CONSULTING AND SEPARATION AGREEMENT

                  This  Consulting and  Separation  Agreement and Mutual General
Release of all Claims (this  "Agreement")  is entered into on May 5, 2000 by and
between  Bobby V. Abraham (the  "Executive")  and Paragon  Trade  Brands,  inc.,
including its subsidiaries (the "Company").

                  In  Consideration of the promises set forth in this Agreement,
the Executive and the Company hereby agree as follows.

         I.       ENTIRE AGREEMENT.
                  ----------------

                  This Agreement is the entire  agreement  between the Executive
                  and the  Company  with  respect to the subject  matter  hereof
                  which includes  without  limitation any rights which may arise
                  from the  separation  of the  Executive  from the  Company and
                  contains all of the agreements, whether written, oral, express
                  or  implied,   between  the  Executive  and  the  Company  and
                  supersedes  any  other  agreement,  whether  written  or oral,
                  express or implied,  between the  Executive  and the  Company.
                  Except as set forth herein,  all prior  agreements and alleged
                  agreements, whether written, oral, express or implied ,between
                  the Executive and the Company including without limitation the
                  Employment  Agreement  between the  Executive  and the Company
                  dated August 5, 1997 and the Schedules  attached  thereto (the
                  "Employment Agreement") are hereby terminated and extinguished
                  effective as of the Separation Date. Other than this Agreement
                  there are no other agreements of any nature whatsoever between
                  the Executive  and the Company  which survive this  Agreement.
                  This  Agreement  cannot be  modified  or  amended  except in a
                  writing signed and agreed to by the Executive and the Company.

         II.      SEPARATION.
                  ----------

                  As of June 30, 2000 or such earlier time as may be  determined
                  by the Company's  Board of Directors (the "Board") in its sole
                  discretion  (the  "Separation  Date"),  the  Executive  hereby
                  resigns from any and all appointments as an officer,  employee
                  or director he holds with the Company  (including as the Chief
                  Executive  Officer of the Company) and any  appointments as an
                  officer,  employee or director of any of its  subsidiaries  or
                  other  affiliates,  and hereby agrees that his employment with
                  the Company is terminated as of the Separation Date. Except as
                  expressly set forth in this  Agreement,  the Executive and the
                  Company shall have no  obligations to each other of any nature
                  whatsoever  after the  Separation  Date.  After the Separation
                  Date,  the Executive  shall have no authority to act on behalf
                  of the Company,  and shall not hold himself out as having such
                  authority.  The  Executive  will be paid as of the  Separation
                  Date,  a lump  sum cash  payment  equal  to any  accrued  wage
                  benefits  earned prior to the

<PAGE>
                                                                               2


                  Separation Date,  including  but  not  limited to  any  unused
                  accrued vacation and personal time.

