<PAGE>   1




                               PROMISSORY NOTE


Dallas, Texas                                                 May 4, 1999

Borrower:     PILLOWTEX CORPORATION, a Texas corporation

Commitment:   $20,000,000.00


     Borrower, for value received, promises to pay to the order of NATIONSBANK,
N.A. ("Lender"), at its principal office in Dallas, Texas, or at any other
place designated to Borrower in writing by Lender an amount, in lawful money of
the United States of America in immediately available funds, up to the
Commitment (or such lesser amount as provided in Section 1.2 hereof) on the
Maturity Date (except as otherwise required to be paid earlier pursuant to this
Note), together with interest on the unpaid principal balance of each Advance
evidenced by this Note at the applicable rates herein set forth.

This Note is issued upon the following terms and conditions:


                               ARTICLE I

                              THE ADVANCES

     1.1 Definitions.  Defined terms used herein shall have the meaning given
to them above and in Article III hereof.

     1.2 The Advances.  Lender agrees, upon the terms and subject to the
conditions of this Note and provided that (a) no Default or Event of Default
has occurred and is continuing, and (b) the Unused Portion  (as defined in the
Credit Agreement) is zero, to make Advances to Borrower for the purposes set
forth in Section 5.8 of the Credit Agreement from time to time in an aggregate
amount not to exceed the Commitment.  Subject to Section 1.9 hereof, Advances
may be repaid and then reborrowed.  Any Advance shall, at the option of
Borrower as provided in Section 1.3 hereof (and, in the case of Eurodollar
Advances, subject to availability and to the provisions of Section 1.14
hereof), be made as a Base Rate Advance or a Eurodollar Advance; provided that
there shall not be more than five Eurodollar Advances outstanding at any one
time.  On the Maturity Date unless sooner paid as provided herein, the
outstanding Advances shall be repaid in full.


<PAGE>   2

     1.3 Manner of Borrowing and Disbursement.

        (1) Each Borrowing shall be made on notice, given not later than 1:00
p.m. (Dallas time) (I) in the case of such a Borrowing comprised of Base Rate
Advances, on the date of the proposed Borrowing, and (ii) in the case of such a
Borrowing comprises of Eurodollar Advances on the second Business Day prior to
the date of the proposed Borrowing, in each case by Borrower to Lender.  Each
such notice of a Borrowing (a "Notice of Borrowing") shall be by telephone
(confirmed by sending a Notice of Borrowing by one of the following means)
telex, telecopier or cable, in substantially the form of Exhibit "A" attached
hereto, specifying therein the requested (A) date of such Borrowing, (B) Type
of Advances comprising such Borrowing,   aggregate amount of such Borrowing,
and (D) in the case of such a Borrowing consisting of Eurodollar Advances,
the Interest Period for each such Advance.  Provided (a) no Default or Event of
Default has occurred and is continuing, and (b) the Unused Portion (as defined
in the Credit Agreement) is zero, Lender will make such funds available to
Borrower by depositing such funds received in the general deposit account of
Borrower with Lender.

        (2) Borrower may on any Business Day, subject to the notice provisions
of Section 1.3(a) hereof and the provisions of Section 1.14 hereof, Convert all
or any portion of the Advances of one Type; provided, however, that (I) any
Conversion of any Eurodollar Advances into Base Rate Advances shall be made on,
and only on, the last day of the Interest Period for such Eurodollar Advance,
and any Conversion of one Advance into another Advance shall be in an amount
not less than the minimum amount specified in Section 1.3(d) hereof and (ii)
no Conversion into Eurodollar Advances shall be permitted at any time that a
Default or Event of Default has occurred and is continuing.  Each such notice
of Conversion shall, within the restrictions specified above, specify (I) the
date of such Conversion, (ii) the Advance to be Converted and (iii) if such
Conversion is into Eurodollar Advances, the duration of the initial Interest
Period for such Advances.  Each notice of Conversion shall be irrevocable and
binding on Borrower.

        (3) If prior to the end of any Interest Period for any Eurodollar
Advance Borrower shall fail to give timely notice of the continuance or
Conversion thereof, each such Eurodollar Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance.  If any notice given by Borrower pursuant to Section 1.3(a)
hereof for a Eurodollar Advance or any notice given by Borrower pursuant to
Section 1.3(b) hereof shall fail to designate an Interest Period, such notice
shall be deemed to have designated an Interest Period of one (1) month for
Eurodollar Advances.

        (4) The aggregate amount of Base Rate Advances to be made by Lender on
any day shall be in a principal amount which is at least $100,000 and which is
an integral multiple of $50,000.  The aggregate amount of Eurodollar Advances
having the same Interest Period and to be made by Lender on any day shall be in
a principal amount which is at least $1,000,000 any which is an integral
multiple of $100,000.

