EXHIBIT 2.3






                            STOCK PURCHASE AGREEMENT

                                  BY AND AMONG

                              SARA LEE CORPORATION,

                             CHAMPION PRODUCTS, INC.

                                       AND

                        GFSI, INC., d/b/a GEAR FOR SPORTS

                                 April 20, 2001



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<TABLE>
<CAPTION>

TABLE OF CONTENTS

<S>     <C>                                                                                 <C>
ARTICLEI. DEFINITIONS .......................................................................2

ARTICLE II. PURCHASE AND SALE; CLOSING ......................................................2
   2.1.  Purchase and Sale...................................................................2
   2.2.  The Closing.........................................................................2
   2.3.  Purchase Price......................................................................2
   2.4.  Seller's Closing Deliveries.........................................................2
   2.5.  Buyer's Closing Deliveries..........................................................2
   2.6.  Inventory Definitions...............................................................2
   2.7.  Closing Inventory Statement.........................................................3
   2.8.  Inventory Updates...................................................................4
   2.9.  Inventory Adjustment Amount.........................................................4
   2.10. Shipping and Shipping Costs.........................................................5

Article III. REPRESENTATIONS AND WARRANTIES RELATING TO SELLER...............................5
   3.1.  Organization of Seller..............................................................5
   3.2.  Authorization of Transaction........................................................5
   3.3.  No Violation........................................................................6
   3.4.  Brokers' Fees.......................................................................6
   3.5.  Shares..............................................................................6

ARTICLE IV. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY...........................6
   4.1.  Corporate Organization and Authority................................................6
   4.2.  Capitalization......................................................................7
   4.3.  Authority...........................................................................7
   4.4.  No Violation........................................................................7
   4.5.  Corporate Records...................................................................7
   4.6.  Closing Inventory...................................................................8
   4.7.  Compliance with Laws................................................................8
   4.8.  No Undisclosed Liabilities..........................................................8
   4.9.  Taxes...............................................................................8
   4.10. Company Assets.....................................................................10
   4.11. Intellectual Property..............................................................11
   4.12. Consents and Approvals.............................................................12
   4.13. Contracts..........................................................................12
   4.14. Litigation.........................................................................12
   4.15. Employee Plans.....................................................................12
   4.16. Labor and Employee Matters.........................................................13
   4.17. Hazardous Substances...............................................................13
   4.18. Subsidiaries.......................................................................14
   4.19. Customers and Products.............................................................14
   4.20. Contribution P&L...................................................................14
   4.21. Real Estate........................................................................14
   4.22. Brokers' Fees and Commissions......................................................14
   4.23  Disclaimer.........................................................................15


                                      -i-
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ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER..........................................15
   5.1.  Corporate Organization.............................................................15
   5.2.  Authority..........................................................................15
   5.3.  No Violation.......................................................................15
   5.4.  Consents and Approvals.............................................................16
   5.5.  Brokers' Fees and Commissions......................................................16
   5.6.  Litigation.........................................................................16
   5.7.  Investigation By Buyer.............................................................16
   5.8.  Investment Representation..........................................................16
   5.9.  Availability of Financing..........................................................16

ARTICLE VI. COVENANTS 16
   6.1.  Conduct of Business of the Company Prior to the Closing Date.......................16
   6.2.  Employees and Employee Benefits....................................................17
   6.3.  Access to Information..............................................................18
   6.4.  All Reasonable Efforts.............................................................19
   6.5.  Exclusivity........................................................................19
   6.6.  Public Announcements...............................................................19
   6.7.  Schedules..........................................................................19
   6.8.  Licenses and Related Transactions..................................................20
   6.9.  Access to Records..................................................................21
   6.10. Confidentiality Agreement..........................................................21
   6.11. Resignation of Officers and Directors..............................................21
   6.12. Raw Materials......................................................................21
   6.13. Tax Matters........................................................................21
   6.14. Name Change........................................................................22
   6.15. Collection of Accounts Receivable..................................................23
   6.16. Returns of Merchandise.............................................................24
   6.17. Fiscal 2001 Contribution P&L.......................................................24

ARTICLE VII. CONDITIONS TO CLOSING......................................................... 24
   7.1.  Conditions to Obligations of Buyer.................................................24
   7.2.  Conditions to Obligations of Seller................................................25

ARTICLE VIII. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS AND INDEMNIFICATION.....25
   8.1.  Survival of Representations, Warranties and Covenants..............................25
   8.2.  Seller's Indemnification...........................................................26
   8.3.  Buyer's Indemnification............................................................27
   8.4.  Indemnification Procedures for Third Party Claims..................................29
   8.5.  Nature of Other Liabilities........................................................31
   8.6.  Indemnification Limits and Restrictions............................................32
   8.7.  Exclusive Remedy...................................................................32
   8.8.  Tax Matters........................................................................32

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ARTICLE IX. TERMINATION AND ABANDONMENT.................................................... 33
   9.1.  Methods of Termination.............................................................33
   9.2.  Procedure and Effect of Termination................................................34

ARTICLE X. BAILED INVENTORY.................................................................34
   10.1.  Retention of Buyer................................................................34
   10.2.  The Services......................................................................35
   10.3.  Insurance.........................................................................35
   10.4.  Confidential and Proprietary Information..........................................36
   10.5.  Rights to Company IP..............................................................37
   10.6.  Buyer Warranty....................................................................37
   10.7.  Not a Requirements Contract.......................................................38
   10.8.  Specifications; Quality Standards.................................................38
   10.9.  Ownership of Product and Assets...................................................38
   10.10. Obligations Upon Termination of this Agreement....................................39
   10.11. Independent Contractor Relationship...............................................39

ARTICLE XI. MISCELLANEOUS...................................................................40
   11.1. Notices............................................................................40
   11.2. Amendments; Waivers................................................................40
   11.3. Successors and Assigns.............................................................41
   11.4. Construction; Interpretation; Certain Terms........................................41
   11.5. Severability.......................................................................41
   11.6. Counterparts.......................................................................41
   11.7. Entire Agreement...................................................................41
   11.8. Governing Law; Consent to Jurisdiction; Venue......................................41
   11.9. Expenses...........................................................................42
   11.10.   Third-Party Beneficiaries.......................................................42
   11.11.   Knowledge.......................................................................42
   11.12.   WAIVERS OF TRIAL BY JURY........................................................42
</TABLE>



EXHIBIT A - Defined Terms
EXHIBIT B - Intentionally Omitted
EXHIBIT C - Seller's Closing  Deliveries
EXHIBIT D -  Buyer's  Closing  Deliveries
EXHIBIT E - CAMS License
EXHIBIT F - Champion  License
EXHIBIT G - Supply  Agreement
EXHIBIT H - Fall 2001 Agreement
EXHIBIT I -  Noncompetition  Agreement
EXHIBIT J - Current Defect Guidelines


Schedule 2.3     - Wire Transfer  Instructions
Schedule 2.7(a)  - Estimated Inventory and Value
Schedule 2.7(b)  - Attribution  Pricing  Methodology
Schedule 4.1     - Corporate  Organization and Authority


                                     -iii-
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Schedule 4.4     - No Violation
Schedule 4.7     - Compliance with Laws
Schedule 4.8     - Undisclosed Liabilities
Schedule 4.9(a)  - Taxes
Schedule 4.9(f)  - Tax Elections
Schedule 4.10(e) - Included Contracts
Schedule 4.11(b) - Infringement
Schedule 4.12    - Consents and Approvals
Schedule 4.13(a) - Certain Contracts
Schedule 4.13(b) - Contracts
Schedule 4.14    - Litigation
Schedule 4.15    - Employee Plans Relating to Business Employees [To follow]
Schedule 4.16(a) - Collective Bargaining  Agreements
Schedule 4.16(b) - Employment Contracts
Schedule 4.16(c) - Business Employees [To follow]
Schedule 4.16(d) - Severance Policy
Schedule 4.16(e) - Salary Increases  [To follow]
Schedule 4.17    - Hazardous  Substances
Schedule 4.19    - Major Customers and Major Products; Changes in Margins
Schedule 4.20    - Fiscal 2000 Contribution P&L Statement
Schedule 6.1     - Conduct of Business of the Company Prior to the Closing Date
Schedule 6.2     - Employees of Business
Schedule 10.8(a) -  Packing Requirements


                                      -iv-
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                            STOCK PURCHASE AGREEMENT


        This Stock Purchase  Agreement  ("Agreement"),  dated April 20, 2001, by
and among Sara Lee  Corporation,  a Maryland  corporation  ("Seller"),  Champion
Products,  Inc., a New York corporation  (the "Company"),  and GFSI, Inc., d/b/a
GEAR For Sports, a Delaware corporation ("Buyer").

                                    RECITALS:

         A. The  Company  is  engaged  in,  among  other  things,  the  business
("Business")  of  marketing,  distributing  and  selling  Branded  Product in or
through  Specified  Distribution  Channels  located  within the United States of
America (including its possessions and territories).  The term "Branded Product"
means  collectively,   Collegiate  Products,  Military  Products  and  Specialty
Products.  The term "Specified  Distribution Channels" means (a) with respect to
Blank  Product  which  is  attributed  with  college   decoration   ("Collegiate
Products"),  any of the channels  described in clauses (b) or (c) below, as well
as college bookstores, campus stores, department stores (except Wal-Mart, Kmart,
Target,  Ames, Value City, Dollar General and Dollar Stores),  specialty stores,
sporting  goods  stores,  direct mail,  collegiate  event  concessionaires,  and
Internet  distributors,  (b) with respect to Blank  Product  which is attributed
with military  decoration  ("Military  Product"),  military bases and other such
outlets, and (c) with respect to Blank Product which is attributed with any form
of decoration  (other than  decoration  described in clause (a) or (b) above and
other than  decoration  pertaining  to a  professional  sports  team,  league or
franchise)  ("Specialty  Product"),  resort retail shops,  casinos,  hotel spas,
athletic clubs, cruise lines, and resort event concessionaires.  The term "Blank
Product" means (1) fleece tops and bottoms, jersey tops and bottoms, mesh fabric
tops and bottoms,  woven tops and  bottoms,  polo  shirts,  windwear,  sweaters,
outerwear,  and headwear for men, women, boys, girls,  toddlers and infants, and
(2) such other  products as Buyer  requests,  from time to time,  to be included
within the  definition of Blank  Product,  to which request Seller agrees in its
sole  discretion,  in each case  bearing  the brand name  Champion  or a related
trademark.

         B.  Seller owns 100% of  the  issued  and outstanding  shares of common
stock of the Company, $1.00 par value per share (the "Common Stock").

         C. The Company is in the process of selling or  otherwise  transferring
all or  substantially  all of the Company's  properties,  rights and  interests,
other than the Company  Assets.  As a result of such sales and transfers,  as of
the Closing Date, the Company will be engaged only in the Business.

         D. Seller desires  to sell to Buyer, and Buyer desires to purchase from
Seller, all of the issued and outstanding shares of Common Stock, subject to the
terms and conditions contained herein.

                                A G R E E M E N T

         NOW,  THEREFORE,   in  consideration  of  the  mutual  representations,
warranties  and covenants  hereinafter  set forth,  the parties  hereto agree as
follows:

                                       1
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                                   ARTICLE I.
                                   DEFINITIONS

         In addition  to the terms  defined  elsewhere  in this  Agreement,  the
capitalized  terms set  forth on  Exhibit A shall  have the  meanings  set forth
therein.


                                  ARTICLE II.
                           PURCHASE AND SALE; CLOSING

      2.1.  Purchase and Sale.  Upon the terms and subject to the  conditions of
this  Agreement  and  in  reliance  upon  the  representations,  warranties  and
covenants  herein set forth,  on the Closing  Date,  Seller shall sell,  assign,
transfer,  convey and deliver to Buyer,  free and clear of all Liens,  and Buyer
shall purchase and accept from Seller,  all of the issued and outstanding shares
of the Common Stock owned by Seller,  which shares represent one hundred percent
(100%)  of  the  issued  and  outstanding  capital  stock  of the  Company  (the
"Shares").

      2.2.  The  Closing.  Subject  to  Article  VII,  the  consummation  of the
transactions  contemplated by this Agreement (the "Closing") shall take place at
10:00  a.m.,  Central  Standard  Time,  on June  25,  2001,  at the  offices  of
Sonnenschein  Nath &  Rosenthal,  located in Chicago,  or at such other time (no
later  than June 29,  2001) or place as agreed to in writing by Buyer and Seller
(the date on which the Closing occurs, the "Closing Date"). The Closing shall be
effective as of the start of business on the Closing Date.

      2.3. Purchase Price. The aggregate  purchase price to be paid by Buyer for
the  Shares  shall be the sum of  $7,500,000.00  less the  Inventory  Adjustment
Amount, if any (said sum being called the "Purchase Price").  The Purchase Price
shall be paid to Seller as follows:  (i) $2,250,000.00 in cash (U.S. dollars) at
Closing by wire  transfer of same day funds as set forth in Schedule  2.3,  (ii)
$2,000,000.00  in cash  (U.S.  dollars)  on or  before  August  1,  2001 by wire
transfer of same day funds as set forth in Schedule 2.3, (iii)  $1,625,000.00 in
cash (U.S.  dollars) on or before September 1, 2001 by wire transfer of same day
funds as set forth in Schedule  2.3, and (iv) the balance of the Purchase  Price
in cash (U.S. dollars) on or before October 1, 2001 by wire transfer of same day
funds as set forth in Schedule 2.3.

      2.4. Seller's Closing  Deliveries.  Subject to the conditions set forth in
this Agreement, at the Closing,  simultaneous with Buyer's deliveries hereunder,
Seller shall  deliver or cause to be  delivered  to Buyer all of the  documents,
certificates  and  instruments set forth on Exhibit C, all in form and substance
reasonably satisfactory to Buyer and Buyer's counsel.

      2.5.  Buyer's Closing  Deliveries.  Subject to the conditions set forth in
this Agreement, at the Closing, simultaneous with Seller's deliveries hereunder,
Buyer shall  deliver or cause to be delivered to Seller all of the documents and
instruments  set  forth  on  Exhibit  D, all in form  and  substance  reasonably
satisfactory to Seller and Seller's counsel.

      2.6. Inventory Definitions.  For purposes of this Agreement, the following
terms shall have the following meanings:


                                       2
<PAGE>

      (a) "Inventory"  means the Blank Product and Branded Product  reflected on
the  Inventory  Schedule  all of which  is  intended  for sale by the  Company's
customers  for the Fall  2001  season  and (x)  which  is  owned by the  Company
immediately after the Closing, or (y) which was owned by the Company between the
date hereof and the Closing  Date and  transferred  by the Company to Seller (or
one of its  Affiliates)  prior  to  Closing  and is  owned  by  such  transferee
immediately after the Closing.

      (b) "Closing Inventory" means the Inventory described in clause (x) of the
definition of Inventory  other than the portions of such Inventory  which at any
time on or prior to the Closing  Date  constituted  Bailed  Inventory,  it being
agreed that the  Closing  Inventory  is intended to be the first  portion of the
Inventory which Seller reasonably expects to be shipped to the Company after the
Closing;  provided,  however,  that the Closing  Inventory shall not include any
Inventory to the extent that its value (as set forth on the Inventory  Schedule)
causes the sum of the Closing  Inventory Value and the Bailed Inventory Value to
exceed $8,000,000.

      (c) "Fall 2001 Inventory"  means the Inventory  described in clause (z) of
the  definition of Inventory  plus the Inventory  which is excluded from Closing
Inventory due to the proviso of the definition of Closing Inventory.

      (d) "Closing  Inventory Value" means the value of the Closing Inventory as
determined in accordance with the Inventory Schedule.

      (e) "Bailed Product" means Blank Product  constituting  Inventory which is
shipped to Buyer by the  Company  (or one of its  Affiliates)  between  the date
hereof and the Closing Date pursuant to Article X of this Agreement.

      (f) "Bailed  Inventory"  means all of the Bailed  Product  and  Attributed
Product which,  immediately prior to the Closing, is either in the possession of
Buyer (or a third  party  warehouse  or bailee for the  benefit  of  Buyer),  in
transit to Buyer  from the  Company  or was  shipped  by Buyer to the  Company's
customers pursuant to Article X.

      (g)  "Bailed  Inventory  Value"  means the value of the  Bailed  Inventory
(assuming,  for the  purposes  of this  definition  only,  that all such  Bailed
Inventory has not been  attributed),  as determined in accordance  with Schedule
2.7(a).

      (h)  "Attributed  Product" means Bailed Product after being  attributed by
Buyer pursuant to Article X.

      (i)  "Shipped  Inventory"  means the  portions  of the  Closing  Inventory
shipped on or after the Closing Date by Seller (or one of its  Affiliates) to or
for the account of the Company.

      2.7.  Closing Inventory Statement.

      (a) Schedule  2.7(a)  represents  the parties'  estimate of the  Inventory
other than the Fall 2001 Inventory (the "Estimated Inventory").  Schedule 2.7(a)
also sets forth the value of the  Estimated  Inventory  based upon the  parties'
assumptions  regarding  the portions of the  Estimated  Inventory  which will be
attributed prior to the Closing Date and the cost of such

                                       3

<PAGE>

attribution,  including value added processing (e.g., packing and labels, etc.).
Schedule 2.7(b) sets forth the pricing methodology used by Seller in determining
the cost of attributing Blank Product, including value added processing.

      (b) No later than 48 hours prior to the Closing  Date,  the parties  shall
agree upon a statement ("Closing Inventory Statement") setting forth the Closing
Inventory  and the Closing  Inventory  Value.  If the parties are not able so to
agree,  then,  on the Closing  Date,  Seller shall  deliver to Buyer the Closing
Inventory  Statement,  it  being  agreed  that  Seller  shall  use  commercially
reasonable  efforts  to cause the  Closing  Inventory  set forth on the  Closing
Inventory  Statement  to be the  portions  of the  Inventory  which  satisfy the
definition of Closing  Inventory set forth in Section 2.6(b).  The parties agree
that any of the Inventory which does not constitute  Bailed  Inventory and which
is not Closing Inventory set forth on the Closing  Inventory  Statement shall be
transferred by the Company to Seller (or one of its Affiliates) prior to Closing
and shall constitute the Fall 2001 Inventory.

      (c) On the Closing Date, Seller shall deliver to Buyer a certificate, duly
signed by Seller,  verifying that the Company owns as of the Closing Date all of
the Closing Inventory.

      2.8. Inventory Updates. Between the date of this Agreement and the Closing
Date,  the parties  from time to time shall  revise  Schedule  2.7(a) to reflect
adjustments  which are  mutually  agreeable  to the parties and which are either
based on (a) requests of Buyer or (b)  recommendations  of Seller,  in each case
made in response to actual (rather than forecasted)  customer  orders.  Schedule
2.7(a) as in effect on the Closing Date is herein  referred to as the "Inventory
Schedule".

     2.9.  Inventory Adjustment Amount.

            (a) As used herein the term "Inventory  Adjustment Amount" means the
      sum of (i) the amount by which  $7,250,000  exceeds the sum of (A) 90.625%
      of the  Closing  Inventory  Value (as set forth on the  Closing  Inventory
      Statement) and (B) 90.625% of the Bailed  Inventory  Value,  plus (ii) the
      amount, if any, of the Bailed Inventory  Reduction (as calculated pursuant
      to Section  10.8  below),  plus (iii) the  amount,  if any, of the Closing
      Inventory Reduction.

