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                                                                     EXHIBIT 3.1


                       RESTATED ARTICLES OF INCORPORATION

                                       OF

                             PILLOWTEX CORPORATION

         Pursuant to the provisions of Article 4.07 of the Texas Business
Corporation Act (the "Act"), Pillowtex Corporation (the "Corporation") hereby
adopts Restated Articles of Incorporation, which accurately copy the Articles
of Incorporation and all amendments thereto that are in effect to date, as
further amended by these Restated Articles of Incorporation, and which contain
no other change in any provision thereof.

         ARTICLE ONE.     The name of the Corporation is Pillowtex Corporation.

         ARTICLE TWO.     The following amendments to the Articles of
Incorporation were adopted by the unanimous written consent of the shareholders
of the Corporation as of January 18, 1993:

         Article V of the Articles of Incorporation is hereby amended to read
in its entirety as follows:

                                   "ARTICLE V

                          The aggregate number of shares which the corporation
                 is authorized to issue is 50,000,000 shares consisting of
                 30,000,000 shares of Common Stock, having a par value of $0.01
                 per share and 20,000,000 shares of Preferred Stock, having a
                 par value of $0.01 per share.

                          The following is a statement of the relative rights,
                 preferences and limitations with respect to the shares of each
                 class of capital stock of the corporation, insofar as the same
                 are fixed in these Articles of Incorporation, and of the
                 authority expressly vested in the Board of Directors of the
                 corporation to divide the Preferred Stock into series and to
                 fix and determine the variations in the relative rights and
                 preferences as between series:

                            A.      Preferred Stock

                                  1.       The Preferred Stock may, from time
                          to time, be divided into and issued in one or more
                          series. The shares of each series may have such
                          designations, preferences, limitations and relative
                          rights, including voting rights, as are stated herein
                          and in one or more resolutions providing for the
                          issue of such series adopted by the Board of
                          Directors as hereinafter provided.



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                                  2.       To the extent that these Articles of
                          Incorporation do not fix and determine the variations
                          in the relative rights and preferences of the
                          Preferred Stock, both in relation to the Common Stock
                          and as between series of Preferred Stock, the Board
                          of Directors of the corporation is expressly vested
                          with the authority to divide the Preferred Stock into
                          one or more series and, within the limitations set
                          forth in these Articles of Incorporation, to fix and
                          determine the designation, preferences, limitations
                          and relative rights of the shares of any series so
                          established, and, with respect to each such series,
                          to fix by one or more resolutions providing for the
                          issue of such series, the following:

                                        (a)     The maximum number of shares to
                                  constitute such series and the distinctive
                                  designation thereof;

                                        (b)     The annual dividend rate, if
                                  any, on the shares of such series and the
                                  date or dates from which dividends shall
                                  commence to accrue or accumulate as herein
                                  provided, and whether dividends shall be
                                  cumulative;

                                        (c)     The price at and the terms and
                                  conditions on which the shares of such series
                                  may be redeemed, including, without
                                  limitation, the time during which shares of
                                  the series may be redeemed, the premium, if
                                  any, over and above the par value thereof and
                                  any accumulated dividends thereon that the
                                  holders of shares of such series shall be
                                  entitled to receive upon the redemption
                                  thereof, which premium may vary at different
                                  dates and may also be different with respect
                                  to shares redeemed through the operation of
                                  any retirement or sinking fund;

                                        (d)     The liquidation preference, if
                                  any, over and above the par value thereof,
                                  and any accumulated dividends thereon, that
                                  the holders of shares of such series shall be
                                  entitled to receive upon the voluntary or
                                  involuntary liquidation, dissolution or
                                  winding up of the affairs of the corporation;

                                        (e)     Whether or not the shares of
                                  such series shall be subject to the operation
                                  of a retirement or sinking fund, and, if so,
                                  the extent and manner in which any such
                                  retirement

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                                  or sinking fund shall be applied to the
                                  purchase or redemption of the shares of such
                                  series for retirement or for other corporate
                                  purposes, and the terms and provisions
                                  relative to the operations of such retirement
                                  or sinking fund;

                                        (f)     The terms and conditions, if
                                  any, on which the shares of such series shall
                                  be convertible into, or exchangeable for,
                                  shares of any other class or classes of
                                  capital stock of the corporation or any
                                  series of any other class or classes, or of
                                  any other series of the same class, including
                                  the price or prices or the rate or rates of
                                  conversion or exchange and the method, if
                                  any, of adjusting the same, provided that
                                  shares of such series may not be convertible
                                  into shares of a series or class that has
                                  prior or superior rights and preferences as
                                  to dividends or distribution of assets of the
                                  corporation upon voluntary or involuntary
                                  liquidation, dissolution or winding up of the
                                  affairs of the corporation;

                                        (g)     The voting rights, if any, on
                                  the shares of such series; and

                                        (h)     Any or all other preferences
                                  and relative, participating, optional or
                                  other special rights, or qualifications,
                                  limitations or restrictions thereof, as shall
                                  not be inconsistent with the law or with this
                                  Article V.

                                  3.       All shares of any one series of
                          Preferred Stock shall be identical with each other in
                          all respects, except that shares of any one series
                          issued at different times may differ as to the dates
                          from which dividends thereon, if any, shall be
                          cumulative; and all series shall rank equally and be
                          identical in all respects, except as provided in
                          Paragraph 1 of this Section A and except as permitted
                          by the provisions of Paragraph 2 of this Section A.

                                  4.       Except to the extent restricted or
                          otherwise provided in the resolution or resolutions
                          adopted by the Board of Directors providing for the
                          issue of any series of Preferred Stock, no dividends
                          (other than dividends payable in Common Stock) on any
                          class or classes of capital stock of the corporation
                          ranking, with respect to dividends,

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                          junior to the Preferred Stock, or any series thereof,
                          shall be declared, paid or set apart for payment,
                          until and unless the holders of shares of Preferred
                          Stock of each senior series shall have been paid, or
                          there shall have been set apart for payment, cash
                          dividends, when and as declared by the Board of
                          Directors out of funds of the corporation legally
                          available therefor, at the annual rate, and no more,
                          fixed in the resolution or resolutions adopted by the
                          Board of Directors providing for the issue of such
                          series.

                                  5.       To the extent provided in the
                          resolution or resolutions adopted by the Board of
                          Directors providing for the issue of any series of
                          Preferred Stock, upon the voluntary or involuntary
                          liquidation, dissolution or winding up of the affairs
                          of the corporation, before any payment or
                          distribution of the assets of the corporation
                          (whether capital or surplus) shall be made to or set
                          apart for the holders of any class or classes of
                          capital stock of the corporation ranking junior, as
                          to liquidation rights, to the Preferred Stock, or any
                          series thereof, the holders of the shares of the
                          Preferred Stock shall be entitled to receive payment
                          at the rate fixed in the resolution or resolutions
                          adopted by the Board of Directors providing for the
                          issue of the respective series. Unless otherwise
                          provided in the resolution or resolutions adopted by
                          the Board of Directors providing for the issue of any
                          series of Preferred Stock, for the purposes of this
                          Paragraph 5 and Paragraph 2(d) of this Section A,
                          neither the consolidation nor merger of the
                          corporation with one or more other corporations shall
                          be deemed to be a liquidation, dissolution or winding
                          up.

                                  6.       The corporation, at the option of
                          the Board of Directors, may redeem, unless otherwise
                          provided in the resolution establishing a series of
                          Preferred Stock, at such time as is fixed (and if not
                          so fixed, at any time) in the resolution or
                          resolutions adopted by the Board of Directors
                          providing for the issue of a series, the whole or,
                          from time to time, any part of the Preferred Stock of
                          any series then outstanding, at the par value
                          thereof, plus in every case an amount equal to all
                          accumulated dividends, if any (whether or not earned
                          or declared), with respect to each share so redeemed
                          and, in addition thereto, the amount of the premium,
                          if any, payable upon such redemption fixed in the
                          resolution or resolutions adopted by

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                          the Board of Directors providing for the issue of
                          such series. The Board of Directors shall have full
                          power and authority, subject to the limitations and
                          provisions contained herein and in the Texas Business
                          Corporation Act, to prescribe the terms and
                          conditions upon which the Preferred Stock shall be
                          redeemed from time to time.

                                  7.       Shares of Preferred Stock that have
                          been redeemed, purchased or otherwise acquired by the
                          corporation or that, if convertible or exchangeable,
                          have been converted into or exchanged for shares of
                          capital stock of any other class or classes or any
                          series of any other class or classes or of any other
                          series of the same class, shall be cancelled and such
                          shares may not under any circumstances thereafter be
                          reissued as Preferred Stock, and the corporation
                          shall from time to time cause all such acquired
                          shares of Preferred Stock to be cancelled in the
                          manner provided by law.

                                  8.       Nothing herein contained shall limit
                          any legal right of the corporation to purchase any
                          shares of the Preferred Stock.

                                        B.      Common Stock

                                  1.       Shares of Common Stock may be issued
                          by the corporation from time to time for such
                          consideration as may lawfully be fixed by the Board
                          of Directors.

                                  2.       The Common Stock shall be entitled
                          to one vote per share on all matters.  Cumulative
                          voting for directors shall not be permitted and is
                          hereby expressly denied.

                                  3.       Subject to the prior rights and
                          preferences of the Preferred Stock set forth in this
                          Article V, or in any resolution or resolutions
                          providing for the issuance of a series of Preferred
                          Stock, and to the extent permitted by the laws of the
                          State of Texas, the holders of Common Stock shall be
                          entitled to receive such cash dividends as may be
                          declared and made payable by the Board of Directors.

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                                  4.       After payment shall have been made
                          in full to the holders of any series of Preferred
                          Stock having preferred liquidation rights, upon any
                          voluntary or involuntary liquidation, dissolution or
                          winding up of the affairs of the corporation, the
                          remaining assets and funds of the corporation shall
                          be distributed among the holders of the Common Stock
                          according to their respective shares."

Article VIII of the Articles of Incorporation is hereby amended to read in its
entirety as follows:

                                 "ARTICLE VIII

                          The number of directors shall be fixed in the manner
                 provided in the Bylaws of the corporation.  The current Board
                 of Directors consists of four directors, and the names and
                 addresses of the persons who are serving as directors until
                 their successors are elected and qualified are:

                          Name                   Address
                          ----                   -------
                 Mary R. Silverthorne            10640 Lennox Lane
                                                 Dallas, Texas 75229

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

                 Scott E. Shimizu                4111 Mint Way
                                                 Dallas, Texas 75237

                 Philip J. Souza                 4111 Mint Way
                                                 Dallas, Texas 75237"

Article IX of the Articles of Incorporation is hereby amended to read in its
entirety as follows:

                                  "ARTICLE IX

                          The corporation may purchase, directly or indirectly,
                 its own shares to the extent of the surplus of the
                 corporation."

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Article X of the Articles of Incorporation is hereby amended to read in its
entirety as follows:

                                   "ARTICLE X

                 A.       Approval of Certain Business Combinations. A Business
         Combination (as hereinafter defined) shall require (I) only such
         affirmative vote as is required by law and any other provision of
         these Articles of Incorporation, if all of the conditions specified in
         either of Paragraph 1 or Paragraph 2 of this Section A are met or (ii)
         in addition to any affirmative vote required by law or these Articles
         of Incorporation, the affirmative vote of the holders of at least 80%
         of the voting power of the then outstanding shares of capital stock of
         the corporation entitled to vote generally in the election of
         directors (referred to in this Article X as the "Voting Stock"),
         voting together as a single class (it being understood that for the
         purposes of this Article X, each share of the Voting Stock shall have
         the number of votes granted to it pursuant to Article V of these
         Articles of Incorporation). Such affirmative vote shall be required
         notwithstanding the fact that no vote may be required, or that a
         lesser percentage may be specified, by law.

                                  1.       Approval by Disinterested Directors.
                          The Business Combination shall have been approved by a
                          majority of the Disinterested Directors (as
                          hereinafter defined).

                                  2.       Price and Procedure Requirements.
                          All of the following conditions shall have been met:

                                        (a)     The aggregate amount of the
                                  cash and the Fair Market Value (as
                                  hereinafter defined) as of the date of the
                                  consummation of the Business Combination of
                                  consideration other than cash to be received
                                  per share by holders of shares of Common
                                  Stock in such Business Combination shall be
                                  at least equal to the higher of the
                                  following:

                                                 (I)      (if applicable) the
                                        highest price per share (including any
                                        brokerage commissions, transfer
                                        taxes and soliciting dealers' fees)
                                        paid by the Interested Shareholder
                                        (as hereinafter defined) for any
                                        shares of Common Stock or the common
                                        stock of any Predecessor Corporation
                                        (as hereinafter defined) acquired by
                                        it (1) within the two-year

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                                        period immediately prior to the first
                                        public announcement of the terms of the
                                        proposed Business Combination (the
                                        "Announcement Date") or (2) in the
                                        transaction in which it became an
                                        Interested Shareholder, whichever is
                                        higher; and

                                                (ii)     the Fair Market Value
                                        per share of Common Stock on the
                                        Announcement Date or on the date on
                                        which the Interested Shareholder
                                        became an Interested Shareholder
                                        (such later date is referred to in
                                        this Article X as the "Determination
                                        Date"), whichever is higher.

                                        (b)     The aggregate amount of the
                                  cash and the Fair Market Value as of the date
                                  of the consummation of the Business
                                  Combination of consideration other than cash
                                  to be received per share by holders of shares
                                  of any class of outstanding Voting Stock
                                  other than Common Stock shall be at least
                                  equal to the highest of the following (it
                                  being intended that the requirements of this
                                  Paragraph 2(b) shall be required to be met
                                  with respect to every class of outstanding
                                  Voting Stock, whether or not the Interested
                                  Shareholder has previously acquired any
                                  shares of a particular class of Voting
                                  Stock);

                                                (I)      (if applicable) the
                                        highest price per share (including any
                                        brokerage commissions, transfer taxes
                                        and soliciting dealers' fees) paid by
                                        the Interested Shareholder for any
                                        shares of such class of Voting Stock or
                                        a substantially identical class of
                                        stock of any Predecessor Corporation
                                        acquired by it (1) within the two-year
                                        period immediately prior to the
                                        Announcement Date or (2) in the
                                        transaction in which it became an
                                        Interested Shareholder, whichever is
                                        higher;

                                                (ii)     (if applicable) the
                                        highest preferential amount per share
                                        to which the holders of shares of such
                                        class of Voting Stock are entitled in
                                        the event of any voluntary or
                                        involuntary liquidation,

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                                        dissolution or winding up of the
                                        corporation; and

                                                (iii)    the Fair Market Value
                                        per share of such class of Voting Stock
                                        on the Announcement Date or on the
                                        Determination Date, whichever is
                                        higher.

                                              The consideration to be
                                  received by holders of a particular class of
                                  outstanding Voting Stock (including Common
                                  Stock) shall be in cash or in the same form
                                  as the Interested Shareholder has previously
                                  paid for shares of such class of Voting Stock
                                  or stock of a Predecessor Corporation. If the
                                  Interested Shareholder has paid for shares of
                                  any class of Voting Stock or stock of a
                                  Predecessor Corporation with varying forms of
                                  consideration, the form of consideration for
                                  such class of Voting Stock shall be either
                                  cash or the form used to acquire the largest
                                  number of shares of such class of Voting
                                  Stock or stock of a Predecessor Corporation
                                  previously acquired by it. The price
                                  determined in accordance with Paragraphs 2(a)
                                  and 2(b) of this Section A shall be subject
                                  to appropriate adjustment in the event of any
                                  special dividend or other disposition of
                                  material assets other than in the ordinary
                                  course of business, stock dividend, stock
                                  split, combination of shares or similar
                                  event. Whether specific consideration
                                  satisfies this subsection shall be determined
                                  by vote of a majority of the Disinterested
                                  Directors.

                                        (d)     After such Interested
                                  Shareholder has become an Interested
                                  Shareholder and prior to the consummation of
                                  such Business Combination: (I) except as
                                  approved by a majority of the Disinterested
                                  Directors, there shall have been no failure
                                  to declare and pay at the regular date
                                  therefor any full quarterly dividends
                                  (whether or not cumulative) on any
                                  outstanding stock having preference over the
                                  Common Stock as to dividends or upon
                                  liquidation; (ii) there shall have been (1)
                                  no reduction in the annual rate of dividends
                                  paid on the Common Stock (except as necessary
                                  to reflect any subdivision of the Common
                                  Stock), except as approved by a majority of
                                  the Disinterested Directors, and (2) an
                                  increase in such annual

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                                  rate of dividends as necessary to reflect any
                                  reclassification (including any reverse stock
                                  split), recapitalization, reorganization or
                                  any similar transaction that has the effect
                                  of reducing the number of outstanding shares
                                  of the Common Stock, unless the failure so to
                                  increase such annual rate is approved by a
                                  majority of the Disinterested Directors; and
                                    such Interested Shareholder shall not
                                  have become the beneficial owner of any
                                  additional shares of Voting Stock except as
                                  part of the transaction that results in such
                                  Interested Shareholder becoming an Interested
                                  Shareholder.

                                        (e)     After such Interested
                                  Shareholder has become an Interested
                                  Shareholder, such Interested Shareholder
                                  shall not have received the benefit, directly
                                  or indirectly (except proportionately as a
                                  shareholder), of any loans, advances,
                                  guaranties, pledges or other financial
                                  assistance or any tax credits or other tax
                                  advantages provided to or by the corporation,
                                  whether in anticipation of or in connection
                                  with such Business Combination or otherwise.

                                        (f)     A proxy or information
                                  statement describing the proposed Business
                                  Combination and complying with the
                                  requirements of the Securities Exchange Act
                                  of 1934 and the rules and regulations
                                  thereunder (or any subsequent provisions
                                  replacing such Act, rules or regulations)
                                  shall have been mailed to public shareholders
                                  of the corporation at least 30 days prior to
                                  the consummation of such Business Combination
                                  (whether or not such proxy or information
                                  statement is required to be mailed pursuant
                                  to such Act or subsequent provisions).

