41

Exhibit  2.1(h)




                                   RECEIVABLES PURCHASE AND SERVICING AGREEMENT

                                               Dated as of September 1, 1999,
                                                             by and among
                                                       CONE RECEIVABLES II LLC,

                                                              as Seller,

                                                REDWOOD RECEIVABLES CORPORATION,

                                                             as Purchaser,

                                                        CONE MILLS CORPORATION,

                                                             as Servicer,

                                                                  and

                                          GENERAL ELECTRIC CAPITAL CORPORATION,

                                         as Operating Agent and Collateral Agent

                                                                 47




                                                           TABLE OF CONTENTS

ARTICLE I  DEFINITIONS AND INTERPRETATION.....................................1

         SECTION 1.01 Definitions............................................1

         SECTION 1.02 Rules of Construction....................................1

ARTICLE II  AMOUNTS AND TERMS OF PURCHASES.....................................2

         SECTION 2.01 Purchases................................................2

         SECTION 2.02 Optional Changes in Maximum Purchase Limit...............2

         SECTION 2.03 Notices Relating to Purchases and Reductions in Capital
                                                    Investment.................3

         SECTION 2.04 Conveyance of Receivables................................4

                  (a) Purchase Assignment......................................4
                  (b) Funding of Collection Account; Payment of Purchase
                                               Price...........................4
                  (c) Vesting of Ownership.....................................4
                  (d) Repurchases of Transferred Receivables...................4
         SECTION 2.05 Facility Termination Date................................5

         SECTION 2.06 Daily Yield..............................................5

         SECTION 2.07 Fees.....................................................5

         SECTION 2.08 Time and Method of Payments..............................5

         SECTION 2.09 Capital Requirements; Additional Costs...................6

         SECTION 2.10 Breakage Costs...........................................7

         SECTION 2.11 Purchase Excess..........................................7

ARTICLE III  CONDITIONS PRECEDENT..............................................7

         SECTION 3.01 Conditions to Effectiveness of Agreement.................7

                  (a) Purchase Agreement; Other Related Documents..............8
                  (b) Governmental and Other Approvals.........................8
                  (c) Compliance with Laws.....................................8
                  (d) Payment of Fees..........................................8
         SECTION 3.02 Conditions Precedent to All Purchases....................8

ARTICLE IV  REPRESENTATIONS AND WARRANTIES.....................................9

         SECTION 4.01 Representations and Warranties of the Seller.............9

                  (a) LegalExistence; Compliance with Law......................9
                  (b) Executive Offices; Collateral Locations; Seller Names;
                                                   FEIN........................9
                  (c) Power, Authorization, Enforceable Obligations...........10
                  (d) No Litigation...........................................10
                  (e) Solvency................................................10
                  (f) Material Adverse Effect.................................10
                  (g) Ownership of Property; Liens............................11
                  (h) Ventures, Subsidiaries and Affiliates; Outstanding Stock
                                                     and Indebtedness.........11
                  (i) Taxes...................................................11
                  (j) Full Disclosure.........................................12
                  (k) ERISA...................................................12
                  (l) Brokers.................................................12
                  (m) Margin Regulations......................................12
                  (n) Nonapplicability of Bulk Sales..........................12
                  (o) Securities Act and Investment Company Act Exemptions....12
                  (p) Government Regulation...................................13
                  (q) Nonconsolidation, Etc...................................13
                  (r) Deposit and Disbursement Accounts.......................15
                  (s) Transferred Receivables.................................15
                  (t) Representations & Warranties in Other Related Documents.15
                  (u) Year 2000 Problems......................................15
         SECTION 4.02 Representations and Warranties of the Servicer..........16

ARTICLE V GENERAL COVENANTS OF THE SELLER.....................................16

         SECTION 5.01 Affirmative Covenants of the Seller.....................16

                  (a) Compliance with Agreements and Applicable Laws..........16
                  (b) Maintenance of Existence and Conduct of Business....... 16
                  (c) Deposit of Collections..................................16
                  (d) Use of Proceeds.........................................16
                  (e) Payment, Performance and Discharge of Obligations.......17
                  (f) ERISA.................................................. 17
                  (g) Year 2000 Compliance....................................17
         SECTION 5.02 Reporting Requirements of the Seller................... 17

         SECTION 5.03 Negative Covenants of the Seller........................17

                  (a) Sale of Stock and Assets................................18
                  (b) Liens...................................................18
                  (c) Modifications of Receivables, Contracts or Transfer
                                                Agreement.....................18
                  (d) Changes in Instructions to Obligors.....................18
                  (e) Capital Structure and Business..........................18
                  (f) Mergers, Subsidiaries, Etc..............................18
                  (g) Sale Characterization; Transfer Agreement...............18
                  (h) Restricted Payments.....................................19
                  (i) Debt 19
                  (j) Prohibited Transactions.................................19
                  (k) Investments.............................................19
                  (l) Commingling.............................................19
                  (m) ERISA...................................................19
ARTICLE VI COLLECTIONS AND DISBURSEMENTS......................................19

         SECTION 6.01 Establishment of Deposit Accounts.......................19

                  (a) The Lockbox Accounts....................................19
                  (b) Collection Account......................................21
                  (c) Retention Account.......................................22
                  (d) Collateral Account......................................22
         SECTION 6.02 Funding of Collection Account...........................22

         SECTION 6.03 Daily Disbursements From the Collection Account and
                                     Related Sub-Accounts; Revolving Period   23

         SECTION 6.04 Disbursements From the Retention Account; Settlement
                                      Date Procedures; Revolving Period       25

         SECTION 6.05 Liquidation Settlement Procedures.......................26

         SECTION 6.06 Investment of Funds in Accounts.........................29

         SECTION 6.07 Termination Procedures..................................29

ARTICLE VII SERVICER PROVISIONS...............................................29

         SECTION 7.01 Appointment of the Servicer.............................30

         SECTION 7.02 Duties and Responsibilities of the Service..............30

         SECTION 7.03 Collections on Receivables..............................30

         SECTION 7.04 Authorization of the Servicer...........................31

         SECTION 7.05 Servicing Fees..........................................31

         SECTION 7.06 Covenants of the Servicer...............................31

                  (a) Ownership of Transferred Receivables....................31
                  (b) Compliance with Credit and Collection Policies..........32
                  (c) Covenants in Other Related Documents....................32
         SECTION 7.07 Reporting Requirements of the Servicer..................32

ARTICLE VIII GRANT OF SECURITY INTERESTS......................................32

         SECTION 8.01 Seller's Grant of Security Interest.....................32

         SECTION 8.02 Seller's Certification..................................33

         SECTION 8.03 Consent to Assignment...................................34

         SECTION 8.04 Delivery of Collateral..................................34

         SECTION 8.05 Seller Remains Liable...................................34

         SECTION 8.06 Covenants of the Seller and the Servicer Regarding
                                               the Seller Collateral..........35

                  (a) Offices and Records.....................................35
                  (b) Access..................................................35
                  (c) Communication with Accountants..........................36
                  (d) Collection of Transferred Receivables...................36
                  (e) Performance of Seller Assigned Agreements...............37
ARTICLE IX TERMINATION EVENTS.................................................37

         SECTION 9.01 Termination Events......................................37

         SECTION 9.02 Events of Servicer Termination..........................40

ARTICLE X REMEDIES............................................................41

         SECTION 10.01 Actions Upon Termination Event.........................41

         SECTION 10.02 Exercise of Remedies...................................42

         SECTION 10.03 Power of Attorney......................................43

         SECTION 10.04 Continuing Security Interest...........................43

ARTICLE XI SUCCESSOR SERVICER PROVISIONS......................................43

         SECTION 11.01 Servicer Not to Resign.................................43

         SECTION 11.02 Appointment of the Successor Servicer..................43

         SECTION 11.03 Duties of the Servicer.................................44

         SECTION 11.04 Effect of Termination or Resignation...................44

ARTICLE XII INDEMNIFICATION...................................................44

         SECTION 12.01 Indemnities by the Seller..............................44

         SECTION 12.02 Indemnities by the Servicer............................46

         SECTION 12.03 Limitation of Damages; Purchaser Indemnified Persons...47

ARTICLE XIII OPERATING AGENT AND COLLATERAL AGENT.............................47

         SECTION 13.01 Authorization and Action...............................47

         SECTION 13.02 Reliance...............................................47

         SECTION 13.03 GE Capital and Affiliates..............................48

ARTICLE XIV MISCELLANEOUS.....................................................48

         SECTION 14.01 Notices................................................48

         SECTION 14.02 Binding Effect; Assignability..........................49

         SECTION 14.03 Termination; Survival of Seller Secured Obligations
                                      Upon Facility Termination Date.         49

         SECTION 14.04 Costs, Expenses and Taxes..............................50

         SECTION 14.05 Confidentiality........................................51

         SECTION 14.06 No Proceedings.........................................52

         SECTION 14.07 Complete Agreement; Modification of Agreement..........53

         SECTION 14.08 Amendments and Waivers.................................53

         SECTION 14.09 No Waiver; Remedies....................................53

         SECTION 14.10 Governing Law; Consent to Jurisdiction; Waiver of
                                               Jury Trial.....................53

         SECTION 14.11 Counterparts...........................................55

         SECTION 14.12 Severability...........................................55

         SECTION 14.13 Section Titles.........................................55

         SECTION 14.14 Limited Recourse.......................................55

         SECTION 14.15 Further Assurances.....................................55





Exhibit 2.02(a).............................Form of Commitment Reduction Notice

Exhibit 2.02(b)...........................Form of Commitment Termination Notice

Exhibit 2.02(c)..............................Form of Commitment Increase Notice

Exhibit 2.03(a).............................Form of Investment Base Certificate

Exhibit 2.03(b)........................................Form of Purchase Request

Exhibit 2.03(c)........................................Form of Repayment Notice

Exhibit 2.04(a).....................................Form of Purchase Assignment

Exhibit 3.01(a)(i).................................Form of Solvency Certificate

Exhibit 3.01(a)(ii)(A)..................Form of Bringdown Certificate (Closing)

Exhibit 3.01(a)(ii)(B).............Form of Bringdown Certificate (Post-Closing)

Exhibit 3.01(a)(iii)(A)................Form of Servicer's Certificate (Closing)

Exhibit 3.01(a)(iii)(B)...........Form of Servicer's Certificate (Post-Closing)

Exhibit 3.01(a)(iv)......................................Form of Monthly Report

Exhibit 3.01(a)(v).....................Form of Quarterly Compliance Certificate

Exhibit 5.03(b).................................Form of Intercreditor Agreement

Exhibit 10.03........................................Form of Power of Attorney



Schedule  4.01(b)........Executive Offices; Collateral Locations; Seller Names;

