section 1129(a)(3)).
The Plan has been proposed in good faith and not by any means
forbidden by law, and therefore the Plan satisfies the requirements
of Section 1129(a)(3) of the Bankruptcy Code.
N. Payment of Costs and Expenses (Section 1129(a)(4)).
Any payment made or to be made by the Plan Proponents or any person
issuing securities or acquiring property under the Plan, for
services or for costs and expenses in, or in connection with, this
Chapter 11 case, or in connection with the Plan and incident to the
Chapter 11 case, has been approved by, or is subject to the
approval of the Court as reasonable, and therefore the Plan
satisfies the requirements of Section 1129(a)(4) of the Bankruptcy
Code.
O. Disclosure of Identities of Insiders (Section
1129(a)(5)). The Plan Proponents have or will disclose the
identity, affiliation and compensation of all individuals,
including insiders, proposed to serve, after confirmation of the
Plan, as a director, officer or voting trustee of the Debtor,
pursuant to the statement respecting officers and directors and the
terms of their employment, that will be filed by the Debtor or
<PAGE>
Reorganized Rose's on or before March 31, 1995, and the appointment
to, or continuance in, such office of each such individual is
consistent with the interests of creditors and equity security
holders and with public policy, and therefore the Plan satisfies
the requirements of Section 1129(a)(5) of the Bankruptcy Code.
P. No Rate Change (Section 1129(a)(6)). Section
1129(a)(6) is inapplicable to the Plan since there are no rate
changes provided for in the Plan for which a governmental
regulatory commission will have jurisdiction over the Debtor after
confirmation.
Q. Best Interests of Creditors (Section 1129(a)(7)).
With respect to each impaired Class of Claims and Interests, (i)
each holder of a Claim or Interest of such Class has accepted the
Plan, or will receive or retain under the Plan, on account of such
Claim or Interest, property of a value, as of the Effective Date
of the Plan, that is not less than the amount that such holder
would so receive or retain if the Debtor was liquidated under
Chapter 7 of the Bankruptcy Code on such date, and (ii) there are
no holders of Allowed Secured Claims who are entitled to make
elections under Section 1111(b)(2) of the Bankruptcy Code, and
therefore the Plan satisfies the requirements of Section 1129(a)(7)
of the Bankruptcy Code.
R. Plan Acceptance (Section 1129(a)(8)). Ballots
accepting the Plan have been timely received from the holders of
Claims in Classes 2B (pursuant to the Plan Support Consent Order),
<PAGE>
3 and 5. Holders of Allowed Claims in Classes 1 and 2A are
unimpaired within the meaning of Section 1124 of the Bankruptcy
Code, and are conclusively presumed to have accepted the Plan under
Section 1126(f) of the Bankruptcy Code such that solicitation of
acceptances or rejections with respect to such Classes is not
required pursuant to Section 1129(a)(8) of the Bankruptcy Code.
The sole holder of a Claim in Class 4 has indicated its support for
the Plan. Accordingly, the Plan satisfies the requirements of
Section 1129(a)(8) of the Bankruptcy Code except with respect to
Classes 6, 7 and 8 Interests. The Plan provides for no
distributions to Classes 6, 7 and 8 and therefore, Classes 6, 7 and
8 are deemed to have rejected the Plan.
S. Plan Treatment of Administrative and Tax Claims
(Section 1129(a)(9)). The Plan satisfies the requirements of
Section 1129(a)(9) of the Bankruptcy Code since, except to the
extent that the holder of a particular Claim has agreed to a
different treatment of such Claim, the Plan provides that:
(1) With respect to a Claim of a kind specified in
Sections 507(a)(1) or (2) of the Bankruptcy Code, upon the later
of the Effective Date or upon entry of a Final Order of this Court,
the holder of such Claim will receive on account of such Claim Cash
equal to the allowed amount of such Claim;
(2) Section 1129(a)(9)(B) of the Bankruptcy Code
is inapplicable since there are no Claims of the kind specified in
Sections 507(a)(3), (4), (5) or (6) of the Bankruptcy Code; and
<PAGE>
(3) With respect to a Claim of a kind specified in
Section 507(a)(7) of the Bankruptcy Code, the holder of such Claim
will receive, upon the later of the Effective Date or upon entry
of a Final Order of this Court, on account of such Claim, Cash
equal to the allowed amount of such Claim or deferred Cash
payments, over a period not exceeding six years after the date of
assessment of such Claim, of a value, as of the Effective Date of
the Plan, equal to the allowed amount of such Claim.
T. At Least One Impaired Class Accepted the Plan
(Section 1129(a)(10)). At least one Class of Claims that is
impaired under the Plan has accepted the Plan, determined without
including any acceptance of the Plan by any insider holding a Claim
in such Class, and therefore the Plan satisfies the requirements
of Section 1129(a)(10) of the Bankruptcy Code.
U. Feasibility (Section 1129(a)(11)). Liquidation of
the Debtor is provided for under the Alternative Treatment
Provisions of the Plan in the event said provisions are effective,
and, after the Effective Date, under certain terms and provisions
of the New Rose's Secured Notes in the event certain circumstances
occur. Confirmation and the consummation of the Plan by the
occurrence of the Effective Date is not likely to be followed by
the need for further financial reorganization of the Debtor or
Reorganized Rose's, as applicable. Therefore, the Plan satisfies
the requirements of Section 1129(a)(11) of the Bankruptcy Code.
<PAGE>
V. Fees (Section 1129(a)(12)). The Debtor has or will
pay on or prior to the Effective Date all amounts due under 28
U.S.C. Section 1930, and therefore the Plan satisfies the
requirements of Section 1129(a)(12) of the Bankruptcy Code.
W. Retiree Benefits (Section 1129(a)(13)). The Plan
provides for the continuation after its Effective Date of payment
of all retiree benefits (as such term is defined in the Bankruptcy
Code), at the level established or modified pursuant to subsection
(e)(1)(B) or (g) of Section 1114 of the Bankruptcy Code, at any
time prior to the Effective Date of the Plan, for the duration of
the period the Debtor has obligated itself or Reorganized Rose's,
as the case may be, to provide such benefits, and therefore the
Plan satisfies the requirements of Section 1129(a)(13) of the
Bankruptcy Code.
X. Cramdown (Section 1129(b)). The Plan does not
discriminate unfairly, and is fair and equitable, with respect to
Classes 6, 7 and 8, since no holder of an Interest junior to the
Interests of such Classes will receive or retain under the Plan any
payment on account of such junior Interest, and therefore the Plan
satisfies the requirements of Section 1129(b) of the Bankruptcy
Code.
Y. No Other Plan (Section 1129(c)). No other plan has
been filed with respect to the Debtor's Chapter 11 Case.
<PAGE>
Z. Avoidance of Taxes (Section 1129(d)). No party-
in-interest that is a governmental unit has requested that the Plan
not be confirmed on the grounds that the principal purpose of the
Plan is the avoidance of taxes or the avoidance of the application
of Section 5 of the Securities Act of 1933, and therefore the Plan
satisfies the requirements of Section 1129(d) of the Bankruptcy
Code.
AA. Releases and Injunctions.
1. The release and injunction provisions set forth
in Article IX of the Plan:
a. are within the jurisdiction of this Court
under 28 U.S.C. SectionSection 1334(a), (b) and (d);
b. are each an essential means of
implementing the Plan pursuant to Section 1123(a)(5) of the
Bankruptcy Code;
c. are integral elements of the settlements
and compromises incorporated in the Plan;
d. confer material benefits on, and thus are
in the best interests of, the Debtor's estate; and
e. are consistent with and permitted pursuant
to Sections 105, 524, 1129 and all other applicable provisions of
the Bankruptcy Code.
2. All parties released under the Plan contributed
value to the Debtor's estate.
<PAGE>
AB. Notice of the Confirmation Hearing. Proper, timely,
adequate and sufficient notice of the Confirmation Hearing has been
provided in accordance with the Disclosure Statement Approval
Order.
AC. Solicitation and Tabulation of Acceptances. The
solicitation and tabulation of acceptances was accomplished in a
proper and fair manner and the Plan has been duly accepted by the
holders of Claims and Interests whose acceptance is required in
accordance with the provisions of Section 1126 of the Bankruptcy
Code.
AD. Debtor's Duties. The Debtor has completed all of
its obligations and duties with respect to its estate pursuant to
Section 1107 of the Bankruptcy Code.
THEREFORE, NOW, upon the motion of the Debtor and after
due deliberation, the Court hereby ORDERS, ADJUDGES AND DECREES
THAT:
1. Confirmation. The Plan shall be, and hereby is
confirmed, having met the requirements of Section 1129 of the
Bankruptcy Code.
2. Record Date. Pursuant to Rule 3021 of the Federal
Rules of Bankruptcy Procedure, the record date for the purpose of
determining those holders of Common Stock Interests entitled to
