DONNKENNY APPAREL, INC.                                    Policies & Procedures

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PART I                                        Section 2                                   Policy/         Page 1 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
                                                                                          EO2-003
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Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
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</TABLE>

1.    Purpose:

      To document the Standards of Business Conduct for all Employees of
      Donnkenny.

2.    Scope:

      All locations

3.    Definitions:

      Audit Committee: A committee of the Company's Board of Directors
      consisting of persons who are independent from the Company in that they
      are not employees of the Company nor do they perform any work or services
      for the Company other than as a member of the Company's Board of Directors
      and certain committees of the Board. Among the responsibilities of the
      Audit Committee is to oversee the management of the financial affairs of
      the Company.

      Donnkenny (the Company): Donnkenny, Inc., Donnkenny Apparel, Inc., and all
      of their affiliates, subsidiaries and divisions.

      Outside Counsel: Harvey Horowitz 212-696-4848 or
      hjhorowitz@mintzandgold.com

      Ombudsman: Designated Company representative available to all Employees
      for conflict or dispute resolution.

4.    References:

      Policy/Procedure #EO2-001 - Equal Employment Opportunity
      Policy/Procedure #EO2-002 - Policy Against Harassment
      Policy/Procedure #EO2-003.1 - Transactions in Company Securities

5.    Policy Statement

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INTRODUCTION

Donnkenny (the "Company") has a firmly established policy of conducting its
affairs in compliance with all applicable laws and regulations and observing the
highest standards of business conduct. Integrity, honesty, forthrightness and
fairness are of primary importance in all business relationships involving the
Company. The Company expects each employee to perform his or her duties in such
a manner as to preserve the Company's good name and reputation. The Company
intends that the spirit, as well as the letter, of these Standards of Business
Conduct shall be followed by every employee.

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DONNKENNY APPAREL, INC.                                    Policies & Procedures

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PART I                                        Section 2                                   Policy/         Page 2 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
                                                                                          EO2-003
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Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
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5.    Policy Statement (continued)

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INTRODUCTION (continued)

These Standards have been adopted by the Board of Directors of the Company and
shall apply to the Company, its subsidiaries and divisions and their directors,
officers and employees. Accordingly, references to the Company shall include its
subsidiaries and divisions. These Standards are not intended to be all
encompassing. Situations may arise that are not expressly covered or where the
proper course of action is unclear. When in doubt, consider applying the "T.V.
Test": i.e., how comfortable would you be if details of your action were
announced on the evening news? Employees should consult with their supervisors
if any questions as to the interpretation of these Standards arise. Any employee
may bring problems to the attention of higher management for review. The Company
has also established the position of Ombudsman who will be available to all
employees, on a confidential basis, to discuss issues or questions about Company
policy or directions given by superiors. In addition, the Audit Committee of the
Company will accept confidential, anonymous concerns from Employees relating to
questionable accounting or auditing matters. Instructions on how to contact an
Ombudsman or the Audit Committee are contained on Page 4 of these Standards. The
Company may modify or supplement these Standards from time to time, as it deems
appropriate.

Disclosure of unethical conduct is paramount to the implementation of these
Standards of Business Conduct. Thus, any employee of the Company having
information or knowledge regarding a violation, or potential violation, of these
Standards shall immediately report the same to his or her supervisor. If an
employee has reason to believe that it would be inappropriate to report the
relevant information to his or her supervisor, then the information should be
reported to another high-level authority within the Company or discussed with
the Company Ombudsman or Audit Committee, if related to financial, accounting or
auditing matters. Retaliation or reprisal of any kind against an employee who
reports a violation (or, in good faith, potential violation) of these Standards
is strictly prohibited.

The Company may regard any employee's acts in violations of these Standards to
be outside the course and scope of that employee's employment. Any employee who
shall be found to have violated these Standards may be subject to immediate
disciplinary action, including reassignment, demotion or, when appropriate,
dismissal. In addition, employee adherence to these Standards of Business
Conduct will be an element of each employee's annual personnel evaluation. As
such, it will affect decisions concerning compensation, promotion and retention.
Legal proceedings may also be commenced against such individual to recover the
amount of any improper expenditure, any other losses which the Company may have
incurred or other appropriate relief. Violators may also be prosecuted by public
officials under applicable criminal statutes.