                          B.      Certain Definitions. For purposes of this
                             Article X:

                                  1.       "Business Combination" shall mean
                                  any transaction that is referred to in any
                                  one or more of the following clauses (a)
                                  through (e):

                                        (a)     any merger or consolidation of
                                  the corporation or any Subsidiary (as
                                  hereinafter defined) with (I) any Interested
                                  Shareholder or (ii) any other corporation
                                  (whether or not

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                                  itself an Interested Shareholder) that is, or
                                  after such merger or consolidation would be,
                                  an Affiliate (as hereinafter defined) of an
                                  Interested Shareholder; or

                                        (b)     any sale, lease, exchange,
                                  mortgage, pledge, transfer or other
                                  disposition (in one transaction or a series
                                  of transactions) to or with any Interested
                                  Shareholder or any Affiliate of any
                                  Interested Shareholder of any assets of the
                                  corporation or any Subsidiary having an
                                  aggregate Fair Market Value of $5,000,000 or
                                  more; or

                                              the issuance or transfer by the
                                  corporation or any Subsidiary (in one
                                  transaction or series of transactions) of any
                                  securities of the corporation or any
                                  Subsidiary to any Interested Shareholder or
                                  any Affiliate of any Interested Shareholder
                                  in exchange for cash, securities or other
                                  property (or a combination thereof) having an
                                  aggregate Fair Market Value of $5,000,000 or
                                  more; or

                                        (d)     the adoption of any plan or
                                  proposal for the liquidation or dissolution
                                  of the corporation proposed by or on behalf
                                  of any Interested Shareholder or any
                                  Affiliate of any Interested Shareholder; or

                                        (e)     any reclassification of
                                  securities (including any reverse stock
                                  split) or recapitalization of the
                                  corporation, or any merger or consolidation
                                  of the corporation with any of its
                                  Subsidiaries or any other transaction
                                  (whether or not with or into or otherwise
                                  involving an Interested Shareholder) that has
                                  the effect, directly or indirectly, of
                                  increasing the proportionate share of the
                                  outstanding shares of any class of Equity
                                  Security (as hereinafter defined) of the
                                  corporation or any Subsidiary that is
                                  directly or indirectly owned by any
                                  Interested Shareholder or any Affiliate of
                                  any Interested Shareholder.

                                  2.       "Person" shall mean any individual,
                          firm, corporation or other entity.

                                  3.       "Interested Shareholder" shall mean
                          any Person (other than the corporation or any





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                          Subsidiary or employee benefit plan of the
                          corporation or any Subsidiary) that:

                                        (a)     is the beneficial owner,
                                  directly or indirectly, of 10% or more of the
                                  voting power of the outstanding Voting Stock;
                                  or

                                        (b)     at any time within the two-year
                                  period immediately prior to the date in
                                  question was the beneficial owner, directly
                                  or indirectly, of 10% or more of the voting
                                  power of the then outstanding Voting Stock;
                                  or

                                              is an assignee of or has
                                  otherwise succeeded to any shares of Voting
                                  Stock or of capital stock of any Predecessor
                                  Corporation that were at any time within the
                                  two-year period immediately prior to the date
                                  in question beneficially owned by any
                                  Interested Shareholder, if such assignment or
                                  succession shall have occurred in the course
                                  of a transaction or series of transactions
                                  not involving a public offering within the
                                  meaning of the Securities Act of 1933.

                                  4.       A person shall be a "beneficial
                          owner" of any stock that:

                                        (a) such Person or any of its
                                  Affiliates or Associates (as hereinafter
                                  defined) beneficially owns directly or
                                  indirectly; or

                                        (b)     such Person or any of its
                                  Affiliates or Associates has (I) the right to
                                  acquire (whether such right is exercisable
                                  immediately or only after the passage of
                                  time), pursuant to any agreement, arrangement
                                  or understanding or upon the exercise of
                                  conversion rights, exchange rights, warrants
                                  or options, or otherwise, or (ii) the right
                                  to vote pursuant to any agreement,
                                  arrangement or understanding; or

                                              is beneficially owned, directly
                                  or indirectly, by any other Person with which
                                  such Person or any of its Affiliates or
                                  Associates has any agreement, arrangement or
                                  understanding for the purpose of acquiring,
                                  holding, voting or disposing of any shares of
                                  such stock.

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                                  5.       For the purpose of determining
                          whether a Person is an Interested Shareholder
                          pursuant to Paragraph 3 of this Section B, the number
                          of shares of Voting Stock deemed to be outstanding
                          shall include shares deemed owned through application
                          of Paragraph 4 of this Section B but shall not
                          include any other shares of Voting Stock that may be
                          issuable pursuant to any agreement, arrangement or
                          understanding, or upon exercise of conversion rights,
                          warrants or options, or otherwise.

                                  6.       "Affiliate" and "Associate" shall
                          have the meanings ascribed to such terms in Rule
                          12b-2 of the General Rules and Regulations under the
                          Securities Exchange Act of 1934, as in effect on
                          January 1, 1993.

                                  7.       "Subsidiary" means any corporation
                          of which a majority of any class of Equity security
                          is owned, directly or indirectly, by the corporation,
                          provided, however, that for purposes of the
                          definition of Interested Shareholder set forth-in
                          Paragraph 3 of this Section B, the term "Subsidiary"
                          shall mean only a corporation of which a majority of
                          each class of Equity Security is owned, directly or
                          indirectly, by the corporation.

                                  8.       "Disinterested Director" means any
                          member of the Board of Directors who is unaffiliated
                          with the Interested Shareholder and was a member of
                          the Board of Directors immediately before the time
                          that the Interested Shareholder became an Interested
                          Shareholder, and any successor of a Disinterested
                          Director who is unaffiliated with the Interested
                          Shareholder and is recommended to succeed a
                          Disinterested Director by a majority of Disinterested
                          Directors then on the Board of Directors.

                                  9.       "Fair Market Value" means: (a) in
                          the case of stock, (I) the highest closing sale price
                          of a share of stock during the 30-day period
                          immediately preceding the date in question on the
                          principal United States securities exchange
                          registered under the Securities Exchange Act of 1934
                          on which such stock is listed, or (ii) if such stock
                          is not listed on any such exchange, the highest
                          closing bid quotation with respect to a share of such
                          stock during the 30-day period immediately preceding
                          the date in question on the National Association of
                          Securities Dealers, Inc. Automated Quotations System
                          or any similar system

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                          then in use, or (iii) if no such quotations are
                          available, the fair market value on the date in
                          question of a share of such stock as determined by a
                          majority of the Disinterested Directors in good
                          faith; or (b) in the case of property other than cash
                          or stock, the fair market value of such property on
                          the date in question as determined by a majority of
                          the Disinterested Directors in good faith.

                                  10.      In the event of any Business
                          combination in which the corporation survives, the
                          phrase "consideration other than cash to be received"
                          as used in Paragraphs 2 (a) and 2 (b) of Section A of
                          this Article X shall include the shares of Common
                          Stock and the shares of any other class of
                          outstanding Voting Stock retained by the holders of
                          such shares.

                                  11.      "Equity Security" shall have the
                          meaning ascribed to such term in Section 3(a)(11) of
                          the Securities Exchange Act of 1934, as in effect on
                          January 1, 1993.

                                  12.      A "Predecessor Corporation" includes
                          any corporation of which the corporation was at one
                          time a wholly-owned subsidiary, or of which the
                          corporation would be deemed to be a legal successor
                          in interest (by contract or by merger or other
                          operation of law).

                          C.      Powers of the Board of Directors. A majority
                 of the Disinterested Directors shall have the power and duty
                 to determine for the purposes of this Article X, on the basis
                 of information known to them after reasonable inquiry, (1)
                 whether a Person is an Interested Shareholder, (2) the number
                 of shares of Voting Stock beneficially owned by any Person,
                 (3) whether a Person is an Affiliate or Associate of another,
                 (4) whether the assets that are the subject of any Business
                 Combination have, or the consideration to be received for the
                 issuance or transfer of securities by the corporation or any
                 subsidiary in any Business Combination has, an aggregate Fair
                 Market Value of $5,000,000 or more. A majority of the
                 Disinterested Directors shall have the further power to
                 interpret all of the terms and provisions of this Article X.

                                       14
<PAGE>   15
                          D.      No Effect on Fiduciary Obligations of
                 Interested Shareholders. Nothing contained in this Article X
                 shall be construed to relieve any Interested Shareholder from
                 any fiduciary obligation imposed by law.

                          E.      Amendment of Article X. Notwithstanding any
                 other provisions of these Articles of Incorporation or the
                 Bylaws of the corporation (and notwithstanding the fact that a
                 lesser percentage may be specified by law, these Articles of
                 Incorporation or the Bylaws of the corporation), the
                 affirmative vote of the holders of 80% or more of the
                 outstanding Voting Stock, voting together as a single class,
                 shall be required to amend or repeal, or adopt any provision
                 inconsistent with, this Article X or any provision hereof."

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

                                  "ARTICLE XI

                 All actions of the shareholders must be taken at an annual or
         special meeting of shareholders and may not be taken by a consent or
         consents in writing."

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

                                  "ARTICLE XII

                 Special meetings of shareholders of the corporation may be
         called only by the Chief Executive Officer or the Board of Directors
         of the corporation or by the holders of at least 50% of all shares
         entitled to vote at the proposed meeting."

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

                                 "ARTICLE XIII

                 The Board of Directors of the corporation only shall have the
         power to make, alter or repeal the Bylaws of the corporation."

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

                                       15
<PAGE>   16
                                  "ARTICLE XIV

                 To the fullest extent permitted by Texas statutory or
         decisional law, as the same exists or may hereafter be amended or
         interpreted, a director of the corporation shall not be liable to the
         corporation or its shareholders for any act or omission in such
         director's capacity as a director. Any repeal or amendment of this
         Article XIV, or adoption of any other provision of these Articles of
         Incorporation inconsistent with this Article XIV by the shareholders
         of the corporation shall be prospective only and shall not adversely
         affect any limitation on the liability to the corporation or its
         shareholders of a director of the corporation existing at the time of
         such repeal, amendment or adoption of an inconsistent provision."

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

                                  "ARTICLE XV

                 No contract or other transactions between the corporation and
         any other corporation, firm or individual shall be affected or
         invalidated by the fact that any one or more of the directors or
         officers of the corporation is or are interested in or is a director
         or officer of such other corporation, or a member of such firm, and
         any director or officer, individually or jointly, may be a party to or
         may be interested in any contract or transaction with the corporation,
         or in which the corporation is interested, and no contract, act or
         transaction of the corporation with any person or persons, firms or
         corporations, shall be affected or invalidated by the fact that any
         director or officer of the corporation is a party to or interested in
         such contract, act or transaction, or is in any way connected with
         such person or persons, firms or corporations, and each and every
         person who may become a director or officer of the corporation is
         hereby relieved from any liability that might otherwise exist from
         contracting with the corporation for the benefit of himself or any
         firm or corporation in which he may be in any way interested."

         ARTICLE THREE.   Each amendment to the Articles of Incorporation made
by these Restated Articles of Incorporation has been effected in conformity
with the provisions of the Act.

                                       16
<PAGE>   17

         ARTICLE FOUR. The number of shares of Common Stock of the Corporation
outstanding and entitled to vote was 6,611 at the time of adoption of these
Restated Articles of Incorporation.

         ARTICLE FIVE. The holders of all of the shares of Common Stock
outstanding and entitled to vote have signed a written consent to the adoption
of these Restated Articles of Incorporation.

         ARTICLE SIX. The Articles of Incorporation and all amendments and
supplements thereto are hereby superseded by the following Restated Articles of
Incorporation:

                                   ARTICLE I

         The name of the corporation is Pillowtex Corporation.

                                   ARTICLE II

         The period of its duration is perpetual.

                                  ARTICLE III

         The purpose for which the corporation is organized is to transact any
and all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.

                                   ARTICLE IV

         The address of the initial registered office of the corporation is
4111 Mint Way, Dallas, Texas 75237, and the name of the initial registered
agent of the corporation at such address is Jeffrey D. Cordes.

                                   ARTICLE V

         The aggregate number of shares which the corporation is authorized to
issue is 50,000,000 shares consisting of 30,000,000 shares of Common Stock,
having a par value of $0.01 per share and 20,000,000 shares of Preferred Stock,
having a par value of $0.01 per share.

         The following is a statement of the relative rights, preferences and
limitations with respect to the shares of each class of capital stock of the
corporation, insofar as the same are fixed in these Articles of Incorporation,
and of the authority expressly vested in the Board of Directors of the
corporation to

                                       17
<PAGE>   18
divide the Preferred Stock into series and to fix and determine the variations
in the relative rights and preferences as between series:

                            A.      Preferred Stock

                 1.       The Preferred Stock may, from time to time, be
         divided into and issued in one or more series.  The shares of each
         series may have such designations, preferences, limitations and
         relative rights, including voting rights, as are stated herein and in
         one or more resolutions providing for the issue of such series adopted
         by the Board of Directors as hereinafter provided.

                 2.       To the extent that these Articles of Incorporation do
         not fix and determine the variations in the relative rights and
         preferences of the Preferred Stock, both in relation to the Common
         Stock and as between series of Preferred Stock, the Board of Directors
         of the corporation is expressly vested with the authority to divide
         the Preferred Stock into one or more series and, within the
         limitations set forth in these Articles of Incorporation, to fix and
         determine the designation, preferences, limitations and relative
         rights of the shares of any series so established, and, with respect
         to each such series, to fix by one or more resolutions providing for
         the issue of such series, the following:

                          (a)     The maximum number of shares to constitute
                 such series and the distinctive designation thereof;

                          (b)     The annual dividend rate, if any, on the
                 shares of such series and the date or dates from which
                 dividends shall commence to accrue or accumulate as herein
                 provided, and whether dividends shall be cumulative;

                                The price at and the terms and conditions on
                 which the shares of such series may be redeemed, including,
                 without limitation, the time during which shares of the series
                 may be redeemed, the premium, if any, over and above the par
                 value thereof and any accumulated dividends thereon that the
                 holders of shares of such series shall be entitled to receive
                 upon the redemption thereof, which premium may vary at
                 different dates and may also be different with respect to
                 shares redeemed through the operation of any retirement or
                 sinking fund;

                          (d)     The liquidation preference, if any, over and
                 above the par value thereof, and any accumulated dividends
                 thereon, that the holders of shares of such series shall be
                 entitled to receive upon the voluntary or

                                       18
<PAGE>   19
                 involuntary liquidation, dissolution or winding up of the
                 affairs of the corporation;

                          (e)     Whether or not the shares of such series
                 shall be subject to the operation of a retirement or sinking
                 fund, and, if so, the extent and manner in which any such
                 retirement or sinking fund shall be applied to the purchase or
                 redemption of the shares of such series for retirement or for
                 other corporate purposes, and the terms and provisions
                 relative to the operations of such retirement or sinking fund;

                          (f)     The terms and conditions, if any, on which
                 the shares of such series shall be convertible into, or
                 exchangeable for, shares of any other class or classes of
                 capital stock of the corporation or any series of any other
                 class or classes, or of any other series of the same class,
                 including the price or prices or the rate or rates of
                 conversion or exchange and the method, if any, of adjusting
                 the same, provided that shares of such series may not be
                 convertible into shares of a series or class that has prior or
                 superior rights and preferences as to dividends or
                 distribution of assets of the corporation upon voluntary or
                 involuntary liquidation, dissolution or winding up of the
                 affairs of the corporation;

                          (g)     The voting rights, if any, on the shares of
                 such series; and

                          (h)     Any or all other preferences and relative,
                 participating, optional or other special rights, or
                 qualifications, limitations or restrictions thereof, as shall
                 not be inconsistent with the law or with this Article V.

                 3.       All shares of any one series of Preferred Stock shall
         be identical with each other in all respects, except that shares of
         any one series issued at different times may differ as to the dates
         from which dividends thereon, if any, shall be cumulative; and all
         series shall rank equally and be identical in all respects, except as
         provided in Paragraph 1 of this Section A and except as permitted by
         the foregoing provisions of Paragraph 2.

                 4.       Except to the extent restricted or otherwise provided
         in the resolution or resolutions adopted by the Board of Directors
         providing for the issue of any series of Preferred Stock, no dividends
         (other than dividends payable in Common Stock) on any class or classes
         of capital stock of the corporation ranking, with respect to
         dividends, junior to the Preferred Stock, or any series thereof, shall
         be declared,

                                       19
<PAGE>   20
         paid or set apart for payment, until and unless the holders of shares
         of Preferred Stock of each senior series shall have been paid, or
         there shall have been set apart for payment, cash dividends, when and
         as declared by the Board of Directors out of funds of the corporation
         legally available therefor, at the annual rate, and no more, fixed in
         the resolution or resolutions adopted by the Board of Directors
         providing for the issue of such series.

                 5.       To the extent provided in the resolution or
         resolutions adopted by the Board of Directors providing for the issue
         of any series of Preferred Stock, upon the voluntary or involuntary
         liquidation, dissolution or winding up of the affairs of the
         corporation before any payment or distribution of the assets of the
         corporation (whether capital or surplus) shall be made to or set apart
         for the holders of any class or classes of capital stock of the
         corporation ranking junior, as to liquidation rights, to the Preferred
         Stock, or any series thereof, the holders of the shares of the
         Preferred Stock shall be entitled to receive payment at the rate fixed
         in the resolution or resolutions adopted by the Board of Directors
         providing for the issue of the respective series.   Unless otherwise
         provided in the resolution or resolutions adopted by the Board of
         Directors providing for the issue of any series of Preferred Stock,
         for the purposes of this Paragraph 5 and Paragraph 2(d) of this
         Section A, neither the consolidation nor merger of the corporation
         with one or more other corporations shall be deemed to be a
         liquidation, dissolution or winding up.

                 6.       The corporation, at the option of the Board of
         Directors, may redeem, unless otherwise provided in the resolution
         establishing a series of Preferred Stock, at such time as is fixed
         (and if not so fixed, at any time) in the resolution or resolutions
         adopted by the Board of Directors providing for the issue of a series,
         the whole or, from time to time, any part of the Preferred Stock of
         any series then outstanding, at the par value thereof, plus in every
         case an amount equal to all accumulated dividends, if any (whether or
         not earned or declared), with respect to each share so redeemed and,
         in addition thereto, the amount of the premium, if any, payable upon
         such redemption fixed in the resolution or resolutions adopted by the
         Board of Directors providing for the issue of such series. The Board
         of Directors shall have full power and authority, subject to the
         limitations and provisions contained herein and in the Texas Business
         Corporation Act, to prescribe the terms and conditions upon which the
         Preferred Stock shall be redeemed from time to time.