distributions under the Plan shall be February 7, 1995, and the
record date for the purpose of determining holders of Claims in
<PAGE>
Classes 1, 2A, 2B and 3 entitled to distributions under the Plan
shall be the Effective Date.
3. New Agreements. All agreements and other documents
that are contemplated to be executed and implemented in connection
with the Plan, including, among other things, the Class 5 Rights
Notice, the New Rose's Common Stock Trust Agreement, the New Rose's
Secured Notes Documents, the New Rose's Charter and By-Laws, the
New Rose's Warrant Agreement and documents relating to the Post-
Effective Date Financing Facility are in the best interests of the
Debtor's estate, and the Debtor, Reorganized Rose's, the Collateral
Agent, the Post-Effective Date Lender and every holder of a Claim
or Interest, their successors, transferees and assigns, as
applicable, are hereby authorized and directed to take any and all
actions that may be reasonable or necessary to consummate the
agreements and any related agreements, subject to any requirements
in the Plan that any such agreements and documents be filed with
and/or approved by this Court prior to or on the Effective Date.
4. Approval of Agreements. Except for the New Rose's
Charter and By-Laws, the Class 5 Rights Notice and the New Rose's
Warrant Agreement, each of which have been filed simultaneously
herewith in accordance with the Plan, notwithstanding any provision
of the Plan to the contrary, all other agreements requiring this
Court's approval under the Plan shall be filed on or before March
1, 1995. The New Rose's Charter and By-Laws, the Class 5 Rights
Notice and the New Rose's Warrant Agreement are each hereby
<PAGE>
approved substantially in their respective forms as filed
simultaneously herewith. The Debtor shall perform, and is hereby
authorized, empowered and directed to perform its obligations
pursuant to all such agreements as part of the Plan.
5. Effective Date. The Effective Date of the Plan
shall be, and hereby is, fixed at the first Business Day, or as
soon as practicable thereafter, upon which all conditions set forth
in Section 8.2 of the Plan have been either satisfied or waived.
In the event any of the Alternative Treatment Provisions are
effective, the Effective Date shall not occur unless and until the
GE Obligations and the Pre-Petition Lenders' Allowed Secured Claims
have been satisfied in full in accordance with the Second
Supplemental Adequate Protection Consent Order.<F2>
[FN]
<F2> All references to the Second Supplemental Adequate
Protection Consent Order refer to such Order as modified
by Orders of the Court dated August 30 and November 30,
1994 respectively.
[/FN]
6. Effect of Withdrawal or Revocation. In the event
that the Effective Date does not or cannot occur as agreed in
writing by all Plan Proponents, then the Plan shall be deemed null
and void, and in such event, nothing contained in the Plan shall
be deemed to constitute a waiver or release of any Claims or
Interests by or against any Plan Proponent or any other Person or
to prejudice in any manner the rights of any Plan Proponent or any
Person in any further proceedings involving the Debtor; provided,
however, that nothing in the Plan shall prejudice or affect the
<PAGE>
rights of any Person under the Second Supplemental Adequate
Protection Consent Order or the Plan Support Consent Order.
7. Treatment of GE Capital. On or prior to the
Effective Date, all of the GE Obligations shall be fully and
finally satisfied pursuant to the Plan, the Second Supplemental
Adequate Protection Consent Order and the DIP Facility. Until all
GE Obligations are fully satisfied, all liens, claims, interests,
rights, remedies and protections granted to GE Capital pursuant to
the DIP Facility shall remain in full force and effect with
priority over all liens, claims and interests except as, and only
to the extent, otherwise specifically set forth in the DIP
Facility. Notwithstanding anything to the contrary set forth
herein or in the Plan, on and after the Effective Date, and unless
the Alternative Treatment Provisions of the Plan are effective,
Reorganized Rose's shall be deemed to have assumed, without any
action or the execution of any document, any and all GE Obligations
which remain outstanding and unsatisfied as of the Effective Date,
including, without limitation, any indemnification obligations of
the Debtor under or pursuant to the DIP Facility or the Second
Supplemental Adequate Protection Consent Order; provided however,
that such assumption shall not for any purpose constitute or be
deemed to constitute a satisfaction or novation of the GE
Obligations. Notwithstanding anything to the contrary contained
herein or implied hereby, nothing contained in this Order shall
alter, limit or otherwise modify or amend the rights, remedies or
treatment of GE Capital or the GE Capital Obligations under the DIP
<PAGE>
Facility, the Second Supplemental Adequate Protection Consent Order
or the Plan in a manner which would impair or diminish any right
or benefit of GE Capital thereunder.
8. Post-Effective Date Financing Facility.
Notwithstanding anything to the contrary contained herein or
implied hereby, nothing contained in this Order shall alter, limit
or otherwise modify or amend the provisions, terms or conditions
of the Plan with respect to the Post-Effective Date Financing
Lender or the Post-Effective Date Financing Facility.
9. Cancellation of Common Stock, Pre-Petition Warrants
and Stock Options and Pre-Petition Secured Notes. As of the
Effective Date, all Common Stock Interests, Pre-Petition Warrants,
Pre-Petition Stock Options and all promissory notes under all
agreements with the Pre-Petition Lenders, including, without
limitation, Pre-Petition Secured Notes, shall be, without any
further action by the Debtor, Reorganized Rose's or any holder
thereof, canceled, annulled and extinguished. Notwithstanding the
foregoing, the right to receive distributions pursuant to Section
6.2 of the Plan, if any, shall survive such cancellation, annulment
and extinguishment.
10. Distributions. In accordance with Article VI of the
Plan, either the Debtor or Reorganized Rose's, as applicable, or
its designee, as Distribution Agent, shall, and hereby is,
authorized and directed to, on the applicable Distribution Date or
such other date as is specified in the Plan or the Supplemental
<PAGE>
Adequate Protection Orders (i) make the required Cash payments,
and, unless the Alternative Treatment Provisions are effective,
(ii) deliver to the Collateral Agent the New Rose's Secured Notes,
(iii) make the required distributions of the New Rose's Common
Stock and Subscription Proceeds to the holders of Allowed Claims
in Class 3 (and into the Reserves established on account of
Disputed Claims in Class 3), (iv) make the required distributions
of the New Rose's Common Stock, New Rose's Warrants and the New
Rose's Common Stock Secondary Distribution to the holders of
Allowed Common Stock Interests in Class 5, and (v) make the
required distributions of New Rose's Common Stock in accordance
with the Management Incentive and Retention Program, if and to the
extent approved by the Court, or by operation or exercise of the
New Rose's Warrants. Distributions of Cash, Subscription Proceeds,
New Rose's Secured Notes, New Rose's Common Stock and New Rose's
Warrants pursuant to the Plan shall be effectuated when the Debtor
or Reorganized Rose's, as applicable, or any designee thereof
receives all applicable documentation requested of holders of
Allowed Claims and Common Stock Interests pursuant to the Plan.
11. Exemption from Securities Laws. The exemption from
securities laws set forth in Section 1145 of the Bankruptcy Code
is applicable to the issuance of all securities to be distributed
under the Plan, including, without limitation, the New Rose's
Secured Notes, the New Rose's Common Stock, the New Rose's
Warrants, the rights to participate in the Class 5 Subscription
issued under the Plan, and the New Rose's Common Stock issued upon
<PAGE>
the exercise of the New Rose's Warrants or upon exercise of the
rights to participate in the Class 5 Subscription.
12. Merger of RSI. The Debtor is hereby authorized and
directed to cause RSI to be merged with and into the Debtor on or
prior to January 22, 1995, without any further action of the Boards
of Director or Shareholders of either the Debtor or RSI,
respectively. To effect such merger, the Debtor and RSI are
directed to promptly execute all instruments or documents necessary
or desirable in connection with such merger, and the Debtor is
hereby directed to cause to be filed with the Office of the
Secretary of State of the State of Delaware no later than December
31, 1994 a Certificate of Ownership and Merger of RSI Trading, Inc.
into Rose's Stores, Inc., with such Certificate to be effective as
of January 20, 1995. The reversal, modification, vacatur or
revocation of the Confirmation Order shall not affect the validity
of the merger, unless such merger is the subject of a stay pending
appeal at the time of the merger otherwise is to be effectuated.