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DONNKENNY APPAREL, INC.                                    Policies & Procedures

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PART I                                        Section 2                                   Policy/         Page 3 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
                                                                                          EO2-003
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Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
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</TABLE>

5.    Policy Statement (continued)

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CORPORATE ASSETS AND INFORMATION

Company Funds and Property

Employees of the Company are responsible and accountable for the proper
expenditure of funds and use of Company assets under their control, including
all funds and assets entrusted to the Company's custody by customers and others.
The Company's assets are to be used only for proper business purposes both
during and following employment with the Company. Examples of improper uses
include unauthorized taking or use of corporate property or other resources, and
the disbursement of corporate funds, directly or indirectly, for any form of
payment that is illegal or otherwise not in accordance with Company policy.
Unless authorized by appropriate Company executives, the sale, loan or gift of
Company assets to Company employees, customers or suppliers is prohibited.

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Corporate Records and Accounting Books, Data, Records and Reports

Donnkenny is committed to compliance with all applicable securities laws and
regulations, accounting standards, accounting controls and audit practices.

All Company books, data, records and reports must be accurate, truthful, fairly
reflect the underlying transactions and prepared in a proper manner. These
include everyday documents such as expense reports and accounting entries, as
well as cost estimates, contract proposals and other presentations to
management, customer and the public as well as reports and documents the Company
is required to file with governmental agencies. It is essential that those who
rely on these books, records and reports -- managers, creditors, customers,
auditors and other decisionmakers -- have truthful and accurate information. The
integrity of the Company's accounting, technical, personnel, financial and other
records is based on their validity, accuracy and completeness.

Anyone preparing the type of information described above must be diligent in
assuring its integrity and anyone representing or certifying the accuracy of
such information should make an inquiry or review adequate information to
establish a good faith belief in the accuracy of the information. Custodians of
the Company's books, data, records and reports must be sure that such
information is released, whether internally or outside the Company, only if
adequately protected and then only for authorized purposes

Employees are encouraged to raise concerns they have regarding any suspected
violations of these Standards. Supervisory employees, as part of their roles and
responsibilities, are required to report any suspected violations and it is the
Company's position that any other employee has a responsibility to report
suspected violations, even if such reporting is done anonymously.

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DONNKENNY APPAREL, INC.                                    Policies & Procedures

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PART I                                        Section 2                                   Policy/         Page 4 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
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Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
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5.    Policy Statement (continued)

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Corporate Records and Accounting Books, Data, Records and Reports (continued)

The Audit Committee of the Company, which is independent of Company management,
is responsible for investigating and responding to employee concerns over
financial, accounting or auditing matters. Employees may report their concerns
directly to any member of the Audit Committee by phone, mail or email. Employees
are not required to identify themselves when making a complaint - anonymous
complaints will be accepted. The following individuals are members of the Audit
Committee:

        Sheridan C. Biggs                          Robert Schwartz
        P.O. Box 160                               2 Myton Lane
        Quaker Street, New York 12141              Menands, New York 12204
        Phone/Fax: 518-875-6852                    Phone: 516-463-8878
        Email: Azurevista@worldnet.att.net         Fax: 518-786-6558
                                                   Email: rschwartz@shggroup.com

        Richard C. Rusthoven
        7519 Calle Facil
        Sarasota, Florida 34238
        Phone: 941-922-5488
        Fax: 941-924-2159
        Email: kylechad@worldnet.att.net

It is the Company's policy to promptly investigate all reports. Appropriate
corrective action will be taken if warranted by the investigation. All reports
will be kept confidential to the extent possible and consistent with the need to
conduct an adequate investigation. Retaliation against employees who raise
concerns will not be tolerated by the Company, whether such retaliation is by
any officer, employee or agent of the Company or by any contractor or
subcontractor of the Company.

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Confidential and Proprietary Information

The Company's employees are responsible for protecting the Company's
confidential and proprietary information. No employee shall disclose
confidential or proprietary information to a third party without proper
authorization or use such information for his or her own personal benefit, or in
any manner inconsistent with the Company's interest.

