PLEDGE AND SECURITY AGREEMENT

                          DATED AS OF JANUARY 28, 2000



                                      AMONG



                PARAGON TRADE BRANDS, INC. AND EACH OTHER GRANTOR

                         FROM TIME TO TIME PARTY HERETO



                                       AND



                               CITICORP USA, INC.
                             AS ADMINISTRATIVE AGENT














                           WEIL, GOTSHAL & MANGES LLP
                                767 FIFTH AVENUE
                          NEW YORK, NEW YORK 10153-0119


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                                TABLE OF CONTENTS

                                                                           PAGE

ARTICLE I.......................................................Defined Terms  1

         Section 1.1  ............................................Definitions  1

         Section 1.2  ....................................Certain Other Terms  5

ARTICLE II.........................................Grant of Security Interest  5

         Section 2.1  .............................................Collateral  5

         Section 2.2  ...............Grant of Security Interest in Collateral  7

ARTICLE III....................................Representations And Warranties  7

         Section 3.1  ..................................Title; No Other Liens  7

         Section 3.2  ................................Perfection and Priority  7

         Section 3.3  .........State of Incorporation; Chief Executive Office  7

         Section 3.4  ................................Inventory and Equipment  7

         Section 3.5  .....................................Pledged Collateral  8

         Section 3.6  ...............................................Accounts  8

         Section 3.7  .........................................No Other Names  8

         Section 3.8  ..................................Intellectual Property  9

ARTICLE IV..........................................................Covenants  9

         Section 4.1  ..............................................Generally  9

         Section 4.2  Maintenance of Perfected Security Interest; Further
                      ......................................... Documentation 10

         Section 4.3  .......................Changes in Locations, Name, Etc. 10

         Section 4.4  .............. ......................Pledged Collateral 10

         Section 4.5  .....................Control Accounts; Blocked Accounts 12

         Section 4.6  ...............................................Accounts 12

         Section 4.7  ..............Delivery of Instruments and Chattel Paper 13

         Section 4.8  ..................................Intellectual Property 13

         Section 4.9  .................................Payment of Obligations 14

ARTICLE V.................................................Remedial Provisions 15

         Section 5.1  ................................Code and Other Remedies 15

         Section 5.2  .......................Accounts and Payment Intangibles 15

         Section 5.3  .....................................Pledged Collateral 16

         Section 5.4  .....Proceeds to be Turned Over To Administrative Agent 17

         Section 5.5  ....................................Registration Rights 17

         Section 5.6  .....................................Waiver; Deficiency 18

ARTICLE VI...........................................The Administrative Agent 18

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                               TABLE OF CONTENTS
                                  (CONTINUED)


         Section 6.1  .Administrative Agent's Appointment as Attorney-in-Fact 18

         Section 6.2  ...........................Duty of Administrative Agent 20

         Section 6.3  ......................Execution of Financing Statements 20

         Section 6.4  ......................Authority of Administrative Agent 20

ARTICLE VII.....................................................Miscellaneous 21

         Section 7.1  ..................................Amendments in Writing 21

         Section 7.2  ................................................Notices 21

         Section 7.3  ....No Waiver by Course of Conduct; Cumulative Remedies 21

         Section 7.4  .................................Successors and Assigns 21

         Section 7.5  ...........................................Counterparts 21

         Section 7.6  ...........................................Severability 21

         Section 7.7  .......................................Section Headings 21

         Section 7.8  .......................................Entire Agreement 22

         Section 7.9  ..........................................Governing Law 22

         Section 7.10  ...................................Additional Grantors 22

         Section 7.11  .................................Release of Collateral 22

         Section 7.12  .........................................Reinstatement 22



                              ANNEXES AND SCHEDULES


                  Annex 1  Blocked Account Letter
                  Annex 2  Control Account Letter
                  Annex 3  Pledge Amendment
                  Annex 4  Joinder Agreement
                  Annex 5  Short Form Copyright Security Agreement
                  Annex 6  Short Form Patent Security Agreement
                  Annex 7  Short Form Trademark Security Agreement



                  Schedule 1  State of Incorporation; Principal Executive Office
                  Schedule 2  Pledged Collateral
                  Schedule 3  Filings
                  Schedule 4  Location of Inventory and Equipment
                  Schedule 5  Intellectual Property


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                          PLEDGE AND SECURITY AGREEMENT

                  PLEDGE AND SECURITY AGREEMENT,  dated as of  January 28, 2000,
by Paragon Trade  Brands,  Inc., a Delaware  corporation  (the  "BORROWER")  PTB
International,  Inc.,  a Delaware  corporation,  PTB  Acquisition  Sub,  Inc., a
Delaware  corporation  and  PTB  Holdings,  Inc.,  an  Ohio  corporation  (each,
including the Borrower, a "GRANTOR" and, collectively, the "GRANTORS"), in favor
of Citicorp USA, Inc. ("CITICORP"), as agent for the Secured Parties (as defined
in  the  Credit   Agreement   referred   to  below)  (in  such   capacity,   the
"ADMINISTRATIVE AGENT").

                              W I T N E S S E T H:

                  WHEREAS, pursuant to the Credit Agreement, dated as of January
28,  2000 (as the same  may be  amended,  restated,  supplemented  or  otherwise
modified from time to time,  (the "CREDIT  AGREEMENT")  among the Borrower,  the
Lenders and Issuers  party  thereto and  Citicorp,  as agent for the Lenders and
Issuers, the Lenders and the Issuers have severally agreed to make extensions of
credit to the Borrower  upon the terms and subject to the  conditions  set forth
therein; and

                  WHEREAS, the Grantors other than the Borrower are party to the
Guaranty pursuant to which they have guaranteed the Obligations; and

                  WHEREAS,  it is a condition precedent to the obligation of the
Lenders and the  Issuers to make their  respective  extensions  of credit to the
Borrower  under the Credit  Agreement  that the Grantors shall have executed and
delivered this Agreement to the Administrative Agent;

                  NOW, THEREFORE, in consideration of the premises and to induce
the Lenders,  the Issuers and the Administrative  Agent to enter into the Credit
Agreement  and to induce the Lenders  and the  Issuers to make their  respective
extensions of credit to the Borrower thereunder, each Grantor hereby agrees with
the Administrative Agent as follows:

          ARTICLE I.         DEFINED TERMS

          SECTION 1.1       DEFINITIONS.

          (a) Unless  otherwise  defined  herein,  terms  defined  in the Credit
Agreement  and  used  herein  have  the  meanings  given  to them in the  Credit
Agreement.

          (b) Terms used  herein that are  defined in the UCC have the  meanings
given to them in the UCC, including the following which are capitalized herein:

                  "ACCOUNT DEBTOR"
                  "ACCOUNTS"
                  "CHATTEL PAPER"
                  "CONTROL"
                  "DOCUMENTS"
                  "EQUIPMENT"
                  "FINANCIAL ASSET"
                  "GENERAL INTANGIBLES"
                  "INSTRUMENTS"
                  "INVENTORY"
                  "INVESTMENT PROPERTY"


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                  "PROCEEDS"
                  "SECURITY"
                  "SECURITY ENTITLEMENT"

          (c)      The following terms shall have the following meanings:

                  "ADDITIONAL  PLEDGED  COLLATERAL" means all shares of, limited
and/or general partnership interests in, and limited liability company interests
in, and all securities convertible into, and warrants,  options and other rights
to purchase or otherwise  acquire,  stock of, either (i) any Person that,  after
the date of this  Agreement,  as a result  of any  occurrence,  becomes a direct
Subsidiary of any Grantor or (ii) any issuer of Pledged Stock,  any  Partnership
or any  LLC  that  is  acquired  by any  Grantor  after  the  date  hereof;  all
certificates  or  other  instruments  representing  any  of the  foregoing;  all
Security  Entitlements  of any Grantor in respect of any of the  foregoing;  all
additional  indebtedness from time to time owed to any Grantor by any obligor on
the Pledged Notes and the  instruments  evidencing  such  indebtedness;  and all
interest,  cash,  instruments  and other  property or Proceeds from time to time
received,  receivable or otherwise  distributed in respect of or in exchange for
any or all  of the  foregoing.  Additional  Pledged  Collateral  may be  General
Intangibles or Investment Property.

                  "AGREEMENT" means this Pledge and Security Agreement.

                  "APPROVED   SECURITIES   INTERMEDIARY"   means  a   securities
intermediary   or   commodity   intermediary   selected   or   approved  by  the
Administrative  Agent and with  respect to which a Grantor has  delivered to the
Administrative Agent an executed Control Account Letter.

                  "CASH  COLLATERAL   ACCOUNT"  means  any  deposit  account  or
securities  account  established  by the  Administrative  Agent as  provided  in
SECTION 5.2 or 5.4 in which cash and Cash  Equivalents  may from time to time be
on deposit or held therein.

                  "COLLATERAL" has the meaning specified in SECTION 2.1.

                  "CONTROL  ACCOUNT"  means a  securities  account or  commodity
account maintained by any Grantor with an Approved Securities Intermediary which
account is the subject of an effective Control Account Letter,  and includes all
Financial  Assets held therein and all  certificates  and  instruments,  if any,
representing or evidencing such Control Account.

                  "CONTROL   ACCOUNT   LETTER"   means   a   letter   agreement,
substantially  in the form of ANNEX 2 (with such  changes as may be agreed to by
the Administrative Agent),  executed by the Grantor and the Administrative Agent
and acknowledged and agreed to by the relevant Approved Securities Intermediary.