13. Perfection of Post-Effective Date Collateral.
Reorganized Rose's shall take such action, at its own expense, as
is reasonably necessary and appropriate and requested by the
Collateral Agent regarding the filing of the Perfection Instruments
in any jurisdiction or take any other action in order to validate
or perfect the liens and security interests granted to the Pre-
Petition Lenders pursuant to the Plan, in the event that the Pre-
<PAGE>
Petition Lenders or any of their agents, may, at their sole
discretion, choose to file such Perfection Instruments or otherwise
confirm perfection of such liens and security interests, and all
such Perfection Instruments shall be deemed to have been filed or
recorded at the time and on the date of such filing or recording
unless permitted under applicable law to relate back to the
Effective Date. In lieu of filing the Perfection Instruments, the
Pre-Petition Lenders or any of their agents, may, at their sole
discretion, file certified copies of the Plan, this Confirmation
Order and the Consummation Certificate in any place at which such
Perfection Instruments would or could otherwise be filed, together
with a description of Post-Effective Date Collateral located within
the geographic area covered by such place of filing as the Pre-
Petition Lenders may determine, and such filing shall have the
effect as if all such Perfection Instruments had been filed or
recorded at the time and on the date of such filing or recording
unless permitted under applicable law to relate back to the
Effective Date.
14. Executory Contracts and Unexpired Leases. Unless
specifically assumed by Order of the Bankruptcy Court, the subject
of a motion to assume pending as of the Effective Date, or the
subject of a motion for an order seeking additional time to assume
or reject pending as of the Effective Date, on the Effective Date,
all executory contracts and unexpired leases of the Debtor shall
be deemed rejected by the Debtor or Reorganized Rose's as of the
Effective Date or as otherwise provided for by Order of the
<PAGE>
Bankruptcy Court. Notwithstanding anything to the contrary
contained herein or implied hereby, no deadline for the filing of
claims set forth in Section 10.1 of the Plan shall affect in any
manner any deadline established by any prior or subsequent order
of this Court respecting the filing of claims resulting from the
rejection of contracts or leases as authorized by an order of this
Court. The Employee Stock Option Plan and the Pre-Petition Secured
Noteholder Warrant Agreement are hereby rejected as of the
Effective Date, and Claims arising prior to the Filing Date from
these and other executory contracts and leases shall be treated in
accordance with the terms of the Plan.
15. Consummation of the Amended Plan. In accordance
with Section 1142 of the Bankruptcy Code, the implementation and
consummation of the Plan in accordance with its terms shall be, and
hereby is, authorized and approved, and the Debtor, Reorganized
Rose's (and their officers and directors) or any other Person shall
be, and they hereby are, in their own discretion or upon the
reasonable request of the Plan Proponents or GE Capital (as the
case may be), authorized, empowered and directed to issue, execute,
deliver, file and record any document, whether or not any such
document is specifically referred to in the Plan or any exhibit
thereto, and to take any action necessary or appropriate to
implement, effectuate and consummate the Plan in accordance with
its terms, except to the extent that further Court authorization
is required pursuant to this Order or the Plan.
<PAGE>
16. Post-Effective Date Effectuation of the Plan's
Terms. From and after the Effective Date, the Chairman of the
Board, President, any Executive Vice President, Senior Vice
President or Vice President of Reorganized Rose's or the Debtor,
as applicable, shall be authorized to execute, deliver, file or
record such contracts, instruments, releases, indentures and other
agreements or documents and take such actions as may be necessary
or appropriate to effectuate and further evidence the terms and
conditions of the Plan.
17. Discharge.
(a) Except as otherwise expressly provided in
Section 1141 of the Bankruptcy Code, the Plan or this Order, and
except in the event the Alternative Treatment Provisions are
effective pursuant to Section 8.1 of the Plan, the distributions
made pursuant to and in accordance with the Plan will be in full
and final satisfaction, settlement, release and discharge as
against the Debtor, of any debt that arose before the Effective
Date and any debt of a kind specified in Section 502(g), 502(h) or
502(i) of the Bankruptcy Code and all Claims and Interests of any
nature, including, without limitation, any interest accrued thereon
from and after the Filing Date, whether or not (i) a proof of Claim
or Interest based on such debt, obligation or interest is filed or
deemed filed under Section 501 of the Bankruptcy Code, (ii) such
Claim or Interest is allowed under Section 502 of the Bankruptcy
Code or (iii) the holder of such allowed Claim or Interest has
<PAGE>
accepted the Plan. Therefore, upon the Effective Date, except as
otherwise provided in the Plan or this Order, all Persons which are
or could have been holders of Claims against, or Interests in, the
Debtor shall be precluded from asserting against the Debtor or
Reorganized Rose's, or any of their assets or properties, any other
or further Claims or Interests based upon any act or omission,
transaction or other activity of any kind or nature that occurred
prior to the Effective Date, and this Order shall permanently
enjoin said holders of Claims and Interests, their successors and
assigns, from enforcing or seeking to enforce any such Claims or
Interests, subject to and upon the occurrence of the Effective
Date.
(b) In addition, upon the Effective Date, except
as otherwise provided in the Plan or by Order entered by this Court
and with respect to the Debtor's obligations under the Plan, the
commencement or continuation of any action, the employment of
process or any act to collect, recover or offset any debt
discharged under this Order and the Plan and pursuant to Section
1141(d)(1) of the Bankruptcy Code as a liability of the Debtor, or
from property of the Debtor, is forever stayed, restrained and
enjoined.
18. Releases.
(a) Releases of Released Parties. As of the
Effective Date, each of the Released Parties are hereby released
from any and all claims asserted or that could be asserted against
<PAGE>
such Released Party which arise out of such Released Party's
relationship with or work performed for the Debtor on or prior to
the Effective Date, other than claims which constitute (i) claims
preserved against such Released Party pursuant to the Plan, (ii)
claims that arise from obligations created under or in connection
with the Plan, (iii) rights pursuant to the Plan or any agreement
provided for or contemplated in the Plan, or (iv) claims which may
be asserted against such Released Party by an insurance carrier or
the issuer of a bond in connection with any insurance contract,
reinsurance contract, surety bond, fidelity bond, or other type of
insured or bonded obligation; provided, however, that the foregoing
release provisions (i) shall not apply to any such Released Party's
gross negligence or willful misconduct, and (ii) shall not apply
to (a) any Released Party who is the subject of any action or
proceeding pending as of the Effective Date to recover property or
money for the benefit of the Estate, or (b) any claims asserted by
or against any of the Debtor's present or former officers or
directors in any action or proceeding pending as of the Effective
Date; and provided, further, that (i) in the case of the Pre-
Petition Lenders, the scope of the foregoing release as and to the
extent given by the Pre-Petition Lenders shall extend only to
claims of the Pre-Petition Lenders arising on or prior to the
Effective Date against any of the Released Parties solely in the
Pre-Petition Lenders' capacity as the holders of the Pre-Petition
Secured Notes and not to the extent of any other claims arising out
of any other relationship which any of the Pre-Petition Lenders may
<PAGE>
have with the Debtor or any of the Released Parties, including,
without limitation, any insurance, fidelity bond or suretyship
relationship; and (ii) in the case of GE Capital, the scope of the
foregoing release in favor of any Released Party other than GE
Capital given by GE Capital shall extend only to certain claims (as
provided in the Plan) of GE Capital arising on or prior to the
Effective Date against any of the Released Parties solely in GE
Capital's capacity as the lender under the DIP Facility and shall
not extend to any other claims of GE Capital arising out of any
other relationship which GE Capital may have with the Debtor or any
of the Released Parties. Nothing in the Plan or this Order shall
be construed as a release by GE Capital or otherwise of any of the
GE Obligations.
(b) Releases by the Debtor and Reorganized Rose's.
Except as, and only to the extent, provided otherwise in the Plan,
as of the Effective Date, the Debtor, the Estate and Reorganized
Rose's shall be deemed to forever release, waive and discharge all
known and unknown claims of any nature that the Debtor, its Estate,
or Reorganized Rose's has, had or may have against any Released
Party for all acts and omissions through the Effective Date other
than (i) claims preserved against such Released Party pursuant to
the Plan, (ii) claims that arise from obligations created under or
in connection with the Plan, (iii) any claims asserted against any
of the Debtor's present or former officers or directors in any
action or proceeding pending as of the Effective Date or (iv)
claims which may be asserted against such Released Party through
<PAGE>
subrogation or otherwise by an insurance carrier or the issuer of