        (5) Each Notice of Borrowing shall be irrevocable and binding on
Borrower.  In the case of any Borrowing that the related Notice of Borrowing
specifies is to be comprised of Eurodollar Advances, Borrower shall indemnify
Lender against any loss, cost or expense incurred by Lender as a result of any
failure of Borrower to borrow any Eurodollar Advances after a Notice of
Borrowing has been given in accordance with Section 1.3(a) hereof, including,
without limitation, any loss (excluding loss of anticipated profits), cost or
expense incurred by reason of the liquidation or re-employment of deposits or
other funds acquired by Lender to fund the Advances to be made by Lender as
part of such Borrowing when such Advances, as a result of such failure, are
not made on such date.  The obligations of Borrower under this Section 1.3(e)
shall survive termination of this Note.

<PAGE>   3

     1.4 Interest.

        (1) Borrower shall pay interest on the outstanding principal amount of
Base Rate Advances at a rate per annum equal to the Base Rate; provided,
however, if the amount of interest payable for the account of Lender on any
interest payment date in respect of the immediately preceding interest
computation period would exceed the Maximum Amount, the amount of interest
payable on such interest payment date shall be automatically reduced to the
Maximum Amount.  If the amount of interest payable for the account of Lender
in respect of any interest computation period is reduced pursuant to the
immediately preceding sentence and the amount of interest payable for its
account in respect of any subsequent interest computation period would be
less than the Maximum Amount, then the amount of interest payable for its
account in respect of such subsequent interest computation period shall be
automatically increased to such Maximum Amount; provided that at no time
shall the aggregate amount by which interest paid for the account of Lender
has been increased pursuant to this sentence exceed the aggregate amount by
which interest paid for its account has theretofore been reduced pursuant to
the immediately preceding sentence.  Interest on Base Rate Advances shall be
paid quarterly in arrears on each Quarterly Date and on the Maturity Date.

        (2) Borrower shall pay interest on each Eurodollar Advance at a rate
per annum equal to the Eurodollar Rate for such Eurodollar Advance.  Interest
on each Eurodollar Advance shall be payable on the last day of the Interest
Period for such Eurodollar Advance and on the Maturity Date.

        (3) During the continuance of any Event of Default, Borrower shall pay,
on demand, interest on the principal amount of all Advances outstanding and on
all other Obligations due and unpaid hereunder at a rate per annum equal to the
Base Rate plus 2%; provided, however, if the amount of interest payment for the
account of Lender on any interest payment date in respect of the immediately
preceding interest computation period would exceed the Maximum Amount, the
amount of interest payable on such interest payment date shall be automatically
reduced to the Maximum Amount.  If the amount of interest payable for the
account of Lender in respect of any interest computation period is reduced
pursuant to the immediately preceding sentence and the amount of interest
payable for its account in respect of any subsequent interest computation
period would be less than the Maximum Amount, then the amount of interest
payable for its account in respect of such subsequent interest computation
period shall be automatically increased to the Maximum Amount; provided that
at no time shall the aggregate amount by which interest paid for the account
of Lender has been increased pursuant to this sentence exceed the aggregate
amount by which interest paid for its account has theretofore been reduced
pursuant to the immediately preceding sentence.


<PAGE>   4

     1.5 Commitment Fee.  Subject to Section 2.4 hereof, Borrower agrees
to pay to Lender a per annum Commitment Fee (which shall be payable in arrears
on each Quarterly Date and on the Maturity Date), in an amount equal to the
product of 0.50% multiplied by the daily average unused portion of the
Commitment commencing on the date of this Note.  The Commitment Fee shall be
payable monthly in arrears on the last day of each month during the term of
this Note, commencing on the first such date occurring after the date of this
Note and on the Maturity Date.

     1.6 Prepayment.

        (1) Borrower may, from time to time, prepay the outstanding principal
amount of the Advances in whole or in part without penalty or premium,
provided, however, that (I) each partial prepayment shall be in an aggregate
principal amount not less than $100,000 or an integral multiple of $50,000 in
excess thereof, (ii) no such prepayment of a Eurodollar Advance shall be made
other than on the last day of the Interest Period therefor unless Borrower,
simultaneously with such prepayment, pays the compensation required pursuant to
Section 1.9 hereof and (iii) each prepayment of the principal amount of a
Eurodollar Advance shall also include accrued interest to the date of such
prepayment on the principal amount prepaid.  Borrower shall notify Lender
(which notice may be telephonic promptly followed by written notice) by
1:00 p.m. (Dallas time) on the date of the proposed payment (or two Business
Days prior the date of the proposed prepayment of a Eurodollar Advance).
Any notice of prepayment shall be irrevocable.

        (2) On or before the date of any reduction of the Commitment, Borrower
shall prepay applicable outstanding Advances in an amount necessary to reduce
the sum of outstanding Advances to an amount less than or equal to the lesser
of the Commitment as so reduced.  Borrower shall first prepay all Base Rate
Advances and shall thereafter prepay Eurodollar Advances.  To the extent that
any prepayment requires that a Eurodollar Advance be repaid on a date other
than the last day of its Interest Period, Borrower shall reimburse Lender
in accordance with Section 1.9 hereof.