                 7.       Shares of Preferred Stock that have been redeemed,
         purchased or otherwise acquired by the corporation or that, if
         convertible or exchangeable, have been converted into or

                                       20
<PAGE>   21
         exchanged for shares of capital stock of any other class or classes or
         any series of any other class or classes or of any other series of the
         same class, shall be cancelled and such shares may not under any
         circumstances thereafter be reissued as Preferred Stock, and the
         corporation shall from time to time cause all such acquired shares of
         Preferred Stock to be cancelled in the manner provided by law.

                 8.       Nothing herein contained shall limit any legal right
         of the corporation to purchase any shares of the Preferred Stock.

                                 B.      Common Stock

                 1.       Shares of Common Stock may be issued by the
         corporation from time to time for such consideration as may lawfully
         be fixed by the Board of Directors.

                 2.       The Common Stock shall be entitled to one vote per
         share on all matters. Cumulative voting for directors shall not be
         permitted and is hereby expressly denied.

                 3.       Subject to the prior rights and preferences of the
         Preferred Stock set forth in this Article V, or in any resolution or
         resolutions providing for the issuance of a series of Preferred Stock,
         and to the extent permitted by the laws of the State of Texas, the
         holders of Common Stock shall be entitled to receive such cash
         dividends as may be declared and made payable by the Board of
         Directors.

                 4.       After payment shall have been made in full to the
         holders of any series of Preferred Stock having preferred liquidation
         rights, upon any voluntary or involuntary liquidation, dissolution or
         winding up of the affairs of the corporation, the remaining assets and
         funds of the corporation shall be distributed among the holders of the
         Common Stock according to their respective shares.

                                   ARTICLE VI

         No shareholder of the corporation will by reason of his holding shares
of stock of the corporation have any preemptive or preferential rights to
purchase or subscribe to any shares of any class of stock of the corporation,
or any notes, debentures, bonds, warrants, options or other securities of the
corporation, now or hereafter to be authorized.

                                       21
<PAGE>   22
                                  ARTICLE VII

         The corporation will not commence business until it has received for
the issuance of its shares consideration of the value of one Thousand Dollars
($1,000.00), consisting of money paid, labor done or property actually received.

                                  ARTICLE VIII

         The number of directors shall be fixed in the manner provided in the
Bylaws of the corporation. The current Board of Directors consists of four
directors, and the names and addresses of the persons who are serving as
directors until their successors are elected and qualified are:

              Name                            Address
              ----                            -------
         [S]                                  [C]
         Mary R. Silverthorne                 10640 Lennox Lane
                                              Dallas, Texas    75229

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

         Scott E. Shimizu                     4111 Mint Way
                                              Dallas, Texas    75237

         Philip J. Souza                      4111 Mint Way
                                              Dallas, Texas    75237

                                   ARTICLE IX

         The corporation may purchase, directly or indirectly, its own shares
to the extent of the surplus of the corporation.

                                   ARTICLE X

         A.      Approval of Certain Business Combinations. A Business
Combination (as hereinafter defined) shall require (I) only such affirmative
vote as is required by law and any other provision of these Articles of
Incorporation, if all of the conditions specified in either of Paragraph 1 or
Paragraph 2 of this Section A are met or (ii) in addition to any affirmative
vote required by law or these Articles of Incorporation, the affirmative vote
of the holders of at least 80% of the voting power of the then outstanding
shares of capital stock of the corporation entitled to vote generally in the
election of directors (referred to in this Article X as the "Voting Stock"),
voting together as a single class (it being understood that for the purposes of
this Article X, each share of the Voting Stock shall have the number of votes
granted to

                                       22
<PAGE>   23
it pursuant to Article V of these Articles of Incorporation). Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified, by law.

                 1.       Approval by Disinterested Directors. The Business
         Combination shall have been approved by a majority of the
         Disinterested Directors (as hereinafter defined).

                 2.       Price and Procedure Requirements. All of the
         following conditions shall have been met:

                          (a)     The aggregate amount of the cash and the Fair
                 Market Value (as hereinafter defined) as of the date of the
                 consummation of the Business Combination of consideration
                 other than cash to be received per share by holders of shares
                 of Common Stock in such Business Combination shall be at least
                 equal to the higher of the following:

                                  (I)      (if applicable) the highest price
                          per share (including any brokerage commissions,
                          transfer taxes and soliciting dealers' fees) paid by
                          the Interested Shareholder (as hereinafter defined)
                          for any shares of Common Stock or the common stock of
                          any Predecessor Corporation (as hereinafter defined)
                          acquired by it (1) within the two-year period
                          immediately prior to the first public announcement of
                          the terms of the proposed Business Combination (the
                          "Announcement Date") or (2) in the transaction in
                          which it became an Interested Shareholder, whichever
                          is higher; and

                                  (ii)     the Fair Market Value per share of
                          Common Stock on the Announcement Date or on the date
                          on which the Interested Shareholder became an
                          Interested Shareholder (such later date is referred
                          to in this Article X as the "Determination Date"),
                          whichever is higher.

                          (b)     The aggregate amount of the cash and the Fair
                 Market Value as of the date of the consummation of the
                 Business Combination of consideration other than cash to be
                 received per share by holders of shares of any class of
                 outstanding Voting Stock other than Common Stock shall be at
                 least equal to the highest of the following (it being intended
                 that the requirements of this Paragraph 2(b) shall be required
                 to be met with respect to every class of outstanding Voting
                 Stock, whether or not the Interested Shareholder has
                 previously acquired any shares of a particular class of Voting
                 Stock);

                                       23
<PAGE>   24

                (I)   (if applicable) the highest price per share (including
              any brokerage commissions, transfer taxes and soliciting dealers'
              fees) paid by the Interested Shareholder for any shares of such
              class of Voting Stock or a substantially identical class of stock
              of any Predecessor Corporation acquired by it (1) within the
              two-year period immediately prior to the Announcement Date or (2)
              in the transaction in which it became an Interested Shareholder,
              whichever is higher;

                (ii)  (if applicable) the highest preferential amount per share
              to which the holders of shares of such class of Voting Stock are
              entitled in the event of any voluntary or involuntary
              liquidation, dissolution or winding up of the corporation; and

                (iii)  the Fair Market Value per share of such class of Voting
              Stock on the Announcement Date or on the Determination Date,
              whichever is higher.

                  The consideration to be received by holders of a
         particular class of outstanding Voting Stock (including Common Stock)
         shall be in cash or in the same form as the Interested Shareholder has
         previously paid for shares of such class of Voting Stock or stock of a
         Predecessor Corporation. If the Interested Shareholder has paid for
         shares of any class of Voting Stock or stock of a Predecessor
         Corporation with varying forms of consideration, the form of
         consideration for such class of Voting Stock shall be either cash or
         the form used to acquire the largest number of shares of such class of
         Voting Stock or stock of a Predecessor Corporation previously acquired
         by it. The price determined in accordance with Paragraphs 2(a) and
         2(b) of this Section A shall be subject to appropriate adjustment in
         the event of any special dividend or other disposition of material
         assets other than in the ordinary course of business, stock dividend,
         stock split, combination of shares or similar event. Whether specific
         consideration satisfies this subsection shall be determined by vote of
         a majority of the Disinterested Directors.

              (d)   After such Interested Shareholder has become an
         Interested Shareholder and prior to the consummation of such Business
         Combination: (I) except as approved by a majority of the Disinterested
         Directors, there shall have been no failure to declare and pay at the
         regular date therefor any full quarterly dividends (whether or not
         cumulative) on any outstanding stock having preference over the Common
         Stock as to dividends or upon liquidation; (ii) there shall have been
         (1) no reduction

                                       24
<PAGE>   25
         in the annual rate of dividends paid on the Common Stock (except as
         necessary to reflect any subdivision of the Common Stock), except as
         approved by a majority of the Disinterested Directors, and (2) an
         increase in such annual rate of dividends as necessary to reflect any
         reclassification (including any reverse stock split),
         recapitalization, reorganization or any similar transaction that has
         the effect of reducing the number of outstanding shares of the Common
         Stock, unless the failure so to increase such annual rate is approved
         by a majority of the Disinterested Directors; and   such Interested
         Shareholder shall not have become the beneficial owner of any
         additional shares of Voting Stock except as part of the transaction
         that results in such Interested Shareholder's becoming an Interested
         Shareholder.

              (e)  After such Interested Shareholder has become an Interested
         Shareholder, such Interested Shareholder shall not have received the
         benefit, directly or indirectly (except proportionately as a
         stockholder), of any loans, advances, guaranties, pledges or other
         financial assistance or any tax credits or other tax advantages
         provided to or by the corporation, whether in anticipation of or in
         connection with such Business Combination or otherwise.

              (f)  A proxy or information statement describing the proposed
         Business Combination and complying with the requirements of the
         Securities Exchange Act of 1934 and the rules and regulations
         thereunder (or any subsequent provisions replacing such Act, rules or
         regulations) shall have been mailed to public stockholders of the
         corporation at least 30 days prior to the consummation of such
         Business Combination (whether or not such proxy or information
         statement is required to be mailed pursuant to such Act or subsequent
         provisions).

     B.        Certain Definitions. For purposes of this Article X:

         1.    "Business Combination" shall mean any transaction that is
     referred to in any one or more of the following clauses (a) through (e):

              (a)  any merger or consolidation of the corporation or any
         Subsidiary (as hereinafter defined) with (I) any Interested
         Shareholder or (ii) any other corporation (whether or not itself an
         Interested Shareholder) that is, or after such merger or consolidation
         would be, an Affiliate (as hereinafter defined) of an Interested
         Shareholder; or


                                       25
<PAGE>   26
              (b)   any sale, lease, exchange, mortgage, pledge, transfer or
         other disposition (in one transaction or a series of transactions) to
         or with any Interested Shareholder or any Affiliate of any Interested
         Shareholder of any assets of the corporation or any Subsidiary having
         an aggregate Fair Market Value of $5,000,000 or more; or

                 the issuance or transfer by the corporation or any
         Subsidiary (in one transaction or series of transactions) of any
         securities of the corporation or any Subsidiary to any Interested
         Shareholder or any Affiliate of any Interested Shareholder in exchange
         for cash, securities or other property (or a combination thereof)
         having an aggregate Fair Market Value of $5,000,000 or more; or

              (d)  the adoption of any plan or proposal for the liquidation
         or dissolution of the corporation proposed by or on behalf of any
         Interested Shareholder or any Affiliate of any Interested Shareholder;
         or

              (e)  any reclassification of securities (including any reverse
         stock split) or recapitalization of the corporation, or any merger or
         consolidation of the corporation with any of its Subsidiaries or any
         other transaction (whether or not with or into or otherwise involving
         an Interested Shareholder) that has the effect, directly or
         indirectly, of increasing the proportionate share of the outstanding
         shares of any class of Equity Security (as hereinafter defined) of the
         corporation or any Subsidiary that is directly or indirectly owned by
         any Interested Shareholder or any Affiliate of any Interested
         Shareholder.

   2.    "Person" shall mean any individual, firm, corporation or other entity.

   3.    "Interested Shareholder" shall mean any Person (other than the
corporation or any Subsidiary or employee benefit plan of the corporation or
any Subsidiary) that:

              (a)   is the beneficial owner, directly or indirectly, of 10%
         or more of the voting power of the outstanding Voting Stock; or

              (b)   at any time within the two-year period immediately prior
         to the date in question was the beneficial owner, directly or
         indirectly, of 10% or more of the voting power of the then outstanding
         Voting Stock; or


                                       26
<PAGE>   27
                 is an assignee of or has otherwise succeeded to any shares
         of Voting Stock or of capital stock of any Predecessor Corporation
         that were at any time within the two-year period immediately prior to
         the date in question beneficially owned by any Interested Shareholder,
         if such assignment or succession shall have occurred in the course of
         a transaction or series of transactions not involving a public
         offering within the meaning of the Securities Act of 1933.

         4.    A person shall be a "beneficial owner" of any stock that:

              (a)   such Person or any of its Affiliates or Associates (as
         hereinafter defined) beneficially owns directly or indirectly; or

              (b)   such Person or any of its Affiliates or Associates has
         (I) the right to acquire (whether such right is exercisable
         immediately or only after the passage of time), pursuant to any
         agreement, arrangement or understanding or upon the exercise of
         conversion rights, exchange rights, warrants or options, or otherwise,
         or (ii) the right to vote pursuant to any agreement, arrangement or
         understanding; or

                 is beneficially owned, directly or indirectly, by any
         other Person with which such Person or any of its Affiliates or
         Associates has any agreement, arrangement or understanding for the
         purpose of acquiring, holding, voting or disposing of any shares of
         such stock.

         5.    For the purpose of determining whether a Person is an Interested
    Shareholder pursuant to Paragraph 3 of this Section B, the number of shares
    of Voting Stock deemed to be outstanding shall include shares deemed owned
    through application of Paragraph 4 of this Section B but shall not include
    any other shares of Voting Stock that may be issuable pursuant to any
    agreement, arrangement or understanding, or upon exercise of conversion
    rights, warrants or options, or otherwise.

         6.    "Affiliate" and "Associate" shall have the meanings ascribed to
    such terms in Rule 12b-2 of the General Rules and Regulations under the
    Securities Exchange Act of 1934, as in effect on January 1, 1993.

         7.    "Subsidiary" means any corporation of which a majority of any
    class of Equity Security is owned, directly or indirectly, by the
    corporation, provided, however, that for purposes of the definition of
    Interested Shareholder set forth in Paragraph 3 of this Section B, the term
    "Subsidiary" shall

                                       27
<PAGE>   28
         mean only a corporation of which a majority of each class of Equity
         Security is owned, directly or indirectly, by the corporation.

         8.   "Disinterested Director" means any member of the Board of
    Directors who is unaffiliated with the Interested Shareholder and was a
    member of the Board of Directors immediately before the time that the
    Interested Shareholder became an Interested Shareholder, and any successor
    of a Disinterested Director who is unaffiliated with the Interested
    Shareholder and is recommended to succeed a Disinterested Director by a
    majority of Disinterested Directors then on the Board of Directors.

         9.   "Fair Market Value" means:   (a) in the case of stock, the highest
    closing sale price during the 30-day period immediately preceding the date
    in question of a share of stock (I) on the principal United States
    securities exchange registered under the Securities Exchange Act of 1934 on
    which such stock is listed, or (ii) if such stock is not listed on any such
    exchange, the highest closing bid quotation with respect to a share of such
    stock during the 30-day period preceding the date in question on the
    National Association of Securities Dealers, Inc. Automated Quotations
    System or any similar system then in use, or (iii) if no such quotations
    are available, the fair market value on the date in question of a share of
    such stock as determined by a majority of the Disinterested Directors in
    good faith; or (b) in the case of property other than cash or stock, the
    fair market value of such property on the date in question as determined by
    a majority of the Disinterested Directors in good faith.

         10.  In the event of any Business Combination in which the corporation
    survives, the phrase "consideration other than cash to be received" as used
    in Paragraphs 2(a) and 2(b) of Section A of this Article X shall include
    the shares of Common Stock and the shares of any other class of outstanding
    Voting Stock retained by the holders of such shares.

         11.  "Equity Security" shall have the meaning ascribed to such term in
    Section 3(a)(11) of the Securities Exchange Act of 1934, as in effect on
    January 1, 1993.

         12.  A "Predecessor Corporation" includes any corporation of which the
    corporation was at one time a wholly-owned subsidiary, or of which the
    corporation would be deemed to be a legal successor in interest (by
    contract or by merger or other operation of law).

   C.    Powers of the Board of Directors. A majority of the Disinterested
Directors shall have the power and duty to determine for the purposes of this
Article X, on the basis of information

                                       28
<PAGE>   29
known to them after reasonable inquiry, (1) whether a Person is an Interested
Shareholder, (2) the number of shares of Voting Stock beneficially owned by any
Person, (3) whether a Person is an Affiliate or Associate of another, (4)
whether the assets that are the subject of any Business combination have, or
the consideration to be received for the issuance or transfer of securities by
the corporation or any Subsidiary in any Business Combination has, an aggregate
Fair Market Value of $5,000,000 or more. A majority of the Disinterested
Directors shall have the further power to interpret all of the terms and
provisions of this Article X.

   D.    No Effect on Fiduciary Obligations of Interested Shareholders. Nothing
contained in this Article X shall be construed to relieve any Interested
Shareholder from any fiduciary obligation imposed by law.

   E.    Amendment of Article X. Notwithstanding any other provisions of these
Articles of Incorporation or the Bylaws of the corporation (and notwithstanding
the fact that a lesser percentage may be specified by law, these Articles of
Incorporation or the Bylaws of the corporation), the affirmative vote of the
holders of 80% or more of the outstanding Voting Stock, voting together as a
single class, shall be required to amend or repeal, or adopt any provision
inconsistent with, this Article X or any provision hereof.

                                   ARTICLE XI

   All actions of the shareholders must be taken at an annual or special
meeting of shareholders and may not be taken by a consent or consents in
writing.


                                  ARTICLE XII

   Special meetings of shareholders of the corporation may be called only by
the Chief Executive Officer or the Board of Directors of the corporation or by
the holders of at least 50% of all shares entitled to vote at the proposed
meeting.


                                  ARTICLE XIII

   The Board of Directors of the corporation only shall have the power to make,
alter or repeal the Bylaws of the corporation.


                                  ARTICLE XIV

   To the fullest extent permitted by Texas statutory or decisional law, as the
 same exists or may hereafter be amended or

                                       29
<PAGE>   30
interpreted, a director of the corporation shall not be liable to the
corporation or its shareholders for any act or omission in such director's
capacity as a director. Any repeal or amendment of this Article XIV, or adoption
of any other provision of these Articles of Incorporation inconsistent with
this Article XIV, by the shareholders of the corporation shall be prospective
only and shall not adversely affect any limitation on the liability to the
corporation or its shareholders of a director of the corporation existing at
the time of such repeal, amendment or adoption of an inconsistent provision.