            (b) As used herein,  the term "Closing  Inventory  Reduction"  means
      90.625%  of the  amount,  if any,  by which the  Closing  Inventory  Value
      exceeds the aggregate  value (as  determined  in accordance  with Schedule
      2.7(a)) of the Shipped  Inventory.  Shipped  Inventory  shall be valued as
      provided in Schedule 2.7(a), and any Irregular Inventory which constitutes
      Excessive  Irregular  Inventory and which is part of the Shipped Inventory
      shall be valued as agreed  upon by Seller and Buyer.  If the  parties  are
      unable to reach  agreement  within  thirty  days of such  Inventory  being
      received by Buyer, then such Excessive Irregular Inventory shall be valued
      at zero and the Company shall ship such Excessive  Irregular  Inventory at
      such times and to such  destinations  as  directed  by Seller from time to
      time at Seller's  cost,  it being agreed that the Company shall store such
      Excessive Irregular Inventory,  on Seller's behalf, at no charge for up to
      180 days until Seller  provides  such  direction;  provided that Buyer and
      Seller shall  review with one another on a monthly  basis the quantity and


                                       4
<PAGE>

      any  related  issues  pertaining  to storage of such  Excessive  Irregular
      Inventory.  Inventory shall conclusively be deemed "Shipped  Inventory" to
      the extent such  Inventory  is  reflected  on the bills of lading or other
      shipping documents prepared by Seller and accompanying such shipment,  and
      shall be valued as provided therein,  unless, within five business days of
      receipt by Buyer,  Seller  receives  written notice  containing a detailed
      explanation of Buyer's objection to the Shipped Inventory.  Buyer shall be
      entitled  to object  to such  list or  valuation  only to the  extent  (a)
      mathematical  errors  exist in the  list or  valuation,  or (b)  Excessive
      Irregular  Inventory is included in such shipment,  or (c)  merchandise is
      shipped to Buyer but is not reflected on the Closing Inventory  Statement.
      If Buyer objects to Shipped Inventory in accordance with the provisions of
      this  Section,  the  parties,  in good faith,  shall  promptly  attempt to
      resolve such dispute and, where applicable, make any necessary adjustments
      to the aggregate value of the Shipped Inventory.

      2.10. Shipping and Shipping Costs.  Inventory shipped to Buyer pursuant to
this  Agreement,  whether  before  or after  Closing,  shall be  shipped  F.O.B.
Seller's designated Shipping Facility, it being agreed that all costs of freight
and  shipping  shall be at Buyer's  sole cost and  expense and that risk of loss
shall  pass to  Buyer  once  Inventory  is  removed  from a  Shipping  Facility.
Similarly,  Buyer shall be responsible for the cost of freight and shipment (but
not  packaging  for  shipment)  of all  Design  Assets  referred  to in  Section
4.10(c)(iii).  Buyer shall advise Seller of Buyer's arrangement for the shipment
of Inventory  under this Agreement and if Inventory is not picked up in a timely
manner, Seller may ship Inventory on a freight collect or other basis, as Seller
determines.  If Seller incurs any shipping costs which are the responsibility of
Buyer under this  Section  2.10,  Buyer  shall  promptly  upon  demand  therefor
reimburse Seller for such costs.


                                  Article III.
                REPRESENTATIONS AND WARRANTIES RELATING TO SELLER

         Seller hereby  represents and warrants to Buyer as set forth below with
respect to itself as of the date hereof.

      3.1.  Organization of Seller.  Seller is duly organized,  validly existing
and in good standing under the laws of the State of Maryland.

      3.2.  Authorization  of  Transaction.  Seller has full corporate power and
authority to enter into this  Agreement and the Ancillary  Documents to which it
is a party and to consummate the transactions  contemplated  hereby and thereby.
The  execution and delivery of this  Agreement  and the  Ancillary  Documents to
which  Seller  is a party  and the  performance  by  Seller  of its  obligations
hereunder and thereunder have been duly authorized,  and no other proceedings on
the part of Seller are  necessary  to  authorize  such  execution,  delivery and
performance.  This  Agreement and the  Ancillary  Documents to which Seller is a
party have been or will be duly and validly  executed  and  delivered by it and,
assuming the due  execution  and delivery of this  Agreement  and the  Ancillary
Documents  by  the  other  parties  hereto  and  thereto,  constitutes  or  will
constitute valid and binding legal  obligations of Seller,  enforceable  against
Seller  in  accordance  with  their  respective  terms,  except  to  the  extent
enforceability  may  be  limited  by  bankruptcy,  insolvency,   reorganization,
moratorium or other similar laws affecting the enforcement of creditors'  rights
in general and subject to general  principles  of equity and the  discretion  of
courts in granting equitable remedies.

                                       5

<PAGE>

      3.3. No Violation.  The execution,  delivery and  performance by Seller of
this  Agreement  and the  Ancillary  Documents to which it is a party do not and
will not (a) conflict with or result in any violation of, or constitute a breach
of any  provision  of the charter  document or bylaws of Seller (b) give rise to
the creation of any Lien upon the Shares, or (c) violate any Applicable Law.

      3.4.  Brokers' Fees.  Neither  Seller nor any of its directors,  officers,
employees  or agents has  engaged  any  investment  banker,  broker or finder in
connection with the transactions contemplated hereby.

      3.5.  Shares.  Seller  holds of record  and owns  beneficially  all of the
Shares,  free  and  clear  of any  restrictions  on  transfer  (other  than  any
restrictions under the Securities Act and state securities Laws),  Taxes, Liens,
Contracts,  equities,  Claims, or demands.  Seller is not a party to any option,
warrant,  purchase  right,  or other  Contract or commitment  that could require
Seller to sell,  transfer,  or otherwise  dispose of any Shares (other than this
Agreement). Seller is not a party to any voting trust, proxy, or other agreement
or  understanding  with  respect  to  the  voting  of any  of  the  Shares.  The
assignments,  endorsements,  stock  powers  and other  instruments  of  transfer
delivered  by Seller to Buyer at the Closing will be  sufficient  to transfer to
Buyer Seller's entire  interest,  legal and beneficial,  in the Shares and, upon
transfer  to Buyer of the  certificates  representing  such  Shares,  Buyer will
receive good and  marketable  title to such Shares,  free and clear of all Liens
other  than any Liens  created  by or  through  Buyer or any of its  Affiliates,
agents or representatives.


                                  ARTICLE IV.
             REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY

         Subject  to  the  disclosures  set  forth  in  the  Schedules  to  this
Agreement,  Seller hereby represents and warrants to Buyer as set forth below as
of the date hereof.  The  disclosure of any item or  information in any Schedule
shall not be construed as an admission that such item or information is material
to the Company,  and any inclusion in any Schedule shall expressly not be deemed
to  constitute  an  admission,  or  otherwise  imply,  that  any  such  item  or
information is material or creates  measures for materiality for the purposes of
this  Agreement.  The items and  information  reflected in the Schedules are not
necessarily limited to matters required by this Agreement to be reflected.  Such
additional items and information are set forth for information purposes only and
the Schedules do not necessarily include other matters of a similar nature.

      4.1.  Corporate  Organization and Authority.  The Company is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of New
York, with all requisite corporate power and authority to own, lease and operate
its  properties  and assets and to conduct its business as now being  conducted.
The  Company  is  duly  qualified  or  licensed  to  do  business  as a  foreign
corporation in each  jurisdiction  listed on Schedule 4.1, and, to the knowledge
of Seller,  neither the ownership nor leasing of assets or property owned by the
Company on the


                                       6
<PAGE>


Closing  Date or the conduct of the  Business  immediately  prior to the Closing
Date requires such qualification or licensing in any other jurisdiction,  except
where the failure to be so qualified would not be material to the Company or the
Buyer's use of the Company Assets.  Seller has delivered to Buyer true,  correct
and complete copies of the charter  documents and bylaws presently in effect for
the  Company.  The  Company  is not in  default  under  or in  violation  of any
provision of its charter documents or bylaws.

      4.2. Capitalization.  The authorized capital stock of the Company consists
of 244.27  shares of Common Stock.  All of the Shares have been duly  authorized
and validly issued, are fully paid and non-assessable. No shares of Common Stock
are issued and  outstanding  except for the Shares and no other class of capital
stock  is  issued  or  outstanding.  There  are  no  options,  warrants,  calls,
subscriptions,  conversion or other rights, agreements or commitments obligating
the Company to issue any additional shares of capital stock or other securities,
nor are there outstanding any securities  convertible into,  exchangeable for or
evidencing  the right to  subscribe  for any  shares  of  Common  Stock or other
securities of the Company.

      4.3.  Authority.  The Company has full  corporate  power and  authority to
enter into this Agreement and the Ancillary Documents to which it is a party and
to consummate the transactions  contemplated  hereby and thereby.  The execution
and delivery of this Agreement and the Ancillary  Documents to which the Company
is a party and the performance by the Company of its  obligations  hereunder and
thereunder have been duly  authorized,  and no other  proceedings on the part of
the Company are necessary to authorize such execution, delivery and performance.
This Agreement and the Ancillary  Documents to which the Company is a party have
been or will be duly and validly executed and delivered by it and,  assuming the
due execution and delivery of this Agreement and the Ancillary  Documents by the
other  parties  hereto and thereto,  constitutes  or will  constitute  valid and
binding legal  obligations  of the Company to the extent it is a party  thereto,
enforceable  against  the Company in  accordance  with their  respective  terms,
except to the extent  enforceability  may be limited by bankruptcy,  insolvency,
reorganization,  moratorium or other similar laws  affecting the  enforcement of
creditors' rights in general and subject to general principles of equity and the
discretion of courts in granting equitable remedies.

      4.4. No Violation. The execution,  delivery and performance by the Company
of this Agreement and the Ancillary  Documents to which it is a party do not and
will not (a) conflict with or result in any violation of, or constitute a breach
of any  provision of the charter  document or bylaws of the Company,  (b) except
for consents and  approvals set forth in Schedule 4.4 (all of which have been or
prior to Closing  will be obtained  by Seller)  and except  with  respect to the
Design  License  Agreements,  conflict  with,  or  result in a  violation  of or
constitute  a breach or default  (with or  without  notice or a lapse of time or
both)  under,  or permit  the  termination  of, or entitle  any other  Person to
accelerate any obligation, or result in the loss of any benefit, or give rise to
the creation of any Lien upon the Shares or the assets of the Company  under the
terms,  conditions or provisions of any material  agreement or contract to which
the Company is a party or by which any of the  Company  Assets or the Shares are
bound, or (c) violate any Applicable Law.

      4.5. Corporate Records. The corporate minute books (containing the records
of meetings and written consents of the stockholders, the board of directors and
any  committee of the board of  directors)  and records of the Company  relating

                                       7
<PAGE>

solely  to the  Business  and  the  stock  books  and  records  of  the  Company
(collectively,  "Corporate  Records"),  in each case regardless of form, are (a)
with  respect  to the  Corporate  Records  related  to  periods  after  Seller's
acquisition of the Company,  accurate and complete in all material respects, and
(b) with respect to the Corporate  Records  related to periods prior to Seller's
acquisition of the Company,  all of such Corporate  Records in the possession of
the Company or Seller.

      4.6.  Closing  Inventory.  The Closing  Inventory will consist only of (a)
Branded Product which is attributed with college,  military,  specialty or other
form of  decoration  or (b)  Blank  Product,  in  either  case  being  Fall 2001
catalogued  merchandise  (meaning merchandise intended for sale by the Company's
customers to consumers for the Fall 2001 season).

      4.7.  Compliance  with  Laws.  Except as set forth on  Schedule  4.7,  the
Company is, and the Business is being conducted,  and at all times since January
1,  2000,  the  Company  has  been  and the  Business  has  been  conducted,  in
substantial  compliance  with all  Applicable  Laws,  the failure to comply with
which  could  reasonably  be  expected  to be  material  to the  Company  or the
Business.  Except as set forth in Schedule 4.7, the Company has not received, at
any  time  since  January  1,  2000,   any  written   notice  or  other  written
communication from any Governmental Authority or written notice or other written
communication  from  any  other  Person  regarding  (i) any  actual  or  alleged
violation of, or failure to comply with, any Applicable  Law, or (ii) any actual
or alleged obligation on the part of the Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.

      4.8. No Undisclosed Liabilities. Except as expressly set forth in Schedule
4.8,  except for the  executory  portion of  Included  Contracts  and except for
Liabilities  or obligations  which are not required to be disclosed  pursuant to
other  provisions  of this  Agreement  on  account of  qualifications  contained
therein,  the Company will have as of the Closing Date no Liabilities other than
Liabilities  expressly  assumed by Buyer  hereunder and  Liabilities  subject to
indemnification by Seller pursuant to Article VIII hereof.

      4.9.  Taxes.

            (a) Except as set forth on  Schedule  4.9(a),  all  federal,  state,
      local and foreign returns,  estimates,  information statements and reports
      ("Returns")  relating to any and all Taxes relating or attributable to the
      Company  or its  operations  have been  filed and made for the  Company as
      required by all applicable  laws for all periods through and including the
      Closing  Date,  and  such  Returns  are  true and  correct  and have  been
      completed in all material respects in accordance with all Applicable Laws.
      The Company has timely paid all Taxes  required to be paid with respect to
      such filed  Returns and has  withheld  with respect to its  employees  all
      federal and state  income  taxes,  required to be withheld by it under the
      Federal Insurance  Contributions Act, as amended, the Federal Unemployment
      Tax Act,  as amended,  and other  Taxes it is  required  to withhold  from
      amounts  paid or owing to any  employee,  stockholder,  creditor  or other
      Third  Party  and  remitted  the  same  to  the  applicable   Governmental
      Authority.  Except  as set  forth  on  Schedule  4.9(a),  there  is no Tax
      deficiency  outstanding  or, to Seller's  knowledge,  proposed or assessed


                                       8
<PAGE>

      against the Company or its  assets,  nor has the Company  executed or been
      requested  to execute  any  waiver of any  statute  of  limitations  on or
      extending the period for the  assessment or collection of any Tax.  Except
      as  set  forth  on  Schedule  4.9(a),  the  Tax  Returns  relating  to the
      operations of the Company have not within the past five years been audited
      and no audit or other  examination  of any Return is presently in progress
      nor has the Company received written notice from a Governmental  Authority
      indicating an intent to open any such audit or other examination,  and the
      time for assessing or  collecting  income Tax with respect to each taxable
      period  prior to such prior  five year  period has closed and is no longer
      subject to further  review by any  Governmental  Authority.  Except as set
      forth in  Schedule  4.9(a),  the Company is not a party to or bound by any
      Tax indemnity,  Tax sharing or Tax allocation agreement.  There are no Tax
      Liens,  and the Company has no knowledge of any basis for the assertion of
      any Claim which,  if adversely  determined,  would result in Liens,  other
      than Liens for Taxes or assessments not yet due or payable,  on the assets
      of the Company relating to Taxes.

            (b) No consent to the  application of Section  341(f)(2) of the Code
      has been filed with  respect to any property or assets held or acquired or
      to be acquired by the Company.

            (c) No  Company  Asset is or will be at  Closing  property  that the
      Buyer or the  Company is or will be  required  to treat as being  owned by
      another  Person  pursuant to the  provisions  of Section  168(f)(8) of the
      Internal Revenue Code of 1954, as amended and in effect immediately before
      the  enactment  of the Tax  Reform  Act of  1986,  or is  "tax-exempt  use
      property" within the meaning of Section 168(h)(1) of the Code.

            (d) The Company has (i) not agreed to or is not required to make any
      adjustment  pursuant to Section 481(a) of the Code; (ii) no knowledge that
      the IRS has proposed any such  adjustment or change in  accounting  method
      with respect to the  Company,  and (iii) no  application  pending with any
      Governmental  Authority requesting permission for any change in accounting
      method.

            (e) Seller is not a foreign  person  within  the  meaning of Section
      1445 of the Code.

            (f) Except as disclosed on Schedule  4.9(f),  neither Seller nor the
      Company has in effect any tax  elections  for federal  income tax purposes
      under  Sections 108, 168, 338, 441, 471, 1017,  1033,  1502 or 4977 of the
      Code with respect to the Company.

            (g) There is no Contract,  agreement,  plan or arrangement  covering
      any Person that,  individually  or  collectively,  as a consequence of the
      transactions  contemplated  by  this  Agreement,  could  give  rise to the
      payment of any  amount  that  would not be  deductible  by Buyer or by the
      Company by reason of Section 280G or Section 162(m) of the Code.

            (h) The  Company  does  not  own an  interest  in any  (i)  domestic
      international  sales corporation,  (ii) foreign sales  corporation,  (iii)
      controlled foreign corporation or (iv) passive foreign investment company.


                                       9
<PAGE>

            (i) The basis of all  depreciable  or  amortizable  assets,  and the
      methods  used  in  determining  allowable   depreciation  or  amortization
      (including  cost recovery)  deductions of the Company,  are correct and in
      compliance  with the Code and the  regulations  thereunder in all material
      respects.

            (j) The Company  will not be required to pay any Taxes of any Person
      (other than the  Company)  under  Treas.  Reg.ss.1.1502-6  (or any similar
      provision of state,  local, or foreign Law), as a transferee or successor,
      by Contract, or otherwise.

      4.10.  Company Assets. As of the Closing Date, the Company shall own, free
and clear of all Liens,  other than the rights of licensors under Design License
Agreements  (none of which are part of the Included  Contracts) or other license
agreements which are part of the Included Contracts and other than the rights of
customers under the Purchase Orders, the following assets,  rights and interests
(collectively, "Company Assets"):

      (a) The Closing Inventory.

      (b) The Bailed Inventory.

            (c) The design assets (collectively,  "Design Assets") which consist
      of the following:

                  (i) Approximately 56,910 screen art files which have been used
            by the Company in  conducting  the Business  since  January 1, 1999,
            plus all  screen art files  developed  or under  development  by the
            Company  between the date hereof and the Closing Date for use in the
            Business;

                  (ii) Approximately  37,898 embroidery stitch files used in the
            Business,  plus  all  embroidery  stitch  files  developed  or under
            development  by the Company  between the date hereof and the Closing
            Date for use in the Business; and

                  (iii) The Company's film library located in Mexico, consisting
            of  approximately  65,483  acetates  which  have  been  used  in the
            Business,  plus all acetates  developed or under  development by the
            Company  between the date hereof and the Closing Date for use in the
            Business.

            (d) The  following  data  (regardless  of  form)  pertaining  to the
      Business (collectively, "Sales and Product Data"):

                  (i) All active customer accounts as of the Closing Date;

                  (ii) Historical sales data by customer,  sales representative,
            product and product  classification  for the Company's  fiscal years
            1999 through 2001; and

                  (iii) A summary of all non-proprietary  product specifications
            as of the Closing  Date for the Branded  Products,  including  color
            standards.


                                       10
<PAGE>

            (e) The Company's  rights and interest under the Contracts  existing
      as of the Closing Date listed on Schedule 4.10(e)  (collectively  with the
      Purchase Orders, being called the "Included Contracts").

            (f) The  Company's  rights and interest  under all  purchase  orders
      existing at the Closing Date for the sale to customers of Branded Products
      but only to the extent relating to products which have not been shipped to
      a customer as of such date (collectively, "Purchase Orders").

            (g) The Corporate Records.