     1.7 Reduction of Commitment.

        (1) Borrower shall have the right, without payment of any premium or
penalty, at any time upon not less than three (3) Business Days' notice to
Lender (if telephonic, to be confirmed by telecopy or in writing on or before
the date of reduction or termination) to terminate or reduce the Commitment,
in whole or in part, provided that (I) each partial termination shall be in an
aggregate amount which is an integral multiple of $2,000,000, and (ii) no such
reduction in the Commitment shall cause any Eurodollar Advance to be repaid
prior to the last day of its Interest Period.  Once reduced or terminated,
the Commitment may not be increased.


<PAGE>   5

        (2) On the Maturity Date, the Commitment shall automatically reduce
to zero.

     1.8 Payment of Principal of Advances.  Borrower agrees to pay the
principal amount of the Advances to Lender as follows:


        (1) The principal amount of each Eurodollar Advance shall be due and
payable on its Payment Date, which principal payment may be made by means of a
Refinancing Advance.

        (2) On the date of reduction of the Commitment pursuant to Section 1.7
hereof, including the Maturity Date, the aggregate amount of the Advances
outstanding on such date of reduction in excess of the Commitment as reduced
shall be due and payable, which principal payment may not be made by means of
Refinancing Advances.

        (3) The principal amount of all Advances, all accrued interest and fees
thereon, and all other Obligations related thereto, shall be due and payable in
full, or to the extent not otherwise required to be paid earlier herein, on the
Maturity Date.

        1.9 Reimbursement.  If (a) any payment of principal of, or Conversion
of, any Eurodollar Advance is made by Borrower to or for the account of Lender
other than on the last day of the Interest Period for such Advance, or
(b) Borrower shall fail to Convert into or continue a Eurodollar Advance on the
date specified in the notice thereof (other than as a result of any wrongful
act or omission of Lender), Borrower shall, upon demand by Lender, pay to
Lender any and all amounts required to compensate Lender for any and all
additional losses, costs and expenses that it may reasonably incur as a result
of such payment, Conversion or failure to borrow, Convert or continue,
including, without limitation, any loss (excluding loss of anticipated
profits), cost or expense incurred by reason of the liquidation or
re-employment of deposits or other funds acquired by Lender to fund or
maintain such Advance.  Lender shall deliver to Borrower a certificate
setting forth calculation of the additional amounts or amounts to be paid to
it hereunder which shall be conclusive in the absence of manifest error.
 In determining such amount, Lender may use any reasonable averaging and
attribution methods.

        (1) The obligations of Borrower under this Section 1.9 shall survive
any termination of this Note.

     1.10 Payments and Computations.

        (1) Borrower shall make each payment hereunder not later than 12:00
noon (Dallas time) on the day when due in Dollars to Lender at Lender's
principal office in same day funds.


<PAGE>   6

        (2) Interest on Base Rate Advances and the Commitment Fee shall be
calculated on the basis of a 365 or 366 day year, as appropriate.  Subject to
Section 2.4 hereof, interest on Eurodollar Advances shall be calculated on the
basis of actual days elapsed but computed as if each year consisted of 360
days.  Such computations shall be made including the first day but excluding
the last day occurring in the period for which such interest or Commitment Fee
is payable.  Each determination by Lender of an interest rate, fee or
commission hereunder shall be conclusive and binding for all purposes, absent
manifest error.


        (3) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation or payment of interest, as the case may be; provided, however, if
such extension would cause payment of interest on or principal of Eurodollar
Advances to be made in the next following calendar month, such payment shall be
made on the next preceding Business Day.

        (4) Borrower agrees to pay principal, interest, fees and all other
amounts due under this Note without deduction for set-off or counterclaim or
any deduction whatsoever.

        (5) If some but less than all amounts due from Borrower are received
by Lender, Lender shall apply such amounts in the following order of priority:
(I) to the payment of all fees then due and payable; (ii) to the payment of
interest then due and payable on the Advances; and (iii) to the payment of
principal then due and payable on the Advances.

     1.11 Calculation of Rates.  The provisions of this Note relating to
calculation of the Eurodollar Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid hereunder that are
based upon such rate, it being understood that Lender shall be entitled to fund
and maintain its funding of all or any part of a Eurodollar Advance as it sees
fit.

     1.12 Booking Advances.  Lender shall make, carry or transfer Advances at,
to or for the account of any of its branch offices or the office of any
affiliate.

     1.13 Taxes.

        (1) Any and all payments by Borrower hereunder shall be made, in
accordance with Section 1.10 hereof, free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges
and withholdings, and all liabilities with respect thereto, excluding, in the
case of Lender, taxes imposed on, based upon or measured by its overall net
income, net worth or capital, and franchise taxes, doing business taxes or
minimum taxes imposed on it, (I) by the jurisdiction under the laws of which
Lender is organized and in which it has its applicable lending office or any
political subdivision thereof; (ii) by any other jurisdiction, or any
political subdivision thereof, other than those imposed by reason of (A) an
asserted relation of such jurisdiction to the transactions contemplated by this


<PAGE>   7

Note, (B) the activities of Borrower in such jurisdiction, or   the
activities in connection with the transactions contemplated by this Note of
Lender; and (iii) in the case of Lender, any Taxes in the nature of transfer,
stamp, recording or documentary taxes resulting from a transfer (other than
as a result of foreclosure) by Lender of all or any portion of its interest
in this Note (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as
"Taxes").  If Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder to Lender, (x) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 1.13) Lender receives an amount equal to the sum it would have
received had no such deductions been made, (y) Borrower shall make such
deductions and (z) Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.