                  "COPYRIGHTS"  means (a) all copyrights  arising under the laws
of the United States,  any other country or any political  subdivision  thereof,
whether  registered or unregistered  and whether  published or unpublished,  all
registrations  and  recordings  thereof,  and  all  applications  in  connection
therewith,  including all  registrations,  recordings  and  applications  in the
United States  Copyright Office or in any foreign  counterparts  thereof and (b)
the right to obtain all renewals and extensions thereof.

                  "COPYRIGHT  LICENSES" means any written  agreement  naming any
Grantor  as  licensor  or  licensee  granting  any right  under  any  Copyright,
including  the grant of  rights to copy,



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publicly perform, create derivative works, manufacture,  distribute, exploit and
sell materials derived from any Copyright.

                  "INTELLECTUAL  PROPERTY"  means,  collectively,   all  rights,
priorities and privileges  relating to  intellectual  property,  whether arising
under  United  States,  multinational  or foreign laws or  otherwise,  including
Copyrights,  Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark
Licenses,  the  entire  goodwill  of  any  business  connected  with  use of and
symbolized by the Trademarks and trade secrets,  and all rights to sue at law or
in equity for past, present and future  infringement or other  misappropriations
thereof,  including,  without  limitation,  the right to receive  all  proceeds,
royalties, income and damages therefrom now or hereafter due and payable or both
with  respect  thereto  including  damages  and  payments  for  past  or  future
infringements or  misappropriations  thereof, and all other rights corresponding
thereto throughout the world.

                  "INTERCOMPANY NOTE" means any promissory note evidencing loans
made by any Grantor to any of its Subsidiaries or another Grantor.

                  "LLC" means each limited  liability company in which a Grantor
has an interest, including those set forth on SCHEDULE 2.

                  "LCC AGREEMENT" means each operating agreement with respect to
an LLC, as each  agreement  has  heretofore  been and may  hereafter be amended,
restated, supplemented or otherwise modified from time to time.

                  "MATERIAL  INTELLECTUAL  PROPERTY" means Intellectual Property
owned by or licensed to a Grantor which is material to its business.

                  "PARTNERSHIP" means each partnership in which a Grantor has an
interest, including those set forth on SCHEDULE 2.

                  "PARTNERSHIP   AGREEMENT"  means  each  partnership  agreement
governing a  Partnership,  as each such  agreement has  heretofore  been and may
hereafter be amended, restated, supplemented or otherwise modified.

                  "PATENTS"  means (a) all letters  patent of the United States,
any other  country or any  political  subdivision  thereof and all  reissues and
extensions thereof, (b) all applications for letters patent of the United States
or any other country and all divisions,  continuations and continuations-in-part
or extensions  thereof,  and (c) all rights to obtain any reissues or extensions
of the foregoing.

                  "PATENT  LICENSE"  means all  agreements,  whether  written or
oral,  providing for the grant by or to any Grantor of any right to manufacture,
use, import, sell or offer for sale any invention covered in whole or in part by
one or more Patents or granting any interest in Patents.

                  "PAYMENT  INTANGIBLES"  has the meaning  specified  in SECTION
5.2(A).

                  "PLEDGED COLLATERAL" means,  collectively,  the Pledged Notes,
the Pledged Stock, the Pledged Partnership Interests, the Pledged LLC Interests,
all certificates or other  instruments  representing  any of the foregoing,  all
Security  Entitlements  of any Grantor in respect of any of the  foregoing,  all
dividends, interest distributions, cash, warrants, rights, instruments and other

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property  or  Proceeds  from  time to time  received,  receivable  or  otherwise
distributed  in  respect  of or in  exchange  for  any or all of the  foregoing.
Pledged Collateral may be General Intangibles or Investment Property.

                  "PLEDGED  LLC  INTERESTS"  means all of any  Grantor's  right,
title  and  interest  as a member of any LLCs and all of such  Grantor's  right,
title and interest in, to and under any LLC Agreement to which it is a party.

                  "PLEDGED  NOTES"  means all right,  title and  interest of any
Grantor,  in the Instruments  evidencing all Indebtedness  owed to such Grantor,
including all Indebtedness described on SCHEDULE 2, issued by the obligors named
therein, and all interest, cash, Instruments and other property or Proceeds from
time to time received,  receivable or otherwise  distributed in respect of or in
exchange for any or all of such Indebtedness.

                  "PLEDGED   PARTNERSHIP   INTERESTS"  shall  mean  all  of  any
Grantor's  right,  title and interest as a limited and/or general partner in all
Partnerships  and all of such  Grantor's  right,  title and  interest in, to and
under any Partnership Agreements to which it is a party.

                  "PLEDGED  STOCK"  means the shares of capital  stock  owned by
each  Grantor,  including  all shares of capital  stock  listed on  SCHEDULE  2;
PROVIDED,  HOWEVER, that only the outstanding capital stock of a subsidiary that
is not a  Domestic  Subsidiary  possessing  up to but not  exceeding  65% of the
voting  power  of all  classes  of  capital  stock  of such  controlled  foreign
corporation  (actually  owned by each such  Grantor)  entitled  to vote shall be
deemed to be pledged hereunder.

                  "RELATED  CONTRACT" means each security  agreement,  lease and
other contract securing or otherwise relating to any Account.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended.

                  "TRADEMARKS" means (a) all trademarks  (whether  registered or
at common law),  trade names,  corporate names,  company names,  business names,
fictitious  business names, trade styles,  service marks, logos and other source
or business identifiers, and all goodwill associated therewith and in connection
with the business of owner symbolized thereby, now existing or hereafter adopted
or acquired,  all registrations and recordings thereof,  and all applications in
connection  therewith,  whether in the United States Patent and Trademark Office
or in any similar  office or agency of the United  States,  any State thereof or
any other country or any political  subdivision  thereof, or otherwise,  and all
common-law  rights  related  thereto,  and (b) the right to obtain all  renewals
thereof.

                  "TRADEMARK  LICENSE" means any agreement,  whether  written or
oral,  providing  for the  grant by or to any  Grantor  of any  right to use any
Trademarks.

                  "UCC" means the Uniform  Commercial  Code as from time to time
in effect in the State of New York; PROVIDED,  HOWEVER,  that in the event that,
by  reason  of  mandatory  provisions  of  law,  any or  all of the  attachment,
perfection or priority of the  Administrative  Agent's and the Secured  Parties'
security  interest in any Collateral is governed by the Uniform  Commercial Code
as in effect in a jurisdiction  other than the State of New York, the term "UCC"
shall mean the Uniform  Commercial Code as in effect in such other  jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of


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definitions related to such provisions;  PROVIDED,  FURTHER,  that if the UCC is
amended after the date hereof,  such  amendment will not be given effect for the
purposes  of this  Agreement  if and to the extent the result of such  amendment
would be to limit or eliminate any item of Collateral.

          SECTION 1.2       CERTAIN OTHER TERMS.

          (a) The words "HEREIN," "HEREOF," "HERETO" and "HEREUNDER" and similar
words  refer to this  Agreement  as a whole and not to any  particular  Article,
Section, subsection or clause in this Agreement.

          (b) References  herein  to  an   Annex,  Schedule,  Article,  Section,
subsection or clause refer to the appropriate  Annex or Schedule to, or Article,
Section, subsection or clause in this Agreement.

          (c) The  meanings  given  to terms defined  herein shall be equally
applicable to both the singular and plural forms of such terms.

          (d) Where the context requires, provisions  relating to the Collateral
or any part  thereof,  when used in relation  to a Grantor,  shall refer to such
Grantor's Collateral or the relevant part thereof.

          (e) Any reference in this Agreement  to a Loan Document  shall include
all appendices,  exhibits and schedules thereto, and, unless specifically stated
otherwise  all  amendments,  restatements,  supplements  or other  modifications
thereto,  and as the same may be in effect at any and all times  such  reference
becomes operative.

          (f) The term "INCLUDING" means "INCLUDING  WITHOUT  LIMITATION" except
when used in the computation of time periods.

          (g) The terms "LENDER," "ISSUER," "ADMINISTRATIVE AGENT" and  "SECURED
PARTY" include their respective successors.

          (h)  References  in this  Agreement  to any statute  shall be to  such
statute as amended or modified and in effect from time to time.