                                   ARTICLE XV

   No contract or other transactions between the corporation and any other
corporation, firm or individual shall be affected or invalidated by the fact
that any one or more of the directors or officers of the corporation is or are
interested in or is a director or officer of such other corporation, or a
member of such firm, and any director or officer, individually or jointly, may
be a party to or may be interested in any contract or transaction with the
corporation, or in which the corporation is interested, and no contract, act or
transaction of the corporation with any person or persons, firms or
corporations, shall be affected or invalidated by the fact that any director or
officer of the corporation is a party to or interested in such contract, act or
transaction, or is in any way connected with such person or persons, firms or
corporations, and each and every person who may become a director or officer of
the corporation is hereby relieved from any liability that might otherwise
exist from contracting with the corporation for the benefit of himself or any
firm or corporation in which he may be in any way interested.


   IN WITNESS WHEREOF, the undersigned Corporation has caused these Restated
Articles of Incorporation to be executed as of January 18, 1993.


                                        PILLOWTEX CORPORATION


                                        By:  /s/ CHARLES M. HANSEN, JR.
                                            -----------------------------
                                            Charles M. Hansen, Jr.
                                            President





                                       30
<PAGE>   31
                                  STATEMENT OF
                       CANCELLATION OF TREASURY SHARES


To the Secretary of State of the State of Texas:

   Pursuant to the provisions of Article 4.11 of the Texas Business
Corporation Act, the undersigned corporation submits the following statement of
cancellation by resolution of its board of directors of shares of the
corporation reacquired by it, other than redeemable shares redeemed or
purchased:

         1.      The name of the corporation is Pillowtex Corporation.

         2.      A resolution was duly adopted by all necessary action on the
part of the corporation on February 10, 1993, authorizing the cancellation of
12,545 shares of Common Stock, $0.01 par value per share, held as Treasury
Stock of the corporation.

   The amount of stated capital represented by the shares to be cancelled is
One Hundred Twenty-Five and Forty-Five Hundredths Dollars ($125.45).

   3.    The aggregate number of issued shares, itemized by classes and series
and par value, if any, after giving effect to such cancellation is 19,155
itemized as follows:

<TABLE>
<CAPTION>
        Class              Par Value    Number of Shares
        -----              ---------    ----------------
         <S>                <C>          <C>
         Common Stock       $0.01        19,155
</TABLE>


   4.    The amount of the stated capital of the corporation, after giving
effect to such cancellation, is $191.55.

Dated: February 10, 1993

                                        PILLOWTEX CORPORATION



                                        By: /s/ CHARLES M. HANSEN, JR.
                                           --------------------------------
                                           Charles M. Hansen, Jr.
                                           President
<PAGE>   32
                             ARTICLES OF AMENDMENT
                                     TO THE
                              AMENDED AND RESTATED
                           ARTICLES OF INCORPORATION
                                       OF
                             PILLOWTEX CORPORATION


   Pursuant to the provisions of Article 4.04 of the Texas Business Corporation
Act, Pillowtex Corporation (the "Company"), hereby adopts the following
Articles of Amendment to its Articles of Incorporation.

   ARTICLE ONE.   The name of the corporation is Pillowtex Corporation.

   ARTICLE TWO.   The following amendments to the Amended and Restated Articles
of Incorporation was adopted by the shareholders of the Company as of February
15, 1993:

         (a)      Article X of the Amended and Restated Articles of
         Incorporation be amended to read in its entirety as follows:

                                   "ARTICLE X

            A.   Approval of Certain Business Combinations.   A Business
         Combination (as hereinafter defined) during the three-year period
         immediately following the date that a shareholder became an Interested
         Shareholder (as hereinafter defined) shall require (I) only such
         affirmative vote as is required by law and any other provision of
         these Articles of Incorporation, if all of the conditions specified in
         Paragraph 1, 2, 3 or 4 of this Section A are met, or (ii) in addition
         to any affirmative vote required by law or these Articles of
         Incorporation, the affirmative vote of the holders of at least 66-2/3%
         of the voting power of the then outstanding shares of capital stock of
         the corporation that are entitled to vote generally in the election of
         directors (referred to in this Article X as the "Voting Stock") and
         that are not owned by the Interested Shareholder, voting together as a
         single class (it being understood that for the purposes of this
         Article X, each share of the Voting Stock shall have the number of
         votes granted to it pursuant to Article V of these Articles of
         Incorporation). Such affirmative vote shall be required
         notwithstanding the fact that no vote may be required, or that a
         lesser percentage may be specified, by law.

                    1.    Approval by Disinterested Directors. The Business
                 Combination or the transaction that resulted in the
                 shareholder becoming an Interested Shareholder shall

<PAGE>   33
                 have been approved by a majority of the Disinterested Directors
                 (as hereinafter defined).

         2.      Price and Procedure Requirements. All of the following
conditions shall have been met:

                 (a) The aggregate amount of the cash and the Fair Market Value
         (as hereinafter defined) as of the date of the consummation of the
         Business Combination of consideration other than cash to be received
         per share by holders of shares of Common Stock in such Business
         Combination shall be at least equal to the higher of the following:

                    (I)   (if applicable) the highest price per share
                 (including any brokerage commissions, transfer taxes and
                 soliciting dealers' fees) paid by the Interested Shareholder
                 (as hereinafter defined) for any shares of Common Stock
                 acquired by it (1) within the three-year period immediately
                 prior to the first public announcement of the terms of the
                 proposed Business Combination (the "Announcement Date")   or
                 (2) in the transaction in which it became an Interested
                 Shareholder, whichever is higher; and

                    (ii)   the Fair Market Value per share of Common Stock on
                 the Announcement Date or on the date on which the Interested
                 Shareholder became an Interested Shareholder (such later date
                 is referred to in this Article X as the "Determination Date"),
                 whichever is higher.

                 (b)      The aggregate amount of the cash and the Fair Market
         Value as of the date of the consummation of the Business Combination
         of consideration other than cash to be received per share by holders
         of shares of any class of outstanding Voting Stock other than Common
         Stock shall be at least equal to the highest of the following (it
         being intended that the requirements of this Paragraph 2(b) shall be
         required to be met with respect to every class of outstanding Voting
         Stock, whether or not the Interested Shareholder has previously
         acquired any shares of a particular class of Voting Stock);

                (I)   (if applicable) the highest price per share (including
              any brokerage commissions, transfer taxes and soliciting dealers'
              fees) paid by the Interested

                                       2
<PAGE>   34
              Shareholder for any shares of such class of Voting stock
              acquired by it (1) within the three-year period immediately prior
              to the Announcement Date or (2) in the transaction in which it
              became an Interested Shareholder, whichever is higher;

                (ii) (if applicable) the highest preferential amount per share
              to which the holders of shares of such class of Voting Stock are
              entitled in the event of any voluntary or involuntary
              liquidation, dissolution or winding up of the corporation; and

                (iii) the Fair Market Value per share of such class of Voting
              Stock on the Announcement Date or on the Determination Date,
              whichever is higher.

                    The consideration to be received by holders of a
         particular class of outstanding Voting Stock (including Common Stock)
         shall be in cash or in the same form as the Interested Shareholder has
         previously paid for shares of such class of Voting Stock. If the
         Interested Shareholder has paid for shares of any class of Voting
         Stock with varying forms of consideration, the form of consideration
         for such class of Voting Stock shall be either cash or the form used
         to acquire the largest number of shares of such class of Voting Stock
         previously acquired by it. The price determined in accordance with
         Paragraphs 2(a) and 2(b) of this Section A shall be subject to
         appropriate adjustment in the event of any special dividend or other
         disposition of material assets other than in the ordinary course of
         business, stock dividend, stock split, combination of shares or
         similar event.  Whether specific consideration satisfies this
         subsection shall be determined by vote of a majority of the
         Disinterested Directors.

                (d)   After such Interested Shareholder has become an
         Interested Shareholder and prior to the consummation of such Business
         combination: (I) except as approved by a majority of the Disinterested
         Directors, there shall have been no failure to declare and pay at the
         regular date therefor any full quarterly dividends (whether or not
         cumulative) on any outstanding stock having preference over the Common
         Stock as to dividends or upon liquidation; (ii) there shall have been
         (1) no

                                       3

<PAGE>   35
         reduction in the annual rate of dividends paid on the Common Stock
         (except as necessary to reflect any subdivision of the Common Stock) ,
         except as approved by a majority of the Disinterested Directors, and
         (2) an increase in such annual rate of dividends as necessary to
         reflect any reclassification (including any reverse stock split),
         recapitalization, reorganization or any similar transaction that has
         the effect of reducing the number of outstanding shares of the Common
         Stock, unless the failure so to increase such annual rate is approved
         by a majority of the Disinterested Directors; and   such Interested
         Shareholder shall not have become the beneficial owner of any
         additional shares of Voting Stock except as part of the transaction
         that results in such Interested Shareholder's becoming an Interested
         Shareholder.

                (e)  After such Interested Shareholder has become an Interested
         Shareholder, such Interested Shareholder shall not have received the
         benefit, directly or indirectly (except proportionately as a
         stockholder), of any loans, advances, guaranties, pledges or other
         financial assistance or any tax credits or other tax advantages
         provided to or by the corporation, whether in anticipation of or in
         connection with such Business Combination or otherwise.

                (f)  A proxy or information statement describing the proposed
         Business Combination and complying with the requirements of the
         securities Exchange Act of 1934 and the rules and regulations
         thereunder (or any subsequent provisions replacing such Act, rules or
         regulations) shall have been mailed to public stockholders of the
         corporation at least 30 days prior to the consummation of such
         Business Combination (whether or not such proxy or information
         statement is required to be mailed pursuant to such Act or subsequent
         provisions).

        3.    Acquisition of 85% of Voting Stock.  Upon consummation of the
    transaction that resulted in the shareholder becoming an Interested
    Shareholder, the Interested Shareholder owned at least 85% of the Voting
    Stock outstanding at the time such transaction commenced.

        4.    Previously Proposed Business Combinations. The Business
    Combination is proposed prior to the consummation or abandonment of and
    subsequent to the earlier of the public announcement or the notice required

                                       4
<PAGE>   36
    hereunder of a proposed transaction that (I) constitutes one of the
    transactions described in the second sentence of this Paragraph; (ii) is
    with or by a person who either was not an Interested Shareholder during the
    previous three years or who became an Interested Shareholder with the
    approval of the corporation's Board of Directors; and (iii) is approved or
    not opposed by a majority of the Disinterested Directors then in office
    (but not less than one) . The proposed transactions referred to in the
    preceding sentence are limited to (x) a merger or consolidation of the
    corporation; (y) a sale, lease, exchange, mortgage, pledge, transfer or
    other disposition (in one transaction or a series of transactions), whether
    as part of a dissolution or otherwise, of assets of the corporation or of
    any Subsidiary (as hereinafter defined) (other than to any wholly-owned
    Subsidiary or to the corporation) having an aggregate Fair Market Value
    equal to 50% or more of either the aggregate Fair Market Value of all of
    the assets of the corporation determined on a consolidated basis or the
    aggregate Fair Market Value of all the outstanding stock of the
    corporation; or (z) a proposed tender or exchange offer for 50% or more of
    the outstanding Voting Stock. The corporation shall give not less than 20
    days notice to all Interested Shareholders prior to the consummation of any
    of the transactions described in clauses (x) or (y) of the second sentence
    of this Paragraph.

B.       Certain Definitions. For purposes of this Article X:

    1.   "Business Combination" shall mean any transaction that is referred to
in any one or more of the following clauses (a) through (e):

            (a)  any merger or consolidation of the corporation or any
         Subsidiary with (I) any Interested Shareholder or (ii) any other
         corporation (whether or not itself an Interested Shareholder) that is,
         or after such merger or consolidation would be, an Affiliate (as
         hereinafter defined) of an Interested Shareholder; or

            (b)  any sale, lease, exchange, mortgage, pledge, transfer or other
         disposition (in one transaction or a series of transactions) to or
         with any Interested Shareholder or any Affiliate of any Interested
         Shareholder of any assets of the corporation or any Subsidiary having
         an aggregate Fair Market Value equal to 10% or more of either the Fair
         Market Value of all the assets of the corporation determined on a
         consolidated basis or

                                       5

<PAGE>   37
         the aggregate Fair Market Value of all the outstanding stock of the
         corporation; or

                    the issuance or transfer by the corporation or any
         Subsidiary (in one transaction or series of transactions) of any
         securities of the corporation or any Subsidiary to any interested
         Shareholder or any Affiliate of any Interested Shareholder in
         exchange for cash, securities or other property (or a combination
         thereof), except (I) pursuant to the exercise, exchange or conversion
         of securities exercisable for, exchangeable for or convertible into
         stock of the corporation or any Subsidiary, which securities were
         outstanding prior to the time that the Interested Shareholder became
         such, (ii) pursuant to a dividend or distribution paid or made, or the
         exercise, exchange or conversion of securities exercisable for,
         exchangeable for or convertible into stock of the corporation or any
         Subsidiary, which security is distributed, pro rata, to all holders of
         a class or series of stock of the corporation subsequent to the time
         the Interested Shareholder became such, (iii) pursuant to an exchange
         offer by the corporation to purchase stock made on the same terms to
         all holders of such stock, or (iv) any issuance or transfer of stock
         by the corporation, provided however, that in no case under (I)
         through (iv) shall there be an increase in the Interested
         Shareholder's proportionate share of the stock of any class or series
         of the corporation or of the Voting Stock; or

                (d)   the adoption of any plan or proposal for the liquidation
         or dissolution of the corporation proposed by or on behalf of any
         Interested Shareholder or any Affiliate of any Interested Shareholder;
         or

                (e)   any reclassification of securities (including any reverse
         stock split) or recapitalization of the corporation, or any merger or
         consolidation of the corporation with any of its Subsidiaries or any
         other transaction (whether or not with or into or otherwise involving
         an Interested Shareholder) that has the effect, directly or
         indirectly, of increasing the proportionate share of the outstanding
         shares of any class of Equity Security (as hereinafter




                                       6


<PAGE>   38
         defined) of the corporation or any Subsidiary that is directly or
         indirectly owned by any Interested Shareholder or any Affiliate of any
         Interested Shareholder.

   2.    "Person" shall mean any individual, firm, corporation or other entity.

   3.    "Interested Shareholder" shall mean any Person (other than the
corporation or any Subsidiary or employee benefit plan of the corporation or
any Subsidiary) that:

                (a)  is the beneficial owner, directly or indirectly, of 15% or
         more of the outstanding Voting Stock; or

                (b)  is an assignee of or has otherwise succeeded to any shares
         of Voting Stock that were at any time within the three-year period
         immediately prior to the date in question beneficially owned by any
         Interested Shareholder, if such assignment or succession shall have
         occurred in the course of a transaction or series of transactions not
         involving a public offering within the meaning of the Securities Act
         of 1933.

   4.    A person shall be a "beneficial owner" of any stock that:

                (a)  such Person or any of its Affiliates or Associates (as
         hereinafter defined) beneficially owns directly or indirectly; or

                (b)  such Person or any of its Affiliates or Associates has (I)
         the right to acquire (whether such right is exercisable immediately or
         only after the passage of time), pursuant to any agreement,
         arrangement or understanding or upon the exercise of conversion
         rights, exchange rights, warrants or options, or otherwise, or (ii)
         the right to vote pursuant to any agreement, arrangement or
         understanding; or

                   is beneficially owned, directly or indirectly, by any
         other Person with which such Person or any of its Affiliates or
         Associates has any agreement, arrangement or understanding for the
         purpose of acquiring, holding, voting or disposing of any shares of
         such stock.




                                       7
<PAGE>   39
        5.    For the purpose of determining whether a Person is an Interested
    Shareholder pursuant to Paragraph 3 of this Section B, the number of shares
    of Voting Stock deemed to be outstanding shall include shares deemed owned
    through application of Paragraph 4 of this Section B but shall not include
    any other shares of Voting Stock that may be issuable pursuant to any
    agreement, arrangement or understanding, or upon exercise of conversion
    rights, warrants or options, or otherwise.

        6.    "Affiliate" and "Associate" shall have the meanings ascribed to
    such terms in Rule 12b-2 of the General Rules and Regulations under the
    Securities Exchange Act of 1934, as in effect on January 1, 1993.

        7.    "Subsidiary" means any corporation of which a majority of any
    class of Equity Security is owned, directly or indirectly, by the
    corporation, provided, however, that for purposes of the definition of
    Interested Shareholder set forth in Paragraph 3 of this Section B, the term
    "Subsidiary" shall mean only a corporation of which a majority of each
    class of Equity Security is owned, directly or indirectly, by the
    corporation.

        8.    "Disinterested Director" means any member of the Board of
    Directors who is unaffiliated with the Interested Shareholder and was a
    member of the Board of Directors immediately before the time that the
    Interested Shareholder became an Interested Shareholder, and any successor
    of a Disinterested Director who is unaffiliated with the Interested
    Shareholder and is recommended to succeed a Disinterested Director by a
    majority of Disinterested Directors then on the Board of Directors.

        9.    "Fair Market Value" means: (a) in the case of stock, the highest
    closing sale price during the 30-day period immediately preceding the date
    in question of a share of stock (I) on the principal United States
    securities exchange registered under the Securities Exchange Act of 1934 on
    which such stock is listed, or (ii) if such stock is not listed on any such
    exchange, the highest closing bid quotation with respect to a share of such
    stock during the 30-day period preceding the date in question on the
    National Association of Securities Dealers, Inc. Automated Quotations
    System or any similar system then in use, or (iii) if no such quotations
    are available, the fair market value on the date in question of a share of
    such stock as determined by a majority of the Disinterested Directors in
    good faith; or (b) in the



                                       8
<PAGE>   40
    case of property other than cash or stock, the fair market value of such
    property on the date in question as determined by a majority of the
    Disinterested Directors in good faith.

        10.  In the event of any Business Combination in which the corporation
    survives, the phrase "consideration other than cash to be received" as used
    in Paragraphs 2(a) and 2(b) of Section A of this Article X shall include
    the shares of Common Stock and the shares of any other class of outstanding
    Voting Stock retained by the holders of such shares.

        11.  "Equity Security" shall have the meaning ascribed to such term in
    Section 3(a)(11) of the Securities Exchange Act of 1934, as in effect on
    January 1, 1993.

        12.  "Announcement Date" shall have the meaning set forth in Section
    A(2)(a)(I) of this Article X.

        13.  "Determination Date" shall have the meaning set forth in Section
    A(2)(a)(ii) of this Article X.

        14.  "Voting Stock" shall have the meaning set forth in the first
    paragraph of Section A of this Article X.