         III.     CONSULTING ARRANGEMENT.
                  ----------------------

                  In accordance with the understanding  between the parties, the
                  Company  shall  retain the  Executive  as a  consultant  for a
                  period  commencing  on the  Separation  Date and ending on the
                  first business day following the six-month  anniversary of the
                  Separation date (the  "Termination  Date");  provided that the
                  parties  may agree in  writing  to extend  the  period of this
                  consulting  arrangement (the "Consulting  Arrangement") may be
                  extended,  by mutual agreement of the parties,  for any period
                  of time following the Termination  Date, and may be terminated
                  by the Company prior to the Termination  Date for "cause." The
                  Executive shall have such reasonable duties as may be assigned
                  by the Board from time to time,  including but not limited to,
                  facilitating  the transition of Mike Riordan into the position
                  of Chief Executive Officer of the Company,  and assisting with
                  employees,  customers,  vendors and joint venture partners. In
                  respect of his availability to provide consulting services and
                  for any such services  rendered,  the Executive shall be paid,
                  on  January  1,  2001,  a lump sum in an  amount  equal to the
                  excess if any of (i) $500,000  (the  "Consulting  Fee"),  over
                  (ii) the total amount of the Fee  Advances (as defined  below)
                  previously  paid to the  Executive.  The  Executive  shall  be
                  reimbursed  for  any  reasonable   expenses  incurred  in  the
                  performance of his duties hereunder in accordance with Company
                  policy. Executive shall receive monthly advance payments ("Fee
                  Advances")  of the  Consulting  Fee in an amount  equal to the
                  product of (i) the  number of days  consulting  services  were
                  actually  rendered in the preceding month,  multiplied by (ii)
                  $5,000.  Notwithstanding  the  foregoing,  in  the  event  the
                  consulting Arrangement is terminated by the Company for cause,
                  the  Executive  shall  not  be  entitled  to  payment  of  the
                  Consulting  Fee and shall  only  receive  payment  for and Fee
                  Advances  accrued  through the date of such  termination.  Any
                  amounts   received  by  the  Executive  under  the  Consulting
                  Arrangement  shall not be  reduced  or offset by any  payments
                  received by the Executive from other  employment  prior to the
                  Termination date. If the Consulting  Arrangement is terminated
                  by the Company without Cause prior to the Executive's  receipt
                  of the Consulting  Fee, the Company shall pay to the Executive
                  on January 1, 2001, a sum  representing  the excess of (i) the
                  Consulting Fee over (ii) the total amount of Fee Advances paid
                  to the Executive. For the purposes of this Agreement,  "Cause"
                  shall mean (I) the Executive engaging in acts of dishonesty or
                  fraud in  connection  with his services  under the  Consulting
                  Arrangement,  or (ii) the breach of a term of this  Agreement;
                  provided,  however, that Executive's  unavailability to render
                  services at a given time shall not constitute "Cause."

<PAGE>
                                                                               3


         IV.      ENTITLEMENTS.
                  ------------

                  A.       The Executive shall receive the following payments:

                  (i)      a single lump sum payment of $1,000,000, representing
                           severance  payable in  accordance  with  Section 4(C)
                           below;

                  (ii)     a deferred  compensation award of $100,001.20 payable
                           on the Separation Date; and

                  (iii)    an  additional  deferred   compensation   payment  of
                           $216,048 as  reflected  in the  Company's  1999 proxy
                           payable on the Separation Date.

                  B.       The Executive (and the Executive's dependents)  shall
                  receive  coverage  under the  Company's  health  and  employee
                  benefit  plans in effect  as of the  Separation  Date,  to the
                  extent permitted by such plans (in the event such continuation
                  of coverage is not permitted under such employee  benefit plan
                  such coverage shall be secured  through  "COBRA"  continuation
                  coverage which shall be provided at the Company's expense), at
                  the  Company's  expense for a period of two (2) years from the
                  Separation  date  (provided  that  substantially  the  same or
                  equivalent  benefits  are not  available  to the  Executive by
                  reason of employment obtained following the Separation Date).

                  C.       The payment described  in Section 4(A)(i) above  will
                  be made  promptly following  the expiration  of the  seven-day
                  revocation  period  commencing  on  the  Separation  Date,  as
                  described in  Section 7 of this  Agreement.  The Company shall
                  withhold  from   any  amounts  paid  under  this    Agreement,
                  or  otherwise, the amount of any federal, state or local taxes
                  then  required to be withheld.

         IV.      DOCUMENTS, CONFIDENTIALITY AND NON DISPARAGEMENT.
                  ------------------------------------------------

                    A.   RETURN OF DOCUMENTS  AND PROPERTY.  Promptly  after the
                         Separation  date, the Executive agrees to return to the
                         Company all originals and copies of papers,  notes, and
                         documents (in any medium,  including  computer  disks),
                         whether Company property or not, prepared,  received or
                         obtained by the  Executive  or his  counsel  during the
                         course of the  Executive's  employment with the Company
                         and  related  to the  Company or its  business  but not
                         including the Executive's  "Rolodex" and calendar,  and
                         all  equipment and property of the Company which may be
                         in the  Executive's  possession  or under his  control,
                         whether or not relating to the claims released  hereby,
                         including,  without  limitation,  all such papers, work
                         papers,   notes,   documents   and   equipment  in  the
                         possession of the


<PAGE>
                                                                               4



                         Executive,  Executive's family  and  counsel; provided,
                         however, that the Executive  may keep his "Rolodex" but
                         shall  provide  the  Company   with   a  copy  of   any
                         information contained   thereon.  The Executive  agrees
                         that the Executive shall not retain  copies of any such
                         papers,    work    papers,    notes   and    documents.
                         Notwithstanding the foregoing, the Executive may   keep
                         copies of any benefits agreements between the Executive
                         and the Company, this Agreement with  supporting  notes
                         and documentation, any publicly filed materials and any
                         employee benefit plan and stock  option plan  materials
                         distributed  generally to participants in any such plan
                         by the Company.