          ARTICLE II.  GRANT OF SECURITY INTEREST

          SECTION 2.1  COLLATERAL.  For  the purposes of this Agreement,  all of
the following  property now owned or at any time hereafter acquired by a Grantor
or  in which a Grantor  now has or  at any time  in the future  may  acquire any
right, title or interests is collectively referred to as the "COLLATERAL":

          (a) all Accounts;

          (b) all Inventory;

          (c) all Equipment;

          (d) all General Intangibles,  including all  Intellectual  Property of
any such Grantor and that portion of the Pledged Collateral constituting General
Intangibles;

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          (e) all Investment Property,  including all Control Accounts  and that
portion of the Pledged Collateral constituting Investment Property;

          (f) all Documents, Instruments and Chattel Paper;

          (g) the Cash Collateral  Accounts and all  Blocked Accounts  and other
deposit accounts;

          (h) all books and records pertaining to the Collateral;

          (i) all other  goods and  personal  property of such  Grantor  whether
tangible or intangible wherever located,  including money, letters of credit and
all rights of payment or performance under letters of credit;

          (j) all property of any Grantor  held by  Administrative  Agent or any
Secured Party, including all property of every description, in the possession or
custody  of or in transit to Administrative  Agent or such Secured Party for any
purpose, including safekeeping,  collection or pledge,  for the  account of such
Grantor, or as to which such Grantor may have any right or power; and

          (k) to the extent not otherwise  included,  all  Proceeds and products
of each of the foregoing and all accessions to, substitutions  and  replacements
for,  and rents,  profits and products of,  each of the foregoing,  any  and all
proceeds of any  insurance,  indemnity,  warranty or  guaranty  payable  to  the
Grantor from time to time with respect to any of the Collateral;

PROVIDED,  HOWEVER,  that the foregoing  grant of a security  interest shall not
include a security  interest in a contract  right,  any license  agreement,  any
lease pertaining to real or personal property or any other General Intangible of
any  Grantor  or  any  equity   interests  of  each  of  the  Borrower  and  PTB
International,  Inc. in any Existing  Foreign  Joint  Venture  Agreements or any
obligations  or  property  of or  contracts  with any  joint  venture  resulting
therefrom (each such contract right, license agreement, lease pertaining to real
or  personal  property,  foreign  joint  venture  interests  and  other  General
Intangible of such Grantor discussed in this PROVISO being hereinafter  referred
to as "EXCLUDED  PROPERTY")  if the granting of a security  interest  therein by
such Grantor to the Administrative Agent is prohibited by any Requirement of Law
or by the terms and provisions of the written agreement,  document or instrument
creating or evidencing  such Excluded  Property or rights related  thereto;  and
PROVIDED FURTHER that if and when the prohibition which prevents the granting by
such Grantor to the Administrative Agent of a security interest in such Excluded
Property is removed or otherwise  terminated,  the Administrative  Agent will be
deemed to have,  and at all times from and after the date  hereof to have had, a
security  interest  in such  Excluded  Property,  as the case may be,  and that,
notwithstanding  anything set forth herein to the contrary,  the  Administrative
Agent will be deemed to have, and at all times from and after the date hereof to
have had, a security interest in the proceeds of such Excluded Property.

          SECTION  2.2  GRANT OF SECURITY INTEREST IN COLLATERAL.  Each Grantor,
as collateral security for the full, prompt and complete payment and performance
when due (whether at stated  maturity,  by  acceleration  or  otherwise)  of the
Secured  Obligations  of such Grantor,  hereby  collaterally  assigns,  conveys,
mortgages,  pledges,  hypothecates and transfers to the Administrative Agent for
the benefit of the Secured Parties,  and grants to the Administrative


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Agent for the benefit of the Secured Parties a lien on and security interest in,
all of its right,  title and  interest in, to and under the  Collateral  of such
Grantor.

          ARTICLE III.  REPRESENTATIONS AND WARRANTIES

          To induce the  Lenders,  the  Issuers and the  Administrative Agent to
enter into the Credit Agreement,  each Grantor hereby represents and warrants to
the Administrative Agent, the Lenders, the Issuers and the other Secured Parties
that:

          SECTION 3.1  TITLE;  NO  OTHER  LIENS.  Except for  the  Lien  granted
to the  Administrative  Agent  pursuant  to this  Agreement  and the other Liens
permitted  to exist on the  Collateral  under  the  Credit  Agreement,  (a) such
Grantor is the record and beneficial owner of the Pledged  Collateral pledged by
it hereunder  constituting  Instruments  or  certificated  securities and is the
entitlement  holder  of all  such  Pledged  Collateral  constituting  Investment
Property held in a securities  account and owns each other item of Collateral in
which a Lien is granted by it  hereunder  and (b) all such  Collateral  is owned
free and clear of any and all Liens.

          SECTION 3.2  PERFECTION AND PRIORITY.  The security  interest  granted
pursuant to this  Agreement  will  constitute a valid and  continuing  perfected
security  interest in favor of the  Administrative  Agent in the  Collateral for
which  perfection  is  governed  by the UCC or  filing  with the  United  States
Copyright  Office  upon (i) the  completion  of the  filings  and other  actions
specified on SCHEDULE 3 (which,  in the case of all filings and other  documents
referred to on such schedule, have been delivered to the Administrative Agent in
completed and duly executed form), (ii) the delivery to the Administrative Agent
of all Collateral consisting of Instruments and certificated securities, in each
case properly endorsed for transfer to the Administrative Agent or in blank, and
(iii) all appropriate  filings having been made with the United States Copyright
Office.  Such  security  interest  will  be  prior  to all  other  Liens  on the
Collateral  except for  Customary  Permitted  Liens which have priority over the
Administrative  Agent's Lien by operation of law or otherwise as permitted under
the Credit Agreement.

          SECTION 3.3  STATE OF  INCORPORATION;  CHIEF EXECUTIVE OFFICE.  On the
date hereof such Grantor's jurisdiction of organization and the location of such
Grantor's  chief  executive  office or sole place of  business is  specified  on
SCHEDULE 1.

          SECTION  3.4  INVENTORY  AND  EQUIPMENT.  On  the  date  hereof,  such
Grantor's  Inventory  and  Equipment  (other than mobile goods and  Inventory or
Equipment in transit) are kept at the locations listed on SCHEDULE 4.

          SECTION 3.5       PLEDGED COLLATERAL.

          (a) The Pledged Stock,  Pledged Partnership  Interests and Pledged LLC
Interests pledged  hereunder by such Grantor  constitutes that percentage of the
issued and outstanding equity of all classes of each issuer thereof as set forth
on SCHEDULE 2.

          (b) All of  the  Pledged  Stock,  Pledged  Partnership  Interests  and
Pledged LLC Interests  have been duly and validly  issued and are fully paid and
nonassessable.

          (c)  Each  of the  Pledged  Notes  constitutes  the  legal, valid  and
binding  obligation  of  the  obligor  with  respect  thereto,   enforceable  in
accordance  with its terms,  subject to the effects of  bankruptcy,  insolvency,
fraudulent  conveyance,  reorganization,   moratorium  and  other  similar


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laws relating to or affecting creditors' rights generally, and general equitable
principles (whether considered in a proceeding in equity or at law).

          (d) All Pledged Stock,  Pledged Partnership  Interests and Pledged LLC
Interests of such Grantor as of the date hereof are listed on SCHEDULE 2.

          (e) All Pledged  Collateral consisting  of certificated  securities or
Instruments  has been delivered to the  Administrative  Agent in accordance with
SECTION 4.4(A).

          (f) All  Pledged Collateral  held by  a  securities  intermediary in a
securities account is in a Control Account.

          (g) Other than the Pledged  Partnership  Interests and the Pledged LLC
Interests that constitute  General  Intangibles,  there is no Pledged Collateral
other than that  represented  by  certificated  securities or Instruments in the
possession of the  Administrative  Agent or that consisting of Financial  Assets
held in a Control Account.

          (h) No Person other than the Administrative Agent has Control over any
Investment Property of such Grantor.

          (i) As  to  any  Grantor  that is an  LLC or a  Partnership,  the  LLC
Agreement or Partnership Agreement,  as the case may be, provides that, upon the
occurrence and during the continuance of an Event of Default, the Administrative
Agent  shall be  entitled  to  exercise  all of the rights of the member of such
Grantor  and  that  a  transferee  or  assignee  of  a  membership  interest  or
partnership  interest, as the case may be, of such Grantor shall become a member
or partner,  as the case may be, of such Grantor  entitled to participate in the
management of such Grantor and, upon the transfer of the entire  interest of the
transferor,  such transferor  ceases to be a member or partner,  as the case may
be.

          SECTION 3.6  ACCOUNTS.  No amount  payable to such Grantor under or in
connection  with any Account is evidenced  by any  Instrument  or Chattel  Paper
which has not been delivered to the Administrative  Agent, properly endorsed for
transfer, to the extent delivery is required by SECTION 4.3.

          SECTION 3.7  NO OTHER NAMES.  Except as set forth on SCHEDULE 1,  such
Grantor has no trade  names,  fictitious  names or other names  except its legal
name,  and  does  not  operate  in any  jurisdiction  under,  and has not had or
operated in any  jurisdiction  within the  five-year  period  preceding the date
hereof under, any trade name, fictitious name or other name other than its legal
name.

          SECTION 3.8  INTELLECTUAL PROPERTY.

          (a) SCHEDULE 5  lists  all  Material  Intellectual  Property  of  such
Grantor on the date hereof,  separately  identifying  that owned by such Grantor
and that licensed to such Grantor.  Each such Grantor has the full right,  power
and authority to enter into this Agreement and to grant all the right, title and
interest  herein  granted.  The  Material  Intellectual  Property  set  forth on
SCHEDULE 5 for such Grantor constitutes all of the intellectual  property rights
necessary to conduct its business as currently conducted on the date hereof.

                                       8
<PAGE>

          (b) On the date hereof,  all  Material Intellectual Property  owned by
such  Grantor is valid,  subsisting,  unexpired  and  enforceable,  has not been
adjudged  invalid  or  unenforceable  in  whole  or in  part,  and has not  been
abandoned  and the use thereof in the  business of such Grantor does not, to the
best knowledge of such Grantor, infringe the Intellectual Property rights, owned
or possessed by any other Person,  except where such infringement would not have
a Material Adverse Effect on the Grantors.

          (c) Except as set forth in SCHEDULE 5, on the date hereof, none of the
Material  Intellectual  Property  owned by such  Grantor  is the  subject of any
licensing or franchise  agreement pursuant to which such Grantor is the licensor
or franchisor.

          (d) No  holding,  decision  or  judgment  has  been  rendered  by  any
Governmental  Authority which would limit, cancel or question the validity of or
enforceability  of, or such  Grantor's  rights  in,  any  Material  Intellectual
Property.