a bond in connection with any insurance contract, reinsurance
contract, surety bond, fidelity bond, or other type of bonded
obligation. Except in the event that the Alternative Treatment
Provisions are effective pursuant to Section 8.1 of the Plan, as
of the Effective Date, and notwithstanding anything to the contrary
contained in Sections 7.14 and 9.3 of the Plan, the Debtor and
Reorganized Rose's shall also be deemed to forever release, waive
and discharge all Avoiding Power Actions not commenced prior to the
Effective Date.
(c) Releases by Recipients of New Rose's Common
Stock, New Rose's Secured Notes, New Rose's Warrants and Cash, or
Available Cash (as applicable), and by All Other Persons. Except
as, and only to the extent, otherwise provided in the Plan, each
Person receiving Cash, New Rose's Secured Notes, New Rose's
Warrants, the right to participate in the Class 5 Subscription
and/or New Rose's Common Stock, Available Cash (as applicable), or
other distribution or payment pursuant to the Plan on account of
its Allowed Claim, Administrative Claim or Common Stock Interest,
as the case may be, shall be deemed, as of the Effective Date, to
forever release, waive and discharge all known and unknown claims
of any nature arising on or prior to the Effective Date against
each of the Released Parties to the extent that such claims arise
out of such Released Party's actions or failure to act in
connection with the Debtor, the Committees, the Chapter 11 Case,
or claims otherwise treated and discharged under the Plan, other
<PAGE>
than claims which constitute (i) claims preserved against such
Released Party pursuant to the Plan, (ii) claims that arise from
obligations created under or in connection with the Plan, (iii)
such Person's rights pursuant to the Plan or any agreement provided
for or contemplated in the Plan or (iv) claims which may be
asserted against such Released Party by an insurance carrier or the
issuer of a bond in connection with any insurance contract,
reinsurance contract, surety bond, fidelity bond, or other type of
insured or bonded obligation; provided, however, that the foregoing
release provisions (i) shall not apply to any such Released Party's
gross negligence or willful misconduct, and (ii) shall not apply
to (a) any Released Party who is the subject of any action or
proceeding pending as of the Effective Date to recover property or
money for the benefit of the Estate, or (b) any claims asserted by
or against any of the Debtor's present or former officers or
directors in any action or proceeding pending as of the Effective
Date; and provided, further, that (i) in the case of the Pre-
Petition Lenders, the scope of the foregoing release as and to the
extent given by the Pre-Petition Lenders shall extend only to
claims of the Pre-Petition Lenders arising on or prior to the
Effective Date against any of the Released Parties solely in the
Pre-Petition Lenders' capacity as the holders of the Pre-Petition
Secured Notes and not to the extent of any other claims arising out
of any other relationship which any of the Pre-Petition Lenders may
have with the Debtor or any of the Released Parties, including,
without limitation, any insurance, fidelity bond or suretyship
<PAGE>
relationship; and (ii) in the case of GE Capital, the scope of the
foregoing release in favor of any Released Party other than GE
Capital by GE Capital shall extend only to certain claims (as
provided in the Plan) of GE Capital arising on or prior to the
Effective Date against any of the Released Parties solely in GE
Capital's capacity as the lender under the DIP Facility and shall
not extend to any other claims of GE Capital arising out of any
other relationship which GE Capital may have with the Debtor or any
of the Released Parties. Nothing in the Plan or this Order shall
be construed as a release by GE Capital or otherwise of any of the
GE Obligations.
19. Injunctions.
(a) Injunction Related to Claims Released by the
Debtor and Reorganized Rose's (if applicable), Recipients of Cash,
New Rose's Common Stock, New Rose's Secured Notes and New Rose's
Warrants, or Available Cash (if applicable), and All Other Persons.
As of the Effective Date and subject to its occurrence, all Persons
that have held, currently hold or may have asserted a Claim or
other debt, or liability or an interest or other right of a holder
of an Interest, that is released or terminated pursuant to Sections
9.1 (if applicable), 9.2, 9.3, 9.4 or 9.6 of the Plan are, except
as provided in or with respect to the New Rose's Secured Notes, the
New Rose's Secured Notes Documents, the Supplemental Adequate
Protection Orders, the New Rose's Common Stock and the New Rose's
Warrants, permanently enjoined from taking any of the following
<PAGE>
actions on account of such released Claims, debts or liabilities
or Interests: (a) commencing or continuing, in any manner or in any
place, any action or other proceeding; (b) enforcing, attaching,
collecting or recovering in any manner any judgment, award, decree
or order; (c) creating, perfecting or enforcing any lien or
encumbrance except as is necessary to ensure continuous perfection
of any lien as provided in the Plan; (d) asserting a set-off, right
of subrogation or recoupment of any kind against any debt,
liability or obligation due to any such releasing Person; and
(e) commencing or continuing any action, in any manner or in any
place, that does not comply with or is inconsistent with the
provisions of the Plan.
(b) Injunction Relating to the Plan. As of the
Effective Date, except as otherwise provided in the Plan, all
Persons are permanently enjoined from commencing or continuing, in
any manner or in any place, any action or other proceeding, whether
directly, derivatively or otherwise against any or all of the
Released Parties, on account of or respecting any claims, debts,
rights, causes of action or liabilities released or discharged
pursuant to the Plan or this Order, except to the extent permitted
under the Plan.
(c) Consent By Holders of Claims and Interests to
Entry of Injunctive Relief. Without limitation to the scope,
extent, validity or enforceability of the injunctive relief set
forth in Section 9.7 of the Plan and in this Confirmation Order,
<PAGE>
by accepting distributions pursuant to the Plan, each holder of an
Allowed Claim or Interest receiving distributions pursuant to the
Plan shall be deemed to have specifically consented to the releases
and injunctions set forth in Article IX of the Plan.
(d) Injunction Against Subsequent Bankruptcy
Proceedings. From and after the Effective Date, pursuant to
Sections 105 and 1141 of the Bankruptcy Code, until such time as
obligations owing pursuant to the New Rose's Secured Notes
Documents shall be satisfied in full, all creditors (including
creditors holding claims entitled to administrative priority), all
equity security holders, the Debtor, Reorganized Rose's, and any
officer, director, professional or agent of the Debtor or
Reorganized Rose's, together with their respective successors and
assigns, are hereby enjoined from (a) causing the Debtor or
Reorganized Rose's to be subject to or to seek or obtain relief
under any chapter of the Bankruptcy Code or (b) in connection with
an Event of Default or event of default under the New Rose's
Secured Notes Documents or the Post-Effective Date Financing
Facility, taking any action (including seeking the appointment of
a trustee or an examiner or seeking conversion of this case to any
other case under the Bankruptcy Code) inconsistent with or that
would delay, hinder or interfere with the rights and remedies of
the Pre-Petition Lenders or the Post-Effective Date Lender or both,
as the case may be, as set forth in Section 5.1.4 and other
provisions of the Plan. The foregoing shall not be construed as
limiting the ability of any party-in-interest from seeking to
<PAGE>
enforce any provision of the Plan or any Order of the Bankruptcy
Court related thereto or the DIP Facility, the Plan Support Consent
Order, the Second Supplemental Adequate Protection Consent Order,
the New Rose's Secured Notes, the New Rose's Secured Notes
Documents, or the Post-Effective Date Financing Facility, in the
Bankruptcy Court or other appropriate forum.
20. Jurisdiction from Confirmation through the Effective
Date. Upon Confirmation and through the Effective Date, the
Bankruptcy Court shall retain full jurisdiction over the Chapter
11 Case notwithstanding that Confirmation has occurred, pursuant
to Section 11.1 of the Plan.
21. Jurisdiction from and after the Effective Date.
From and after the Effective Date, and until such time as all
payments and distributions required to be made under the Plan have
been made, all events required under the Plan to have occurred have
occurred, and all other obligations required to be performed under
the Plan have been made and performed by the Debtor or Reorganized
Rose's, the Bankruptcy Court shall retain such jurisdiction as is
legally permissible, including, but not limited to, the following:
(a) To hear and determine any and all objections
to the allowance of a Claim or Interest or any controversy as to
the classification of Claims or Interests or Reserves;
(b) To hear and determine any and all applications
by Professionals for compensation and reimbursement of expenses;
<PAGE>
(c) To hear and determine any and all pending
applications for the rejection and disaffirmance of executory
contracts and unexpired leases and fix and allow any Claims
resulting therefrom;
(d) To enable the Debtor, or Reorganized Rose's,
to prosecute any and all proceedings which have been or may be
brought prior to the Effective Date, to set aside liens or
encumbrances and to recover any transfers, assets, properties or
damages to which the Debtor or Reorganized Rose's may be entitled
under applicable provisions of the Bankruptcy Code or any other
federal, state or local laws except as may be waived pursuant to
the Plan or this Order;