   C.    Powers of the Board of Directors. A majority of the Disinterested
Directors shall have the power and duty to determine for the purposes of this
Article X, on the basis of information known to them after reasonable inquiry,
(1) whether a Person is an Interested Shareholder, (2) the number of shares of
Voting Stock beneficially owned by any Person, (3) whether a Person is an
Affiliate or Associate of another, (4) whether the assets that are the subject
of any Business Combination have an aggregate Fair Market Value equal to 10% or
more of either the Fair Market Value of all the assets of the corporation
determined on a consolidated basis or the aggregate Fair Market Value of all
the outstanding stock of the corporation. A majority of the Disinterested
Directors shall have the further power to interpret all of the terms and
provisions of this Article X.

   D.    No Effect on Fiduciary Obligations of Interested Shareholders. Nothing
contained in this Article X shall be construed to relieve any Interested
Shareholder from any fiduciary obligation imposed by law.

   E.    Amendment of Article X. Notwithstanding any other provisions of these
Articles of Incorporation or the Bylaws of



                                       9
<PAGE>   41
    the corporation (and notwithstanding the fact that a lesser percentage
    may be specified by law, these Articles of Incorporation or the Bylaws
    of the corporation), the affirmative vote of the holders of 80% or more of
    the outstanding Voting Stock, voting together as a single class, shall be
    required to amend or repeal, or adopt any provision inconsistent with, this
    Article X or any provision hereof."

    (b)     Article XIII of the Amended and Restated Articles of Incorporation
    be amended to read in its entirety as follows:

                                 "ARTICLE XIII

    The Bylaws of the corporation may be amended or repealed or new Bylaws may
    be adopted by the affirmative vote of either (a) the holders of at least
    80% of the voting power of the then outstanding shares of capital stock of
    the corporation entitled to vote generally in the election of directors, or
    (b) the majority of the directors present at any meeting of the Board of
    Directors of the corporation at which a quorum is present.


    Notwithstanding any other provisions of these Articles of Incorporation or
    the Bylaws of the corporation (and notwithstanding that a lesser percentage
    may be specified by law, these Articles of Incorporation or the Bylaws of
    the corporation), the affirmative vote of the holders of at least 80% of
    the outstanding capital stock of the corporation, voting together as a
    single class, shall be required to amend or repeal, or adopt any provision
    inconsistent with, this Article XIII or any provision hereof."

    ARTICLE THREE. The number of shares of Common Stock of the Company
outstanding and entitled to vote was 6,505,224 at the time of the adoption of
this amendment.

    ARTICLE FOUR.  The holders of all of the shares of Common Stock
outstanding and entitled to vote have signed a written consent to the adoption
of this amendment.





                                       10
<PAGE>   42
DATED as of the 15th day of February, 1993.


                                        PILLOWTEX CORPORATION



                                        By: /s/ CHARLES M. HANSEN, JR.
                                           -------------------------------
                                           Charles M. Hansen, Jr.,
                                           President






                                      11


<PAGE>   43


                            ARTICLES OF CORRECTION
                                   TO THE
                            ARTICLES OF AMENDMENT
                                   TO THE
               AMENDED AND RESTATED ARTICLES OF INCORPORATION
                                     OF
                            PILLOWTEX CORPORATION

    Pursuant to Article 1302-7.01 et seq of the Texas Miscellaneous
Corporation Laws Act, these Articles of Correction are adopted to correct a
document which is an inaccurate record of corporate action, contains an
inaccurate or erroneous statement, or was defectively or erroneously executed,
sealed, acknowledged, or verified.

                                 ARTICLE ONE

    The name of the corporation is Pillowtex Corporation.

                                 ARTICLE TWO

    The document to be corrected is the Articles of Amendment to the Amended and
Restated Articles of Incorporation of Pillowtex Corporation filed in the Office
of the Secretary of State of Texas on February 17, 1993.

                                ARTICLE THREE

    The Articles are erroneous, inaccurate, or incomplete because they
erroneously state in Article Four that holders of all of the shares of Common
Stock outstanding and entitled to vote have signed a written consent to the
adoption of the Articles of Amendment.

                                ARTICLE FOUR

    These Articles of Correction correct the Articles of Amendment by
substituting the following for Article Four in its entirety:

            "ARTICLE FOUR. At a special meeting of shareholders called for the
         purpose of voting on adoption of this amendment, the holders of
         6,284,808 shares of Common Stock outstanding and entitled to vote
         voted for this amendment and the holders of -0- shares of Common Stock
         outstanding and entitled to vote voted against this amendment."
<PAGE>   44
IN WITNESS WHEREOF, these Articles of Correction are dated as of March 12, 1993.


                                            PILLOWTEX CORPORATION

                                            By: /s/ STEPHEN P. RICHMAN
                                               -------------------------------
                                               Stephen P. Richman,
                                               Vice President





                                       2
<PAGE>   45
                             ARTICLES OF AMENDMENT
                                     TO THE
                              AMENDED AND RESTATED
                           ARTICLES OF INCORPORATION
                                       OF
                             PILLOWTEX CORPORATION


   Pursuant to the provisions of Article 4.04 of the Texas Business Corporation
Act, Pillowtex Corporation (the "Company"), hereby adopts the following
Articles of Amendment to its Articles of Incorporation.

   ARTICLE ONE.  The name of the corporation is Pillowtex corporation.

   ARTICLE TWO.  The following amendments to the Amended and Restated Articles
of Incorporation were adopted by the shareholders of the Company as of March
12, 1993:

         (a)     Article XI of the Amended and Restated Articles of
         Incorporation be amended to read in its entirety as follows:

                                  "ARTICLE XI

                          [INTENTIONALLY LEFT BLANK]"

         (b)     Article XII of the Amended and Restated Articles of
         Incorporation be amended to read in its entirety as follows:

                                  "ARTICLE XII

            Special meetings of shareholders of the corporation may be called
         only by the Chief Executive Officer, the President or the Board of
         Directors of the corporation or by the holders of at least 50% of all
         shares entitled to vote at the proposed meeting."

         ARTICLE THREE. The number of shares of Common Stock of the Company
outstanding and entitled to vote was 6,505,224 at the time of the adoption of
this amendment.

         ARTICLE FOUR.  At a special meeting of shareholders called for the
purpose of voting on adoption of this amendment, the holders of 6,284,808
shares of Common Stock outstanding and entitled to vote voted for this
amendment and the holders of -0- shares of Common Stock outstanding and entitled
to vote voted against this amendment.
<PAGE>   46
IN WITNESS WHEREOF, these Articles of Amendment are dated as of March 12, 1993.


                                       PILLOWTEX CORPORATION



                                       By: /s/ STEPHEN P. RICHMAN
                                          ------------------------------------
                                          Stephen P. Richman,
                                          Vice President





                                       2
<PAGE>   47
                                  STATEMENT 0F
                        CANCELLATION OF TREASURY SHARES


To the Secretary of State of the State of Texas:

   Pursuant to the provisions of Article 4.11 of the Texas Business
Corporation Act, the undersigned corporation submits the following statement of
cancellation by resolution of its board of directors of shares of the
corporation reacquired by it, other than redeemable shares redeemed or
purchased:

         1.      The name of the corporation is Pillowtex Corporation.

         2.      A resolution was duly adopted by all necessary action on
the part of the corporation on March 25, 1993, authorizing the cancellation of
12,343,296 shares of Common Stock, $0.01 par value per share, held as Treasury
Stock of the corporation.

   The amount of stated capital represented by the shares to be cancelled is
One Hundred Twenty-Three Thousand Four Hundred Thirty-Two and Ninety-Six
Hundredths Dollars ($123,432.96).

         3.      The aggregate number of issued shares, itemized by classes and
series and par value, if any, after giving effect to such cancellation is
10,590,224 itemized as follows:

<TABLE>
<CAPTION>
         Class           Par Value    Number of Shares
         -----           ---------    ----------------
         <S>               <C>           <C>
         Common Stock      $0.01         10,590,224
</TABLE>


         4.      The amount of the stated capital of the corporation, after
giving effect to such cancellation, is $105,902.24

Dated: March 25, 1993

                                        PILLOWTEX CORPORATION



                                        By: /s/ CHARLES M. HANSEN, JR.
                                           ----------------------------------
                                           Charles M. Hansen, Jr.
                                           President
<PAGE>   48



                            STATEMENT OF RESOLUTION
                                      FOR
                        SERIES A REDEEMABLE CONVERTIBLE
                                PREFERRED STOCK
                                       OF
                             PILLOWTEX CORPORATION
                     PURSUANT TO ARTICLE 2.13 OF THE TEXAS
                            BUSINESS CORPORATION ACT

         I, Jeffrey D. Cordes, President of Pillowtex Corporation, a
corporation organized and existing under the Texas Business Corporation Act
(the "Company"), DO HEREBY CERTIFY that at a meeting of the Board of Directors
on December 15, 1997, at which meeting a quorum was present, the following
resolution was adopted:

         RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of Article V of the
Company's Restated Articles of Incorporation, as amended, a series of Preferred
Stock, par value $0.01 per share, of the Company be, and hereby is, created,
and the designations, preferences, and relative rights of the shares of such
series, and the qualifications, limitations or restrictions thereof, be, and
hereby are, as follows:

         Section 1.  Designation and Amount.  The shares of such series shall
be designated as "Series A Redeemable Convertible Preferred Stock" (the
"Preferred Stock") and the number of shares constituting such series initially
shall be 200,000.

         Section 2.  Definitions.  For purposes of this Statement of
Resolution, the following definitions shall apply:

         "1999 EPS" shall mean EPS for the twelve month fiscal year of the
Company ending January 1, 2000.

         "1999 Pro Forma EPS" shall mean 1999 EPS calculated on a pro forma
basis assuming (I) the dividend rate on the Preferred Stock for calendar 1997
(if applicable) and calendar 1998 was the Adjusted 1998 Dividend Rate; (ii) the
dividend rate on the Preferred Stock for calendar 1999 was (a) 10.0% of Stated
Value per annum if 1999 EPS is less than $2.35, (b) 7.0% of Stated Value per
annum if 1999 EPS is greater than, or equal to, $2.35 but less than $2.70, and
  3.0% of Stated Value per annum if 1999 EPS is greater than, or equal to,
$2.70; and (iii) any incremental dividends included pursuant to clauses (I) and
(ii) which were not paid when due (in either cash or shares of Preferred Stock)
were paid in additional shares of Preferred Stock (including the effect of all
dividends earned on unpaid dividends).

         "Adjusted 1998 Dividend Rate" shall mean (I) if 1999 EPS is equal to,
or greater than, $2.35 (as adjusted pursuant to Section 3), 3% of Stated Value
per annum, or (ii) if 1999 EPS is less than $2.35 (as adjusted pursuant to
Section 3), 10% of Stated Value per annum.
<PAGE>   49
         "Affiliate" of any specified Person shall mean:

                 (a)      any other Person which, directly or indirectly, is in
         control of, is controlled by or is under common control with such
         specified Person; or

                 (b)      any other Person which beneficially owns or holds ten
         percent or more of any class of the share capital normally entitled to
         vote in the election of directors of such specified Person; or

                        any other Person of which ten percent or more of the
         share capital normally entitled to vote in the election of directors
         of such Person is beneficially owned or held by such specified Person
         or a subsidiary of such specified Person; or

                 (d)      any other Person who is a director or officer (I) of
         such specified Person; (ii) of any Subsidiary of such specified Person
         or (iii) of any Person described in paragraph (a) above; and

for purposes of this definition, "control" of a Person means the power, direct
or indirect, to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

         "Aggregate Dividends Owed" shall mean the aggregate amount of
dividends which would have been paid on the Preferred Stock from the Issue Date
through and including the last Dividend Payment Date prior to the Final
Determination Date assuming (I) the dividend rate on the Preferred Stock for
calendar 1997 (if applicable) and calendar 1998 was (a) 3.0% of Stated Value
per annum if 1999 Pro Forma EPS is equal to, or greater than, $2.35 (as
adjusted pursuant to Section 3), or (b) 10.0% of Stated Value per annum if 1999
Pro Forma EPS is less than $2.35 (as adjusted pursuant to Section 3); (ii) the
dividend rate on the Preferred Stock for calendar 1999 was the Applicable
Dividend Rate; and (iii) any incremental dividends included in calculating
dividends pursuant to clauses (I) and (ii) which were not paid when due (in
either cash or shares of Preferred Stock) were paid in additional shares of
Preferred Stock (including the effect of all dividends earned on unpaid
dividends).

         "Aggregate Dividends Paid" shall mean the aggregate amount of
dividends actually paid (whether in cash or additional shares of Preferred
Stock) from the Issue Date through and including the last Dividend Payment Date
prior to the Final Determination Date, including amounts actually paid in cash
pursuant to Section 3(c).

         "Applicable Dividend Rate" shall have the meaning assigned to it in
Section 3.

         "Asset Sales" shall mean the sale or conveyance of assets in one or a
series of related transactions (other than inventory sold in the ordinary
course of business) having a fair market value in excess of $1,000,000.

         A "Bankruptcy Event" shall be deemed to have occurred with respect to
a Person if such Person shall:



                                      2
<PAGE>   50
                 (I)      generally fail to pay, or admit in writing its
                          inability to pay, its debts as they become due;

                 (ii)     apply for, consent to or acquiesce in, the
                          appointment of a liquidator, trustee, receiver,
                          sequestrator or other custodian for itself or any of
                          its material Subsidiaries or any property of any
                          thereof, or make a general assignment for the benefit
                          of creditors;

                 (iii)    in the absence of such application, consent or
                          acquiescence, permit or suffer to exist the
                          appointment of a liquidator, trustee, receiver,
                          sequestrator or other custodian for itself or any of
                          its material Subsidiaries or for a substantial part
                          of the property of any thereof and such appointment
                          shall not be discharged within 30 days;

                 (iv)     commence, or permit or suffer to exist the
                          commencement of, any bankruptcy, reorganization, debt
                          arrangement, or other case or proceeding under any
                          bankruptcy or insolvency law, or any dissolution,
                          winding up or liquidation proceeding, in respect of
                          such Person or any of its material Subsidiaries, and,
                          if such case or proceeding is not commenced by such
                          Person or any such Subsidiaries, such case or
                          proceeding shall be consented to or acquiesced in by
                          such Person or any of its material Subsidiaries or
                          shall result in the entry of any order for relief or
                          shall remain for 30 days undismissed; or

                 (v)      take any action to authorize any of the foregoing.

                 "Board" shall mean the Board of Directors of the Company.

                 "Business Day" means any day which is neither a Saturday or
         Sunday nor a legal holiday on which banks are authorized or required
         to be closed in New York, New York.

                 "Capital Stock" shall mean any class or series of capital
         stock of the Company.

                 "Catch Up Dividend" shall have the meaning set forth in
         Section 3(d).

                 "Change of Control" shall have the meaning assigned to it in
         the Indenture except that any transaction or series of transactions in
         which the Apollo Purchasers (as defined in the Purchase Agreement) or
         their Affiliates or any transferees of any of the foregoing (either
         individually or as part of a "group" as defined in Section 13(d)(3) of
         the Securities Exchange Act of 1934, as amended) acquire 50% or more
         of the Company's capital stock shall not be deemed a Change of
         Control.

                 "Company" shall mean Pillowtex Corporation, a Texas
         corporation.

                 "Common Stock" shall mean the Common Stock, par value $0.01,
         of the Company.





                                       3
<PAGE>   51
                 "Common Stock's Fair Market Value" shall mean (I) if the
         Common Stock is listed on a national securities exchange, the closing
         sale price per share on the principal exchange on which the Common
         Stock is listed as reported by such exchange, (ii) if the Common Stock
         is quoted in the National Market System, the closing sale price per
         share as reported by NASDAQ or (iii) if the Common Stock is traded in
         the over-the- counter market but not quoted in the National Market
         System, the average of the closing bid and asked quotations per share
         as reported by NASDAQ, or any other nationally accepted reporting
         medium if NASDAQ quotations shall be unavailable.

                 "Control Notice" shall have the meaning assigned to it in
         Section 6(c)(ii).

                 "Conversion Date" shall have the meaning assigned to it in
         Section 7(c).

                 "Conversion Price"  shall mean $24.00 per share; provided that
         if the Determination Price is less than $23.00 then the Conversion
         Price shall equal the Determination Price plus $1.00; provided
         further, that the Conversion Price shall, in any event, be subject to
         adjustment from time to time as provided in Section 7.

                 "Determination Price" shall mean the average of the closing
         sales prices of the Company's Common Stock as reported on the New York
         Stock Exchange Composite Transactions List for each of the 20
         consecutive trading days immediately preceding the fifth trading day
         prior to the Closing Date (as defined in the Agreement and Plan of
         Merger dated September 10, 1997 among the Company,  a Company
         Subsidiary and the Target).

                 "Dividend Adjustment Amount" shall mean the difference between
         (I) the Aggregate Dividends Owed and (ii) the Aggregate Dividends
         Paid.

                 "Dividend Increase" shall have the meaning assigned to it in
         Section 3.

                 "Dividend Payment Date" means each of  March 31, June 30,
         September 30 and December 31 upon which quarterly dividend payments
         are due.

                 "EPS" for any fiscal year shall mean the Company's diluted
         earnings per share (as calculated based on Financial Accounting
         Standard Board Statement No. 128) as included in the Company's audited
         financial statements for such fiscal year, as adjusted to exclude the
         following items set forth, included or reflected in such audited
         statements (a) the after-tax effect of any changes in GAAP from
         September 5, 1997, other than the effects of Financial Accounting
         Standards Board Statement No. 128, (b) the after-tax effect of any
         extraordinary gains or losses, and   the after-tax effect of gains
         on Asset Sales.

                 "Event of Noncompliance" shall have the meaning assigned to it
         in Section 10.

                 "Final Determination Date" shall have the meaning assigned to
         it in Section 3.





                                       4
<PAGE>   52
                 "GAAP" shall mean generally acceptable accounting principles
         consistently applied in the United States, unless any other
         jurisdiction is specified, in which case it shall be the equivalent
         set of accounting principles for such jurisdiction.

                 "Indenture" means the Indenture dated as of November 12, 1996,
         between the Company, certain guarantors described therein and Bank
         One, Columbus, N.A., as trustee, relating to the Series A and Series B
         10% Senior Subordinated Notes of the Company.

                 "Issue Date" shall mean the date of original issuance of the
         Preferred Stock.