      To the extent the Company owns as of the Closing  Date any assets,  rights
or  interests  other than the Company  Assets,  Buyer  shall cause such  assets,
rights or  interests,  whenever  received  or  realized,  including  all  claims
relating  thereto and all  proceeds  thereof,  to be conveyed to Seller  without
further   consideration  as  provided  in  Section  6.4.  Without  limiting  the
foregoing,  Buyer acknowledges  that, (1) as of the date of this Agreement,  the
Company owns certain  European,  Middle East and African  registrations  for the
Champion trademarks (the "Foreign Registrations"), (2) the Foreign Registrations
will be sold by the Company  prior to Closing,  (3) the Company  will,  prior to
Closing,  distribute to Seller, as a dividend, all property and cash received by
the  Company  as  consideration  for the  sale  by the  Company  of the  Foreign
Registrations, and (4) if the Company receives any consideration for the sale by
the Company of the Foreign  Registrations  after the Closing,  Buyer shall cause
the Company to promptly convey to Seller any such consideration.

     4.11.  Intellectual Property.


            (a)  The  Company  has  the  right  to  use   pursuant  to  license,
      sublicense,  Contract,  or  permission  the CAMS Software and the Licensed
      Marks.  Buyer  acknowledges  that  Seller is making no  representation  or
      warranty  of any kind  regarding  the  Company's  rights  under the Design
      License  Agreements,  and that the Company intends to terminate all of the
      Design License Agreements  immediately prior to the Closing as provided in
      Section 6.8(a).

            (b) Except as set forth on Schedule 4.11(b),  neither Seller nor the
      Company has, in the past two years, received any charge, complaint, claim,
      demand,  or written  notice  alleging with respect to the CAMS Software or
      Licensed  Marks  any  interference,  infringement,   misappropriation,  or
      violation  (including  any claim that the Company  must license or refrain
      from using any  intellectual  property rights of any Third Party).  To the
      knowledge  of  Seller,  during  the past two  years,  no Third  Party  has
      interfered with, infringed upon,  misappropriated,  or otherwise come into
      conflict  with any rights of the Company in the CAMS  Software or Licensed
      Marks which interference,  infringement,  misappropriation or conflict has
      not been resolved to the Company's satisfaction.

            (c) No patent has been  issued to the  Company  with  respect to any
      intellectual  property used in the Business.  A patent  application in the
      name of the  Company  for the CAMS  Software  is  pending  with the United
      States Patent and Trademark Office,  which application will be transferred
      to Seller prior to the Closing Date.


                                       11
<PAGE>

            (d) The Company does not consider the product  specifications  owned
      by it relating to Branded Product to be proprietary.

      4.12.  Consents and  Approvals.  Except as set forth on Schedule  4.12, no
filing or registration with, no notice to and no permit, authorization, consent,
approval or waiver, of any Governmental Authority is necessary to be made by the
Company  and/or  Seller  in  order  for  the  consummation  of the  transactions
contemplated by this Agreement or the Ancillary Documents.

      4.13. Contracts.

            (a) Except as specifically  indicated in Schedule  4.13(a),  neither
      the  Company nor Seller is a party to (x) any  Contract  pursuant to which
      the  Company  is  restricted  from  conducting  the  Business,  or (y) any
      Contract  with any employee (i) the  benefits of which are  contingent  or
      accelerated, or the terms of which are materially altered upon or affected
      by the occurrence of  transactions  contemplated  by this Agreement or the
      other  Ancillary  Documents,  (ii)  under  which any  Person  may  receive
      payments  subject to the tax imposed by Section 4999 of the Code, or (iii)
      the value of any of the benefits of which will be  calculated on the basis
      of any of the transactions contemplated by this Agreement.

            (b) Except  for the  Included  Contracts  and except as set forth in
      Schedule  4.13(b),  at the Closing  the Company  will not be a party to or
      bound by any Material Contract.

            (c) The  Company  is not a party  to any  Contract  with  any  Major
      Customer  other than any of the Purchase  Orders to which a Major Customer
      is a party.

      4.14.  Litigation.  Except as set  forth in  Schedule  4.14,  there are no
claims, actions, suits, hearings,  investigations or proceedings  (collectively,
"Claims")  pending  or, to the  knowledge  of  Seller,  threatened,  before  any
Governmental  Authority,  or before any arbitrator of any nature,  brought by or
against  Seller,  the Company or any of their  respective  officers,  directors,
employees,  agents  or  Affiliates  involving,  affecting  or  relating  to  the
Business,  the Shares,  the Company Assets or the  transactions  contemplated by
this Agreement or the Ancillary  Documents.  No Claim set forth on Schedule 4.14
could reasonably be expected to be material to the Company or the Business. None
of the Company, the Business, the Shares or the Company Assets is subject to any
Judgment.

      4.15. Employee Plans. Within 10 days of Buyer providing Seller with notice
designating the Business Employees,  Seller shall provide to Buyer Schedule 4.15
which shall be a true and complete  list of each Employee Plan of the Company or
sponsored  by Seller  which  covers,  or is  maintained  for the  benefit of, or
relates to, any Business Employee.  With respect to each Employee Plan listed in
Schedule 4.15, the Company will make available to Buyer true and complete copies
of all summary plan descriptions and summaries of material modifications and all
modifications thereto communicated to employees.


                                       12
<PAGE>

      4.16. Labor and Employee Matters.

            (a) Except as set forth in  Schedule  4.16(a),  the Company is not a
      party to, or otherwise bound by, a collective bargaining agreement (or any
      other agreement with any labor organization)  relating to any employees of
      the Company.  During the past five years, the Business has not experienced
      any material work stoppage, labor dispute, grievance, slowdown, lockout or
      strike,  and, to the knowledge of Seller, none has been threatened against
      the Company.  To Seller's  knowledge,  there is no unfair  labor  practice
      charge or complaint  against the Company pending before the National Labor
      Relations Board or any other Governmental Authority.

            (b)  Except as set forth on  Schedule  4.16(b),  the  Company is not
      currently a party to or bound by any  Contract for the  employment  of any
      Business Employee which (i) involves annual payments (salary and bonus) in
      excess of  $50,000.00  or (ii) cannot be  terminated by the Company for no
      "cause" and without penalty on no more than 90 days' prior notice.

            (c) Within 10 days of Buyer providing Seller with notice designating
      the Business  Employees,  Seller shall provide to Buyer  Schedule  4.16(c)
      which shall set forth, for each Business  Employee who is not subject to a
      collective bargaining agreement, a summary description of the current rate
      of compensation payable to such Person.

            (d) The  Company  has  provided  Buyer with  access to copies of all
      manuals,  written  policies or similar  documents of the Company which are
      material to the Business regarding  compensation,  benefits,  perquisites,
      and  personnel  matters.  Except as set  forth in  Schedule  4.16(d),  the
      Company  has no  oral or  written  severance  policy  or  other  severance
      obligation.

            (e) Within 10 days of Buyer providing Seller with notice designating
      the Business  Employees,  Seller shall provide to Buyer  Schedule  4.16(e)
      which shall set forth any increases in the salary of any Business Employee
      since January 1, 2001,  other than customary  salary increases made in the
      ordinary course of business.

      4.17. Hazardous Substances.  Except as set forth in Schedule 4.17:

            (a) The Company  and the Real  Property  are in material  compliance
      with all Environmental Laws.

            (b) To Seller's knowledge, there are no pending or threatened:

                  (i) claims,  complaints,  notices or requests for  information
            received by the Company with respect to any alleged violation of any
            Environmental Law, or

                  (ii) complaints, notices or inquiries to the Company regarding
            potential Liability of the Company under any Environmental Law.


                                       13
<PAGE>


            (c) To Seller's  knowledge,  no Real  Property is listed or proposed
      for listing on the National  Priorities  List  pursuant to CERCLA,  on the
      CERCLIS or on any similar state list of sites requiring  investigation  or
      clean-up, the effect of which, given Seller's indemnification  obligations
      contained in Section 8.2, could adversely affect Buyer, the Company or the
      Business.

      4.18.  Subsidiaries.  The Company has no direct or indirect  subsidiaries,
either  wholly or partially  owned,  and the Company does not hold any direct or
indirect  economic,  voting  or  management  interest  in any  Person or own any
securities issued by any Person.

      4.19.  Customers and Products.

            (a) Schedule 4.19 sets forth:

                  (i) a list of the 10  largest  customers  of the  Company,  in
            terms of revenue  during each of the 1999 and 2000 fiscal  years and
            the  portion  of 2001  prior to  February  28,  2001,  in each  case
            relating to Branded Products (collectively,  the "Major Customers"),
            showing  the total  revenue  received  in each such period from each
            such customer; and

                  (ii) a list of the 10 products  with the largest  sales volume
            sold by the Company in terms of revenue  during each of the 1999 and
            2000  fiscal  years and the  portion of 2001 prior to  February  28,
            2001, in each case relating to Branded Products  (collectively,  the
            "Major Products"), showing the approximate total revenue received in
            each such period with respect to each such product.

            (b) Except as set forth on Schedule  4.19,  since December 31, 2000,
      as of the date hereof,  (i) there has not been any material adverse change
      in the business  relationship  between the Company and any Major Customer,
      and the  Company  has not  received  any  written  notice  that any  Major
      Customer intends to reduce its purchases from the Company,  and (ii) there
      have been no  decreases  in the profit  margins on any Major  Product  and
      there are no indications that the profit margins on any Major Product will
      decrease in the next two fiscal years.

      4.20.  Contribution P&L. Schedule 4.20 contains a contribution  profit and
loss  statement  of the  Business  for the  Company's  2000  fiscal  year.  Such
statement was prepared in accordance with the Company's  standard  practices and
was based on the books and records of the Company.

      4.21.  Real Estate.  As of the Closing,  the Company will not own or lease
any real property and Seller,  one of its Affiliates or one or more  transferees
of assets of the Company,  in the aggregate,  shall have assumed all Liabilities
of the Company relating to any Real Property.

      4.22.  Brokers' Fees and  Commissions.  Neither the Company nor any of its
directors,  officers,  employees  or agents has engaged any  investment  banker,
broker or finder in connection with the transactions contemplated hereby.


                                       14
<PAGE>

      4.23.  Disclaimer.  BUYER ACKNOWLEDGES THAT NEITHER SELLER NOR THE COMPANY
IS MAKING ANY  REPRESENTATIONS  OR  WARRANTIES  WHATSOEVER,  EXPRESS OR IMPLIED,
RELATING TO ANY INVENTORY OR THE COMPANY ASSETS EXCEPT AS EXPRESSLY  PROVIDED IN
THIS ARTICLE IV. WITHOUT LIMITING THE FOREGOING,  NEITHER SELLER NOR THE COMPANY
MAKES ANY  REPRESENTATION  OR WARRANTY AS TO  MERCHANTABILITY,  OR FITNESS FOR A
PARTICULAR  PURPOSE,  OF ANY OF SUCH  INVENTORY  OR THE COMPANY  ASSETS OR OTHER
REPRESENTATIONS  OR  WARRANTIES  ARISING BY STATUTE OR OTHERWISE IN LAW,  FROM A
COURSE  OF  DEALING  OR  USAGE OF  TRADE.  ALL SUCH  OTHER  REPRESENTATIONS  AND
WARRANTIES ARE HEREBY  EXPRESSLY  DISCLAIMED BY THE COMPANY AND SELLER.  NOTHING
CONTAINED IN THIS SECTION 4.23 SHALL LIMIT  BUYER'S  RIGHTS  PURSUANT TO ARTICLE
VIII.


                                   ARTICLE V.
                     REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer hereby represents and warrants to Seller as of the date hereof as
set forth below.

      5.1.  Corporate  Organization.  Buyer is a  corporation,  duly  organized,
validly existing and in good standing under the laws of Delaware.

      5.2. Authority.  Buyer has the corporate power and authority to enter into
this  Agreement  and the  Ancillary  Documents  to  which  it is a party  and to
consummate the transactions  contemplated hereby and thereby.  The execution and
delivery of this Agreement,  the Ancillary Documents to which it is a party, the
consummation  of the  transactions  contemplated  hereby  and  thereby  and  the
performance  of Buyer's  obligations  hereunder  and  thereunder  have been duly
authorized by Buyer, and no other proceedings on the part of Buyer are necessary
to authorize such execution,  delivery and  performance.  This Agreement and the
Ancillary  Documents  to which  Buyer is a party  have  been or will be duly and
validly  executed and  delivered by Buyer and,  assuming the due  execution  and
delivery of this  Agreement  and the  Ancillary  Documents by the other  parties
hereto,  constitutes or will constitute  valid and binding legal  obligations of
Buyer,  enforceable  against Buyer in accordance  with their  respective  terms,
except to the extent  enforceability  may be limited by bankruptcy,  insolvency,
reorganization,  moratorium or other similar laws  affecting the  enforcement of
creditors' rights in general and subject to general principles of equity and the
discretion of courts in granting equitable remedies.

      5.3. No Violation.  The  execution,  delivery and  performance by Buyer of
this  Agreement and the  Ancillary  Documents to which it is a party and Buyer's
performance of the transactions  contemplated hereby and thereby, do not violate
any Applicable Law, do not and will not conflict with or result in any violation
of, or constitute a breach of or default under  (whether with or without  notice
or a lapse of time or both) any  provision of the charter  document or bylaws of
Buyer or of any other agreement or obligation to which it is a party, the breach
of which would impair Buyer's ability to consummate such transactions.



                                       15
<PAGE>

      5.4. Consents and Approvals.  No filing or registration with, no notice to
and no permit, authorization,  consent, approval or waiver of any Third Party or
any  Governmental  Authority is necessary for the  consummation  by Buyer of the
transactions  contemplated by this Agreement or the Ancillary Documents to which
it is a party.

      5.5.  Brokers' Fees and  Commissions.  Other than with respect to payments
made to The Jordan  Company,  LLC,  neither Buyer nor its respective  directors,
officers,  employees  or agents has employed any  investment  banker,  broker or
finder in connection with the transactions contemplated hereby.

      5.6.  Litigation.  There are no Claims  pending  or, to the  knowledge  of
Buyer, threatened against Buyer which seek to enjoin or rescind the transactions
contemplated  by this  Agreement or otherwise  prevent Buyer from complying with
the terms and provisions of this Agreement, nor does Buyer have knowledge of the
basis for any such Claim.

      5.7.  Investigation By Buyer.  Buyer  acknowledges that (a) Buyer has made
such investigation of the business,  assets, financial condition and Liabilities
of the Company and the Company  Assets,  and has been offered the opportunity to
ask such  questions  of  appropriate  representatives  of the  Company or Seller
relating  to the  foregoing,  as  Buyer  deems  appropriate  to  enter  into the
transactions  contemplated  hereby, and (b) except for the  representations  and
warranties of Seller in this Agreement or in any Ancillary  Document to which it
is a party,  Buyer is not relying on any representation or warranty by Seller or
any other Person in entering into the transactions contemplated hereby (and will
not rely on any other  representation  or warranty in  effecting  the  Closing).
Buyer  acknowledges  and agrees that Seller has not made any  representation  or
warranty as to the future prospects  (financial or otherwise),  profitability or
sales levels of the  Business.  Buyer further  acknowledges  and agrees that the
Company has sold,  discontinued or is seeking to sell or discontinue substantial
businesses  and  operations  owned by it,  in  addition  to the  Business,  and,
therefore,  the Company intends to sell or otherwise transfer all assets, rights
and interests  owned by it (other than the Company  Assets) prior to the Closing
Date.

      5.8. Investment Representation. The Shares are being acquired by Buyer for
its own account, for investment and not with a view to or for sale in connection
with any distribution thereof.

      5.9.  Availability of Financing.  Buyer has all funds necessary to perform
its  obligations  hereunder,  including to pay the Purchase Price in full at the
times provided in this Agreement.


                                  Article VI.
                                    COVENANTS

      6.1. Conduct of Business of the Company Prior to the Closing Date.

            (a)  During  the period  from the date of this  Agreement  until the
      Closing,  except as set forth on Schedule 6.1 or as expressly contemplated
      or permitted by this Agreement or to the extent that Buyer shall otherwise
      consent,  Seller shall use  commercially  reasonable  efforts to cause the
      Company  to  carry  on  the   Business  in  such  a  manner  so  that  the
      representations  and warranties  contained in Article IV shall continue to
      be true and correct in all material respects on and as of the Closing Date
      as if made on the Closing Date.


                                       16
<PAGE>

            (b) Between the date hereof and the Closing Date,  Seller shall take
      all actions  necessary (x) to cause the Company to convey to Seller or one
      of its  Affiliates all assets,  properties and rights,  including the Fall
      2001 Inventory,  other than the Company Assets and (y) to assume (directly
      or through its  Affiliates  or any other  Person) all  Liabilities  of the
      Company other than (i) Liabilities  arising under the executory portion of
      Included Contracts and (ii) Liabilities for which Seller is entitled to be
      indemnified pursuant to Section 8.3.

            (c) From  the date  hereof  through  the  Closing  Date,  except  as
      contemplated   by  this  Agreement,   the  Ancillary   Documents  and  the
      transactions  contemplated  hereby and  thereby,  (i) the Company will not
      enter into any  transaction  with  respect to the  Business or the Company
      Assets other than in the ordinary  course,  consistent with past practice,
      and (ii)  there will be no change  made or  authorized  in the  charter or
      bylaws of the Company.

     6.2.  Employees and Employee Benefits.

            (a) Schedule 6.2 sets forth a list of all  employees of the Business
      as of April 10, 2001.  At least 15 days prior to the Closing,  Buyer shall
      notify Seller of those employees listed on Schedule 6.2 which Buyer wishes
      the Company to continue to employ after the Closing (those employees to be
      retained  by the  Company  after the  Closing  being  collectively  called
      "Business Employees"),  and, provided such individuals are employed by the
      Company as of the Closing, Buyer shall cause the Company (or any successor
      entity) to continue to employ after the Closing all Business Employees, in
      each case (i) in the same  capacity  in which  they were  employed  by the
      Company immediately prior to the Closing Date, (ii) at the same salary and
      bonus  level  paid or payable to such  Business  Employees  as was paid or
      payable  immediately  prior to the Closing  Date (until such  salaries and
      bonuses are changed by the Company in the ordinary course of business) but
      in no event shall such level or salaries or bonuses be decreased  prior to
      the first anniversary of the Closing Date, (iii) with such benefits as are
      substantially  comparable,  in the aggregate,  to the benefits provided to
      similarly  situated  employees of Buyer, (iv) providing each such Business
      Employee  full  service  credit  (equal  at  least to the  level  existing
      immediately  prior to the Closing  Date) for  vesting and for  eligibility
      purposes  under any employee  benefit plan  hereafter  adopted for Company
      employees ("Company Employee Plans"),  and (v) providing that with respect
      to any medical,  dental or other welfare benefits that are provided at any
      time to Business  Employees under Company  Employee Plans,  any applicable
      pre-existing  condition  exclusions  (to the  extent  satisfied  under the
      comparable Employee Plan immediately prior to the Closing Date) be waived,
      and any expenses  incurred before such time under the comparable  Employee
      Plan be taken into account  under such Company  Employee Plan for purposes
      of satisfying applicable deductible, coinsurance and maximum out-of-pocket
      provisions. Buyer may also seek to employ current employees of the Company


                                       17
<PAGE>

      other than the Business  Employees ("Other  Employees"),  and shall not be
      obligated  to provide  the rights and  benefits  described  in clauses (i)
      through (v) above with  respect to Other  Employees.  Buyer shall not, and
      shall cause its  Affiliates  not to,  provide any  specific  incentive  or
      inducement  to any Business  Employees or Other  Employees to choose to be
      covered  under the health care  continuation  provisions  of any  Employee
      Plans,  including  without  limitation  the payment of all or portion of a
      Business Employee's "COBRA" premium.