          (e) Except as set forth on Schedule 5, no action or proceeding seeking
to limit,  cancel or question  the  validity or  enforceability  of any Material
Intellectual Property owned by such Grantor or such Grantor's ownership interest
therein is on the date hereof  pending  or, to the  knowledge  of such  Grantor,
threatened. Except as set forth on Schedule 5, there are no claims, judgments or
settlements  to be paid by such Grantor  relating to the  Material  Intellectual
Property.

          ARTICLE IV.  COVENANTS

          As  long  as  any  of  the  Obligations  or  the   Commitments  remain
outstanding,  unless the Requisite Lenders  otherwise  consent in writing,  each
Grantor agrees with the Administrative Agent that:

          SECTION 4.1 GENERALLY.  Such Grantor shall (a) except for the security
interest created by this Agreement,  not create or suffer to exist any Lien upon
or with respect to any of the  Collateral,  except Liens permitted under Section
8.2 of  the  Credit  Agreement  or  otherwise  as  permitted  under  the  Credit
Agreement;  (b) not use or permit any  Collateral  to be used  unlawfully  or in
violation  of any  provision of this  Agreement,  any other Loan  Document,  any
Requirement of Law or any policy of insurance  covering the Collateral;  (c) not
sell,  transfer or assign (by  operation  of law or  otherwise)  any  Collateral
except as permitted under the Credit Agreement;  (d) enter into any agreement or
undertaking   restricting   the  right  or  ability  of  such   Grantor  or  the
Administrative  Agent to sell,  assign or transfer any of the Collateral if such
restriction  would have a Material  Adverse Effect;  and (e) promptly notify the
Administrative   Agent  of  its  entry  into  any  agreement  or  assumption  of
undertaking  that  restricts the ability to sell,  assign or transfer any of the
Collateral regardless of whether or not it has a Material Adverse Effect.

          SECTION 4.2  MAINTENANCE  OF  PERFECTED  SECURITY  INTEREST;   FURTHER
DOCUMENTATION.

          (a) Such Grantor will maintain the security  interest  created by this
Agreement  as a  perfected  security  interest  having  at  least  the  priority
described in SECTION 3.2 and shall  defend such  security  interest  against the
claims and demands of all Persons.

          (b) Such  Grantor will furnish to the  Administrative  Agent from time
to  time  statements  and  schedules  further  identifying  and  describing  the
Collateral  and such other  reports


                                       9
<PAGE>

in connection  with the  Collateral as the  Administrative  Agent may reasonably
request, all in reasonable detail.

          (c) At any  time  and  from  time to  time, upon  the  written request
of the  Administrative  Agent,  and at the sole  expense of such  Grantor,  such
Grantor will  promptly and duly execute and  deliver,  and have  recorded,  such
further   instruments  and  documents  and  take  such  further  action  as  the
Administrative  Agent may  reasonably  request for the purpose of  obtaining  or
preserving  the full  benefits  of this  Agreement  and of the rights and powers
herein granted,  including the filing of any financing or continuation statement
under the UCC (or other similar laws) in effect in any jurisdiction with respect
to the  security  interest  created  hereby and the  execution  and  delivery of
Blocked Account Letters and Control Account Letters.

          SECTION 4.3  CHANGES IN LOCATIONS, NAME, ETC.

          (a) Except upon  15 days' prior written  notice to the  Administrative
Agent and delivery to the  Administrative  Agent of (i) all additional  executed
financing   statements  and  other   documents   reasonably   requested  by  the
Administrative  Agent to maintain the validity,  perfection  and priority of the
security  interests  provided  for  herein  and (ii) if  applicable,  a  written
supplement to SCHEDULE 4 showing any additional  location at which  Inventory or
Equipment shall be kept, such Grantor will not:

          (i) permit any of the Inventory or  Equipment to be kept at a location
          other than those listed on SCHEDULE 4;

          (ii) change its state of  incorporation or the  location of  its chief
          executive  office or sole  place of business  from that referred to in
          SECTION 3.3; or

          (iii) change its name,  identity or  corporate  structure  to  such an
          extent that any financing  statement filed by the Administrative Agent
          in connection  with this Agreement would become misleading.

          (b) Such Grantor  will keep  and maintain  at its own cost and expense
satisfactory  and  complete  records of the  Collateral,  including  a record of
all  payments  received and all credits  granted with respect to the  Collateral
and all other dealings with the Collateral.

          SECTION 4.4  PLEDGED COLLATERAL.

          (a) Such Grantor will  (i) deliver to the  Administrative  Agent,  all
certificates or Instruments  representing or evidencing any Pledged  Collateral,
whether now arising or  hereafter  acquired,  in suitable  form for  transfer by
delivery or, as applicable,  accompanied by such  Grantor's  endorsement,  where
necessary,  or duly executed instruments of transfer or assignment in blank, all
in form and substance  satisfactory to the Administrative Agent, together with a
Pledge  Amendment,  duly executed by the Grantor,  in substantially  the form of
ANNEX 2 (a "PLEDGE AMENDMENT"), in respect of such additional Pledged Collateral
and authorizes the Administrative  Agent to attach each Pledge Amendment to this
Pledge  Agreement and (ii) maintain all other  Pledged  Collateral  constituting
Investment  Property in a Control Account.  The Administrative  Agent shall have
the right,  at any time in its discretion and without notice to the Grantor,  to
transfer to or to register in its name or in the name of its nominees any or all
of the Pledged Collateral.  The Administrative Agent shall have the right at any
time to exchange


                                       10
<PAGE>

certificates  or  instruments  representing  or  evidencing  any of the  Pledged
Collateral for certificates or instruments of smaller or larger denominations.

          (b) Except as provided in ARTICLE V, such  Grantor  shall  be entitled
to receive all cash dividends paid in respect of the Pledged  Collateral  (other
than liquidating or distributing dividends). Any sums paid upon or in respect of
any of the Pledged  Collateral upon the liquidation or dissolution of any issuer
of any of the  Pledged  Collateral  or any  property  distributed  upon  or with
respect to any of the Pledged  Collateral  pursuant to the  recapitalization  or
reclassification  of the capital of any issuer of Pledged Collateral or pursuant
to the  reorganization  thereof shall,  unless otherwise  subject to a perfected
security  interest in favor of the  Administrative  Agent,  be  delivered to the
Administrative  Agent  to be  held  by it  hereunder  as  additional  collateral
security for the Secured  Obligations.  If any sums of money or property so paid
or distributed in respect of any of the Pledged  Collateral shall be received by
such  Grantor,  such  Grantor  shall,  until such money or  property  is paid or
delivered to the Administrative  Agent, hold such money or property in trust for
the  Administrative  Agent,  segregated  from other  funds of such  Grantor,  as
additional security for the Secured Obligations.

          (c) Except as provided in ARTICLE V, such  Grantor will be entitled to
exercise all voting,  consent and  corporate  rights with respect to the Pledged
Collateral;  PROVIDED,  HOWEVER,  that no vote shall be cast,  consent  given or
right  exercised or other  action  taken by such Grantor  which would impair the
Collateral or which would be inconsistent with or result in any violation of any
provision of the Credit Agreement, this Agreement or any other Loan Document or,
without prior notice to the  Administrative  Agent,  to enable or take any other
action to permit any issuer of  Pledged  Collateral  to issue any stock or other
equity  securities  of any nature or to issue any other  securities  convertible
into or granting the right to purchase or exchange for any stock or other equity
securities of any nature of any issuer of Pledged Collateral.

          (d) Such Grantor shall not grant Control over any  Investment Property
to any Person other than the Administrative Agent.

          (e) In the  case of  each  Grantor  which  is  an  issuer  of  Pledged
Collateral,  such  Grantor  agrees  to be bound by the  terms of this  Agreement
relating to the Pledged  Collateral issued by it and will comply with such terms
insofar as such terms are applicable to it. In the case of each Grantor which is
a partner in a Partnership,  such Grantor hereby consents to the extent required
by the  applicable  Partnership  Agreement to the pledge by each other  Grantor,
pursuant to the terms  hereof,  of the  Pledged  Partnership  Interests  in such
Partnership  and to the  transfer of such Pledged  Partnership  Interests to the
Administrative   Agent  or  its   nominee  and  to  the   substitution   of  the
Administrative Agent or its nominee as a substituted partner in such Partnership
with all the  rights,  powers  and  duties  of a  general  partner  or a limited
partner, as the case may be. In the case of each Grantor which is a member of an
LLC, such Grantor hereby  consents to the extent  required by the applicable LLC
Agreement to the pledge by each other Grantor,  pursuant to the terms hereof, of
the Pledged LLC  Interests  in such LLC and to the  transfer of such Pledged LLC
Interests to the Administrative  Agent or its nominee and to the substitution of
the Administrative  Agent or its nominee as a substituted member of the LLC with
all the rights, powers and duties of a member of the LLC in question.

          (f)  Such Grantor will not agree to any amendment  of an LLC Agreement
or Partnership Agreement that in any way adversely affects the perfection of the
security  interest  of  the  Administrative  Agent  in the  Pledged  Partnership
Interests or Pledged LLC Interests pledged


                                       11
<PAGE>

by such Grantor hereunder,  including electing to treat the membership  interest
or partnership interest of such Grantor as a security under Section 8-103 of the
UCC.

          SECTION 4.5 CONTROL ACCOUNTS; BLOCKED ACCOUNTS.