        (2) In addition, Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies (other than Taxes described in clause (iii) of the first
sentence of Section 1.13(a) hereof) that arise from any payment made hereunder
or from the execution, delivery or registration of, or otherwise with respect
to, this Note (hereinafter referred to as "Other Taxes").

        (3) Borrower will indemnify Lender for the full amount of Taxes and
Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 1.13) paid by Lender and
all liabilities (including penalties, additions to tax, interest and reasonable
expenses) arising therefrom or with respect thereto whether or not such Taxes
or Other Taxes were correctly or legally asserted, other than penalties,
additions to tax, interest and expenses arising as a result of gross negligence
or wilful misconduct on the part of Lender, provided, however, that Borrower
shall have no obligation to indemnify Lender unless and until Lender shall
have delivered to Borrower a certificate setting forth in reasonable detail
the basis of Borrower's obligation to indemnify Lender pursuant to this
Section 1.13.  This indemnification shall be made within 30 days from the date
Lender makes written demand therefor.

        (4) Within 30 days after the date of any payment of Taxes, Borrower
will furnish to Lender the original or a certified copy of a receipt evidencing
payment thereof.  If no Taxes are payable in respect of any payment hereunder,
Borrower will furnish to Lender a certificate from each appropriate taxing
authority, or an opinion of counsel acceptable to Lender, in either case
stating that such payment is exempt from or not subject to Taxes, provided,
however, that such certificate or opinion need only be given if:  (I) Borrower
makes any payment from any account located outside the United States, or
(ii) the payment is made by a payor that is not a United States Person.
For purposes of this Section 1.13 the terms "United States" and "United States
Person" shall have the meanings set forth in Section 7701 of the Code.


<PAGE>   8

        (5) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 1.13 shall survive the payment in full of principal and interest
hereunder.

        (6) If  Lender claims any additional amounts payable pursuant to this
Section 1.13, it shall use its reasonable best efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its lending office, if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and would not, in the reasonable judgment of Lender in good
faith, be materially disadvantageous to Lender.

        (7) Lender agrees that (I) it will take all reasonable actions by all
usual means to maintain all exemptions, if any, available to it from United
States withholding taxes (whether available by treaty, existing administrative
waiver, by virtue of the location of Lender's lending office) and
(ii) otherwise cooperate with Borrower to minimize amounts payable by
Borrower under this Section 1.13; provided, however, Lender shall not be
obligated by reason of this Section 1.13(g) to contest the payment of any
Taxes or Other Taxes or to disclose any information regarding its tax affairs
or tax computations or reorder its tax or other affairs or tax or other
planning.  Subject to the foregoing, to the extent Borrower pays sums
pursuant to this Section 1.13 and Lender receives a refund of any or all of
such sums, such refund shall be applied to reduce any amounts then due and
owing under this Note or, to the extent that no amounts are due and owing
under this Note at the time such refunds are received, Lender shall promptly
pay over all such refunded sums to Borrower, provided that no Default
or Event of Default is in existence at such time.

     1.14 Increased Costs, Etc.

        (1) If, due to either (I) the introduction of or any change (other than
any change which is taken into account in the calculation of the Eurodollar
Rate) in or in the interpretation or administration of any Law or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority, in any case introduced, changed, interpreted or
requested after the date hereof (whether or not having the force of Law),
there shall be any increase in the cost to Lender of agreeing to make or
making, funding or maintaining Eurodollar Advances to Borrower or there shall
be any reduction in the amount received or receivable by Lender hereunder
(whether of principal, interest or otherwise), then Borrower shall from time
to time, upon demand by Lender pay to Lender additional amounts sufficient
to compensate Lender for such increased cost.  A certificate as to the amount
of such increased costs or reductions, submitted to Borrower by Lender,
shall be conclusive and binding for all purposes, absent manifest error.

        (2) If Lender determines that compliance with any Law or any guideline
of request from any central bank or Tribunal (other than as set forth in the
Risked-Based Capital Guidelines issued by the Board of Governors of the Federal
Reserve System, in the form in effect on the date of this Agreement, in


<PAGE>   9

Appendix A to Part 208 of the Federal Reserve Board's Regulation H, 12 CFR
Part 208, and in Appendix B to Part 225 of the Federal Reserve Board's
Regulation Y, 12 CFR Part 225 (collectively, "Capital Adequacy Guidelines"),
but not excluding from this Section 1.14(b) any increase in cost as a result of
any amendment, modification or change in interpretation or administration of
the Capital Adequacy Guidelines subsequent to the date of this Note) (whether
or not having the force of Law) affects or would affect the amount of capital
required or expected to be maintained by Lender or any corporation controlling
Lender or has or would have the effect of reducing the rate of return on
Lender's capital or on the capital of the corporation controlling Lender and
that the amount of such capital is increased, or the return on such capital is
decreased, by or based upon the existence of Lender's commitment to lend
hereunder and other commitments of this type, then, upon demand by Lender,
Borrower shall pay to Lender, from time to time as specified by Lender,
additional amounts sufficient to compensate Lender or such controlling
corporation in the light of such circumstances, to the extent that Lender
or such controlling corporation reasonably determines such increase in
capital, or reduction in the return on capital, to be allocable to the
existence of Lender's commitment to lend hereunder.  A certificate as to
such amounts submitted to Borrower by Lender shall be conclusive and binding
for all purposes, absent manifest error.