                    B.   Confidentiality and Non Disparagement.  For purposes of
                         this   Section   5  of   this   Agreement,   the   term
                         "Communicate"  shall include  without  limitation,  any
                         oral or written  communication with any other person or
                         entity  through  any means  including  any  electronic,
                         telephonic  or other  medium,  directly  or  indirectly
                         publishing, or causing,  participating in, assisting or
                         providing any statement or any  information  or making,
                         publishing, or producing or in any way participating in
                         placing into the public domain any  statement,  opinion
                         or  information in connection  with the  publication of
                         any diary, memoir, letter story, photograph, interview,
                         article,   essay,   account  or  description   (whether
                         fictionalized  or not,  whether  written or electronic)
                         publication being deemed to include any presentation or
                         reproduction of any written,  verbal or visual material
                         in  any  communication  medium,   including  any  book,
                         magazine, newspaper, theatrical production or movie, or
                         television  or  radio   programming  or  commercial  or
                         electronic medium of any kind.

                         (i)  The Executive  explicitly and fully agrees that he
                              will  not  at  any  time  (a)  defame,  impugn  or
                              impair  the reputation or public  perception of or
                              with  respect  to,  or  disparage,  criticize   or
                              otherwise made negative comments in respect of the
                              Company,  its  subsidiaries  or  affiliates,   the
                              business,    assets,   properties,     operations,
                              prospects,  plans,  performance (including   stock
                              market  performance),   strategies,   current   or
                              former    employees,      directors,     advisors,
                              stockholders,   lenders,  joint  venture partners,
                              customers,  tenants  or  borrowers  of  any of the
                              foregoing, and (b) will not Communicate  the terms
                              or   circumstances  of  the Executive's separation
                              from    the    Company  or   of   this   Agreement
                              (collectively, "Company Matters"). Company Matters
                              shall  be  deemed  not  to  include  the  mutually
                              agreed upon  departure  statement with  respect to
                              the  Executive's  separation   from   the  Company
                              provided for by Section  5.D. of  this  Agreement.
                              In  addition,  the Executive explicitly  and fully
                              agrees that  at any and  all times  the  Executive
                              will   hold   all  confidential  and   proprietary
                              information (including



<PAGE>
                                                                               5


                                    without  limitation the Company's  financial
                                    affairs or business  processes or methods or
                                    research,  development or marketing programs
                                    or plans,  any  other of its trade  secrets,
                                    any  information   regarding   customers  or
                                    customer   lists)  in  confidence   for  the
                                    benefit of the  Company,  and the  Executive
                                    will not  disclose to any third party in any
                                    medium or use for the Executive's benefit or
                                    that   of  any   third   party,   any   such
                                    confidential   information   except  to  the
                                    extent  required  by law or agreed to by the
                                    Company.

                           (ii)     Without   limiting   the   foregoing,    the
                                    Executive  further  agrees  that,  from  the
                                    Separation Date until the Termination  date,
                                    the  Executive  will not,  other than at the
                                    request of the Company, Communicate with (a)
                                    any reporters or any members of the press or
                                    any  other  representative  of any  media or
                                    publication  ("Media Persons"),  and (b) any
                                    joint venture partners of the Company or its
                                    subsidiaries or affiliates.