            (b)  Seller  shall  assume  responsibility  for,  and all  Liability
      associated with, any obligations of the Company to pay severance  benefits
      on account of the transactions  contemplated  hereby, other than severance
      benefits  payable  with respect to the  Business  Employees  and the Other
      Employees  hired by Buyer  (including  but not  limited to pursuant to the
      terms  of the  Sara  Lee  Corporation  Severance  Pay  Plan  or any  other
      severance plans  maintained by a Controlled  Entity),  and shall indemnify
      the Company for any Liabilities arising thereunder whether before or after
      the Closing.

            (c) Seller  acknowledges that, as of and following the Closing Date,
      it shall retain all assets and retain or otherwise  assume all Liabilities
      with  respect to  benefits  accrued  through  the  Closing  Date under any
      Employee  Plans  including any that are "employee  pension  benefit plans"
      within the meaning of Section 3(2) of ERISA (such plans,  the  "Retirement
      Plans")  and shall  indemnify  the  Company  for any  Liabilities  arising
      thereunder  whether before or after  Closing.  As of the Closing Date, the
      Business  Employees and any Other  Employees shall cease to accrue further
      retirement  benefits  under  the  Retirement  Plans  except  as  otherwise
      required by the terms of the Retirement Plans.

            (d)  Seller  will,  and will  cause the  Company  to,  take prior to
      Closing such actions as Seller and Buyer reasonably agree are necessary in
      order  that  effective  immediately  prior to  Closing  (i) the  Company's
      participation  in (and  thus  Business  Employees'  and  Other  Employees'
      participation  and benefit  accrual under) all Employee Plans sponsored by
      Seller shall  cease,  and (ii) any Employee  Plans  sponsored  only by the
      Company and covering only its employees  shall  terminate or be assumed by
      Seller or a  Controlled  Entity.  Seller  agrees that it shall  retain all
      responsibilities  for,  and shall  indemnify  Buyer with  respect  to, all
      Liabilities associated with all Employee Plans.

      6.3.  Access to  Information.  Between the date of this  Agreement and the
Closing Date, upon reasonable notice and at reasonable times,  Seller will cause
the  Company  to  give  Buyer  and  its  authorized  representatives  access  to
personnel,  facilities  and books and records (a) relating to the Business  (and
will permit Buyer to make copies  thereof and will cooperate with regard to such
inspections)  and (b)  relating  to such other  aspects of the  business  of the
Company as Buyer may  request;  provided  that  Seller  shall not be required to
disclose business  information of a confidential  nature other than with respect
to the  Business;  provided  that  Buyer  shall  be  responsible  for all of its
out-of-pocket costs incurred in connection with such  investigation.  All access
hereunder  shall be afforded  during normal  business  hours,  and Buyer and its
representatives shall conduct any review and inspection in such a manner so that
the Company's  normal business  activities  shall not be unduly or unnecessarily
disrupted.  The foregoing  notwithstanding,  without  first  obtaining the prior


                                       18

<PAGE>

approval  of a  senior  employee  of  Seller,  neither  Buyer  nor  any  of  its
representatives  shall  tour or visit  the  Company's  operating  facilities  or
contact any of its employees,  customers or suppliers.  Buyer  acknowledges  and
agrees that Buyer and its  representatives  shall not be afforded  access to any
employee  records or other records or information  the disclosure of which would
be prohibited by any Applicable Law.

      6.4. All Reasonable  Efforts.  Subject to the terms and conditions  herein
provided,  each of the parties  hereto agrees to use all  reasonable  efforts to
take,  or cause to be  taken,  all  actions,  and to do,  or cause to be done as
promptly  as  practicable,   all  things  necessary,  proper  and  advisable  to
consummate  and make  effective  as promptly  as  practicable  the  transactions
contemplated by this Agreement, including to cause the conditions to Closing set
forth in Article VII hereof to be  satisfied.  Without  limiting the  foregoing,
Buyer agrees to (a) take the actions specified in clause (4) of Section 4.10 and
(b) execute, or cause the Company to execute,  all documents necessary to convey
to Seller (or its  designee)  after the Closing  any  properties,  interests  or
rights  (including  the  proceeds  thereof)  owned by the  Company  prior to the
Closing which are not Company Assets.  If at any time after the Closing Date any
further  action is  necessary  or  desirable  to carry out the  purposes of this
Agreement,   including,   without   limitation,   the  execution  of  additional
instruments, each party to this Agreement shall take all such action.

      6.5.  Exclusivity.  Seller will not (and prior to Closing  Seller will not
cause or  permit  the  Company  to) (i)  solicit,  initiate,  or  encourage  the
submission of any proposal or offer from any Person  relating to the acquisition
of any capital stock or other voting  securities of the Company,  or any portion
of the Company Assets or the Business (including any acquisition structured as a
merger, consolidation, or share exchange) or (ii) participate in any discussions
or negotiations  regarding,  furnish any information  with respect to, assist or
participate  in, or  facilitate in any other manner any effort or attempt by any
Person to do or seek any of the  foregoing.  Seller  will not vote the Shares in
favor of any such acquisition, whether structured as a merger, consolidation, or
share  exchange.  Seller will notify Buyer  immediately  if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.

      6.6.  Public  Announcements.  None of the parties to this Agreement  shall
issue or make any press release or other public statements or otherwise announce
the transactions  described  herein to employees,  customers or suppliers except
and unless such press release,  public statement or other  announcement has been
jointly  approved by Seller and Buyer (which  approval shall not be unreasonably
withheld  or  delayed),  except  as  may be  required  by  Applicable  Law or by
obligations  pursuant to any listing agreement with any securities market or any
securities market regulations. If either party is so required to issue or make a
press release, public statement or other announcement, it shall inform the other
party prior to issuing or making any such press  release,  public  statement  or
other  announcement and shall consult with the other party regarding the content
thereof.

      6.7.  Schedules.  Notwithstanding any specific reference to the disclosure
of any matter pursuant to any section of this Agreement or to any Schedule,  all
disclosures  made pursuant to any section of this  Agreement or of the Schedules
shall be deemed made for all other sections to which such  disclosure may apply,
and  any  headings  or  captions  on any  section  herein  or  therein  are  for
convenience of reference  only.  Seller shall be entitled to supplement or amend


                                       19
<PAGE>

the Schedules delivered in connection herewith at or before Closing with respect
to any  matter  which,  if  existing,  occurring  or  known  at the date of this
Agreement,  would have been  required to be set forth or  described  in any such
Schedule or which is necessary to correct any  information  in any such Schedule
which has been rendered  inaccurate  thereby,  and whether or not such matter is
material.  No supplement  or amendment  shall have any effect for the purpose of
determining satisfaction of the conditions set forth in Section 7.1(a) hereof or
the  compliance  by Seller  with the  covenant  set forth in Section 6.1 hereof;
provided,  however,  that, except as provided in Section 7.1(a), by consummating
the  transactions  contemplated  hereby,  Buyer waives any right or Claim it may
have or have had on account of or relating to such failure to satisfy conditions
or comply  with  covenants  or on account of or  relating  to any such breach of
representation or warranty of Seller.

      6.8. Licenses and Related Transactions.

            (a) Immediately prior to the Closing, Seller shall cause the Company
      to (i) provide notice to the licensor under each Design License  Agreement
      of the Company's  election to terminate such Design License  Agreement and
      (ii) terminate the Company's rights, as in effect immediately prior to the
      Closing,  to use the Licensed Marks and the CAMS  Software;  provided that
      such  termination  shall not affect the rights of Buyer and its Affiliates
      under the Champion License or the CAMS License.

            (b) On the Closing  Date,  Seller (or one of its  Affiliates)  shall
      execute  and  deliver to Buyer,  and Buyer  shall  execute  and deliver to
      Seller  (or  its  designated   Affiliate),   non-exclusive   royalty-free,
      fully-paid  and  nonasessable  licenses to use the Champion Art Management
      System software  package (the "CAMS Software") and the methods and systems
      described in the patent pending in connection  with the CAMS Software,  in
      each case in the forms  attached  hereto as Exhibit E  (collectively,  the
      "CAMS  License")  and  ----------  shall  deliver to Buyer one copy of the
      source code for the CAMS Software.  Buyer  acknowledges that Seller or one
      of its  Affiliates  (other  than the  Company)  shall  retain the sole and
      exclusive  ownership of all modifications to, and derivative works created
      from, the CAMS Software.

            (c) On the Closing  Date,  Seller (or one of its  Affiliates)  shall
      execute  and  deliver to Buyer,  and Buyer  shall  execute  and deliver to
      Seller (or its designated Affiliate), an exclusive license of the Champion
      brand  and  related  trademarks  on the  terms  set  forth in the  license
      attached hereto as Exhibit F (the "Champion License").

            (d) At the Closing, Seller, the Company and Buyer shall enter into a
      Supply Agreement in the form set forth as Exhibit G ("Supply Agreement").

            (e) At the Closing, Seller, the Company and Buyer shall enter into a
      Fall  2001  Merchandising  Agreement  in the form set  forth as  Exhibit H
      ("Fall 2001 Agreement").

            (f) At or prior to the Closing,  Seller  shall,  and shall cause the
      Company to, terminate all  arrangements  and agreements  pursuant to which
      Seller or any of its Affiliates  provides,  or arranges for the Company to
      receive,   products  or  services  including  insurance  coverage,   joint
      purchasing  arrangements  and  corporate,   administrative  and  financial
      services.


                                       20
<PAGE>

            (g) Prior to the Closing, Seller shall use its best efforts to cause
      the Company to transfer to another Person all assets, rights and interests
      owned by the Company other than the Company Assets.

      6.9. Access to Records.  Seller shall be entitled, for any lawful purpose,
after the Closing,  upon reasonable notice and during the regular business hours
of Buyer,  to have  access to and to make  copies of the  Corporate  Records and
Sales and  Product  Data of the  Company  which  relate to periods  prior to the
Closing;   provided,   however,   that  Seller  shall  be  responsible  for  all
out-of-pocket  costs incurred in connection  with any such  inspection and shall
reimburse  Buyer for any such costs incurred by Buyer or any of its  Affiliates.
Any  inspection  under this  Section 6.9 shall be  conducted in such a manner so
that the  Company's  business  activities  shall not be unduly or  unnecessarily
disrupted.  Buyer  shall use  commercially  reasonable  efforts  to retain  such
records for a period of five years following the Closing, after which time Buyer
may destroy or  otherwise  dispose of such  business  records  without  Seller's
consent; provided, however, that at any time after the second anniversary of the
Closing Buyer may, at its election and sole cost,  deliver to Seller some or all
of the Corporate  Records and Sales and Product Data of the Company which relate
to periods prior to the Closing.

      6.10.  Confidentiality  Agreement.  Buyer and its Affiliates  shall remain
obligated under the provisions of that certain Confidentiality  Agreement, dated
December 20, 2000, between Buyer and Seller, the terms of which are incorporated
herein by reference;  provided,  however, that the obligations contained in this
Section 6.10 shall terminate at the Closing.

      6.11.  Resignation  of Officers  and  Directors.  Seller  shall cause each
officer and member of the Board of Directors of the Company,  if so requested by
Buyer, to tender his or her resignation  from such position  effective as of the
Closing.

      6.12.  Raw  Materials.  Commencing on the Closing  Date,  Seller and Buyer
shall cooperate with one another to pursue  opportunities in order for Seller to
sell raw material  inventory (such as inks,  supplies of boxes, bags and labels)
owned by Seller on the Closing Date and utilized in the Business as conducted by
the  Company  prior to the  Closing  Date.  To the  extent  Buyer (or any of its
Affiliates) chooses to purchase any such raw materials from Seller, the purchase
price for such  materials  shall be the cost of such  materials as stated on the
Company's  books and records plus the cost of freight,  F.O.B.  the  appropriate
Shipping  Facility.  This  Section  6.12 shall not require  Buyer (or any of its
Affiliates)  to purchase  any raw  materials  from Seller and shall not restrict
Seller from transferring such raw materials to any Person on any terms.

     6.13.  Tax Matters.

            (a) To the extent  permitted  by law,  Buyer agrees that the Company
      shall not elect to carry back any item of loss,  deduction or credit which
      arises in any taxable  year ending  after the Closing  Date into a taxable
      period ending on or before the Closing Date.


                                       21
<PAGE>

            (b) Seller  shall be  entitled to any refunds or credits of Taxes of
      the Company relating to periods (or portions  thereof) ending on or before
      the Closing Date, and the Buyer and the Company shall promptly  forward to
      Seller any refunds after the receipt thereof.

            (c) Seller, Buyer and the Company shall provide each other with such
      assistance as may be reasonably requested by the others in connection with
      the preparation of any Tax Return,  any audit or other  examination by any
      taxing authority,  or any judicial or administrative  proceedings relating
      to liabilities for Taxes.  Such assistance  shall include making employees
      available on a mutually convenient basis to provide additional information
      or explanation of material provided  hereunder and shall include providing
      copies of relevant tax returns,  books, and other material relating to the
      preparation and filing of any Tax Returns. The party requesting assistance
      hereunder shall reimburse the assisting party for reasonable out-of-pocket
      expenses incurred in providing  assistance.  Buyer, the Company and Seller
      shall retain for the full period of any statute of limitations and provide
      the others with any records or  information  which may be relevant to such
      preparation, audit, examination, proceeding, or determination.

            (d) Seller shall,  at its sole expense,  cause the Company to timely
      file all Tax Returns of the  Company due on or prior to the Closing  Date,
      which  such Tax  Returns  shall be  prepared  on a basis  consistent  with
      existing  procedures  for preparing such returns.  The Federal,  state and
      other income Tax Returns for a consolidated, combined or unitary group the
      parent of which is  Seller  or an  Affiliate  of  Seller  (other  than the
      Company)  ("Combined  Returns") will be filed, so as to accurately reflect
      the operations of the Company  through the Closing Date.  Buyer shall,  at
      its sole  expense,  cause the  Company to prepare  and timely file all Tax
      Returns of the  Company due after the  Closing  Date (other than  Combined
      Returns),  which such Tax  Returns,  to the extent  they relate to taxable
      periods  beginning  prior to, but  including  the  Closing  Date,  and for
      purposes of determining  the Seller's  liability for Taxes hereunder shall
      be prepared in accordance with prior practice,  unless such treatment does
      not have  sufficient  legal support to avoid the  imposition of penalties.
      Notwithstanding anything else in this Agreement to the contrary, Buyer and
      the Company  shall not have any right to file any tax return or control or
      resolve any  examination,  investigation,  audit, or other proceeding that
      relates to a Combined Return.

            (e) The  Company  will not,  without  the prior  written  consent of
      Buyer,  make any Tax election or settle or compromise any federal,  state,
      local or foreign income Tax  Liability,  or waive or extend the statute of
      limitations in respect of any such Taxes.

            (f)  Seller,  the  Company  and Buyer  shall  treat and  report  the
      transactions  contemplated by this Agreement in all respects  consistently
      for  purposes of any  federal,  state,  local or foreign  Tax. The parties
      hereto  shall not take any  actions  or  positions  inconsistent  with the
      obligations set forth herein.

      6.14. Name Change. At or prior to Closing,  Seller shall cause the Company
to change its corporate name to such name as may be mutually  agreed to by Buyer
and Seller.


                                       22
<PAGE>

     6.15.  Collection of Accounts Receivable.

            (a) Following the Closing, each of Seller and the Company shall have
      the  exclusive  right to collect its accounts  receivable  relating to the
      Business,  it being  agreed that all accounts  receivable  of the Business
      existing  as of the  Closing  Date  shall  be owned  by  Seller.  Promptly
      following  the  Closing,  Seller  shall  provide  Buyer with a list of all
      accounts receivable of the Business then owned by Seller, which list shall
      include  aged  invoice   detail,   including  any  unapplied   credits  or
      overpayments.  The parties shall use  commercially  reasonable  efforts to
      cooperate  and  coordinate  with one another on a daily or other  frequent
      basis to maximize  the prompt  collection  of accounts  receivable  of the
      Business owned by each of Seller and the Company following the Closing.

            (b) The parties  further agree that the following  principles  shall
      apply to all accounts  receivable of the Business  existing on the Closing
      Date:

                  (i)  Neither  Buyer,  Seller,  the  Company  nor any of  their
            respective Affiliates, employees or representatives will communicate
            (regardless  of  form or  means)  with  any  account  debtor  of the
            Business who owes any accounts  receivable of the Business to Seller
            or Buyer  regarding  payment terms,  direction of funds or any other
            matter relating to invoices,  purchase orders or accounts receivable
            of the  Business  unless  such  communications  are made  jointly by
            Buyer,  the Company or one of their  Affiliates on the one hand, and
            Seller or one of its  Affiliates on the other hand or with the prior
            written approval of the non communicating party;

                  (ii)  Buyer,   Seller,   the  Company  and  their   respective
            Affiliates  shall  cooperate  with  each  other to  assure  that any
            amounts  collected by any of them in connection with any invoices or
            purchase  orders dated prior to the Closing Date are remitted to the
            proper  party.  Following  the  Closing  Date,  either  party  shall
            promptly  remit,  once every week, to the other party,  or reimburse
            the other party for, all amounts,  and endorse or remit to the other
            party the proceeds of all checks,  drafts,  notes or other documents
            received by such party that  relate to  invoices or purchase  orders
            which are the property of the other party;

                  (iii) No party hereto,  nor any of its respective  Affiliates,
            employees or representatives,  shall be obligated to bring any legal
            action or retain collection  agencies to collect any balances due in
            respect  of any  invoices  or  purchase  orders  dated  prior to the
            Closing Date, it being  acknowledged  that nothing contained in this
            Section  6.15  shall  prohibit  any  party  hereto,  or  any  of its
            respective  Affiliates,  from bringing any legal action or retaining
            collection  agencies to collect any  balances  due in respect of any
            such invoices or purchase orders; and

                  (iv) If any customer specifically  indicates in writing that a
            payment  made by it is intended to be applied to a specific  invoice
            or  invoices,  then such payment  shall be applied to such  specific


                                       23
<PAGE>

            invoice or invoices as so indicated;  provided that if such customer
            does  not so  indicate,  the  parties  shall  jointly  contact  such
            customer to obtain direction regarding  application of such invoice.
            Both parties shall make  commercially  reasonable  efforts to insure
            that all such  customers  are  jointly  contacted.  No party  hereto
            shall, and each party hereto shall cause its respective  Affiliates,
            employees  and  representatives  not to, take any actions to cause a
            customer  to direct  that a payment  in  respect  to any  invoice or
            purchase  order related to the Business be applied other than to the
            oldest  outstanding  balance  specified  in the list  referred to in
            Section 6.16(a).

      6.16.  Returns of Merchandise or Credits.  After the Closing,  Buyer shall
not, and shall cause each of its Affiliates not to, accept from any customer the
return of, or provide any credit to any  customer  with  respect to, any product
shipped by the  Company for its own  account  prior to the  Closing  unless such
product,  at  the  time  of  such  shipment,   would  have  been  deemed  to  be
nonconforming  product  for which such  customer  would have the right to return
such product  pursuant to the terms and conditions  under which such product was
sold to such  customer,  or such product was shipped in error to such  customer.
Seller shall provide Buyer, at its reasonable request,  with such information as
it  reasonably  requires  to make any  determinations  regarding  whether it may
accept the return of any product or provide any credit  pursuant to this Section
6.16.  If any  customer  requests a return or credit  which is permitted by this
Section  6.16  specifically  indicates  in writing  that the return or credit is
intended to be applied to a specific  invoice or  invoices,  then such return or
credit  shall be  applied  against  such  specific  invoice  or  invoices  as so
indicated;  provided  that if such  customer  does not so indicate,  the parties
shall jointly contact such customer to obtain direction regarding application of
such return or credit.  Both parties shall make commercially  reasonable efforts
to insure that all such customers are jointly contacted.

      6.17. Fiscal 2001 Contribution P&L. Not more than 60 days after the end of
Seller's  2001  fiscal  year,  Seller  shall  deliver  to  Buyer  a copy  of the
contribution profit and loss statement of the Business in the format of Schedule
4.20 for the Company's 2001 fiscal year,  which  statement  shall be prepared in
accordance  with the Company's  standard  practices and based upon the Company's
books and records.


                                  ARTICLE VII.
                              CONDITIONS TO CLOSING

      7.1.  Conditions to Obligations of Buyer.  All  obligations of Buyer under
this Agreement are subject to the  fulfillment,  at or prior to the Closing,  of
the following conditions, any of which may be waived by Buyer:

            (a)  Except  as  contemplated  by this  Agreement  or the  Ancillary
      Documents,  except for matters  which arise in the ordinary  course of the
      Business  after the date of this Agreement and which would not be material
      to a reasonably  prudent  investor's  decision to purchase the Shares, and
      except for  matters  which arise as a result of the acts or  omissions  of
      Buyer and its  Affiliates  (collectively,  the "Permitted  Changes"),  all
      representations  and  warranties  made by the  Company  and Seller in this
      Agreement  shall be true and  correct in all  material  respects as of the


                                       24
<PAGE>

      date of this Agreement and as of the Closing,  as though made at and as of
      the Closing,  and Seller shall have delivered all documents and agreements
      described in Section 2.3 and Seller shall have otherwise  performed in all
      material respects all covenants, obligations and conditions required under
      this  Agreement  to be  performed  by them  on or  prior  to the  Closing;
      provided,  however,  that if the foregoing  condition to Closing requiring
      that all  representations and warranties made by the Company and Seller in
      this  Agreement  shall be true and correct in all material  respects as of
      the date of this Agreement and as of the Closing is not  satisfied,  Buyer
      shall  nonetheless  be  obligated  to perform its  obligations  under this
      Agreement  so long as (i)  Seller  agrees in  writing  to  unconditionally
      indemnify  the Buyer  Indemnified  Parties for the amount of Losses  which
      such Buyer Indemnified  Parties would be entitled to receive on account of
      the  representations  and warranties which caused such condition not to be
      satisfied  not being true and  correct as of the  Closing  Date,  and (ii)
      Seller specifies in such writing, with reasonable  specificity in light of
      the circumstances known to Seller at such time, the amount of such Losses.

            (b) No injunction, restraining order or other ruling or order issued
      by any  Governmental  Authority or other legal  restraint  or  prohibition
      preventing the consummation of the Closing shall be in effect.

      7.2.  Conditions to Obligations of Seller. All obligations of Seller under
this Agreement are subject to the  fulfillment,  at or prior to the Closing,  of
the following conditions, any of which may be waived by Seller:

            (a)  All  representations  and  warranties  made  by  Buyer  in this
      Agreement  shall be true and  correct in all  material  respects as of the
      date of this  Agreement  and as of the Closing as though made at and as of
      the  Closing  and Buyer  shall have  delivered  all funds,  documents  and
      agreements  described  in  Section  2.4  and  otherwise  performed  in all
      material respects all covenants, obligations and conditions required under
      this Agreement to be performed by it on or prior to the Closing Date.

            (b) No injunction, restraining order or other ruling or order issued
      by any  Governmental  Authority or other legal  restraint  or  prohibition
      preventing the consummation of the Closing shall be in effect.


                                 ARTICLE VIII.
                   SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
                          COVENANTS AND INDEMNIFICATION

      8.1.  Survival of  Representations,  Warranties and Covenants.  All of the
terms  and  conditions  of  this   Agreement,   together  with  the  warranties,
representations,  indemnities,  agreements and covenants  contained herein or in
any  instrument  or  document  delivered  or to be  delivered  pursuant  to this
Agreement,  shall survive the execution of this  Agreement and the Closing Date,
notwithstanding  any investigation  heretofore or hereafter made by or on behalf
of any party  hereto;  provided,  however,  that unless  otherwise  stated,  the
indemnities,  agreements and covenants set forth in this Agreement shall survive
and continue until all  obligations  set forth therein shall have been performed


                                       25
<PAGE>

and  satisfied.  No party or other  Person  entitled  to  indemnification  under
Sections  8.2(a) or 8.3(a)  shall  commence any suit or  proceeding  alleging an
Indemnity  Claim under such  sections due to a breach of any  representation  or
warranty in this  Agreement  after the 540th day  following  the  Closing  Date,
except  insofar as (i) such party or other  Person  entitled to  indemnification
under  Sections  8.2(a) or 8.3(a)  shall  have  asserted  in  writing a specific
Indemnity Claim prior to the expiration of the Survival  Period,  in which event
the  representations  and  warranties  alleged  to have  been  breached  in such
Indemnity Claim shall continue in effect and remain a basis for indemnity solely
with respect to each such asserted Indemnity Claim until such Indemnity Claim is
finally  resolved,  or (ii) any Indemnity Claim arising under Sections 3.2, 3.3,
3.4, 3.5, 4.1, 4.2, 4.3, 4.4, 4.9,  4.10,  4.17,  5.1, 5.2, 5.3, 5.7, or 5.8, it
being agreed that the right of an  Indemnified  Party to make a claim for breach
of such  representations and warranties shall continue through the longer of 540
days or the period of the  applicable  statute of  limitations  (the  applicable
foregoing  period  being  called the  "Survival  Period").  Notwithstanding  the
foregoing,  the  parties  agree  that if any Buyer  Indemnified  Party or Seller
Indemnified  Party incurs any Losses,  whether on account of a Third Party Claim
or  otherwise,  for which it is  entitled  to  indemnification  pursuant  to any
provision of Section 8.2 (other than Section  8.2(a)) or Section 8.3 (other than
Section 8.3(a)), as the case may be, such Party's right to indemnification under
Article  VIII shall not be limited or  impaired  in any manner  pursuant  to the
foregoing limitations of this Section 8.1.

      8.2. Seller's  Indemnification.  Subject to the further provisions of this
Article VIII,  Seller shall  indemnify,  defend and hold harmless  Buyer and its
Affiliates (including,  without limitation, the Company with respect to any time
after  the  Closing)  and  their  respective  directors,   officers,  employees,
Affiliates,   advisors,   representatives,   agents,   successors   and  assigns
(collectively,  "Buyer  Indemnified  Parties"),  against  and in  respect of any
Losses that any of such parties shall incur or suffer,  to the extent arising or
resulting  from, or relating to,  directly or indirectly in any way  whatsoever,
(a) subject to the  provisions  of section 8.1, any  inaccuracy or breach of any
representation  or  warranty  made by Seller  herein  or in any other  Ancillary
Document,  (b) the failure of Seller or its Affiliates to comply with any of the
covenants or other  obligations  set forth in this  Agreement  or any  Ancillary
Document  (provided  that after the  Closing  indemnification  pursuant  to this
clause (b) shall not apply to any  covenants to be performed by the Company,  or
any  covenants  which Seller or any of its  Affiliates  is required to cause the
Company to perform, in each case after the Closing),  (c) any Liabilities of the
Company  existing as of the Closing Date or relating to matters  occurring prior
to the Closing Date,  regardless of when asserted, to the extent relating to the
period  prior  to  Closing,  (d)  Liabilities  resulting  from the  business  or
operations of the Company prior to Closing  (including  product liability claims
related  to  product  manufactured  prior to such time  other than to the extent
resulting  from  any  acts  or  omissions  of  Buyer  or  its  Affiliates),  (e)
Liabilities  resulting  from the  relationships  of the Company with present and
former  employees,  customers,  suppliers,  stockholders,   directors,  lenders,
borrowers  and any others to the extent such  Liabilities  pertain to the period
prior to the Closing,  (f) any claim of infringement  relating to the use of any
Company IP in a manner  authorized  by  Article X, (g) any Taxes of the  Company
with respect to any Tax year or portion  thereof ending on or before the Closing
Date (or for any Tax period  beginning  before and ending after the Closing Date
to the extent allocable  (determined in a manner consistent with Section 8.8(b))
to the portion of such period  beginning  before and ending on the Closing Date,
(h) any unpaid Taxes of Seller or any of its Affiliates (other than the Company)


                                       26
<PAGE>

under Treasury Regulation Section 1.1502-6 (or similar provision of state, local
or foreign law), as a transferee or successor,  by Contract,  or otherwise,  (i)
any Claims or  Liabilities  relating to the matters set forth on Schedule  4.14,
(j) any  Liabilities  arising under the Retirement  Plans or the Employee Plans,
(k) any and all Liabilities that arise as a result of  environmental  conditions
which existed at, or activities  which  occurred at, Real Property  prior to the
Closing (including,  without limitation, the presence of Hazardous Substances on
or  under  such  Real  Property  or  the  escape,  seepage,  leakage,  spillage,
discharge,  emission,  release  of  Hazardous  Substances  at or from  such Real
Property) or  activities  related to the Company's  operations  prior to Closing
(including,  without  limitation,  the  transportation,  handling,  disposal  or
arrangement for disposal of Hazardous  Substances),  (l) trademark  infringement
arising out of approved use of the Licensed  Marks by Licensee in the  Territory
in accordance with the terms of the Champion License, (m) trademark infringement
arising out of approved use of the CAMS Software by Licensee in the Territory in
accordance with the terms of the CAMS License,  or (n) any Claim relating to the
foregoing;  provided,  however,  that no indemnification  shall be provided with
respect to the portion of such Losses that any of such Buyer Indemnified Parties
shall incur or suffer to the extent  arising or resulting from (1) the operation
of the Business, or any other acts or omission of the Company or its successors,
in each case after the Closing,  (2) the ownership and use of the Company Assets
or other  properties  owned by Buyer or any of its Affiliates after the Closing,
(3) the consummation of the transactions contemplated hereby or by the Ancillary
Documents to the extent resulting from an act or omission of Buyer or any of its
Affiliates, (4) the failure of any Buyer Indemnified Party to perform any of its
obligations  under this Agreement or the Ancillary  Documents,  or (5) any other
matter set forth in Section 8.3.

      8.3. Buyer's  Indemnification.  Subject to the further  provisions of this
Article VIII,  Buyer shall  indemnify,  defend and hold harmless Seller (and the
Company with respect to any Loss pursuant to Section  8.3(a) or (b) prior to the
Closing)  and  their  Affiliates  and  their  respective  directors,   officers,
employees, Affiliates, advisors, representatives, agents, successors and assigns
(collectively,  "Seller Indemnified  Parties") against and in respect of any and
all Losses that any such parties shall incur or suffer, to the extent arising or
resulting from, or relating to, directly or indirectly in any way whatsoever any
of the following: (a) any inaccuracy or breach of any representation or warranty
made by Buyer or any of its Affiliates herein or in any Ancillary Document,  (b)
the  failure of Buyer or any of its  Affiliates  to comply with or the breach by
Buyer  or any of its  Affiliates  of any  their  respective  covenants  or other
obligations set forth in this Agreement or any Ancillary Document, (c) after the
Closing,  the failure of the Company to comply with or the  Company's  breach of
any covenants in this Agreement or any Ancillary  Document to be performed after
the  Closing,  (d)  Liabilities  under the  executory  portion  of any  Included
Contracts  so  long as such  Liabilities  do not  relate  to the  breach  of any
Included  Contract prior to Closing,  (e)  Liabilities to the extent relating to
the  operation  of the  Business on or after the Closing  Date,  (f) any acts or
omissions  of Buyer,  the  Company  or their  respective  Affiliates,  agents or
representatives   on  or  after  the  Closing,   (g)  the  consummation  of  the
transactions  contemplated  hereby or by the  Ancillary  Documents to the extent
resulting  from  an act or  omission  of  Buyer  or any of its  Affiliates,  (h)
Liabilities  to the extent  relating  to the  ownership  and use of the  Company
Assets or other  properties  of the  Company or its  Affiliates  on or after the
Closing Date, (i) Attributed Product produced,  packaged,  stored or shipped for
the Company in  accordance  with  Article X arising out of or  resulting  from a
breach  of the  warranty  set forth in  Section  10.6,  (j)  Bailed  Product  or
Attributed  Product  while in the  possession,  or under the control  of,  Buyer


                                       27
<PAGE>

pursuant to Article X, (k) warranty or similar  Claims  asserted by any customer
of the  Business to the extent  related to the sale of any  Branded  Product for
which  Buyer  (or  any of  its  Affiliates)  is  entitled  to the  consideration
(regardless  of form)  generated by such sale, (l) the  manufacture,  packaging,
sale,  marketing or  distribution  of the Licensed  Products by Licensee and its
third-party manufacturers and the officers, directors,  employees, and agents of
each of the  foregoing,  or which may be occasioned by Licensee's  breach of the
warranties, representations, or covenants contained in the Champion License, (m)
the use of the CAMS Software by Licensee and its third-party  manufacturers  and
the officers,  directors,  employees,  and agents of each of the  foregoing,  or
which may be occasioned by Licensee's breach of the warranties, representations,
or covenants  contained in the CAMS License,  and (n) any Claim  relating to the
foregoing;  provided,  however,  that no indemnification  shall be provided with
respect  to the  portion  of such  Losses  that any of such  Seller  Indemnified
Parties  shall  incur or suffer to the extent  arising or  resulting  from (1) a
determination  that  Licensee's use of the Licensed Marks in accordance with the
terms of the Champion License infringes prior trademark rights of a third party,
(2) any manufacturing, packaging or other error or defect in connection with any
Licensed Product that is supplied to Licensee by Seller,  or (3) use by Licensee
of the CAMS  Software in  accordance  with the terms and  provisions of the CAMS
License;  provided,  further,  that no  indemnification  shall be provided  with
respect  to the  portion  of such  Losses  that any of such  Seller  Indemnified
Parties  shall incur or suffer to the extent  arising or resulting  from (1) the
operation  of the  Business,  or any other  acts or  omissions  of Seller or the
Company or its predecessors,  in each case before the Closing, (2) the ownership
and use of the Company Assets or other  properties  before the Closing,  (3) the
consummation  of  the  transactions  contemplated  hereby  or by  the  Ancillary
Documents  to the  extent  resulting  from an act or  omission  of Seller or the
Company,  or (4) the failure of any Seller  Indemnified  Party to perform any of
its obligations under this Agreement or the Ancillary Documents.

         Notwithstanding  anything  contained  in  Section  8.2  or  8.3  to the
contrary,   the  parties  agree  that  (A)  Seller  shall  indemnify  the  Buyer
Indemnified  Parties for all Losses to the extent  arising or resulting from (I)
the operation of the  Business,  or any other acts or omissions of Seller or the
Company or its predecessors, in each case before the Closing, (II) the ownership
and use of the Company Assets or other properties before the Closing,  (III) the
consummation  of  the  transactions  contemplated  hereby  or by  the  Ancillary
Documents  to the  extent  resulting  from an act or  omission  of Seller or the
Company,  or (IV) the failure of any Seller  Indemnified Party to perform any of
its obligations under this Agreement or the Ancillary Documents, (B) Buyer shall
indemnify the Seller Indemnified Parties to the extent arising or resulting from
(I) the operation of the Business,  or any other acts or omission of the Company
or its successors, in each case after the Closing, (II) the ownership and use of
the Company Assets or other  properties  owned by Buyer or any of its Affiliates
after the  Closing,  (III) the  consummation  of the  transactions  contemplated
hereby or by the  Ancillary  Documents  to the extent  resulting  from an act or
omission  of Buyer or any of its  Affiliates,  or (IV) the  failure of any Buyer
Indemnified  Party to perform any of its obligations under this Agreement or the
Ancillary  Documents,  and (c) in the event that any Losses arise or result from
acts or omissions which relate  partially to the matters  referred to in Section
(A) above and partially to the matters  referred to in (B) above,  each of Buyer
and  Seller  shall  indemnify  the  Seller  Indemnified  Parties  and the  Buyer
Indemnified Parties,  respectively, for the respective portion of such Losses in
accordance with the principles set forth in (A) and (B) above.



                                       28
<PAGE>

      8.4. Indemnification Procedures for Third Party Claims.

            (a) In the event that a Third  Party  files a  lawsuit,  enforcement
      action or other  proceeding  against a party  entitled to  indemnification
      under this Article VIII (an "Indemnified  Party") or the Indemnified Party
      receives  notice  of,  or  becomes  aware of a  condition  or event  which
      otherwise entitles such party to the benefit of any indemnity hereunder in
      connection with Losses incurred as a result of a Claim by a Third Party (a
      "Third Party  Claim"),  the  Indemnified  Party shall give written  notice
      thereof (the "Claim  Notice")  promptly to each party obligated to provide
      indemnification  pursuant to this Article VIII (an "Indemnifying  Party").
      All Third Party Claims for  indemnification by the Indemnified Party shall
      be bona fide.  The Claim Notice shall  describe in  reasonable  detail the
      nature of the Third Party Claim, including an estimate, if practicable, of
      the amount of Losses  that have been or may be suffered or incurred by the
      Indemnified  Party  attributable  to  such  Claim  and  the  basis  of the
      Indemnified  Party's  request for  indemnification  under this  Agreement.
      Notwithstanding the foregoing,  failure by an Indemnified Party to provide
      notice on a timely  basis of a Third  Party  Claim  shall not  relieve the
      Indemnifying Party of its obligations  hereunder,  unless, and then solely
      to the extent that, the Indemnifying Party is prejudiced thereby.

            (b) Subject to the following sentence,  the Indemnifying Party shall
      have the right, upon written notice to the Indemnified Party (the "Defense
      Notice") within fifteen days of its receipt from the Indemnified  Party of
      the Claim Notice, to conduct at its expense the defense against such Third
      Party  Claim  in its  own  name,  or,  if  necessary,  in the  name of the
      Indemnified Party; provided, however, that:

                  (i)  if  the  Indemnifying  Party  does  not  deliver  to  the
            Indemnified  Party  within 90 days  after its  receipt  of the Claim
            Notice a writing  indicating that, based on the facts alleged in the
            Claim Notice and any facts actually known to the Indemnifying  Party
            at such time  regarding  such Third Party  Claim,  the  Indemnifying
            Party  has  not  concluded  that  it is  not  obligated  to  provide
            indemnification  pursuant  to this  Article  VIII on account of such
            Third  Party  Claim (it being  agreed  that such  writing  shall not
            constitute any binding obligation or waiver of rights on the part of
            the  Indemnifying  Party),  or if,  following  the  delivery of such
            writing  or at any  other  time,  the  Indemnifying  Party  fails to
            promptly notify the  Indemnified  Party of any facts or developments
            which have caused the Indemnifying  Party to conclude that it is not
            obligated  to provide  indemnification  for such Third  Party  Claim
            pursuant to this Article VIII; or

                  (ii)  such  Third  Party  Claim  seeks   injunctive  or  other
            equitable relief against the Indemnified Party or otherwise would be
            reasonably  likely  to have a  material  and  adverse  impact on the
            ability of the  Indemnified  Party to conduct  its  business  in the
            ordinary course;


                                       29
<PAGE>


         then, in either such case, the  Indemnified  Party shall be entitled to
         conduct the defense  against such Third Party Claim,  at the expense of
         the Indemnifying  Party and shall so notify the  Indemnifying  Party in
         the  Claim  Notice  in the  case of  clause  (ii)  above,  or  promptly
         following the occurrence giving rise to its right in the case of clause
         (i)  above.  Notwithstanding  anything  in  this  Section  8.4  to  the
         contrary,  including  any  rights a Buyer  Indemnified  Party  may have
         pursuant  to the  preceding  sentence,  Seller  shall have the right to
         conduct the  defense of any Third Party Claim which  relates to (A) the
         Licensed Marks,  the CAMS Software or any other  intellectual  property
         rights  owned  or  used by  Seller  or any of its  Affiliates,  (B) the
         safety, quality, design or manufacture of any Licensed Products, or (C)
         any matter which adversely reflects on the name, reputation or goodwill
         of  Seller,   any  of  its  Affiliates  or  any  of  their   respective
         intellectual  property  rights,  including  any matter which would give
         Seller the right to terminate its approval of any facility  pursuant to
         Section 18 of the Champion  License,  and if Seller is the  Indemnified
         Party  with  respect  to  such  Third  Party  Claim,   Buyer  shall  be
         responsible  for the cost of such  defense.  Regardless  of which party
         conducts the defense of a Third Party Claim, the other party shall have
         the right to approve  the defense  counsel for such Third Party  Claim,
         which approval shall not be  unreasonably  withheld or delayed,  and in
         the event the Indemnifying Party and the Indemnified Party cannot agree
         upon such counsel  within ten days after counsel is proposed,  then the
         party  conducting  the  defense  shall  propose  an  alternate  defense
         counsel,  which shall be subject again to the other  party's  approval,
         which  approval  shall  not  be   unreasonably   withheld  or  delayed.
         Notwithstanding  the  foregoing,  if the counsel  retained by the party
         conducting the defense is prohibited by the  applicable  rules of legal
         ethics  from   representing   both  the  Indemnifying   Party  and  the
         Indemnified Party, then the party not conducting the defense may employ
         separate  counsel to represent or defend it in any such claim,  action,
         suit or proceeding  and the  Indemnifying  Party shall pay the fees and
         disbursements  of such separate  counsel.  If the Indemnified  Party is
         conducting  the  defense of a Third  Party  Claim at the expense of the
         Indemnifying   Party,  the  Indemnifying   Party  shall  reimburse  the
         Indemnified  Party for the costs and  expenses  of such  defense  which
         constitute  Losses  for  which the  Indemnified  Party is  entitled  to
         indemnification  pursuant  to  this  Article  VIII on a  monthly  basis
         promptly after the Indemnifying  Party's receipt of an invoice therefor
         from the Indemnified Party.

            (c) In the event that the Indemnifying  Party shall fail to give the
      Defense Notice within the time and as prescribed by Section 8.4(b),  or if
      the  Indemnified  Party has the right to defend  such  Third  Party  Claim
      pursuant to Section  8.4(b) and has elected to do so, then, in either such
      event, the Indemnified  Party shall have the right to conduct such defense
      in good faith  with  counsel  reasonably  acceptable  to the  Indemnifying
      Party, but the Indemnified  Party (or any insurance carrier defending such
      Third Party Claim on the  Indemnified  Party's behalf) shall be prohibited
      from  compromising  or settling  the Third  Party Claim  without the prior
      written  consent of the  Indemnifying  Party,  which  consent shall not be
      unreasonably  withheld  or  delayed.  Failure  at any  time  of the  party
      conducting  the  defense  to  diligently  defend  a Third  Party  Claim as
      required  herein  shall  entitle the other party to assume the defense and
      settlement of such Third Party Claim.


                                       30
<PAGE>

            (d)  Regardless of which party conducts the defense of a Third Party
      Claim, the other party will cooperate with and make available to the party
      conducting the defense such assistance, personnel, witnesses and materials
      as  such  party  may  reasonably  request,  all  at  the  expense  of  the
      Indemnifying  Party.  Regardless  of which party  defends such Third Party
      Claim,  the other party shall have the right at its expense to participate
      in the defense  assisted by counsel of its own choosing.  Each Indemnified
      Party shall reasonably  consult and cooperate with each Indemnifying Party
      with a view towards  mitigating  Losses,  in  connection  with Third Party
      Claims for which a party seeks indemnification under this Article VIII.

            (e)  Without  the prior  written  consent of the  Indemnified  Party
      (which shall not be unreasonably  withheld or delayed),  the  Indemnifying
      Party (or any insurance  carrier  defending  such Third Party Claim on the
      Indemnifying  Party's  behalf) will not enter into any  settlement  of any
      Third Party Claim if, pursuant to or as a result of such settlement,  such
      settlement  could  lead to  Liability  or create  any  financial  or other
      obligation on the part of the Indemnified  Party (including any obligation
      which  would have a material  and  adverse  impact on the  ability of such
      Indemnified  Party to conduct its  business in the  ordinary  course ) for
      which the Indemnified Party is not entitled to indemnification  hereunder.
      If the  Indemnifying  Party  receives a firm offer to settle a Third Party
      Claim  which  contains  an  agreement  on the part of a the Third Party to
      otherwise  unconditionally  release the Indemnified Party from any further
      Third  Party  Claims,  which  offer the  Indemnifying  Party is  otherwise
      permitted to settle under this  Section  8.4, and the  Indemnifying  Party
      desires  to accept  such  offer,  the  Indemnifying  Party will give prior
      written notice to the Indemnified Party to that effect. If the Indemnified
      Party objects to such firm offer within ten days after its receipt of such
      notice, the Indemnified Party may continue to contest or defend such Third
      Party Claim and, in such event, the maximum  Liability of the Indemnifying
      Party as to such  Third  Party  Claim  will not  exceed the amount of such
      settlement  offer,  plus  costs  and  expenses  paid  or  incurred  by the
      Indemnified Party up to the point such notice had been delivered.

            (f) If Buyer  assigns  all or any  portion of its rights  under this
      Agreement as permitted by Section 11.3,  then for purposes of this Section
      8.4 and the actions and  decisions  to be made by Buyer and any  assignee,
      Buyer shall be deemed to be the representative of such assignee and Seller
      and the Seller  Indemnified  Parties shall be entitled to rely exclusively
      on the acts and omissions of Buyer with respect to actions to be taken by,
      or inferences from omissions of, either Buyer or such assignee.

            (g)  Notwithstanding  any  contrary  provisions  contained  in  this
      Section 8.4,  Seller shall have the  exclusive  right to defend all of the
      Claims set forth on  Schedule  4.14 so long as Seller  diligently  defends
      such Claims.

            (h) The  provisions  of this  Section 8.4 shall not apply to any Tax
      Contest to the extent such provisions are inconsistent with the provisions
      of Section 8.9(c).

      8.5.  Nature of Other  Liabilities.  In the event  any  Indemnified  Party
should have a Claim  against any  Indemnifying  Party  hereunder  which does not
involve a Third  Party  Claim,  the  Indemnified  Party  shall  transmit  to the
Indemnifying  Party a written  notice (the  "Indemnity  Notice")  describing  in


                                       31
<PAGE>

reasonable  detail  the  nature of the  Claim  and the basis of the  Indemnified
Party's request for  indemnification  under this Agreement.  If the Indemnifying
Party does not notify the  Indemnified  Party within 45 days from its receipt of
the Indemnity Notice that the Indemnifying Party disputes such Claim (a "Dispute
Notice"),  the Claim specified by the Indemnified  Party in the Indemnity Notice
shall,  subject to the further  provisions  of this  Article  VIII,  be deemed a
Liability of the Indemnifying Party under this Article VIII.

      8.6.  Indemnification Limits and Restrictions.  None of Buyer or any other
Buyer  Indemnified Party shall be entitled to any indemnity under Section 8.2(a)
unless and until all Indemnity Claims by the Buyer Indemnified Parties exceed 5%
of the Purchase Price, in the aggregate ("Basket"),  at which time the Person(s)
seeking indemnification shall be entitled to recover all Losses in excess of the
Basket;  provided,  however,  that in no event shall Seller be liable for Losses
solely  pursuant to Section 8.2(a) in excess of 50% of the Purchase Price. In no
case shall  Losses  include  fees and  expenses  of more than one  counsel  with
respect  to any  Indemnity  Claim or  Claims  arising  out of the  same  general
allegations or circumstances.

      8.7.  Exclusive  Remedy.  Except for injunctive and other equitable relief
and  remedies  and except as  otherwise  expressly  provided  elsewhere  in this
Agreement, the rights and obligations of the parties under this Article VIII are
the exclusive  rights and  obligations of the parties with respect to any breach
of any representation,  warranty, covenant or agreement in this Agreement or any
Ancillary Document and shall be in lieu of any other rights or remedies to which
the party entitled to indemnification hereunder would otherwise be entitled as a
result of such breach; provided,  however, that any rights or remedies contained
in any  Ancillary  Document  shall  also be  available  so long as they  are not
inconsistent with the terms of this Agreement.

     8.8.     Tax Matters.

            (a) All  indemnification  payments  under this Article VIII shall be
      deemed adjustments to the Purchase Price.

            (b)  Notwithstanding  anything  else in this  Agreement,  the Seller
      shall only be liable for Taxes of the Company for taxable  periods  ending
      on or before the Closing  Date and, for any period not ending on or before
      the  Closing  Date,  the portion of any Taxes  attributable  to the period
      ending  on the  Closing  Date.  For any  period  that  does not end on the
      Closing  Date,  (i)  liability  for Taxes  determined  by reference to net
      income,  net receipts,  net profits,  capital gains,  gross income,  gross
      receipts,  gross  profits,  sales,  windfall  profits or similar  items or
      arising as the result of a transfer of assets shall be  allocated  between
      the portion of the period  ending on the  Closing  Date and the portion of
      the period  beginning  after the Closing Date based on the date such items
      accrued, and (ii) liability for all other Taxes shall be allocated between
      the portion of the period  ending on the  Closing  Date and the portion of
      the period  beginning after the Closing Date, pro rata based on the number
      of days in the taxable period.

            (c) Seller shall be entitled to control and conduct those aspects of
      audits,  examinations  or proceedings  (a "Tax  Contest")  relating to the
      Company that are related to (i)  Liability  for any Taxes for which Seller
      would be required to indemnify  any Buyer  Indemnified  Party  pursuant to


                                       32
<PAGE>

      Section 8.2, (ii) a claim for refund for any Taxes that Seller is entitled
      to  pursuant to Section  8.9(b),  or (iii) a year for which the Company is
      included in Seller's  consolidated Return. Costs of any Tax Contest are to
      be borne by Seller. Seller shall have the right to control and conduct all
      Tax Contests  including  the right to determine,  in its sole  discretion,
      such  issues as (1) the forum,  administrative  or  judicial,  in which to
      contest any proposed  adjustment,  (2) the attorney  and/or  accountant to
      represent the Company in the Tax Contest, (3) whether or not to appeal any
      decision of any  administrative or judicial body and (4) whether to settle
      any such Tax  Contest.  Buyer shall cause the Company to deliver to Seller
      any  power  of  attorney  required  to allow  Seller  and its  counsel  to
      represent the Company in connection with the Tax Contest and shall use its
      best efforts to provide  Seller with such  assistance as may be reasonably
      requested  by Seller in  connection  with the Tax  Contest.  Seller  shall
      reimburse  the  Company  monthly  for  reasonable   expenses  incurred  in
      providing such  assistance.  Notwithstanding  the foregoing,  Seller shall
      consult  in good faith with  Buyer  with  respect to the  conduct  of, and
      before  entering into any  settlement  of, any Tax Contest that may have a
      material  adverse  impact on the Liability  for Taxes of the Company,  but
      Seller  shall alone be entitled to determine  whether,  and on what terms,
      any such  settlement  shall be  entered  into so long as Seller  agrees to
      fully  indemnify  Buyer for any such  Liability  to the extent  related to
      periods prior to Closing.

            (d) All transfer,  documentary,  sales, use, stamp, registration and
      other such Taxes and fees (including any penalties and interest)  incurred
      in connection with this Agreement (including any New York State Gains Tax,
      New York City  Transfer Tax and any similar tax imposed in other states or
      subdivisions), shall be paid by Buyer when due, and Buyer will, at its own
      expense,  file all  necessary  Tax  Returns and other  documentation  with
      respect to all such transfer, documentary, sales, use, stamp, registration
      and other Taxes and fees, and, if required by applicable law, Seller will,
      and will cause its  affiliates  to, join in the  execution of any such Tax
      Returns and other documentation.


                                  ARTICLE IX.
                           TERMINATION AND ABANDONMENT

      9.1.  Methods of  Termination.  This  Agreement may be terminated  and the
transactions  contemplated  hereby  may be  abandoned  at any time  prior to the
Closing:

            (a) by mutual written consent of Buyer and Seller;

            (b) by either Buyer or Seller:

                  (i) if the other party shall have failed to comply with any of
            its material  obligations or agreements  contained in this Agreement
            required to be complied with or performed  prior to the date of such
            termination,  which failure to comply has not been cured within five
            business  days  following  receipt  by such  other  party of written
            notice of such failure to comply;



                                       33
<PAGE>

                  (ii) if there has been a material breach by the other party of
            any  representation  or  warranty  made in this  Agreement  and such
            breach  has not been  cured  within  five  business  days  following
            receipt by the breaching party of written notice of the breach;

                  (iii) if a Governmental  Authority shall have issued an order,
            decree  or  ruling  or  taken  any  other  action,   in  each  case,
            permanently  restraining,  enjoining  or otherwise  prohibiting  the
            transactions contemplated by this Agreement, and such order, decree,
            ruling or other action shall have become final and nonappealable; or

                  (iv) if the Closing Date shall not have  occurred on or before
            June 29, 2001;

provided,  however,  that the right to  terminate  this  Agreement  shall not be
available to any party whose breach of this  Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before such date.

      9.2.  Procedure and Effect of Termination.  In the event of termination of
this  Agreement  by either  Buyer or Seller,  as provided in Section  9.1,  this
Agreement  shall  immediately  become  void  and  there  shall  be no  Liability
hereunder on the part of any party except that nothing contained in this Section
9.2 shall  relieve  any party  hereto  from any  Liability  for any  breach of a
representation,  warranty or covenant contained in this Agreement or relieve any
party from obligations which survive termination  pursuant to Article X. Without
limiting the foregoing, the parties agree that such Liability shall include such
consequential  damages on account of such breach  (including  (a) if the Closing
does  not  occur on or prior to June  29,  2001 due to  Buyer's  breach  of this
Agreement, the loss of tax benefits to Seller, and (b) the costs incurred by the
non-breaching  party in connection with this Agreement,  the Ancillary Documents
and the  transactions  contemplated  hereby and thereby),  as the  non-breaching
party is able to prove.


                                   ARTICLE X.
                                BAILED INVENTORY

         As an accommodation to Buyer to assist with the successful  transfer of
the  Business  to Buyer,  the  Company  and Seller are willing to enter into the
arrangements  contained in this Article X to provide Buyer with certain  Branded
Products  which will be part of the Company Assets on the Closing Date to enable
Buyer to have an adequate  inventory  of Branded  Products to be able to fulfill
orders for  customers of the Business  pursuant to the purchase  orders to which
the Company will be a party on the Closing Date.

      10.1.  Retention of Buyer.  The Company hereby  retains  Buyer,  and Buyer
hereby accepts such retention,  to provide to the Company during the period from
the date of this  Agreement  through  the first to occur of the  Closing  or the
termination of this Agreement pursuant to Section 9.1 (such period, the "Term"),
solely as an agent of the Company,  the  Services.  From time to time during the
Term,  the Company shall provide for the use of Buyer in performing the Services
(a)  such of the  Design  Assets  and  Sales  and  Product  Data as the  Company


                                       34
<PAGE>

reasonably  determines that Buyer will require to perform the Services, it being
acknowledged  that the  Company  shall not  provide  to Buyer  pursuant  to this
Section 10.1 any of the Design Assets described in Section 4.10(c)(iii), and (b)
the CAMS  Software and one copy of the source code for the CAMS Software (all of
such items  referred  to in clauses  (a) and (b)  provided  for the use of Buyer
pursuant to this Section  10.1,  the "Provided  Assets").  Buyer will not alter,
modify or create derivative works from, the CAMS Software during the Term.

      10.2.  The Services.  From time to time during the Term, the Company shall
ship to Buyer  Bailed  Product,  all such  shipments  to be in  accordance  with
Section  2.10 of this  Agreement.  For all Bailed  Product,  the  Company  shall
deliver to Buyer from time to time a set of written instructions (each such set,
an "Instruction").  Upon Buyer's receipt of any Bailed Product,  Buyer shall, at
its sole cost and expense,  perform the following  services  (collectively,  the
"Services") with respect to such Bailed Product:

            (a) Cause  Bailed  Product  to be  attributed  with the  decorations
      designated by the Company in the applicable  Instructions  within the time
      frames  designated in the  applicable  Instructions  (such Bailed  Product
      after being attributed, the "Attributed Product");

            (b) Store Bailed  Product and  Attributed  Product to such locations
      and in a manner, as mutually agreed upon by the Company and Buyer; and

            (c)  Cause  all  Bailed  Products  and  Attributed  Products  to  be
      segregated from other  merchandise of Buyer and its Affiliates and clearly
      marked and identified as being the property of the Company.

Buyer shall perform the Services in accordance with the specifications contained
in the applicable Instructions and all applicable laws and regulations. Further,
Buyer shall  perform the Services in  compliance  with the  Company's  currently
existing  specifications,  as such specifications may be amended by Company from
time to time (the  "Specifications").  A current copy of the  Specifications has
previously been provided to Buyer by the Company.  In the event of a conflict or
inconsistency  between the  Specifications  and an applicable  Instruction,  the
Instructions  shall  control.  Risk of loss  or  damage  to  Bailed  Product  or
Attributed  Product  shall  be the  responsibility  of Buyer  until  the same is
delivered  to the  Company or, at the  direction  of the  Company,  to a Company
customer.

     10.3.    Insurance.

            (a) Buyer shall,  at its cost,  procure and maintain  throughout the
      Term  Commercial  General  Liability   insurance  and  umbrella  liability
      insurance written on an occurrence basis with the following  coverages and
      limits:

                  Coverage                                       Limits
                  --------                                       ------

         General Aggregate Limit                             $2,000,000.00

         Products/Completed Operations Aggregate Limit       $2,000,000.00

         Personal and Advertising Injury - Per Injury        $1,000,000.00


                                       35
<PAGE>

            (b)  All  coverages   required   hereunder  shall  be  carried  with
      insurer(s)  acceptable to the Company.  Buyer shall submit policies and/or
      certificates  of insurance  evidencing  the above  coverages  (which shall
      include an agreement by the insurer not to cancel or materially  alter its
      coverage  except upon thirty (30) days prior written  notice to Seller) to
      Seller for its approval before at the time of execution of this Agreement.
      The  coverages   provided  by  Buyer   hereunder   shall  be  primary  and
      non-contributing  with any similar  insurance  which may be  maintained or
      provided by the Company,  and any certificate  furnished by Buyer shall be
      endorsed to so state. The coverages  described in Sections 10.3(b) and (c)
      shall continue in effect for Seller's and its  Affiliates'  benefits for a
      period of one (1) year from the earlier of the Closing Date or the date of
      termination of this Agreement.  In case of Buyer's failure to maintain the
      required insurance in effect, the Company may, at its option,  procure the
      aforementioned  insurance  and charge  Buyer for the amount so expended by
      the Company.

       10.4. Confidential and Proprietary Information.

            (a)  The   Specifications   and  Company  IP  are   proprietary  and
      confidential  information  of the Company,  and shall not be used by Buyer
      except in connection with the performance of the Services  hereunder.  The
      term  "Company  IP" means the  Licensed  Marks,  the  Design  Assets,  the
      Company's  rights and interests under the Design License  Agreements,  the
      CAMS Software and the source code for the CAMS Software.

            (b) All business and technical information, whether in written, oral
      or electronic form, including, but not limited to, technical know-how, the
      Specifications,  the Instructions,  procedures and Sales and Product Data,
      which the Company  may  hereafter  disclose  to Buyer or to any  employee,
      agent or representative of Buyer,  shall be received and retained by Buyer
      and its employees,  agents and  representatives  as strictly  confidential
      and,  except as provided  for herein,  may not be  disclosed  to any third
      party.  Buyer shall not disclose any such information to any person within
      its  organization  not  having a need to know the same and shall  only use
      such  information  in  connection  with the  performance  of the  Services
      hereunder.

            (c)  Notwithstanding  Section  10.4(b),  Buyer  shall  not  have  an
      obligation of confidentiality with respect to information which:

                  (i) was in the public  domain at the time of receipt  from the
            Company,  or which  thereafter  comes into the public domain without
            breach of an obligation assumed hereunder; or

                  (ii) was known and can be shown to have been known by Buyer at
            the time of receipt from the Company and was not previously acquired
            directly or indirectly from the Company on a confidential basis; or


                                       36
<PAGE>

                  (iii)  becomes  known  to Buyer  on a  non-confidential  basis
            through a third  party whose own  acquisition  and  disclosure  were
            entirely  independent  of Buyer,  not in  breach  of any  obligation
            hereunder or any other confidentiality  agreement for the benefit of
            the Company,  its Affiliates,  predecessors  or successors,  and not
            obtained on a confidential basis from the Company; or

                  (iv) is approved for disclosure by the Company in writing.

            (d) All originals  and copies of  documented  business and technical
      information  identified  or reasonably  identifiable  as  confidential  or
      proprietary  to the Company  shall be returned to the Company  upon demand
      or, if no demand is made,  upon the  cancellation  or  termination of this
      Agreement,  except  that  in the  case of the  source  code  for the  CAMS
      Software,  Buyer  shall  return  it  (and  all  copies  thereof)  and  any
      modifications it has made to it (and all copies thereof) (or cause them to
      be returned to Seller or provide Seller with  satisfactory  proof of their
      destruction)  promptly  following  termination  for any reason of the CAMS
      License if the Closing occurs  hereunder.  Until the earlier of Closing or
      termination of this Agreement, Buyer may not make any modifications to the
      source  code for the CAMS  Software.  Following  Closing,  Buyer  may make
      modifications to the CAMS Software;  provided,  however,  that Buyer shall
      preserve   the  original   source  code  as  it  existed   prior  to  such
      modification.

            (e) The obligations imposed upon Buyer pursuant to this Section 10.4
      shall  survive  the  Closing  or any  termination  or  expiration  of this
      Agreement;  provided,  however,  that any such  obligations of Buyer which
      relate solely to Company Assets shall expire at the Closing, if it occurs.

     10.5.  Rights to Company IP.

            (a) Buyer agrees that, as between Buyer and the Company,  all of the
      Company IP to be used by Buyer in the  performance  of the Services is the
      sole and  exclusive  property of the  Company.  Nothing in this  Agreement
      shall give or is intended to give Buyer any right, title or interest in or
      to any of the  Company  IP or the  good  will  associated  with any of the
      Company IP, except the right to use the same in accordance  with the terms
      and  conditions of this Article X. Buyer shall not contest the validity or
      ownership  of any of the  Company IP or assist  others in  contesting  the
      validity or ownership of any of the Company IP.

            (b) Buyer agrees that Company shall  determine all decorations to be
      attributed to Bailed Product and all printed matter on packaging materials
      and  labeling  utilized  pursuant to this  Article X. Buyer  agrees not to
      affix  any  label or other  printed  material  on any  Bailed  Product  or
      Attributed  Product  which  either has not been  provided  to Buyer by the
      Company or for which Buyer has not  received  the prior  written  approval
      from the Company.

      10.6.  Buyer  Warranty.  Buyer warrants and represents to the Company that
all of  the  Services  shall  be  performed  in  compliance  with  all  material
applicable laws and regulations  and in compliance with the  Specifications  and
the Instructions.


                                       37
<PAGE>

      10.7. Not a Requirements Contract.  Buyer acknowledges and agrees that the
provisions  of this  Article  X are not a  requirements  contract,  and  nothing
contained  herein shall be deemed as granting to Buyer,  and Buyer is not hereby
acquiring, any exclusive rights with respect to the performance of the Services.

      10.8.   Specifications;   Quality  Standards.  All  Bailed  Product  which
constitutes  a part of the  Bailed  Inventory  will  have been  produced  by the
Company in accordance with the Company's  currently existing  specifications for
Blank Product, as such specifications may be amended by the Company from time to
time. All Bailed Product which  constitutes a part of the Bailed  Inventory will
have been packed in accordance with the terms set forth on Schedule 10.8(a).  If
the  Closing  occurs,  Buyer's  exclusive  remedy for any Bailed  Product  which
constitutes a part of the Bailed Inventory but which does not meet the Company's
specifications  for Blank Product  shall be a reduction in the Bailed  Inventory
Value  for  each  item  of the  Bailed  Inventory  which  constitutes  Excessive
Irregular  Inventory,  such reduction to be in an amount mutually agreed upon by
Seller  and  Buyer;  provided,  however,  that if Seller and Buyer are unable to
reach  agreement  within a reasonable  period of time,  such reduction  shall be
calculated by valuing the Excessive  Irregular  Inventory at zero (the aggregate
of all such reductions being called the "Bailed  Inventory  Excessive  Irregular
Inventory Reduction").  If Excessive Irregular Inventory is valued at zero, then
Buyer shall ship such  Excessive  Irregular  Inventory at such times and to such
destinations  as directed by Seller from time to time at Seller's cost, it being
agreed,  however, that Buyer shall store such Excessive Irregular Inventory,  on
Seller's behalf,  until Seller provides such direction and that Buyer and Seller
shall review with one another,  on a monthly basis, the quantity and any related
issues pertaining to storage of such Excessive  Irregular  Inventory.  Inventory
shall  conclusively  be deemed Bailed  Inventory to the extent such Inventory is
reflected on the bills of lading or other shipping  documents prepared by Seller
and accompanying such shipment, and shall be valued as provided therein, unless,
within five business days of receipt by Buyer,  Seller  receives  written notice
containing a detailed explanation of Buyer's objection to the Shipped Inventory.
Buyer shall be entitled to object to such list or  valuation  only to the extent
(a)  mathematical  errors  exist  in the  list or  valuation,  or (b)  Excessive
Irregular  Inventory is included in such  shipment.  If Buyer  objects to Bailed
Inventory in accordance  with the  provisions of this Section,  the parties,  in
good  faith,   shall  promptly  attempt  to  resolve  such  dispute  and,  where
applicable,  make any necessary  adjustments to the Bailed  Inventory Value (the
aggregate of all such reductions,  together with the Bailed Inventory  Excessive
Irregular Inventory being called the "Bailed Inventory Reduction")

      10.9.  Ownership  of Product and Assets.  Until the  Closing  occurs,  the
Company shall be the sole and exclusive owner of all Bailed Products, Attributed
Products and Provided Assets and Buyer shall have no right, title or interest of
any kind in any Bailed Product,  Attributed  Product or Provided  Assets,  other
than the rights  expressly  provided in this Article X. Buyer shall  execute and
deliver to the  Company  such  financing  statements  and other  instruments  at
Seller's  expense,  and shall allow the Company to send such  notices to Buyer's
creditors,  as the  Company  may  deem  appropriate  to  protect  the  Company's
ownership  interest in the Bailed  Products,  the  Attributed  Products  and the
Provided Assets.


                                       38
<PAGE>

      10.10. Obligations Upon Termination of this Agreement.

            (a) If this Agreement is terminated for any reason, then the Company
      shall pay to Buyer, as compensation  for the Services,  an amount equal to
      the   Reimbursement   Amount  for  each   Completed   Product.   The  term
      "Reimbursement  Amount" means, with respect to each Completed Product,  an
      amount  equal  to  the  amount  set  forth  in  Schedule  2.7(b)  for  the
      attribution  performed on the Bailed Product by Buyer. The term "Completed
      Product" means each  Attributed  Product for which Buyer has performed the
      Services in accordance with the terms of this Article X. The Reimbursement
      Amount  for each  Completed  Product  shall be paid to Buyer no later than
      thirty (30) days after the termination of this Agreement.  Buyer shall not
      be entitled to any compensation for the Services if the Closing occurs.

            (b) If this Agreement is terminated for any reason, Buyer shall, (i)
      within ten (10) days after the date of such termination,  at its sole cost
      and  expense,  ship all of the  Bailed  Product,  Attributed  Product  and
      Provided  Assets  (including  all  copies  of  source  code  for the  CAMS
      Software) then in the  possession,  control or custody of Buyer, or any of
      its  Affiliates,  to Seller or to such other  location  as Seller  directs
      Buyer in a written  direction  delivered  to Buyer no later than five days
      after the date of such termination, and (ii) within 60 days after the date
      of such  termination,  pay to Seller an amount,  in immediately  available
      funds,  equal to the Full Value less the Shipped  Value.  The "Full Value"
      shall mean the aggregate of the amounts  determined in accordance with the
      valuations  set  forth in  Schedule  2.7(a)  for each  item of the  Bailed
      Product and Attributed  Product  (assuming,  for these purposes only, that
      all such Attributed  Product had not been attributed)  which,  immediately
      prior to the date of  termination  of this  Agreement,  is  either  in the
      possession of Buyer (or a third party  warehouse or bailee for the benefit
      of Buyer) or in transit to Buyer from the  Company.  The  "Shipped  Value"
      shall  mean  the sum of the  amounts  determined  in  accordance  with the
      valuations  set  forth in  Schedule  2.7(a)  for each  item of the  Bailed
      Product and Attributed  Product  (assuming,  for these purposes only, that
      all such Attributed  Product had not been  attributed)  which (A) does not
      constitute  Irregular  Inventory,  and (B) was shipped to Seller or any of
      its Affiliates pursuant to clause (i) above.

            (c) The  provisions  of Article X shall survive the  termination  of
      this Agreement.

            (d) Nothing  contained in this Section 10.10 shall relieve any party
      of any  Liability  to  another  party on  account  of its  breach  of this
      Agreement.

      10.11.  Independent  Contractor  Relationship.  The relationship which the
Company  holds as to Buyer  in  connection  with  their  respective  obligations
pursuant to this Article X is that of an independent contractor.  This Article X
is not  intended to create and shall not be  construed  as creating  between the
Company and Buyer the  relationship  of principal  and agent,  joint  venturers,
partners or any other  similar  relationship,  the  existence of which is hereby
expressly  denied,  nor shall Buyer be  considered  in any sense an Affiliate or
subsidiary of the Company.  Neither party shall not have any authority to create
or assume in the other party's name or on its behalf any  obligation,  expressed


                                       39
<PAGE>

or implied,  or to act or purport to act as the other  party's  agent or legally
empowered  representative  for any purpose  whatsoever.  Neither  party shall be
liable to any third party in any way for any engagement, obligation, commitment,
contract,  representation,  transaction  or act or omission to act of the other,
except as expressly provided herein.


                                   ARTICLE XI.
                                  MISCELLANEOUS

      11.1. Notices. All notices and other communications  required or permitted
to be made under this  Agreement  shall be in writing  and shall be deemed  duly
given for all purposes (a) on the date of delivery,  if delivered  personally or
by  confirmed  telecopier  transmission,  (b) on the  next  business  day  after
delivery by a recognized  overnight  carrier,  or (c) on the third  business day
after  mailing,  if  sent by  United  States  registered  mail,  return  receipt
requested,  postage-prepaid,  and addressed as follows (or at such other address
as any party shall provide to the other parties by notice given pursuant to this
Section 11.1):

                           If to Seller:
                           ------------

                           Sara Lee Corporation
                           Three First National Plaza
                           Chicago, Illinois  60602
                           Attention:  Senior Vice President,
                           Secretary and General Counsel
                           Fax No.:  312-419-3187

                           If to Buyer:
                           -----------

                           GFSI, Inc.
                           9700 Commerce Parkway
                           Lenexa, Kansas  66219
                           Attention:  Craig Peterson, Chief Financial Officer
                           Fax No.:  913-693-3913

                           with a copy to:

                           Mayer, Brown & Platt
                           555 College Street
                           Palo Alto, California 94306-1433
                           Attention: Martin J. Collins
                           Fax No.:  650-331-2010

      11.2. Amendments;  Waivers. Any provision of this Agreement may be amended
or waived if, and only if,  such  amendment  or waiver is in writing and is duly
executed, in the case of an amendment, by Buyer and Seller, or, in the case of a
waiver,  by the party  against whom the waiver is to be enforced.  No failure or
delay by any party in  exercising  any  right,  power or  privilege  under  this
Agreement  shall  operate  as a waiver  thereof  nor shall any single or partial
waiver or exercise thereof preclude the enforcement of any other right, power or
privilege.

                                       40

<PAGE>

      11.3.  Successors and Assigns.  This  Agreement  shall be binding upon and
inure  to the  benefit  of the  parties  and  their  respective  successors  and
permitted assigns.  No party may assign or delegate or otherwise transfer any of
its rights or  obligations  hereunder  without the prior written  consent of the
other party,  except that Buyer may (i) assign its rights under this  Agreement,
including  the right to purchase  the Shares,  to a wholly owned  subsidiary  of
Buyer, and (ii) assign its rights under this Agreement to any Person (other than
a  competitor  of Seller as  determined  by Seller in good  faith) who  acquires
(whether   by   acquisition   of  stock  or   assets,   merger,   consolidation,
recapitalization  or otherwise) the Business and  substantially all of the other
assets and liabilities of Buyer and its subsidiaries,  it being agreed, however,
that in each case no such  assignment  shall  relieve  Buyer of its  obligations
hereunder  and, upon any such  assignment,  without any further action by any of
the parties, all obligations of Buyer shall be the joint and several obligations
of Buyer and such assignee.

      11.4. Construction;  Interpretation; Certain Terms. The headings contained
in this  Agreement are for  reference  purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Article, Section, Schedule,
Exhibit,  Recital and party  references are to this Agreement  unless  otherwise
stated.  The words "hereof,"  "herein,"  "hereunder" and words of similar import
shall refer to this  Agreement as a whole and not to any  particular  Section or
provision of this  Agreement,  and  reference  to a  particular  Section of this
Agreement  shall include all  subsections  thereof.  No party,  nor its counsel,
shall be deemed the drafter of this  Agreement  for purposes of  construing  the
provisions of this  Agreement,  and all  provisions of this  Agreement  shall be
construed in accordance with their fair meaning, and not strictly for or against
any party.  The term "including" as used in this Agreement shall mean including,
without  limitation,   and  shall  not  be  deemed  to  indicate  an  exhaustive
enumeration of the items at issue.

      11.5.  Severability.  Any term or provision of this  Agreement  that is or
becomes  invalid or  unenforceable  shall be  ineffective  to the extent of such
invalidity or  unenforceability  without  rendering invalid or unenforceable the
remaining terms or provisions of this Agreement.

      11.6.  Counterparts.  This  Agreement  may be  executed  in any  number of
counterparts,  each of  which  shall  constitute  an  original  and all of which
together shall constitute one and the same instrument.

      11.7.  Entire  Agreement.  This Agreement,  together with the Exhibits and
Schedules and Ancillary  Documents,  constitute the entire  agreement  among the
parties  pertaining to the subject matter hereof and thereof,  and supersede all
prior and  contemporaneous,  oral and  written,  agreements  and  understandings
pertaining thereto.

      11.8. Governing Law; Consent to Jurisdiction;  Venue. This Agreement shall
be  governed  by and  construed  in  accordance  with the  laws of the  State of
Illinois, without giving effect to conflict of law principles. Each party hereto
hereby  agrees that any  proceeding  relating to this  Agreement,  the Ancillary
Documents and the transactions  contemplated  hereby or thereby shall be brought
solely in the state or federal  court located in Chicago,  Illinois.  Each party


                                       41
<PAGE>

hereto hereby  consents to personal  jurisdiction  in any such action brought in
any such state or federal  court,  consents to service of process by  registered
mail made upon such party,  waives any  objection  to venue in any such state or
federal  court  and any  Claim  that  any  such  state  or  federal  court is an
inconvenient forum.

      11.9. Expenses. Except as otherwise expressly provided herein, Buyer shall
pay all costs and expenses incurred by or on its behalf and Seller shall pay all
costs  and  expenses  incurred  by or on  behalf  of  Seller,  in  each  case in
connection with this  Agreement,  the Ancillary  Documents and the  transactions
contemplated hereby and thereby.

      11.10. Third-Party  Beneficiaries.  Nothing herein expressed or implied is
intended to or shall be construed to confer upon or give any Person,  other than
the parties hereto and their respective  successors and permitted  assigns,  any
rights or remedies under or by reason of this Agreement.

      11.11.  Knowledge.  All references to Seller's  "knowledge," or phrases of
similar import (such as "known" or "knows"),  shall mean the actual (not imputed
or implied) knowledge,  at the time of execution of this Agreement by Seller, of
Gerald Evans, Bob Hall and Lynn Gwyn.

      11.12. WAIVERS OF TRIAL BY JURY. SELLER AND BUYER HEREBY IRREVOCABLY WAIVE
ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL  PROCEEDING  ARISING  OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER ANCILLARY DOCUMENTS,  AND CONSENT
TO THE GRANTING OF SUCH LEGAL OR EQUITABLE  RELIEF AS IS DEEMED  APPROPRIATE  BY
THE COURT.




                                       42
<PAGE>


         The parties hereto have caused this Stock Purchase Agreement to be duly
executed as of the day and year first above written.



                                       SARA LEE CORPORATION


                                       By: /s/  Richard Oberdorf
                                          --------------------------------------
                                       Name:  Richard Oberdorf
                                       Title: Vice President



                                       CHAMPION PRODUCTS, INC.


                                       By:  /s/ Christian McGrath
                                          --------------------------------------
                                       Name:   Christian McGrath
                                       Title:  Vice President



                                       GFSI, INC., d/b/a Gear For Sports


                                       By:   /s/  Larry D. Graveel
                                          --------------------------------------
                                       Name:   Larry D. Graveel
                                       Title:  President & COO




                                       43

<PAGE>


                                    EXHIBIT A

                                  Defined Terms


         "Affiliate"  means with  respect  to any  Person  (a) any  Person  who,
directly or  indirectly,  controls,  or is controlled by or under common control
with,  the Person in question,  or (b) any person who is a director or executive
officer of such Person.  For purposes of this definition,  "control" of a Person
shall mean the power, direct or indirect, to vote or direct the voting of 50% or
more of the outstanding  voting  securities of such Person or to direct or cause
the direction of the  management  and policies of such Person,  whether  through
ownership of voting securities, veto rights or otherwise.

         "Agreement" shall have the meaning set forth in the Preamble.

         "Ancillary Documents" means the agreements,  certificates,  instruments
and other  documents  to be  executed  and  delivered  in  connection  with this
Agreement.

         "Applicable  Law" means,  with  respect to any Person,  any domestic or
foreign,  federal, state or local statute, law, ordinance,  rule, administrative
interpretation,   regulation,  order,  writ,  injunction,  directive,  Judgment,
permit, decree or other requirement of any Governmental  Authority applicable to
such  Person or any of its  Affiliates  or any of their  respective  properties,
assets,  officers,  directors,  employees,  consultants or agents (in connection
with such officer's, director's, employee's,  consultant's or agent's activities
on behalf of such Person or any of its affiliates).

         "Attributed  Product"  shall  have the  meaning  set  forth in  Section
2.6(h).

         "Bailed Inventory" shall have the meaning set forth in Section 2.6(f).

         "Bailed Inventory Excessive  Irregular Inventory  Reduction" shall have
the meaning set forth in Section 10.8.

         "Bailed  Inventory  Reduction"  shall  have the  meaning  set  forth in
Section 10.8.

         "Bailed  Inventory  Value"  shall have the meaning set forth in Section
2.6(g).

         "Bailed Product" shall have the meaning set forth in Section 2.6(e).

         "Basket" shall have the meaning set forth in Section 8.6.

         "Blank Product" shall have the meaning set forth in Recital A.

         "Branded Product" shall have the meaning set forth in Recital A.

         "Business  Employees"  shall  have the  meaning  set  forth in  Section
6.2(a).


                                       1
<PAGE>

         "Business" shall have the meaning set forth in Recital A.

         "Buyer" shall have the meaning set forth in the Preamble.

         "Buyer Indemnified Parties" shall have the meaning set forth in Section
8.2.

         "CAMS License" shall have the meaning set forth in Section 6.8(b).

         "Champion License" shall have the meaning set forth in Section 6.8(c).

         "Claim Notice" shall have the meaning set forth in Section 8.4(a).

         "Claims" shall have the meaning set forth in Section 4.14.

         "Closing"  and "Closing  Date" shall have the  respective  meanings set
forth in Section 2.2.

         "Closing Inventory" shall have the meaning set forth in Section 2.6(b).

         "Closing  Inventory  Reduction"  shall  have the  meaning  set forth in
Section 2.9(b).

         "Closing  Inventory  Statement"  shall  have the  meaning  set forth in
Section 2.7(c).

         "Closing  Inventory  Value" shall have the meaning set forth in Section
2.6(d).

         "COBRA" means the  Consolidated  Omnibus Budget  Reconciliation  Act of
1985 or other similar law.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Collegiate Products" shall have the meaning set forth in Recital A.

         "Combined Returns" shall have the meaning set forth in Section 6.13(d).

         "Common Stock" shall have the meaning set forth in Recital B.

         "Company" shall have the meaning set forth in the Preamble.

         "Company Assets" shall have the meaning set forth in Section 4.10.

         "Company  Employee  Plans"  shall have the meaning set forth in Section
6.2(a).

         "Company IP" shall have the meaning set forth in Section 10.4(a).

         "Completed  Product"  shall  have the  meaning  set  forth  in  Section
10.10(a).


                                       2
<PAGE>

         "Contracts" means all contracts, agreements, sales and purchase orders,
commitments and other instruments of any kind, whether written or oral, to which
the Company is a party or to which the Company, the Business,  the Shares or the
Company's assets, properties or operations are otherwise bound or subject.

         "Controlled  Entity" shall mean any member of the Company's  controlled
group as described in Sections 414(b), (c), (m) and (o) of the Code.

         "Corporate Records" shall have the meaning set forth in Section 4.5.

         "Defense Notice" shall have the meaning set forth in Section 8.4(b).

         "Design Assets" shall have the meaning set forth in Section 4.10(d).

         "Design License  Agreements" shall mean the license agreements pursuant
to which the  Company  has the right to  attribute  the  Design  Assets to Blank
Product.

         "Dispute Notice" shall have the meaning set forth in Section 8.5.

         "Employee  Plans" shall mean all (i) employee welfare benefit plans and
employee  pension benefit plans, as those terms are defined in Sections 3(1) and
3(2) of ERISA;  (ii) bonus,  pension,  stock option,  stock  purchase,  benefit,
welfare,   profit  sharing,   retirement,   disability,   vacation,   severance,
hospitalization,  insurance,  incentive, deferred compensation and other similar
fringe or  employee  benefit  plans,  funds,  programs or  arrangements  for any
current or former employee,  director,  consultant or agent, whether pursuant to
Contract,  arrangement,  custom  or  informal  understanding,   which  does  not
constitute an employee benefit plan (as defined in 3(3) of ERISA), and (iii) all
employment Contracts or executive compensation agreements,  in each case whether
written or oral,  existing  prior to the Closing Date, and in each case relating
to employees (past or present) of the Company.

         "Environmental   Law"  means  any  Applicable  Law,  or  other  written
governmental   requirement  relating  to  the  environment,   including  without
limitation,  all such laws, or requirements  which impose liability or standards
of conduct concerning emissions,  discharges, releases or threatened releases of
Hazardous  Substances  into  air,  surface  water,  ground  water,  or land,  or
otherwise  relating to the manufacture,  processing,  generation,  distribution,
use,  treatment,  storage,  disposal,  cleanup,  transport  or  handling of such
Hazardous   Substances,   including  (but  not  limited  to)  the  Comprehensive
Environmental  Response,  Compensation  and  Liability  Act of 1980,  as amended
("CERCLA"),  the Resource  Conservation  and  Recovery  Act of 1976,  as amended
("RCRA")  any  other  so-called   "Superfund"  or  "Superlien"  law,  the  Toxic
Substances  Control Act, or any other similar federal,  state or local statutes,
laws or regulations.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.

         "Estimated  Inventory"  shall  have the  meaning  set forth in  Section
2.7(a).


                                        3
<PAGE>

         "Excessive  Irregular  Inventory" shall mean all Irregular Inventory to
the extent  that it exceeds  five  percent of the total  amount (by  quantity of
garments) of the combined Closing Inventory and the Bailed Inventory of the same
style,  but only the amounts  which are in excess of five  percent of such total
amount.

         "Fall  2001  Agreement"  shall  have the  meaning  set forth in Section
6.6(c).

         "Foreign  Registrations"  shall have the  meaning  set forth in Section
4.10.

         "Full Value" shall have the meaning set forth in Section 10.10(b).

         "Governmental   Authority"  means  any  foreign,   domestic,   federal,
territorial,   state  or  local   governmental   authority,   quasi-governmental
authority,  instrumentality,  court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory,  administrative or other
agency,  or any political or other  subdivision,  department or branch of any of
the foregoing.

         "Hazardous Substances" means

            (a) any "hazardous substance", as defined by CERCLA;

            (b) any "hazardous waste", as defined by RCRA;

            (c) any  petroleum  product or fraction  thereof  (including  diesel
      fuel);

            (d) any asbestos;

            (e) any polychlorinated biphenyl; or

            (f) any pollutant or  contaminant  or hazardous,  dangerous or toxic
chemical,  material,  substance or  matter  within  the  meaning  of  any  other
Environmental Law.

         "Included  Contracts"  shall  have the  meaning  set  forth in  Section
4.10(e).

         "including" shall have the meaning set forth in Section 11.4.

         "Indemnified Party" shall have the meaning set forth in Section 8.4(a).

         "Indemnifying  Party"  shall  have the  meaning  set  forth in  Section
8.4(a).

         "Indemnity Claim" means a claim for Losses asserted pursuant to Article
VIII.

         "Indemnity Notice" shall have the meaning set forth in Section 8.5.

         "Instruction" shall have the meaning set forth in Section 10.2.

         "Inventory " shall have the meaning set forth in Section 2.6(a).


                                       4
<PAGE>

         "Inventory  Adjustment  Amount"  shall  have the  meaning  set forth in
Section 2.9(a).

         "Inventory Schedule" shall have the meaning set forth in Section 2.8.

         "Irregular Inventory" shall mean all Inventory of a specific style with
Quality Nonconformances.

         "IRS" means the Internal Revenue Service.

         "Judgment" shall include any judgment, order, writ, injunction,  decree
or award of any Governmental Authority.

         "knowledge" shall  have  the  meaning  when  referring to Seller as set
forth in Section 11.11.

         "Liability"  shall  mean  any  obligation  or  liability,  absolute  or
contingent, known or unknown, liquidated or unliquidated,  accrued or unaccrued,
asserted or  unasserted,  whether due or to become due regardless of when and by
who asserted it.

         "Licensed  Marks"  has  the  meaning  ascribed  to it in  the  Champion
License.

         "Licensee" has the meaning ascribed to it in the Champion License.

         "Lien" means any mortgage, lien, pledge, security interest, conditional
sale agreement, charge, claim, easement, right, condition,  restriction,  option
or  other  legal or  equitable  encumbrance  or  defect  of title of any  nature
whatsoever (including,  without limitation, any assessment, charge or other type
of notice which is levied or given by any Governmental Authority and for which a
lien could be filed).

         "Losses"  shall  mean  all  actions,  claims,  suits,  demands,  costs,
proceedings, hearings, investigations,  charges, complaints, Judgments, rulings,
charges,  dues, fines,  obligations,  Liabilities,  liens, losses, fees, damages
(including  incidental and  consequential  damages),  recoveries,  deficiencies,
expenses (including interest, penalties, court costs, settlement costs, costs of
investigation and reasonable attorneys' fees) and diminution of value.

         "Major Customer" shall have the meaning set forth in Section 4.19(a).

         "Major Product" shall have the meaning set forth in Section 4.19(b).

         "Material Contract" shall mean:

              (a)  Each  Contract  that  involves  performance  of  services  or
delivery of goods or materials by the Company of an amount or value in excess of
$25,000.00;

              (b) Each Contract that was not entered into in the ordinary course
of business and that involves  expenditures or receipts of the Company in excess
of $25,000.00;


                                       5
<PAGE>


              (c)  Each  lease,   rental  or   occupancy   agreement,   license,
installment and conditional  sale  agreement,  and other Contract  affecting the
ownership of,  leasing of, title to, use of or any  leasehold or other  interest
in,  any  real  or  personal  property  (except  personal  property  leases  and
installment  and  conditional  sales  agreements  having  a  value  per  item or
aggregate payments of less than $25,000 and with terms of less than one year);

              (d) Each  licensing  agreement or other  Contract  with respect to
patents,   trademarks,   copyrights  or  other  proprietary  rights,   including
agreements  with  current  or  former  employees,   consultants  or  contractors
regarding  the  appropriation  or the  non-disclosure  of  any  of  the  Company
proprietary rights;

              (e) Each collective  bargaining agreement and other Contract to or
with any labor union or other employee representative of a group of employees of
the Company;

              (f)  Each joint venture, partnership  and other Contract  (however
named)  involving  a sharing of profits,  losses,  costs or  liabilities  by the
Company with any other Person;

              (g) Each Contract containing  covenants that in any way purport to
restrict the business activity of the Company or any Affiliate of the Company or
limit the  freedom of the Company or any  Affiliate  of the Company to engage in
any line of business or to compete with any Person;

              (h) Each  Contract to which the Company is a party  providing  for
payments to or by any Person based on sales,  purchases  or profits,  other than
direct payments for goods;

              (i)  Each  power  of  attorney  granted  by the  Company  that  is
currently effective and outstanding;

              (j) Each  Contract  entered into by the Company  other than in the
ordinary course of business that contains or provides for an express undertaking
by the Company to be responsible for consequential damages;

              (k)  Each   Contract  for  capital   expenditures   in  excess  of
$500,000.00;

              (l) Each written warranty,  guaranty and other similar undertaking
with respect to  contractual  performance  extended by the Company other than in
the ordinary course of business; and

              (m) Each amendment,  supplement, and modification (whether oral or
written) in respect of any of the foregoing.

         "Military Product" shall have the meaning set forth in Recital A.

         "Noncompetition  Agreement" shall have the meaning set forth in Exhibit
C.

         "Other Employees" shall have the meaning set forth in Section 6.2(a).

         "Permitted Changes" shall have the meaning set forth in Section 7.1(a).


                                       6
<PAGE>

         "Person" means any individual,  corporation,  association,  partnership
(general or limited), joint venture, trust, estate, limited liability company or
other legal entity or organization.

         "Provided Assets" shall have the meaning set forth in Section 10.1.

         "Purchase Orders" shall have the meaning set forth in Section 4.10(g).

         "Purchase Price" shall have the meaning set forth in Section 2.3.

         "Quality  Nonconformances" means those nonconformances described in the
Company's current defect  guidelines,  a copy of which is attached as Exhibit J,
provided  that the Company  shall  maintain  the right to  interpret  subjective
aesthetic  quality  issues.  Notwithstanding  the  foregoing,  (a)  all  garment
measurement points and measurement  specification targets and tolerance shall be
as defined in the Company's  specifications therefor, and (b) fabric performance
with regards to color consistency, colorfastness, garment fabric weight, garment
shrinkage,  and  strength  will be  defined  by the  Company  and will be within
commercially acceptable tolerances.

         "Real  Property"  means any real property  presently or formerly owned,
leased or operated by the Company.

         "Reimbursement  Amount"  shall  have the  meaning  set forth in Section
10.10(a).

         "Retirement Plans" shall have the meaning set forth in Section 6.2(c).

         "Returns" shall have the meaning set forth in Section 4.9(a).

         "Sales and  Product  Data"  shall have the meaning set forth in Section
4.10(e).

         "Seller" shall have the meaning set forth in the Preamble.

         "Seller  Indemnified  Parties"  shall  have the  meaning  set  forth in
Section 8.3.

         "Services" shall have the meaning set forth in Section 10.2.

         "Severance Plan" means the plan described in Schedule 4.16(d).

         "Shares" shall have the meaning set forth in Section 2.1.

         "Shipped Inventory" shall have the meaning set forth in Section 2.6(i).

         "Shipped Value" shall have the meaning set forth in Section 10.10(b).

         "Shipping  Facility" shall mean a shipping facility designated by Buyer
in any of El Paso, Texas, Laurel Hill, North Carolina or Perry, New York.

         "Specialty Product" shall have the meaning set forth in Recital A.



                                       7
<PAGE>

         "Specifications" shall have the meaning set forth in Section 10.2.

         "Specified  Distribution  Channels" shall have the meaning set forth in
Recital A.

         "Supply Agreement" shall have the meaning set forth in Section 6.8(d).

         "Survival Period" shall have the meaning set forth in Section 8.1.

         "Tax" or  "Taxes"  means all taxes  imposed  of any  nature  including,
without limitation,  federal, state, local or foreign income tax, alternative or
add-on minimum tax, profits or excess profits tax,  franchise tax, gross income,
adjusted gross income or gross receipts tax,  employment-related tax (including,
without limitation, employee withholding or employer payroll tax, FICA or FUTA),
real or personal  property tax or ad valorem tax, sales or use tax,  excise tax,
stamp tax or duty, any withholding or backup  withholding  tax, value added tax,
severance  tax,  prohibited  transaction  tax,  premiums tax or occupation  tax,
together with any interest or any penalty,  addition to tax or additional amount
imposed by any Governmental Authority responsible for the imposition of any such
tax.

         "Tax Contest" shall have the meaning set forth in Section 8.9(c).

         "Term" shall have the meaning set forth in Section 10.1.

         "Territory" has the meaning ascribed to it in the Champion License.

         "Third Party" shall mean any Person  unaffiliated  and unrelated to the
Person at issue.

         "Third Party Claim" shall have the meaning set forth in Section 8.4(a).



                                       8
<PAGE>

                                    EXHIBIT B

                              Intentionally Omitted



<PAGE>





                                    EXHIBIT C

                           Seller's Closing Deliveries

      1. Stock Certificates. The stock certificates for the Shares duly endorsed
in blank for transfer or accompanied  by appropriate  stock powers duly executed
in blank.

      2. Certificates. The following certificates:

            (a) a certified copy of the certificate of incorporation  and bylaws
      and all amendments thereto of the Company;

            (b) a certificate  certifying the existence and good standing of the
      Company  issued by the Secretary of State of the State of New York as of a
      date not more than ten days prior to the Closing Date; and

            (c) a  certificate  executed  by Seller to the  effect  that (i) the
      representations  and warranties of Seller contained herein are true in all
      material  respects on the Closing Date,  and (ii) Seller has performed and
      complied in all material respects with all of the agreements and covenants
      to be  performed  or complied  with by each of them prior to and as of the
      Closing Date.

      3. Corporate Books and Records.  The Company's minute books, stock records
and corporate seal.

      4.  Approvals.   All  required  consents,   waivers,   authorizations  and
approvals,  if any, from  Governmental  Authorities or any other Person required
pursuant  to  Section  4.12 in  connection  with  the  execution,  delivery  and
performance by the Buyer and Seller of this Agreement,  the Ancillary  Documents
and the transactions  contemplated  hereby and thereby,  other than any consents
related to the Design License Agreements.

      5.  Resignations.  Written resignations, effective as of the Closing Date,
of all of the directors and officers of the Company.

      6. CAMS License. The CAMS License, duly executed by Seller or a subsidiary
of Seller which is the owner of the property licensed thereby.

      7.  Champion License.  The Champion License,  duly executed by Seller or a
subsidiary of Seller which is the owner of the property licensed thereby.

      8. Supply Agreement. The Supply Agreement, duly executed by Seller.

      9. Fall 2001 Agreement. The Fall 2001 Agreement, duly executed by Seller.

      10.  Noncompetition  Agreement.  The Noncompetition  Agreement in the form
attached as Exhibit I (the "Noncompetition Agreement"), duly executed by Seller.

      11.  Receipt.  A  receipt  dated  the  Closing  Date  executed  by  Seller
acknowledging receipt of $4,250,000.

<PAGE>

      12. Closing Inventory Statement. The Closing Inventory Statement.

      13.  Other  Documents.   All  such  other   certificates,   documents  and
instruments as Buyer or its counsel shall reasonably  request in connection with
the  consummation  of the  transactions  contemplated  by this  Agreement or the
Ancillary Documents.





                                       2
<PAGE>


                                    EXHIBIT D

                           Buyer's Closing Deliveries

      1.  Purchase  Price.  The wire transfer of (a)  $2,250,000.00  and (b) the
Noncompetition   Payment  (as  that  term  is  defined  in  the   Noncompetition
Agreement).

      2. Closing  Certificate.  A  certificate  executed by the chief  executive
officer of Buyer to the effect that (i) the  representations  and  warranties of
Buyer  contained  herein are true in all material  respects on the Closing Date,
and (ii)  Buyer  has  performed  and  complied  with all of the  agreements  and
covenants to be  performed  or complied  with by each of them prior to and as of
the Closing Date.

      3.  Receipt.  A receipt dated the Closing Date executed on behalf of Buyer
acknowledging receipt of the Shares.

      4. CAMS License. The CAMS License, duly executed by Buyer and the Company.

      5. Champion License. The Champion License,  duly executed by Buyer and the
Company.

      6. Supply Agreement. The Supply Agreement,  duly executed by Buyer and the
Company.

      7. Fall 2001 Agreement.  The Fall 2001  Agreement,  duly executed by Buyer
and the Company.


      8. Other Documents. All such other certificates, documents and instruments
as Seller  or its  counsel  shall  reasonably  request  in  connection  with the
consummation of the transactions contemplated by this Agreement or the Ancillary
Documents.