         ............................................................. FEIN

Schedule  4.01(d)..................................................Litigation

Schedule  4.01(h)......Ventures, Subsidiaries and Affiliates; Outstanding Stock

         .....................................................and Indebtedness

Schedule  4.01(i)..................................................Tax Matters

Schedule  4.01(r)............................Deposit and Disbursement Accounts

Schedule  5.03(b)...............................................Existing Liens



Annex 1  Concentration Limits

Annex 2  Excluded Obligors

Exhibit A to

Annex 2  Form of Amending Letter

Annex 3  Determination of A Redwood Yield @

Annex 4  Yield Discount Amount

Annex G  Financial Covenants

Annex 5.02(a)..............................Reporting Requirements of the Seller

Annex 5.02(b)................................................Investment Reports

Annex 7.07...............................Reporting Requirements of the Servicer

Annex X  Definitions

Annex Y  Schedule of Documents


     115
THIS  RECEIVABLES  PURCHASE AND SERVICING  AGREEMENT  ("Agreement")  is
entered into as of September 1, 1999,  by and among CONE  RECEIVABLES  II LLC, a
North Carolina limited  liability  company (the "Seller"),  REDWOOD  RECEIVABLES
CORPORATION, a Delaware corporation (the "Purchaser"), CONE MILLS CORPORATION, a
North  Carolina  corporation  ("Cone  Mills"),  as servicer  hereunder  (in such
capacity, the "Servicer"),  and GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation,  as operating agent for the Purchaser  hereunder (in such capacity,
the  "Operating  Agent")  and as  collateral  agent  for the  Purchaser  and the
Purchaser Secured Parties (in such capacity,  the "Collateral Agent").  RECITALS
A...............................   The  Seller  is  a  special  purpose  limited
liability company owned by the Independent  Member,  Cone Mills, and one or more
of Cone Mills's  Subsidiaries.  B. The Seller has been formed for the purpose of
purchasing, or otherwise acquiring by capital contribution, all or substantially
all of the  trade  receivables  of  each  Originator  pursuant  to the  Transfer
Agreement.  C.  ...........................The  Seller  intends to sell, and the
Purchaser  intends to purchase,  such trade  receivables,  from time to time, as
described herein. D. ..............................The  Operating Agent has been
requested and is willing to act as operating agent on behalf of the Purchaser in
connection   with   the   making   and   financing   of   such   purchases.   E.
 ............................In   order  to  effectuate   the  purposes  of  this
Agreement, the Seller and the Purchaser desire to appoint Cone Mills to service,
administer  and collect the  receivables  acquired by the Purchaser  pursuant to
this Agreement and Cone Mills is willing to act in such capacity as the Servicer
hereunder  on  the  terms  and  conditions  set  forth  herein.  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 AMOUNTS AND TERMS OF PURCHASES SECTION 2.01
Purchases.  On the  Closing  Date and each  Business  Day  thereafter  until the
Facility  Termination Date and subject to the terms and conditions  hereof,  the
Purchaser  agrees to  purchase  from Seller  (each such  purchase  hereunder,  a
"Purchase") all Transferred Receivables acquired on such date by Seller from the
Originators  under the  Transfer  Agreement  and the Seller  agrees to sell such
Transferred  Receivables  to the  Purchaser.  Under no  circumstances  shall the
Purchaser be obligated to make any Purchase if, after giving effect  thereto,  a
Purchase Excess would exist. The aggregate purchase price for each such Purchase
shall equal the Cash  Purchase  Price plus the Deferred  Purchase  Price for the
related Purchase date.  SECTION 2.02 Optional Changes in Maximum Purchase Limit.
(a) So long as no Incipient  Termination  Event or Termination  Event shall have
occurred  and be  continuing,  the Seller may,  not more than twice  during each
calendar year,  reduce the Maximum Purchase Limit  permanently;  provided,  that
(i) the  Seller shall give ten Business  Days' prior written  notice of any such
reduction to the Purchaser and the Operating Agent  substantially in the form of
Exhibit 2.02(a) (each such notice, a "Commitment  Reduction  Notice"),  (ii) any
partial  reduction of the Maximum Purchase Limit shall be in a minimum amount of
$5,000,000 or an integral  multiple  thereof and (iii)no such  reduction  shall
reduce the Maximum  Purchase  Limit below  Capital  Investment at such time (and
after giving effect to any concurrent  reduction in the Capital  Investment made
pursuant to Section 2.03(c)). (b) The Seller may at any time on at least 90 days
prior written  notice by the Seller to the  Purchaser  and the  Operating  Agent
irrevocably terminate the Maximum Purchase Limit; provided, that (i) such notice
of  termination  shall be  substantially  in the form of  Exhibit  2.02(b)  (the
"Commitment Termination  Notice")and  (ii) the  Seller  shall reduce the Capital
Investment to zero and make all payments  required by Section 2.03(c) or Section
2.07(c) at the time and in the manner specified therein.  Upon such termination,
the Seller's right to request that the Purchaser make Purchases  hereunder shall
simultaneously  terminate and the Facility  Termination Date shall automatically
occur. (c) So long as no Incipient  Termination Event or Termination Event shall
have  occurred  and be  continuing,  the Seller may,  on a one-time  basis only,
increase  the Maximum  Purchase  Limit to  $65,000,000;  provided,  that (i) the
Seller shall give ten Business Days prior written notice of such increase to the
Purchaser and the Operating Agent  substantially  in the form of Exhibit 2.02(c)
(such notice, a "Commitment  Increase  Notice") and (ii) such increase shall not
become  effective  unless and until the Foreign  Receivable  Election Date shall
have  occurred.  (d) Each written  notice  required to be delivered  pursuant to
Sections 2.02(a),  (b) or (c) shall be irrevocable and shall be effective (i) on
the day of receipt if  received by the  Purchaser  and the  Operating  Agent not
later  than  5:00  p.m.  (New  York  time) on any  Business  Day and (ii) on the
immediately  succeeding  Business  Day  if  received  by  the  Purchaser  or the
Operating  Agent after such time on such  Business  Day or if any such notice is
received on a day other than a Business Day  (regardless of the time of day such
notice is received). Each such notice of termination or reduction shall specify,
respectively,  the amount of, or the amount of the  proposed  reduction  in, the
Maximum  Purchase  Limit.   SECTION  2.03  Notices  Relating  to  Purchases  and
Reductions in Capital Investment.  (a) Not later than 11:00 a.m. (New York time)
on the  third  Business  Day of each  week,  the  Seller  shall  deliver  to the
Purchaser and the Operating Agent an Officer's Certificate  substantially in the
form of Exhibit 2.03(a) (each an "Investment Base Certificate");  provided, that
if (i) an Incipient Termination Event or a Termination Event shall have occurred
and be continuing or (ii) 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 Seller shall deliver an Investment Base Certificate to
the  Purchaser and the  Operating  Agent at such more frequent  intervals as the
Operating  Agent may request  from time to time.  Capital  Investment  Available
shall be determined by the Operating  Agent based on information  related to the
Seller  Collateral  available to it,  including (A) any information  obtained in
connection  with any  audit or  reflected  in the most  recent  Investment  Base
Certificate or any other  Investment  Report  delivered to the Purchaser and the
Operating  Agent  or (B) any  other  information  that may be  available  to the
Purchaser and the Operating Agent. (b) Each Purchase resulting in an increase in
Capital  Investment  shall be made upon the provision of notice by the Seller to
the Purchaser and the Operating  Agent in the manner provided  herein.  Any such
notice  must be given in writing so that it is  received no later than 4:00 p.m.
(New York time) on the Business Day immediately  preceding the proposed Purchase
Date set forth  therein.  Each such notice (a "Purchase  Request")  shall (i) be
substantially  in the form of Exhibit  2.03(b),  (ii) be  irrevocable  and (iii)
specify  the amount by which the  Seller  wishes the  Capital  Investment  to be
increased and the proposed  Purchase Date (which shall be a Business  Day),  and
shall include such other information as may be required by the Purchaser and the
Operating Agent.  (c) The Seller may at any time reduce the Capital  Investment;
provided, that (i) the Seller shall give one Business Day's prior written notice
of any such reduction to the Purchaser and the Operating Agent  substantially in
the form of Exhibit 2.03(c) (each such notice, a "Repayment Notice"),  (ii) each
such  notice  shall be  irrevocable,  (iii) each such notice  shall  specify the
amount by which the Seller  wishes the Capital  Investment to be reduced and the
proposed  date of such  reduction  (which shall be a Business  Day) and (iv) any
such  reduction must be accompanied by payment of (A) all Daily Yield accrued on
the Capital  Investment  being  reduced  through but  excluding the date of such
reduction and (B) the Breakage Costs, if any, required by Section 2.10. Any such
notice of reduction must be received by the Purchaser and the Operating Agent no
later than 4:00 p.m. (New York time) on the Business Day  immediately  preceding
the  date  of  the  proposed  reduction  in  Capital  Investment.  SECTION  2.04
Conveyance of Receivables.  (a) Purchase Assignment.  On or prior to the Closing
Date,  the Seller  shall  complete,  execute  and  deliver to the  Purchaser  an
assignment    substantially    in   the    form    of    Exhibit 2.04(a)    (the
"Purchase Assignment")  in order to  evidence  the  Purchases.  (b)  Funding  of
Collection Account; Payment of Purchase Price. (i) Funding of Collection Account
by  Purchaser.  Following  receipt  of any  Purchase  Request,  and  subject  to
satisfaction  of the conditions  set forth in Section 3.02, the Purchaser  shall
make  available  to or on behalf of the Seller on the  Purchase  Date  specified
therein  the lesser of the amount  specified  in such  Purchase  Request and the
Capital Investment  Available by depositing such amount in same day funds to the
Collection  Account.  (ii) Payment of Purchase  Price.  The Purchaser  shall, or
shall cause the Operating Agent to, make available to or on behalf of the Seller
on each Business Day during the Revolving Period, in same day funds, all amounts
on deposit in the Collection Account that are to be disbursed to or on behalf of
the Seller as payment for the Transferred  Receivables pursuant to Section 6.03;
provided  that,  if and for so long as the  Operating  Agent and the  Collateral
Agent have not taken  exclusive  dominion and control  over the Lockbox  Account
pursuant to Section  6.01(a)(i),  such payments for the Transferred  Receivables
shall be made by way of the  Seller's  receipt  of  transfers  from the  Lockbox
Accounts of proceeds of  Collections on the  Transferred  Receivables as well as
from amounts on deposit in the  Collection  Account.  (c) Vesting of  Ownership.
Effective  on  and as of  each  Purchase  Date,  the  Purchaser  shall  own  all
Transferred  Receivables sold by the Seller hereunder on such Purchase Date. The
Seller shall not take any action  inconsistent with such ownership and shall not
claim any ownership interest in such Transferred  Receivables.  The Seller shall
indicate in its Records that ownership of such Transferred Receivables is vested
in the  Purchaser.  In addition,  the Seller shall respond to any inquiries with
respect to the ownership of any such  Transferred  Receivable by stating that it
is no longer the owner of such Transferred Receivable and that ownership thereof
is vested in the Purchaser. The Seller and the Servicer shall hold all Contracts
and other documents and incidents  relating to such  Transferred  Receivables in
trust for the benefit of the Purchaser,  as the owner thereof,  and for the sole
purpose of  facilitating  the  servicing of such  Transferred  Receivables.  The
Seller and the Servicer hereby  acknowledge  that their retention and possession
of such Contracts and documents  shall at all times be at the sole discretion of
the Purchaser and in a custodial capacity for the Purchaser's  benefit only. (d)
Repurchases  of  Transferred  Receivables.  If any  Originator  is  required  to
repurchase  Transferred  Receivables from the Seller pursuant to Section 4.04 of
the Transfer  Agreement,  the Purchaser shall sell or reconvey such  Transferred
Receivables  to the Seller  (i) for cash or (ii) in  exchange  for new  Eligible
Receivables,  in each case in an amount equal to the Outstanding Balance of such
Transferred Receivables. SECTION 2.05 Facility Termination Date. Notwithstanding
anything  to the  contrary  set  forth  herein,  the  Purchaser  shall  have  no
obligation to purchase any additional Transferred Receivables from and after the
Facility  Termination  Date.  SECTION 2.06 Daily Yield. (a) The Seller shall pay
Daily  Yield to the  Purchaser  in the  manner  and at the  times  specified  in
Sections 6.03,  6.04 and 6.05.  (b)  Notwithstanding  the foregoing,  the Seller
shall pay interest at the applicable  Daily Yield Rate on unpaid Daily Yield and
on any other amount payable by the Seller  hereunder (to the extent permitted by
law) that shall not be paid in full when due  (whether  at stated  maturity,  by
acceleration or otherwise) for the period  commencing on the due date thereof to
(but  excluding) the date the same is  indefeasibly  paid in full.  SECTION 2.07
Fees.  (a) The Seller shall pay to the  Purchaser  the fees set forth in the Fee
Letter.  (b) On each Settlement Date, the Seller shall pay to the Servicer or to
the  Successor  Servicer,  as  applicable,  the  Servicing  Fee or the Successor
Servicing  Fees  and  Expenses,  respectively,  in each  case to the  extent  of
available  funds  therefor  as  provided  in  Section  6.04.  (c) If the  Seller
terminates the Maximum Purchase Limit pursuant to Section 2.02(b) on or prior to
the  second  anniversary  of the  Closing  Date,  the  Seller  shall  pay to the
Operating Agent, for the account of the Purchaser and as liquidated  damages and
compensation for the costs of being prepared to make Purchases,  on the Facility
Termination Date a prepayment fee (the "Prepayment Fee") in an amount determined
by  multiplying  the  Applicable  Percentage  (as defined  below) by the Maximum
Purchase  Limit as in  effect  immediately  prior to such  termination.  As used
herein,  the term "Applicable  Percentage"  shall mean (i) two percent (2.0%) in
the  case  of any  such  termination  which  occurs  on or  prior  to the  first
anniversary  of the Closing Date and (ii) one percent  (1.0%) in the case of any
such  termination  which  occurs on or prior to the  second  anniversary  of the
Closing Date. The Seller  acknowledges and agrees that (x) it would be difficult
or  impractical  to  calculate  the  Purchaser's  actual  damages  from an early
termination  of  Purchaser's  obligation to make  Purchases  pursuant to Section
2.02(b),  (y) the  Prepayment  Fee  provided  above is intended to be a fair and
reasonable  approximation  of such damages,  and (z) the Prepayment Fee provided
above is not intended to be a penalty. SECTION 2.08 Time and Method of Payments.
Subject to the provisions of Sections 6.02, 6.03, 6.04 and 6.05, all payments in
reduction  of  Capital  Investment  and all  payments  of yield,  fees and other
amounts payable by the Seller hereunder shall be made in Dollars, in immediately
available  funds,  to the Purchaser not later than 11:00 a.m. (New York time) on
the due date  therefor.  Any such  payment made on such date but after such time
shall be deemed to have been made on, and Daily Yield  shall  continue to accrue
and be payable  thereon  until,  the next  succeeding  Business Day. If any such
payment  becomes due on a day other than a Business  Day, the  maturity  thereof
will be extended to the next  succeeding  Business  Day and Daily Yield  thereon
shall be payable  during  such  extension.  Any and all  payments  by the Seller
hereunder shall be made in accordance with this  Section 2.08  without setoff or
counterclaim and free and clear of and without deduction for any and all present
or future taxes, levies, imposts, deductions, charges or withholdings, excluding
taxes  imposed on or  measured  by the net income of any  Affected  Party by the
jurisdictions under the laws of which any such Affected Party is organized or by
any political  subdivisions  thereof.  If the Seller shall be required by law to
deduct any taxes from or in respect of any sum  payable  hereunder,  (a) the sum
payable  shall be  increased  as much as shall be necessary so that after making
all required  deductions  (including  deductions  applicable to additional  sums
payable under this Section 2.08) the Affected Party entitled to receive any such
payment  receives an amount equal to the sum it would have  received had no such
deductions  been made,  (b) the Seller shall make such  deductions,  and (c) the
Seller  shall  pay the full  amount  deducted  to the  relevant  taxing or other
authority in accordance  with  applicable  law. Within 30 days after the date of
any  payment of taxes,  the Seller  shall  furnish  to the  Operating  Agent the
original or a certified copy of a receipt evidencing payment thereof. The Seller
shall  indemnify any Affected  Party from and against,  and,  within ten days of
demand therefor, pay any Affected Party for, the full amount of taxes (including
any  taxes  imposed  by  any   jurisdiction   on  amounts   payable  under  this
Section 2.08)  paid  by  such  Affected  Party  and  any  liability   (including
penalties,  interest and expenses)  arising  therefrom or with respect  thereto,
whether or not such taxes were  correctly  or  legally  asserted.  SECTION  2.09
Capital Requirements;  Additional Costs. (a) If the Operating Agent on behalf of
any Affected Party shall have determined that the adoption after the date hereof
of any law,  treaty,  governmental  (or  quasi-governmental)  rule,  regulation,
guideline or order regarding capital adequacy,  reserve  requirements or similar
requirements  or compliance by such Affected Party with any request or directive
regarding  capital  adequacy,   reserve  requirements  or  similar  requirements
(whether  or not  having  the  force  of law)  from  any  central  bank or other
Governmental  Authority  increases  or would have the effect of  increasing  the
amount of capital,  reserves or other funds  required to be  maintained  by such
Affected Party against  commitments  made by it under this Agreement,  any other
Related Document or any Program Document and thereby reducing the rate of return
on such Affected  Party's capital as a consequence of its commitments  hereunder
or  thereunder,  then the  Seller  shall  from time to time  upon  demand by the
Operating  Agent pay to the  Collateral  Agent on behalf of such Affected  Party
additional amounts sufficient to compensate such Affected Party for the Seller's
Share of such reduction together with interest thereon from the date of any such
demand until  payment in full at the Daily Yield Rate. A  certificate  as to the
amount  of that  reduction  and  showing  the basis of the  computation  thereof
submitted  by the  Operating  Agent to the Seller  shall be final,  binding  and
conclusive on the parties hereto (absent  manifest error) for all purposes.  (b)
If, due to any Regulatory Change, there shall be any increase in the cost to any
Affected  Party of  agreeing  to make or  making,  funding  or  maintaining  any
commitment  hereunder,  under any other  Related  Document  or under any Program
Document, including with respect to any Purchases, Capital Investment, LOC Draws
or Liquidity  Loans, or any reduction in any amount  receivable by such Affected
Party hereunder or thereunder,  including with respect to any Purchases, Capital
Investment, LOC Draws or Liquidity Loans (any such increase in cost or reduction
in amounts receivable are hereinafter referred to as "Additional  Costs"),  then
the Seller shall,  from time to time upon demand by the Operating  Agent, pay to
the  Collateral  Agent on  behalf  of such  Affected  Party  additional  amounts
sufficient to  compensate  such  Affected  Party for the Seller's  Share of such
Additional  Costs  together with interest  thereon from the date demanded  until
payment in full  thereof at the Daily Yield Rate.  Such  Affected  Party  agrees
that,  as promptly as  practicable  after it becomes  aware of any  circumstance
referred to above that would result in any such  Additional  Costs, it shall, to
the extent not inconsistent with its internal  policies of general  application,
use reasonable  commercial efforts to minimize costs and expenses incurred by it
and  payable  to  it by  the  Seller  pursuant  to  this  Section  2.09(b).  (c)
Determinations  by any  Affected  Party for purposes of this Section 2.09 of the
effect of any Regulatory  Change on its costs of making,  funding or maintaining
any commitments hereunder, under any other Related Document or under any Program
Document  or on amounts  receivable  by it  hereunder  or  thereunder  or of the
additional  amounts required to compensate such Affected Party in respect of any
Additional  Costs  shall be set  forth in a  written  notice  to the  Seller  in
reasonable  detail  and shall be final,  binding  and  conclusive  on the Seller
(absent  manifest  error) for all  purposes.  SECTION 2.10 Breakage  Costs.  The
Seller shall pay to the Collateral Agent for the account of the Purchaser,  upon
request  of the  Purchaser,  such  amount or  amounts  as shall  compensate  the
Purchaser for any loss, cost or expense  actually  incurred by the Purchaser (as
determined  by the  Purchaser)  as a result of any  reduction  by the  Seller in
Capital  Investment (and accompanying loss of Daily Yield thereon) other than on
the maturity date of the Commercial  Paper (or other  financing  source) funding
such Capital Investment, which compensation shall include an amount equal to any
loss or expense  actually  incurred by the Purchaser  during the period from the
date of such reduction to (but  excluding) the maturity date of such  Commercial
Paper (or other  financing  source) if the rate of  interest  obtainable  by the
Purchaser upon the redeployment of funds in an amount equal to such reduction is
less  than the  interest  rate  applicable  to such  Commercial  Paper (or other
financing  source)  (any such loss,  cost or expense  referred  to  collectively
herein as "Breakage Costs"). The determination by the Purchaser of the amount of
any such loss or expense shall be set forth in a written notice to the Seller in
reasonable  detail  and shall be final,  binding  and  conclusive  on the Seller
(absent manifest error) for all purposes.  SECTION 2.11 Purchase Excess. On each
Business  Day  during  the  Revolving   Period  and  after   completion  of  the