Confidential information includes, without limitation, information or data
relating to the Company's planning, business strategy, projects, existing or
potential customers, competitors or suppliers, financial results or operations,
or any other information that is not generally known to the public. This
prohibition also applies to the confidential information of the Company's
customers, suppliers and other parties with whom the Company does business.
Additionally, employees shall have an absolute responsibility to safeguard all
confidential information related to personnel records. Such information
includes, but is not limited to salary and related compensation information,
performance appraisals and health and personal information.

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DONNKENNY APPAREL, INC.                                    Policies & Procedures

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PART I                                        Section 2                                   Policy/         Page 5 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
                                                                                          EO2-003
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Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
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</TABLE>

5.    Policy Statement (continued)

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Confidential and Proprietary Information (continued)

Proprietary information includes, without limitation, information relating to
trade secrets, patents, research studies and results, manufacturing techniques
and marketing strategies. It includes records, practices, letters, plans,
drawings, software and data stored on electronic or magnetic media. Proprietary
information also includes inventions and other information employees may create
or develop which relate to the Company's business. Proprietary information is a
Company asset. Employees are required to report the creation or development of
proprietary information to permit the Company to take the necessary steps to
protect its assets. Improper disclosure or use could destroy the value of such
information to the Company, substantially weaken the Company's competitive
position and subject it to substantial liability to any third-party licensor of
such information. Access to confidential and proprietary information must be
limited to authorized persons with a need to know that particular information.
Unauthorized disclosure even to other Company employees, for example, in non-job
related discussions, is prohibited. Employees should take care not to: (1)
discuss Company matters in public places where discussion can be overheard; (2)
read Company documents where others can see them; or (3) discard Company
documents where they can be retrieved. Employees should also be aware of the
insecure nature of conversations conducted on car, airplane, mobile and cellular
telephones, and act accordingly.

At the conclusion of employment with the Company, employees are required to
return all Company documents, records and other property in their possession,
including those that contain confidential or proprietary information. After
leaving the Company, former employees have a continuing obligation to safeguard
confidential and proprietary information, including keeping it confidential and
avoiding its unauthorized use.

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Insider Trading

Because of the position of the Company as a public company whose stock is traded
by members of the public, special care must be taken with respect to information
concerning the Company. If an employee has material non-public information
relating to the Company, he or she may not buy or sell securities of the Company
or engage in any other action or take advantage of, or pass on to others that
information. Examples include undisclosed earnings, sales or profitability data,
impending announcements of acquisitions or investments, and significant project
or product developments. "Material non-public information" is defined as any
information, favorable or unfavorable, that (a) has not been widely disseminated
to the public generally, (b) could affect the market price of a specific
security and (c) a reasonable investor would attach importance to in deciding
whether to buy, sell or retain such security. Information should be considered
"non-public" until a reasonable time after it has been disseminated widely to
the general public through press releases, news ticker or newspaper items, or
quarterly or annual reports.

In addition, "securities" are defined very broadly under the federal securities
laws and include any stock, note, bond debenture (or other debt instrument),
certificate of interest or participation in any profit-sharing agreement,
investment contract, voting-trust certificate of deposit, warrant, or any put,
call, straddle or option or privilege on any security, or in general, any
instrument commonly known as security.

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DONNKENNY APPAREL, INC.                                    Policies & Procedures

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PART I                                        Section 2                                   Policy/         Page 6 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
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Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
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</TABLE>

5.    Policy Statement (continued)

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Insider Trading (continued)

The prohibition on insider trading also applies to information relating to any
other company, including any customer, competitor, or supplier of the Company.
These restrictions also apply to an employee's family members and others living
in his or her household, and any other person with whom the employee may share
material, non-public information. Employees are expected to be responsible for
the compliance of their immediate family and personal household. To that end,
employees must not disclose ("tip") material non-public information (obtained
through employment with the Company or otherwise) to anyone, inside or outside
the Company (including family or household members or friends), except to those
who need to know such information in order to the Company to properly and
effectively carry out its business. Transactions that may appear to be necessary
or justifiable for personal, independent reasons (such as the need to raise
money for an emergency expenditure) are no exception. Even the appearance of an
improper transaction must be avoided.