(e) To liquidate any disputed, contingent or
unliquidated Claims or Interests;
(f) To enforce the provisions of the Plan and the
injunction and releases provided for in Article IX of the Plan;
(g) To correct any defect, cure any omission, or
reconcile any inconsistency in the Plan or in this Confirmation
Order as may be necessary to carry out its purpose and the intent
of the Plan, provided, however, that no such proposed correction,
cure or reconciliation shall modify, alter or amend the express
provisions of the Plan without the express written consent of the
Plan Proponents and GE Capital;
(h) To hear and determine any and all Avoiding
Power Actions;
<PAGE>
(i) To determine any Tax Claim which the Debtor or
Reorganized Rose's, as applicable, may incur as a result of the
transactions contemplated in the Plan;
(j) To determine such other matters as may be
provided for in this Confirmation Order or as may be authorized
under the provisions of the Bankruptcy Code;
(k) To resolve any and all disputes that may arise
under the Plan;
(l) To hear and determine any and all
administrative matters that may arise in closing the Chapter 11
Case, including the entry of the Final Decree;
(m) To enforce any rights and remedies pursuant to
the New Rose's Secured Notes and the New Rose's Secured Notes
Documents, and to resolve and adjudicate any and all issues arising
under the New Rose's Secured Notes and the New Rose's Secured Notes
Documents, and if any obligations then remain outstanding under the
New Rose's Secured Notes, to enforce any rights and remedies and
to resolve and adjudicate any and all issues arising under the
Post-Effective Date Financing Facility, including any rights or
remedies of the Collateral Agent, any Pre-Petition Lender or the
Post-Effective Date Lender upon an Event of Default or an event of
default under the New Rose's Secured Notes Documents or the Post-
Effective Date Financing Facility, as the case may be (including
issues relating to Section 5.1.4 of the Plan); and
(n) All other matters with respect to which the
Bankruptcy Court's retention of jurisdiction over the Chapter 11
<PAGE>
Case is legally permissible, including without limitation,
jurisdiction as is necessary to ensure that the provisions of the
Plan are implemented.
22. Claims Involving Debtor and GOB2 Landlords.
Confirmation of the Plan and the entry of this Order shall not
affect the rights of the Debtor or the landlords who held leases
of the GOB2 Stores (as such term is defined in Section III.F.2 of
the Disclosure Statement) (collectively, the "GOB2 Landlords")
concerning the claims each may have against the other, if any, and
all remedies each may have are hereby preserved notwithstanding
confirmation or any provision of the Plan reciting the purported
status of such claims or the Debtor's performance of its
obligations under the leases with the GOB2 Landlords, including
Article X (Section 10.3) of the Plan regarding the Debtor's
compliance with the leases with the GOB2 Landlords and relevant
provisions of the Bankruptcy Code.
23. Modification or Amendment. The Plan may be modified
or amended before or after Confirmation as provided in Section 1127
of the Bankruptcy Code and in Section 12.7 of the Plan if, in the
opinion of the Bankruptcy Court, the modification does not
materially and adversely affect the interests of holders of Claims
and Interests; provided, however, that any such altered or amended
plan shall not be binding on GE Capital without the prior written
consent of GE Capital. The Plan may be modified or amended before
or after the Confirmation Date in a manner which, in the opinion
<PAGE>
of the Bankruptcy Court, materially and adversely affects holders
of Claims and Interests, only on consent of all Plan Proponents and
GE Capital and after a further hearing and acceptance of the Plan
as so altered or modified as provided in Section 1126 of the
Bankruptcy Code.
24. Payment of Professional Fees and Expenses. During
the period from the Confirmation Date through and including the
Effective Date, Professionals employed by the Debtor or the
Committees may be paid compensation and reimbursement of expenses
monthly in arrears in full in Cash upon the submission of invoices
to the Debtor and the Committees. All Professional Fees for
services rendered after the Effective Date in connection with the
Debtor or Reorganized Rose's, as the case may be, the Chapter 11
Case and/or the Plan shall be paid by the Debtor or Reorganized
Rose's, as the case may be, pursuant to the provisions of the Plan
or upon such other terms as agreed to by the Debtor (or Reorganized
Rose's, as the case may be) and the particular Professional without
further Bankruptcy Court review or authorization. In all
circumstances, the fees of the professionals of the Pre-Petition
Lenders shall be paid in accordance with the Second Supplemental
Adequate Protection Consent Order.
25. Final Fee Application. All final applications
relating to Professional Fees for the period up to and including
the Confirmation Date shall be filed with the Bankruptcy Court
within sixty (60) days after the Confirmation Date. Each such
<PAGE>
application shall comply with the applicable provisions of the
Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and the
Local Bankruptcy Rules, and shall set forth, among other things,
(a) the name and address of the applicant; (b) the nature of the
professional or other services rendered and expenses for which
reimbursement is requested for all periods from the date the
particular applicant was retained through the date of the
application, including the nature of services contemplated to be
rendered by the applicant from the date of the application to and
including the final fee hearing; (c) the amount of compensation and
reimbursement of expenses requested for the period commencing
October 1, 1994 (or such earlier date as may be applicable for a
particular professional) through and including the Confirmation
Date; (d) whether any payments have been received on account and,
if so, the amount thereof; and (e) the amounts of compensation and
reimbursement of expenses previously allowed by the Court, if any.
26. Failure to Claim Undeliverable Distributions.
Except upon a showing of (a) excusable neglect and (b) no prejudice
to any Persons who have received a distribution under the Plan (as
determined by the Bankruptcy Court), any holder of an Allowed Claim
or Common Stock Interest that does not assert a right to receive
a distribution of Cash or shares of New Rose's Common Stock
pursuant to the Plan within one year after the first distribution
shall have its right to receive such undeliverable distribution
discharged and shall be forever barred from asserting any such
right for an undeliverable distribution against the applicable
<PAGE>
Distribution Agent and Reorganized Rose's or the Debtor, as
applicable, or its property.
27. Taxes. All transactions or transfers of property
by the Debtor and Reorganized Rose's that are contemplated by, made
pursuant to, or in connection with the Plan shall be, and hereby
are, deemed to be transfers under the Plan and therefore free from
the imposition of taxes of the kind specified in Section 1146(c)
of the Bankruptcy Code.
28. Treatment of Taxes. Notwithstanding anything to
the contrary in the Plan or this Order: (a) Sections 9.1 and 9.7
of the Plan shall apply only to those federal taxes that arose
prior to the Confirmation Date, (b) Section 9.2 of the Plan shall
not pertain to the collection of any potential trust fund taxes
pursuant to I.R.C. Section 6672, (c) Section 11.2(i) of the Plan
shall be limited (only as it applies to federal taxes) such that
it shall only apply to those federal taxes incurred as of the
Confirmation Date and (d) payments to the Internal Revenue Service,
with respect to priority taxes pursuant to Section 1129(a)(9)(C)
of the Bankruptcy Code, shall be made in equal quarterly payments
with interest at 8% per annum, accruing from the Confirmation Date
until full payment is made, and the first such quarterly payment
shall be made within fifteen (15) days after the Effective Date.
29. Full and Final Satisfaction. Except as expressly
provided in the Plan, all payments and all distributions under the
<PAGE>
Plan shall be in full and final satisfaction, settlement, release
and discharge of all Claims and Interests against the Debtor.
30. Conflicts. In the event of any conflict between the
provisions of this Order, the Second Supplemental Adequate
Protection Consent Order, the Plan or any other order that may be
entered in this case after entry of the Second Supplemental
Adequate Protection Consent Order or any succeeding case or
proceeding, the provisions of the Second Supplemental Adequate
Protection Consent Order shall govern with regard to the matters
addressed therein, unless otherwise agreed to in writing by each
of the Plan Proponents and GE Capital; and, provided, further, that
except as expressly set forth in this Order or the Plan, nothing
herein shall modify, alter or amend the DIP Financing Orders and
the Supplemental Adequate Protection Orders in a manner which would
impair or diminish any right or benefit of the Pre-Petition Lenders
thereunder.
31. Ratification of Actions. All transactions effected
pursuant to order of the Bankruptcy Court by the Debtor and/or any
successors to, or designees of, the Debtor, including Reorganized
Rose's (if applicable), during the period commencing on the Filing
Date and ending on the Confirmation Date and such other
transactions as of the Effective Date which have been taken
pursuant to the Plan and this Order in implementation thereof are
hereby ratified.
<PAGE>
32. Notice. Notice of entry of this Order, shall be,
and hereby is, deemed sufficient if served by first class mail upon
all persons having (a) filed a notice of appearance herein within
twenty (20) days from the date hereof, and (b) appeared at the
Confirmation Hearing.