disbursements  specified in Section 6.03,  the Operating  Agent shall notify the
Seller and the Servicer of any Purchase Excess on such day, and the Seller shall
deposit the amount of such Purchase  Excess in the  Collection  Account by 11:00
a.m. (New York time) on the  immediately  succeeding  Business Day.  ARTICLE III
CONDITIONS PRECEDENT SECTION 3.01 Conditions to Effectiveness of Agreement.  The
Purchaser shall not be obligated to purchase Transferred  Receivables  hereunder
on the occasion of the initial Purchase, nor shall the Purchaser,  the Operating
Agent or the Collateral Agent be obligated to take, fulfill or perform any other
action  hereunder,  until the following  conditions have been satisfied,  in the
sole  discretion  of, or waived in writing by, the  Purchaser  and the Operating
Agent:  (a) Purchase  Agreement;  Other  Related  Documents.  This  Agreement or
counterparts  hereof  shall have been duly  executed by, and  delivered  to, the
parties  hereto and the Purchaser  and the  Operating  Agent shall have received
such  other  documents,  instruments,  agreements  and  legal  opinions  as  the
Purchaser  and  the  Operating  Agent  shall  request  in  connection  with  the
transactions  contemplated by this Agreement,  including all those listed in the
Schedule of Documents,  each in form and substance satisfactory to the Purchaser
and the Operating Agent. (b) Governmental and Other Approvals. The Purchaser and
the  Operating  Agent shall have  received  (i) satisfactory  evidence  that the
Seller and the Servicer have obtained all required consents and approvals of all
Persons,  including 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 or thereby or (ii) an
Officer's  Certificate  from each of the  Seller  and the  Servicer  in form and
substance  satisfactory  to the Purchaser and the Operating Agent affirming that
no such consents or approvals are required. (c) Compliance with Laws. The Seller
and the  Servicer  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 5.01(a).  (d) Payment of Fees.  The
Seller shall have paid all fees  required to be paid by it on the Closing  Date,
including all fees required  hereunder and under the Fee Letter,  and shall have
reimbursed  the  Purchaser  for all fees,  costs and  expenses  of  closing  the
transactions  contemplated  hereunder  and under the  other  Related  Documents,
including the Purchaser's reasonable legal and other document preparation costs.
SECTION 3.02 Conditions  Precedent to All Purchases.  The Purchaser shall not be
obligated to purchase Transferred Receivables hereunder on any Purchase Date if,
as of the date thereof:  (a) any representation or warranty of the Seller or the
Servicer  contained  herein or in any of the other  Related  Documents  shall be
untrue or incorrect as of such date, either before or after giving effect to the
Purchase of Transferred  Receivables on such date and to the  application of the
proceeds  therefrom,  except to the extent that such  representation or warranty
expressly  relates to an earlier date and except for changes  therein  expressly
permitted by this Agreement;  (b) any event shall have occurred, or would result
from the Purchase of  Transferred  Receivables on such Purchase Date or from the
application of the proceeds therefrom, that constitutes an Incipient Termination
Event, a Termination Event, an Incipient Servicer  Termination Event or an Event
of Servicer  Termination;  (c) the Seller shall not be in compliance with any of
its covenants or other agreements set forth herein; (d) the Facility Termination
Date  shall have  occurred;  (e) either  before or after  giving  effect to such
Purchase and to the  application of the proceeds  therefrom,  a Purchase  Excess
would exist;  (f) any Originator,  the Seller or the Servicer shall fail to have
taken such other action,  including delivery of approvals,  consents,  opinions,
documents and  instruments  to the Purchaser  and the  Operating  Agent,  as the
Purchaser or the Operating  Agent may reasonably  request or a Rating Agency may
request;  or  (g)  the  Operating  Agent  or the  Collateral  Agent  shall  have
determined  that any event or  condition  has  occurred  that has had,  or could
reasonably  be expected  to have or result in, a Material  Adverse  Effect.  The
delivery by the Seller of a Purchase Request and the acceptance by the Seller of
the purchase price for any Transferred Receivables on any Purchase Date shall be
deemed  to  constitute,  as of any such  Purchase  Date,  a  representation  and
warranty  by the  Seller  that the  conditions  in this  Section  3.02 have been
satisfied.    ARTICLE   IV   REPRESENTATIONS   AND   WARRANTIES   SECTION   4.01
Representations  and  Warranties  of the  Seller.  To induce  the  Purchaser  to
purchase the  Transferred  Receivables  and each of the Operating  Agent and the
Collateral  Agent to take any action  hereunder,  the Seller makes the following
representations  and  warranties to the Purchaser,  the Operating  Agent and the
Collateral Agent, each and all of which shall survive the execution and delivery
of this Agreement. (a) Legal Existence; Compliance with Law. The Seller (i) is a
limited  liability company duly organized and validly existing under the laws of
its  jurisdiction  of formation;  (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 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 articles of organization and operating  agreement;
and (vi)subject to specific  representations  set forth herein regarding ERISA,
tax 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;  Seller Names;  FEIN. As of the Closing Date, the current
location of the Seller's chief  executive  office,  principal place of business,
other offices, the warehouses and premises within which any Seller Collateral is
stored or  located,  and the  locations  of its  records  concerning  the Seller
Collateral (including originals of the Seller Assigned Agreements) are set forth
in Schedule  4.01(b) and none of such  locations has changed  within the past 12
months (or such  shorter time as the Seller has been in  existence).  During the
prior five  years (or such  shorter  time as the Seller has been in  existence),
except as set forth in  Schedule  4.01(b),  the  Seller has not been known as or
used any name  (including  without  limitation any assumed,  fictitious or trade
name or "doing  business  as" name).  In  addition,  Schedule 4.01(b)  lists the
federal employer identification number of the Seller. (c) Power,  Authorization,
Enforceable Obligations.  The execution,  delivery and performance by the Seller
of this  Agreement and the other Related  Documents to which it is a party,  the
creation  and  perfection  of all Liens and  ownership  interests  provided  for
therein and, solely with respect to clause (vii) below,  the exercise by each of
the Seller, 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  the  Seller's  power;  (ii) have  been duly  authorized  by all
necessary  or proper  manager,  member or other  action  on the  Seller's  part;
(iii) do not contravene any provision of the Seller's  articles of  organization
or operating agreement;  (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 the
Seller or any  Originator is a party or by which the Seller or any Originator or
any of the property of the Seller or any Originator is bound; (vi) do not result
in the creation or  imposition  of any Adverse Claim upon any of the property of
the Seller or any  Originator;  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 to which the Seller is a party shall have been duly  executed
and delivered by the Seller and each such Related Document shall then constitute
a legal, valid and binding  obligation of the Seller  enforceable  against it in
accordance with its terms.  (d) No Litigation.  No Litigation is now pending or,
to  the   knowledge   of  the  Seller,   threatened   against  the  Seller  that
(i) challenges  the Seller'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, sale, pledge or contribution 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 the  Seller  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, the
Seller.   (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,  the Seller is and will be  Solvent.  (f)  Material  Adverse  Effect.
Between  January 3, 1999 and the Closing Date,  (i) the  Seller has not 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 the Seller or has become  binding upon the Seller's  assets
and no law or regulation  applicable to the Seller has been adopted that has had
or could  reasonably be expected to have a Material Adverse Effect and (iii) the
Seller is not in default  and no third  party is in default  under any  material
contract,  lease or other agreement or instrument to which the Seller 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 Property;  Liens. As of the
Closing Date, no Transferred Receivable is subject to any Adverse Claim, none of
the other  properties and assets of the Seller are subject to any Adverse Claims
other than  Permitted  Encumbrances,  and there are no facts,  circumstances  or
conditions  known to the  Seller  that may  result  in (i) with  respect  to the
Transferred  Receivables,  any Adverse Claims (including  Adverse Claims arising
under  Environmental  Laws) and (ii) with  respect to its other  properties  and
assets, any Adverse Claims (including Adverse Claims arising under Environmental
Laws)  other  than   Permitted   Encumbrances.   The  Seller  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  the  Seller's  right,  title  and  interest  in and to the  Transferred
Receivables  and its other  properties  and  assets.  The Liens  granted  to the
Purchaser  pursuant to  Section 8.01  will at all times be fully perfected first
priority Liens in and to the Seller Collateral.  (h) Ventures,  Subsidiaries and
Affiliates;  Outstanding Stock and Indebtedness. Except as set forth in Schedule
4.01(h), the Seller has no Subsidiaries,  is not engaged in any joint venture or
partnership with any other Person,  and is not an Affiliate of any other Person.
All of the  issued and  outstanding  Stock of the Seller is owned by each of the
Stockholders  in the  amounts  set  forth  on  Schedule  4.01(h).  There  are no
outstanding  rights  to  purchase,   options,  warrants  or  similar  rights  or
agreements  pursuant  to which  the  Seller  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.  All outstanding Debt of the Seller
as of the Closing  Date is  described  in Section  5.03(i).  (i) Taxes.  All tax
returns, reports and statements,  including information returns, required by any
Governmental  Authority  to be filed by the  Seller  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  5.01(e).  Proper and accurate  amounts have been  withheld by the
Seller  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 the Seller'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  any  such  audit  or  otherwise   currently
outstanding.  Except as  described  on  Schedule  4.01(i),  the  Seller  has not
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.  The  Seller is not  liable for any
charges:  (A) under  any agreement  (including  any tax sharing  agreements)  or
(B) to the best of the Seller's  knowledge,  as a transferee.  As of the Closing
Date, the Seller has not 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) Full Disclosure.  No information
contained in this Agreement, any Investment Base Certificate or any of the other
Related  Documents,  or any written  statement  furnished by or on behalf of the
Seller to 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
the  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 on the estimates and  assumptions  stated
therein,  all of which the Seller believes to be reasonable and fair in light of
current  conditions  and  current  facts  known to Seller and, as of the Closing
Date,  reflect  Cone  Mill's  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.  (k)
ERISA.  The Seller is in compliance with ERISA and has not incurred and does not
expect to incur any  liabilities  (except  for premium  payments  arising in the
ordinary course of business)  payable to the PBGC under ERISA.  (l) Brokers.  No
broker or finder  acting on behalf of the Seller was  employed  or  utilized  in
connection   with  this  Agreement  or  the  other  Related   Documents  or  the
transactions  contemplated hereby or thereby and the Seller has no obligation to
any Person in respect of any finder's or brokerage fees in connection therewith.
(m) Margin  Regulations.  The Seller is not engaged 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").  The  Seller  owns no Margin  Stock,  and no portion of the
proceeds of the purchase price for Transferred  Receivables  sold hereunder 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.  The Seller  will not take or permit to be taken any action that
might  cause any  Related  Document  to violate  any  regulation  of the Federal
Reserve  Board.  (n)   Nonapplicability  of  Bulk  Sales  Laws.  No  transaction
contemplated  by  this  Agreement  or  any  of the  Related  Documents  requires
compliance  with any bulk  sales act or  similar  law.  (o)  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.  (p)  Government  Regulation.  The  Seller  is not 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.  The  Purchase of the  Transferred  Receivables  by the  Purchaser
hereunder,  the application of the proceeds  thereof 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. (q) Nonconsolidation, Etc. The
Seller is operated in such a manner that the  separate  legal  existence  of the
Seller and each member of the Cone Mills Group would not be  disregarded  in the
event of the bankruptcy or insolvency of any member of the Cone Mills Group and,
without  limiting the generality of the  foregoing:  (i) the Seller is a limited
purpose,  limited  liability  company  whose  activities  are  restricted in its
articles of organization to those activities  expressly  permitted hereunder and
under the other Related  Documents and the Seller has not engaged,  and does not
presently  engage,  in  any  activity  other  than  those  activities  expressly
permitted  hereunder and under the other Related  Documents,  nor has the Seller
entered into any agreement other than this Agreement,  the Management Agreement,
the other  Related  Documents to which it is a party and, with the prior written
consent of the  Purchaser,  the Operating  Agent and the Collateral  Agent,  any
other  agreement  necessary to carry out more  effectively  the  provisions  and
purposes  hereof  or  thereof;  (ii) no member  of the Cone  Mills  Group or any
individual at the time he or she is acting as an officer or employee of any such
member is or has been involved in the day-to-day management of the Seller; (iii)
other  than  the  purchase  and  acceptance  through  capital   contribution  of
Transferred  Receivables,  the payment of dividends and the return of capital to
any Stockholder Originator,  any lease or sub-lease of office space or equipment
and the payment of Servicing  Fees to the  Servicer  under this  Agreement,  the
Seller engages and has engaged in no inter-company  transactions with any member
of the Cone Mills Group;  (iv) the Seller maintains company records and books of
account,   holds  regular  company  meetings  and  otherwise   observes  company
formalities and has a business  office,  in each case separate from that of each
member of the Cone  Mills  Group.  (v) the  financial  statements  and books and
records of the Seller and each  Originator  reflect the separate legal existence
of the Seller;  (vi) (A) the Seller  maintains  its assets  separately  from the
assets of each member of the Cone Mills Group (including through the maintenance
of separate bank accounts and except for any Records to the extent  necessary to
assist  the  Servicer  in  connection  with  the  servicing  of the  Transferred
Receivables), (B) the Seller's funds (including all money, checks and other cash
proceeds) and assets,  and records relating  thereto,  have not been and are not
commingled with those of any member of the Cone Mills Group and (C) the separate
creditors  of the Seller will be entitled to be  satisfied  out of the  Seller's
assets  prior to any value in the  Seller  becoming  available  to the  Seller's
Stockholders; (vii) except as otherwise expressly permitted hereunder, under the
other Related  Documents  and under the Seller's  organizational  documents,  no
member of the Cone Mills Group  (A) pays the Seller's  expenses,  (B) guarantees
the Seller's obligations, or (C) advances funds to the Seller for the payment of
expenses  or   otherwise;   (viii)  all   business   correspondence   and  other
communications  of the Seller are conducted in the Seller's own name, on its own
stationery and business forms and through a separately-listed  telephone number;
(ix) the Seller  does not act as agent for any  member of the Cone Mills  Group,
but  instead  presents  itself  to the  public as a  limited  liability  company
separate  from each such  member and  independently  engaged in the  business of
purchasing  and financing  Receivables;  (x) if and for so long as Cone Mills is
obligated  to comply  with  Section  3.9 of the  Indenture,  the Seller is not a
Subsidiary  (as  defined in the  Indenture)  of Cone  Mills and the  Independent
Member owns and controls, directly or indirectly, a majority of the total voting
power of outstanding  securities or other interests  entitled (without regard to
the  occurrence  of any  contingency)  to vote  in the  election  of  directors,
managers  or  trustees of the  Seller;  (xi) the Seller  maintains  at least two
independent managers each of whom (A) is not a Stockholder,  director,  officer,
employee or associate,  or any relative of the  foregoing,  of any member of the
Cone Mills Group (other than being a manager of Seller),  all as provided in its
articles of organization,  and (B) is otherwise acceptable to the Purchaser, the
Operating  Agent and the Collateral  Agent;  (xii) the Seller  complies with the
factual  assumptions  pertaining  to it contained in the opinions of Schell Bray
Aycock Abel & Livingston  P.L.L.C.  pursuant to the Schedule of  Documents;  and
(xiii) the articles of  organization  and the operating  agreement of the Seller
requires (A) the affirmative vote of (1) a supermajority of all managers and (2)
each  independent  manager before a voluntary  petition under Section 301 of the
Bankruptcy  Code may be filed by the  Seller,  (B) the  Seller to  maintain  (1)
correct  and  complete  books and  records  of  account  and (2)  minutes of the
meetings and other  proceedings of its Stockholders  and board of managers.  (r)
Deposit and Disbursement  Accounts.  Schedule 4.01(r)  lists all banks and other
financial  institutions  at which the  Seller  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.  (s)  Transferred
Receivables.  (i)  Transfers.  Each  Transferred  Receivable was purchased by or
contributed to the Seller on the relevant Transfer Date pursuant to the Transfer
Agreement.  (ii)  Eligibility.  Each  Transferred  Receivable  designated  as an
Eligible Receivable in each Investment Base Certificate  constitutes an Eligible
Receivable as of the date of such Investment Base Certificate. (iii) No Material
Adverse Effect.  The Seller 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 each  Transferred  Receivable
designated as an Eligible Receivable in any Investment Base Certificate will not
be paid in full when due or to expect any other Material  Adverse  Effect.  (iv)
Nonavoidability   of  Transfers.   The  Seller  shall  (A)  have  received  each
Contributed  Receivable  as a  contribution  to the capital of the Seller by the
Originator  thereof and (B) (1) have  purchased  each Sold  Receivable  from the
Originator  thereof for cash  consideration and (2) have accepted  assignment of
any Eligible  Receivables  transferred pursuant to clause (b) of Section 4.04 of
the  Transfer  Agreement,  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 the Transfer  Agreement shall not
have been made for or on account of an  antecedent  debt owed by the  Originator
thereof  to the  Seller  and no such Sale is or may be  avoidable  or subject to
avoidance under any bankruptcy laws, rules or regulations.  (t)  Representations
and  Warranties  in Other Related  Documents.  Each of the  representations  and
warranties  of the Seller  contained in the Related  Documents  (other than this
Agreement)  is true and correct in all respects and the Seller 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. (u) Year 2000 Problems.  The Seller has no Year 2000 Problems except any
such problems that  individually  or in the  aggregate  could not  reasonably be
expected to have a Material  Adverse Effect.  SECTION 4.02  Representations  and
Warranties of the Servicer.  To induce the Purchaser to purchase the Transferred
Receivables and each of the Operating Agent and the Collateral Agent to take any
action  required to be performed by it hereunder,  the Servicer  represents  and
warrants to the Purchaser,  the Operating Agent and the Collateral Agent,  which
representation  and warranty  shall  survive the  execution and delivery of this
Agreement,  that each of the  representations  and  warranties  of the  Servicer
(whether  made  by the  Servicer  in its  capacity  as an  Originator  or as the
Servicer)  contained in any Related Document is true and correct and, if made by
the Servicer in its capacity as an  Originator,  applies with equal force to the
Servicer in its capacity as the  Servicer,  and the  Servicer  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.  ARTICLE V GENERAL  COVENANTS  OF THE SELLER  SECTION  5.01  Affirmative
Covenants of the Seller. The Seller covenants and agrees that from and after the
Closing Date and until the Termination  Date: (a) Compliance with Agreements and
Applicable  Laws.  The Seller 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  Transferred  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,  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.  (b)  Maintenance of Existence and
Conduct of  Business.  The Seller  shall:  (i) do or cause to be done all things
necessary  to preserve  and keep in full force and effect its limited  liability
company  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  articles of  organization  and  operating
agreement and Sections  4.01(q) and (r); (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 names as are set forth in Schedule 4.01(b).
(c) Deposit of  Collections.  The Seller shall  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 with respect
to any Transferred Receivable. (d) Use of Proceeds. The Seller shall utilize the
proceeds  of the  Purchases  made  hereunder  solely  for  (i) the  purchase  of
Receivables  from an  Originator  pursuant to the Transfer  Agreement,  (ii) the
payment of dividends to the Seller's direct Stockholders,  and (iii) the payment
of administrative  fees or Servicing Fees or expenses to the Servicer or routine
administrative or operating  expenses,  in each case only as expressly permitted