                 "Junior Securities" shall mean Capital Stock of the Company
         that, with respect to dividend distributions and distributions upon
         the liquidation, winding up or dissolution of the Company, rank junior
         to the Preferred Stock.

                 "Liquidation Preference" shall have the meaning assigned to it
         in Section 4.

                 "Majority of the Preferred Stock" shall mean more than 50% of
         the outstanding shares of Preferred Stock.

                 "Mandatory Redemption Date" shall have the meaning assigned to
         it in Section 5(b).

                 "Mandatory Redemption Price" shall have the meaning assigned
         to it in Section 5(b).

                 "Optional Redemption Date" shall have the meaning assigned to
         it in Section 5(a)(I).

                 "Optional Redemption Price" shall have the meaning assigned to
         it in Section 5(a)(I).

                 "Parity Securities" shall mean Capital Stock of the Company
         that, with respect to dividend distributions and distributions upon
         the liquidation, winding-up or dissolution of the Company, ranks on a
         parity with the Preferred Stock and has a mandatory redemption date on
         or after the Mandatory Redemption Date.

                 "Participating Holder" shall have the meaning assigned to it
         in Section 6(c)(ii).

                 "Permitted Indebtedness" shall mean (I) term loans issued
         pursuant to the Company's senior credit facilities contemplated in
         Section 9.8(b) of the Purchase Agreement, (ii) the subordinated debt
         contemplated in Section 9.8  of the Purchase Agreement, (iii) $22
         million of the Company's and the Target's industrial revenue bonds,
         (iv) approximately $125 million of the Company's 10% Senior
         Subordinated Notes due 2006 under the Indenture and (v) approximately
         $117.8 million principal amount of the Target's 6% Convertible
         Subordinated Debentures due 2012 ("6% Notes") (reduced to the extent
         such 6% Notes have theretofore been converted in accordance with their
         terms).

                 "Person" shall include all natural persons, corporations,
         business trusts, associations, companies, partnerships, joint ventures
         and other entities and governments and agencies and political
         subdivisions.





                                       5
<PAGE>   53
                 "Preferred Stock" shall mean the Series A Redeemable
         Convertible Preferred Stock of the Company.

                 "Purchase Agreement" shall mean the Purchase Agreement dated
         as of September 10, 1997 among the Company and the purchasers named
         therein pursuant to which 65,000 shares of Preferred Stock are to be
         issued, including all schedules and exhibits thereto, as such Purchase
         Agreement may be from time to time amended, modified or supplemented.

                 "Reclassification" shall mean any capital reorganization of
         the Company, any reclassification of the Common Stock, the
         consolidation of the Company with or the merger of the Company with or
         into any other Person, a statutory share exchange having an effect
         similar to a merger or consolidation, the sale, lease or other
         transfer of all or substantially all of the assets of the Company to
         any other Person or any similar transaction.  The subdivision or
         combination of shares of Common Stock issuable upon conversion of
         shares of Preferred Stock at any time outstanding into a greater or
         lesser number of shares of Common Stock (whether with or without par
         value) shall not be deemed to be a "Reclassification" of the Common
         Stock for the purposes of Section 7(d)(iv).

                 "Senior Securities" shall mean Capital Stock of the Company
         that, with respect to dividend distributions and distributions upon
         the liquidation, winding-up or dissolution of the Company, ranks
         senior to the Preferred Stock or Capital Stock that, with respect to
         dividend distributions and distributions upon the liquidation,
         winding-up or dissolution of the Company ranks on a parity with the
         Preferred Stock and has a mandatory redemption date prior to the
         Mandatory Redemption Date.

                 "Special Redemption Date" shall have the meaning assigned to
         it in Section 5(a)(ii).

                 "Special Redemption Price" shall have the meaning assigned to
         it in Section 5(a)(ii).

                 "Stated Value" shall be an amount equal to $1,000 per share of
         Preferred Stock.

                 "Subsidiary" means, as to any Person, (a) any corporation 51%
         or more of the outstanding shares of capital stock of which having
         ordinary voting power for the election of directors is owned directly
         or indirectly by such Person and (b) any partnership, association,
         joint venture or other entity in which such Person and/or one or more
         Subsidiaries of such Person has 51% or more of an equity interest at
         the time.

                 "Target" shall mean Fieldcrest Cannon, Inc., a Delaware
         corporation.

                 "Target Acquisition" shall have the meaning assigned to it in
         the Purchase Agreement.

                 The foregoing definitions shall be equally applicable to both
         the singular and plural forms of the defined terms.





                                       6
<PAGE>   54
         Section 3.  Dividends.  The holders of the outstanding shares of
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board, out of funds legally available therefor, distributions in the form of
dividends on each share of Preferred Stock as set forth below:

         (a)     Right to Dividends.

                 (I)      Subject to the provisions of this Section 3,
beginning on the Issue Date through and including December 31, 1999, at a rate
per annum of 3% of Stated Value;

                 (ii)     Beginning on January 1, 2000 through and including
the Mandatory Redemption Date, at a rate (the "Applicable Dividend Rate") per
annum based upon 1999 Pro Forma EPS as follows:  (A) if 1999 Pro Forma EPS is
less than $2.35, then the dividend rate shall be 10.0% of Stated Value per
annum; (B) if 1999 Pro Forma EPS is greater than, or equal to, $2.35 but less
than $2.70, then the dividend rate shall be 7.0% of Stated Value per annum; and
  if 1999 Pro Forma EPS is greater than or equal to $2.70, then the dividend
rate shall be 3.0% of Stated Value per annum;

in each case subject to increase as set forth herein.

         Each of the $2.35 and $2.70 targets for 1999 Pro Forma EPS set forth
above shall be (A) appropriately adjusted for (x) subdivisions and combinations
of shares of Common Stock, (y) Reclassifications and (z) dividends on Common
Stock payable in shares of Common Stock subsequent to the Issue Date and (B)
reduced by an amount equal to (rounded to the nearest hundredth) (x) 0.065
multiplied by (y)(I) $23.00 minus (ii) the Determination Price, but the
provisions of this clause (B) shall only be applicable if the Determination
Price is less than $23.00.

         (b)     Determination of 1999 EPS and 1999 Pro Forma EPS.  The Company
will promptly (and in any event within 5 Business Days) after determination of
1999 EPS (which date of determination shall be no later than March 31, 2000),
determine 1999 Pro Forma EPS and send to each record holder of Preferred Stock
at its record address a written statement of its calculation of 1999 EPS and
1999 Pro Forma EPS (including each adjustment thereto for the items described
in clauses (a) through   of the definition of EPS in Section 2 hereof and any
adjustments pursuant to the definition of 1999 Pro Forma EPS in Section 2
hereof), and a negative assurance letter from the Company's auditors to the
effect that they have reviewed such 1999 EPS and 1999 Pro Forma EPS
calculations and that nothing has come to the auditors' attention that would
cause them to believe that 1999 EPS and 1999 Pro Forma EPS were not calculated
as required by this Statement of Resolution.  In the event that the holders of
a Majority of the Preferred Stock disagree with the calculation of 1999 EPS
and/or 1999 Pro Forma EPS ("Disagreeing Holders"), such Disagreeing Holders (or
their duly appointed representative) shall notify the Company in writing of
such disagreement within 30 days after the applicable notice of such 1999 EPS
and 1999 Pro Forma EPS figures have been sent by the Company.  Failure to send
such notice of disagreement within such time period shall be deemed acceptance
of the Company's 1999 EPS and 1999 Pro Forma EPS figures absent fraud.  Upon
receipt of such notice of disagreement, the Company shall provide to the
Disagreeing Holders and their representatives (including accountants) access to
the books and records of the Company used to calculate such 1999 EPS and 1999
Pro Forma EPS figures during reasonable business hours, as well as the auditors
that reviewed such calculations and the work papers relating to the audit of





                                       7
<PAGE>   55
the Company's financial statements and the review of the 1999 EPS and 1999 Pro
Forma EPS calculations.  If, within 30 days of the Company's receipt of such
notice of disagreement, agreement as to the proper 1999 EPS and 1999 Pro Forma
EPS calculations cannot be reached, the calculation of such 1999 EPS and 1999
Pro Forma EPS figures shall be promptly determined by a "big-six" accounting
firm, which does not audit the Company and which is mutually acceptable to
holders of a majority of the shares held by the Disagreeing Holders and the
Company. The Company and such Disagreeing Holders shall promptly (and in any
event within 30 days after the expiration of the 30-day period described in the
preceding sentence) appoint such accounting firm, and such accounting firm
shall use its reasonable best efforts to calculate such 1999 EPS and 1999 Pro
Forma EPS figures within 30 days after its appointment and produce such
calculation in writing.  The scope of such accounting firm's review of  (I) the
1999 EPS calculation shall be limited to the items described in clauses (a)
through   of the definition of EPS in Section 2 hereof and (ii) the 1999 Pro
Forma EPS calculation shall be limited to any adjustments pursuant to the
definition of 1999 Pro Forma EPS in Section 2 hereof.  Absent fraud, such
accounting firm's calculation of the 1999 EPS and 1999 Pro Forma EPS figures
shall be binding on the Company and all holders of Preferred Stock for all
purposes of this Statement of Resolution.  If such accounting firm's
calculation of either of the 1999 EPS figure or the 1999 Pro Forma EPS figure
is lower than that calculated by the Company, the Company shall bear the fees
and expenses of such accounting firm. If such accounting firm's calculation of
both of the 1999 EPS figure and 1999 Pro Forma EPS figure is equal to or higher
than that calculated by the Company, the Disagreeing Holders shall bear the
fees and expenses of such accounting firm.

               Estimated Dividend Payments.  Notwithstanding anything herein
to the contrary, the Company may at its option pay dividends in cash during
each quarterly period during calendar years 1998 and 1999 at a rate in excess
of 3% of Stated Value per annum.

         (d)     Dividend Adjustment.  Following the date on which the final
determination of 1999 EPS and 1999 Pro Forma EPS is made ("Final Determination
Date"), as contemplated by Section 3(b), the Company will promptly (and in any
event within five Business Days) determine the Aggregate Dividends Paid and the
Aggregate Dividends Owed.  If the Aggregate Dividends Paid is less than the
Aggregate Dividends Owed, the Company will, prior to the expiration of such
five-Business-Day period, pay to the holders of Preferred Stock a number of
additional shares of Preferred Stock (the "Catch Up Dividend") with a Stated
Value equal to the Dividend Adjustment Amount.  In determining dividends
payable on the next succeeding Dividend Payment Date following the Final
Determination Date, the Company shall assume that the shares of Preferred Stock
outstanding at the prior Dividend Payment Date included all additional shares
issued in the Catch Up Dividend.  If the Aggregate Dividends Paid is more than
the Aggregate Dividends Owed, then the Dividend Adjustment Amount shall be
offset against dividends payable on the next succeeding Dividend Payment Date
or Dividend Payment Dates, as the case shall be.

         (e)     Dividends Cumulative; Compounding.  All dividends shall be
cumulative, whether or not declared, on a daily basis from the Issue Date and
shall be payable quarterly, in arrears, on each Dividend Payment Date
commencing December 31, 1997.  Dividends (in the form of additional dividends
due) will compound quarterly on all unpaid dividends from the Dividend Payment
Date with respect thereto until the date of payment at the Applicable Dividend
Rate (as adjusted in accordance with this Section 3).





                                       8
<PAGE>   56
         (f)     Payment in Kind; Fractional Shares.  From the Issue Date
through the fifth anniversary of the Issue Date, dividends declared may be
paid, at the Company's option, either in cash or in additional shares of
Preferred Stock (other than the Catch Up Dividend, which shall be paid in
additional shares of Preferred Stock).  Fractional shares of Preferred Stock
shall not be issued in certificated form, but shall be deemed outstanding on
the books of the Company and held of record by the appropriate stockholder for
all purposes, including the payment of dividends.  Uncertificated fractional
shares held of record by a stockholder, when aggregating a whole share, shall
be issued in whole share increments.  After the fifth anniversary of the Issue
Date, dividends are payable only in cash.  The number of shares of Preferred
Stock to be issued in circumstances when dividends are paid in the form of
additional shares of Preferred Stock shall equal (x) the cash amount of the
dividend that would have been payable had the dividend in question been paid in
cash, divided by (y) the Stated Value, rounded to the nearest hundredth of a
full share.

         (g)     Increase in Rate.  In the event that after the fifth
anniversary of the Issue Date, the Company shall fail to pay dividends in cash
on the Dividend Payment Date when due, the Applicable Dividend Rate applicable
to any period in which any such dividends remain unpaid shall be increased by
0.5% of Stated Value per quarter for each quarter in which any such dividends
remain unpaid (such rate increase, the "Dividend Increase").  The Applicable
Dividend Rate plus the Dividend Increase applicable to any period shall not
exceed the lesser of (I) 18.0% of Stated Value per annum and (ii) the maximum
rate permitted by applicable law.  After a Dividend Increase, when the Company
pays all accrued and unpaid dividends, and upon the payment of dividends on the
next Dividend Payment Date at the rate in effect prior to giving effect to any
Dividend Increase, the annual dividend rate shall be decreased to the otherwise
Applicable Dividend Rate.

         All dividends shall be paid pro rata to the holders entitled thereto.

         Section 4.  Liquidation Rights of Preferred.  In the event of any
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, the holders of the Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Company available for distribution
to its shareholders, whether such assets are capital, surplus, or earnings,
before any payment or declaration and setting apart for payment of any amount
shall be made in respect of any other class of Capital Stock of the Company
(other than Parity Securities) whether currently authorized or hereafter
created, an amount equal to $1,000 per share plus an amount equal to all
accrued and unpaid dividends thereon, whether or not earnings are available in
respect of such dividends or such dividends have been declared, to and
including the date full payment shall be tendered to the holders of the
Preferred Stock with respect to such liquidation, dissolution or winding-up,
and no more (the "Liquidation Preference").  If upon any liquidation,
dissolution, or winding-up of the Company, whether voluntary or involuntary,
the assets to be distributed to the holders of the Preferred Stock, along with
the holders of Parity Securities, if any, shall be insufficient to permit the
payment to such shareholders of the full preferential amounts aforesaid, then
all of the assets of the Company shall be distributed ratably to the holders of
the Preferred Stock and such Parity Securities on the basis of the amount due
on such liquidation if there were sufficient assets held by each such
shareholder.  Neither a consolidation or merger of the Company with or into any
other company nor a merger of any other company with or into the Company, nor a
sale or transfer of all or any part of the Company's assets for cash,
securities or other property, will be considered a liquidation, dissolution or
winding-up of the Company.





                                       9
<PAGE>   57
         Section 5.  Redemptions.

         (a)     Optional Redemption.

                 (I)      The Company may, at the option of the Board of
Directors, redeem, to the extent of funds legally available therefor, at any
time on or after the fourth anniversary of the Issue Date, in whole or in part,
in the manner provided for in Section 5  hereof, any or all of the shares of
the Preferred Stock, at a redemption price per share equal to (x) the
Liquidation Preference plus (y) (A) the Redemption Premium (as defined below)
multiplied by (B) the Liquidation Preference (minus any accrued and unpaid
dividends from the Dividend Payment Date prior to the Optional Redemption
Date).  The "Redemption Premium" shall equal the Applicable Dividend Rate on
the Preferred Stock on the fourth anniversary of the Issue Date and shall
decline ratably (pursuant to the table attached hereto as Annex I) from the
fourth anniversary of the Issue Date to the Mandatory Redemption Date so that
at the Mandatory Redemption Date the Redemption Premium of the Preferred Stock
under this Section 5(a)(I) (y) shall be equal to zero.  The redemption price
per share determined under this Section 5(a)(I) is referred to herein as the
"Optional Redemption Price" and the date fixed for redemption in accordance
with Section 5  below is the "Optional Redemption Date."  In the event of a
redemption pursuant to this Section 5(a)(I) of only a portion of the then
outstanding shares of the Preferred Stock, the Company shall effect such
redemption on a pro rata basis according to the number of shares held by each
record holder of the Preferred Stock, except that the Company may redeem such
shares held by holders of fewer than 10 shares (or shares held by holders who
would hold less than 10 shares as a result of such pro rata redemption),
without regard to the pro rata requirements of this sentence.

                 (ii)     To the extent a Change of Control has occurred and
the Company has received a Control Notice from Participating Holders, the
Company may, at the option of the Board, redeem, to the extent of funds legally
available therefor all, but not less than all, of the Preferred Stock held by
such Participating Holders on a date fixed by the Company, which date shall be
no less than 20 days nor more than 90 days after receipt of the Control Notice
or if the Control Notice is received more than 20 days prior to the date of the
Change of Control no later than the date of the Change of Control (the "Special
Redemption Date") in the manner provided for in Section 5  below at a
redemption price per share equal to 101% of the Liquidation Preference
(including, without limitation, an amount equal to a prorated dividend for the
period from the Dividend Payment Date immediately prior to the Special
Redemption Date to the Special Redemption Date) (the "Special Redemption
Price").

         (b)     Mandatory Redemption.  On June 30, 2008 (the "Mandatory
Redemption Date") the Company shall redeem, to the extent of funds legally
available therefor, in the manner provided for in Section 5  hereof, all of
the shares of the Preferred Stock then outstanding at a redemption price per
share equal to the Liquidation Preference (including, without limitation, an
amount equal to a prorated dividend for the period from the dividend payment
date immediately prior to the Mandatory Redemption Date to the Mandatory
Redemption Date) (the "Mandatory Redemption Price").





                                       10
<PAGE>   58
               Procedures for Redemption.