Dated: Raleigh, North Carolina
December 14, 1994

/s/ Judge A. Thomas Small
UNITED STATES BANKRUPTCY JUDGE

<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION

In Re: CASE NO. 93-01365-5-ATS

ROSE'S STORES, INC., (CHAPTER 11)
(Tax ID #56-0382475),
Debtor.
___________________________

CONSENT ORDER APPROVING JOINT MOTION OF DEBTOR,
OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS
AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS
TO SET CLASS 5 SUBSCRIPTION PRICE AND MAKE
TECHNICAL MODIFICATIONS TO PLAN OF REORGANIZATION

THIS MATTER coming on before the undersigned Bankruptcy Judge upon the
joint motion of Rose's Stores, Inc. (the "Debtor"), the Official Committee of
Equity Security Holders of the Debtor (the "Equity Committee") and the Official
Committee of Unsecured Creditors of the Debtor (the "Unsecured Committee")
(collectively, the "Movants"), for the entry of an ex parte order establishing
a Class 5 Subscription Price and permitting technical modifications to the First
Amended Joint Plan of Reorganization (the "Joint Plan"), and following a review
of the Joint Motion and notice as required by the Court, the Court finds as
follows:

1. The Movants have requested that this Court enter an order
pursuant to Section 1.33 of the Joint Plan confirmed on December 14, 1994, and
sections 1127 and 105 of the Bankruptcy Code, (a) establishing the Class 5
Subscription Price, as that term is defined in the Joint Plan, at $6.50 per
share, and (b) making technical modifications to the Joint Plan to reflect the
establishment of the Class 5 Subscription Price.