        (3) If Lender notifies Borrower that the Eurodollar Rate for any
Interest Period for any Eurodollar Advances will not adequately reflect the
cost to such Lender of making, funding or maintaining its Eurodollar Advances
for such Interest Period, (I) each such Eurodollar Advance will automatically,
on the last day of the then existing Interest Period therefor, Convert into a
Base Rate Advance and (ii) the obligation of Lender to make or continue, or
to Convert Advances into, Eurodollar Advances shall be suspended until Lender
notifies Borrower that it has determined that the circumstances causing such
suspension no longer exist.

        (4) Notwithstanding any other provision of this Note, if the
introduction of or any change in or in the interpretation or administration of
any Law shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for Lender to perform its
obligations hereunder to make Eurodollar Advances or to continue to fund or
maintain Eurodollar Advances hereunder, then, on notice thereof and demand
therefor by Lender to Borrower, (I) each Eurodollar Advance will automatically,
upon such demand, Convert into a Base Rate Advance and (ii) the obligation of
Lender to make or continue, or to Convert Advances into, Eurodollar Advances
shall be suspended until Lender notifies Borrower that it has determined that
the circumstances causing such suspension no longer exist.

        (5) Upon the occurrence and during the continuance of any Default or
Event of Default, (I) each Eurodollar Advance will automatically, on the last
day of the then existing Interest Period therefor, Convert into a Base Rate
Advance and (ii) the obligation of Lender to make or continue, or to Convert
Advances into, Eurodollar Advances shall be suspended.

        (6) The obligations of Borrower under this Section 1.14 shall survive
any termination of this Agreement.


<PAGE>   10

        (7) Any certificate delivered to Borrower by Lender pursuant to this
Section 1.14 shall include in reasonable detail the basis for Lender's demand
for additional compensation.  Lender shall use reasonable efforts (consistent
with legal and regulatory restrictions) to reduce or eliminate any such
additional compensation which may thereafter accrue and which efforts would
not, in the sole determination of Lender, be otherwise disadvantageous to
Lender.

     1.15 Senior Indebtedness.  The obligations of Borrower evidenced by this
Note constitute senior indebtedness of Borrower in right of payment and is not
subordinated in right of payment to any other indebtedness of Borrower.


                                 ARTICLE II

                                MISCELLANEOUS

     1.16 Waivers and Consents.  Borrower and all endorsers, sureties and
guarantors of this Note hereby severally waive demand and notice of demand,
presentment for payment, protest, notice of protest, notice of acceleration of
and notice of intention to accelerate the maturity of this Note, diligence in
collecting, the bringing of any suit against any Person, and any notice of or
defense on account of any extensions, renewals, partial payments or changes in
any manner of or in this Note or in any of its terms, provisions and covenants,
or any releases or substitutions of any security, or any delay, indulgence or
other act of any holder hereof, whether before or after maturity.

     1.17 Expenses.  If this Note is placed in the hands of an attorney for
collection after default, or if all or any part of the indebtedness evidenced
hereby is proved, established or collected in any court or in any bankruptcy,
receivership, debtor relief, probate or other court proceedings, Borrower and
all endorsers, sureties and guarantors of this Note jointly and severally
agree to pay reasonable attorneys' fees and collection costs to the holder
hereof in addition to the principal and interest payable hereunder.  In
addition, Borrower agrees to pay Lender all reasonable costs and expenses,
including reasonable attorneys' fees, incurred by Lender in connection with
the preparation of this Note, making the Advances hereunder, and in connection
with all amendments, consents and waivers related to the Advances and
requests therefor by Borrower.

     1.18 Governing Law.  This Note is payable and performable in Dallas
County, Texas, and shall be construed and enforced in accordance with and
governed by the laws of the State of Texas and the federal laws of the United
States of America.  Without excluding any other jurisdiction, Borrower agrees
that the courts of the State of Texas sitting in Dallas, Texas and the federal
courts sitting in Dallas, Texas will have jurisdiction over proceedings in
connection herewith.


<PAGE>   11

     1.19 Interest and Charges.  Interest paid or agreed to in this Note or in
any other documents executed in connection herewith shall not exceed the
Maximum Amount, and, in any contingency whatsoever, if Lender shall receive
anything of value deemed interest under Applicable Law which would exceed the
Maximum Amount, the excessive interest shall be applied to the reduction of
unpaid principal or refunded to Borrower, if it exceeds unpaid principal.