          (a) Such Grantor will (i) except
for Investments  permitted by the Credit Agreement to be maintained in a Control
Account, deposit all cash and all Proceeds received by such Grantor in a Blocked
Account,  (ii) not make or maintain any securities  account or commodity account
with any  financial  or other  institution  other  than an  Approved  Securities
Intermediary  that maintains the same in a Control Account and (iii) not make or
maintain any account in which Proceeds are deposited with any financial or other
institution  other than a Blocked  Account  Bank,  a Lender or an Affiliate of a
Lender.

          (b) Subject to the terms of the Credit  Agreement,  such Grantor shall
instruct each Account Debtor or other Person obligated to make a payment to such
Grantor to make payment,  or to continue to make payment, as the case may be, to
a Blocked Account and will deposit in a Blocked Account all Proceeds received by
such Grantor from any other Person immediately upon receipt.

          (c) In the  event  such Grantor,  to the  extent permitted  under  the
Credit  Agreement,  or any Approved  Securities  Intermediary or Blocked Account
Bank shall,  after the date hereof,  terminate an agreement  with respect to the
maintenance of a Control  Account or Blocked  Account for any reason,  or if the
Administrative Agent shall demand such termination as a result of the failure of
an Approved  Securities  Intermediary or Blocked Account Bank to comply with the
terms of the  applicable  Control  Account  Letter or Blocked  Account Letter or
there shall be  continuing  an Event of Default or if the  Administrative  Agent
determines in its sole  discretion  that the financial  condition of an Approved
Securities  Intermediary  or  Blocked  Account  Bank,  as the case  may be,  has
materially deteriorated,  such Grantor agrees to notify all of its obligors that
were making payments to such terminated  Control Account or Blocked Account,  as
the case may be, to make all  future  payments  to  another  Control  Account or
Blocked Account, as the case may be.

          SECTION 4.6  ACCOUNTS.

          (a) Such  Grantor  will  not,  other  than in  the ordinary  course of
business,  (i) grant any  extension of the time of payment of any Account,  (ii)
compromise  or settle any Account for less than the full amount  thereof,  (iii)
release, wholly or partially,  any Person liable for the payment of any Account,
(iv) allow any credit or discount on any Account,  or (v) amend,  supplement  or
modify any Account in any manner that could adversely affect the value thereof.

          (b) The  Administrative  Agent  shall  have  the  right to  make  test
verifications  of the  Accounts  in any manner and  through  any medium  that it
reasonably  considers  advisable,  and  such  Grantor  shall  furnish  all  such
assistance and information as the Administrative Agent may reasonably require in
connection therewith. At any time and from time to time, upon the Administrative
Agent's request and at the expense of the relevant  Grantor,  such Grantor shall
cause   independent   public   accountants   or  others   satisfactory   to  the
Administrative  Agent to furnish to the  Administrative  Agent  reports  showing
reconciliations,  aging and test  verifications  of, and trial balances for, the
Accounts;  PROVIDED, HOWEVER, that unless a Default or Event of Default shall be
continuing, the Administrative Agent shall request no more than two such reports
during any calendar year.

                                       12
<PAGE>

          SECTION 4.7 DELIVERY OF INSTRUMENTS  AND CHATTEL PAPER.  If any amount
in excess of $250,000  payable under or in connection with any of the Collateral
owned by such Grantor  shall be or become  evidenced by an Instrument or Chattel
Paper, such Grantor shall  immediately  deliver such Instrument or Chattel Paper
to the  Administrative  Agent,  duly  indorsed in a manner  satisfactory  to the
Administrative  Agent, or, if consented to by the  Administrative  Agent,  shall
mark all such  Instruments  and Chattel Paper with the following  legend:  "This
writing  and the  obligations  evidenced  or secured  hereby are  subject to the
security interest of Citicorp USA, Inc., as Administrative Agent".

          SECTION 4.8  INTELLECTUAL PROPERTY.

          (a) Such  Grantor (either  itself  or  through  licensees)  will   (i)
continue to use each  Trademark that is Material  Intellectual  Property of such
Grantor in order to  maintain  such  Trademark  in full  force and  effect  with
respect to each class of goods for which such Trademark is currently  used, free
from any claim of  abandonment  for non-use,  except where such  abandonment  or
expiration  would not have a Material  Adverse  Effect on the  business  of such
Grantor,  such Grantor may allow a Trademark to expire in the ordinary course of
its business upon prior notice to the Administrative  Agent, (ii) maintain as in
the past the quality of products  and  services  offered  under such  Trademark,
(iii) use such Trademark with the  appropriate  notice of  registration  and all
other notices and legends  required by applicable  Requirements of Law, (iv) not
adopt or use any mark which is confusingly  similar or a colorable  imitation of
such Trademark unless the Administrative Agent shall obtain a perfected security
interest in such mark pursuant to this Agreement and (v) not (and not permit any
licensee or  sublicensee  thereof to) do any act or knowingly omit to do any act
whereby such Trademark may become invalidated or impaired in any way.

          (b) Such Grantor (either itself or through licensees)  will not do any
act, or omit to do any act,  whereby any Patent  which is Material  Intellectual
Property of such  Grantor may become  forfeited,  abandoned  or dedicated to the
public where such  forfeiture,  abandonment or dedication  would have a Material
Adverse Effect on the business of such Grantor.

          (c) Such  Grantor  (either itself or through licensees)  (i)  will not
(and will not permit any licensee or sublicensee  thereof to) do any act or omit
to do  any  act  whereby  any  portion  of  the  Copyrights  which  is  Material
Intellectual  Property  of such  Grantor  may become  invalidated  or  otherwise
impaired  and (ii) will not  (either  itself or  through  licensees)  do any act
whereby any portion of the Copyrights which is Material Intellectual Property of
such Grantor may fall into the public domain, if in either case such event would
have a Material Adverse Effect on the business of such Grantor.

          (d) Such Grantor (either itself or through  licensees) will not do any
act,  or  omit to do any  act,  whereby  any  trade  secret  which  is  Material
Intellectual Property of such Grantor may become publicly available or otherwise
unprotectable  where such  forfeiture,  abandonment  or dedication  would have a
Material  Adverse  Effect on the  business of such Grantor  unless  compelled by
order of a Governmental Authority.

          (e) Such Grantor  (either itself or through licensees) will not do any
act that  knowingly  uses any  Material  Intellectual  Property to infringe  the
intellectual  property rights of any other Person where such infringement  would
have a Material Adverse Effect on the business of such Grantor.

                                       13
<PAGE>

          (f) Such  Grantor  will  notify  the  Administrative  Agent as soon as
reasonably  possible if it knows, or has reason to know, that any application or
registration   relating  to  any  Material   Intellectual  Property  may  become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or  development  (including the  institution  of, or any such  determination  or
development in, any proceeding in the United States Patent and Trademark Office,
the United  States  Copyright  Office or any court or tribunal  in any  country)
regarding  such  Grantor's  ownership  of,  right to use,  interest  in,  or the
validity  of, any  Material  Intellectual  Property or such  Grantor's  right to
register the same or to own and maintain the same.

          (g) Whenever  such Grantor,  either  by  itself  or through any agent,
licensee or designee,  shall file an  application  for the  registration  of any
Intellectual  Property with the United States Patent and Trademark  Office,  the
United States Copyright Office or any similar office or agency within or outside
the United States,  such Grantor shall report such filing to the  Administrative
Agent  within  five  Business  Days after the last day of the fiscal  quarter in
which such filing  occurs.  Upon the  reasonable  request of the  Administrative
Agent,  such Grantor shall execute and deliver,  and have recorded,  any and all
agreements,  instruments,  documents, and papers as the Administrative Agent may
request  to  evidence  the  Administrative  Agent's  security  interest  in  any
Copyright,  Patent or Trademark and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby.

          (h) Such  Grantor  will  take all  reasonable  actions  necessary   or
requested by the  Administrative  Agent,  including in any proceeding before the
United States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency,  to maintain and pursue each  application  (and to
obtain the  relevant  registration)  and to maintain  each  registration  of any
Copyright,  Trademark or Patent that is Material  Intellectual  Property of such
Grantor,  including  filing of  applications  for  renewal,  affidavits  of use,
affidavits  of   incontestability   and  opposition,   reissue,   reexamination,
interference and cancellation proceedings.

          (i) In the  event that  any  Material  Intellectual  Property  of such
Grantor is infringed upon or  misappropriated  or diluted by a third party, such
Grantor shall notify the Administrative Agent promptly after such Grantor learns
thereof.  Such  Grantor  shall take such action as it deems  appropriate  in its
reasonable  business  judgement  under the  circumstances  in  response  to such
infringement, misappropriation or dilution to protect such Material Intellectual
Property  of such  Grantor if the loss  thereof  would  have a Material  Adverse
Effect on the business of the Grantor.

          (j) Unless  otherwise  agreed to  by the  Administrative  Agent,  such
Grantor will execute and deliver to the  Administrative  Agent for filing in (i)
the United States Copyright Office a short-form  copyright security agreement in
the form  attached  hereto  as Annex 5, (ii) in the  United  States  Patent  and
Trademark  Office a short-form  patent  security  agreement in the form attached
hereto as Annex 6 and (iii) the  United  States  Patent and  Trademark  Office a
short-form trademark security agreement in form attached hereto as Annex 7.

          SECTION 4.9  PAYMENT  OF  OBLIGATIONS.  Such  Grantor  will  pay   and
discharge  or  otherwise  satisfy at or before  maturity  or before  they become
delinquent,  as the case may be, all taxes, assessments and governmental charges
or levies  imposed  upon the  Collateral  or in  respect  of  income or  profits
therefrom,  as well as all  claims  of any kind  (including  claims  for  labor,
materials and supplies)  against or with respect to the Collateral,  except that
no such charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings,  reserves in conformity with
GAAP with respect  thereto  have been


                                       14
<PAGE>

provided on the books of such Grantor and such proceedings  could not reasonably
be expected to result in the sale, forfeiture or loss of any material portion of
the Collateral or any interest therein.