2. The Debtor filed a voluntary petition for relief under chapter
11 of the Bankruptcy Code on September 5, 1993 (the "Petition Date") and is
<PAGE>
operating as a debtor-in-possession pursuant to sections 1107 and 1108 of the
Bankruptcy Code.
3. The Debtor owns and operates a chain of 113 retail discount
stores located in the mid-Atlantic and Southeastern United States.
4. On December 14, 1994, this Court confirmed the Joint Plan.
The Joint Plan was a product of intense negotiation between the Debtor, the
Unsecured' Committee, the Equity Committee and the Debtor's secured lenders.
5. If the Joint Plan becomes effective, and if the Alternative
Treatment provisions thereof are not effective, holders of Common Stock
Interests<F1> as of February 7, 1995 will have the collective right to purchase
up to 10 million shares of New Rose's Common Stock to be issued by Reorganized
Rose's on the Effective Date of the Joint Plan. This offering is referred to
in the Joint Plan as the "Rights Offering." The per share price of the New
Rose's Common Stock to be purchased in the Rights Offering will be determined
either (a) by calculating 50% of the Full Recovery Target Amount<F2> divided by
10 million (the number of shares of New Rose's Common Stock available in the
Rights Offering) or, (b) by agreement between the Equity Committee and the
Creditors' Committee (hereinafter the "Committees") pursuant to Section 1.33 of
the Joint Plan.<F3>
[FN]
<F1> All capitalized terms not defined herein have the meanings given them in
the Joint Plan.
<F2> The Full Recovery Target Amount is defined in Section 1.70 of the Joint
Plan as the amount of Allowed Claims in Class 3 (except for those to be satis-
fied by Cash payment pursuant to this Plan or order of the Bankruptcy Court)
plus the total Reserve Amount as of such date, if any, determined pursuant to
Section 7.12 of the Plan for all Disputed Claims in Class 3.
<F3> Section 1.33 of the Joint Plan provides that "the Class 5 Subscription
Price may be fixed by order of the Bankruptcy Court entered upon Joint Motion
of the Committees and on appropriate notice and hearing."
[/FN]
<PAGE>
6. The Joint Plan contemplates that, in the absence of an
agreement on the Class 5 Subscription Price, the Debtor will send on or about
February 12, 1995, a Class 5 Rights Notice to holders of Common Stock
Interests. The Class 5 Rights Notice will contain the Class 5 Subscription
Price based upon the current Full Recovery Target Amount. Pursuant to Section
7.10(b) of the Joint Plan, beginning on March 24, 1995 and continuing for not
more than three consecutive Business Days thereafter, the Debtor must cause to
be published in the Wall Street Journal, at a cost of no more than $40,000,
notice of the Class 5 Subscription Price as adjusted as of March 24, 1995.
7. A determination of the Full Recovery Target Amount on or about
February 7, 1995 for use on February 12, 1995 would not be reflective of the
ultimate amount of Allowed Claims in Class 3. At this time, the Debtor has
filed numerous omnibus objections to claims. The Court is in the process of
entering orders allowing the objections where no responses have been filed, and
the Debtor is trying to determine appropriate settlements, where possible, with
creditors which have filed responses. The allowability of many landlord claims
may be delayed pending rulings by this Court on the "recoupment issue."
Therefore, the Full Recovery Target Amount could equal approximately
$200,000,000 as of February 7, 1995. This would require a Class 5 Subscription
Price of approximately $10.00 per share in a Class 5 Rights Notice sent on
February 12, 1995.
8. By March 24, 1995, the Debtor believes most objections to
claims will be resolved such that the reserves for Disputed Claims will
primarily include amounts for claims in the Alternative Dispute Resolution
Procedure. A much more accurate Full Recovery Target Amount would then be
available for publication.
<PAGE>
9. After negotiations between the Committees regarding only the
claims filed, the objections pending, and the likelihood of success of such
objections, the Committees have reached an agreement on a Class 5 Subscription
Price at $6.50 per share and believe this price is generally reflective of 50%
of $130,000,000, the anticipated amount of Allowed Claims in Class 3. No
discussions were had regarding the contents of the Class 5 Rights Notice
soliciting the Class 5 Subscription. The Debtor did not participate in the
negotiations, other than provide information on the status of claims resolution,
but does not object to $6.50 as the Class 5 Subscription Price.
10. Resolution of the Class 5 Subscription Price by motion, as
contemplated in Section 1.33 of the Joint Plan, results in cost savings to the
estate by eliminating the need to perform a continuing calculation of the Class
5 Subscription Price, and by eliminating the need for publication of the Class
5 Subscription Price on March 24, 1995 as provided in Section 7.10(b) of the
Joint Plan. Elimination of the publication will save the estate up to $40,000.

11. Technical modifications to the Plan are required to effectuate
the establishment of the Class 5 Subscription Price. These modifications are
attached hereto as Exhibit A. These modifications do not materially affect the
treatment of any claims or interests under the Joint Plan as confirmed, but
rather clarify the fact that a Class 5 Subscription Price has been reached set
at $6.50 per share.
12. The agreement of all Plan Proponents to the terms of this
order are reflected by their execution of this order; now therefore,
IT IS ORDERED that the Class 5 Subscription Price is set at $6.50
per share and the technical modifications to the Joint Plan set forth in Exhibit
"A" hereto are approved.
<PAGE>
<PAGE>
Dated: February 3, 1995

_/s/ Judge A. Thomas Small_________
United States Bankruptcy Judge

We consent:

By: _/s/ Benjamin Waisbren, Esq._____
Benjamin Waisbren, Esq.
Michael Yetnikoff, Esq.
Lord, Bissell & Brook
115 South LaSalle Street
Chicago, Illinois 60603

_/s/ Lacy M. Presnell, III, Esq._
Lacy M. Presnell, III, Esq.
Burns, Day & Presnell, P.A.
2626 Glenwood Avenue, Suite 560
Raleigh, North Carolina 27605

COUNSEL FOR THE EQUITY COMMITTEE

_/s/ Glenn B. Rice, Esq.________
Glenn B. Rice, Esq.
Otterbourg, Steindler, Houston &
Rosen, P.C.
230 Park Avenue
New York, New York 10169

_/s/ N. Hunter Wyche, Jr., Esq._
N. Hunter Wyche, Jr., Esq.
Wyche & Story
P. O. Box 1389
Raleigh, North Carolina 27602

COUNSEL FOR CREDITORS' COMMITTEE
<PAGE>
<PAGE>

_/s/ Michael E. Foreman, Esq.____
Michael E. Foreman, Esq.
Proskauer, Rose, Goetz &
Mendelsohn
1585 Broadway, 25th Floor
New York, New York 10036

_/s/ Terri L. Gardner, Esq.______
Terri L. Gardner, Esq.
Smith, Debnam, Hibbert & Pahl
4700 New Bern Avenue
Raleigh, North Carolina 27611

COUNSEL FOR THE DEBTOR

_/s/ Jeffrey L. Glatzer, Esq.______
Jeffrey L. Glatzer, Esq.
Anderson Kill Okick & Oshinsky, P.C.
1251 Avenue of the Americas
New York, NY 10020

_/s/ William A. Mann, Esq._________
William A. Mann, Esq.
Ragsdale, Liggett & Foley
Cross Pointe Plaza
2840 Plaza Place
Raleigh, North Carolina 27612

COUNSEL FOR BANK OF TOKYO, LTD.

_/s/ Thomas H. Day, Esq.___________
Thomas H. Day, Esq.
Hebb & Gitlin
One State Street
Hartford, CT 06103-3178

_/s/ Gregory B. Crampton, Esq._____
Gregory B. Crampton, Esq.
Merriman, Nicholls & Crampton, P.A.
100 Saint Albans Drive, Suite 200
Raleigh, North Carolina 27619

COUNSEL FOR THE PRE-PETITION SECURED NOTEHOLDERS

<PAGE>

<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION

In Re: CASE NO. 93-01365-5-ATS

ROSE'S STORES, INC., (CHAPTER 11)
(Tax ID #56-0382475),
Debtor.
___________________________

CONSENT ORDER APPROVING MOTION FOR ORDER AUTHORIZING
TECHNICAL MODIFICATIONS TO JOINT PLAN OF REORGANIZATION
REGARDING RECORD DATES FOR DISTRIBUTIONS TO CLASS 5

THIS MATTER coming on before the undersigned Bankruptcy Judge upon the
motion of Rose's Stores, Inc. (the "Debtor") for the entry of an ex parte order
authorizing technical modifications to the Joint Plan of Reorganization regard-
ing record dates for distributions to Class 5 (the "Motion"), and following a
review of the Motion and notice as required by the Court, the Court finds as
follows:

1. The Debtor has requested this Court to enter an order pursuant
to Section 12.7 of the Joint Plan and sections 1127 and 105 of the Bankruptcy
Code permitting technical modifications to the Joint Plan to redefine Equity
Record Date and Record Date as discussed herein.
2. The Debtor filed a voluntary petition for relief under chapter
11 of the Bankruptcy Code on September 5, 1993 (the "Petition Date") and is
operating as a debtor-in-possession pursuant to sections 1107 and 1108 of the
Bankruptcy Code.
3. The Debtor owns and operates a chain of 113 retail discount
stores located in the mid-Atlantic and Southeastern United States.
4. On December 14, 1994, this Court confirmed the Joint Plan.
The Joint Plan was the product of intense negotiations among the Debtor, the
Official Committee of Unsecured Creditors (the "Unsecured Committee"), the
<PAGE>
Official Committee of Equity Security Holders (the "Equity Committee") and the
Debtor's secured lenders.
5. Section 1.63 of the Joint Plan defines "Equity Record Date"
as "the Record Date for purposes of making distributions under this Plan to
holders of Common Stock Interests<F4>, which date shall be February 7, 1995."
Section 1.114 defines "Record Date" as follows:
Record Date shall mean (a) for the purpose of voting on this Plan, the date
of entry of the order approving the Disclosure Statement, (b) for the
purposes of any distribution and payments under and pursuant to this Plan
other than to holders of Common Stock Interests, the Effective Date, or
(c) for the purpose of any distribution to the holders of Common Stock
Interests, the Equity Record Date.

6. Assuming that the Joint Plan becomes effective and the
Alternative Treatment Events do not occur, each holder of a Common Stock
Interest in Class 5 shall receive, in exchange for such Interest, (i) its Pro-
Rata share of the New Rose's Warrants, within thirty days after the Effective
Date, (ii) its Pro-Rata share of the New Rose's Common Stock Secondary Distribu-
tion, if any, after the Determination Date, and (iii) the non-transferrable
right to pay Cash to acquire shares of New Rose's Common Stock in accordance
with the Class 5 Subscription pursuant to Section 7.10 of the Plan and the Class
5 Rights Notice.
7. Section 7.4 of the Joint Plan provides that, as of the close
of business on the Effective Date (or with respect to Common Stock Interests,
the Equity Record Date), the transfer ledgers or registers and any other records
determining record ownership of the Debtor's equity and debt instruments
maintained by the Debtor or the Collateral Agent shall be closed and there can
be no further changes in the record holders of Interests. This Section further
[FN]
<F4> All capitalized terms not defined herein shall have the meanings set
forth in the Joint Plan.
[/FN]
<PAGE>
provides, with regard to Interests, that the Debtor shall have no obligation to
recognize any thereafter occurring transfers of Interests, but shall be entitled
to recognize only those Persons who were holders of Interests on the Effective
Date or Equity Record Date, as applicable.
8. An issue has arisen regarding the trading of Common Stock
Interests after the Equity Record Date. The Joint Plan provides that the
transfer ledgers recording ownership of the Debtor's Common Stock Interests
shall be closed after the Equity Record Date.
9. The Debtor has been advised by legal counsel and believes
that, based upon the provisions in the Joint Plan cited above, NASDAQ may halt
the trading of the Debtor's stock and delist the Debtor's stock. This action
would restrict the ability of holders of the existing stock to continue trading
the stock based on the anticipated or possible value of the warrants and might
also cause the Debtor to incur significant additional fees and charges from
NASDAQ with respect to the listing of the new common stock and warrants. The
Debtor has further been advised by legal counsel and believes that normal
practice in the Chapter 11 cases of publicly held companies in which the exist-
ing stock will be canceled is for the record date for distributions to such
holders to be the same as the effective date of the plan. The Debtor believes
that the Joint Plan is not clear as to the intention of the parties with respect
to continued trading of the existing stock after the Equity Record Date which is
February 7, 1995. The Joint Plan does not provide for any notice, other than
distribution of the Joint Plan itself, which would give notice of the termina-
tion of trading of the existing stock after February 7.
10. After discussions with the Debtor's securities counsel and
bankruptcy counsel, the Debtor proposes that the Equity Record Date remain
February 7, 1995 for the Class 5 Subscription. At this time, the Class 5 Rights
<PAGE>
Notice is being prepared for mailing to record holders of Common Stock Interests
no later than February 12, 1995. However, with regard to the distribution of
New Rose's Warrants and any distribution from the New Rose's Common Stock
Secondary Distribution, the Debtor proposes that the record date be the Effec-
tive Date. On the Effective Date, all existing common stock is considered
canceled under Section 7.4 of the Joint Plan such that no further trading can or
should occur. Immediately after the Effective Date, the New Rose's Common Stock
should begin trading on a when-issued basis.
11. The modifications required in the Joint Plan to effectuate
the change specified in paragraph 10 will be as follows:
Section 1.63 should be revised to delete the words "making distributions
under this Plan" and to insert the words "distributing the rights to
participate in the Class 5 Subscription."

Section 1.114(b) should be revised to insert the words "the rights to
participate in the Class 5 Subscription" immediately before the words "to
holders of."

Section 1.114(c) should be revised to delete the words "any distributions"
and to insert the words "distributing the rights to participate in the
Class 5 Subscription."

Section 7.4 should be revised (i) to delete, in line 6 thereof, the words
"(or with respect to Common Stock Interests, the Equity Record Date)" and
(ii) to delete, in line 13 thereof, the words "(or the Equity Record Date,
as applicable)."

12. The Debtor believes that these changes will benefit current
holders of Common Stock Interests by allowing them to continue trading their
Common Stock Interests prior to the Effective Date. Furthermore, the Debtor
will be benefitted with regard to protection of its NASDAQ listing.

13. The Pre-Petition Secured Noteholders have not executed this
consent order. However, they do not object to its entry by the Court; now
therefore,
IT IS ORDERED that the technical modifications to the Joint Plan as
set forth herein are approved.
<PAGE>
Dated: February 13, 1995

_/s/ Judge A. Thomas Small____________
United States Bankruptcy Judge

We consent:

By: _/s/ Benjamin Waisbren, Esq._____
Benjamin Waisbren, Esq.
Michael Yetnikoff, Esq.
Lord, Bissell & Brook
115 South LaSalle Street
Chicago, Illinois 60603

_/s/ Lacy M. Presnell, III, Esq._
Lacy M. Presnell, III, Esq.
Burns, Day & Presnell, P.A.
2626 Glenwood Avenue, Suite 560
Raleigh, North Carolina 27605

COUNSEL FOR THE EQUITY COMMITTEE

_/s/ Glenn B. Rice, Esq._________
Glenn B. Rice, Esq.
Otterbourg, Steindler, Houston &
Rosen, P.C.
230 Park Avenue
New York, New York 10169

_/s/ N. Hunter Wyche, Jr., Esq._
N. Hunter Wyche, Jr., Esq.
Wyche & Story
P. O. Box 1389
Raleigh, North Carolina 27602

COUNSEL FOR CREDITORS' COMMITTEE

_/s/ Michael E. Foreman, Esq.____
Michael E. Foreman, Esq.
Proskauer, Rose, Goetz &
Mendelsohn
1585 Broadway, 25th Floor
New York, New York 10036
<PAGE>
<PAGE>
_/s/ Terri L. Gardner, Esq.______
Terri L. Gardner, Esq.
Smith, Debnam, Hibbert & Pahl
4700 New Bern Avenue
Raleigh, North Carolina 27611

COUNSEL FOR THE DEBTOR

_/s/ Jeffrey L. Glatzer, Esq.______
Jeffrey L. Glatzer, Esq.
Anderson Kill Okick & Oshinsky, P.C.
1251 Avenue of the Americas
New York, NY 10020

_/s/ William A. Mann, Esq._________
William A. Mann, Esq.
Ragsdale, Liggett & Foley
Cross Pointe Plaza
2840 Plaza Place
Raleigh, North Carolina 27612

COUNSEL FOR BANK OF TOKYO, LTD.