Moreover, employees must not engage in speculative transactions in the
securities of the Company, including as follows:

Short Sales: The sale of a security by an investor who has borrowed the security
for this purpose. The short seller borrows the security with the intention of
later "covering" the short sale -- that is, the investor will return to the
lender (brokerage house), at a later date, an identical security that the
investor will purchase in the market. The purpose of a short sale is to take
advantage of the anticipation of the stock price going down.

Buying or selling of options (puts or calls): A contract that permits the owner,
depending on the option held, to purchase or sell an asset is a put. Depending
on how an investor uses options, the risk is quite high.

Any employee who buys or sells securities of the Company should be aware that if
the transactions become the subject of scrutiny, they will be viewed
after-the-fact with the benefit of hindsight. As a result, before engaging in
any such transaction, an individual should carefully consider how regulators and
others might view the transaction. In the United States, as a general rule, it
is considered safe for employees to buy or sell securities of the company that
employs them on or after the third business day after the release to the general
public of the company's quarterly or annual reports. However, the rules differ
from jurisdiction to jurisdiction and are subject to change. Accordingly, any
employee in possession of confidential information wishing to trade in Company
securities should consult the Company's Outside Counsel beforehand.

Refer to Policy/Procedure #EO2-003.1 - Transactions in Company Securities for
important information about Quiet Periods and required Notification and
Reporting.

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DONNKENNY APPAREL, INC.                                    Policies & Procedures

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PART I                                        Section 2                                   Policy/         Page 7 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
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Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
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</TABLE>

5.    Policy Statement (continued)

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Legal Disputes and Governmental Inquiries

Employees involved with a Company lawsuit or other legal dispute may not discuss
it with outsiders or other Company employees without prior approval of the
Company's Outside Counsel. Failure to follow these restrictions could constitute
a break of the attorney-client privilege and result in the loss of confidential
information. Additionally, any employee who is contacted by any regulatory or
law enforcement authority seeking Company information should promptly contact
his or her supervisor who shall immediately bring the matter to the attention of
the Company's Outside Counsel. No employee should respond to any inquiry
regarding the Company without first consulting the Company's Outside Counsel.

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CONFLICTS OF INTEREST

Conflicts of Interest

Although Company employees are generally free to engage in personal financial
business transactions, there are certain limitations. All employees have a duty
to avoid situations where their loyalties may be divided between the Company's
interests and their own interests. Employees should avoid even the appearance of
such a conflict of interest. In the event a possible conflict does arise, its
nature and extent must be fully disclosed immediately to the employee's
supervisor and/or the Outside Counsel.

While it is impossible to outline every situation that may give rise to a
conflict of interest or the appearance of impropriety, the following are some
examples:

1.    No employee may have a financial interest or stock ownership in, or
      obligation to, a competitor, customer, or supplier of the Company, where
      the interest or obligation might cause divided loyalty or even the
      appearance of divided loyalty.

2.    No employee may perform services as an employee, independent contractor,
      advisor or consultant for any competitor of the Company. No employee may
      perform such services for a customer or supplier of the Company without
      the written approval of the Company's Outside Counsel.

3.    No employee may serve as a director of any competitor of the Company. No
      employee may serve as a director of any customer or supplier of the
      Company without the written approval of the Company's Outside Counsel.

4.    No employee may accept a position with another company if doing so would
      impair the employee's ability to fulfill his or her obligations to the
      Company.

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DONNKENNY APPAREL, INC.                                    Policies & Procedures

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PART I                                        Section 2                                   Policy/         Page 8 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
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Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
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</TABLE>

5.    Policy Statement (continued)

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Conflicts of Interest (continued)

6.    No employee may seek or accept elected or appointed public office, which
      would put an employee in a position of dealing with the Company or
      competitors of the Company in such employee's elected or appointed
      capacity, unless he or she has received written authorization from the
      Company's Outside Counsel.

7.    No employee may deprive the Company of a business opportunity, or divert a
      business opportunity to such employee's own benefit.