          ARTICLE V. REMEDIAL PROVISIONS

          SECTION 5.1  CODE AND OTHER REMEDIES.  During  the  continuance  of an
Event of Default,  the  Administrative  Agent may  exercise,  in addition to all
other rights and  remedies  granted to them in this  Agreement  and in any other
instrument  or  agreement  securing,  evidencing  or  relating  to  the  Secured
Obligations,  all rights and  remedies  of a secured  party under the UCC or any
other  applicable  law.  Without  limiting the generality of the foregoing,  the
Administrative   Agent,   without   demand  of   performance  or  other  demand,
presentment,  protest,  advertisement  or notice of any kind  (except any notice
required by law  referred  to below) to or upon any Grantor or any other  Person
(all and each of which demands, defenses,  advertisements and notices are hereby
waived), may in such circumstances forthwith collect,  receive,  appropriate and
realize upon the  Collateral,  or any part thereof,  and/or may forthwith  sell,
lease,  assign, give option or options to purchase,  or otherwise dispose of and
deliver  the  Collateral  or any  part  thereof  (or  contract  to do any of the
foregoing),  in one or more parcels at public or private  sale or sales,  at any
exchange,  broker's board or office of the Administrative Agent or any Lender or
elsewhere  upon such terms and  conditions as it may deem  advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption  of any credit risk.  The  Administrative  Agent shall have the right
upon any such public sale or sales,  and, to the extent  permitted by law,  upon
any  such  private  sale or  sales,  to  purchase  the  whole or any part of the
Collateral  so sold,  free of any right or equity of  redemption in any Grantor,
which  right or equity is hereby  waived  and  released.  Each  Grantor  further
agrees, at the  Administrative  Agent's request,  to assemble the Collateral and
make it available to the Administrative Agent at places which the Administrative
Agent shall reasonably select,  whether at such Grantor's premises or elsewhere.
The Administrative  Agent shall apply the net proceeds of any action taken by it
pursuant to this SECTION 5.1, after deducting all reasonable  costs and expenses
actually  incurred  in  connection  therewith  or  incidental  to  the  care  or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the  Administrative  Agent and any other Secured Party  hereunder,
including reasonable attorneys' fees and disbursements,  to the payment in whole
or in part of the  Secured  Obligations,  in such order as the Credit  Agreement
shall  proscribe,  and only after such  application and after the payment by the
Administrative  Agent of any other  amount  required  by any  provision  of law,
including Section 9-504(1)(c) of the UCC, need the Administrative  Agent account
for the surplus,  if any, to any Grantor.  To the extent permitted by applicable
law, each Grantor waives all claims,  damages and demands it may acquire against
the Administrative  Agent or any other Secured Party arising out of the exercise
by them of any  rights  hereunder.  If any  notice of a  proposed  sale or other
disposition of Collateral  shall be required by law, such notice shall be deemed
reasonable  and  proper  if given at least  10 days  before  such  sale or other
disposition.

SECTION 5.2  ACCOUNTS AND PAYMENT INTANGIBLES.

          (a) If required  by the  Administrative  Agent  at any time during the
continuance  of an Event of  Default,  any  payments  of Accounts or payments in
respect of General Intangibles  ("PAYMENT  INTANGIBLES"),  when collected by any
Grantor,  shall be  forthwith  (and,  in any event,  within two  Business  Days)
deposited  by such  Grantor in the exact form  received,  duly  indorsed by such
Grantor to the  Administrative  Agent if required,  in a Cash Collateral Account
maintained  under the sole  dominion  and control of the  Administrative  Agent,
subject to  withdrawal by the  Administrative  Agent only as provided in SECTION
5.4. Until so turned over,  such payments shall


                                       15
<PAGE>

be held by such Grantor in trust for the Administrative  Agent,  segregated from
other funds of such Grantor.

          (b) At the  Administrative Agent's request,  during the continuance of
an Event of Default,  each Grantor  shall  deliver to the  Administrative  Agent
copies of the material documents evidencing, and relating to, the agreements and
transactions which gave rise to the Accounts or Payment  Intangibles,  including
copies of all original orders, invoices and shipping receipts.

          (c) The  Administrative Agent may, without notice, at any time  during
the  continuance  of an Event of Default,  limit or terminate the authority of a
Grantor to collect its Accounts or Payment Intangibles or any thereof.

          (d) The Administrative Agent  in its own name or in the name of others
may at any time during the continuance of an Event of Default  communicate  with
Account Debtors to verify with them to the Administrative  Agent's  satisfaction
the existence, amount and terms of any Accounts or amounts due under any General
Intangibles.

          (e)  Upon the request of the Administrative Agent at any  time  during
the  continuance  of an Event of Default,  each  Grantor  shall  notify  Account
Debtors that the Accounts or Payment Intangibles have been collaterally assigned
to the  Administrative  Agent and that payments in respect thereof shall be made
directly to the Administrative Agent. In addition,  the Administrative Agent may
at any time  during the  continuance  of an Event of  Default so notify  Account
Debtors.

          (f) Anything  herein  to  the  contrary notwithstanding,  each Grantor
shall  remain  liable  under each of the  Accounts  and Payment  Intangibles  to
observe  and perform  all the  conditions  and  obligations  to be observed  and
performed by it  thereunder,  all in accordance  with the terms of any agreement
giving rise  thereto.  Neither the  Administrative  Agent nor any other  Secured
Party shall have any obligation or liability under any agreement  giving rise to
an Account or a Payment Intangible by reason of or arising out of this Agreement
or the  receipt  by  Administrative  Agent  nor any other  Secured  Party of any
payment relating thereto,  nor shall  Administrative Agent nor any other Secured
Party be  obligated  in any  manner to  perform  any of the  obligations  of any
Grantor  under or  pursuant  to any  agreement  giving  rise to an  Account or a
Payment Intangible, to make any payment, to make any inquiry as to the nature or
the  sufficiency of any payment  received by it or as to the  sufficiency of any
performance by any party  thereunder,  to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have  been  assigned  to it or to which  it may be  entitled  at any time or
times.

          SECTION 5.3  PLEDGED COLLATERAL.

          (a)   During  the   continuance  of  an  Event  of  Default,  if   the
Administrative  Agent shall give written  notice of its intent to exercise  such
rights to the relevant Grantor or Grantors,  (i) the Administrative  Agent shall
have the right to receive any and all cash dividends, payments or other Proceeds
paid in respect of the Pledged  Collateral and make  application  thereof to the
Obligations in the order and manner set forth in the Credit Agreement,  and (ii)
the  Administrative  Agent or its nominee may exercise (A) all voting,  consent,
corporate and other rights  pertaining to the Pledged  Collateral at any meeting
of shareholders, partners or members, as the case may be, of the relevant issuer
or issuers  of Pledged  Collateral  or  otherwise  and (B) any and all rights of
conversion,  exchange  and  subscription  and any other  rights,  privileges  or
options  pertaining to


                                       16
<PAGE>

the Pledged  Collateral as if it were the absolute owner thereof  (including the
right to exchange at its discretion any and all of the Pledged  Collateral  upon
the merger, consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of any issuer of Pledged Securities, the right
to deposit and deliver any and all of the Pledged Collateral with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Administrative Agent may determine), all without liability
except to account for property actually  received by it, but the  Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option  and shall not be  responsible  for any  failure  to do so or delay in so
doing.

          (b) In order to permit the Administrative Agent to exercise the voting
and other consensual rights which it may be entitled to exercise pursuant hereto
and to receive all dividends and other distributions which it may be entitled to
receive hereunder, (i) each Grantor shall promptly execute and deliver (or cause
to be executed and  delivered)  to the  Administrative  Agent all such  proxies,
dividend payment orders and other  instruments as the  Administrative  Agent may
from time to time  reasonably  request and (ii)  without  limiting the effect of
CLAUSE (I) above,  such Grantor  hereby  grants to the  Administrative  Agent an
irrevocable  proxy  to vote  all or any part of the  Pledged  Collateral  and to
exercise all other rights, powers,  privileges and remedies to which a holder of
the  Pledged  Collateral  would be  entitled  (including  giving or  withholding
written  consents of  shareholders,  partners  or  members,  as the case may be,
calling special meetings of shareholders,  partners or members,  as the case may
be, and voting at such meetings), which proxy shall be effective,  automatically
and without the necessity of any action  (including  any transfer of any Pledged
Collateral  on the  record  books of the  issuer  thereof)  by any other  person
(including  the  issuer  of such  Pledged  Collateral  or any  officer  or agent
thereof)  during the  continuance  of an Event of Default  and which proxy shall
only terminate upon the payment in full of the Secured Obligations.

          (c) Each Grantor hereby expressly authorizes and instructs each issuer
of any Pledged  Collateral  pledged hereunder by such Grantor to (i) comply with
any instruction received by it from the Administrative Agent in writing that (A)
states  that an Event of  Default  has  occurred  and is  continuing  and (B) is
otherwise in accordance with the terms of this  Agreement,  without any other or
further instructions from such Grantor, and each Grantor agrees that such issuer
shall be fully  protected in so complying  and (ii) unless  otherwise  expressly
permitted  hereby,  pay any  dividends  or other  payments  with  respect to the
Pledged Collateral directly to the Administrative Agent.