                 (I)      At least thirty (30) days and not more than sixty
(60) days prior to the date fixed for any redemption of the Preferred Stock in
accordance with Section 5(a)(I) or Section 5(b) and at least five days prior to
the Special Redemption Date for any redemption of the Preferred Stock in
accordance with Section 5(a)(ii), written notice (the "Redemption Notice")
shall be given by first class mail, postage prepaid, to each holder of record
on the mailing date of such notice at such holder's address as it appears on
the stock books of the Company (and by facsimile, if a record holder has
provided a facsimile contact); provided that no failure to give such notice nor
any deficiency therein shall affect the validity of the procedure for the
redemption of any shares of Preferred Stock to be redeemed except as to the
holder or holders to whom the Company has failed to give said notice or to whom
such notice was defective.  Any holder of Preferred Stock may exercise its
conversion rights under Section 7(a) at any time up until 5:00 p.m. New York
City time on the Business Day prior to the date fixed for redemption in
accordance with this Section 5 (the "Redemption Date") and if not exercised
prior to such time, such redemption right shall expire unless the Company
defaults in making the payment due on redemption.  The Redemption Notice shall
state:

                          (A)     whether the redemption is pursuant to Section
5(a)(I), 5(a)(ii) or 5(b) hereof;

                          (B)     the Optional Redemption Price, the Special
Redemption Price or Mandatory Redemption Price, as the case may be;

                                whether all or less than all the outstanding
shares of the Preferred Stock are to be redeemed and the total number of shares
of the Preferred Stock being redeemed;

                          (D)     the Redemption Date;

                          (E)     that the holder is to surrender to the
Company or its transfer agent, in the manner, at the place or places and at the
price designated, his certificate or certificates representing the shares of
Preferred Stock to be redeemed; and

                          (F)     that dividends on the shares of the Preferred
Stock to be redeemed shall cease to accumulate on such Redemption Date unless
the Company defaults in the payment of the Optional Redemption Price, the
Special Redemption Price or the Mandatory Redemption Price, as the case may be.

                 (ii)     Each holder of Preferred Stock shall surrender the
certificate or certificates representing such shares of Preferred Stock to the
Company, duly endorsed (or otherwise in proper form for transfer, as determined
by the Company), in the manner and at the place designated in the Redemption
Notice, and on the Redemption Date the full Optional Redemption Price, Special
Redemption Price or Mandatory Redemption Price, as the case may be, for such
shares shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired.  In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.





                                       11
<PAGE>   59
                 (iii)    On and after the Redemption Date, unless the Company
defaults in the payment of the applicable redemption price, dividends on the
Preferred Stock called for redemption shall cease to accumulate on the
Redemption Date, and all rights of the holders of redeemed shares shall
terminate with respect thereto on the Redemption Date, other than the right to
receive the Optional Redemption Price, Special Redemption Price or the
Mandatory Redemption Price, as the case may be, without interest.

         Section 6.  Voting Rights.

         (a)     General.  The holders of Preferred Stock, except as otherwise
required under Texas law or as set forth in Sections 6(b) and 6  below, shall
not be entitled or permitted to vote on any matter required or permitted to be
voted upon by the shareholders of the Company.

         (b)     Amendments to Articles of Incorporation; Mergers and Similar
Transactions.  So long as any shares of the Preferred Stock are outstanding,
the Company shall not (I) amend its Restated Articles of Incorporation
(including this Statement of Resolution) so as to: (A) affect adversely the
specified rights, preferences, privileges or voting rights of holders of shares
of Preferred Stock (including any adjustment to the Stated Value) or (B)
authorize the issuance of additional shares of any class of Senior Securities
(or amend the provisions of any existing class of Capital Stock to make such
class of Capital Stock Senior Securities) or (ii) merge, consolidate or enter
into any other Reclassification that would (A) materially affect adversely the
special or relative rights, preferences, privileges or voting rights of the
Preferred Stock (including any adjustment to the Stated Value), or (B) result
in a breach of any of the Company's obligations under this Statement of
Resolution, without, in any such case, the affirmative vote or consent of
holders of at least a Majority of the Preferred Stock, voting or consenting, as
the case may be, as one class, given in person or by proxy, either in writing
(to the extent permitted under the Company's Restated Articles of
Incorporation) or by resolution adopted at an annual or special meeting of
shareholders. Notwithstanding the foregoing, any amendment to the Restated
Articles of Incorporation (including this Statement of Resolution) that would
alter in any material respect the dividend rates, liquidation preference,
redemption rights or conversion rights of the Preferred Stock shall require the
affirmative vote or consent of each holder of Preferred Stock.

               Election of Directors.

                 (I)      The foregoing notwithstanding, in the event of the
Company's failure to pay dividends in accordance with Section 3, or the
occurrence of one or more Events of Noncompliance, within 10 Business Days of
such failure or such event, as the case may be, the Company shall notify each
holder of Preferred Stock thereof in writing, and the number of directors
constituting the Board shall thereupon be automatically increased so that the
number of new directorships of the Board so created will constitute at least
25.0% (rounded up to the nearest whole number) of the entire Board, after
giving effect to such increase, and the holders of the Preferred Stock shall
have, in addition to the other voting rights provided herein, the exclusive and
special right, voting separately as a class, to elect directors to fill such
newly created directorships (and to fill any vacancy in such directorships
until such time as the special voting rights provided by this Section 6(c)(I)
shall terminate as set forth below).  If the event giving rise to the special
voting rights was a failure to pay dividends or an Event of Noncompliance
described in Section 10(a)(iii), the special voting rights will continue until
all





                                       12
<PAGE>   60
accrued and unpaid dividends have been paid in full or all Events of
Noncompliance have been cured, as the case may be, subject to revesting in the
event of any future failure to pay dividends in accordance with the terms
hereof or a subsequent Event of Noncompliance. Except as provided in the prior
sentence, the special voting rights provided by this Section 6(c)(I) shall
continue as long as any Preferred Stock is outstanding.  If the special voting
rights provided by this Section 6(c)(I) terminate, the terms of the additional
directors elected by the holders of Preferred Stock pursuant to this Section
6(c)(I) shall terminate and the number of directors constituting the Board
shall then be decreased to such number as constituted the whole Board
immediately prior to the occurrence of the event giving rise to such special
voting rights.  The special voting rights provided in this Section 6(c)(I)
shall not preclude or affect the exercise of any other rights or remedies
provided hereby or by agreement, by law or otherwise upon the occurrence of any
event giving rise to such special rights.

                 (ii)     The foregoing notwithstanding, the Company will give
notice to each holder of Preferred Stock within five days after the Company
becomes aware of any Change of Control that has occurred or is reasonably
likely to occur and, if a Change of Control occurs, the holders of a Majority
of the Preferred Stock shall, by written notice to the Company and the other
holders of Preferred Stock delivered before or 15 days after the Change of
Control (a "Control Notice") have the right to elect a majority of the Board in
accordance with this Section 6(c)(ii), unless the Company has theretofore
redeemed shares of any holder of Preferred Stock participating in a Control
Notice (each, a "Participating Holder") in accordance with Section 5(a)(ii).
Any holder of Preferred Stock may, at any time within ten days after receipt of
the Control Notice, elect to become a Participating Holder by delivery of
written notice of such election to the Company and the other Participating
Holders.  If a Control Notice is received by the Company and the Company has
not redeemed the shares of Preferred Stock held by all Participating Holders,
upon the later to occur of (I) the occurrence of such Change of Control and
(ii) the date that the Company's redemption rights under Section 5(a)(ii) shall
have expired, the number of directors constituting the Board shall thereupon be
automatically increased by such number as will be necessary to constitute a
majority of the total number of the members, after giving effect to such
increase, of such Board, and the holders of the Preferred Stock shall have, in
addition to the other voting rights provided herein, the exclusive, special and
continuing right, voting separately as a class, to elect directors to fill such
newly created directorships (and to fill any vacancy in such directorships) and
to continually elect at least a majority of the Board as long as any Preferred
Stock is outstanding.

                 (iii)    The directors to be elected (or if such directors
have been previously elected and any vacancy shall exist, such vacancy to be
filled) by the holders of Preferred Stock (voting as a class) shall be elected
(or filled) at (I) annual meetings of the shareholders of the Company, or (ii)
a special meeting of the holders of Preferred Stock for the purpose of electing
such directors (or filling any such vacancy), to be called by the Secretary of
the Company upon the written request of the holders of record of 10% or more of
the number of shares of Preferred Stock then outstanding; provided, however,
that if the Secretary of the Company shall fail to call any such meeting within
10 days after any such request, such meeting may be called by any holder of
Preferred Stock designated for that purpose by the holders of record of 10% or
more of the number of shares of Preferred Stock then outstanding.  At any
meeting or at any adjournment thereof held for the purpose of electing
directors at which the holders of shares of Preferred Stock shall have the
special voting right provided by this Section 6(c), the presence, in person or
by proxy, of the holders of the equivalent of a Majority of the Preferred Stock
shall be required to constitute a quorum for the election of any





                                       13
<PAGE>   61
director by the holders of the Preferred Stock exercising such special right.
The special right of holders of shares of Preferred Stock under this Section
6  may be exercised by the written consent of the holders of shares of
Preferred Stock then outstanding in accordance with the law of the Company's
jurisdiction of incorporation at such time to the extent permitted by the
Company's Restated Articles of Incorporation.

                 (iv)     The foregoing notwithstanding, in the case of any
vacancy in the office of a director occurring among the directors elected by
the holders of the Preferred Stock pursuant to Section 6(c), the remaining
director or directors so elected by the holders of the Preferred Stock may, by
affirmative vote of a majority thereof (or the remaining director so elected if
there is only one such director), elect a successor or successors to hold the
office for the unexpired term of the director or directors whose place or
places shall be vacant.  Any director who shall have been elected by the
holders of the Preferred Stock, or any director so elected as provided in the
next preceding sentence hereof, shall be removed during the aforesaid term of
office, whether with or without cause, only by the affirmative vote of the
holders of a Majority of the Preferred Stock.

                 (v)      The Company shall promptly take all necessary action
to facilitate the implementation of the rights of the holders of Preferred
Stock to appoint directors that are provided for under this Section 6.

         Section 7.  Conversion Rights.

         The Preferred Stock shall be convertible into Common Stock as follows:

         (a)     Optional Conversion.  Subject to and upon compliance with the
provisions of this Section 7, the holder of any shares of Preferred Stock shall
have the right at such holder's option, at any time or from time to time, to
convert any shares of Preferred Stock into the number of fully paid and
nonassessable shares of Common Stock set forth in Section 7(b).

         (b)     Conversion Price.  Each share of Preferred Stock converted
pursuant to Section 7(a) shall be converted into such number of shares of
Common Stock as is determined by dividing (I) the sum of (A) $1,000 plus (B)
any dividends on such share of Preferred Stock which such holder is entitled to
receive, but has not yet received (including, without limitation, an amount
equal to a prorated dividend for the period from the Dividend Payment Date
immediately prior to the Conversion Date to the Conversion Date), by (ii) the
Conversion Price in effect on the Conversion Date.  The Conversion Price shall
be subject to adjustment as set forth in Section 7(d).

               Mechanics of Conversion.  The holder of any shares of
Preferred Stock may exercise the conversion right specified in Section 7(a) as
to any part thereof by surrendering to the Company or any transfer agent of the
Company the certificate or certificates for the shares to be converted,
accompanied by written notice stating that the holder elects to convert all or
a specified portion of the shares represented thereby.  Conversion shall be
considered to have been effected on the date when a holder of Preferred Stock
delivers notice of an election to convert shares of Preferred Stock to the
Company accompanied by certificates representing such shares, and such date is
referred to herein as the "Conversion Date." Subject to the provisions of
Section 7(d), as promptly as practicable thereafter (and after surrender of the
certificate or certificates evidencing the shares of Preferred





                                       14
<PAGE>   62
Stock or delivery to the Company of an affidavit and indemnity with respect to
such certificates), the Company shall issue and deliver to or upon the written
order of such holder a certificate or certificates for the number of full
shares of Common Stock to which such holder is entitled and a check or cash
with respect to any fractional interest in a share of Common Stock as provided
in Section 7(h) hereof.  Subject to the provisions of Section 7(d), the Person
in whose name the certificate or certificates for Common Stock are to be issued
shall be considered to have become a holder of record of such Common Stock on
the Conversion Date.  Upon conversion of only a portion of the number of shares
covered by a certificate evidencing shares of Preferred Stock surrendered for
conversion, the Company shall issue and deliver to or upon the written order of
the holder of the certificate so surrendered for conversion, at the expense of
the Company, a new certificate covering the number of shares of Preferred Stock
representing the unconverted portion of the certificate so surrendered.  The
Company will use its best efforts to deliver all stock certificates required by
this Section 7  within three business days after the Conversion Date.

         (d)     Conversion Price Adjustments.  The Conversion Price shall be
subject to adjustment from time to time as follows:

                 (I)      Stock Dividends.  If the number of shares of Common
         Stock outstanding at any time after the date of issuance of Preferred
         Stock is increased by a stock dividend payable in shares of Common
         Stock or by a subdivision or split-up of shares of Common Stock, then
         immediately after the record date fixed for the determination of
         holders of Common Stock entitled to receive such stock dividend or the
         effective date of such subdivision or split-up, as the case may be,
         the Conversion Price shall be appropriately reduced so that the holder
         of any shares of Preferred Stock thereafter converted shall be
         entitled to receive the number of shares of Common Stock of the
         Company which he would have received immediately following such action
         had such shares of Preferred Stock been converted immediately prior
         thereto.

                 (ii)     Combination of Stock.  If the number of shares of
         Common Stock outstanding at any time after the date of issuance of
         Preferred Stock is decreased by a combination of the outstanding
         shares of Common Stock, then immediately after the effective date of
         such combination, the Conversion Price shall be appropriately
         increased so that the holder of any shares of Preferred Stock
         thereafter converted shall be entitled to receive the number of shares
         of Common Stock which he would have received immediately following
         such action had such shares of Preferred Stock been converted
         immediately prior thereto.

                 (iii)    Adjustments for Other Dividends and Distributions.
         In the event the Company at any time or from time to time after the
         Issue Date makes or issues, or fixes a record date for the
         determination of holders of Common Stock entitled to receive, a
         dividend or other distribution payable in securities or other rights
         of the Company other than a dividend or other distribution payable
         solely in shares of Common Stock, then and in each such event
         provision shall be made so that the holders of Preferred Stock shall
         receive upon conversion thereof, in addition to the number of shares
         of Common Stock receivable thereupon, the amount of securities or
         other rights of the Company which they would have received had their
         Preferred Stock been converted into Common Stock on the date of such
         event and had they thereafter, during the period from the date of such
         event to and including the Conversion Date, retained





                                       15
<PAGE>   63
         such securities or other rights receivable by them as aforesaid during
         such period, subject to all other adjustments called for during such
         period under this Section 7 with respect to the rights of the holders
         of the Preferred Stock.

                 (iv)     Reclassification, etc.  In case of any
         Reclassification, each share of Preferred Stock shall, after such
         Reclassification, be convertible into the number of shares of stock or
         other securities or property to which the holder of the Common Stock
         issuable (at the time of such Reclassification) upon conversion of
         such share of Preferred Stock would have been entitled upon such
         Reclassification; and in any such case, if necessary, the provisions
         set forth herein with respect to the rights and interests thereafter
         of the holders of the shares of Preferred Stock shall be appropriately
         adjusted so as to be applicable, as nearly as possible, to any shares
         of stock or other securities or property thereafter deliverable on the
         conversion of the shares of Preferred Stock.  If the holders of Common
         Stock have an election with respect to the stock, securities or other
         property to be received upon a Reclassification, the same election
         shall be afforded to the holders of Preferred Stock.

                 (v)      Rounding of Calculations.  All calculations under
         this Section 7(d) shall be made to the nearest cent or to the nearest
         one hundredth (1/100th) of a share, as the case may be.

                 (vi)     Timing of Issuance of Additional Common Stock Upon
         Certain Adjustments.  In any case in which the provisions of this
         Section 7(d) shall require that an adjustment shall become effective
         immediately after a record date for an event, the Company may defer
         until the occurrence of such event by (A) issuing to the holder of any
         shares of Preferred Stock converted after such record date and before
         the occurrence of such event the additional shares of Common Stock
         issuable upon such conversion by reason of the adjustment required by
         such event over and above the shares of Common Stock issuable upon
         such conversion before giving effect to such adjustment, and (B)
         paying to such holder any amount of cash in lieu of a fractional share
         of Common Stock pursuant to Section 7(h) hereof; provided, however,
         that the Company upon request shall deliver to such holder a due bill
         or other appropriate instrument evidencing such holder's right to
         receive such additional shares and such cash upon the occurrence of
         the event requiring such adjustment.

         (e)     Statement Regarding Adjustments.  Whenever the Conversion
Price shall be adjusted as provided in Section 7(d), the Company shall
forthwith file, at the office of any transfer agent for such Preferred Stock
and at the principal office of the Company, a statement showing in detail the
facts requiring such adjustment and the Conversion Price that shall be in
effect after such adjustment, and the Company shall also cause a copy of such
statement to be sent by mail, first class postage prepaid, to each holder of
shares of Preferred Stock at the address appearing on the Company's records.
Each such statement shall be signed by the Company's independent public
accountants.  Where appropriate, such copy may be given in advance and may be
included as part of a notice required to be mailed under the provisions of
Section 7(f).

         (f)     Notice to Holders.  In the event the Company shall propose to
take any action of the type described in Section 7(d)(I), (ii), (iii), or (iv)
the Company shall give notice to each holder of shares of Preferred Stock
affected by such action in the manner set forth in this Section 7(f), which





                                       16
<PAGE>   64
notice shall specify the record date, if any, with respect to any such action
and the approximate date on which such action is to take place.  Such notice
shall also set forth such facts with respect thereto as shall be reasonably
necessary to indicate the effect of such action (to the extent such effect may
be known at the date of such notice) on the Conversion Price and the number,
kind or class of shares or other securities or property which shall be
deliverable or purchasable upon the occurrence of such action or deliverable
upon conversion of shares of Preferred Stock.  In the case of any action which
would require the fixing of a record date, such notice shall be given at least
ten days prior to the date so fixed, and in the case of any other action, such
notice shall be given at least 15 days prior to the taking of such proposed
action.  Failure to give such notice, or any defect therein, shall not affect
the legality or validity of any such action.

         (g)     Costs.  The Company shall pay all documentary, stamp, transfer
or other transactional taxes attributable to the issuance or delivery of shares
of Common Stock of the Company upon conversion of any shares of Preferred
Stock; provided, however, that the Company shall not be required to pay any
taxes which may be payable in respect of any transfer involved in the issuance
or delivery of any certificate for such shares in a name other than that of the
holder of the shares of Preferred Stock in respect of which such shares are
being issued.

         (h)     Fractional Shares.  No fractional shares of Common Stock shall
be issued upon conversion of Preferred Stock.  If more than one share of
Preferred Stock shall be surrendered for conversion at any one time by the same
holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Preferred Stock so surrendered.  In lieu of any fractional share to which the
holder would otherwise be entitled, the Company shall pay cash equal to the
product of such fraction multiplied by the Common Stock's Fair Market Value on
the date of conversion.

         (I)     Reservation of Stock Issuable Upon Conversion.  The Company
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Preferred Stock; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Preferred Stock,
the Company will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.

         (j)     Notices.  All notices and other communications required by the
provisions of this Section 7 shall be in writing and shall be deemed to have
been duly given if delivered personally, mailed by certified mail (return
receipt requested) or sent by overnight delivery service, cable, telegram,
facsimile transmission or telex to each holder of record at the address of such
holder appearing on the books of the Company.  Notice so given shall, in the
case of notice so given by mail, be deemed to be given and received on the
fourth calendar day after posting, in the case of overnight delivery service,
on the date of actual delivery and, in the case of notice so given by cable,
telegram, facsimile transmission, telex or personal delivery, on the date of
actual transmission or, as the case may be, personal delivery.





                                       17
<PAGE>   65
         (k)     No Dilution or Impairment.  The Company shall not amend its
Articles of Incorporation or participate in any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in
carrying out all such action as may be reasonably necessary or appropriate in
order to protect the conversion rights of the holders of the Preferred Stock
against dilution or other impairment.

         Section 8.  Restrictions and Limitations.

         (a)     So long as any shares of Preferred Stock remain outstanding
and except as set forth below, the Company shall not, and shall not permit any
Subsidiary to, without the vote or written consent by the holders of a Majority
of the Preferred Stock:

                 (I)      (A)     Declare or pay any dividend or make any other
payment or distribution on account of the Equity Interests of the Company
(other than in respect of the Preferred Stock) or any of its Subsidiaries
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company or any of its Subsidiaries) or to the
direct or indirect holders of the Equity Interests of the Company or any of its
Subsidiaries in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Senior Securities or Parity Securities
(except that dividends payable on Parity Securities issued in accordance with
the provisions hereof solely in Parity Securities of the same class or series,
as the case may be, shall be permitted) of the Company, dividends or
distributions payable to the Company or any Subsidiary of the Company or
dividends or distributions made by a Subsidiary of the Company to all holders
of its Common Stock on a pro rata basis)); and

                          (B)     Make any payment on or in respect of, or
purchase, redeem, defease or otherwise acquire or retire for value any Equity
Interests (other than the Preferred Stock in accordance with Section 5 or any
Equity Interests owned by the Company or any Subsidiary of the Company) except
at Stated Maturity.

                 All such payments and other actions set forth in clauses (A)
and (B) above shall be collectively referred to as "Restricted Payments".

                 Notwithstanding the foregoing, the Company shall be permitted
to make Restricted Payments if, at the time of and after giving effect to such
Restricted Payment:

                 (I)      No Event of Noncompliance shall have occurred and be
         continuing or would occur as a consequence thereof; and

                 (II)     The Company would, at the time of such Restricted
         Payment and after giving pro forma effect thereto as if such
         Restricted Payment had been made at the beginning of the applicable
         four-quarter period, have been permitted to incur at least $1.00 of
         additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
         test set forth in the first paragraph of Section 8 (a)(v); and





                                       18
<PAGE>   66
                 (III)    Such Restricted Payment, together with the aggregate
         of all other Restricted Payments made by the Company and its
         Subsidiaries after the Issue Date (excluding Restricted Payments
         permitted by clauses (v) and (w) of the next succeeding paragraph), is
         less than the sum of (I) 50% of the Consolidated Net Income of the
         Company for the period (taken as one accounting period) commencing on
         the Issue Date to the end of the Company's most recently ended fiscal
         quarter for which internal financial statements are available at the
         time of such Restricted Payment (or, if such Consolidated Net Income
         for such period is a deficit, less 100% of such deficit), plus (ii)
         100% of the aggregate net cash proceeds received by the Company from
         the issue or sale since the Issue Date of Equity Interests of the
         Company or of debt securities of the Company that have been converted
         into such Equity Interests (other than Equity Interests (or
         convertible debt securities) sold to a Subsidiary of the Company or
         conversion of the 6% Notes) subject to the provisions of Section
         8(a)(vii), plus (iii) $7.5 million.

                 The foregoing provisions will not prohibit (u) the payment of
any dividend within 60 days after the date of declaration thereof, if at said
date of declaration such payment would have complied with the provisions of
this Section 8(a)(I); (v) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of the Company in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to a Subsidiary
of the Company) of other Equity Interests of the Company (other than any Parity
Securities); provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement or other acquisition
shall be excluded from clause (ii) of paragraph (III) above; (w) the
defeasance, redemption or repurchase of Junior Securities or Parity Securities
with the net cash proceeds from the substantially concurrent sale (other than
to a Subsidiary of the Company) of Equity Interests of the Company (other than
Parity Securities); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (ii) of paragraph (III) above; (x)
the repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Subsidiary of the Company held by any
member of the Company's (or any of its Subsidiaries') management pursuant to
any management equity subscription agreement or stock option agreement in
effect as of the Issue Date; provided that (A) the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $250,000 in any 12-month period plus the aggregate cash proceeds
received by the Company during such 12-month period from any reissuance of
Equity Interests by the Company to members of management of the Company and its
Subsidiaries, and (B) no Event of Noncompliance shall have occurred and be
continuing immediately after such transaction; and (y) so long as no Event of
Noncompliance shall have occurred and be continuing, ordinary dividends paid by
the Company in respect of its Common Stock in an aggregate amount not to exceed
$2.5 million since the Issue Date.

                 The amount of all Restricted Payments (other than cash) shall
be the fair market value (evidenced by a resolution of the Board of Directors
or a committee of the Board of Directors having at least one Independent
director set forth in an Officers' Certificate delivered to each holder of
Preferred Stock) on the date of the Restricted Payment of the asset(s) proposed
to be transferred by the Company or such Subsidiary, as the case may be,
pursuant to the Restricted Payment.  Not later than the date of making any
Restricted Payment, the Company shall deliver to each holder of Preferred Stock
an Officers' Certificate stating that such Restricted Payment is permitted and
setting





                                       19
<PAGE>   67
forth the basis upon which the calculations required by this Section 8(a)(I)
were computed, which calculations may be based upon the Company's latest
available financial statements.

                 For purposes of this Section 8(a)(I), capitalized terms used
and not defined herein shall have the meanings assigned to them in the
Indenture as in effect on the Issue Date.

                 (ii)     Authorize or issue, or obligate itself to issue, any
Senior Securities;

                 (iii)    Increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Preferred Stock;

                 (iv)     Enter any agreement, contract or understanding or
otherwise incur any obligation which by its terms would violate, be in conflict
with, restrict or burden the rights of the holders of Preferred Stock, or the
Company's ability to perform its obligations hereunder;

                 (v)      Directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Indebtedness) or issue any Parity Securities (other than as
contemplated by Section 3) unless the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Parity Securities are issued would
have been at least 1.75 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Parity Securities had been issued, as
the case may be, at the beginning of such four-quarter period.

         The foregoing provisions will not apply to:

                          (A)     the incurrence by the Company of Indebtedness
         under the Credit Agreement (and guarantees thereof by the Guarantors)
         in an aggregate principal amount at any time outstanding (with letters
         of credit being deemed to have a principal amount equal to the maximum
         potential liability of the Company and its Subsidiaries thereunder)
         not to exceed the greater of (x) $600.0 million and (y) the sum of (A)
         80% of the Eligible  Receivables and (B) 65% of Eligible Inventory,
         less, in the case of each of clause (x) and clause (y), the aggregate
         amount of all Net Proceeds of Asset Sales applied to permanently
         reduce the commitments with respect to such Indebtedness pursuant to
         Section 4.10 of the Indenture as in effect on the Issue Date;

                          (B)     the incurrence by the Company of Permitted
         Indebtedness;

                                the incurrence by the Company or any of its
         Subsidiaries of Indebtedness represented by Capital Lease Obligations
         (whether or not incurred pursuant to sale and leaseback transactions),
         mortgage financing or purchase money obligations, in each case
         incurred for the purpose of financing all or any part of the purchase
         price or cost of construction or improvement of property, plant or
         equipment used in the business of the Company or such Subsidiary, in
         an aggregate principal amount not to exceed $15.0 million at any time
         outstanding;





                                       20
<PAGE>   68
                          (D)     the incurrence by the Company or any of its
         Subsidiaries of Indebtedness ("Refinancing Indebtedness") in exchange
         for, or the net proceeds of which are used to extend, refinance,
         renew, replace, defease or refund, Permitted Indebtedness or
         Indebtedness that was permitted to be incurred hereunder, provided
         that the principal amount (or accreted value, if applicable) of such
         Refinancing Indebtedness does not exceed the principal amount (or
         accreted value, if applicable) of the Indebtedness extended,
         refinanced, renewed, replaced, defeased or refunded;

                          (E)     the incurrence by the Company or any of its
         Wholly Owned Subsidiaries of intercompany Indebtedness between or
         among the Company and any of its Wholly Owned Subsidiaries;

                          (F)     the incurrence by the Company of Hedging
         Obligations that are incurred in the ordinary course of business for
         the purpose of fixing or hedging interest rate risk;

                          (G)     the incurrence by the Company of Hedging
         Obligation under commodity hedging and currency exchange agreements;
         provided that, such agreements were entered into in the ordinary
         course of business for the purpose of limiting risks that arise in the
         ordinary course of business;

                          (H)     the incurrence of Indebtedness of a guarantor
         represented by guarantees of Indebtedness of the Company that has been
         incurred in accordance with the terms hereof; and

                          (I)     the incurrence by the Company of Indebtedness
         or the issuance by the Company of Junior Securities or Parity
         Securities (in addition to Indebtedness, Junior Securities or Parity
         Securities permitted by any other clause of this Section 8(a)(v)) in
         an aggregate principal amount (or accreted value, as applicable) at
         any time outstanding not to exceed $20.0 million.

                 For purposes of this Section 8(a)(v), capitalized terms used
and not defined herein shall have the meanings assigned to them in the
Indenture as in effect on the Issue Date.

                 (vi)     Make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(A) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Subsidiary than those that would have been obtained in
a comparable transaction by the Company or such Subsidiary with an unrelated
Person and (B) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving the aggregate consideration in excess of $2.0
million, the Company delivers to each holder of Preferred Stock a resolution of
the Board of Directors set forth in an Officers' Certificate certifying that
such Affiliate Transaction complies with clause (A) above and that such
Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors and   with respect to an Affiliate
Transaction or series of related Affiliate Transactions involving aggregate





                                       21
<PAGE>   69
consideration in excess of $5.0 million, the Company delivers to each holder of
Preferred Stock an opinion as to the fairness to the holders of Preferred Stock
of such Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing; provided
that (w) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board of
Directors or the payment of fees and indemnities to directors of the Company
and its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practices of the Company or such Subsidiary, (x) loans
or advances to employees in the ordinary course of business, (y) transactions
between or among the Company and/or its Wholly Owned Subsidiaries and (z)
Restricted Payments that are permitted by the provisions of Section 8(a)(I), in
each case, shall not be deemed Affiliate Transactions.

                 For purposes of this Section 8(a)(vi), capitalized terms used
and not defined herein shall have the meanings assigned to them in the
Indenture as in effect on the Issue Date.

                 (vii)    Make any Restricted Investment (as such term is
defined in the Indenture as in effect on the Issue Date) unless the Company
could borrow an additional $1.00 of Indebtedness under the Fixed Charge
Coverage Ratio in Section 8(a)(v) above; except that, notwithstanding the
foregoing, the Company shall be permitted to make a Restricted Investment if
(x) such Restricted Investment is made after the Issue Date and is sold for
cash or otherwise liquidated or repaid for cash, in an amount equal to the
lesser of (a) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition) and (b) the initial amount of such
Restricted Investment or (y) such Restricted Investment is in exchange for, or
out of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the Company (other than any
Senior Securities and Parity Securities); provided that the amount of any such
net cash proceeds that are utilized for any such Restricted Investment made
under (x) and (y) above shall be excluded from Section 8(a)(I)(III)(ii).

         Section 9.  No Reissuance of Preferred Stock.

         No share or shares of Preferred Stock acquired by the Company by
reason of redemption, purchase, conversion or otherwise shall be reissued, and
all such shares shall be canceled, retired and eliminated from the shares which
the Company shall be authorized to issue.

         Section 10.  Events of Noncompliance.

         (a)     Definition.  An Event of Noncompliance will be deemed to have
occurred if:

                 (I)      the Company fails to make any redemption payment with
respect to the Preferred Stock which it is obligated to make hereunder, whether
or not such payment is legally permissible;

                 (ii)     the Company breaches or otherwise fails to perform or
observe the provisions of Section 8;





                                       22
<PAGE>   70
                 (iii)    the Company breaches or otherwise fails to perform or
observe any other covenant or agreement set forth herein or any covenant or
agreement set forth in the Purchase Agreement (other than a covenant or
agreement set forth in Section 5.14 (the breach of which Section 5.14 shall not
be considered an Event of Noncompliance under this Section 10(a)(iii)) or  in
Article 7 of the Purchase Agreement) and such breach or failure to perform or
observe continues for a period of 60 days after notice thereof from any holder
of Preferred Stock; or the Company breaches or otherwise fails to perform or
observe any covenant or agreement set forth in Article 7 of the Purchase
Agreement and such breach or failure to perform or observe continues for a
period of 30 days after notice thereof from any holder of Preferred Stock; or

                 (iv)     a Bankruptcy Event occurs with respect to the Company
or any Subsidiary.

                 The Company shall promptly (and in any event within five days)
after learning of (x) any failure by the Company to observe any covenant or
agreement contained herein or in the Purchase Agreement or (y) any Event of
Noncompliance, give notice thereof to each holder of Preferred Stock.

         (b)     Consequences of Certain Events of Noncompliance.

                 (I)      If an Event of Noncompliance (other than the failure
to pay timely dividends, which affects the dividend rate of the Preferred Stock
as provided in Section 3) has occurred, the dividend rate on the Preferred
Stock shall increase immediately to the lesser of (A) 18% per annum and (B) the
maximum rate permitted by applicable law, and shall remain at such rate as long
as any Preferred Stock is outstanding; provided, however, that if the Event of
Noncompliance is one under Section 10(a)(iii), upon the cure of such Event of
Noncompliance, the dividend rate shall be that which would otherwise be
applicable but for the application of this Section 10(b)(I).

                 (ii)     If any Event of Noncompliance has occurred, each
holder of Preferred Stock will also have (A) rights pursuant to Section
6(c)(I), (B) any other rights which such holder may have been afforded under
any contract or agreement at any time and   any other rights which such
holder may have pursuant to applicable law.

         Section 11.  Waivers.

                 With the written consent of holders of a Majority of the
Preferred Stock (or each holder of Preferred Stock to the extent required
pursuant to the last sentence of Section 6(b)), the obligations of the Company
and the rights of the holders of the Preferred Stock under this Statement of
Resolution may be waived (either generally or in a particular instance, either
retroactively or prospectively and either for a specified period of time or
indefinitely).  Upon the effectuation of each such waiver, the Company shall
promptly give written notice thereof to the holders of Preferred Stock who have
not previously consented thereto in writing.





                                       23
<PAGE>   71
                                                                         ANNEX 1

<TABLE>
<CAPTION>
                                                       APPLICABLE DIVIDEND RATE
                                       --------------------------------------------------------
REDEMPTION PREMIUM APPLICABLE DURING THE             3%                7%               10%
FOLLOWING YEARS AFTER THE ISSUE DATE:                --                --               ---

                                        <S>       <C>               <C>               <C>
                                         1        Non-Call          Non-Call          Non-Call
                                         2        Non-Call          Non-Call          Non-Call
                                         3        Non-Call          Non-Call          Non-Call
                                         4        Non-Call          Non-Call          Non-Call
                                         5         3.000%            7.000%           10.000%
                                         6         2.400%            5.600%            8.000%
                                         7         1.800%            4.200%            6.000%
                                         8         1.200%            2.800%            4.000%
                                         9         0.600%            1.400%            2.000%
                                        10         0.000%            0.000%            0.000%
</TABLE>

To the extent a different Applicable Dividend Rate applies, a similar ratable
decline shall apply.


                                       24
<PAGE>   72
         I, THE UNDERSIGNED, being the President of Pillowtex Corporation, do
hereby execute this Statement of Resolution, declaring and certifying under
penalties of perjury that the facts herein stated are true, and accordingly
have hereunto set my hand this 18th day of December, 1997.



                                        /s/ JEFFREY D. CORDES
                                        ----------------------------------------
                                        Jeffrey D. Cordes
                                        President


                                        ATTEST:


                                        /s/ BRENDA SANDERS
                                        ----------------------------------------
                                        Brenda Sanders
                                        Assistant Secretary



                                       25

<PAGE>   73

                              ARTICLES OF AMENDMENT
                                      TO THE
                               AMENDED AND RESTATED
                             ARTICLES OF INCORPORATION
                                       OF
                               PILLOWTEX CORPORATION


     Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, Pillowtex Corporation (the "Company") hereby adopts the
following Articles of Amendment to the Articles of Incorporation.

     ARTICLE ONE.  The name of the corporation is Pillowtex Corporation.

     ARTICLE TWO.  The following amendment to the Amended and Restated
Articles of Incorporation was adopted by shareholders of the Company
as of May 5, 1999:

     (a)     The first paragraph of Article V of the Amended and Restated
Articles of Incorporation be amended to read as follows:

                                 ARTICLE V

     The aggregate number of shares which the corporation is authorized to
issue is 75,000,000 shares consisting of 55,000,000 shares of Common Stock,
having a par value of $0.01 per share, and 20,000,000 shares of Preferred
Stock, having a par value of $0.01 per share."

             [The remainder of Article V is not being amended.]

     ARTICLE THREE.  The number of shares of Common Stock of the Company
outstanding and entitled to vote was 14,183,852 at the time of the adoption
of this amendment.

     ARTICLE FOUR.  At the 1999 Annual Meeting of Shareholders, the holders
of 12,077,693 shares of Common Stock outstanding and entitled to vote voted
for this amendment and the holders of 785,527 shares of Common Stock
outstanding and entitled to vote voted against this amendment.


     IN WITNESS WHEREOF, these Articles of Amendment are dated as of
June 3, 1999.

                                         PILLOWTEX CORPORATION


                                         /s/  Brenda Sanders
                                         ----------------------------------
                                         Brenda Sanders
                                         Corporate Secretary