     1.20 Binding Effect.  This Note shall be binding upon and inure to the
benefit of Borrower and Lender and their respective successors and assigns,
except that Borrower shall not have the right to assign its rights or
obligations hereunder or any interest herein without the prior written consent
of Lender.  Lender may assign to one or more banks, all or any part of, or
may grant participations to one or more banks in or to all or part of, any
Advance or Advances and this Note, and to the extent of any such assignment or
participation (unless where otherwise stated) the assignee or participant of
such assignment or participation shall have the rights and benefits with
respect to each Advance or Advances and this Note, as it would have if it was
Lender hereunder.


     1.21 Titles.  The titles to Sections in this Note are inserted for
convenience only and do not constitute a part of the text hereof.

     1.22 Remedies.  If an Event of Default shall have occurred and be
continuing:

        (1) With the exception of an Event of Default specified in
Section 8.1(f) or (g) of the Credit Agreement, Lender may at its election,
terminate the Commitment and/or by written notice to Borrower declare the
principal of and interest on the Advances and all other amounts owed under this
Note to be forthwith due and payable without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived.

        (2) Upon the occurrence of an Event of Default specified in
Section 8.1(f) or (g) of the Credit Agreement, such principal, interest and
other amounts shall thereupon and concurrently therewith become due and
payable and the Commitment shall forthwith terminate, all without any action
by Lender and without presentment, demand, protest or other notice of any
kind, all of which are expressly waived, anything in this Note to the contrary
notwithstanding.

        (3) Lender may exercise all of the rights granted to it under this
Note and under Applicable Law.

        (4) The rights of Lender hereunder shall be cumulative, and not
exclusive.


<PAGE>   12

                                ARTICLE III

                                 DEFINITIONS

     1.23 As used in and for all purposes of this Note, the terms defined in
this Article III shall have the following meanings, and the singular shall
include the plural, and vice versa, unless otherwise specifically required by
the context:

     "Advance" means any amount advanced by Lender to Borrower pursuant to
Section 1.2 hereof on the occasion of any borrowing, including without
limitation any Refinancing Advance.

     "Applicable Law" means (a) in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and final orders of governmental
bodies or regulatory agencies applicable to such Person and its properties,
including, without limiting the foregoing, all orders and decrees of all
tribunals in proceedings or actions to which the Person in question is a party,
and (b) in respect of contracts relating to interest or finance charges that
are made or performed in the State of Texas, "Applicable Law" shall mean the
laws of the United States of America, including without limitation 12 USC ''
85 and 86, as amended from time to time, and any other statute of the United
States of America now or at any time hereafter prescribing the maximum rates
of interest on loans and extensions of credit, and the laws of the State of
Texas, including, without limitation, Art. 1H, if applicable, and if Art. 1H
is not applicable, Art. 1D, and any other statute of the State of Texas
prescribing maximum rates of interest and extensions of credit; provided that
the parties hereto agree pursuant to Texas Finance Code Section 346.004 that
the provisions of Chapter 346 of the Texas Finance Code shall not apply to
this Note or any other Note Documents.

     "Art. 1D" means Article 5069-1D, Title 79, Revised Civil Statutes of
Texas, 1925, as amended.

     "Art. 1H" means Article 5069-1H, Title 79, Revised Civil Statutes of
Texas, 1925, as amended.

     "Base Rate" means an interest rate per annum for each day equal to the
sum of (a) 2.50%  plus (b) higher of (I) the Prime Rate in effect on such day
or (ii) the Federal Funds Rate in effect on such day plus 1/2%, each without
notice to Borrower.

     "Base Rate Advance" means any Advance bearing interest at the Base Rate.

     "Borrowing" means any borrowing hereunder of a Base Rate Advance or a
Eurodollar Advance.

     "Business Day" means a day on which banks are open for the transaction of
business in Dallas, Texas and, with respect to any Eurodollar Advance, also
a day on which commercial banks are open for international business (including
dealings in Dollar deposits) in London, England.

     "Commitment" means $20,000,000, as reduced from time to time pursuant to
Section 1.7 hereof.


<PAGE>   13

     "Commitment Fee" means the fee described in Section 1.5 hereof.

     "Conversion", "Convert" and "Converted" each refers to a conversion of
Advances of one Type into Advances of another Type pursuant to Section 1.3(b)
hereof.

     "Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated as of December 19, 1997, among Borrower, the lenders party
thereto and NationsBank, N.A. (successor by merger to NationsBank of Texas,
N.A.), as Administrative Lender, as amended, modified, supplemented or restated
from time to time.

     "Debtor Relief Laws" has the meaning given to such term in the Credit
Agreement.

     "Default" has the meaning given to such term in the Credit Agreement.

     "Eurodollar Advances" means Advances which bear interest at the Eurodollar
Rate.

     "Eurodollar Rate" means an interest rate per annum equal to the sum of
(I) 4.00% plus (ii) a rate per annum determined pursuant to the following
formula:

                            London Interbank Rate
                     ------------------------------------
                 100% - Eurodollar Reserve Percentage

     "Eurodollar Reserve Percentage" means the reserve requirement including
any supplemental and emergency reserves (expressed as a percentage) applicable
to member banks of the Federal Reserve System in respect of "Eurocurrency
liabilities" under Regulation D of the Board of Governors of the Federal
Reserve System, or such substituted or amended reserve requirement as may be
hereafter applicable to member banks of the Federal Reserve System.