          SECTION 5.4  PROCEEDS TO BE TURNED OVER TO ADMINISTRATIVE  AGENT.  All
Proceeds  received by the  Administrative  Agent  hereunder shall be held by the
Administrative  Agent in a Cash  Collateral  Account  maintained  under its sole
dominion and control.  All Proceeds while held by the Administrative  Agent in a
Cash  Collateral  Account  (or by such  Grantor in trust for the  Administrative
Agent)  shall  continue  to be  held as  collateral  security  for  the  Secured
Obligations  and shall not constitute  payment thereof until applied as provided
in the Credit Agreement.

          SECTION 5.5  REGISTRATION RIGHTS.

          (a) Each  Grantor  recognizes  that the  Administrative  Agent  may be
unable to effect a public sale of any or all the Pledged Collateral by reason of
certain  prohibitions  contained  in the  Securities  Act and  applicable  state
securities   laws  or  otherwise  or  may  determine   that  a  public  sale  is
impracticable or not commercially reasonable and, accordingly, may resort to one
or


                                       17
<PAGE>

more private  sales thereof to a restricted  group of  purchasers  which will be
obliged to agree,  among other things,  to acquire such securities for their own
account  for  investment  and not  with a view  to the  distribution  or  resale
thereof.  Each  Grantor  acknowledges  and agrees that any such private sale may
result in prices and other terms less  favorable than if such sale were a public
sale and, notwithstanding such circumstances,  agrees that any such private sale
shall be  deemed  to have been made in a  commercially  reasonable  manner.  The
Administrative  Agent shall be under no obligation to delay a sale of any of the
Pledged Collateral for the period of time necessary to permit the issuer thereof
to register such  securities for public sale under the Securities  Act, or under
applicable state securities laws, even if such issuer would agree to do so.

          (b) Each  Grantor agrees to use its best  efforts to do or cause to be
done all such other acts as may be  necessary  to make such sale or sales of all
or any portion of the Pledged Collateral  pursuant to this SECTION 5.5 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor  further agrees that a breach of any of the covenants  contained in
this SECTION 5.5 will cause irreparable injury to the  Administrative  Agent and
other  Secured  Parties,  that the  Administrative  Agent and the other  Secured
Parties  have no  adequate  remedy at law in respect of such  breach  and,  as a
consequence, that each and every covenant contained in this SECTION 5.5 shall be
specifically  enforceable  against such Grantor,  and such Grantor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such  covenants  except for a defense  that no Event of Default has  occurred
under the Credit Agreement.

          SECTION 5.6 WAIVER; DEFICIENCY.  Each Grantor waives and agrees not to
assert any rights or privileges  which it may acquire under Section 9-112 of the
UCC. Each Grantor shall remain liable for any  deficiency if the proceeds of any
sale or other  disposition of the Collateral are insufficient to pay its Secured
Obligations  and the fees and  disbursements  of any  attorneys  employed by the
Administrative Agent or any other Secured Party to collect such deficiency.

          ARTICLE VI.  THE ADMINISTRATIVE AGENT

          SECTION 6.1  ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.

          (a) Each  Grantor  hereby  irrevocably  constitutes  and  appoints the
Administrative  Agent and any  officer  or agent  thereof,  with  full  power of
substitution,  as its true and  lawful  attorney-in-fact  with full  irrevocable
power and  authority  in the place and stead of such  Grantor and in the name of
such  Grantor or in its own name,  for the purpose of carrying  out the terms of
this Agreement,  to take any and all  appropriate  action and to execute any and
all documents and instruments  which may be necessary or desirable to accomplish
the purposes of this  Agreement,  and,  without  limiting the  generality of the
foregoing,  each  Grantor  hereby gives the  Administrative  Agent the power and
right,  on behalf of such Grantor,  without notice to or assent by such Grantor,
to do any or all of the following:

          (i)  in the  name of  such  Grantor  or its own  name,  or  otherwise,
         take possession of and indorse and collect any checks,  drafts,  notes,
         acceptances  or other  instruments  for the payment of moneys due under
         any  Account  or  General  Intangible  or  with  respect  to any  other
         Collateral and file any claim or take any other action or proceeding in
         any court of law or  equity  or  otherwise  deemed  appropriate  by the
         Administrative  Agent for the  purpose of  collecting  any and all such
         moneys due under


                                       18
<PAGE>

         any  Account  or  General  Intangible  or with  respect  to  any  other
         Collateral whenever payable;

          (ii)  in  the case of any Intellectual Property,  execute and deliver,
         and have recorded, any and all agreements,  instruments,  documents and
         papers  as  the  Administrative  Agent  may  request  to  evidence  the
         Administrative  Agent's security interest in such Intellectual Property
         and the  goodwill  and General  Intangibles  of such  Grantor  relating
         thereto or represented thereby;

          (iii)  pay  or  discharge  taxes  and  Liens  levied  or  placed on or
         threatened against the Collateral other than Customary Permitted Liens,
         effect  any  repairs or any  insurance  called for by the terms of this
         Agreement  and pay all or any  part of the  premiums  therefor  and the
         costs thereof;

          (iv)  execute,  in  connection  with any sale  provided for in SECTION
         5.1 or 5.5,  any  endorsements,  assignments  or other  instruments  of
         conveyance or transfer with respect to the Collateral; and

          (v)  (A) direct  any party  liable for  any payment  under  any of the
         Collateral  to make  payment of any and all moneys due or to become due
         thereunder   directly   to   the   Administrative   Agent   or  as  the
         Administrative  Agent shall direct; (B) ask or demand for, collect, and
         receive  payment of and receipt  for,  any and all  moneys,  claims and
         other amounts due or to become due at any time in respect of or arising
         out of any  Collateral;  (C) sign and indorse any invoices,  freight or
         express bills, bills of lading,  storage or warehouse receipts,  drafts
         against  debtors,   assignments,   verifications,   notices  and  other
         documents in connection  with any of the  Collateral;  (D) commence and
         prosecute any suits,  actions or proceedings at law or in equity in any
         court of  competent  jurisdiction  to  collect  the  Collateral  or any
         portion  thereof  and to  enforce  any other  right in  respect  of any
         Collateral;  (E) defend any suit, action or proceeding  brought against
         such Grantor with respect to any Collateral;  (F) settle, compromise or
         adjust  any  such  suit,   action  or  proceeding  and,  in  connection
         therewith, give such discharges or releases as the Administrative Agent
         may deem  appropriate;  (G) assign any  Copyright,  Patent or Trademark
         (along with the  goodwill of the  business to which any such  Trademark
         pertains),  throughout  the  world  for  such  term or  terms,  on such
         conditions,  and in such manner, as the  Administrative  Agent shall in
         its  sole  discretion  determine,   including  without  limitation  the
         execution  and filing of any documents  necessary to effectuate  and/or
         record such assignment;  and (H) generally,  sell, transfer, pledge and
         make any  agreement  with respect to or otherwise  deal with any of the
         Collateral as fully and completely as though the  Administrative  Agent
         were the  absolute  owner  thereof  for all  purposes,  and do,  at the
         Administrative  Agent's option and such Grantor's expense, at any time,
         or from time to time,  all acts and  things  which  the  Administrative
         Agent  deems  necessary  to  protect,  preserve  or  realize  upon  the
         Collateral  and  the  Administrative  Agent's  and  the  other  Secured
         Parties'  security  interests  therein and to effect the intent of this
         Agreement, all as fully and effectively as such Grantor might do.

Anything  in  this  SECTION   6.1(A)  to  the  contrary   notwithstanding,   the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this SECTION 6.1(A) unless an Event of Default shall
be continuing.

                                       19
<PAGE>

          (b) If  any  Grantor  fails  to  perform  or  comply  with  any of its
agreements  contained  herein,  the  Administrative  Agent,  at its option,  but
without any  obligation  so to do, may  perform or comply,  or  otherwise  cause
performance or compliance, with such agreement.

          (c) The expenses of the  Administrative  Agent  actually  incurred  in
connection  with actions  undertaken  as provided in this SECTION 6.1,  together
with  interest  thereon at a rate per annum equal to the rate per annum at which
interest  would then be payable on past due  Revolving  Loans that are Base Rate
Loans under the Credit Agreement, from the date of payment by the Administrative
Agent to the date reimbursed by the relevant  Grantor,  shall be payable by such
Grantor to the Administrative Agent on demand.

          (d) Each  Grantor   hereby  ratifies  all that  said  attorneys  shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies  contained  in this  Agreement  are coupled  with an  interest  and are
irrevocable  until this  Agreement  is  terminated  and the  security  interests
created hereby are released.

          SECTION 6.2 DUTY OF ADMINISTRATIVE  AGENT. The Administrative  Agent's
sole duty with respect to the custody,  safekeeping and physical preservation of
the Collateral in its possession  shall be to deal with it in the same manner as
the  Administrative  Agent  deals with  similar  property  for its own  account.
Neither  the  Administrative  Agent,  any other  Secured  Party nor any of their
respective officers, directors,  employees or agents shall be liable for failure
to demand,  collect or realize  upon any of the  Collateral  or for any delay in
doing so or shall be under any  obligation  to sell or otherwise  dispose of any
Collateral  upon the request of any  Grantor or any other  Person or to take any
other action  whatsoever with regard to the Collateral or any part thereof.  The
powers conferred on the Administrative Agent hereunder are solely to protect the
Administrative  Agent's interest in the Collateral and shall not impose any duty
upon the  Administrative  Agent or any other  Secured Party to exercise any such
powers.  The  Administrative  Agent  and the  other  Secured  Parties  shall  be
accountable  only for  amounts  that they  actually  receive  as a result of the
exercise of such powers, and neither they nor any of their officers,  directors,
employees or agents shall be  responsible  to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.