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Dealing with Government Officials

Employees who have dealings with governmental officials shall conform to the
following standards.

1.    All employees who contact public officials must be familiar with the
      applicable lobbying laws and public disclosure requirements, particularly
      those laws or regulations that pertain to registrations or filings that
      must be made by the Company.

2.    No payment shall be made to, or for the benefit of, any public official in
      order to induce or entice such official to enact, defeat or violate any
      law or regulation for the Company's benefit; to influence any official
      act; or to obtain any favorable action by a governmental agency or
      official on behalf of the Company.

3.    Social amenities, entertainment and other courtesies may be extended to
      government officials or employees only to the extent appropriate and
      reasonable under applicable laws and customs. Gifts of greater than
      nominal value to, or lavish entertainment of, public officials are
      prohibited. No gifts in the form of cash, stock or other similar
      consideration shall be given, regardless of amount. Any gift about which
      an employee is uncertain should not be made without the written approval
      of the Company's Outside Counsel. Any expenses incurred by a Company
      employee in connection with the matters discussed herein shall be
      accurately recorded on the Company's books and records.

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DONNKENNY APPAREL, INC.                                    Policies & Procedures

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PART I                                        Section 2                                   Policy/         Page 9 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
                                                                                          EO2-003
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Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
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</TABLE>

5.    Policy Statement (continued)

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Business Hospitality

Business entertainment (including meals and transportation for non-business
purposes), gratuities and gifts, whether offered by Company employees or their
families to third parties or extended to Company employees or their families by
third parties, are permitted, provided the entertainment, meal or non-business
transportation provided is not lavish or excessive and the gift or gratuity
given is of nominal value and does not consist of cash or cash equivalents (e.g.
gift certificates). Neither should exceed the bounds of good taste or customary
business standards in the community. Even business travel when provided or
extended should not appear to be a resort excursion or junket. Care should be
exercised to ensure that any business entertainment or gift cannot reasonably be
construed by the recipient as a bribe or improper inducement. The nature of the
transactions should be such that their public disclosure would not be
embarrassing to the Company, employee giving the gift or the recipient. All
funds expended for business entertainment and gifts must be documented
accurately and reflected in the books and records of the Company. Under any
circumstances, gifts having a value of $100.00 or more require approval by an
officer of the Company before being extended or accepted.

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Prohibited Payments

Bribery and Kickbacks: Our business is built on integrity in dealing with
suppliers, customers and business agents. To that end, no employee of the
Company shall directly or indirectly offer, give, solicit or accept any money,
privilege, special benefit, gift, or other item of value for the purpose of
obtaining, retaining, or directing business or bestowing or receiving any kind
of special or favored treatment for the Company. The Company does not permit or
condone the use or receipt of bribes, kickbacks, or any other illegal or
improper payments or transfers in the transaction of its business. The use of
any outside consultant, attorney, accountant, or agent in any manner or for any
purpose that would be contrary to this prohibition will not be permitted.

Business Dealings Outside the United States: The Foreign Corrupt Practices Act
(the "Act") prohibits a U. S. citizen from engaging in certain types of
activities while conducting business outside the United States. In accordance
with the provisions of the Act, no director, officer, employee, or agent of the
Company shall give or offer to give, directly or indirectly, anything of value
to any foreign official (including an official of any political party or
candidate for any political office) for the purpose of (i) influencing any act
or decision of the recipient in his official capacity; (ii) inducing the
recipient to use his influence to affect any act or decision of any foreign
government; or (iii) inducing the recipient to do or omit to do any act in
violation of the lawful duty of such person. The Act provides that an individual
may be fined up to $100,000 and imprisoned for up to five years for violations
of the Act.

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DONNKENNY APPAREL, INC.                                    Policies & Procedures

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PART I                                        Section 2                                   Policy/         Page 10 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
                                                                                          EO2-003
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Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
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</TABLE>

5.    Policy Statement (continued)

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Prohibited Payments (continued)

Business Dealings Outside the United States (continued) - In addition, the
Company is subject to substantial monetary penalties for violations of the Act
by its employees or agents and is prohibited from directly or indirectly paying
the monetary fines imposed on individual violators of the law. Small
facilitating payments may be made to foreign officials whose duties are
essentially clerical in nature in order to secure or expedite the performance of
certain non-discretionary "routine" governmental actions such as obtaining
permits or processing visas. The Company discourages, but does not categorically
prohibit, facilitating payments provided they are permitted under United States
law and are not made in order to influence a foreign official or other person to
make a decision that the individual is not required to make, such as any
decision whether, or on what terms to award new business to or to continue
business with a particular party.

It may also be permissible to reimburse or pay the reasonable and bona fide
travel, lodging, food or similar expenses of a foreign official provided that
(i) the payment is not contrary to United States or applicable foreign law; or
(ii) the payment is for expenses that related directly to the promotion,
demonstration, or explanation of the Company's products or services, or to the
execution or performance of a Company contract with a foreign government or
agency.

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Political Contributions - No corporate funds or services shall be paid or
furnished to any political party of any candidate for, or incumbent in, any
public office except as permitted by law and as approved by the Company's
Outside Counsel.

The prohibitions and limitations on political contributions outlined above
relate only to the use of corporate funds and services and are not intended to
discourage employees from making personal contributions to candidates or
political parties of their choice. Personal involvement in political activity is
permitted as long as the activity does not interfere with or impair the
performance of the employee's duties for the Company. In addition, any employee
who becomes involved with a political group must make it clear that his or her
activities are being conducted purely in a personal capacity and not on behalf
of or in connection with the Company.

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DONNKENNY APPAREL, INC.                                    Policies & Procedures

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PART I                                        Section 2                                   Policy/         Page 11 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
                                                                                          EO2-003
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Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
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</TABLE>

5.    Policy Statement (continued)

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EQUAL EMPLOYMENT OPPORTUNITY AND UNLAWFUL HARASSMENT

Donnkenny has a longstanding policy of ensuring an environment that respects the
dignity and worth of each individual and is free from all forms of unlawful
employment discrimination, including sexual harassment and harassment because of
race, color, gender, age, religion, national origin, sexual orientation, creed,
physical or mental handicap, citizenship status or status as a Vietnam Era
Veteran or qualified disabled veteran or any other characteristic in accordance
with all applicable Federal, State and local laws.

The Company maintains a strong policy of equal employment opportunity for all
employees and applicants for employment. This policy applies to all employment
decisions, including but not limited to recruitment, hiring, placement,
promotion, upgrading, demotion, downgrading, termination, layoff, recall,
transfer, leaves of absence, compensation and training and apprenticeship and
other terms and conditions of employment. The Company makes such decisions on
the basis of individual competence and potential without regard for race, color,
religion, gender (sex), national origin, age, creed, physical or mental
handicap, sexual orientation, citizenship status or status as a Vietnam Era
Veteran or qualified disabled veteran in accordance with all applicable Federal,
State and local laws.

The Company is committed to adhering to and enforcing its obligations under
applicable non-discrimination laws including the Americans with Disabilities Act
("ADA"). All managers and employees are expected to help implement the Company's
goals with regard to equal employment opportunity. Disabled employees and job
applicants who want to request reasonable accommodations from the Company are
encouraged to consult with their supervisors or Human Resources Department. In
addition, employees and job applicants who feel that they have been
discriminated against because of disability should register a complaint with the
Head of the Human Resources Department, or with the appropriate supervisory
executive.

The Company opposes harassment of others on the basis of sex, sexual
orientation, age, race, color, national origin, religion, marital status,
citizenship, disability and other characteristics protected by applicable laws.
Harassment includes, for example, making derogatory remarks about such
characteristics, using negative epithets, making "jokes" about ethnic or other
groups.

It is the policy of the Company to provide a non-discriminatory work environment
free of intimidation and harassment. All employees are expected to cooperate in
maintaining this work environment. Not only must supervisors conduct themselves
in a manner consistent with this policy, they are also responsible for
establishing and maintaining a work environment free of unlawful discrimination.

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<PAGE>

DONNKENNY APPAREL, INC.                                    Policies & Procedures

<TABLE>
<S>                                           <C>                                         <C>             <C>
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PART I                                        Section 2                                   Policy/         Page 12 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
                                                                                          EO2-003
-------------------------------------------------------------------------------------------------------------------------
Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

5.    Policy Statement (continued)

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EQUAL EMPLOYMENT OPPORTUNITY AND UNLAWFUL HARASSMENT (continued)

Any form of unlawful harassment, whether verbal or physical, will not be
tolerated by the Company at any level. Sexual harassment includes unwelcome
sexual advances, requests for sexual favors or other verbal or physical conduct
of a sexual nature when: (1) submission to such conduct is made, either
explicitly or implicitly, a term or condition of an individual's employment; (2)
submission to or rejection of such conduct by an individual is used as the basis
of employment decisions affecting such individual; or (3) such conduct has the
purpose or effect of substantially interfering with the affected person's work
performance or creating an intimidating, hostile or offensive work environment.

It is the Company's policy to investigate and remedy any incidents of
harassment. In order to accomplish this, however, harassment must be brought to
the attention of the Company. Accordingly, employees who feel aggrieved because
of harassment have an obligation to communicate their problems immediately. An
employee who feel he or she has been harassed should immediately notify the Head
of the Human Resources Department, or any member of management with whom he or
she feels comfortable discussing the situation. All complaints will be treated
as confidentially as possible

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SAFETY OF THE WORKPLACE AND ENVIRONMENTAL PROTECTION

The Company requires each employee to perform his or her work in a safe manner
so as not to cause harm to themselves or to others. The Company similarly
insists that work conducted under its leadership or supervision be performed
safely. Work performed individually or under Company leadership must also comply
with applicable environmental standards and regulations, which regulate, among
other things, the emission of pollutants into the atmosphere and surface and
underground waters and the handling and disposal of wastes.

Working or supervising work with hazardous equipment or materials, or under
hazardous conditions, requires knowledge of and compliance with all applicable
occupational safety and health standards, information requirements and
government regulations. Any employee having any questions about these standards,
requirements or regulations should consult with his or her supervisor.

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<PAGE>

DONNKENNY APPAREL, INC.                                    Policies & Procedures

<TABLE>
<S>                                           <C>                                         <C>             <C>
-------------------------------------------------------------------------------------------------------------------------
PART I                                        Section 2                                   Policy/         Page 13 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
                                                                                          EO2-003
-------------------------------------------------------------------------------------------------------------------------
Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

5.    Policy Statement (continued)

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RELATIONSHIPS WITH COMPETITORS AND OTHER TRADE PRACTICES

Relationship with Competitors

Employees of the Company must be aware that there are laws protecting and
promoting proper competition, including laws protecting competitors' proprietary
and other sensitive information; such laws apply in many of the countries in
which the Company does business. Company employees and consultants, especially
any person having direct contact with competitors, have a clear responsibility
to know and obey these laws.

Proprietary and Sensitive Information

The Company will not acquire another company's trade secrets or other
proprietary information by improper means, or permit the unauthorized use of a
third party's patents, copyrights or trademarks. The acquisition of trade
secrets or other proprietary information by other than authorized means may
subject individuals and the Company to criminal or civil liability.
Additionally, means such as reverse engineering may be prohibited by contractual
arrangements or may violate certain patent or other proprietary rights. Any
employee who comes into possession of confidential or proprietary information
from or regarding another company should immediately consult with the Outside
Counsel.

Fair Competition

The Company will compete fairly for business respecting the rights of other
parties. This includes respect for the legitimate business relationships of
competitors with the Company's prospective customers. If, as a result of our
wrongful act, a customer breaches a contract or terminates a business
relationship with a competitor, the Company and its employees may be liable for
damages.

Price Fixing

Any kind of joint action taken by two or more companies which directly or
indirectly influences the price of the products or services they sell in
competition with one another is price fixing. Such an agreement is illegal
whether or not the parties have arrived at a specific price or even a range of
prices.

Customer Allocation, Dividing Territories, or Limiting Production

Any agreement between competitors not to compete by allocating customer or
potential customers is illegal, whether the allocation is by territory, by
specific customer, or by customer classification. Agreements to limit production
or avoid production innovation are also illegal.

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<PAGE>

DONNKENNY APPAREL, INC.                                    Policies & Procedures

<TABLE>
<S>                                           <C>                                         <C>             <C>
-------------------------------------------------------------------------------------------------------------------------
PART I                                        Section 2                                   Policy/         Page 14 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
                                                                                          EO2-003
-------------------------------------------------------------------------------------------------------------------------
Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

5.    Policy Statement (continued)

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Restrictive Internal Trade Practices

United States law prohibits U. S. corporations and their foreign operations from
complying with restrictive practices, including governmental boycotts,
instituted by foreign countries against other countries or against U. S.
organizations or persons. Violations by a company can result in significant
monetary penalties and suspension of export privileges. Individuals who violate
the regulations face the possibility of imprisonment. These laws require
companies to immediately report any such requests to the U. S. Government. To
ensure compliance with United States and applicable foreign laws, employees must
report promptly to management any request received for compliance with
international restrictive trade practices.

--------------------------------------------------------------------------------

OFFICE OF OMBUDSMAN

The Company has established the office of Company Ombudsman. If for any reason
an employee has questions which he or she does not feel comfortable discussing
with other employees or supervisors concerning employment, directions given by a
supervisor or co-worker, or questions of propriety or legality of conduct, such
individual should contact the Company Ombudsman. The Ombudsman is available to
discuss the employee's concern, and to provide information about the Company's
procedures. All discussions with the Ombudsman will be kept confidential. The
role of the Ombudsman is to work with the employee to try to find a way of
resolving the problem or concern of the employee, if possible, in a manner
acceptable to the individual and in keeping with the policies and standards
contained in this Code. The Ombudsman's objective will be to offer the employee
options for handling, and at the individual's request, help in solving the
problem or concern. The Ombudsman may be contacted privately, in writing or even
on an anonymous basis. The name(s) of the Company Ombudsman will be posted along
with other employee notices, in the place designated for such purpose in each
Company location. The persons designated to serve as Ombudsman as of this date
are:

<TABLE>
<CAPTION>
<S>                                  <C>                              <C>
Jonathan Matheny                     Lynn Golubchik                   Harvey Horowitz, Esq.
Corporate Controller                 VP HR & Admin                    Director, Donnkenny
276-228-6181, Ext. 203               212-790-3964                     212-696-4848
jmatheny@donnkenny.com               lgolubchik@donnkenny.com         hjhorowitz@mintzandgold.com

Mitchell Todd                        Bonnie Singer
Manager Inbound Distribution         Production Manager
843-783-0770                         609-387-1999, Ext. 128
mtodd@donnkenny.com                  msinger@donnkenny.com
</TABLE>

Refer to Page 4 - Section on Corporate Records and Accounting Books, Data,
Records and Reports for information on reporting concerns over financial,
accounting or auditing matters to the Audit Committee.

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<PAGE>

DONNKENNY APPAREL, INC.                                    Policies & Procedures

<TABLE>
<S>                                           <C>                                         <C>             <C>
-------------------------------------------------------------------------------------------------------------------------
PART I                                        Section 2                                   Policy/         Page 15 of 15
EMPLOYEE ORIENTATION                          Employment Policies                         Procedure #:
                                                                                          EO2-003
-------------------------------------------------------------------------------------------------------------------------
Subject:                                      Prepared by:                                Revision        Effective
Standards of Business Conduct                 Lynn Golubchik                              No. 5           Date:
                                                                                                          January 2004
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

5.    Policy Statement (continued

--------------------------------------------------------------------------------

ACKNOWLEDGMENT AND UNDERSTANDING

Because of the importance of this policy, it is the Company's intent to
distribute a copy to all Employees, upon hire and once each year, and confirm
their acknowledgment and understanding (Form #HR-009 - Acknowledgment and
Understanding - Standards of Business Conduct).

--------------------------------------------------------------------------------

6.    Records/Reports or Forms:

      Form HR-009 - Acknowledgment & Understanding - Standards of Business
      Conduct