                           (iii)    Notwithstanding anything to the  contrary in
                                    this Section 5, the Executive may  confer in
                                    confidence   with   the  Executive's   legal
                                    counsel,   make   truthful   statements   if
                                    required  by  law,   and  confer  with   his
                                    immediate   family   members  and   personal
                                    financial or tax advisors. In the event that
                                    the Executive is required to make disclosure
                                    under  any  court  order,  subpoena or other
                                    judicial   or  governmental   administrative
                                    process,  the Executive will promptly notify
                                    the  Company,  take  all   reasonable  steps
                                    requested  by  the Company to defend against
                                    compulsory disclosure and permit the Company
                                    to  participate  with counsel  of its choice
                                    and  at  its   expense   in  any  proceeding
                                    relating to the compulsory  disclosure.

                  C.       The  Company  and  the  Executive  shall  develop   a
                           mutually   acceptable   public  departure   statement
                           regarding   the  Executive's   separation  from   the
                           Company.  The Company and the Executive shall develop
                           a  mutually  acceptable  standard  response  for  the
                           Executive to  unsolicited inquiries from stockholders
                           of  the  Company, and Media Persons, which  statement
                           shall  be  deemed  not  to  be  a  violation  of  any
                           provision  of this  Section 5  if made in response to
                           any  inquiry  not  solicited  by  the Executive.  The
                           Company  and  the  Executive  will  also  develop   a
                           mutually   acceptable  farewell  "E-mail"  from   the
                           Executive to the employees of the Company.

                  D.       Nothing in  this Agreement is intended to prevent the
                           Executive  from  (i) using  on the Executive's behalf
                           general  knowledge  or  experience  in  any  area  of
                           professional  activity,  whether or not involving the
                           Executive's  services  with  the  Company;  and  (ii)
                           referring to the



<PAGE>
                                                                               6





                           Executive's  performance  of services for the Company
                           as  descriptive  of  the  Executive's  abilities  and
                           qualifications  for  employment  or engagement by any
                           other person.

         VI.      GENERAL RELEASE AND WAIVER OF CLAIMS.
                  ------------------------------------

                  A.       The Executive and the  Company hereby unconditionally
                           and forever release, discharge  and waive any and all
                           claims  of  any nature,  whatsoever,  whether  legal,
                           equitable  or  otherwise which  the  Executive or the
                           Company may  have against  the other  arising  at any
                           time  on or before  the Separation Date.  This mutual
                           release of all claims extends to  any and all  claims
                           of any nature,  whatsoever, whether known, unknown or
                           capable  or  incapable  of  being  known  as  of  the
                           Separation Date or thereafter, with regard to actions
                           or  omissions  prior to  the  Separation  Date.  This
                           Agreement  is a  release of all  claims of any nature
                           whatsoever  by the  Executive and the Company against
                           the other  with regard  to actions or omissions prior
                           to  the   Separation  Date   and   includes,  without
                           limitation,  any and all claims,  demands,  causes of
                           action,  liabilities   whether   known   or   unknown
                           including  those  arising  from  or  related  to  the
                           Executive's employment relationship with the Company,
                           including but without limitation, any and all alleged
                           discrimination  or  acts  of   discrimination   which
                           occurred  or  may  have  occurred  on  or  before the
                           Separation Date  based  upon race, color, sex, creed,
                           national  origin,  age,  disability   or  any   other
                           violation  of  any  Equal Employment Opportunity Law,
                           ordinance, rule, regulation  or order,  including but
                           not limited to, Title VII of the Civil Rights  Act of
                           1964, as amended,  the Civil Rights Act  of 1966; the
                           Civil Rights Act of 1991;   The Age Discrimination in
                           Employment  Act,  as  amended  ("ADEA")  (as  further
                           described  in  Section  7  below);   the  Fair  Labor
                           Standards  Act,   as amended;   the  Americans   with
                           Disabilities Act;  and  any  similar state statute or
                           regulations.  The  parties  agree  and understand and
                           knowingly  agree to this  release because it is their
                           respective intent  in  executing  this  Agreement  to
                           forever  discharge  each  other  from  any  and   all
                           present,  future,  foreseen  or  unforeseen causes of
                           action with regard to actions or omissions   prior to
                           the  Separation  Date.  Nothing  in this Section 6.A.
                           shall be deemed to limit the remedies of either party
                           set forth in Section 11 of this Agreement.