     "Event of Default" means (I) the occurrence of an "Event of Default" as
defined in the Credit Agreement (whether or not the Credit Agreement is still
in effect), (ii) the failure of Borrower to pay any interest under this Note
or any fees payable hereunder or any other costs, expenses or other amounts
payable hereunder when due, and such failure is not cured within one Business
Day from the date such payment is due, (iii) the failure of Borrower to pay
any principal under this Note when due, (iv) the failure or refusal of
Borrower or any Guarantor to comply with any of the covenants contained in
this Note or any Guaranty, or (v) any representation or warranty made under
this Note or any Guaranty shall prove to have been incorrect or misleading in
any material respect when made.

     "Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of Dallas on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate quoted to
Lender on such day on such transactions as determined by Lender.


<PAGE>   14

     "Guarantor" has the meaning set forth in the Credit Agreement.


     "Highest Lawful Rate" means at the particular time in question the maximum
rate of interest which, under Applicable Law, Lender is then permitted to
charge on the Obligations.  If the maximum rate of interest which, under
Applicable Law, the Lenders are permitted to charge on the Obligations shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to
Borrower.  For purposes of determining the Highest Lawful Rate under the
Applicable Law of the State of Texas, the applicable rate ceiling shall be
(a) the weekly rate ceiling described in and computed in accordance with the
provisions of Art. 1H, or (b) either the quarterly ceiling or the annualized
ceiling computed pursuant to Art. 5069-1D.008, Title 79, Revised Civil Statutes
of Texas, as amended; provided, however, that at any time the weekly rate
ceiling, the quarterly ceiling or the annualized ceiling shall be less than
18% per annum or more than 24% per annum, the provisions of Art. 5069-1D.009(a)
and (b), Title 79, Revised Civil Statutes of Texas, as amended, shall control
for purposes of such determination, as applicable.

     "Interest Period" means, with respect to any Eurodollar Advance, the
period beginning on the date an Advance is made or continued as or Converted
into a Eurodollar Advance and ending one or two months thereafter (as Borrower
shall select):

        (1) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business Day,
provided, however, that if such extension would cause the last day of such
Interest Period to occur in the next following calendar month, the last
day of such Interest Period shall occur on the next preceding Business
Day; and

        (2) whenever the first day of any Interest Period occurs on a day
of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months in
such Interest Period, such Interest Period shall end on the last Business
Day of such succeeding calendar month.

     "Law" has the meaning given to such term in the Credit Agreement.

     "London Interbank Rate" means, for any Eurodollar Advance for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period.  If for any
reason such rate is not available, the term "London Interbank Rate" shall
mean, for any Eurodollar Advance for any Interest Period therefor, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates.


<PAGE>   15

     "Maturity Date" means the earliest of (a) the occurrence of a Prepayment
Event, (b) the date which is 90 days from the date of this Note or   the date
of termination in whole of the Commitment hereunder.

     "Maximum Amount" means the maximum amount of interest which, under
Applicable Law, Lender is permitted to charge on the Obligations.

     "Necessary Authorization" has the meaning given to such term in the
Credit Agreement.

     "Obligations" means all obligations of any nature (whether matured or
unmatured, fixed or contingent) of Borrower to Lender under this Note.

     "Payment Date" means the last day of any Interest Period for any
Eurodollar Advance.

     "Person" means an individual, corporation, partnership, trust or
unincorporated organization, or a government or any agency or political
subdivision thereof.

     "Prepayment Event" means any increase in the commitment under the Credit
Agreement after the date of this Note or the issuance of any Capital Stock (as
defined in the Credit Agreement) of the Borrower or any of its Subsidiaries
after the date of this Note.

     "Prime Rate" means, at any time, the prime interest rate announced or
published by Lender from time to time as its reference rate for the
determination of interest rates for loans of varying maturities in United
States dollars to United States residents of varying degrees of
creditworthiness and being quoted at such time by Lender as its "prime rate;"
it being understood that such rate may not be the lowest rate of interest
charged by Lender.

     "Quarterly Date" means the last day of each March, June, September and
December commencing with the first such day after the date of this Note.

     "Refinancing Advance" means any Advance which is used to pay the principal
amount (or any portion thereof) of an Advance at the end of its Interest Period
and which, after giving effect to such application, does not result in an
increase in the aggregate amount of outstanding Advances.


<PAGE>   16

     "Term Credit Agreement" means that certain Term Credit Agreement, dated as
of December 19, 1997, among Borrower, the Lenders party thereto and
NationsBank, N.A. (successors by merger to NationsBank of Texas, N.A.), an
Administrator Lender, as amended, modified, supplemented or  restated from
time to time.

     "Tribunal" has the meaning given to such term in the Credit Agreement.