by and in  accordance  with the terms of this  Agreement  and the other  Related
Documents. (e) Payment, Performance and Discharge of Obligations. (i) Subject to
Section 5.01(e)(ii),  the Seller shall pay, perform and discharge or cause to be
paid,  performed and discharged  promptly all charges  payable by it,  including
(A) charges  imposed  upon it, its income and  profits,  or any of its  property
(real,  personal or mixed) and all charges with respect to tax,  social security
and  unemployment  withholding  with  respect  to its  employees  (if any),  and
(B) lawful  claims for labor,  materials,  supplies  and  services or  otherwise
before any  thereof  shall  become  past due.  (ii) The Seller may in good faith
contest,  by appropriate  proceedings,  the validity or amount of any charges or
claims described in Section  5.01(e)(i);  provided,  that (A) adequate  reserves
with  respect to such  contest are  maintained  on the books of the  Seller,  in
accordance with GAAP, of and to the extent determined to be material under GAAP,
(B) such  contest is maintained and prosecuted  continuously and with diligence,
(C) none of the Seller  Collateral  becomes  subject to  forfeiture or loss as a
result of such contest,  (D) no Lien shall be imposed to secure  payment of such
charges or claims  other than  inchoate  tax liens and  (E) the  Purchaser,  the
Operating  Agent or the  Collateral  Agent has not advised the Seller in writing
that such Affected Party  reasonably  believes that  nonpayment or  nondischarge
thereof could have or result in a Material Adverse Effect. (f) ERISA. The Seller
shall give 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.  (g) Year 2000  Compliance.  The Seller will have no Year 2000
Problems,  except any such problems that  individually or in the aggregate could
not  reasonably  be expected to have a Material  Adverse  Effect.  SECTION  5.02
Reporting  Requirements  of the Seller.  (a) The Seller hereby agrees that, from
and after the Closing Date and until the  Termination  Date, it shall deliver or
cause to be delivered to the  Purchaser,  the Operating  Agent,  the  Collateral
Agent and, in the case of paragraph (f) therein  only,  to the Rating  Agencies,
the financial  statements,  notices and other  information at the times,  to the
Persons  and in the manner  set forth in Annex  5.02(a).  (b) The Seller  hereby
agrees that, from and after the Closing Date and until the Termination  Date, it
shall deliver or cause to be delivered to the Purchaser, the Operating Agent and
the  Collateral  Agent  the  Investment  Reports   (including   Investment  Base
Certificates)  at the times, to the Persons and in the manner set forth in Annex
5.02(b) SECTION 5.03 Negative  Covenants of the Seller. The Seller covenants and
agrees that,  without the prior written consent of the Purchaser,  the Operating
Agent  and the  Collateral  Agent,  from and after the  Closing  Date  until the
Termination  Date:  (a) Sale of Stock and  Assets.  The  Seller  shall not sell,
transfer, convey, assign or otherwise dispose of, or assign any right to receive
income in respect  of, any of its  properties  or other  assets,  including  its
capital  Stock  (whether in a public or a private  offering or  otherwise),  any
Transferred Receivable or Contract therefor or any of its rights with respect to
any  Lockbox or any Lockbox  Account,  the  Collection  Account,  the  Retention
Account or any other deposit account in which any Collections of any Transferred
Receivable  are  deposited  except  as  otherwise  expressly  permitted  by this
Agreement or any of the other Related Documents. (b) Liens. The Seller shall not
create,  incur,  assume  or permit  to exist  (i) any  Adverse  Claim on or with
respect to its  Transferred  Receivables  or (ii) any  Adverse  Claim on or with
respect  to its other  properties  or  assets  (whether  now owned or  hereafter
acquired) except for the Liens set forth in Schedule 5.03(b) and other Permitted
Encumbrances. In addition, the Seller shall not become a party to any agreement,
note,  indenture or instrument or take any other action that would  prohibit the
creation  of a Lien on any of its  properties  or other  assets  in favor of the
Purchaser as additional collateral for the Seller Secured Obligations, except as
otherwise  expressly  permitted by this  Agreement  or any of the other  Related
Documents.  (c) Modifications of Receivables,  Contracts or Transfer  Agreement.
The Seller  shall not extend,  amend,  forgive,  discharge,  compromise,  waive,
cancel or otherwise  modify the terms of any  Transferred  Receivable  or amend,
modify or waive any term or condition of any Contract  related thereto or amend,
modify, waive or terminate any term or condition of the Transfer Agreement,  any
Receivables Assignment,  or the Parent Agreement;  provided, that the Seller may
authorize  the Servicer to take such actions as are  expressly  permitted by the
terms of any Related Document or the Credit and Collection Policies. (d) Changes
in  Instructions  to  Obligors.  The  Seller  shall  not make any  change in its
instructions  to Obligors  regarding the deposit of Collections  with respect to
the  Transferred  Receivables.  (e) Capital  Structure and Business.  The Seller
shall not (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,  (iii) amend  its
articles of organization or its operating  agreement or be operated in violation
of its articles of  organization or operating  agreement,  or (iv) if and for so
long as Cone Mills is obligated to comply with Section 3.9 of the Indenture,  be
or become a Subsidiary (as defined in the  Indenture) of Cone Mills.  The Seller
shall not engage in any business other than the businesses  currently engaged in
by it.  (f)  Mergers,  Subsidiaries,  Etc.  The  Seller  shall not  directly  or
indirectly,  by  operation  of  law  or  otherwise,   (i) form  or  acquire  any
Subsidiary,  or (ii) merge with,  consolidate with, acquire all or substantially
all of the assets or capital Stock of, or otherwise combine with or acquire, any
Person. (g) Sale Characterization; Transfer Agreement. The Seller shall not make
statements  or  disclosures,  prepare any  financial  statements or in any other
respect  account  for or treat the  transactions  contemplated  by the  Transfer
Agreement  (including for accounting,  tax and reporting purposes) in any manner
other  than (i) with  respect  to each  Sale of each  Sold  Receivable  effected
pursuant to the Transfer  Agreement,  as a true sale and absolute  assignment of
the  title  to  and  sole  record  and  beneficial  ownership  interest  of  the
Transferred  Receivables by the Originators  thereof to the Seller and (ii) with
respect  to each  contribution  of  Contributed  Receivables  thereunder,  as an
increase  in the stated  capital of the Seller.  (h)  Restricted  Payments.  The
Seller shall not enter into any lending  transaction with any other Person.  The
Seller  shall not at any time (i) advance  credit to any Person or  (ii) declare
any  dividends,  repurchase  any Stock,  return any  capital,  or make any other
payment or  distribution  of cash or other  property or assets in respect of the
Seller's  Stock if, after giving effect to any such advance or  distribution,  a
Purchase  Excess would  exist.  (i) Debt.  The Seller  shall not create,  incur,
assume  or  permit  to exist any  Debt,  except  (i) Debt  of the  Seller to any
Affected Party,  Purchaser  Indemnified Person, the Servicer 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 they are permitted to remain unfunded
under  applicable  law,  and (iv)  endorser  liability  in  connection  with the
endorsement of negotiable  instruments for deposit or collection in the ordinary
course of  business.  (j)  Prohibited  Transactions.  The Seller shall not enter
into,  or be a party to, any  transaction  with any Person  except as  expressly
permitted hereunder or under any other Related Document. (k) Investments. Except
as otherwise expressly permitted hereunder or under the other Related Documents,
the Seller shall not make any investment in, or make or accrue loans or advances
of money to, any Person, including any Stockholder, manager, officer or employee
of the Seller or any of Cone Mill's  other  Subsidiaries,  through the direct or
indirect  lending of money,  holding of  securities  or  otherwise,  except with
respect to Transferred  Receivables and Permitted Investments.  (l) Commingling.
The Seller  shall not  deposit  or permit  the  deposit of any funds that do not
constitute Collections of Transferred  Receivables into any Lockbox Account. (m)
ERISA.  The  Seller  shall  not,  and shall not cause or permit any of its ERISA
Affiliates  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.  ARTICLE VI COLLECTIONS AND DISBURSEMENTS  SECTION 6.01  Establishment of
Deposit Accounts.  (a) The Lockbox Accounts. (i) The Seller has established with
each Lockbox Bank one or more Lockbox Accounts.  If (i) an Incipient Termination
Event or a  Termination  Event shall have occurred and be continuing or (ii) the
Operating Agent, in good faith,  believes that a Termination  Event is imminent,
the  Operating  Agent (and from and after the  Facility  Termination  Date,  the
Collateral  Agent)  may,  without  prior  notice to the Seller,  take  exclusive
dominion and control of each  Lockbox  Account and all monies,  instruments  and
other property then or thereafter on deposit therein,  and the Seller thereafter
shall not make or cause to be made,  nor shall the  Seller  thereafter  have any
ability to make or cause to be made, any  withdrawals  from any Lockbox  Account
except as provided in Section 6.01(b)(ii). (ii) The Seller and the Servicer have
instructed all existing Obligors of Transferred Receivables,  and shall instruct
all future  Obligors of such  Receivables,  to make payments in respect  thereof
only (A) by check or money order mailed to one or more  lockboxes or post office
boxes  under  the  control  of  the  Operating   Agent  (each  a  "Lockbox"  and
collectively the "Lockboxes") or (B) by wire transfer or moneygram directly to a
Lockbox  Account.  Schedule 4.01(r) lists all Lockboxes and all Lockbox Banks at
which the Seller  maintains  Lockbox  Accounts as of the Closing Date,  and such
schedule  correctly  identifies  (1) with respect to each such Lockbox Bank, the
name,  address and telephone  number  thereof,  (2) with respect to each Lockbox
Account,  the name in which such account is held and the complete account number
therefor,  and (3) with respect to each Lockbox,  the lockbox number and address
thereof. The Seller and the Servicer shall endorse, to the extent necessary, all
checks or other  instruments  received  in any  Lockbox  so that the same can be
deposited in the Lockbox  Account,  in the form so received  (with all necessary
endorsements),  on the first Business Day after the date of receipt thereof.  In
addition,  each of the  Seller  and the  Servicer  shall  deposit or cause to be
deposited  into a  Lockbox  Account  all  cash,  checks,  money  orders or other
proceeds of Transferred  Receivables or Seller  Collateral  received by it other
than in a  Lockbox  or a  Lockbox  Account,  in the form so  received  (with all
necessary  endorsements),  not  later  than the close of  business  on the first
Business Day following the date of receipt  thereof,  and until so deposited all
such  items or other  proceeds  shall be held in trust  for the  benefit  of the
Collateral  Agent.  Neither the Seller nor the Servicer  shall make any deposits
into a Lockbox or any Lockbox  Account  except in  accordance  with the terms of
this  Agreement  or any other  Related  Document.  (iii) If, for any  reason,  a
Lockbox  Agreement  terminates  or any  Lockbox  Bank  fails to comply  with its
obligations  under the Lockbox Agreement to which it is a party, then the Seller
shall promptly notify all Obligors of Transferred Receivables who had previously
been  instructed  to make wire payments to a Lockbox  Account  maintained at any
such  Lockbox  Bank to make all  future  payments  to a new  Lockbox  Account in
accordance with this  Section 6.01(a)(iii).  The Seller shall not close any such
Lockbox  Account unless it shall have (A) received the prior written  consent of
the Operating Agent and the Collateral Agent, (B) established a new account with
the same Lockbox Bank or with a new depositary  institution  satisfactory to the
Operating Agent and the Collateral Agent, (C) entered into an agreement covering
such new account with such Lockbox Bank or with such new depositary  institution
substantially  in the form of such Lockbox  Agreement or that is satisfactory in
all respects to the Operating Agent and the Collateral Agent (whereupon, for all
purposes of this  Agreement  and the other Related  Documents,  such new account
shall  become a  Lockbox  Account,  such new  agreement  shall  become a Lockbox
Agreement and any new depositary  institution  shall become a Lockbox Bank), and
(D) taken  all such action as the  Collateral  Agent shall  require to grant and
perfect a first priority Lien in such new Lockbox Account to the Purchaser under
Section 8.01 of this  Agreement.  Except as  permitted by this Section  6.01(a),
neither  the  Seller  nor the  Servicer  shall  open any new  Lockbox or Lockbox
Account  without  the  prior  written  consent  of the  Operating  Agent and the
Collateral Agent. (b) Collection Account.  (i) The Purchaser has established and
shall maintain the Collection  Account with the  Depositary.  The Seller and the
Purchaser agree that prior to the Facility Termination Date the Operating Agent,
and from and after the Facility  Termination  Date the Collateral  Agent,  shall
have exclusive  dominion and control of the  Collection  Account and all monies,
instruments and other property from time to time on deposit  therein.  (ii) From
and after  the  Operating  Agents  or the  Collateral  Agents  taking  exclusive
dominion and control over the Lockbox Accounts  pursuant to Section  6.01(a)(i),
the Operating Agent or the Collateral  Agent (as the case may be) shall instruct
each Lockbox Bank to transfer,  on each Business Day and in same day funds,  all
available  funds in each  Lockbox  Account to the  Collection  Account,  and the
Seller shall cause each Lockbox Bank to make such transfer.  The Purchaser,  the
Operating Agent and the Collateral Agent may deposit into the Collection Account
from time to time all monies,  instruments and other property received by any of
them as proceeds of the Transferred  Receivables.  On each Business Day prior to
the Facility  Termination  Date the Operating Agent shall instruct and cause the
Depositary  (which  instruction  may be in  writing  or by  telephone  confirmed
promptly  thereafter in writing) to release  funds on deposit in the  Collection
Account in the order of priority set forth in Section 6.03. On each Business Day
from and after the Facility  Termination  Date the Collateral  Agent shall apply
all amounts when received in the Collection Account in the order of priority set
forth in Section 6.05. (iii) If, for any reason, the Depositary wishes to resign
as depositary of the Collection  Account or fails to carry out the  instructions
of the Operating Agent or the Collateral  Agent, then the Operating Agent or the
Collateral  Agent shall  promptly  notify the  Purchaser  Secured  Parties.  The
Purchaser  shall not  close  the  Collection  Account  unless it shall  have (A)
received the prior  written  consent of the Operating  Agent and the  Collateral
Agent,  (B)  established a new deposit account with the Depositary or with a new
depositary  institution  satisfactory  to the Operating Agent and the Collateral
Agent,  (C) entered  into an agreement  covering  such new account with such new
depositary  institution  satisfactory in all respects to the Operating Agent and
the  Collateral  Agent  (whereupon  such new account shall become the Collection
Account for all purposes of this Agreement and the other Related Documents), and
(D) taken all such action as the  Collateral  Agent  shall  require to grant and
perfect a first priority Lien in such new  Collection  Account to the Collateral
Agent under the Collateral Agent Agreement. (c) Retention Account. The Purchaser
has  established  and shall maintain the Retention  Account with the Depositary.
The Seller and the Purchaser agree that prior to the Facility  Termination  Date
the  Operating  Agent,  and from and after  the  Facility  Termination  Date the
Collateral  Agent,  shall have  exclusive  dominion and control of the Retention
Account  and all monies,  instruments  and other  property  from time to time on
deposit therein. (d) Collateral Account. The Purchaser has established and shall
maintain  the  Collateral  Account  with  the  Depositary.  The  Seller  and the
Purchaser  agree that the  Operating  Agent shall have  exclusive  dominion  and
control of the Collateral Account and all monies, instruments and other property
from  time to time on  deposit  therein.  SECTION  6.02  Funding  of  Collection
Account.  (a) As soon as practicable,  and in any event no later than 11:00 a.m.
(New  York  time)  on each  Business  Day:  (i) if the  Operating  Agent  or the
Collateral  Agent has taken  exclusive  dominion  and  control  over the Lockbox
Accounts  pursuant to Section  6.01(a)(i),  the Operating  Agent, the Collateral
Agent,  the Seller and the  Servicer  shall cause the  Lockbox  Bank to make the
transfer to the  Collection  Account  required to be made on such  Business  Day
pursuant to Section  6.01(b)(ii);  (ii) the  Purchaser  or the  Operating  Agent
shall, or shall cause the Collateral Agent to, deposit in the Collection Account
the amount, if any, required pursuant to Section 2.04(b)(i); (iii) the Purchaser
or the Operating Agent shall, or shall cause the Collateral Agent to, deposit in
the  Collection  Account  any Seller LOC Draws or  Insurance  Draws made on such
Business Day; (iv) if, on the immediately  preceding Business Day, the Operating
Agent shall have notified the Seller of any Purchase  Excess pursuant to Section
2.11,  then the Seller shall deposit cash in the amount of such Purchase  Excess
in the Collection Account; (v) if on such Business Day the Seller is required to
make  other  payments  under  this  Agreement  not  previously  retained  out of
Collections (including Additional Amounts and Indemnified Amounts not previously
paid),  then the Seller shall  deposit an amount  equal to such  payments in the
Collection  Account;  (vi) if, on the  immediately  preceding  Business Day, any
Originator made a capital  contribution or repurchased a Transferred  Receivable
pursuant  to  Section 4.04  of the  Transfer  Agreement,  or made a payment as a
result of any  Dilution  Factors  pursuant to  Section 4.02(o)  of the  Transfer
Agreement,  then the Seller shall  deposit  cash in the amount so received  from
such Originator for such  contribution,  repurchase or payment in the Collection
Account;  (vii)  the  Servicer  shall  deposit  in the  Collection  Account  the
Outstanding  Balance of any Transferred  Receivable it elects to pay pursuant to
Section 7.04;  and (viii) if the Operating  Agent and the Collateral  Agent have
not taken dominion and control over the Lockbox  Account  Agreement  pursuant to
Section 6.01(a)(i), the Seller shall deposit in the Collection Account an amount
equal to the  following  for such  Business  Day and any  immediately  preceding
non-Business Days; (A) the Daily Yield (B) the Servicing Fee; and (C) the Unused
Facility Fee. (b) If, on or before the second Business Day immediately preceding
any Settlement  Date, the Operating  Agent shall have notified the Seller of any
Retention Account Deficiency pursuant to Section 6.04(b),  then the Seller shall
deposit cash in the amount of such deficiency in the Collection Account no later
than 11:00 a.m. (New York time) on such Settlement  Date. (c) From and after the
Facility  Termination  Date, the Collateral  Agent shall transfer all amounts on
deposit  in the  Retention  Account as of that date to the  Collection  Account.
SECTION  6.03  Daily  Disbursements  From the  Collection  Account  and  Related
Sub-Accounts;  Revolving  Period.  On each  Business  Day during  the  Revolving
Period, and following the transfers made pursuant to Section 6.02, the Operating
Agent shall disburse all amounts then on deposit in the  Collection  Account and
its related subaccounts in the following  priority:  (a) with respect to amounts
on deposit in the  Collection  Account:  (i) to the  Retention  Account  for the
account  of the  Purchaser,  the  amount  of any  Retention  Account  Deficiency
deposited  pursuant to Section  6.02(b);  (ii) to the  Deferred  Purchase  Price
Sub-Account,  the amount of all Deferred Purchase Price Collections deposited in
the Collection Account on that day; (iii) to the Capital Investment Sub-Account,
the balance of any amounts  remaining after making the foregoing  disbursements;
(b)  with  respect  to  amounts  on  deposit  in  the  Deferred  Purchase  Price
Sub-Account after making the transfers  required by Section 6.03(a):  (i) to the
Retention  Account for the account of the Purchaser,  an amount equal to the sum
of (A) Daily  Yield;  (B) the Yield  Shortfall as of the  immediately  preceding
Business Day; (C) the  Servicing  Fee; (D) the Servicing Fee Shortfall as of the
immediately  preceding  Business  Day; (E) the Unused  Facility Fee; and (F) the
Unused Facility Fee Shortfall as of the immediately preceding Business Day; (ii)
to the Capital  Investment  Sub-Account,  an amount equal to the Dilution Funded
Amount;  (iii) if the Deferred Purchase Price Adjustment is less than zero, then
to the Capital  Investment  Sub-Account an amount equal to the absolute value of
the Deferred Purchase Price Adjustment; (iv) to an account previously designated
by the Seller, in partial payment of the Deferred Purchase Price, the balance of
any amounts  remaining  after making the foregoing  disbursements;  and (c) with
respect to amounts on deposit in the Capital Investment Sub-Account after making
the transfers required by Section 6.03(a):  (i) to the Retention Account for the
account of the Purchaser, an amount equal to the sum of any Yield Shortfall, any
Servicing  Fee Shortfall  and any Unused  Facility Fee  Shortfall  following the
transfer made pursuant to Section 6.03(b)(i); (ii) to the Collateral Account for
the  account  of the  Purchaser  (or,  in the  case of  Indemnified  Amounts  or
Additional  Amounts  for the  account of the  applicable  Purchaser  Indemnified
Person or Affected Party, respectively), an amount equal to the deposits made in
the  Collection  Account  pursuant  to  Section  6.02(a)(v)  and  not  otherwise
disbursed  pursuant to Section  6.03(a)(i);  (iii) to the Collateral Account for
the account of the Purchaser,  an amount equal to any Purchase  Excess;  (iv) if
the Deferred  Purchase Price Adjustment is greater than zero, then to the Seller
an amount equal to the Deferred  Purchase Price Adjustment as partial payment of
the Deferred  Purchase Price; and (v) the balance of any amounts remaining after
making the foregoing  disbursements,  at the Seller's option,  (A) to an account
previously  designated by the Seller as payment of the Cash  Purchase  Price for
Purchases made on such day or (B) if, pursuant to a Repayment Notice, the Seller
has  requested to reduce the Capital  Investment of the  Purchaser,  then to the
Collateral  Account  for the  account  of the  Purchaser,  the lesser of (1) the
amount of such requested  reduction of Capital  Investment and (2) such balance.
SECTION  6.04  Disbursements   From  the  Retention  Account;   Settlement  Date
Procedures;  Revolving Period.  (a) On each Settlement Date during the Revolving
Period,  the amounts on deposit in the  Retention  Account shall be disbursed or
retained by the Operating Agent in the following priority: (i) to the Collateral
Account  for the account of the  Purchaser  (or, if  applicable,  any  Purchaser
Indemnified  Person), an amount equal to: (A) the accrued and unpaid Daily Yield
minus the Margin as of the end of the immediately  preceding  Settlement Period;
(B) all Additional  Amounts incurred and payable to any Affected Party as of the
end of the  immediately  preceding  Settlement  Period;  (C) all  other  amounts
accrued and payable under this Agreement (including Indemnified Amounts incurred
and  payable  to  any  Purchaser  Indemnified  Person)  as of  the  end  of  the
immediately  preceding  Settlement Period to the extent not already  transferred
pursuant to Section  6.03(c)(ii);  and (D) if a Purchase  Excess  exists on such
date, an amount equal to such excess;  (ii) to the Operating  Agent, the accrued
and unpaid Margin as of the end of the immediately  preceding  Settlement Period
for distribution to the applicable  parties;  (iii) to the Servicer on behalf of
the Seller,  an amount equal to its accrued and unpaid  Servicing  Fee as of the
end of  the  immediately  preceding  Settlement  Period;  (iv)  retained  in the
Retention Account, an amount equal to the Accrued Monthly Yield,  Accrued Unused
Facility  Fee and  Accrued  Servicing  Fee as of such date;  and (v) the balance
remaining  after  retaining or disbursing  the  foregoing  amounts to an account
previously  designated by the Seller.  (b) No later than the second Business Day
immediately  preceding each Settlement Date, the Operating Agent shall determine
and notify the Seller of any  Retention  Account  Deficiency  for the  preceding
Settlement  Period,  and the  Seller  shall  deposit  cash in the amount of such
Retention   Account   Deficiency   to  the   Collection   Account   pursuant  to
Section 6.02(b).   SECTION  6.05  Liquidation  Settlement  Procedures.  On  each
Business Day from and after the Facility  Termination Date until the Termination
Date,  the  Collateral  Agent shall:  (a) as soon as  practicable,  transfer all
amounts then on deposit in the Retention Account to the Collection Account;  (b)
transfer all amounts in the Collection Account  (including  amounts  transferred
from the  Retention  Account  pursuant  to  Section  6.02(c))  in the  following
priority: (i) to the Deferred Purchase Price Sub-Account, an amount equal to all
Deferred Purchase Price Collections  deposited in the Collection Account on such
day; and (ii) to the Capital Investment Sub-Account,  the balance of any amounts
remaining after making the foregoing  disbursement;  (c) transfer all amounts in
the Deferred Purchase Price Sub-Account  (after making the transfers required by
Section 6.05(b)),  in the  following  priority:  (i)  if an  Event  of  Servicer
Termination   has   occurred   and  a   Successor   Servicer   has  assumed  the
responsibilities  and  obligations  of the Servicer in  accordance  with Section
11.02, then to the Successor  Servicer an amount equal to its accrued and unpaid
Successor  Servicing  Fees and  Expenses;  (ii) if on such  Business Day Capital
Investment is being maintained  through the issuance of Commercial Paper (to the
extent such Capital Investment exceeds Liquidity Loans then outstanding), to the
Collateral Account for the account of the Purchaser,  an amount equal to accrued
and unpaid CP Interest  Amount through and including the date of maturity of the
Commercial Paper maintaining such Capital  Investment;  (iii) to the Insurer, an
amount  equal to any  unpaid  premiums  then  owing  to the  Insurer  under  the
Insurance  Agreement (but only to the extent that the Seller is responsible  for
paying such premiums  under the Fee Letter);  (iv) if there are Insurance  Draws
then outstanding,  to the Insurer an amount equal to accrued and unpaid interest
on the Insurance Draws to the extent amounts on deposit in the Deferred Purchase
Price  Sub-Account are allocated to this  subparagraph  (c)(iv)  pursuant to the
terms of the Insurance  Agreement;  (v) if Liquidity Loans are then outstanding,
to the Liquidity  Agent on behalf of the Liquidity  Lenders,  an amount equal to
accrued  and  unpaid  interest  on the  Liquidity  Loans;  (vi)  to the  Capital
Investment  Sub-Account:  (A) an amount equal to the Dilution Funded Amount; and
(B) if Liquidity  Loans or Seller LOC Draws are then  outstanding  or if Capital
Investment is being  maintained  through the issuance of Commercial  Paper,  the
balance of any amounts  remaining  after making the  disbursements  set forth in
Sections 6.05(c)(i)-(vi)(A);  (vii) to the  Letter  of Credit  Agent,  an amount
equal to any  accrued  and unpaid  interest  on Seller LOC Draws;  (viii) to the
Collateral  Account,  an amount equal to (A) accrued and unpaid Daily Yield plus
any  Prepayment  Fee then due and unpaid  minus (B) the  aggregate  amounts paid
pursuant  to  Sections  6.05(c)(ii),  (iv),  (v) and (vii);  (ix) if an Event of
Servicer Termination shall not have occurred, to the Servicer in an amount equal
to its accrued and unpaid  Servicing  Fee;  and (x) upon  payment in full of all
amounts set forth in Sections 6.05(d)(i) through (d)(viii) below, the balance of
any  amounts  remaining  to an account  previously  designated  by the Seller as
partial payment of the Deferred  Purchase Price; and (d) transfer all amounts in
the  Capital  Investment  Sub-Account,  in the  following  priority:  (i) to the
Collateral Account for the account of the Purchaser,  an amount equal to: (A) if
on such Business Day Capital Investment is being maintained through the issuance
of Commercial  Paper (to the extent such Capital  Investment  exceeds  Liquidity
Loans then  outstanding),  accrued  and unpaid CP  Interest  Amount  through and
including  such  date to the  extent  not paid  under  Sections 6.05(c)(ii)  and
6.05(c)(viii);  and (B) if on such  Business  Day  Capital  Investment  is being
maintained  through the issuance of Commercial Paper (to the extent such Capital
Investment  exceeds  Liquidity  Loans then  outstanding),  the  principal of all
Capital  Investment in excess of such Liquidity Loans;  (ii) to the Insurer,  to
the  extent  amounts  on  deposit  in the  Capital  Investment  Sub-Account  are
allocated to this  subparagraph  (d)(ii)  pursuant to the terms of the Insurance
Agreement,  an amount  equal to any unpaid  premiums  of the  Insurer  under the
Insurance Agreement to the extent not paid under Section  6.05(c)(iii) (but only
to the extent that the Seller is responsible  for paying such premiums under the
Fee Letter);  (iii) if Insurance Draws are then outstanding,  to the Insurer, to
the  extent  amounts  on  deposit  in the  Capital  Investment  Sub-Account  are
allocated to this  subparagraph  (d)(iii) pursuant to the terms of the Insurance
Agreement,  an amount equal to: (A) accrued and unpaid interest on the Insurance
Draws to the  extent  not paid under  Section 6.05(c)(iv);  (B) the  outstanding
amount of  Insurance  Draws;  and (C) any  other  amounts  owing to the  Insurer
pursuant to the Insurance Policy or the Insurance Agreement,  including, without
limitation,  any fees and expenses of the Insurer other than Additional  Amounts
and Indemnified  Amounts;  (iv) if Liquidity Loans are then outstanding,  to the
Liquidity  Agent on behalf of the  Liquidity  Lenders,  an amount  equal to: (A)
accrued and unpaid  interest on the Liquidity Loans to the extent not paid under
Section 6.05(c)(v);  (B) the principal of outstanding  Liquidity  Loans; and (C)
any other unpaid  amounts,  including any fees,  owing to the Liquidity Agent or
Liquidity  Lenders in connection with the Liquidity Loans; (v) to the Collateral
Account for the account of the Purchaser, an amount equal to: (A) all Additional
Amounts  incurred and payable to any  Affected  Party;  and (B) all  Indemnified
Amounts incurred and payable to any Purchaser  Indemnified  Person;  (vi) to the
Letter of Credit Agent, if there are any outstanding Seller LOC Draws, an amount
equal to: (A) accrued and unpaid interest on such  outstanding  Seller LOC Draws
to the extent not paid  pursuant to Section  6.05(c)(vii);  (B) the principal of
such outstanding  Seller LOC Draws;  and (C) any other amounts,  including fees,
owing to the Letter of Credit Agent in connection with such  outstanding  Seller
LOC Draws; and (vii) to the Collateral  Account,  an amount equal to (A) accrued
and unpaid Daily Yield plus any  Prepayment  Fee then due and unpaid,  minus (B)
the  aggregate  amounts  paid  pursuant  to Sections  6.05(c)(ii),  6.05(c)(iv),
6.05(c)(v),   6.05(c)(vii),   6.05(c)(viii),   6.05(d)(i)(A),   6.05(d)(iii)(A),
6.05(d)(iv)(A) and  6.05(d)(vi)(A);  (viii) If an Event of Servicer  Termination
shall not have  occurred,  to the Servicer in an amount equal to its accrued and
unpaid  Servicing  Fee;  and (ix) to an  account  previously  designated  by the
Seller,  the balance of any funds remaining after payment in full of all amounts
set forth in Sections 6.05(d)(i)-(d)(viii).  SECTION 6.06 Investment of Funds in
Accounts.  To the extent  uninvested  amounts  are on deposit in the  Collateral
Account or the Retention  Account on any given day during the Revolving  Period,
the  Operating  Agent shall  invest all such  amounts in  Permitted  Investments
selected by the  Operating  Agent that mature no later than (a) the  immediately
succeeding  Business  Day, in the case of the  Collateral  Account,  and (b) the
immediately  succeeding  Settlement Date, in the case of the Retention  Account.
From and after the Facility  Termination  Date,  any  investment of such amounts
shall be  solely  at the  discretion  of the  Operating  Agent,  subject  to the
restrictions  described above. SECTION 6.07 Termination  Procedures.  (a) On the
earlier of (i) the  first  Business Day after the Facility  Termination  Date on
which the Capital Investment has been reduced to zero or (ii) the Final Purchase
Date, if the  obligations to be paid pursuant to Section 6.05 have not been paid
in full,  the Seller  shall  immediately  deposit in the  Collection  Account an
amount  sufficient to make such payments in full. (b) On the  Termination  Date,
all amounts on deposit in the Collection Account and the Retention Account shall
be disbursed to the Seller. Such disbursement shall constitute the final payment
to which the Seller is entitled pursuant to the terms of this Agreement. ARTICLE
VII SERVICER  PROVISIONS  SECTION 7.01 Appointment of the Servicer.  Each of the
Seller and the  Purchaser  hereby  appoints the Servicer as its agent to service
the  Transferred  Receivables  and enforce its rights and interests in and under
each Transferred  Receivable and Contract therefor and to serve in such capacity
until the  termination  of its  responsibilities  pursuant to  Sections  9.02 or
11.01. In connection therewith, the Servicer hereby accepts such appointment and
agrees to perform the duties and  obligations  set forth  herein.  If and for so
long as Cone  Mills is the  Servicer,  Cone  Mills may  delegate  its  duties as
Servicer in respect of any  Transferred  Receivables  to the  Originator of such
Transferred Receivables and, to the extent of such delegation, all references to
the Servicer in any Related  Document shall be deemed to include such Originator
in such capacity, but Cone Mills shall remain liable for the performance by such
Originator of such  delegated  duties.  The Servicer may, with the prior written
consent  of the  Purchaser,  the  Operating  Agent  and  the  Collateral  Agent,
subcontract  with a  Sub-Servicer  (other than  another  Originator  as provided
above)  for the  collection,  servicing  or  administration  of the  Transferred
Receivables;  provided,  that  (a) the  Servicer  shall  remain  liable  for the
performance of the duties and  obligations of the  Sub-Servicer  pursuant to the
terms hereof and (b) any  Sub-Servicing  Agreement  that may be entered into and
any other  transactions  or  services  relating to the  Transferred  Receivables
involving a Sub-Servicer  shall be deemed to be between the Sub-Servicer and the
Servicer alone, and the Purchaser,  the Operating Agent and the Collateral Agent
shall not be deemed  parties  thereto and shall have no  obligations,  duties or
liabilities  with  respect  to  the   Sub-Servicer.   SECTION  7.02  Duties  and
Responsibilities  of the Servicer.  Subject to the provisions of this Agreement,
the Servicer shall conduct the servicing,  administration  and collection of the
Transferred  Receivables and shall take, or cause to be taken,  all actions that
(i) may be  necessary  or  advisable  to service,  administer  and collect  each
Transferred  Receivable from time to time,  (ii) the  Servicer would take if the
Transferred  Receivables  were owned by the Servicer,  and (iii) are  consistent
with  industry  practice  for the  servicing  of such  Transferred  Receivables.
SECTION 7.03  Collections on Receivables.  (a) In the event that the Servicer is
unable to determine the specific  Transferred  Receivables on which  Collections
have been received from the Obligor  thereunder,  the parties agree for purposes
of this  Agreement  only  that  such  Collections  shall be  deemed to have been
received on such  Receivables  in the order in which they were  originated  with
respect to such  Obligor.  In the event that the Servicer is unable to determine
the  specific  Transferred  Receivables  on which  discounts,  offsets  or other
non-cash  reductions  have been  granted  or made with  respect  to the  Obligor
thereunder,  the parties  agree for  purposes of this  Agreement  only that such
reductions  shall be deemed to have been granted or made on such Receivables (i)
prior to the  occurrence of a Termination  Event,  as determined by the Servicer
and (ii) from and after the  occurrence of a Termination  Event,  in the reverse
order in which they were  originated  with respect to such  Obligor.  (b) If the
Servicer  determines that amounts unrelated to the Transferred  Receivables (the
"Unrelated  Amounts") have been deposited in the  Collection  Account,  then the
Servicer shall provide written evidence thereof to the Purchaser,  the Operating
Agent and the  Collateral  Agent no later than the first  Business Day following
the day on which the Servicer had actual knowledge thereof, which evidence shall
be provided in writing and shall be otherwise satisfactory to each such Affected
Party. Upon receipt of any such notice,  the Seller,  the Servicer and Operating
Agent  shall  segregate  the  Unrelated  Amounts  and  return  the  same  to the
appropriate   Originator  and  the  same  shall  not  be  deemed  to  constitute
Collections  on  Transferred  Receivables  and  shall  not  be  subject  to  the
provisions of Article VI. SECTION 7.04  Authorization  of the Servicer.  Each of
the Seller and the Purchaser hereby  authorizes the Servicer to take any and all
reasonable  steps in its name and on its behalf  necessary or desirable  and not
inconsistent with the ownership of the Transferred  Receivables purchased by the
Purchaser  hereunder and the pledge  thereof by the Purchaser to the  Collateral
Agent pursuant to the Collateral  Agent Agreement,  in the  determination of the
Servicer,  to (a)  collect all  amounts  due under any  Transferred  Receivable,
including  endorsing  its name on  checks  and  other  instruments  representing
Collections on such Receivable,  and execute and deliver any and all instruments
of  satisfaction  or cancellation or of partial or full release or discharge and
all other  comparable  instruments  with respect to any such  Receivable and (b)
after any  Transferred  Receivable  becomes a Delinquent  Receivable  and to the
extent  permitted under and in compliance  with applicable law and  regulations,
commence  proceedings  with  respect to the  enforcement  of payment of any such
Receivable  and the  Contract  therefor  and adjust,  settle or  compromise  any
payments  due  thereunder,  in each case to the same  extent  as the  Originator
thereof  could  have  done if it had  continued  to own  such  Receivable.  Each
Originator,  the Seller and the  Purchaser  shall  furnish the Servicer with any
powers of attorney and other  documents  necessary or  appropriate to enable the
Servicer to carry out its servicing and  administrative  duties  hereunder,  and
shall  cooperate  with  the  Servicer  to the  fullest  extent  to  collect  the
Transferred  Receivables  and to assist the  Servicer  in the  discharge  of its
duties hereunder and under the other Related Documents. Notwithstanding anything
to the contrary  contained  herein,  the Purchaser,  the Operating Agent and the
Collateral  Agent  shall have the  absolute  and  unlimited  right to direct the
Servicer (whether the Servicer is Cone Mills or otherwise) to commence or settle
any legal  action to enforce  collection  of any  Transferred  Receivable  or to
foreclose  upon,  repossess or take any other action that the Operating Agent or
the  Collateral  Agent  deems  necessary  or  advisable  with  respect  thereto;
provided, that in lieu of commencing any such action or taking other enforcement
action,  the  Servicer  may, at its option,  elect to pay to the  Purchaser  the
Outstanding  Balance  of such  Transferred  Receivable.  In no event  shall  the
Servicer  be  entitled  to make any  Affected  Party a party  to any  Litigation
without such Affected  Party's  express prior  written  consent,  or to make the
Seller a party to any Litigation without the Operating Agent's consent.  SECTION
7.05  Servicing  Fees.  As  compensation  for its  servicing  activities  and as
reimbursement for its reasonable expenses in connection therewith,  the Servicer
shall be entitled to receive the Servicing Fees in accordance with Sections 6.04
and 6.05. The Servicer shall be required to pay for all expenses  incurred by it
in  connection  with  its  activities   hereunder  (including  any  payments  to
accountants,  counsel  or any other  Person)  and shall not be  entitled  to any
payment  therefor other than the Servicing  Fees.  SECTION 7.06 Covenants of the
Servicer. The Servicer covenants and agrees that from and after the Closing Date
and until the Termination  Date: (a) Ownership of Transferred  Receivables.  The
Servicer shall identify the Transferred Receivables clearly and unambiguously in
its Servicing  Records to reflect that such  Transferred  Receivables  have been
sold or contributed to the Seller and, following the Purchase thereof under this
Agreement, are owned by the Purchaser. (b) Compliance with Credit and Collection
Policies.  The  Servicer  shall  comply  in all  respects  with the  Credit  and
Collection Policies with respect to each Transferred Receivable and the Contract
therefor. (c) Covenants in Other Related Documents.  The Servicer shall perform,
keep and observe all covenants applicable to it in its capacity as an Originator
under the Transfer  Agreement and the other Related  Documents  (including those
covenants set forth in Sections 4.02 and 4.03 of the Transfer Agreement) and the
Servicer  hereby  agrees to be bound by such  covenants  in its  capacity as the
Servicer hereunder for the benefit of the Purchaser, the Operating Agent and the
Collateral  Agent as if the same were set  forth in full  herein.  SECTION  7.07
Reporting  Requirements  of the Servicer.  The Servicer hereby agrees that, from
and after the Closing Date and until the  Termination  Date, it shall deliver or
cause to be delivered to the Purchaser,  the Operating  Agent and the Collateral
Agent the financial  statements,  notices,  Projections and other information at
the times,  to the Persons and in the manner set forth in Annex 7.07  (except if
the Servicer is Cone Mills,  in which case the Servicer shall not be required to
furnish the  information  required in paragraphs  (a) and (b) therein).  ARTICLE
VIII  GRANT OF  SECURITY  INTERESTS  SECTION  8.01  Seller's  Grant of  Security
Interest.   The  parties   hereto  intend  that  each  Purchase  of  Transferred
Receivables  to be made hereunder  shall  constitute a purchase and sale of such
Transferred  Receivables  and not a loan.  If,  however,  a court  of  competent
jurisdiction  determines that any transaction  provided for herein constitutes a
loan and not a purchase  and sale,  then the  parties  hereto  intend  that this
Agreement shall  constitute a security  agreement under  applicable law. In such
regard and, in any event, to secure the prompt and complete payment, performance
and observance of all Seller Secured Obligations, and to induce the Purchaser to
enter into this Agreement and perform the  obligations  required to be performed
by it hereunder in accordance with the terms and conditions thereof,  the Seller
hereby grants,  assigns,  conveys,  pledges,  hypothecates  and transfers to the
Purchaser a Lien upon all of its right,  title and interest in, to and under the
following  property,  whether now owned by or owing to, or hereafter acquired by
or arising in favor of, the Seller  (including under any trade names,  styles or
derivations of the Seller),  and regardless of where located (all of which being
hereinafter  collectively  referred  to as the  "Seller  Collateral"):  (a)  all
Transferred  Receivables,  Contracts therefor and Collections  thereon; (b) this
Agreement,  the Transfer Agreement, all Lockbox Agreements and all other Related
Documents  now or hereafter  in effect  relating to the  purchase,  servicing or
processing  of  Transferred  Receivables  (collectively,  the  "Seller  Assigned
Agreements"),  including  (i) all rights of the Seller to receive moneys due and
to become due thereunder or pursuant  thereto,  (ii) all rights of the Seller to
receive proceeds of any insurance,  indemnity, warranty or guaranty with respect
thereto,  (iii) all  claims of the Seller for  damages  or breach  with  respect
thereto or for default  thereunder  and  (iv) the  right of the Seller to amend,
waive or  terminate  the same  and to  perform  and to  compel  performance  and
otherwise   exercise  all  remedies   thereunder;   (c)  all  of  the  following
(collectively,  the  "Seller  Deposit  Account  Collateral"):  (i)  the  Lockbox
Accounts,  the Lockboxes and all funds on deposit  therein and all  certificates
and  instruments,  if any,  from time to time  representing  or  evidencing  the
Lockbox Accounts,  the Lockboxes or such funds, (ii) the Collection Account, the
Retention  Account  and all funds on deposit  therein and all  certificates  and
instruments, if any, from time to time representing or evidencing the Collection
Account, the Retention Account or such funds, (iii) all Investments from time to
time of amounts in the  Collection  Account and the Retention  Account,  and all
certificates,  instruments  and investment  property,  if any, from time to time
representing or evidencing  such  Investments,  (iv) all notes,  certificates of
deposit  and other  instruments  from  time to time  delivered  to or  otherwise
possessed by the  Purchaser or any assignee or agent on behalf of the  Purchaser
in  substitution  for or in addition to any of the then existing  Seller Deposit
Account  Collateral,  and  (v)  all  interest,   dividends,  cash,  instruments,
investment property and other property from time to time received, receivable or
otherwise  distributed with respect to or in exchange for any or all of the then
existing Seller Deposit Account Collateral; (d) all other property that may from
time to time  hereafter be granted and pledged by the Seller or by any Person on
its behalf under this Agreement,  including any deposit with the Purchaser,  the
Operating Agent or the Collateral Agent of additional  funds by the Seller;  and
(e) to the extent not  otherwise  included,  all  proceeds  and  products of the
foregoing and all accessions to, substitutions and replacements for, and profits
of, each of the foregoing Seller Collateral  (including proceeds that constitute
property of the types described in Sections  8.01(a)  through (d).  SECTION 8.02
Seller's Certification. The Seller hereby certifies that (a) the benefits of the
representations  and warranties of each  Originator made to the Seller under the
Transfer  Agreement have been assigned by the Seller to the Purchaser  hereunder
and  by the  Purchaser  to the  Collateral  Agent  under  the  Collateral  Agent
Agreement;  (b) the rights of the Seller under the Transfer Agreement to require
a capital contribution or payment of a Rejected Amount from an Originator may be
enforced  by the  Purchaser  and the  Collateral  Agent;  and  (c) the  Transfer
Agreement provides that the representations,  warranties and covenants described
in Sections  4.01 and 4.02 and 4.03  thereof,  the  indemnification  and payment
provisions of Article V thereof and the provisions of Sections 4.03(j), 8.03 and
8.14  thereof  shall  survive the sale of the  Transferred  Receivables  and the
termination of the Transfer  Agreement and this Agreement.  SECTION 8.03 Consent
to Assignment.  Each of the Seller and the Servicer acknowledges and consents to
the grant by the Purchaser to the  Collateral  Agent  pursuant to the Collateral
Agent Agreement of a Lien upon all of the Purchaser's  right, title and interest
in,  to and under the  Seller  Collateral  and  acknowledges  the  rights of the
Collateral  Agent thereunder and the covenants made by the Purchaser in favor of
the Collateral  Agent set forth therein,  and further  acknowledges and consents
that, upon the occurrence and during the continuance of an Incipient Termination
Event or a Termination  Event, the Collateral Agent shall be entitled to enforce
the  provisions of the Seller  Assigned  Agreements and shall be entitled to all
the rights and remedies of the Purchaser  thereunder.  In addition,  each of the
Seller and the Servicer  hereby  authorizes the Collateral  Agent to rely on the
representations  and warranties made by it in the Seller Assigned  Agreements to
which it is a party and in any other  certificates or documents  furnished by it
to any party in connection therewith.  SECTION 8.04 Delivery of Collateral.  All
certificates  or instruments  representing  or evidencing the Seller  Collateral
shall be delivered to and held by or on behalf of the Collateral  Agent pursuant
to the terms of the Collateral Agent Agreement and shall be in suitable form for
transfer by delivery or shall be  accompanied  by duly executed  instruments  of
transfer or assignment in blank,  all in form and substance  satisfactory to the
Collateral  Agent. The Collateral Agent shall have the right, at any time in its
discretion following the occurrence and during the continuation of a Termination
Event and without  notice to the Seller or the  Purchaser,  to transfer to or to
register in the name of the  Collateral  Agent or any of its nominees any or all
of the Seller Collateral. In addition, the Collateral Agent shall have the right
at any time to exchange  certificates or instruments  representing or evidencing
Seller   Collateral  for  certificates  or  instruments  of  smaller  or  larger
denominations. SECTION 8.05 Seller Remains Liable. It is expressly agreed by the
Seller that, anything herein to the contrary  notwithstanding,  the Seller shall
remain liable under any and all of the  Transferred  Receivables,  the Contracts
therefor,  the Seller Assigned Agreements and any other agreements  constituting
the Seller  Collateral  to which it is a party to observe  and  perform  all the
conditions and  obligations  to be observed and performed by it thereunder.  The
Purchaser,  the Operating  Agent,  the Collateral  Agent and the other Purchaser
Secured  Parties  shall  not have any  obligation  or  liability  under any such
Receivables,  Contracts  or  agreements  by  reason  of or  arising  out of this
Agreement or the Collateral Agent Agreement or the granting herein or therein of
a Lien  thereon or the receipt by the  Purchaser,  the  Collateral  Agent or any
Purchaser  Secured  Party of any payment  relating  thereto  pursuant  hereto or
thereto.  The exercise by the  Purchaser or the  Collateral  Agent of any of its
respective  rights under this Agreement or the Collateral  Agent Agreement shall
not  release  any  Originator,  the  Seller  or the  Servicer  from any of their
respective  duties or  obligations  under  any such  Receivables,  Contracts  or
agreements.  None of the Purchaser, the Operating Agent, the Collateral Agent or
any of the  Purchaser  Secured  Parties  shall be required or  obligated  in any
manner to perform or  fulfill  any of the  obligations  of any  Originator,  the
Seller or the  Servicer  under or pursuant to any such  Receivable,  Contract or
agreement,  or to make any  payment,  or to make any inquiry as to the nature or
the  sufficiency  of  any  payment  received  by it or  the  sufficiency  of any
performance by any party under any such Receivable, Contract or agreement, or to
present or file any  claims,  or to take any  action to  collect or enforce  any
performance  or the payment of any amounts that may have been  assigned to it or
to which it may be entitled at any time or times.  SECTION 8.06 Covenants of the
Seller  and the  Servicer  Regarding  the Seller  Collateral.  (a)  Offices  and
Records.  The Seller shall  maintain its  principal  place of business and chief
executive office and the office at which it stores its Records at the respective
locations specified in Schedule 4.01(b) or, upon 30 days prior written notice to
the  Purchaser,  the Operating  Agent and the  Collateral  Agent,  at such other
location in a  jurisdiction  where all action  requested by the  Purchaser,  the
Operating  Agent or the  Collateral  Agent  pursuant to Section 14.15 shall have
been taken with  respect  to the Seller  Collateral.  Each of the Seller and the
Servicer  shall,  at its own cost and  expense,  maintain  adequate and complete
records of the  Transferred  Receivables  and the Seller  Collateral,  including
records  of any and all  payments  received,  credits  granted  and  merchandise
returned  with respect  thereto and all other  dealings  therewith.  Each of the
Seller and the  Servicer  shall mark  conspicuously  with a legend,  in form and
substance satisfactory to the Collateral Agent, its books and records,  computer
tapes, computer disks and credit files pertaining to the Seller Collateral,  and
its file cabinets or other  storage  facilities  where it maintains  information
pertaining  thereto,  to evidence this  Agreement and the  assignment  and Liens
granted  pursuant  to this  Article  VIII.  Upon the  occurrence  and during the
continuance  of a Termination  Event,  the Seller and Servicer shall deliver and
turn over such books and records to the Collateral Agent or its  representatives
at any time on demand of the  Collateral  Agent.  Prior to the  occurrence  of a
Termination  Event and upon notice from the Collateral Agent, the Seller and the
Servicer  shall  permit  any  representative  of  the  Operating  Agent  or  the
Collateral Agent to inspect such books and records and shall provide photocopies
thereof to the Operating Agent and the Collateral Agent as more specifically set
forth in Section 8.06(b). (b) Access. Each of the Seller and the Servicer shall,
during normal business  hours,  from time to time upon five Business Day's prior
notice as frequently as the Operating Agent or the Collateral  Agent  determines
to be  appropriate:  (i) provide  the  Purchaser,  the  Operating  Agent  or the
Collateral  Agent and any of their  respective  officers,  employees  and agents
access to its properties  (including  properties utilized in connection with the
collection, processing or servicing of the Transferred Receivables), facilities,
advisors  and  employees  (including  officers)  and to the  Seller  Collateral,
(ii) permit the Purchaser,  the Operating Agent or the Collateral  Agent and any
of their respective  officers,  employees and agents to inspect,  audit and make
extracts  from its books and records,  including all Records,  (iii) permit  the
Purchaser,  the Operating  Agent or the  Collateral  Agent and their  respective
officers,  employees and agents to inspect,  review and evaluate the Transferred
Receivables  and the  Seller  Collateral  and  (iv) permit  the  Purchaser,  the
Operating Agent or the Collateral Agent and their respective officers, employees
and agents to discuss  matters  relating to the  Transferred  Receivables or its
performance  under this Agreement or the other Related Documents or its affairs,
finances and accounts with any of its officers, directors,  managers, 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,  the  Seller  Assigned
Agreements or any other Seller Collateral insecure,  then each of the Seller and
the Servicer  shall provide such access at all times and without  advance notice
and shall provide the Purchaser,  the Operating  Agent or the  Collateral  Agent
with access to its suppliers and customers.  Each of the Seller and the Servicer
shall make available to 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, that the Operating Agent
or the Collateral  Agent may request.  Each of the Seller and the Servicer shall
deliver any document or  instrument  necessary  for 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 the Seller or the
Servicer,  and shall maintain  duplicate records or supporting  documentation on
media,  including  computer tapes and discs owned by the Seller or the Servicer.
(c)  Communication  with  Accountants.  Each  of the  Seller  and  the  Servicer
authorizes  the  Purchaser,  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 the Purchaser,  the Operating  Agent and the Collateral  Agent
any and all  financial  statements  and other  supporting  financial  documents,
schedules  and  information  relating to the Seller or the  Servicer  (including
copies of any issued management letters) with respect to its business, financial
condition and other affairs. (d) Collection of Transferred  Receivables.  Except
as otherwise  provided in this  Section  8.06(d),  the Seller shall  continue to
collect or cause to be collected,  at its sole cost and expense, all amounts due
or to become due to the Seller  under the  Transferred  Receivables,  the Seller
Assigned  Agreements and any other Seller Collateral.  In connection  therewith,
the Seller shall take such action as it, and from and after the  occurrence  and
during the continuance of a Termination  Event,  the Collateral  Agent, may deem
necessary or desirable to enforce collection of the Transferred Receivables, the
Seller Assigned Agreements and the other Seller Collateral;  provided,  that the
Seller  may,  rather  than  commencing  any such  action  or  taking  any  other
enforcement action, at its option, elect to pay to the Purchaser the Outstanding
Balance of any such Transferred  Receivable;  provided  further,  that if (i) an
Incipient  Termination  Event or a Termination  Event shall have occurred and be
continuing  or  (ii) 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,  the Seller
Assigned Agreements or any other Seller Collateral insecure, then the Collateral
Agent may,  without  prior  notice to the Seller,  (x)  exercise  its rights and
remedies  with respect to the Lockbox  Accounts  under  Section 6.01 and Section
6.02 and/or (y) notify any Obligor under any Transferred  Receivable or obligors
under the Seller  Assigned  Agreements  of the  assignment  of such  Transferred
Receivables or Seller Assigned Agreements,  as the case may be, to the Purchaser
hereunder  and direct  that  payments of all amounts due or to become due to the
Seller  thereunder  be made  directly to the  Collateral  Agent or any servicer,
collection agent or lockbox or other account  designated by the Collateral Agent
and, upon such notification and at the sole cost and expense of the Seller,  the
Collateral Agent may enforce  collection of any such  Transferred  Receivable or
the Seller  Assigned  Agreements and adjust,  settle or compromise the amount or
payment  thereof.  (e)  Performance of Seller Assigned  Agreements.  Each of the
Seller  and the  Servicer  shall  (i) perform  and  observe  all the  terms  and
provisions of the Seller Assigned  Agreements to be performed or observed by it,
maintain the Seller  Assigned  Agreements in full force and effect,  enforce the
Seller Assigned Agreements in accordance with their terms and take all action as
may  from  time to  time be  requested  by the  Collateral  Agent  in  order  to
accomplish  the  foregoing,  and (ii) upon the request of and as directed by the
Operating Agent or the Collateral  Agent,  make such demands and requests to any
other party to the Seller Assigned Agreements as are permitted to be made by the
Seller or the Servicer  thereunder.  ARTICLE IX TERMINATION  EVENTS SECTION 9.01
Termination Events. If any of the following events (each, a "Termination Event")
shall occur (regardless of the reason  therefor):  (a) the Seller shall (i) fail
to make any payment of any Seller  Secured  Obligation  when due and payable and
the same shall remain  unremedied  for one Business Day or more, or (ii) fail or
neglect to perform, keep or observe any other provision of this Agreement or the
other Related Documents (other than any provision  embodied in or covered by any
other clause of this  Section  9.01) and the same shall  remain  unremedied  for
three  Business Days or more after written  notice thereof shall have been given
by the  Operating  Agent or the  Collateral  Agent to the Seller;  (b) any other
agreement,  document or instrument  to which any  Originator,  any  Originator's
Subsidiary, the Seller or the Servicer is a party or by which any such Person or
its property is bound that  involves the failure to make any payment when due in
respect of any Debt  (other  than the Seller  Secured  Obligations) of  any such
Person in excess of $1,000,000 in the  aggregate,  or (ii) any  other default or
breach shall occur with respect to any such Debt in excess of  $1,000,000 in the
aggregate and such default or breach causes,  or permits any holder of such Debt
or a trustee  or agent to cause,  such Debt or a portion  thereof  to become due
prior  to its  stated  maturity  or prior to its  regularly  scheduled  dates of
payment,  regardless  of  whether  such  default  is  waived,  or such  right is
exercised,  by such holder, trustee or agent, and such default or breach remains
uncured  and  unwaived  for 15 days;  (c) a case or  proceeding  shall have been
commenced against any Originator, the Seller or the Servicer seeking a decree or
order in respect of any such Person  (i) under the Bankruptcy  Code or any other
applicable   federal,   state  or  foreign  bankruptcy  or  other  similar  law,
(ii) appointing  a  custodian,  receiver,   liquidator,   assignee,  trustee  or
sequestrator  (or similar  official) for any such Person or for any  substantial
part of such Person's assets, or (iii) ordering the winding-up or liquidation of
the affairs of any such Person;  (d) Servicer shall (i) file a petition  seeking
relief  under the  Bankruptcy  Code or any other  applicable  federal,  state or
foreign  bankruptcy  or other similar law,  (ii) consent  or fail to object in a
timely and appropriate manner to the institution of proceedings thereunder or to
the filing of any such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official)  for any such  Person  or for any  substantial  part of such  Person's
assets,  (iii) make an assignment for the benefit of creditors, or (iv) take any
corporate action in furtherance of any of the foregoing; (e) any Originator, the
Seller or the Servicer is not Solvent or admits in writing its  inability to, or
is  generally  unable  to,  pay its Debts as such Debts  become  due;  (f) final
judgment or judgments in excess f  $5,000,000  (less the amount,  if any, of any
such  judgment  which is  covered  by  insurance  as to which  the  insurer  has
confirmed coverage in writing) in the aggregate at any time outstanding shall be
rendered  against any Originator or the Servicer and the same shall not,  within
60 days after the entry  thereof,  have been  discharged  or  execution  thereof
stayed or bonded pending appeal,  or shall not have been discharged prior to the
expiration of any such stay; (g) a final judgment shall be rendered  against the
Seller;  (h) any  information  contained in any Investment  Base  Certificate is
untrue or  incorrect  in any  respect or any  representation  or warranty of any
Originator  or the  Seller  herein or in any other  Related  Document  or in any
written  statement,  report,  financial  statement or certificate (other than an
Investment Base  Certificate)  made or delivered by any Originator or the Seller
to any Affected  Party is untrue or incorrect in any material  respect as of the
date when made or deemed made; (i) any Governmental Authority (including the IRS
or the  PBGC)  shall  file  notice of a Lien  with  regard to any  assets of any
Originator  (other  than a Lien  (i) limited  by its terms to assets  other than
Receivables and (ii) not materially  adversely affecting the financial condition
of such Originator or Cone Mill's ability to perform as Servicer hereunder); (j)
any Governmental  Authority (including the IRS or the PBGC) shall file notice of
a Lien with regard to any of the assets of the Seller;  (k) the Operating  Agent
or the Collateral  Agent shall have  determined that any event or condition that
has had or could  reasonably be expected to have or result in a Material Adverse
Effect has occurred; (l) (i) a default or breach shall occur under any provision
of Sections 4.02(o),  4.04, 5.01 or 8.14 of the Transfer  Agreement and the same
shall  remain  unremedied  for one  Business  Day or more  after the  occurrence
thereof,  (ii) a default or breach shall occur under any other  provision of the
Transfer  Agreement and the same shall remain  unremedied for five Business Days
or more after  written  notice  thereof  shall have been given by the  Operating
Agent or the  Collateral  Agent to the  Seller or (iii) the  Transfer  Agreement
shall for any reason  cease to evidence  the transfer to the Seller of the legal
and  equitable  title to, and  ownership of, the  Transferred  Receivables;  (m)
except as otherwise  expressly  provided  herein,  any Lockbox  Agreement or the
Transfer  Agreement shall have been modified,  amended or terminated without the
prior written  consent of the Purchaser,  the Operating Agent and the Collateral
Agent;  (n) an  Event of  Servicer  Termination  shall  have  occurred;  (o) the
Operating   Agent  shall  have   determined  that  the  funding  of  Transferred
Receivables hereunder is impracticable for any reason whatsoever, including as a
result of (i) a drop in or  withdrawal  of any of the  ratings  assigned  to the
Commercial Paper, (ii) the imposition of Additional Amounts,  (iii) restrictions
on the amount of Transferred  Receivables  the Purchaser may finance or (iv) the
inability  of Redwood to issue  Commercial  Paper;  (p) (i) with  respect to the
Transferred  Receivables,  (A) prior to their Purchase hereunder, (1) the Seller
shall cease to hold valid and  properly  perfected  title to and sole record and
beneficial ownership in such Transferred  Receivables or (2) the Purchaser shall
cease to hold a first priority,  perfected Lien in such Transferred  Receivables
or (B) after  their Purchase  hereunder,  (1) the Purchaser  shall cease to hold
either (a) valid and properly  perfected title to and sole record and beneficial
ownership in such  Transferred  Receivables or (b) a first  priority,  perfected
Lien in such Transferred  Receivables;  or (ii) the Purchaser and the Collateral
Agent  shall  cease  to  hold a first  priority,  perfected  Lien in the  Seller
Collateral;  (q) a Seller LOC Draw shall have occurred;  (r) the  obligations of
the Liquidity  Lenders to make  Liquidity  Loans shall have  terminated  and not
otherwise  been  replaced;  (s) a default or breach of any of the  covenants set
forth  in  Annex G shall  have  occurred;  (t) an event  of  default  under  the
Collateral  Agent  Agreement or any other Program  Document shall have occurred;
(u) the short term debt rating of a Liquidity  Lender shall have been downgraded
by a Rating  Agency and such  Liquidity  Lender shall not have been  replaced in
accordance with the terms of the Liquidity  Agreement within 30 days thereafter;
(v) the  Purchase  Discount  Rate  shall be less  than  50% for two  consecutive
Settlement  Periods;  (w) the Seller shall amend its articles of organization or
operating  agreement without the express prior written consent of the Purchaser,
the Operating Agent and the Collateral  Agent;  (x) CRLLC shall have received an
Election Notice pursuant to Section 2.01(d) of the Transfer  Agreement;  (y) the
Credit  Facility  shall be terminated or an event of default shall have occurred
thereunder;  (z) a Change of Control  shall  have  occurred;  or (aa)a  material
adverse  change  shall  occur after the  Closing  Originator,  the Seller or the
Servicer or in the collectibility of the Transferred  Receivables.  then, and in
any such event,  the Operating  Agent shall, at the request of, or may, with the
consent of, the  Purchaser  or the  Collateral  Agent,  by notice to the Seller,
declare the Facility  Termination Date to have occurred without demand,  protest
or further notice of any kind, all of which are hereby  expressly  waived by the
Seller;  provided,  that the Facility Termination Date shall automatically occur
(i) upon the occurrence of any of the Termination  Events  described in Sections
9.01(c),  (d),  (e),  (q),  (r),  (t),  (u) or (x) or (ii) four  days  after the
occurrence of the Termination Event described in Section  9.01(a)(i) if the same
shall not have been remedied by such time, in each case without demand,  protest
or any  notice of any  kind,  all of which are  hereby  expressly  waived by the
Seller.  SECTION 9.02 Events of Servicer  Termination.  If any of the  following
events (each, an "Event of Servicer Termination") shall occur (regardless of the
reason  therefor):  (a) the Servicer  shall fail or neglect to perform,  keep or
observe any provision of this Agreement or the other Related Documents  (whether
in its  capacity as an  Originator  or the  Servicer)  and the same shall remain
unremedied  for five Business Days or more after  written  notice  thereof shall
have been given by the Purchaser, the Operating Agent or the Collateral Agent to
the Servicer;  (b) any  representation  or warranty of the Servicer herein or in
any other  Related  Document  or in any  written  statement,  report,  financial
statement or certificate made or delivered by the Servicer to the Purchaser, the
Operating Agent or the Collateral Agent hereto or thereto is untrue or incorrect
in any material  respect as of the date when made or deemed made;  (c) a default
or breach of any of the covenants set forth in Annex G shall have occurred;  (d)
the Operating Agent or the Collateral Agent shall have determined that any event
or condition that  materially  adversely  affects the ability of the Servicer to
collect the  Transferred  Receivables  or to  otherwise  perform  hereunder  has
occurred;  (e) a Termination  Event shall have occurred or this Agreement  shall
have been  terminated;  (f) a  deterioration  has taken  place in the quality of
servicing  of  Transferred  Receivables  or other  Receivables  serviced  by the
Servicer that either the Operating  Agent or the Collateral  Agent,  each in its
sole discretion,  determines to be material, and such material deterioration has
not been remedied to the  satisfaction of the Operating Agent and the Collateral
Agent within 30 days after written  notice  thereof shall have been given by the
Operating Agent or the Collateral Agent to the Servicer;  (g) the Servicer shall
assign  or  purport  to assign  any of its  obligations  hereunder  or under the
Transfer  Agreement without the prior written consent of the Operating Agent and
the  Collateral  Agent;  or (h)  the  Seller's  board  of  managers  shall  have
determined  that it is in the best  interests  of the  Seller to  terminate  the
duties  of the  Servicer  hereunder  and shall  have  given  the  Servicer,  the
Purchaser, the Operating Agent and the Collateral Agent at least 30 days written
notice thereof;  then, and in any such event,  the Operating Agent shall, at the
request of, or may, with the consent of, the Purchaser or the Collateral  Agent,
by delivery  of a Servicer  Termination  Notice to the Seller and the  Servicer,
terminate  the servicing  responsibilities  of the Servicer  hereunder,  without
demand, protest or further notice of any kind, all of which are hereby waived by
the Servicer.  Upon the delivery of any such notice,  all authority and power of
the Servicer under this Agreement and the Transfer  Agreement  shall pass to and
be vested in the Successor Servicer acting pursuant to Section 11.02;  provided,
that  notwithstanding  anything to the contrary  herein,  the Servicer agrees to
continue  to follow the  procedures  set forth in Section  7.02 with  respect to
Collections  on the  Transferred  Receivables  until a  Successor  Servicer  has
assumed the  responsibilities and obligations of the Servicer in accordance with
Section 11.02.  ARTICLE X REMEDIES SECTION 10.01 Actions Upon Termination Event.
If any Termination Event shall have occurred and be continuing and the Operating
Agent shall have declared the Facility  Termination Date to have occurred or the
Facility  Termination Date shall be deemed to have occurred  pursuant to Section
9.01,  then  the  Collateral  Agent  may  exercise  in  respect  of  the  Seller
Collateral,  in addition to any and all other rights and remedies  granted to it
hereunder,  under any other  Related  Document or under any other  instrument or
agreement securing,  evidencing or relating to the Seller Secured Obligations or
otherwise  available  to it, all of the rights and  remedies of a secured  party
upon  default  under the UCC (such  rights and  remedies  to be  cumulative  and
nonexclusive),  and,  in  addition,  may take  the  following  actions:  (a) The
Collateral Agent may, without notice to the Seller except as required by law and
at any time or from time to time,  charge,  offset or  otherwise  apply  amounts
payable to the Seller from the  Collection  Account,  any Lockbox  Account,  the
Retention Account or any part of such accounts in accordance with the priorities
set  forth  in  Sections  6.05 and 6.07  against  all or any part of the  Seller
Secured  Obligations.  (b) The  Collateral  Agent may,  without notice except as
specified below,  solicit and accept bids for and sell the Seller  Collateral or
any part  thereof  in one or more  parcels  at public or  private  sale,  at any
exchange,  broker's  board  or any  of the  Purchaser's,  Operating  Agent's  or
Collateral  Agent's  offices  or  elsewhere,  for cash,  on credit or for future
delivery,   and  upon  such  other  terms  as  the  Collateral  Agent  may  deem
commercially  reasonable.  The Collateral  Agent shall have the right to conduct
such sales on the Seller's premises or elsewhere and shall have the right to use
any of the Seller's premises without charge for such sales at such time or times
as the Collateral Agent deems necessary or advisable. The Seller agrees that, to
the extent  notice of sale shall be required by law, at least ten Business  Days
notice to the Seller of the time and place of any public  sale or the time after
which any private sale is to be made shall constitute  reasonable  notification.
The  Collateral  Agent  shall  not be  obligated  to make  any  sale  of  Seller
Collateral  regardless of notice of sale having been given. The Collateral Agent
may adjourn any public or private sale from time to time by  announcement at the
time and place fixed for such sale, and such sale may,  without  further notice,
be made at the time and  place to which it was so  adjourned.  Every  such  sale
shall operate to divest all right, title, interest,  claim and demand whatsoever
of the Seller in and to the Seller  Collateral so sold, and shall be a perpetual
bar, both at law and in equity,  against any Originator,  the Seller, any Person
claiming the Seller  Collateral  sold through any Originator or the Seller,  and
their respective  successors or assigns.  The Collateral Agent shall deposit the
net proceeds of any such sale in the Collection  Account and such proceeds shall
be disbursed in  accordance  with Section 6.05.  (c) Upon the  completion of any
sale under  Section 10.01(b),  the Seller or the Servicer shall deliver or cause
to be delivered to the purchaser or purchasers at such sale on the date thereof,
or within a reasonable  time  thereafter  if it shall be  impracticable  to make
immediate  delivery,  all of the Seller Collateral sold on such date, but in any
event full title and right of  possession  to such  property  shall vest in such
purchaser or purchasers  upon the completion of such sale.  Nevertheless,  if so
requested by the  Collateral  Agent or by any such  purchaser,  the Seller shall
confirm any such sale or transfer by executing and  delivering to such purchaser
all proper  instruments  of  conveyance  and  transfer  and  releases  as may be
designated  in any such  request.  (d) At any sale under  Section 10.01(b),  the
Purchaser,  the Operating  Agent,  the Collateral  Agent or any other  Purchaser
Secured  Party may bid for and purchase the property  offered for sale and, upon
compliance with the terms of sale, may hold, retain and dispose of such property
without further accountability  therefor. (e) The Collateral Agent may exercise,
at the sole cost and expense of the Seller,  any and all rights and  remedies of
the Seller under or in  connection  with the Seller  Assigned  Agreements or the
other Seller Collateral, including any and all rights of the Seller to demand or
otherwise  require payment of any amount under, or performance of any provisions
of, the Seller  Assigned  Agreements.  SECTION  10.02  Exercise of Remedies.  No
failure or delay on the part of the  Collateral  Agent in exercising  any right,
power or privilege  under this  Agreement  and no course of dealing  between any
Originator,  the Seller,  the Servicer or the Operating  Agent, on the one hand,
and the Collateral  Agent, on the other hand,  shall operate as a waiver of such
right,  power or  privilege,  nor shall any  single or partial  exercise  of any
right,  power or privilege  under this  Agreement  preclude any other or further
exercise of such right,  power or  privilege or the exercise of any other right,
power or privilege. The rights and remedies under this Agreement are cumulative,
may be exercised singly or concurrently,  and are not exclusive of any rights or
remedies that the Collateral Agent would otherwise have at law or in equity.  No
notice to or demand on any party hereto shall entitle such party to any other or
further  notice or demand in similar or other  circumstances,  or  constitute  a
waiver of the right of the party  providing such notice or making such demand to
any other or  further  action in any  circumstances  without  notice or  demand.
SECTION 10.03 Power of Attorney. On the Closing Date, each of the Seller and the
Servicer shall execute and deliver a power of attorney substantially in the form
attached  hereto as Exhibit 10.03 (each,  a "Power of  Attorney").  The power of
attorney  granted  pursuant to each Power of Attorney is a power coupled with an
interest and shall be irrevocable  until all of the Seller  Secured  Obligations
are  indefeasibly  paid or otherwise  satisfied in full. The powers conferred on
the  Collateral  Agent  under each Power of  Attorney  are solely to protect the
Purchaser's  Liens upon and  interests  in the Seller  Collateral  and shall not
impose any duty upon the  Collateral  Agent to  exercise  any such  powers.  The
Collateral Agent shall not be accountable for any amount other than amounts that
it actually  receives as a result of the exercise of such powers and none of the
Collateral  Agent's officers,  directors,  employees,  agents or representatives
shall be  responsible  to the Seller or the  Servicer  for any act or failure to
act, except in respect of damages to the extent  attributable to their own gross
negligence or willful  misconduct as finally  determined by a court of competent
jurisdiction.  SECTION 10.04 Continuing Security Interest.  This Agreement shall
create a continuing  Lien in the Seller  Collateral  until the conditions to the
release of the Liens of the Purchaser and the Collateral Agent thereon set forth
in Section 6.07(b) have been satisfied. ARTICLE XI SUCCESSOR SERVICER PROVISIONS
SECTION  11.01  Servicer Not to Resign.  The Servicer  shall not resign from the
obligations and duties hereby imposed on it except upon a determination that (a)
the  performance  of  its  duties  hereunder  has  become   impermissible  under
applicable  law or  regulation  and (b) there is no  reasonable  action that the
Servicer  could  take to make the  performance  of its duties  hereunder  become
permissible under applicable law. Any such determination  shall (i) with respect
to clause (a) above,  be  evidenced  by an opinion of counsel to such effect and
(ii) with respect to clause (b) above, be evidenced by an Officer's  Certificate
to such effect,  in each case delivered to the Purchaser,  the Collateral  Agent
and the Operating  Agent.  No such  resignation  shall become  effective until a
Successor  Servicer shall have assumed the  responsibilities  and obligations of
the Servicer in accordance with Section 11.02.  SECTION 11.02 Appointment of the
Successor  Servicer.  In  connection  with  the  termination  of the  Servicer's
responsibilities  or  the  resignation  by the  Servicer  under  this  Agreement
pursuant to Sections 9.02 or 11.01, the Operating Agent shall (a) succeed to and
assume all of the Servicer's responsibilities, rights, duties and obligations as
Servicer  (but  not  in any  other  capacity,  including  specifically  not  the
obligations  of the  Servicer set forth in Section  12.02) under this  Agreement
(and except that the Operating  Agent makes no  representations  and  warranties
pursuant to Section  4.02) and (b) may at any time appoint a successor  servicer
to the  Servicer  that shall be  acceptable  to the  Collateral  Agent and shall
succeed  to all  rights  and  assume  all of the  responsibilities,  duties  and
liabilities of the Servicer under this Agreement (the Operating  Agent,  in such
capacity,  or  such  successor  servicer  being  referred  to as the  "Successor
Servicer");  provided,  that the Successor Servicer shall have no responsibility
for  any  actions  of the  Servicer  prior  to the  date of its  appointment  or
assumption of duties as Successor  Servicer.  In selecting a Successor Servicer,
the Operating  Agent may obtain bids from any potential  Successor  Servicer and
may agree to any bid it deems  appropriate.  The Successor Servicer shall accept
its  appointment  by executing,  acknowledging  and  delivering to the Operating
Agent and the Collateral Agent an instrument in form and substance acceptable to
the  Operating  Agent and the  Collateral  Agent.  SECTION  11.03  Duties of the
Servicer.  The Servicer covenants and agrees that, following the appointment of,
or  assumption  of duties  by, a  Successor  Servicer:  (a) The  Servicer  shall
terminate its activities as Servicer  hereunder in a manner that facilitates the
transfer  of  servicing  duties  to the  Successor  Servicer  and  is  otherwise
acceptable to the Purchaser and the Collateral  Agent and,  without limiting the
generality  of  the  foregoing,  shall  timely  deliver  (i) any  funds  to  the
Collateral  Agent that were required to be remitted to the Collateral  Agent for
deposit in the  Collection  Account  and  (ii) all  Servicing  Records and other
information  with  respect  to the  Transferred  Receivables  to  the  Successor
Servicer at a place  selected by the  Successor  Servicer.  The  Servicer  shall
account for all funds and shall execute and deliver such instruments and do such
other  things as may be required to vest and confirm in the  Successor  Servicer
all rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer. (b) The Servicer shall terminate each existing Sub-Servicing Agreement
and the  Successor  Servicer  shall  not be deemed  to have  assumed  any of the
Servicer's  interests  therein  or to  have  replaced  the  Servicer  as a party
thereto. SECTION 11.04 Effect of Termination or Resignation.  Any termination of
or  resignation by the Servicer  hereunder  shall not affect any claims that the
Seller,  the Purchaser,  the Operating  Agent or the  Collateral  Agent may have
against the  Servicer  for events or actions  taken or not taken by the Servicer
arising   prior  to  any  such   termination   or   resignation.   ARTICLE   XII
INDEMNIFICATION  SECTION 12.01  Indemnities by the Seller.  (a) Without limiting
any other rights that the Purchaser,  the Operating Agent, the Collateral Agent,
the Liquidity  Agent,  any  Liquidity  Lender,  the Letter of Credit Agent,  the
Insurer or any Letter of Credit  Provider or any of their  respective  officers,
directors,  employees,  attorneys, agents or representatives (each, a "Purchaser
Indemnified  Person")  may have  hereunder or under  applicable  law, the Seller
hereby agrees to indemnify and hold harmless each Purchaser  Indemnified  Person
from and against any and all Indemnified Amounts that may be claimed or asserted
against or incurred by any such Purchaser  Indemnified Person in connection with
or arising out of the  transactions  contemplated  under this Agreement or under
any other  Related  Document or 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;  provided, that the Seller shall not be liable for any
indemnification  to a Purchaser  Indemnified  Person to the extent that any such
Indemnified  Amount  results from (i) with respect to any Purchaser  Indemnified
Person other than the  Purchaser,  such  Purchaser  Indemnified  Person's  gross
negligence  or (ii) with  respect  to any  Purchaser  Indemnified  Person,  such
Purchaser  Indemnified  Person's  willful  misconduct,  in each case as  finally
determined by a court of competent jurisdiction. Without limiting the generality
of the foregoing,  the Seller shall pay on demand to each Purchaser  Indemnified
Person any and all  Indemnified  Amounts  relating  to or  resulting  from:  (A)
reliance on any representation or warranty made or deemed made by the Seller (or
any of its  officers)  under or in connection  with this  Agreement or any other
Related  Document or on any other  information  delivered by the Seller pursuant
hereto or thereto that shall have been  incorrect  in any material  respect when
made or deemed made or  delivered;  (B) the failure by the Seller 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
the Contract therefor, or the nonconformity of any Transferred Receivable or the
Contract  therefor with any such applicable  law, rule or regulation;  or (C)(1)
the failure to vest and maintain vested in the Seller or the Purchaser 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,  (2) the
failure to maintain or transfer to the Purchaser a first  priority and perfected
Lien in the Seller Collateral and (3) the failure to maintain or transfer to the
Collateral  Agent a first  priority,  perfected  Lien therein;  (D) any dispute,
claim, offset or defense of any Obligor (other than its discharge in bankruptcy)
to the payment of any  Transferred  Receivable that is the subject of a Purchase
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),  or any other claim resulting from the
sale of the  merchandise  or  services  giving  rise to such  Receivable  or the
furnishing of 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 or any of its Affiliates  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 any  Purchaser
Indemnified  Person; (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 with respect to any Transferred Receivable;  (F) the commingling
of Collections with respect to Transferred Receivables by the Seller at any time
with its other funds or the funds of any other Person; or (G) any failure by the
Seller 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  Transferred
Receivable that is the subject of a Purchase  hereunder,  whether at the time of
any such Purchase or at any subsequent time. (b) Any Indemnified Amounts subject
to the  indemnification  provisions of this Section 12.01 not paid in accordance
with Article VI shall be paid by the Seller to the Purchaser  Indemnified Person
entitled thereto within five Business Days following  demand  therefor.  SECTION
12.02 Indemnities by the Servicer.  (a) Without limiting any other rights that a
Purchaser  Indemnified  Person may have hereunder or under  applicable  law, the
Servicer hereby agrees to indemnify and hold harmless each Purchaser Indemnified
Person from and against any and all  Indemnified  Amounts that may be claimed or
asserted  against  or  incurred  by any such  Purchaser  Indemnified  Person  in
connection  with or arising out of any breach by the Servicer of its obligations
hereunder or under any other Related Document; provided, that the Servicer shall
not be liable for any  indemnification to a Purchaser  Indemnified Person to the
extent  that any  such  Indemnified  Amount  results  from  (i)  such  Purchaser
Indemnified  Person's gross  negligence or willful  misconduct,  in each case as
finally  determined by a court of competent  jurisdiction,  or (ii) recourse for
uncollectible  or  uncollected  Transferred  Receivables.  Without  limiting the
generality of the foregoing,  the Servicer shall pay on demand to each Purchaser
Indemnified  Person any and all  Indemnified  Amounts  relating to or  resulting
from: (A) reliance on any  representation or warranty made or deemed made by the
Servicer (or any of its officers)  under or in connection with this Agreement or
any other Related Document or on any other information delivered by the Servicer
pursuant  hereto or  thereto  that  shall have been  incorrect  in any  material
respect when made or deemed made or  delivered;  (B) the failure by the Servicer
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 the Contract  therefor,  or the  nonconformity of any
Transferred  Receivable or the Contract  therefor with any such  applicable law,
rule or regulation;  (C) the imposition of any Adverse Claim with respect to any
Transferred  Receivable or the Seller Collateral as a result of any action taken
by the Servicer hereunder; or (D) the commingling of Collections with respect to
Transferred  Receivables by the Servicer at any time with its other funds or the
funds  of  any  other  Person.  (b)  Any  Indemnified  Amounts  subject  to  the
indemnification  provisions of this Section  12.02 not paid in  accordance  with
Article VI shall be paid by the  Servicer to the  Purchaser  Indemnified  Person
entitled thereto within five Business Days following  demand  therefor.  SECTION
12.03  Limitation  of  Damages;  Purchaser  Indemnified  Persons.  NO  PURCHASER
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 XIII  OPERATING  AGENT AND  COLLATERAL  AGENT SECTION 13.01
Authorization and Action. (a) The Operating Agent may take such action and carry
out such functions  under this Agreement as are authorized to be performed by it
pursuant  to the terms of this  Agreement,  any other  Related  Document  or the
Operating  Agent  Agreement or otherwise  contemplated  hereby or thereby or are
reasonably incidental thereto;  provided, that the duties of the Operating Agent
hereunder  shall  be  determined  solely  by  the  express  provisions  of  this
Agreement, and, other than the duties set forth in Section 13.02, any permissive
right of the Operating  Agent  hereunder shall not be construed as a duty.(b)The
Collateral  Agent may take such action and carry out such  functions  under this
Agreement as are  authorized to be performed by it pursuant to the terms of this
Agreement,  any other  Related  Document or the  Collateral  Agent  Agreement or
otherwise  contemplated hereby or thereby or are reasonably  incidental thereto;
provided,  that the duties of the Collateral Agent hereunder shall be determined
solely by the express  provisions of this Agreement,  and, other than the duties
set  forth  in  Section 13.02,  any  permissive  right of the  Collateral  Agent
hereunder shall not be construed as a duty. SECTION 13.02 Reliance.  None of the
Operating Agent, the Collateral Agent, any of their respective Affiliates or any
of their respective directors, officers, agents or employees shall be liable for
any action  taken or  omitted to be taken by any of them under or in  connection
with this  Agreement,  the other  Related  Documents  or the Program  Documents,
except for damages to the extent caused by its or their own gross  negligence or
willful misconduct as finally  determined by a court of competent  jurisdiction.
Without limiting the generality of the foregoing,  and  notwithstanding any term
or provision hereof to the contrary,  the Seller, the Servicer and the Purchaser
hereby acknowledge and agree that each of the Operating Agent and the Collateral
Agent (a) acts as agent  hereunder for the Purchaser  (and,  with respect to the
Collateral  Agent,  the Affected  Parties) and has no duties or obligations  to,
shall incur no liabilities  or  obligations  to, and does not act as an agent in
any capacity for, the Seller (other than, with respect to the Collateral  Agent,
under the Power of Attorney with respect to remedial actions) or any Originator,
(b) may consult with legal counsel,  independent  public  accountants  and other
experts  selected by it and shall not be liable for any action  taken or omitted
to be taken by it in good faith in  accordance  with the advice of such counsel,
accountants or experts, (c) makes no representation or warranty hereunder to any
Affected  Party  and  shall  not be  responsible  to any  such  Person  for  any
statements,  representations  or warranties  made in or in connection  with this
Agreement,  the other Related Documents or the Program Documents,  (d) shall not
have any duty to ascertain or to inquire as to the  performance or observance of
any of the terms,  covenants or conditions of this Agreement,  the other Related
Documents or the Program  Documents  on the part of the Seller,  the Servicer or
the  Purchaser or to inspect the property  (including  the books and records) of
the Seller,  the Servicer or the Purchaser,  (e) shall not be responsible to the
Seller, the Servicer or the Purchaser for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Related Documents or any other instrument or document  furnished pursuant hereto
or thereto,  (f) shall incur no liability under or in respect of this Agreement,
the other Related  Documents or the Program Documents by acting upon any notice,
consent, certificate or other instrument or writing believed by it to be genuine
and signed,  sent or  communicated  by the proper party or parties and (g) shall
not be bound to make any  investigation  into the facts or matters stated in any
notice or other  communication  hereunder  and may rely on the  accuracy of such
facts or matters. Notwithstanding the foregoing, each of the Operating Agent and
the Collateral Agent  acknowledges  that it has a duty to transfer funds between
and among the Lockbox Accounts and the Collection Account,  and make investments
of funds on deposit in the  Retention  Account and the  Collateral  Account,  in
accordance with Article VI and the  instructions of the Servicer.  SECTION 13.03
GE Capital and Affiliates. GE Capital and its Affiliates may generally engage in
any kind of business with any Obligor, any Originator,  the Seller, the Servicer
or the Purchaser,  any of their respective  Affiliates and any Person who may do
business  with or own  securities  of such  Persons  or any of their  respective
Affiliates,  all as if GE Capital were not the Operating Agent or the Collateral
Agent and without the duty to account  therefor to any Obligor,  any Originator,
the  Seller,  the  Servicer,  the  Purchaser  or any other  Person.  ARTICLE XIV
MISCELLANEOUS  SECTION  14.01  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 14.01),  (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  hereunder upon delivery to the Operating  Agent in accordance
with the  terms  of this  Section  14.01.  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 the
Purchaser,  the  Operating  Agent and the  Collateral  Agent)  designated in any
written  notice  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 14.02 Binding Effect; Assignability
This Agreement shall be binding upon and inure to the benefit of the Seller, the
Servicer, the Purchaser,  the Operating Agent and the Collateral Agent and their
respective successors and permitted assigns. Neither the Seller nor the Servicer
may assign,  transfer,  hypothecate or otherwise  convey any of their respective
rights or  obligations  hereunder or interests  herein without the express prior
written consent of the Purchaser,  the Operating Agent and the Collateral  Agent
and unless the Rating Agency Condition shall have been satisfied with respect to
any such assignment. Any such purported assignment,  transfer,  hypothecation or
other conveyance by the Seller or the Servicer without the prior express written
consent of the Purchaser,  the Operating Agent and the Collateral Agent shall be
void. The  Purchaser,  the Operating  Agent or the Collateral  Agent may, at any
time, assign any of its rights and obligations  hereunder or interests herein to
any Eligible  Assignee and any such assignee may further  assign at any time its
rights and obligations  hereunder or interests  herein  (including any rights it
may have in and to the Transferred Receivables and the Seller Collateral and any
rights it may have to exercise  remedies  hereunder),  in each case  without the
consent of any Originator,  the Seller or the Servicer.  The Seller acknowledges
and agrees that,  upon any such  assignment,  the  assignee  thereof may enforce
directly, without joinder of the Purchaser, all of the obligations of the Seller
hereunder.  SECTION 14.03  Termination;  Survival of Seller Secured  Obligations
Upon Facility  Termination  Date. (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 any  Affected  Party  under  this  Agreement  shall in any way affect or
impair the  obligations,  duties and  liabilities of the Seller or the rights of
any  Affected  Party  relating  to any  unpaid  portion  of the  Seller  Secured
Obligations,  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 the Seller or the  Servicer,  and all rights of any Affected  Party
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 and the other Related  Documents shall terminate (except to
the extent  otherwise  expressly  provided  herein or  therein),  all  ownership
interests or Liens of the Purchaser in and to all  Transferred  Receivables  and
all  Liens  of the  Purchaser  and the  Collateral  Agent  in and to the  Seller
Collateral  shall be released by the Purchaser and the Collateral  Agent and the
Purchaser  and the  Collateral  Agent shall  promptly  return any and all of the
Seller  Collateral  then in their  possession  to Seller and shall  execute such
documents  (including without  limitation  UCC-3=s) as the Seller may reasonably
request to evidence such releases and terminations (provided that such documents
shall be prepared  and recorded at the Seller's  expenses);  provided,  that the
rights  and  remedies  provided  for  herein  with  respect to any breach of any
representation  or  warranty  made by the  Seller or the  Servicer  pursuant  to
Article IV,  the  indemnification  and  payment  provisions  of Article  XII and
Sections  14.04,  14.05 and 14.06  shall be  continuing  and shall  survive  the
Termination  Date and any  termination of this  Agreement.  SECTION 14.04 Costs,
Expenses and Taxes. (a) The Seller shall reimburse the Purchaser,  the Operating
Agent  and the  Collateral  Agent for all  out-of-pocket  expenses  incurred  in
connection  with the negotiation and preparation of this Agreement and the other
Related  Documents  (including  the  reasonable  fees and expenses of all of its
special counsel, advisors,  consultants and auditors retained in connection with
the transactions  contemplated thereby and advice in connection therewith).  The
Seller shall  reimburse the  Purchaser,  the Operating  Agent and the Collateral
Agent for all reasonable fees, costs and expenses, including the fees, costs and
expenses of counsel or other advisors  (including  environmental  and management
consultants and appraisers) for advice,  assistance,  or other representation in
connection  with: (i) the forwarding to the Seller or any other Person on behalf
of the  Seller  by the  Purchaser  of any  payments  for  Purchases  made  by it
hereunder;  (ii) any amendment,  modification or waiver of, consent with respect
to, or termination  of this  Agreement or any of the other Related  Documents or
advice in connection with the administration  thereof or their respective rights
hereunder  or  thereunder;  (iii) any  Litigation,  contest or dispute  (whether
instituted by the Seller,  the Purchaser,  the Operating  Agent,  the Collateral
Agent or any other Person as a party, witness, or otherwise) in any way relating
to the Seller Collateral, any of the Related Documents or any other agreement to
be executed or delivered in  connection  herewith or  therewith,  including  any
Litigation,  contest,  dispute, suit, case, proceeding or action, and any appeal
or review thereof,  in connection with a case commenced by or against the Seller
or any other Person that may be obligated to the Purchaser,  the Operating Agent
or the Collateral Agent by virtue of the Related  Documents,  including any such
Litigation,  contest,  dispute, suit, proceeding or action arising in connection
with any  work-out or  restructuring  of the  transactions  contemplated  hereby
during the  pendency  of one or more  Termination  Events;  (iv) any  attempt to
enforce any remedies of the  Purchaser,  the Operating  Agent or the  Collateral
Agent  against the Seller or any other  Person that may be  obligated to them by
virtue of any of the Related  Documents,  including  any such attempt to enforce
any  such  remedies  in the  course  of any  work-out  or  restructuring  of the
transactions  contemplated hereby during the pendency of one or more Termination
Events;  (v) any  work-out or  restructuring  of the  transactions  contemplated
hereby during the pendency of one or more Termination  Events;  and (vi) efforts
to  (A) monitor  the  Purchases  or  any  of  the  Seller  Secured  Obligations,
(B) evaluate,  observe or assess any  Originator,  the Seller or the Servicer or
their respective affairs, and (C) verify,  protect,  evaluate, assess, appraise,
collect,  sell,  liquidate or otherwise dispose of any of the Seller Collateral;
including all reasonable  attorneys and other professional and service providers
fees  arising  from  such  services,  including  those  in  connection  with any
appellate  proceedings,  and all reasonable  expenses,  costs, charges and other
fees incurred by such counsel and others in  connection  with or relating to any
of the events or actions  described in this Section 14.04, all of which shall be
payable,  on demand, by the Seller to the Purchaser,  the Operating Agent or the
Collateral  Agent,  as  applicable.  Without  limiting  the  generality  of  the
foregoing,  such expenses,  costs, charges and fees may include: fees, costs and
expenses of accountants, environmental advisors, appraisers, investment bankers,
management  and other  consultants  and  paralegals;  court costs and  expenses;
photocopying and duplication expenses;  court reporter fees, costs and expenses;
long  distance  telephone  charges;  air express  charges;  telegram or telecopy
charges; secretarial overtime charges; and expenses for travel, lodging and food
paid or  incurred  in  connection  with the  performance  of such legal or other
advisory services.  (b) In addition,  the Seller shall pay on demand any and all
stamp,  sales,  excise and other taxes (excluding income taxes) and fees payable
or determined to be payable in connection with the execution,  delivery,  filing
or recording of this  Agreement or any other  Related  Document,  and the Seller
agrees to indemnify and save each Purchaser Indemnified Person harmless from and
against any and all  liabilities  with respect to or resulting from any delay or
failure to pay such taxes and fees. SECTION 14.05 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 the Operating
Agent shall otherwise  consent in writing,  the Seller and the Servicer 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 Purchaser  Indemnified Person and otherwise and not to
disclose, deliver or otherwise make available to any third party (other than its
directors,  managers, 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  a  Purchaser
Indemnified Person. (b) The Seller and the Servicer each agree 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 other Related  Documents  without the prior written consent of
the Purchaser and the Operating  Agent (which consent shall not be  unreasonably
withheld) unless such news release or public announcement is required by law, in
which case the Seller or the  Servicer,  as  applicable,  shall consult with the
Purchaser and the Operating  Agent prior to the issuance of such news release or
public announcement.  The Seller may, however, disclose the general terms of the
transactions  contemplated by this Agreement and the other 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) The
Purchaser,  the  Operating  Agent and the  Collateral  Agent each  agrees to use
commercially  reasonable efforts  (equivalent to the efforts such Person 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 them by the Seller or the Servicer and
designated  by the Seller or the Servicer  (as the case may be) as  confidential
except,  that the Purchaser,  the Operating  Agent and the Collateral  Agent may
disclose such  information (a) to Persons  employed or engaged by the Purchaser,
the  Operating  Agent  or  the  Collateral   Agent  in  evaluating,   approving,
structuring  or   administering   the  Purchases  and  the  other   transactions
contemplated  by the  Related  Documents;  (b)  to any  bona  fide  assignee  or
participant  or potential  assignee or  participant  of the  Purchaser  that has
agreed to comply with the covenant contained in this paragraph (c) (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 the  Purchaser,  the Operating  Agent or the  Collateral
Agent to be compelled by any court decree,  subpoena or legal or  administrative
order or process; (d) as, on the advice of the Purchaser's, the Operating Agents
or the Collateral  Agent'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  the  Purchaser,  the  Operating  Agent  or the
Collateral  Agent is a party; or (f) which ceases to be confidential  through no
fault of the Purchaser,  the Operating  Agent or the Collateral  Agent.  SECTION
14.06 No  Proceedings.  Each of the Seller and the Servicer  hereby agrees that,
from and  after  the  Closing  Date  and  until  the date one year  plus one day
following the date on which the  Commercial  Paper with the latest  maturity has
been  indefeasibly  paid in full in cash, it will not,  directly or  indirectly,
institute  or cause to be  instituted  against the Seller or the  Purchaser  any
proceeding  of the type  referred to in Sections  9.01(c) and  9.01(d).  SECTION
14.07  Complete  Agreement;  Modification  of Agreement.  This Agreement and the
other Related  Documents  constitute  the complete  agreement  among the parties
hereto 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 14.08. SECTION 14.08 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 the Seller or the Servicer
therefrom,  shall in any event be effective  unless the same shall be in writing
and signed by each of the parties  hereto or thereto.  SECTION  14.09 No Waiver;
Remedies.  The failure by the Purchaser,  the Operating  Agent or the Collateral
Agent, at any time or times, to require strict  performance by the Seller or the
Servicer of any provision of this Agreement or the Purchase Assignment shall not
waive, affect or diminish any right of the Purchaser, the Operating Agent or the
Collateral Agent 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 the
Seller or the Servicer  contained in this Agreement or any Purchase  Assignment,
and no breach or default by the Seller or the Servicer  hereunder or thereunder,
shall be deemed to have been suspended or waived by the Purchaser, the Operating
Agent  or the  Collateral  Agent  unless  such  waiver  or  suspension  is by an
instrument in writing signed by an officer of or other duly authorized signatory
of the Purchaser,  the Operating Agent and the Collateral  Agent and directed to
the Seller or the Servicer, as applicable, specifying such suspension or waiver.
The rights and remedies of the Purchaser, the Operating Agent and the Collateral
Agent under this  Agreement  shall be cumulative and  nonexclusive  of any other
rights and remedies that the Purchaser,  the Operating  Agent and the Collateral
Agent may have under any other agreement, including the other Related Documents,
by operation of law or otherwise. Recourse to the Seller Collateral shall not be
required.  SECTION 14.10 Governing Law; Consent to Jurisdiction;  Waiver of Jury
Trial.  (a) this agreement and each other 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 other  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 the purchaser, the operating agent or the
collateral  agent from  bringing  suit or taking other legal action in any other
jurisdiction  to realize on the seller  collateral or any other security for the
seller  secured  obligations,  or to enforce a judgment  or other court order in
favor of the purchaser,  the operating agent or the collateral agent. 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 other related document or the transactions  contemplated hereby
or thereby.  SECTION 14.11  Counterparts.  This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.  SECTION 14.12 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  14.13  Section  Titles.  The  section  titles  and table of
contents  contained  in this  Agreement  are 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 14.14 Limited Recourse.  The obligations of
the  Purchaser  under this  Agreement  and all Related  Documents are solely the
corporate obligations of the Purchaser. No recourse shall be had for the payment
of any  amount  owing in  respect  of  Purchases  or for the  payment of any fee
hereunder  or any other  obligation  or claim  arising out of or based upon this
Agreement  or any other  Related  Document  against any  Stockholder,  employee,
officer,   director,  agent  or  incorporator  of  the  Purchaser.  Any  accrued
obligations  owing by the Purchaser under this Agreement shall be payable by the
Purchaser  solely to the extent that funds are  available  therefor from time to
time in accordance  with the  provisions of Article VI of the  Collateral  Agent
Agreement and Article VI of this Agreement (and such accrued  obligations  shall
not be extinguished until paid in full).  SECTION 14.15 Further Assurances.  (a)
Each of the Seller and the Servicer  shall,  at its sole cost and expense,  upon
request of 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  action  that  may be  necessary  or  desirable  or that the
Purchaser,  the  Operating  Agent or the  Collateral  Agent may  request  to (i)
perfect, protect,  preserve,  continue and maintain fully the Purchases made and
the right, title and interests  (including Liens) granted to the Purchaser under
this Agreement, (ii) enable the Purchaser, the Operating Agent or the Collateral
Agent to exercise and enforce its rights under this Agreement,  any of the other
Related Documents or the Collateral Agent Agreement or (iii) otherwise carry out
more  effectively  the  provisions  and purposes of this  Agreement or any other
Related Document.  Without limiting the generality of the foregoing,  the Seller
shall,  upon request of the  Purchaser,  the Operating  Agent or the  Collateral
Agent,  (A) execute  and file such  financing  or  continuation  statements,  or
amendments thereto or assignments thereof, and such other instruments or notices
that may be necessary or desirable or that the Purchaser, the Operating Agent or
the Collateral Agent may request to perfect,  protect and preserve the Purchases
made and the Liens  granted  pursuant to this  Agreement,  free and clear of all
Adverse  Claims,  (B) mark,  or  cause  the  Servicer  to  mark,  each  Contract
evidencing  each  Transferred  Receivable  with  a  legend,  acceptable  to  the
Purchaser,  the Operating  Agent and the Collateral  Agent  evidencing  that the
Purchaser  has  purchased  all right and title  thereto and interest  therein as
provided  herein,  (C) mark,  or cause the  Servicer  to mark,  its master  data
processing  records  evidencing such Transferred  Receivables with such a legend
and (D) notify or cause the  Servicer  to notify  Obligors  of the  transfer  of
Transferred Receivables effected hereunder.  (b) Without limiting the generality
of the foregoing,  the Seller hereby authorizes the Purchaser and the Collateral
Agent, and the Purchaser hereby  authorizes the Collateral Agent, to file one or
more financing or continuation statements,  or amendments thereto or assignments
thereof,  relating to all or any part of the Transferred Receivables,  including
Collections with respect thereto, or the Seller Collateral without the signature
of the Seller or, as  applicable,  the  Purchaser  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,
the Seller  Collateral  or any part thereof  shall be  sufficient as a notice or
financing statement where permitted by law.
    IN WITNESS WHEREOF,  the parties have caused this Receivables  Purchase and
Servicing  Agreement to be executed by their respective  officers thereunto duly
authorized, as of the date first above written.
                                            CONE RECEIVABLES II LLC

                                            By       /s/ 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 Carolina27415-6540
                                            Attention: Treasurer
                                            Telecopy: (336) 379-6043

                                            REDWOOD RECEIVABLES CORPORATION
                                            By       /s/ Denis Creeden
                                            Name: Denis Creeden
                                            Title:  Assistant Secretary
                                            3001 Summer Street
                                            Stamford, Connecticut  06927
                                            Attention: Redwood Administrator
                                            Telecopy: (203) 961-2953

                                            CONE MILLS CORPORATION

                                            By       /s/ David E. Bray
                                            Name: David E. Bray
                                            Title: Treasurer
                                            3101 North Elm Street
                                            Greensboro, NC 27415-6540
                                            Attention: Treasurer
                                            Telecopy: (336) 379-6043

                                            GENERAL ELECTRIC CAPITAL CORPORATION
                                            As Operating Agent&Collateral Agent
                                            By       /s/s Craig Winslow
                                            Name:    Craig Winslow
                                            Duly Authorized Signatory
                                            1201 High Ridge Road
                                            Stamford, Connecticut  06927
                                            Attention: VP-Portfolio/Cone
                                                  Receivables II LLC
                                            Telecopy: (203) 316-7821