                  B.       The Company and its successors  and/or assigns,  will
                           indemnify  and defend the  Executive  with respect to
                           any claims that may be brought  against the Executive
                           arising  out of any action  taken or not taken in the
                           Executive's capacity as an officer of the Company. In
                           addition, the Executive shall continue to be covered,
                           in  respect  of  the  Executive's  activities  as  an
                           officer of the Company,  by the  Company's  Directors
                           and

<PAGE>
                                                                               7


                           Officer liability policy or other comparable policies
                           obtained by the Company's successors, to the   extent
                           permitted by such policies.

         VII.     RELEASE AND WAIVER OF  CLAIMS UNDER  THE AGE DISCRIMINATION IN
                  --------------------------------------------------------------
                  EMPLOYMENT ACT
                  --------------

                  The Executive acknowledges  that the Company encouraged him to
                  consult  with an  attorney  of his  choosing,  and that he has
                  consulted  with  such  attorney  and  through  this  Agreement
                  encourages  him to  consult  with his  attorney  and he has so
                  consulted  with such attorney with respect to possible  claims
                  under  the ADEA and that the  Executive  acknowledges  that he
                  understands  that the ADEA is a federal statute that prohibits
                  discrimination,  on the basis of age, in employment, benefits,
                  and benefit plans.  The Executive  wishes to waive any and all
                  claims under the ADEA that he may have,  as of the  Separation
                  Date,  against the Company,  its shareholders,  employees,  or
                  successors  and  hereby  waives  such  claims.  The  Executive
                  further  understands  that by signing this  Agreement he is in
                  fact waiving,  releasing and forever giving up any claim under
                  the ADEA that may have  existed on or prior to the  Separation
                  Date. The Executive acknowledges that the Company has informed
                  him that he has at his option,  twenty-one  (21) days in which
                  to sign the  waiver  of this  claim  under  ADEA,  and he does
                  hereby  knowingly and  voluntarily  waive said twenty-one (21)
                  day period.  The Executive also  understands that he has seven
                  (7) days following the Separation  Date within which to revoke
                  the release contained in this paragraph by providing a written
                  notice of his  revocation of the release and waiver  contained
                  in  this  Section  to  the  Company.   The  Executive  further
                  understands that this right to revoke the release contained in
                  this Section  relates only to this Section and does not act as
                  a  revocation  of  any  other  term  of  this  Agreement.  The
                  Executive  acknowledges  that the  cash  payment  required  by
                  Section  4.A. of this  Agreement is in  consideration  for the
                  release  contained  in this Section 7. The  Executive  further
                  acknowledges that in the event of the revocation  permitted by
                  this Section 7, he shall not receive the payment  described in
                  the preceding sentence.

         VIII.    PROCEEDINGS.
                  -----------

                  The  Executive  has not filed,  and agrees not to  initiate or
                  cause to be initiated on his behalf,  any  complaint,  charge,
                  claim or  proceeding  against  the  Company or its  affiliates
                  before any local, state or federal agency, court,  arbitration
                  tribunal  or other  body  relating  to his  employment  or the
                  termination of his  employment,  other than wit respect to the
                  obligations  of  the  Company  to  the  Executive  under  this
                  Agreement (each, individually, a "Proceeding"), and agrees not
                  to voluntarily  participate in any  Proceeding.  The Executive
                  waives  any right he may have to benefit  any manner  from any
                  relief  (whether  monetary  or  otherwise)  arising out of any
                  Proceeding.

<PAGE>
                                                                               8


         IX.      CONTINUED COOPERATION.
                  ---------------------

                  The Executive agrees to cooperate with all reasonable requests
                  by  the  Company  with  respect  to  matters  relating  to the
                  Executive's  former position as chief Executive Officer of the
                  Company, including agreement to provide sworn testimony.

         X.       SURVIVAL OF COMPETITION, ETC. COVENANTS.
                  ---------------------------------------

                  The  Executive  acknowledges and  agrees  that  the  covenants
                  contained in Section 6 and 7 of the Employment Agreement shall
                  survive  the Separation Date  and be effective for the periods
                  described  therein  as  if  those  periods  had  commenced  on
                  the  Termination Date.   Notwithstanding  the  foregoing,  the
                  aforementioned  covenants  shall also remain in force from the
                  Separation Date  to the Termination date.

         XI.      REMEDIES.
                  --------

                  The parties  acknowledge, consent and agree that the  remedies
                  at law  available to the Company and the  Executive for breach
                  of  any  of  the  obligations   of  this  Agreement  would  be
                  inadequate and that damages flowing from such a breach may not
                  readily be  susceptible to  being  measured in monetary terms.
                  Accordingly,  the  parties  will  have the right to seek  both
                  damages   and   specific   performance,   including  immediate
                  injunctive relief as  remedies  in the case of a breach by the
                  other  party of this Agreement and nothing  in this  Agreement
                  will be deemed to  eliminate,  limit or otherwise inhibit such
                  rights or the right of either party to seek legal or equitable
                  remedies, including seeking  immediate  injunctive  relief, in
                  connection with or arising out of any other action or omission
                  by the other party on or subsequent to the Separation Date.

         XII.     SEVERABILITY CLAUSE.
                  -------------------

                  In the event any provisions or part of this Agreement is found
                  to be invalid or unenforceable, only that particular provision
                  or  part  so  found,  and not  the  entire  Agreement  will be
                  inoperative.  If any of the restrictions  contained herein are
                  deemed to be unenforceable  by reason of the extent,  duration
                  or  scope  thereof,  or  otherwise,  then  the  court or other
                  tribunal  making such  determination  shall reduce the extent,
                  duration or other provisions hereof to the broadest  provision
                  deemed by such tribunal to be enforceable,  and in its reduced
                  form,  this  Agreement  will then be enforceable in the manner
                  contemplated  hereby.  To the extent  permitted by  applicable
                  law, the parties hereto hereby waive any provisions of law now
                  or  hereafter  in effect which  renders any  provision  hereof
                  unenforceable in any respect.

<PAGE>
                                                                               9


         XIII.    RESOLUTION OF DISPUTES AND GOVERNING LAW.
                  ----------------------------------------

                  This  Agreement  will be  governed by the laws of the State of
                  Georgia. Any dispute under this Agreement (including,  but not
                  limited to, disputes regarding the obligations to make payment
                  hereunder)  will be decided in accordance with the laws of the
                  State of Georgia, in a court of competent  jurisdiction,  with
                  each party  bearing its own expenses and such dispute will not
                  be subject to arbitration.

         XIV.     NON-ADMISSION.
                  -------------

                  Nothing   contained  in  this  Agreement  will  be  deemed  or
                  construed as an admission  of  wrongdoing  or liability on the
                  Executive's  part  or on  the  part  of  the  Company,  or its
                  officers, employees, directors or representatives or agents.

         XV.      HEADINGS.
                  --------

                  Headings  are given to the sections  and  subsections  of this
                  Agreement  solely as a convenience  to  facilitate  reference.
                  Such  headings  shall  not be deemed  in any way  material  or
                  relevant  to  the  construction  or   interpretation  of  this
                  Agreement or any provision thereof.

THE PARTIES  ACKNOWLEDGE  THAT THEY HAVE  CONSULTED  WITH  COUNSEL AND THAT SUCH
COUNSEL HAS REVIEWED  THIS  AGREEMENT AND THE PARTIES  ACKNOWLEDGE  FURTHER THAT
THEY HAVE READ THIS AGREEMENT,  THAT THEY FULLY KNOW,  UNDERSTAND AND APPRECIATE
ITS  CONTENTS,  THAT THEY EXECUTE SAME AND MAKE THIS  AGREEMENT  AND RLEEASE AND
AGREEMENTS PROVIDED FOR HEREIN VOLUNTARILY AND OF THEIR OWN FREE WILL.


<PAGE>
                                                                              10


         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
5th day of May, 2000.

PARAGON TRADE BRANDS, INC.



By:      /S/ ALAN J. CYRON                            /S/ BOBBY V. ABRAHAM
         --------------------------------             --------------------
         Name:  Alan J. Cyron                         Bobby V. Abraham
         Title:  EVP and Chief
                   Financial Officer             Witnessed:  /s/ Bill Rothschild
                                                             Bill Rothschild
                                                             5/30/00