                                ARTICLE IV

                       REPRESENTATIONS AND WARRANTIES

     The Borrower hereby represents and warrants as follows:

     1.24 Corporate Authority and No Violation.  The execution, delivery and
performance by Borrower of this Note (a) is within its corporate powers,
(b) has been duly authorized by all necessary corporate action, and   does
not and will not (I) contravene its certificate of incorporation or bylaws,
(ii) violate any other applicable requirement of law, or any order or decree
of any governmental authority or arbitrator, (iii) conflict with or result in
the breach of, or constitute a default under, or result in or permit the
termination or acceleration of, any of its agreements, (iv) result in the
creation or imposition of any Lien upon any of its property or (v) require the
consent of, authorization by, approval of, notice to, or filing or
registration with, any Person not already obtained.

     1.25 Binding Obligation.  This Note has been duly executed and delivered
by Borrower and is the legal, binding and valid obligation of Borrower
enforceable against it in accordance with its terms, subject to the following
qualifications:  (I) equitable principles generally (whether considered in a
proceeding at law or in equity), and (ii) Debtor Relief Laws (insofar as any
such law relates to the bankruptcy, insolvency or similar event of Borrower).

     1.26 Credit Agreement Representations and Warranties.  For purposes
hereof, all of the representations and warranties of Borrower set forth in
Article 4 of the Credit Agreement (the "Credit Agreement Representations and
Warranties") are hereby reaffirmed by Borrower and are incorporated herein as
written, mutatis mutandis.  The Borrower hereby represents and warrants that
the Credit Agreement Representations and Warranties are true and correct in
all material respects as though made on and as of the date of this Note.


<PAGE>   17

                               ARTICLE V

                               COVENANTS


     Until the termination of the Commitment and payment of all outstanding
Obligations in full, Borrower will comply with all of the covenants and
agreements set forth in Articles 5, 6 and 7 of the Credit Agreement as in
effect on the date of this Note.  For purposes of this Note, all of the
covenants and agreements of Borrower set forth in Articles 5 (except for
Section 5.8), 6 and 7 of the Credit Agreement and all definitions relating
thereto are hereby reaffirmed and adopted by Borrower and are incorporated
herein as written and agreed upon as of the date of this Note, mutatis
mutandis, which phrase for purposes hereof means (a) the phrase "Prior to the
Release Date" appearing in the first paragraph of each of said Articles shall
be deemed to read "Until the termination of the Commitment and payment of all
outstanding Obligations in full", and (b) each reference in such Article to
"Lenders", "each Lender" and "Administrative Lender" shall be deemed to be a
reference to Lender.  In the event of termination of the Credit Agreement
prior to the payment in full of all Obligations under this Note and termination
of the Commitment, Borrower covenants and agrees that the covenants and
agreements of Borrower contained in Articles 5, 6 and 7 of the Credit
Agreement shall nevertheless remain in full force and effect and be binding
upon Borrower, and Borrower shall continue to perform, observe and comply
with all of the covenants and agreements of Borrower set forth in Articles 5,
6 and 7 of the Credit Agreement.  Except for amendments, modifications and
waivers provided up to the date hereof, no amendment, modification or waiver
with respect to Articles 5, 6 and 7 of the Credit Agreement shall be
effective with respect to such Articles as they are incorporated herein
without the written consent of Lender.


                              ARTICLE VI

                            FINAL AGREEMENT

THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

                                          PILLOWTEX CORPORATION



                                          /s/  Jeffrey D. Cordes
                                          -------------------------
                                          President and COO


                                          NATIONSBANK, N.A.



                                          /s/  Suzanne B. Smith
                                          --------------------------
                                          Vice President


<PAGE>   18

                                   EXHIBIT "A"

                              NOTICE OF BORROWING


NationsBank, N.A.   [Date]
901 Main Street, 67th Floor
Dallas, Texas  75202

Attention:     Suzanne B. Smith

Ladies and Gentlemen:

The undersigned refers to the Promissory Note in the maximum principal
amount of $20,000,000, dated as of May 4, 1999 (said Note, as it may be amended
or otherwise modified from time to time, being the "Note"; the terms defined
therein being used herein as therein defined), payable by Pillowtex Corporation
to the order of NationsBank, N.A. and hereby gives you notice pursuant to
Section 1.3 of the Note that the undersigned hereby requests _____ Borrowing[s]
under the Note, and in that connection sets forth below the information
relating to [each] such Borrowing (a "Proposed Borrowing") as required by
Section 1.3 of the Note:

Proposed Borrowing:

(1) The Business Day of such Proposed Borrowing is _______________,
19___.

(2) The Type of Advances comprising such Proposed Borrowing is [Base
Rate Advances [to the extent of an aggregate amount of
$___________]] [Eurodollar Advances [to the extent of an aggregate
amount of $___________]].

(3) The aggregate  amount of such  Proposed  Borrowing is $____________.

(4) [The initial Interest Period for each [Eurodollar Advance] made as
part of such Proposed Borrowing is _____ [months]].

The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing, before
and after giving effect thereto and to the application of the proceeds
therefrom:

(A)  the representations and warranties specified in Article 4 of
the Note are true and correct in all material respects as though made on
and as of such date; and


(B)  no event has occurred and is continuing or would result from
such Proposed Borrowing, which constitutes a Default or Event of Default.

Very truly yours,

PILLOWTEX CORPORATION



By:
Name:
Title: