115





Exhibit 2.1(i)





                                          RECEIVABLES TRANSFER AGREEMENT

                                          Dated as of September 1, 1999,

                                                   by and among

                                              CONE MILLS CORPORATION,

                                        ANY OTHER ORIGINATORS PARTY HERETO,

                                                        and

                                              CONE RECEIVABLES II LLC








                                                        118

                                                        117


         TABLE OF CONTENTS

ARTICLE I  DEFINITIONS AND INTERPRETATION......................................1
SECTION 1.01 Definitions.......................................................1
SECTION 1.02 Rules of Construction.............................................1
ARTICLE II  TRANSFERS OF RECEIVABLES...........................................2
SECTION 2.01 Agreement to Transfers............................................2
 (a) Receivables Transfers....................................................2
 (b) Determination of Sold Receivables........................................2
 (c) Payment of Purchase Price................................................2
 (d) Determination of Contributed Receivables.................................2
 (e) Ownership of Transferred Receivables......................................2
 (f) Reconstruction of General Trial Balance...................................3
 (g) Servicing of Receivables..................................................3
SECTION 2.02 Grant of Security Interest........................................3
SECTION 2.03 Parent Agreement; Addition of Originators.........................3
SECTION 2.04 Termination of Status as an Originator............................4
SECTION 2.05 Transfers of Levi Strauss Europe Receivables......................5
ARTICLE III  CONDITIONS PRECEDENT..............................................5
SECTION 3.01 Conditions to Initial Transfer...................................5
(a) Transfer Agreement; Other Documents........................................5
(b) Governmental and Other Approvals...........................................5
(c) Compliance with Laws.......................................................5
(d) Purchase Agreement Conditions..............................................5
SECTION 3.02 Conditions to all Transfers.......................................6
ARTICLE IV  REPRESENTATIONS, WARRANTIES AND COVENANTS..........................6
SECTION 4.01 Representations and Warranties of the Originators.................6
(a) Corporate Existence; Compliance with Law...................................6
(b) Executive Offices; Collateral Locations; Corporate or Other Names; FEIN....7
(c) Corporate Power, Authorization, Enforceable Obligations....................7
(d) No Litigation..............................................................7
(e) Solvency...................................................................7
(f) Material Adverse Effect....................................................8
(g) Ownership of Receivables; Liens............................................8
(h) Ventures, Subsidiaries and Affiliates; Outstanding Stock...................8
(i) Taxes......................................................................8
(j) Intellectual Property......................................................9
 (k) Full Disclosure...........................................................9
 (l) Notices to Obligors.......................................................9
 (m) ERISA.....................................................................9
 (n) Brokers..................................................................10
 (o) Margin Regulations.......................................................10
 (p) Nonapplicability of Bulk Sales Laws......................................10
 (q) Securities Act and Investment Company Act Exemptions.....................10
 (r) Government Regulation....................................................10
 (s) Books and Records; Minutes...............................................11
 (t) Deposit and Disbursement Accounts........................................11
 (u) Representations and Warranties in Other Related Documents................11
 (v) Receivables..............................................................11
 (w) Nonavoidability of Transfers.............................................12
 (x)  Years 2000 Problems.....................................................12
 SECTION 4.02 Affirmative Covenants of the Originators........................12
 (a) Offices and Records......................................................12
 (b) Access...................................................................12
 (c) Communication with Accountants...........................................13
 (d) Compliance With Credit and Collection Policies...........................13
 (e) Assignment...............................................................13
 (f) Compliance with Agreements and Applicable Laws...........................14
 (g) Maintenance of Existence and Conduct of Business.........................14
 (h) Notice of Material Event.................................................14
 (i) Use of Proceeds..........................................................15
 (j) Separate Identity........................................................15
 (k) ERISA....................................................................16
 (l) Payment, Performance and Discharge of Obligations........................16
 (m) Deposit of Collections...................................................16
 (n) Accounting Changes.......................................................16
 (o) Adjustments to Sale Price................................................17
 (p) Year 2000 Compliance.....................................................17
 SECTION 4.03 Negative Covenants of the Originators...........................17
 (a) Sale of Assets...........................................................17
 (b) Liens....................................................................17
 (c) Modifications of Receivables or Contracts................................17
 (d) Sale Characterization....................................................17
 (e) Capital Structure and Business...........................................18
 (f) Actions Affecting Rights.................................................18
 (g) ERISA....................................................................18
 (h) Change to Credit and Collection Policies.................................18
 (i) Adverse Tax Consequences.................................................18
 (j) No Proceedings...........................................................18
 (k) Debt 18
 (l) Mergers, Acquisitions, Etc...............................................19
 4.04 Breach of Representations, Warranties or Covenants......................20
ARTICLE V  INDEMNIFICATION....................................................21
SECTION 5.01 Indemnification..................................................21
ARTICLE VI  [Intentionally Omitted]...........................................23
ARTICLE VII  [Intentionally Omitted]..........................................23
ARTICLE VIII  MISCELLANEOUS...................................................23
SECTION 8.01 Notices..........................................................23
SECTION 8.02 No Waiver; Remedies..............................................24
SECTION 8.03 Successors and Assigns...........................................24
SECTION 8.04 Termination; Survival of Obligations.............................24
SECTION 8.05 Complete Agreement; Modification of Agreement....................25
SECTION 8.06 Amendments and Waivers...........................................25
SECTION 8.07 Governing Law; Consent To Jurisdiction;Waiver Of Jury Trial......25
SECTION 8.08 Counterparts.....................................................27
SECTION 8.09 Severability.....................................................27
SECTION 8.10 Section Titles...................................................27
SECTION 8.11 No Setoff........................................................27
SECTION 8.12 Confidentiality..................................................27
SECTION 8.13 Further Assurances..............................................28
SECTION 8.14 Fees and Expenses................................................28





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                                                INDEX OF APPENDICES

Exhibit 2.01(a)   Form of Receivables Assignment
Exhibit 2.03      Form of Parent Agreement
Exhibit 2.05      Form of Levi Strauss Europe Notice and Acknowledgment
Exhibit 3.01(a)   Form of Officer' Certificate to Solvency (Originator)

Schedule  2.01(c) Originator Accounts
Schedule 4.01(b)Executive Offices; Collateral Locations;Corporate or other Names
Schedule  4.01(d) Litigation
Schedule  4.01(h) Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule  4.01(i) Tax Matters
Schedule  4.01(j) Intellectual Property Infringements
Schedule  4.01(m) ERISA Plans
Schedule  4.01(t) Deposit and Disbursement Accounts
Schedule  4.03(b) Existing Liens
Schedule  4.03(k) Existing Debt

Annex X           Definitions
Annex Y            Schedule of Documents


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     THIS  RECEIVABLES  TRANSFER  AGREEMENT  ("Agreement") is entered into as of
September  1,  1999,  by and among  Cone  Mills  Corporation,  a North  Carolina
corporation  ("Cone  Mills"),  any other  Originators  that are or may hereafter
become a party to this Agreement (Cone Mills and such other  Originators  herein
individually  called an "Originator" and collectively  the  "originators"),  and
Cone Receivables II LLC, a North Carolina limited liability company ("CRLLC").
                                   RECITALS

     A.  CRLLC is a  special  purpose  limited  liability  company  owned by the
Independent Member, Cone Mills and one or more Subsidiaries of Cone Mills.
     B. CRLLC has been formed for the sole purpose of  purchasing,  or otherwise
acquiring  by capital  contribution,  and  reselling  to the  Purchaser,  all or
substantially all of the trade receivables originated by each Originator.
     C. Each  Originator  intends to sell,  and CRLLC intends to purchase,  such
trade receivables, from time to time, as described herein.
     D. In addition, Cone Mills or any other Originator that is a Stockholder of
CRLLC  (Cone  Mills  and  any  such   Originator   individually  a  "Stockholder
Originator" and collectively the  "Stockholder  Originators")  may, from time to
time,  contribute  capital to CRLLC in the form of  Contributed  Receivables  or
cash.
                                    AGREEMENT

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
hereinafter  contained,  and for  other  good and  valuable  consideration,  the
receipt and  sufficiency  of which are hereby  acknowledged,  the parties hereto
agree as follows:
                                    ARTICLE I

                          DEFINITIONS AND INTERPRETATION

     SECTION 1.01 Definitions.  Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to them in Annex X.
     SECTION 1.02 Rules of  Construction.  For purposes of this  Agreement,  the
rules of construction set forth in Annex X shall govern.  All Appendices hereto,
or expressly identified to this Agreement,  are incorporated herein by reference
and,  taken  together  with  this  Agreement,  shall  constitute  but  a  single
agreement.

                                                ARTICLE II

                                         TRANSFERS OF RECEIVABLES

                  SECTION 2.01       Agreement to Transfer.

     (a) Receivables Transfers. Subject to the terms and conditions hereof, each
Originator  agrees to sell (without  recourse except to the extent  specifically
provided  herein)  or,  in the  case  of any  Stockholder  Originator,  sell  or
contribute,  to CRLLC on the Closing Date and on each  Business  Day  thereafter
(each such date, a "Transfer Date") all Approved Receivables owned by it on each
such  Transfer  Date,  and CRLLC  agrees to  purchase  or  acquire  as a capital
contribution all such Approved  Receivables on each such Transfer Date. All such
Transfers by any  Originator  shall be evidenced by a certificate  of assignment
from  such  Originator  to CRLLC  substantially  in the form of  Exhibit 2.01(a)
(each,  a  "Receivables   Assignment,"   and   collectively,   the  "Receivables
Assignments"),  and each  Originator  and  CRLLC  shall  execute  and  deliver a
Receivables Assignment on or before the Closing Date.
     (b)  Determination  of Sold  Receivables.  On and as of each Transfer Date,
those Approved Receivables sold to, and purchased by, CRLLC shall consist of (i)
all Approved  Receivables  owned by each  Restricted  Originator  and (ii) those
Approved Receivables owned by each Stockholder  Originator and identified by the
Servicer  for  sale  to  CRLLC  (each  such  Receivable  individually,  a  "Sold
Receivable," and collectively,  the "Sold  Receivables").  The Sale Price of all
Sold Receivables  shall not exceed the amount of cash available to CRLLC for the
payment thereof.
     (c)  Payment of  Purchase  Price.  In  consideration  for each Sale of Sold
Receivables hereunder, CRLLC shall pay to the Originator thereof on the Transfer
Date therefor the Sale Price therefor in Dollars in immediately available funds.
Each payment by CRLLC under this Section 2.01(c) shall be effected by means of a
wire  transfer not later than 12:00 p.m.  (New York time) on the day when due to
the  Originator  Account or Accounts  specified  by Cone Mills to CRLLC for such
payment.
  (d)  Determination  of  Contributed  Receivables.  With respect to any
     Stockholder  Originator and on and as of any Transfer Date,  those Approved
Receivables  contributed to CRLLC as a capital contribution shall consist of all
Approved  Receivables  owned by such Stockholder  Originator as of such Transfer
Date (i) that have not been identified as Sold  Receivables  pursuant to Section
2.01(b) and (ii) with respect to which an Election Notice has not been delivered
to  CRLLC  (each  such  contributed  Receivable  individually,   a  "Contributed
Receivable," and collectively,  the "Contributed Receivables").  Any Stockholder
Originator electing not to contribute  Receivables to CRLLC on any Transfer Date
shall  deliver to CRLLC not later than 5:00 p.m. (New York time) on the Business
Day  immediately  preceding  such Transfer Date a notice of such election  (each
such notice, an "Election Notice").
     (e) Ownership of Transferred  Receivables.  On and after each Transfer Date
and after giving  effect to the  Transfers  to be made on each such date,  CRLLC
shall own the Transferred  Receivables  and no Originator  shall take any action
inconsistent  with such ownership nor shall any  Originator  claim any ownership
interest in such Transferred Receivables.
     (f) Reconstruction of General Trial Balance.  If at any time any Originator
fails to  generate  its  General  Trial  Balance,  CRLLC shall have the right to
reconstruct  such  General  Trial  Balance so that a  determination  of the Sold
Receivables and Contributed Receivables can be made pursuant to Sections 2.01(b)
and  2.01(d).  Each  Originator  agrees to cooperate  with such  reconstruction,
including by delivery to CRLLC, upon CRLLC's request, of copies of all Contracts
and Records.
     (g) Servicing of Receivables.  So long as no Event of Servicer  Termination
shall have occurred and be continuing and no Successor  Servicer has assumed the
responsibilities  and  obligations of the Servicer  pursuant to Section 11.02 of
the  Purchase   Agreement,   the  Servicer  shall   (i) conduct  the  servicing,
administration and collection of the Transferred  Receivables and shall take, or
cause to be taken, all such actions as may be necessary or advisable to service,
administer and collect the Transferred  Receivables,  all in accordance with (A)
the  terms  of the  Purchase  Agreement,  (B) customary  and  prudent  servicing
procedures for trade  receivables of a similar type and (C) all applicable laws,
rules and  regulations,  and (ii) hold  all  Contracts  and other  documents and
incidents  relating to the  Transferred  Receivables in trust for the benefit of
CRLLC,  as the owner  thereof,  and for the sole  purpose  of  facilitating  the
servicing of the  Transferred  Receivables  in accordance  with the terms of the
Purchase Agreement.
     SECTION 2.02 Grant of Security  Interest.  The parties  hereto  intend that
each Transfer shall constitute a purchase and sale or capital  contribution,  as
applicable,  and not a loan.  Notwithstanding anything to the contrary set forth
in this Section 2.02, if a court of competent  jurisdiction  determines that any
transaction  provided for herein  constitutes a loan and not a purchase and sale
or capital contribution, as applicable, then the parties hereto intend that this
Agreement shall  constitute a security  agreement under  applicable law and that
each Originator shall be deemed to have granted, and each Originator does hereby
grant, to CRLLC a first priority Lien in and to all of such Originator's  right,
title and interest in, to and under all Transferred Receivables.
     SECTION 2.03 Parent Agreement;  Addition of Originators.  Cone Mills hereby
undertakes  and agrees,  to and for the  benefit of CRLLC,  to cause the due and
punctual  performance  and  observance by each Selling  Subsidiary of all of the
terms,  conditions,  agreements  and  undertakings  on the part of such  Selling
Subsidiary  to be  performed  or  observed  by it  hereunder  or under any other
Related Document and, prior to or concurrently with the first Selling Subsidiary
becoming  an  Originator,  shall  execute  and  deliver  to CRLLC  an  agreement
substantially in the form of Exhibit 2.03 (the "Parent Agreement") to more fully
evidence such undertaking.  Any Subsidiary or Affiliate of Cone Mills may become
an Originator  hereunder upon  satisfaction of the Rating Agency  Condition with
respect  thereto.  Cone Mills and any such  Subsidiary  or Affiliate  shall give
prior written  notice of any such  proposed  addition to CRLLC and the Operating
Agent. Upon provision of such notice,  any addition of a Subsidiary or Affiliate
of Cone Mills as an Originator  pursuant to this section shall become  effective
on the first  Business Day  following  the date on which  (a) the  Rating Agency
Condition has been satisfied with respect  thereto,  (b) such new Originator and
the parties hereto shall have executed and delivered,  at such new  Originator's
sole cost and expense, such further agreements, instruments and other documents,
each in form and substance  satisfactory to CRLLC and the Operating Agent,  that
CRLLC or the Operating Agent reasonably  determines are necessary or appropriate
to effect such addition,  and (c) CRLLC and the Operating Agent shall have given
their prior written  consent to any such proposed  addition.  From and after the
effective date of any such addition,  any reference to an  "Originator"  in this
Agreement  shall  include any  Subsidiary or Affiliate of Cone Mills added as an
Originator pursuant to this Section 2.03.
                  SECTION 2.04       Termination of Status as an Originator.
     (a) At any  time  when  two or more  Originators  are  parties  hereto,  an
Originator may terminate its  obligations as an Originator  hereunder (each such
Originator, a "Terminating Originator") if:
     (i) such  Terminating  Originator  shall have given CRLLC and the Operating
Agent not less than 60 days' prior written notice of its intention to terminate;
     (ii) (A) an Authorized  Officer of the  Terminating  Originator  shall have
certified to CRLLC, and (B) an Authorized  Officer of CRLLC shall have certified
to the Operating  Agent,  that the termination by the Terminating  Originator of
its status as an Originator will not have a Material Adverse Effect;
     (iii) both immediately before and after giving effect to the termination by
the Terminating Originator,  no Incipient Termination Event or Termination Event
shall have occurred and be  continuing or shall  reasonably be expected to occur
as a result of such termination;
     (iv) both immediately  before and after giving effect to the termination by
the Terminating Originator,  no Purchase Excess shall exist; and
     (v) CRLLC shall have  consented,  in  writing,  to the  termination  of the
obligations  of such  Terminating  Originator  hereunder  and  delivered  to the
Operating  Agent  the  Officer's  Certificate  of  such  Terminating  Originator
identified in clause (a)(ii)(A) above.

     Any termination by a Terminating  Originator  shall become effective on the
first Business Day following the day on which the requirements of clauses (a)(i)
through  (a)(v) above shall have been satisfied (or such later date specified in
any notice or  certificate  referred to in such clauses).  Any  termination by a
Terminating  Originator  shall terminate its rights and  obligations  hereunder;
provided,   that  any  such  termination  shall  not  relieve  such  Terminating
Originator of obligations that relate to Transferred  Receivables originated by,
or obligations of, such  Terminating  Originator  prior to the effective date of
such  termination,  including  any  and  all  obligations  of  such  Terminating
Originator to CRLLC under Sections 4.02(o), 4.04, 5.01 and 8.14.
     (b) An  Originator's  right and obligation to sell its Receivables to CRLLC
shall  terminate  immediately  if such  Originator  ceases to be a Subsidiary or
Affiliate of Cone Mills;  provided,  that any such termination shall not relieve
such Originator of obligations that relate to Transferred Receivables originated
by, or  obligations  of, such  Originator  prior to the  effective  date of such
termination, including any and all obligations of such Originator to CRLLC under
Sections 4.02(o), 4.04, 5.01 and 8.14.
     SECTION 2.05 Transfers of Levi Strauss Europe Receivables. Receivables owed
by Levi Strauss Europe shall not be transferred  hereunder  unless and until the
Foreign Receivable  Election Date has occurred and the owner of such Receivables
(if not already an  Originator)  becomes an Originator  pursuant to Section 2.03
hereof. In addition,  prior to any Receivable owed by Levi Strauss Europe to any
Originator becoming an Eligible Foreign  Receivable,  such Originator shall send
to Levi Strauss Europe a one-time written notice of such  Originator's  transfer
of such  Receivable to CRLLC and of CRLLC's  re-transfer  of such  Receivable to
Purchaser and such Originator shall obtain Levi Strauss' written  acknowledgment
of its receipt of such notice.  Each such notice shall be in the form of Exhibit
2.05 (properly  completed).  No later than the fifteenth  (15th) Business Day of
each fiscal month, each such Originator shall provide the Operating Agent with a
detailed  report  of all  Receivables  owed by Levi  Strauss  Europe  that  were
outstanding as of the end of the immediately  preceding  fiscal month (including
invoice numbers).

                                                    ARTICLE III

                                               CONDITIONS PRECEDENT

     SECTION 3.01 Conditions to Initial Transfer. The initial Transfer hereunder
shall be subject to satisfaction of each of the following  conditions  precedent
(any one or more of which  may be  waived  in  writing  by each of CRLLC and the
Operating Agent):
     (a) Transfer  Agreement;  Other  Documents.  This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, each  Originator  and
CRLLC, and CRLLC shall have received such documents, instruments, agreements and
legal  opinions  as CRLLC  shall  request in  connection  with the  transactions
contemplated by this Agreement,  including all those  identified in the Schedule
of Documents, each in form and substance satisfactory to CRLLC.
     (b)   Governmental   and  Other   Approvals.   CRLLC  shall  have  received
(i)satisfactory  evidence  that the  Originators  have  obtained  all  required
consents and approvals of all Persons,  including the Credit Facility Lender and
all  requisite  Governmental  Authorities,   to  the  execution,   delivery  and
performance  of  this  Agreement  and  the  other  Related   Documents  and  the
consummation  of the  transactions  contemplated  hereby and  thereby or (ii)an
Officer's Certificate from each Originator in form and substance satisfactory to
CRLLC affirming that no such consents or approvals are required.
     (c) Compliance  with Laws.  Each  Originator  shall be in compliance in all
material respects with all applicable foreign, federal, state and local laws and
regulations, including those specifically referenced in Section 4.02(f).
     (d) Purchase Agreement  Conditions.  Each of those conditions precedent set
forth in Article III of the  Purchase  Agreement  shall have been  satisfied  or
waived in writing as provided therein.
     SECTION  3.02  Conditions  to  all  Transfers.   Each  Transfer   hereunder
(including  the  initial  Transfer)  shall be  subject  to  satisfaction  of the
following further conditions precedent as of the Transfer Date therefor:
     (a) the representations and warranties of each Originator  contained herein
or in any other Related  Document  shall be true and correct as of such Transfer
Date,  both  before  and  after  giving  effect  to  such  Transfer  and  to the
application  of the Sale  Price  therefor,  except to the  extent  that any such
representation  or warranty  expressly relates to an earlier date and except for
changes therein expressly permitted by this Agreement;
     (b) no Incipient Termination Event or Termination Event shall have occurred
and be  continuing  or would result after giving  effect to such Transfer or the
application of the Sale Price therefor;
     (c) each  Originator  shall be in compliance with each of its covenants and
other agreements set forth herein; and
     (d) each Originator shall have taken such other action,  including delivery
of approvals,  consents,  opinions,  documents and instruments to CRLLC as CRLLC
may request.
     The  contribution  by any Originator of any  Contributed  Receivable or the
acceptance by any  Originator of the Sale Price for any Sold  Receivables on any
Transfer Date shall be deemed to  constitute,  as of any such  Transfer  Date, a
representation  and  warranty by such  Originator  that the  conditions  in this
Section 3.02 have been satisfied.
                                                    ARTICLE IV

                                     REPRESENTATIONS, WARRANTIES AND COVENANTS

     SECTION 4.01  Representations and Warranties of the Originators.  To induce
CRLLC  to  purchase  the  Sold   Receivables  and  to  acquire  the  Contributed
Receivables,  each Originator makes the following representations and warranties
to CRLLC, each and all of which shall survive the execution and delivery of this
Agreement.
     (a) Corporate  Existence;  Compliance  with Law. Each  Originator  (i) is a
corporation or limited  liability  company duly  organized and validly  existing
under the laws of its jurisdiction of  incorporation  or  organization;  (ii) is
duly  qualified  to  conduct  business  in each  other  jurisdiction  where  its
ownership  or lease of  property or the conduct of its  business  requires  such
qualification;  (iii) has the  requisite  corporate or other power and authority
and the legal right to own, pledge,  mortgage or otherwise  encumber and operate
its  properties,  to lease the property it operates under lease,  and to conduct
its  business as now,  heretofore  and  proposed to be  conducted;  (iv) has all
licenses,  permits,  consents or approvals  from or by, and has made all filings
with,  and has  given  all  notices  to,  all  Governmental  Authorities  having
jurisdiction, to the extent required for such ownership,  operation and conduct;
(v) is in compliance with its charter and its bylaws or operating  agreement (as
the case may be); and (vi) subject to specific  representations set forth herein
regarding ERISA,  Environmental  Laws, tax laws and other laws, is in compliance
with all  applicable  provisions  of law,  except  where the  failure to comply,
individually  or in the  aggregate,  could not  reasonably be expected to have a
Material Adverse Effect.
     (b)  Executive  Offices;  Collateral  Locations;  Corporate or Other Names;
FEIN. As of the Closing Date, the current  location of each  Originator's  chief
executive office,  principal place of business,  and other offices are set forth
in Schedule  4.01(b) and none of such  locations have changed within the past 12
months. During the prior five years (or such shorter time as such Originator has
been in existence),  except as set forth in Schedule 4.01(b),  no Originator has
been known as or used any  corporate,  fictitious  or trade name.  In  addition,
Schedule  4.01(b)  lists  the  federal  employer  identification  number of each
Originator.
     (c) Corporate Power, Authorization, Enforceable Obligations. The execution,
delivery and  performance  by each  Originator  of this  Agreement and the other
Related  Documents to which it is a party and the creation of all Liens provided
for herein and therein  and,  solely with  respect to clause  (vii)  below,  the
exercise by CRLLC, the Purchaser, the Operating Agent or the Collateral Agent of
any of its rights  and  remedies  under any  Related  Document  to which it is a
party:  (i)are  within such Person's  corporate or other power;  (ii) have been
duly authorized by all necessary or proper  corporate or other action;  (iii) do
not  contravene  any  provision of such  Person's  charter,  bylaws or operating
agreement (as the case may be);  (iv)do not violate any law or  regulation,  or
any order or decree of any court or Governmental Authority;  (v) do not conflict
with or result in the breach or  termination  of,  constitute a default under or
accelerate  or permit  the  acceleration  of any  performance  required  by, any
indenture,  mortgage,  deed of trust,  lease,  agreement or other  instrument to
which such Person is a party or by which such  Person or any of its  property is
bound;  (vi)do not result in the creation or  imposition  of any Adverse  Claim
upon any of the property of such Person; and (vii)do not require the consent or
approval  of any  Governmental  Authority  or any  other  Person,  except  those
referred to in Section 3.01(b), all of which will have been duly obtained,  made
or complied  with prior to the Closing  Date.  On or prior to the Closing  Date,
each of the Related  Documents  shall have been duly  executed and  delivered by
each  Originator  that is a party thereto and each such Related  Document  shall
then  constitute  a legal,  valid  and  binding  obligation  of such  Originator
enforceable against it in accordance with its terms.
     (d) No Litigation. No Litigation is now pending or, to the knowledge of any
Originator,   threatened   against  any  Originator  that   (i)challenges   any
Originator's  right or power to enter  into or  perform  any of its  obligations
under  the  Related  Documents  to  which  it is a  party,  or the  validity  or
enforceability  of any Related  Document or any action  taken  thereunder,  (ii)
seeks to prevent  the  Transfer,  Purchase  or pledge of any  Receivable  or the
consummation of any of the transactions contemplated under this Agreement or the
other  Related  Documents  or (iii)has a  reasonable  risk of being  determined
adversely to any Originator  and that, if so  determined,  could have a Material
Adverse Effect.  Except as set forth on Schedule 4.01(d), as of the Closing Date
there is no  Litigation  pending or  threatened  that seeks damages in excess of
$500,000 or injunctive  relief against,  or alleges criminal  misconduct by, any
Originator.
     (e) Solvency.  Both before and after giving effect to (i) the  transactions
contemplated  by this  Agreement  and the other  Related  Documents and (ii) the
payment and accrual of all  transaction  costs in connection with the foregoing,
each Originator is and will be Solvent.
     (f) Material Adverse Effect.  Between January 3, 1999 and the Closing Date,
(i)no  Originator has incurred any  obligations,  contingent or  non-contingent
liabilities,  liabilities  for charges,  long-term  leases or unusual forward or
long-term  commitments  that,  alone or in the  aggregate,  could  reasonably be
expected to have a Material  Adverse Effect,  (ii) no  contract,  lease or other
agreement or  instrument  has been entered into by any  Originator or has become
binding upon any Originator's assets and no law or regulation  applicable to any
Originator has been adopted that has had or could reasonably be expected to have
a Material  Adverse  Effect on such  Originator,  and (iii) no  Originator is in
default and no third party is in default under any material  contract,  lease or
other  agreement or instrument to which any  Originator is a party that alone or
in the aggregate could reasonably be expected to have a Material Adverse Effect.
Between January 3, 1999 and the Closing Date no event has occurred that alone or
together  with other  events  could  reasonably  be  expected to have a Material
Adverse Effect.
     (g) Ownership of Receivables;  Liens.  Each Originator owns each Receivable
originated  by it free and clear of any  Adverse  Claim  (other  than  Permitted
Encumbrances)  and, from and after each Transfer Date,  CRLLC will acquire valid
and properly  perfected  title to and the sole record and  beneficial  ownership
interest in each Transferred  Receivable purchased or otherwise acquired on such
date, free and clear of any Adverse Claim or restrictions on transferability. As
of the Closing Date,  none of the  properties  and assets of any  Originator are
subject to any Adverse Claims other than Permitted  Encumbrances,  and there are
no facts, circumstances or conditions known to any Originator that may result in
any Adverse Claims (including Adverse Claims arising under  Environmental  Laws)
other than Permitted Encumbrances. Each Originator has received all assignments,
bills of sale and other documents, and has duly effected all recordings, filings
and other actions necessary to establish,  protect and perfect such Originator's
right,  title and interest in and to the  Receivables  originated  by it and its
other properties and assets.
     (h) Ventures, Subsidiaries and Affiliates; Outstanding Stock. Except as set
forth in Schedule 4.01(h), no Originator has any Subsidiaries, is engaged in any
joint venture or  partnership  with any other Person,  or is an Affiliate of any
other Person.  All of the issued and outstanding  Stock of each Originator which
is a Subsidiary of Cone Mills is owned by Cone Mills in the amounts set forth on
Schedule  4.01(h).  Except  as set  forth  on  Schedule  4.01(h),  there  are no
outstanding  rights  to  purchase,   options,  warrants  or  similar  rights  or
agreements  pursuant to which any  Originator  may be  required to issue,  sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries.
     (i) Taxes. All tax returns,  reports and statements,  including information
returns,  required by any  Governmental  Authority to be filed by any Originator
have been filed with the appropriate Governmental Authority and all charges have
been paid prior to the date on which any fine, penalty,  interest or late charge
may be  added  thereto  for  nonpayment  thereof  (or any  such  fine,  penalty,
interest, late charge or loss has been paid), excluding charges or other amounts
being contested in accordance with Section 4.02(l).  Proper and accurate amounts
have been  withheld by each  Originator  from its  respective  employees for all
periods in full and complete  compliance  with all  applicable  federal,  state,
local  and  foreign  laws and such  withholdings  have been  timely  paid to the
respective  Governmental  Authorities.  Schedule  4.01(i)  sets  forth as of the
Closing Date (i) those taxable years for which any  Originator's tax returns are
currently  being  audited  by  the  IRS  or any  other  applicable  Governmental
Authority and (ii) any assessments or threatened  assessments in connection with
such audit or otherwise currently  outstanding.  Except as described on Schedule
4.01(i),  no  Originator  has  executed  or  filed  with  the  IRS or any  other
Governmental Authority any agreement or other document extending,  or having the
effect of  extending,  the period for  assessment  or collection of any charges.
None of the Originators  and their  respective  predecessors  are liable for any
charges:  (A) under  any agreement  (including  any tax sharing  agreements)  or
(B) to  the best of each  Originator's  knowledge,  as a  transferee.  As of the
Closing Date, no Originator  has agreed or been requested to make any adjustment
under  IRC  Section  481(a),  by  reason  of a change  in  accounting  method or
otherwise, that would have a Material Adverse Effect.
     (j) Intellectual  Property. As of the Closing Date, each Originator owns or
has rights to use all intellectual property necessary to continue to conduct its
business as now or heretofore conducted by it or proposed to be conducted by it.
Each  Originator  conducts its business and affairs  without  infringement of or
interference with any intellectual  property of any other Person.  Except as set
forth in Schedule  4.01(j),  no Originator is aware of any infringement or claim
of infringement by others of any intellectual property of any Originator.
     (k) Full Disclosure. No information contained in this Agreement, any of the
other Related Documents,  or any written statement  furnished by or on behalf of
any Originator to CRLLC,  the Purchaser,  the Operating  Agent or the Collateral
Agent  pursuant  to the  terms of this  Agreement  or any of the  other  Related
Documents (other than  Projections)  contains any untrue statement of a material
fact or  omits or will  omit to  state a  material  fact  necessary  to make the
statements   contained  herein  or  therein  not  misleading  in  light  of  the
circumstances  under which they were made.  The  Projections  are based upon the
estimates and assumptions stated therein, all of which Cone Mills believes to be
reasonable  and fair in light of current  conditions  and current facts known to
Cone Mills and,  as of the  Closing  Date,  reflect  Cone  Mills' good faith and
reasonable  estimate of the future  financial  condition and performance of Cone
Mills and its Subsidiaries and of the other  information  projected  therein for
the period covered thereby.
     (l) Notices to  Obligors.  Each  Originator  has  directed  all Obligors of
Transferred  Receivables  originated by it to remit all payments with respect to
such  Receivables for deposit in a Lockbox or Lockbox  Account.  (m) ERISA.  (i)
Schedule  4.01(m) lists all Plans and  separately  identifies all Pension Plans,
including all Title IV Plans,  Multi-employer  Plans,  ESOPs and Welfare  Plans,
including all Retiree Welfare Plans.  Each Qualified Plan has been determined by
the IRS to qualify under Section 401 of the IRC, the trusts  created  thereunder
have been  determined to be exempt from tax under the  provisions of Section 501
of the  IRC,  and  nothing  has  occurred  that  would  cause  the  loss of such
qualification  or  tax-exempt  status.  Each  Plan  is in  compliance  with  the
applicable  provisions of ERISA and the IRC,  including the timely filing of all
reports  required under the IRC or ERISA.  No Originator or ERISA  Affiliate has
failed to make any  contribution  or pay any  amount due as  required  by either
Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan. No
Originator  or ERISA  Affiliate has engaged in a  "prohibited  transaction,"  as
defined  in  Section  4975 of the IRC,  in  connection  with any Plan that would
subject any Originator to a material tax on prohibited  transactions  imposed by
Section 4975 of the IRC.  (ii) Except as set forth in Schedule  4.01(m):  (A) no
Title IV Plan has any Unfunded  Pension  Liability;  (B) no ERISA Event or event
described  in Section  4062(e)  of ERISA  with  respect to any Title IV Plan has
occurred or is reasonably expected to occur; (C) there are no pending or, to the
knowledge of any Originator,  threatened  claims (other than claims for benefits
in the normal course),  sanctions,  actions or lawsuits,  asserted or instituted
against  any Plan or any  Person as  fiduciary  or  sponsor of any Plan which if
adversely determined could have a Material Adverse Effect;  (D) no Originator or
ERISA  Affiliate has incurred or reasonably  expects to incur any liability as a
result  of  a  complete  or  partial  withdrawal  from  a  Multi-employer  Plan;
(E) within  the  last  five  years  no  Title  IV  Plan  with  Unfunded  Pension
Liabilities has been transferred  outside of the "controlled  group" (within the
meaning of Section  4001(a)(14) of ERISA) of any Originator or ERISA  Affiliate;
(F) Stock  of all  Originators  and  their  ERISA  Affiliates  makes  up, in the
aggregate,  no more than 10% of the assets of any Plan, measured on the basis of
fair  market  value  as of the  last  valuation  date of any  Plan;  and  (G) no
liability  under any Title IV Plan has been  satisfied  with the  purchase  of a
contract from an insurance company that is not rated AAA by S&P or an equivalent
rating by another nationally recognized rating agency. (n) Brokers. No broker or
finder acting on behalf of any Originator was employed or utilized in connection
with  this  Agreement  or  the  other  Related  Documents  or  the  transactions
contemplated  hereby or thereby  and no  Originator  has any  obligation  to any
Person in respect of any finder's or brokerage fees in connection therewith. (o)
Margin Regulations. No Originator is engaged, nor will it engage, principally or
as one of its important activities,  in the business of extending credit for the
purpose of  "purchasing"  or "carrying" any "margin  security" as such terms are
defined in  Regulation  U of the Federal  Reserve  Board as now and from time to
time  hereafter in effect (such  securities  being referred to herein as "Margin
Stock").  No Originator owns any Margin Stock, and no portion of the proceeds of
the Sale  Price  for any Sale  will be used,  directly  or  indirectly,  for the
purpose of purchasing or carrying any Margin Stock,  for the purpose of reducing
or  retiring  any Debt that was  originally  incurred  to  purchase or carry any
Margin  Stock or for any other  purpose  that  might  cause any  portion of such
proceeds to be considered a "purpose  credit"  within the meaning of Regulations
T, U or X of the Federal  Reserve Board. No Originator will take or permit to be
taken any action that might cause any Related Document to violate any regulation
of the Federal  Reserve  Board.  (p)  Nonapplicability  of Bulk Sales  Laws.  No
transaction contemplated by this Agreement or any of the other Related Documents
requires  compliance  with any bulk sales act or similar law. (q) Securities Act
and Investment Company Act Exemptions.  Each purchase of Transferred Receivables
under this Agreement  will  constitute  (i) a "current  transaction"  within the
meaning of Section  3(a)(3) of the  Securities  Act and (ii) a purchase or other
acquisition of notes,  drafts,  acceptances,  open accounts  receivable or other
obligations  representing  part  or all  of  the  sales  price  of  merchandise,
insurance or services  within the meaning of Section  3(c)(5) of the  Investment
Company Act. (r) Government Regulation. No Originator is an "investment company"
or an "affiliated  person" of, or "promoter" or "principal  underwriter" for, an
"investment  company," as such terms are defined in the Investment  Company Act.
No Originator is subject to regulation  under the Public Utility Holding Company
Act of 1935,  the Federal  Power Act, or any other federal or state statute that
restricts  or limits its  ability to incur  Debt or to perform  its  obligations
hereunder.  The purchase or acquisition of the Transferred  Receivables by CRLLC
hereunder,  the  application of the Sale Price therefor and the  consummation of
the transactions  contemplated by this Agreement and the other Related Documents
will not violate any  provision of any such statute or any rule,  regulation  or
order issued by the Securities and Exchange  Commission.  (s) Books and Records;
Minutes.  The bylaws or the  certificate  or articles of  incorporation  of each
Originator  require  it  to  maintain  (i) books  and  records  of  account  and
(ii) minutes of the meetings and other proceedings of its Stockholders and board
of directors. (t) Deposit and Disbursement Accounts.  Schedule 4.01(t) lists all
banks  and other  financial  institutions  at which  each  Originator  maintains
deposit or other bank  accounts as of the Closing  Date,  including  any Lockbox
Accounts, and such schedule correctly identifies the name, address and telephone
number of each depository,  the name in which the account is held, a description
of the purpose of the account,  and the complete  account number  therefor.  (u)
Representations  and  Warranties  in  Other  Related  Documents.   Each  of  the
representations  and  warranties  of each  Originator  contained  in the Related
Documents  (other  than this  Agreement)  is true and  correct  in all  material
respects and such Originator hereby makes each such  representation and warranty
to,  and  for the  benefit  of,  the  Purchaser,  the  Operating  Agent  and the
Collateral Agent as if the same were set forth in full herein.  (v) Receivables.
With respect to each Transferred Receivable designated as an Eligible Receivable
in any Investment  Base  Certificate  delivered on or after the Transfer Date of
such Transferred  Receivable:  (i) such Receivable satisfies the criteria for an
Eligible  Receivable;  (ii) prior to its Transfer to CRLLC such  Receivable  was
owned by the Originator  thereof free and clear of any Adverse Claim (other than
Permitted  Encumbrances),  and such  Originator  had the full  right,  power and
authority to sell, contribute,  assign, transfer and pledge its interest therein
as contemplated  under this Agreement and the other Related  Documents and, upon
such Transfer,  CRLLC will acquire valid and properly perfected title to and the
sole record and beneficial ownership interest in such Receivable, free and clear
of any Adverse Claim and,  following such Transfer,  such Receivable will not be
subject to any  Adverse  Claim as a result of any action or inaction on the part
of such Originator; (iii) the Transfer of each such Receivable by the Originator
thereof pursuant to the Receivables  Assignment  executed by such Originator and
this Agreement constitutes, as applicable, a valid sale, contribution, transfer,
assignment,  setover and conveyance to CRLLC of all right, title and interest of
such  Originator  in and to such  Receivable;  and (iv) the  Originator  of such
Receivable  has no knowledge of any fact  (including any defaults by the Obligor
thereunder on any other Receivable) that would cause it or should have caused it
to expect that any payments on such Receivable will not be paid in full when due
or  to  expect  any  other  Material  Adverse  Effect.  (w)  Nonavoidability  of
Transfers.  Each Originator  shall,  as applicable,  (i) have  transferred  each
Contributed  Receivable  originated  by it as a  contribution  to the capital of
CRLLC  and (ii) (A) have sold each  Sold  Receivable  originated  by it for cash
consideration  and (B) have  transferred  any Eligible  Receivables  pursuant to
clause (b) of Section  4.04,  in each case in an amount  that  constitutes  fair
consideration  and reasonably  equivalent  value  therefor.  Each Sale of a Sold
Receivable  effected pursuant to the terms of this Agreement shall not have been
made for or on account of an antecedent  debt owed by the Originator  thereof to
CRLLC and no such Sale is or may be avoidable or subject to avoidance  under any
bankruptcy laws, rules or regulations.  (x) Year 2000 Problems.  Each Originator
has  completed a Year 2000  Assessment  and has prepared a Year 2000  Corrective
Plan, and on or before October 31, 1999 each Originator shall have completed all
Year 2000 Corrective Actions and Year 2000 Implementation Testing and shall have
eliminated all Year 2000 Problems except where the failure to eliminate the same
could  not  reasonably  be  expected  to have a  Material  Adverse  Effect.  The
representations and warranties  described in this Section 4.01 shall survive the
Transfer of the Transferred  Receivables to CRLLC, any subsequent  assignment of
the Transferred  Receivables by CRLLC, and the termination of this Agreement and
the other Related Documents and shall continue until the indefeasible payment in
full of all Transferred  Receivables.  SECTION 4.02 Affirmative Covenants of the
Originators.  Each  Originator  covenants  and  agrees  that,  unless  otherwise
consented to by CRLLC and the Operating  Agent,  from and after the Closing Date
and until the Termination  Date: (a) Offices and Records.  Each Originator shall
maintain  its  principal  place of business and chief  executive  office and the
office at which it keeps its Records at the  respective  locations  specified in
Schedule  4.01(b) or, upon 30 days' prior written notice to CRLLC, at such other
location in a jurisdiction  where all action  requested by CRLLC, the Purchaser,
the Operating Agent or the Collateral Agent pursuant to Section 8.13  shall have
been taken with respect to the Transferred Receivables. Each Originator shall at
its own cost and  expense,  for not less than three years from the date on which
each Transferred Receivable was originated,  or for such longer period as may be
required by law,  maintain  adequate  Records with  respect to such  Transferred
Receivable,  including  records of all payments  received,  credits  granted and
merchandise  returned with respect thereto.  (b) Access.  Each Originator shall,
during normal business  hours,  from time to time upon five Business Day's prior
notice and as frequently as CRLLC or the Servicer  determines to be appropriate:
(i) provide  CRLLC  or the  Servicer  and  any  of  their  respective  officers,
employees  and agents  access to its  properties  (including  properties of such
Originator  utilized in connection with the collection,  processing or servicing
of the Transferred Receivables),  facilities,  advisors and employees (including
officers) of each Originator, (ii) permit CRLLC or the Servicer and any of their
respective officers,  employees and agents, to inspect,  audit and make extracts
from such Originator's  books and records,  including all Records  maintained by
such  Originator,  (iii) permit  CRLLC  or the  Servicer  and  their  respective
officers,  employees and agents, to inspect, review and evaluate the Transferred
Receivables of any  Originator,  and (iv) permit CRLLC or the Servicer and their
respective  officers,  employees and agents to discuss  matters  relating to the
Transferred Receivables or such Originator's performance under this Agreement or
the affairs,  finances and accounts of such Originator with any of its officers,
directors,  employees,  representatives  or agents  (in each  case,  with  those
Persons  having  knowledge of such matters) and with its  independent  certified
public accountants. If (A) an Incipient Termination Event or a Termination Event
shall have  occurred and be  continuing,  or (B) the  Operating  Agent,  in good
faith,  believes that an Incipient  Termination  Event or a Termination Event is
imminent  or deems  the  Purchaser's  rights  or  interests  in the  Transferred
Receivables  or the  Seller  Collateral  insecure,  each such  Originator  shall
provide  such  access  to  CRLLC,  the  Servicer,  the  Operating  Agent  or the
Collateral  Agent and their  respective  officers,  employees  and agents at all
times and without  advance  notice and shall provide  CRLLC,  the Servicer,  the
Operating  Agent or the  Collateral  Agent  with  access  to its  suppliers  and
customers.  Each Originator shall make available to CRLLC or the Servicer,  and,
if an Incipient Termination Event or a Termination Event shall have occurred and
be continuing, or the Operating Agent, in good faith, believes that an Incipient
Termination  Event or a Termination  Event is imminent or deems the  Purchaser's
rights or  interests in the  Transferred  Receivables  or the Seller  Collateral
insecure,  the Operating  Agent or the Collateral  Agent,  and their  respective
counsel, as quickly as is possible under the circumstances,  originals or copies
of all books and records, including Records maintained by such Originator,  that
CRLLC, the Servicer, the Operating Agent or the Collateral Agent, as applicable,
may request.  Each Originator shall deliver any document or instrument necessary
for CRLLC,  the Servicer,  the Operating Agent or the Collateral  Agent, as they
may from time to time  request,  to obtain  records  from any service  bureau or
other Person that  maintains  records for such  Originator,  and shall  maintain
duplicate records or supporting documentation on media, including computer tapes
and discs owned by such Originator.  (c) Communication  with  Accountants.  Each
Originator  authorizes  CRLLC,  the  Servicer,   the  Operating  Agent  and  the
Collateral Agent to communicate  directly with its independent  certified public
accountants, and authorizes and shall instruct those accountants and advisors to
disclose and make available to CRLLC, the Servicer,  the Operating Agent and the
Collateral Agent any and all financial statements and other supporting financial
documents,  schedules  and  information  relating to any  Originator  (including
copies of any issued management letters) with respect to the business, financial
condition and other affairs of any Originator.  Each Originator agrees to render
to CRLLC,  the Servicer,  the Operating  Agent and the Collateral  Agent at such
Originator's own cost and expense,  such clerical and other assistance as may be
reasonably  requested with regard to the  foregoing.  If any  Termination  Event
shall have occurred and be  continuing,  each  Originator  shall,  promptly upon
request  therefor,  assist CRLLC in delivering  to the  Operating  Agent and the
Collateral  Agent Records  reflecting  activity through the close of business on
the Business Day immediately  preceding the date of such request. (d) Compliance
With  Credit  and  Collection  Policies.  Each  Originator  shall  comply in all
material  respects with the Credit and  Collection  Policies  applicable to each
Transferred  Receivable and the Contracts  therefor,  and with the terms of such
Receivables and Contracts.  (e) Assignment.  Each Originator agrees that, to the
extent  permitted  under the  Purchase  Agreement,  CRLLC may  assign all of its
right, title and interest in, to and under the Transferred  Receivables and this
Agreement,  including  its right to exercise  the  remedies set forth in Section
4.04.  Each  Originator  agrees  that,  upon any such  assignment,  the assignee
thereof may enforce  directly,  without joinder of CRLLC, all of the obligations
of such Originator  hereunder,  including any obligations of such Originator set
forth in Sections  4.02(o),  4.04, 5.01 and 8.14. (f) Compliance with Agreements
and Applicable Laws. Each Originator shall perform each of its obligations under
this  Agreement  and the other  Related  Documents  and comply with all federal,
state and  local  laws and  regulations  applicable  to it and the  Receivables,
including those relating to truth in lending,  retail  installment  sales,  fair
credit  billing,  fair credit  reporting,  equal credit  opportunity,  fair debt
collection  practices,  privacy,  licensing,   securities,  margin  regulations,
taxation,  ERISA and labor  matters  and  Environmental  Laws and  Environmental
Permits, except to the extent that the failure to so comply,  individually or in
the  aggregate,  could not  reasonably  be expected  to have a Material  Adverse
Effect.  (g)  Maintenance of Existence and Conduct of Business.  Each Originator
shall:  (i) do or cause to be done all things  necessary to preserve and keep in
full force and effect its  corporate  existence  and its rights and  franchises;
(ii)  continue to conduct its  business  substantially  as now  conducted  or as
otherwise   permitted  hereunder  and  in  accordance  with  the  terms  of  its
certificate  or  articles  of  incorporation  and  bylaws;  (iii)  at all  times
maintain,  preserve and protect all of its assets and properties  used or useful
in the conduct of its business,  including all licenses,  permits,  charters and
registrations,  and keep the same in good repair, working order and condition in
all material  respects  (taking into  consideration  ordinary wear and tear) and
from  time to time  make,  or cause to be made,  all  necessary  or  appropriate
repairs,   replacements  and  improvements   thereto  consistent  with  industry
practices;  and (iv) transact business only in such corporate and trade names as
are set forth in Schedule 4.01(b). (h) Notice of Material Event. Each Originator
shall  promptly  inform  CRLLC  in  writing  of  the  occurrence  of  any of the
following,  in each case setting forth the details  thereof and what action,  if
any, such Originator  proposes to take with respect thereto:  (i) any Litigation
commenced  or  threatened  against  any  Originator  or  with  respect  to or in
connection with all or any portion of the Transferred Receivables that (A) seeks
damages or  penalties in an  uninsured  amount in excess of $500,000,  (B) seeks
injunctive  relief,   (C) is  asserted  or  instituted  against  any  Plan,  its
fiduciaries  or its assets or  against  any  Originator  or ERISA  Affiliate  in
connection with any Plan, (D) alleges criminal misconduct by any Originator,  or
(E) would,  if determined  adversely,  have a Material Adverse Effect;  (ii) the
commencement  of a case or  proceeding  by or against any  Originator  seeking a
decree or order in respect of any Originator  (A) under the  Bankruptcy  Code or
any other applicable federal,  state or foreign bankruptcy or other similar law,
(B) appointing  a  custodian,   receiver,   liquidator,   assignee,  trustee  or
sequestrator  (or similar  official) for any  Originator or for any  substantial
part of such Person's  assets,  or (C) ordering the winding-up or liquidation of
the  affairs  of any  Originator;  (iii) the  receipt  of  notice  that (A) such
Originator  is being  placed  under  regulatory  supervision,  (B) any  license,
permit,  charter,  registration  or approval  necessary  for the conduct of such
Originator's  business is to be, or may be,  suspended  or revoked,  or (C) such
Originator is to cease and desist any practice,  procedure or policy employed by
such  Originator  in the conduct of its  business if such  cessation  may have a
Material Adverse Effect; (iv) (A) any Adverse Claim made or asserted against any
of  the   Transferred   Receivables   of  which  it  becomes  aware  or  (B) any
determination that a Transferred Receivable designated as an Eligible Receivable
in an Investment Base Certificate or otherwise was not an Eligible Receivable at
the time of such designation;  or (v) any other event, circumstance or condition
that has had or could  reasonably be expected to have a Material Adverse Effect.
(i) Use of  Proceeds.  Each  Originator  shall  utilize the proceeds of the Sale
Price  obtained  by it for each Sale made by it  hereunder  solely  for  general
corporate  purposes  (including the retirement or repayment of third party debt)
and to pay any related  expenses payable by such Originator under this Agreement
and the other Related Documents in connection with the transactions contemplated
hereby and thereby and for no other  purpose.  (j) Separate  Identity.  (i) Each
Originator shall maintain  corporate  records and books of account separate from
those of CRLLC. (ii) The financial statements of Cone Mills and its consolidated
Subsidiaries  shall disclose the effects of each  Originator's  transactions  in
accordance  with GAAP and, in addition,  disclose that (A) CRLLC's sole business
consists of the  purchase or  acceptance  through  capital  contribution  of the
Receivables  from the Originators and the subsequent  resale of such Receivables
to the Purchaser,  (B) CRLLC is a separate business entity with its own separate
creditors  who will be entitled,  upon its  liquidation,  to be satisfied out of
CRLLC's  assets  prior to any  value  in CRLLC  becoming  available  to  CRLLC's
equityholders  and (C) the assets of CRLLC are not available to pay creditors of
any Originator or any other Affiliate of such Originator. (iii) The resolutions,
agreements and other instruments  underlying the transactions  described in this
Agreement  shall be  continuously  maintained  by each  Originator  as  official
records.  (iv) Each Originator shall maintain an arm's-length  relationship with
CRLLC and shall not hold itself out as being liable for the Debts of CRLLC.  (v)
Each Originator  shall keep its assets and its liabilities  wholly separate from
those of CRLLC.  (vi) Each  Originator  shall conduct its business solely in its
own name through its duly Authorized Officers or agents and in a manner designed
not to mislead  third  parties as to the separate  identity of such  Originator.
(vii) Each Originator shall not mislead third parties by conducting or appearing
to conduct business on behalf of CRLLC or expressly or impliedly representing or
suggesting  that such Originator is liable or responsible for the Debts of CRLLC
or that the assets of such  Originator  are  available  to pay the  creditors of
CRLLC.  (viii) Each Originator shall cause operating expenses and liabilities of
CRLLC to be paid from CRLLC's own funds. (ix) Each Originator shall at all times
have  stationery and other  business  forms and a mailing  address and telephone
number  separate  from those of CRLLC.  (x) Each  Originator  shall at all times
limit its transactions with CRLLC only to those expressly permitted hereunder or
under any other Related  Document.  (xi) Each Originator  shall comply with (and
cause to be true and correct)  each of the facts and  assumptions  pertaining to
such Originator contained in the opinion of Schell Bray Aycock Abel & Livingston
P.L.L.C.  delivered  pursuant to the  Schedule  of  Documents.  (k) ERISA.  Each
Originator shall give CRLLC and the Operating Agent prompt written notice of any
event that could result in the imposition of a Lien under Section 412 of the IRC
or Section 302 or 4068 of ERISA.  (l)  Payment,  Performance  and  Discharge  of
Obligations.  (i) Subject to  Section 4.02(l)(ii),  each  Originator  shall pay,
perform and discharge or cause to be paid,  performed and  discharged all of its
obligations and liabilities,  including all taxes,  assessments and governmental
charges  upon its  income  and  properties  and all  lawful  claims  for  labor,
materials, supplies and services, promptly when due. (ii) Each Originator may in
good faith contest,  by appropriate  proceedings,  the validity or amount of any
charges or claims described in Section 4.02(l)(i);  provided,  that (A) adequate
reserves  with  respect  to such  contest  are  maintained  on the books of such
Originator  in  accordance  with  GAAP  if and to the  extent  determined  to be
material under GAAP, (B) such contest is maintained and prosecuted  continuously
and with diligence, (C) no Lien may be imposed to secure payment of such charges
or claims other than inchoate tax liens and (D) CRLLC has advised Originators in
writing that CRLLC reasonably  believes that nonpayment or nondischarge  thereof
could not reasonably be expected to have or result in a Material Adverse Effect.
(m)  Deposit  of  Collections.  Each  Originator  shall  deposit  and  cause its
Subsidiaries  to  deposit  or  cause to be  deposited  promptly  into a  Lockbox
Account,  and in any event no later than the first  Business  Day after  receipt
thereof,  all Collections it may receive in respect of Transferred  Receivables.
(n) Accounting  Changes. If any Accounting Changes occur and such changes result
in a change in the standards or terms used herein, then the parties hereto agree
to enter into  negotiations in order to amend such provisions so as to equitably
reflect such  Accounting  Changes with the desired  result that the criteria for
evaluating the financial  condition of such Persons and their Subsidiaries shall
be the same after such Accounting  Changes as if such Accounting Changes had not
been made.  If the parties  hereto  agree upon the required  amendments  to this
Agreement,  then  after  appropriate  amendments  have  been  executed  and  the
underlying  Accounting  Change with respect  thereto has been  implemented,  any
reference to GAAP contained herein shall,  only to the extent of such Accounting
Change,   refer  to  GAAP  consistently  applied  after  giving  effect  to  the
implementation of such Accounting  Change. If such parties cannot agree upon the
required  amendments  within 30 days following the date of implementation of any
Accounting Change, then all financial statements delivered and all standards and
terms used herein shall be prepared,  delivered  and used without  regard to the
underlying  Accounting  Change. (o) Adjustments to Sale Price. If on any day the
Billed  Amount  of any  Transferred  Receivable  is  reduced  as a result of any
Dilution  Factors,  and the amount of such reduction exceeds the amount, if any,
of Dilution  Factors taken into account in the calculation of the Sale Price for
such Transferred Receivable, the Originator thereof shall make a cash payment to
CRLLC in the amount of such excess by  remitting  such amount to the  Collection
Account in accordance  with the terms of the Purchase  Agreement.  (p) Year 2000
Compliance. On or prior to October 31, 1999, each Originator shall complete Year
2000 Corrective Actions and Year 2000 Implementation Testing and shall eliminate
all Year 2000 Problems  except where the failure to eliminate the same could not
reasonably be reported to have a Material Adverse Effect.  SECTION 4.03 Negative
Covenants of the Originators. Each Originator covenants and agrees that, without
the prior written consent of CRLLC and the Operating  Agent,  from and after the
Closing Date and until the Termination  Date: (a) Sale of Assets.  No Originator
shall sell,  transfer,  convey,  assign (by  operation of law or  otherwise)  or
otherwise  dispose of, or assign any right to receive  income in respect of, any
of its  properties or other  assets,  including  any  Transferred  Receivable or
Contract  therefor,  any of its rights  with  respect to any  Lockbox or Lockbox
Account (except (i) the sale or other disposition of properties or assets (other
than any Transferred Receivables or Contract therefor) in the ordinary course of
business and (ii) as otherwise  expressly  permitted by this Agreement or any of
the other Related  Documents).  (b) Liens.  No Originator  shall create,  incur,
assume  or  permit  to  exist  any  Adverse  Claim  on or  with  respect  to its
Receivables  or any of its  other  properties  or assets  (whether  now owned or
hereafter acquired) except for (i) the Liens set forth in Schedule 4.03(b), (ii)
other  Permitted  Encumbrances,  and (iii)  other  Liens  permitted  by  Section
4.03(l)(5)(y).  (c)  Modifications  of Receivables  or Contracts.  No Originator
shall extend, amend, forgive, discharge,  compromise, cancel or otherwise modify
the terms of any Transferred  Receivable,  or amend, modify or waive any term or
condition of any Contract  therefor.  (d) Sale  Characterization.  No Originator
shall make statements or disclosures or prepare any financial statements for any
purpose,  including for federal  income tax,  reporting or accounting  purposes,
that shall account for the  transactions  contemplated  by this Agreement in any
manner  other  than  (i)  with  respect  to the  Sale  of each  Sold  Receivable
originated by it, as a true sale or absolute assignment of its full right, title
and  ownership  interest in such  Transferred  Receivable to CRLLC and (ii) with
respect to the Transfer of each  Contributed  Receivable  originated by it, as a
contribution to the stated capital of CRLLC. (e) Capital Structure and Business.
No  Originator  shall  (i) make any changes in any of its  business  objectives,
purposes or operations  that could have or result in a Material  Adverse Effect,
(ii) make any change in its capital  structure as described on Schedule 4.01(h),
including  the  issuance of any shares of Stock,  warrants  or other  securities
convertible into Stock or any revision of the terms of its outstanding Stock, in
any or all such cases that could have or result in a Material  Adverse Effect or
(iii) amend,  supplement  or  otherwise  modify its  certificate  or articles of
incorporation  or bylaws in a manner  that  could  have or result in a  Material
Adverse  Effect.  No  Originator  shall  engage in any  business  other than the
businesses  currently  engaged  in by  it.  (f)  Actions  Affecting  Rights.  No
Originator shall (i) take any action, or fail to take any action, if such action
or  failure to take  action may  interfere  with the  enforcement  of any rights
hereunder or under the other Related Documents, including rights with respect to
the Transferred Receivables;  (ii) waive or alter any rights with respect to the
Transferred  Receivables (or any agreement or instrument  relating thereto);  or
(iii) fail to pay any tax,  assessment,  charge, fee or other obligation of such
Originator  with respect to the Transferred  Receivables,  or fail to defend any
action,  if such failure to pay or defend may  adversely  affect the priority or
enforceability  of the  perfected  title of CRLLC  to and the  sole  record  and
beneficial ownership interest of CRLLC in the Transferred  Receivables or, prior
to their Transfer hereunder, such Originator's right, title or interest therein.
(g) ERISA. No Originator shall, or shall cause or permit any ERISA Affiliate to,
cause or permit to occur an event that could result in the  imposition of a Lien
under  Section  412 of the IRC or  Section  302 or 4068 of ERISA.  (h) Change to
Credit and Collection Policies.  No Originator shall fail to comply with, and no
material change shall be made to, the Credit and Collection Policies without the
prior  written  consent  of CRLLC  and the  Operating  Agent.  (i)  Adverse  Tax
Consequences.  No Originator  shall take or permit to be taken any action (other
than with  respect  to  actions  taken or to be taken  solely by a  Governmental
Authority),  or  fail  or  neglect  to  perform,  keep  or  observe  any  of its
obligations hereunder or under the other Related Documents,  that would have the
effect directly or indirectly of subjecting any payment to CRLLC,  the Purchaser
or holders of the  Commercial  Paper who are  residents of the United  States of
America to withholding taxation. (j) No Proceedings.  From and after the Closing
Date and until the date one year  plus one day  following  the date on which the
Commercial   Paper  allocable  to  CRLLC  with  the  latest  maturity  has  been
indefeasibly paid in full in cash, no Originator shall,  directly or indirectly,
institute or cause to be  instituted  against  CRLLC any  proceeding of the type
referred to in Sections 9.01(c) and 9.01(d) of the Purchase Agreement. (k) Debt.
No  Originator  shall create,  incur,  assume or permit to exist any Debt (other
than Debt of a type described in parts (f) or (g) of the definition of such term
in Annex X) except (i) Debt of such Originator to CRLLC, any Affected Party, any
Purchaser  Indemnified  Person, or any other Person expressly  permitted by this
Agreement or any other Related  Document,  (ii) deferred  taxes,  (iii) unfunded
pension fund and other employee  benefit plan obligations and liabilities to the
extent  permitted under  applicable  law, (iv) endorser  liability in connection
with the endorsement of negotiable  instruments for deposit or collection in the
ordinary  course of  business,  (v)  unsecured  Debt  arising  out of the Credit
Facility,  (vi) existing Debt described on Schedule 4.03(k), (vii) Debt incurred
or assumed for the  purpose of  financing  all or any part of such  Originator's
cost of  acquiring  any fixed  asset  provided  that the  aggregate  outstanding
principal  amount of all such Debt for any and all  Originator's  combined shall
not  exceed  $1,000,000  at any one  time;  (viii)  any  other  unsecured  Debt,
non-recourse  Debt and  Capital  Lease  Obligations  (all such  unsecured  Debt,
non-recourse  Debt and  Capital  Lease  Obligations  being  herein  collectively
referred  to as the  "New  Debt")  provided  that  (x) the  aggregate  allocated
principal amount of such Capital Lease  Obligations does not exceed  $10,000,000
at any one time and (y) after giving  effect to the  incurrence of any New Debt,
the  ratio  (expressed  as a  percentage)  of (1) the  total  consolidated  Debt
(including  without  limitation New Debt) of Cone Mills and its  Subsidiaries to
(2) the sum of the total  consolidated  Debt (including  without  limitation New
Debt) of Cone Mills and its Subsidiaries plus the consolidated Net Worth of Cone
Mills and its  Subsidiaries  shall not exceed  65%,  and (ix) any  refinancings,
amendments or modifications of any of the Debt permitted pursuant to clause (vi)
or (vii) above which does not have the effect of increasing the principal amount
thereof (other than to add accrued  interest,  fees or related  expenses to such
principal amount). (l) Mergers, Acquisitions,  Etc. No Originator shall merge or
consolidate with or into, convey, transfer, lease or otherwise dispose of all or
substantially all of its assets (whether now owed or hereafter  acquired) to, or
acquire  all or  substantially  all of the assets or Stock of, any other  Person
(whether in one transaction or in a series of transactions), except that (i) any
Originator may merge or consolidate with another  Originator (ii) any Subsidiary
of Cone  Mills  may merge or  consolidate  with any  Originator  so long as such
Originator is the surviving entity from such  transaction,  (iii) any Originator
may convey,  lease,  transfer or  otherwise  dispose of any of its assets to any
other  Originator,  (iv) any Originator may acquire all or substantially  all of
the  assets or Stock of any other  Person  which is a  Subsidiary  of Cone Mills
immediately prior to such acquisition, and (v) any Originator may acquire all or
substantially  all of the assets or Stock of any other Person (the  "Target") in
any  transaction (a "Permitted  Acquisition")  which satisfies each and every of
the following  conditions:  (1) The Operating Agent shall have received not less
than ten (10) days' prior written notice of such Permitted Acquisition;  (2) The
Target  shall be engaged in a business of the same type as is engaged in by such
Originator;  (3) Such Permitted  Acquisition  shall be consensual and shall have
been approved by the Target's Board of Directors (or other comparable  governing
body);  (4) The aggregate  consideration  paid or payable in connection with all
Permitted  Acquisitions  consummated during any particular Fiscal Year shall not
exceed $30,000,000; (5) Upon the consummation of such Permitted Acquisition, the
business and assets being acquired in such Permitted  Acquisition  shall be free
and clear of all Liens other than (x) Permitted Encumbrances and (y) other Liens
on assets (other than  Receivables)  of the Target granted to secure Debt having
an aggregate outstanding principal balance of not more than $5,000,000; (6) Such
Originator shall be the surviving entity from the Permitted Acquisition; (7) Not
less than ten (10) days prior to the consummation of such Permitted Acquisition,
(x) the Operating  Agent shall have received a pro forma balance  sheet,  income
statement  and  cash  flow   statement  of  Cone  Mills  and  its   Subsidiaries
(collectively,  the  "Acquisition Pro Forma") based on the most recent quarterly
financial  statements  of Cone  Mills  and  its  Subsidiaries  delivered  to the
Operating  Agent  pursuant to Annex  5.02(a) of the  Purchase  Agreement,  which
Acquisition  Pro Forma shall be complete and shall fairly  present the financial
condition  of Cone  Mills  and its  Subsidiaries  after  giving  effect  to such
Permitted   Acquisition  and  the  Acquisition  Pro  Forma  for  such  Permitted
Acquisition  shall reflect that the Seller's and the Originators'  average daily
aggregate  borrowing or other credit  availability  under the Purchase Agreement
and the  Credit  Facility  for  the  90-day  period  immediately  preceding  the
consummation of such Permitted  Acquisition would have exceeded $25,000,000 on a
pro forma basis  taking into  account such  Permitted  Acquisition,  and (y) the
Operating  Agent also shall have received  balance sheet,  income  statement and
cash flow  statement  projections  for Cone Mills and its  Subsidiaries  for the
12-month period immediately following such Permitted Acquisition  (collectively,
the "Acquisition Projections"),  which Acquisition Projections shall be based on
reasonable  assumptions and shall reflect that the Seller's and the Originators'
average  daily  aggregate  borrowing  or other  credit  availability  under  the
Purchase  Agreement and the Credit  Facility for the 90-day  period  immediately
following the consummation of such Permitted  Acquisition shall not be less than
$25,000,000;  (8) Prior to the consummation of such Permitted  Acquisition,  the
Operating  Agent  shall  have  received  a copy of all of the  final  definitive
agreements  for such  Permitted  Acquisition;  and (9) At the time of and  after
giving effect to the consummation of such Permitted Acquisition,  no Termination
Event or Incipient  Termination  Event shall have  occurred  and be  continuing;
provided  that, in the case of any Permitted  Acquisition in which the aggregate
consideration  paid  or  payable  by the  applicable  Originator  is  less  than
$2,500,000,  the conditions specified in items (1) and (7) above shall not apply
and the  conditions  specified  in item  (8)  above  may be  satisfied  within a
reasonable time after such Permitted  Acquisition is  consummated.  SECTION 4.04
Breach of  Representations,  Warranties  or  Covenants.  Upon  discovery  by any
Originator  or CRLLC of any breach of any  representation,  warranty or covenant
described in Sections 4.01, 4.02 or 4.03 (other than a representation,  warranty
or  covenant  relating  to the absence of  Dilution  Factors),  which  breach is
reasonably  likely  to  have  a  material  adverse  effect  on  the  value  of a
Transferred  Receivable or the interests of CRLLC therein, the party discovering
the same shall give prompt written  notice thereof to the other parties  hereto.
The Originator that breached such representation, warranty or covenant shall, if
requested by notice from CRLLC,  on the first Business Day following  receipt of
such notice,  take one of the following actions with respect to such Transferred
Receivable  (it being  specifically  understood  and  agreed  that,  while  such
Originator shall be obligated to take one of the following  actions if requested
by notice from  CRLLC,  such  Originator  shall have the right to elect which of
such actions shall be taken by such Originator)  (a) repurchase such Transferred
Receivable  from  CRLLC  for  cash,  (b) transfer  ownership  of a new  Eligible
Receivable or new Eligible  Receivables to CRLLC on such Business Day, or (c) in
the case of any Stockholder  Originator,  make a capital contribution in cash to
CRLLC  by  remitting  the  amount  (the  "Rejected   Amount")  of  such  capital
contribution  to the  Collection  Account  in  accordance  with the terms of the
Purchase Agreement, in each case in an amount equal to the Billed Amount of such
Transferred  Receivable  minus the sum of (A)  Collections  received  in respect
thereof and (B) the amount of any  Dilution  Factors  taken into  account in the
calculation of the Sale Price therefor.  Notwithstanding  the foregoing,  if any
Receivable  is not  paid  in  full  on  account  of any  Dilution  Factors,  the
Originator's  repurchase obligation under this Section 4.04 with respect to such
Receivable  shall be reduced by the amount of any such  Dilution  Factors  taken
into  account  in  the  calculation  of  the  Sale  Price  therefor.  ARTICLE  V
INDEMNIFICATION SECTION 5.01 Indemnification.  Without limiting any other rights
that  CRLLC,  any  of its  assigns,  or any  of  their  respective  Stockholders
(excluding Stockholder Originators),  officers, directors, employees, attorneys,
agents  or  representatives  (each,  an  "CRLLC  Indemnified  Person")  may have
hereunder or under  applicable law, each  Originator  hereby agrees to indemnify
and hold  harmless  each CRLLC  Indemnified  Person from and against any and all
Indemnified  Amounts that may be claimed or asserted  against or incurred by any
such  CRLLC  Indemnified  Person  in  connection  with  or  arising  out  of the
transactions  contemplated  under  this  Agreement  or under any  other  Related
Document, any actions or failures to act in connection therewith,  including any
and all  reasonable  legal  costs and  expenses  arising  out of or  incurred in
connection  with  disputes  between or among any  parties to any of the  Related
Documents,  or in respect of any Transferred Receivable or any Contract therefor
or the use by such  Originator  of the Sale Price  therefor;  provided,  that no
Originator  shall be  liable  for any  indemnification  to an CRLLC  Indemnified
Person to the extent  that any such  Indemnified  Amounts  result  from (a) such
CRLLC Indemnified  Person's gross negligence or willful  misconduct,  as finally
determined by a court of competent jurisdiction,  (b) recourse for uncollectible
or uncollected Transferred  Receivables,  or (c) any income tax or franchise tax
incurred  by any  CRLLC  Indemnified  Person,  except  to the  extent  that  the
incurrence  of any such tax  results  from a breach  of or  default  under  this
Agreement or any other Related Document.  Without limiting the generality of the
foregoing,  each Originator shall pay on demand to each CRLLC Indemnified Person
any and all Indemnified  Amounts  relating to or resulting from: (a) reliance on
any representation or warranty made or deemed made by such Originator (or any of
its officers)  under or in connection  with this  Agreement or any other Related
Document  or on any other  information  delivered  by such  Originator  pursuant
hereto or thereto that shall have been  incorrect  in any material  respect when
made or deemed made or delivered;  (b) the failure by such  Originator to comply
with any term,  provision  or covenant  contained in this  Agreement,  any other
Related Document or any agreement executed in connection  herewith or therewith,
any  applicable  law,  rule  or  regulation  with  respect  to  any  Transferred
Receivable  or  Contract  therefor,  or the  nonconformity  of  any  Transferred
Receivable  or the  Contract  therefor  with any such  applicable  law,  rule or
regulation; (c) the failure to vest and maintain vested in CRLLC, or to Transfer
to CRLLC,  valid and properly  perfected title to and sole record and beneficial
ownership of the Receivables that constitute Transferred  Receivables,  together
with all  Collections in respect  thereof,  free and clear of any Adverse Claim;
(d) any  dispute,  claim,  offset or  defense  of any  Obligor  (other  than its
discharge in bankruptcy) to the payment of any Receivable that is the subject of
a  Transfer  hereunder  (including  a defense  based on such  Receivable  or the
Contract  therefor  not being a legal,  valid  and  binding  obligation  of such
Obligor  enforceable  against  it in  accordance  with its terms  but  excluding
discounts to, or other Dilution Factors that reduce, the Billed Amount thereof),
or any other claim resulting from the sale of the merchandise or services giving
rise to such Receivable or the furnishing or failure to furnish such merchandise
or services or relating to collection activities with respect to such Receivable
(if such  collection  activities  were  performed  by Cone  Mills  acting as the
Servicer),  except to the extent  that such  dispute,  claim,  offset or defense
results  solely  from any  action  or  inaction  on the part of  CRLLC;  (e) any
products  liability  claim or other claim arising out of or in  connection  with
merchandise,  insurance or services that is the subject of any Contract; (f) any
failure  by such  Originator  to cause the  filing  of, or any delay in  filing,
financing  statements or other similar instruments or documents under the UCC of
any applicable  jurisdiction  or any other  applicable  laws with respect to any
Receivable that is the subject of a Transfer  hereunder,  whether at the time of
any such Transfer or at any  subsequent  time; (g) any failure by any Originator
or the Servicer to perform,  keep or observe any of their  respective  duties or
obligations  hereunder,  under any other Related  Document or under any Contract
related to a Transferred  Receivable,  including the  commingling of Collections
with respect to Transferred Receivables by any Originator or the Servicer at any
time with the funds of any other Person;  (h) any  investigation,  Litigation or
proceeding  related to this  Agreement or the use of the Sale Price  obtained in
connection  with any Sale or the ownership of Receivables  or  Collections  with
respect  thereto or in  respect of any  Receivable  or  Contract,  except to the
extent any such  investigation,  Litigation  or  proceeding  relates to a matter
involving an CRLLC Indemnified  Person for which neither such Originator nor any
of its  Affiliates  is at fault,  as finally  determined by a court of competent
jurisdiction;  or (i) any  claim  brought  by any  Person  other  than an  CRLLC
Indemnified  Person  arising from any activity by such  Originator or any of its
Affiliates  in  servicing,   administering   or   collecting   any   Transferred
Receivables.  NO CRLLC INDEMNIFIED  PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY
OTHER PARTY TO THIS  AGREEMENT OR ANY OTHER  RELATED  DOCUMENT,  ANY  SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING
CLAIMS  DERIVATIVELY  THROUGH SUCH PARTY, FOR INDIRECT,  PUNITIVE,  EXEMPLARY OR
CONSEQUENTIAL  DAMAGES  THAT  MAY BE  ALLEGED  AS A  RESULT  OF ANY  TRANSACTION
CONTEMPLATED HEREUNDER OR THEREUNDER. ARTICLE VI [Intentionally Omitted] ARTICLE
VII  [Intentionally  Omitted] ARTICLE VIII  MISCELLANEOUS  SECTION 8.01 Notices.
Except as otherwise  provided  herein,  whenever it is provided  herein that any
notice, demand, request, consent,  approval,  declaration or other communication
shall or may be given to or served upon any of the parties by any other parties,
or whenever any of the parties  desires to give or serve upon any other  parties
any  communication  with respect to this  Agreement,  each such notice,  demand,
request,  consent,  approval,  declaration  or other  communication  shall be in
writing  and shall be deemed to have been  validly  served,  given or  delivered
(a)upon the earlier of actual  receipt and three Business Days after deposit in
the United States Mail,  registered or certified mail, return receipt requested,
with proper postage  prepaid,  (b) upon  transmission,  when sent by telecopy or
other similar facsimile  transmission  (with such telecopy or facsimile promptly
confirmed  by delivery of a copy by personal  delivery or United  States Mail as
otherwise  provided in this Section  8.01),  (c) one  Business Day after deposit
with a  reputable  overnight  courier  with  all  charges  prepaid  or  (d) when
delivered,  if hand-delivered  by messenger,  all of which shall be addressed to
the party to be notified and sent to the address or  facsimile  number set forth
under  its name on the  signature  page  hereof  or to such  other  address  (or
facsimile  number) as  may be  substituted  by notice given as herein  provided;
provided,  that each such declaration or other  communication shall be deemed to
have been validly  delivered to the  Collateral  Agent under this Agreement upon
delivery to the  Operating  Agent in  accordance  with the terms of this Section
8.01.  The giving of any notice  required  hereunder may be waived in writing by
the party entitled to receive such notice. Failure or delay in delivering copies
of  any  notice,  demand,  request,  consent,  approval,  declaration  or  other
communication  to any  Person  (other  than  CRLLC)  designated  in any  written
communication  provided  hereunder to receive  copies shall in no way  adversely
affect the effectiveness of such notice,  demand,  request,  consent,  approval,
declaration or other communication.  Notwithstanding the foregoing,  whenever it
is provided  herein that a notice is to be given to any other party  hereto by a
specific time, such notice shall only be effective if actually  received by such
party prior to such time, and if such notice is received after such time or on a
day other than a Business  Day,  such  notice  shall  only be  effective  on the
immediately succeeding Business Day. SECTION 8.02 No Waiver;  Remedies.  CRLLC's
failure,  at any time or times, to require strict performance by the Originators
of any  provision of this  Agreement  or any  Receivables  Assignment  shall not
waive,  affect or  diminish  any  right of CRLLC  thereafter  to  demand  strict
compliance and  performance  herewith or therewith.  Any suspension or waiver of
any breach or default  hereunder  shall not  suspend,  waive or affect any other
breach or default  whether the same is prior or  subsequent  thereto and whether
the  same  or  of a  different  type.  None  of  the  undertakings,  agreements,
warranties,  covenants and  representations of any Originator  contained in this
Agreement  or any  Receivables  Assignment,  and no  breach  or  default  by any
Originator  hereunder or  thereunder,  shall be deemed to have been suspended or
waived by CRLLC unless such waiver or  suspension is by an instrument in writing
signed by an officer of or other duly authorized signatory of CRLLC and directed
to such  Originator  specifying  such  suspension or waiver.  CRLLC's rights and
remedies under this Agreement shall be cumulative and  nonexclusive of any other
rights and remedies that CRLLC may have under any other agreement, including the
other  Related  Documents,  by  operation  of law  or  otherwise.  SECTION  8.03
Successors and Assigns.  This Agreement shall be binding upon and shall inure to
the benefit of each  Originator  and CRLLC and their  respective  successors and
permitted  assigns,  except as otherwise  provided  herein.  No  Originator  may
assign,  transfer,   hypothecate  or  otherwise  convey  its  rights,  benefits,
obligations or duties  hereunder  without the prior express  written  consent of
CRLLC,  the Purchaser,  the Operating Agent and the Collateral  Agent.  Any such
purported  assignment,  transfer,  hypothecation  or  other  conveyance  by  any
Originator  without the prior express written  consent of CRLLC,  the Purchaser,
the Operating  Agent and the  Collateral  Agent shall be void.  Each  Originator
acknowledges that, to the extent permitted under the Purchase  Agreement,  CRLLC
may  assign  its  rights  granted  hereunder,   including  the  benefit  of  any
indemnities under Article V, and upon such assignment, such assignee shall have,
to the extent of such  assignment,  all rights of CRLLC  hereunder  and,  to the
extent permitted under the Purchase  Agreement,  may in turn assign such rights.
Each Originator agrees that, upon any such assignment, such assignee may enforce
directly,  without joinder of CRLLC, the rights set forth in this Agreement. All
such assignees,  including parties to the Purchase  Agreement in the case of any
assignment to such parties,  shall be third party beneficiaries of, and shall be
entitled to enforce  CRLLC's  rights and remedies  under,  this Agreement to the
same extent as if they were parties  hereto.  The terms and  provisions  of this
Agreement are for the purpose of defining the relative rights and obligations of
each Originator and CRLLC with respect to the transactions  contemplated  hereby
and, except for the Purchaser,  the Operating Agent and the Collateral Agent, no
Person shall be a third party  beneficiary of any of the terms and provisions of
this  Agreement.  SECTION 8.04  Termination;  Survival of  Obligations.  (a)This
Agreement shall create and constitute the continuing  obligations of the parties
hereto in accordance  with its terms,  and shall remain in full force and effect
until the Termination Date.  (b)Except as otherwise expressly provided herein or
in any other Related  Document,  no termination or  cancellation  (regardless of
cause or procedure) of any commitment  made by CRLLC under this Agreement  shall
in any way  affect or impair the  obligations,  duties  and  liabilities  of any
Originator or the rights of CRLLC  relating to any unpaid portion of any and all
recourse and indemnity obligations of such Originator to CRLLC,  including those
set forth in Sections 4.02(o),  4.04, 5.01 and 8.14, due or not due, liquidated,
contingent or  unliquidated  or any transaction or event occurring prior to such
termination,  or any transaction or event,  the performance of which is required
after the Facility  Termination  Date.  Except as otherwise  expressly  provided
herein  or  in  any  other  Related  Document,  all  undertakings,   agreements,
covenants,  warranties and  representations  of or binding upon each Originator,
and all rights of CRLLC  hereunder,  all as contained in the Related  Documents,
shall not terminate or expire,  but rather shall survive any such termination or
cancellation  and shall continue in full force and effect until the  Termination
Date. On the Termination  Date,  this Agreement  shall terminate  (except to the
extent otherwise expressly provided herein), all ownership interests or Liens of
CRLLC in and to all Transferred Receivables shall be released by CRLLC and CRLLC
shall promptly  return any and all of the  Transferred  Receivables  then in its
possession  to the  appropriate  Originators  and shall  execute such  documents
(including without limitation  UCC-3=s) as the Originator may reasonably request
to evidence such releases and  terminations  (provided that such documents shall
be prepared and recorded at the Originator's expense); provided, that the rights
and remedies pursuant to Sections 4.02(o), 4.04, the indemnification and payment
provisions of Article V, and the provisions of Sections 4.03(j),  8.03, 8.12 and
8.14  shall  be  continuing  and  shall  survive  the  Termination  Date and any
termination of this Agreement. SECTION 8.05 Complete Agreement;  Modification of
Agreement.  This  Agreement  and the  other  Related  Documents  constitute  the
complete agreement between the parties with respect to the subject matter hereof
and thereof,  supersede all prior agreements and understandings  relating to the
subject matter hereof and thereof,  and may not be modified,  altered or amended
except as set forth in Section 8.06.  SECTION 8.06  Amendments  and Waivers.  No
amendment,  modification,  termination  or  waiver  of  any  provision  of  this
Agreement or any of the other Related Documents, or any consent to any departure
by any  Originator  therefrom,  shall in any event be effective  unless the same
shall be in writing and signed by each of the parties  hereto and the Purchaser,
the Operating  Agent and the Collateral  Agent. No consent or demand in any case
shall,  in itself,  entitle any party to any other consent or further  notice or
demand in similar or other circumstances.  SECTION 8.07GOVERNING LAW; CONSENT TO
JURISDICTION;  WAIVER OF JURY TRIAL. (a)THIS AGREEMENT AND EACH RELATED DOCUMENT
(EXCEPT  TO THE EXTENT  THAT ANY  RELATED  DOCUMENT  EXPRESSLY  PROVIDES  TO THE
CONTRARY) AND THE  OBLIGATIONS  ARISING  HEREUNDER AND  THEREUNDER  SHALL IN ALL
RESPECTS,  INCLUDING ALL MATTERS OF CONSTRUCTION,  VALIDITY AND PERFORMANCE,  BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF)
AND ANY  APPLICABLE  LAWS OF THE UNITED STATES OF AMERICA.  (b)EACH PARTY HERETO
HEREBY  CONSENTS  AND  AGREES  THAT THE STATE OR FEDERAL  COURTS  LOCATED IN THE
BOROUGH OF MANHATTAN IN NEW YORK CITY SHALL HAVE EXCLUSIVE  JURISDICTION TO HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES  BETWEEN THEM  PERTAINING TO THIS AGREEMENT
OR TO ANY MATTER  ARISING OUT OF OR RELATING  TO THIS  AGREEMENT  OR ANY RELATED
DOCUMENT;  PROVIDED,  THAT EACH PARTY HERETO  ACKNOWLEDGES THAT ANY APPEALS FROM
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT  LOCATED  OUTSIDE OF THE BOROUGH OF
MANHATTAN IN NEW YORK CITY;  PROVIDED  FURTHER,  THAT NOTHING IN THIS  AGREEMENT
SHALL BE DEEMED OR OPERATE TO PRECLUDE  CRLLC FROM BRINGING SUIT OR TAKING OTHER
LEGAL  ACTION IN ANY OTHER  JURISDICTION  TO  REALIZE  ON ANY  SECURITY  FOR THE
OBLIGATIONS OF THE ORIGINATORS  ARISING  HEREUNDER,  OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF CRLLC.  EACH PARTY HERETO  SUBMITS AND CONSENTS IN
ADVANCE TO SUCH  JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION THAT SUCH PARTY MAY HAVE BASED
UPON LACK OF PERSONAL  JURISDICTION,  IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY  CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE  RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT.  EACH PARTY HERETO HEREBY WAIVES PERSONAL  SERVICE OF
THE SUMMONS,  COMPLAINT AND OTHER PROCESS  ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS,  COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED  OR CERTIFIED  MAIL  ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH
BENEATH ITS NAME ON THE SIGNATURE PAGES HEREOF AND THAT SERVICE SO MADE SHALL BE
DEEMED  COMPLETED  UPON THE EARLIER OF SUCH PARTY'S  ACTUAL  RECEIPT  THEREOF OR
THREE DAYS AFTER  DEPOSIT IN THE UNITED  STATES MAIL,  PROPER  POSTAGE  PREPAID.
NOTHING IN THIS  SECTION  SHALL  AFFECT  THE RIGHT OF ANY PARTY  HERETO TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  (c)BECAUSE DISPUTES ARISING
IN  CONNECTION  WITH  COMPLEX  FINANCIAL   TRANSACTIONS  ARE  MOST  QUICKLY  AND
ECONOMICALLY  RESOLVED BY AN EXPERIENCED  AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION  RULES), THE
PARTIES  DESIRE  THAT  THEIR  DISPUTES  BE  RESOLVED  BY A JUDGE  APPLYING  SUCH
APPLICABLE LAWS.  THEREFORE,  TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL  SYSTEM AND OF  ARBITRATION,  THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF, CONNECTED WITH,
RELATED  TO,  OR  INCIDENTAL  TO THE  RELATIONSHIP  ESTABLISHED  AMONG  THEM  IN
CONNECTION  WITH THIS  AGREEMENT  OR ANY RELATED  DOCUMENT  OR THE  TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. SECTION 8.08 Counterparts. This Agreement may be
executed  in  any  number  of  separate   counterparts,   each  of  which  shall
collectively and separately constitute one agreement. SECTION 8.09 Severability.
Wherever possible, each provision of this Agreement shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
of this Agreement  shall be prohibited by or invalid under  applicable law, such
provision  shall  be  ineffective  only to the  extent  of such  prohibition  or
invalidity without invalidating the remainder of such provision or the remaining
provisions of this Agreement.  SECTION 8.10 Section  Titles.  The section titles
and table of contents  contained  in this  Agreement  are  provided  for ease of
reference only and shall be without  substantive  meaning or content of any kind
whatsoever  and are not a part of the  agreement  between  the  parties  hereto.
SECTION 8.11 No Setoff. Each Originator's obligations under this Agreement shall
not be affected  by any right of setoff,  counterclaim,  recoupment,  defense or
other  right such  Originator  might have  against  CRLLC,  the  Purchaser,  the
Operating  Agent  or the  Collateral  Agent,  all of  which  rights  are  hereby
expressly waived by such Originator. SECTION 8.12 Confidentiality.  (a)Except to
the extent  otherwise  required  by  applicable  law,  as  required  to be filed
publicly with the  Securities and Exchange  Commission,  or unless each Affected
Party shall  otherwise  consent in writing,  each  Originator and CRLLC agree to
maintain  the  confidentiality  of this  Agreement  (and all  drafts  hereof and
documents  ancillary hereto) in its communications with third parties other than
any Affected  Party or any CRLLC  Indemnified  Person and  otherwise  and not to
disclose, deliver or otherwise make available to any third party (other than its
directors, officers, employees, accountants or counsel) the original or any copy
of all or any  part of  this  Agreement  (or  any  draft  hereof  and  documents
ancillary  hereto) except to an Affected Party or an CRLLC  Indemnified  Person.
(b)Each  Originator  agrees  that it shall not (and  shall not permit any of its
Subsidiaries  to)  issue  any  news  release  or make  any  public  announcement
pertaining to the  transactions  contemplated  by this Agreement and the Related
Documents  without the prior written  consent of CRLLC and each  Affected  Party
(which consent shall not be unreasonably  withheld)  unless such news release or
public  announcement  is required by law,  in which case such  Originator  shall
consult  with CRLLC and each  Affected  Party prior to the issuance of such news
release or public  announcement.  Any  Originator  may,  however,  disclose  the
general terms of the transactions contemplated by this Agreement and the Related
Documents to trade creditors,  suppliers and other similarly-situated Persons so
long  as  such  disclosure  is not in the  form  of a  news  release  or  public
announcement. (c)CRLLC agrees to use commercially reasonable efforts (equivalent
to the efforts  CRLLC  applies to  maintaining  the  confidentiality  of its own
confidential  information) to maintain as  confidential  for a period of two (2)
years following receipt thereof all confidential  information  provided to it by
the Originators and designated as  confidential,  except that CRLLC may disclose
such  information  (a) to Persons  employed  or engaged by CRLLC in  evaluating,
approving,  structuring or administering  the transactions  contemplated by this
Agreement;  (b) to the Purchaser,  the Operating  Agent, the Collateral Agent or
any other bona fide assignee or participant or potential assignee or participant
of CRLLC that has agreed to comply with the covenant contained in this paragraph
(c) (and the Purchaser,  the Operating  Agent, the Collateral Agent and any such
bona fide  assignee or  participant  or potential  assignee or  participant  may
disclose such information to Persons employed or engaged by them as described in
clause (a) above); (c) as required or requested by any Governmental Authority or
reasonably  believed by CRLLC to be compelled by any court  decree,  subpoena or
legal or  administrative  order or  process;  (d) as, on the  advice of  CRLLC's
counsel,  required by law; (e) in  connection  with the exercise of any right or
remedy under the Related Documents or in connection with any Litigation to which
CRLLC is a party;  or (f) which  ceases to be  confidential  through no fault of
CRLLC.  SECTION 8.13 Further  Assurances.  (a)Each Originator shall, at its sole
cost and expense,  upon request of CRLLC, the Purchaser,  the Operating Agent or
the Collateral Agent,  promptly and duly execute and deliver any and all further
instruments and documents and take such further actions that may be necessary or
desirable or that CRLLC,  the Purchaser,  the Operating  Agent or the Collateral
Agent may request to carry out more  effectively  the provisions and purposes of
this  Agreement or any other Related  Document or to obtain the full benefits of
this Agreement and of the rights and powers herein granted,  including (i) using
its best efforts to secure all consents and approvals  necessary or  appropriate
for the assignment to or for the benefit of CRLLC of any Transferred  Receivable
held  by such  Originator  or in  which  such  Originator  has  any  rights  not
heretofore  assigned and (ii) filing  any financing or  continuation  statements
under the UCC with respect to the ownership interests or Liens granted hereunder
or under any other Related  Document.  Each Originator  hereby authorizes CRLLC,
the  Purchaser,  the Operating  Agent or the  Collateral  Agent to file any such
financing or continuation statements without the signature of such Originator to
the  extent  permitted  by  applicable  law.  A  carbon,  photographic  or other
reproduction of this Agreement or of any notice or financing  statement covering
the Transferred  Receivables or any part thereof shall be sufficient as a notice
or financing  statement  where  permitted by law. (b)If any Originator  fails to
perform  any  agreement  or  obligation  under this  Section  8.13,  CRLLC,  the
Purchaser,  the Operating  Agent or the  Collateral  Agent may (but shall not be
required  to)  itself  perform,  or cause  performance  of,  such  agreement  or
obligation,  and the reasonable expenses of CRLLC, the Purchaser,  the Operating
Agent or the Collateral Agent incurred in connection  therewith shall be payable
by such Originator upon demand of CRLLC,  the Purchaser,  the Operating Agent or
the  Collateral  Agent.  SECTION  8.14 Fees and  Expenses.  In  addition  to its
indemnification  obligations  pursuant to  Article V,  Each  Originator  agrees,
jointly and severally, to pay on demand all costs and expenses incurred by CRLLC
in connection with the negotiation,  preparation, execution and delivery of this
Agreement and the other Related  Documents,  including the  reasonable  fees and
out-of-pocket  expenses of CRLLC's counsel,  advisors,  consultants and auditors
retained in connection with the transactions  contemplated thereby and advice in
connection therewith,  and each Originator agrees, jointly and severally, to pay
all costs and expenses of CRLLC,  if any (including  reasonable  attorneys' fees
and  expenses  but  excluding  any costs of  enforcement  or  collection  of the
Transferred  Receivables),  in connection with the enforcement of this Agreement
and the other Related Documents.  (remainder of page intentionally left blank)
54 1 IN WITNESS  WHEREOF,  the parties  have caused this  Receivables  Transfer
Agreement to be executed by their respective duly authorized representatives, as
of  the  date  first  above   written.executed  by  their  respective  duly
authorized representatives, as of the date first above written.

                                           Cone Mills Corporation


                                           By ___/s/ David E. Bray____
                                           Name: David E. Bray
                                           Title: Treasurer

                                           3101 North Elm Street
                                           Greensboro, North Carolina 27415-6540
                                           Attention:  Treasurer
                                           Facsimile No.:  (336) 379-6043



                                           Cone Receivables II LLC


                                           By __Brandon Carrey__
                                           Name: Brandon Carrey
                                           Title: President

                                          c/o AMACAR Group, L.L.C.
                                          6525 Morrison Boulevard
                                          Suite 318
                                          Charlotte, North Carolina  28210
                                          Attention: Treasurer
                                          Telecopy: (706) 365-1362

                                          with a copy to:

                                         3101 North Elm Street, Third Floor
                                         Greensboro, North Carolina  27415-6540
                                         Attention:  Treasurer
                                         Facsimile No.:  (336) 379-6043