          SECTION 6.3   EXECUTION   OF   FINANCING   STATEMENTS.   Each  Grantor
authorizes the Administrative  Agent to file or record financing  statements and
other  filing  or  recording  documents  or  instruments  with  respect  to  the
Collateral  without  the  signature  of such  Grantor  in such  form and in such
offices as the Administrative Agent reasonably determines appropriate to perfect
the  security  interests of the  Administrative  Agent under this  Agreement.  A
photographic  or other  reproduction  of this Agreement shall be sufficient as a
financing  statement  or other filing or recording  document or  instrument  for
filing or recording in any jurisdiction.

          SECTION 6.4   AUTHORITY   OF   ADMINISTRATIVE  AGENT.    Each  Grantor
acknowledges that the rights and  responsibilities  of the Administrative  Agent
under this  Agreement  with  respect to any action  taken by the  Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any option,
voting right, request,  judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the  Administrative
Agent and the other Secured Parties,  be governed by the Credit Agreement and by
such other  agreements with respect thereto as may exist from time to time among
them,  but,  as  between  the  Administrative   Agent  and  the  Grantors,   the
Administrative  Agent shall be  conclusively  presumed to be acting as agent for
the  Administrative  Agent and the  other  Secured


                                       20
<PAGE>

Parties with full and valid  authority so to act or refrain from acting,  and no
Grantor  shall be under any  obligation,  or  entitlement,  to make any  inquiry
respecting such authority.

          ARTICLE VII.       MISCELLANEOUS

          SECTION 7.1  AMENDMENTS IN  WRITING.  None of the terms or  provisions
of this Agreement may be waived,  amended,  supplemented  or otherwise  modified
except in accordance with Section 11.1 of the Credit Agreement.

          SECTION 7.2 NOTICES.  All notices, requests  and demands  to  or  upon
the  Administrative  Agent or any  Grantor  hereunder  shall be  effected in the
manner provided for in Section 11.8 of the Credit Agreement;  PROVIDED, however,
that any  such  notice,  request  or  demand  to or upon  any  Grantor  shall be
addressed in case of the Borrower at the Borrower's  notice address set forth in
such Section  11.8 and to the  Grantors at the address of their chief  executive
office as noted on Schedule 1 hereto.

          SECTION 7.3  NO  WAIVER  BY COURSE OF  CONDUCT;  CUMULATIVE  REMEDIES.
Neither the  Administrative  Agent nor any other  Secured Party shall by any act
(except by a written  instrument  pursuant to SECTION 7.1),  delay,  indulgence,
omission or otherwise be deemed to have waived any right or remedy  hereunder or
to have  acquiesced in any Default or Event of Default.  No failure to exercise,
nor any  delay in  exercising,  on the part of the  Administrative  Agent or any
other Secured Party, any right, power or privilege  hereunder shall operate as a
waiver thereof.  No single or partial exercise of any right,  power or privilege
hereunder shall preclude any other or further  exercise  thereof or the exercise
of any other right, power or privilege.  A waiver by the Administrative Agent or
any other  Secured  Party of any right or remedy  hereunder  on any one occasion
shall not be construed as a bar to any right or remedy which the  Administrative
Agent or such other Secured Party would  otherwise have on any future  occasion.
The rights and remedies herein provided are cumulative,  may be exercised singly
or concurrently  and are not exclusive of any other rights or remedies  provided
by law.

          SECTION 7.4  SUCCESSORS AND ASSIGNS.  This  Agreement shall be binding
upon the  successors  and assigns of each Grantor and shall inure to the benefit
of the  Administrative  Agent and each other Secured Party and their  successors
and assigns; PROVIDED, HOWEVER, that no Grantor may assign, transfer or delegate
any of its rights or obligations  under this Agreement without the prior written
consent of the Administrative Agent.

          SECTION 7.5  COUNTERPARTS.  This Agreement  may be  executed by one or
more of the parties to this  Agreement  on any number of  separate  counterparts
(including by telecopy),  and all of said  counterparts  taken together shall be
deemed to constitute one and the same agreement.

          SECTION 7.6 SEVERABILITY. Any  provision  of this  Agreement  which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.

          SECTION 7.7  SECTION  HEADINGS.   The   Article  and  Section   titles
contained  in this  Agreement  are and shall be without  substantive  meaning or
content of any kind  whatsoever and are not part of the agreement of the parties
hereto.

                                       21
<PAGE>

          SECTION  7.8  ENTIRE  AGREEMENT.  This  Agreement  together  with  the
other  Loan  Documents  represents  the  entire  agreement  of the  parties  and
supersedes  all prior  agreements  and  understandings  relating  to the subject
matter hereof.

          SECTION 7.9  GOVERNING LAW.  This   agreement  and   the  rights   and
obligations  of the parties  hereto  shall be  governed  by, and  construed  and
interpreted in accordance with, the law of the state of New York.

          SECTION 7.10  ADDITIONAL GRANTORS.  If, pursuant to Section 7.11(b) of
the Credit  Agreement,  the Borrower  shall be required to cause any  Subsidiary
that is not a Grantor  to  become a Grantor  hereunder,  such  Subsidiary  shall
execute and deliver to the Administrative  Agent a Joinder Agreement in the form
of ANNEX 4 and shall  thereafter for all purposes be a party hereto and have the
same rights,  benefits and  obligations as a Grantor party hereto on the Closing
Date.

          SECTION 7.11  RELEASE OF COLLATERAL.

          (a) At  the  time  provided  in  Section  10.7(b)(i)  of   the  Credit
Agreement,  the  Collateral  shall be released from the Lien created  hereby and
this Agreement and all obligations (other than those expressly stated to survive
such termination) of the  Administrative  Agent and each Grantor hereunder shall
terminate,  all without  delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors. At the
sole expense of any Grantor following any such termination,  the  Administrative
Agent shall  deliver to such Grantor any  Collateral of such Grantor held by the
Administrative  Agent  hereunder  and execute and deliver to such  Grantor  such
documents as such Grantor shall reasonably request to evidence such termination.

          (b) If any of  the Collateral  shall be sold  or disposed  of  by  any
Grantor in a transaction  permitted by the Credit  Agreement,  the Collateral so
sold or disposed of shall be released from the Lien created hereby to the extent
provided  in  Section  10.7(b)(i)  or  (ii)  of the  Credit  Agreement  and,  in
connection  therewith,  the  Administrative  Agent,  at the sole  expense of the
Borrower,  shall  execute  and  deliver to the  Borrower  all  releases or other
documents  reasonably necessary or desirable for the release of the Lien created
hereby on such Collateral.  At the sole expense of the Borrower, a Grantor shall
be released  from its  obligations  hereunder  in the event that all the capital
stock of such Grantor shall be so sold or disposed;  PROVIDED, HOWEVER, that the
Borrower shall have delivered to the Administrative Agent, at least ten Business
Days prior to the date of the proposed  release,  a written  request for release
identifying the relevant Grantor and the terms of the sale or other  disposition
in reasonable detail, including the price thereof and any expenses in connection
therewith,  together  with a  certification  by the  Borrower  stating that such
transaction  is in  compliance  with the  Credit  Agreement  and the other  Loan
Documents.

          SECTION 7.12  REINSTATEMENT.  Each Grantor further agrees that, if any
payment made by any Loan Party or other Person and applied to the Obligations is
at any time annulled, avoided, set aside, rescinded, invalidated, declared to be
fraudulent or  preferential or otherwise  required to be refunded or repaid,  or
the proceeds of  Collateral  are required to be returned by any Secured Party to
such Loan Party, its estate, trustee, receiver or any other party, including any
Grantor, under any bankruptcy law, state or federal law, common law or equitable
cause,  then,  to the  extent of such  payment or  repayment,  any Lien or other
Collateral securing such liability shall be and remain in full force and effect,
as fully as if such  payment  had never


                                       22
<PAGE>

been made or,  if prior  thereto  the Lien  granted  hereby or other  Collateral
securing  such  liability  hereunder  shall have been  released or terminated by
virtue of such cancellation or surrender, such Lien or other Collateral shall be
reinstated in full force and effect,  and such prior  cancellation  or surrender
shall not diminish,  release,  discharge, impair or otherwise affect any Lien or
other  Collateral  securing  the  obligations  of any  Grantor in respect of the
amount of such payment.




<PAGE>


                  IN WITNESS  WHEREOF,  each of the  undersigned has caused this
Pledge and Security  Agreement to be duly  executed and delivered as of the date
first above written.

                                      PARAGON TRADE BRANDS, INC., as Borrower


                                      By:   /S/ ALAN J. CYRON
                                           -----------------------
                                           Name:  Alan J. Cyron
                                           Title:  Chief Financial Officer


                                      PTB INTERNATIONAL, INC., as Grantor


                                      By:   /S/ ALAN J. CYRON
                                           -----------------------
                                           Name:  Alan J. Cyron
                                           Title:  Chief Financial Officer


                                      PTB ACQUISITION SUB, INC., as Grantor


                                      By:   /S/ ALAN J. CYRON
                                           -----------------------
                                           Name:  Alan J. Cyron
                                           Title:  Chief Financial Officer


                                      PTB HOLDINGS, INC., as Grantor


                                      By:   /S/ ALAN J. CYRON
                                           -----------------------
                                           Name:  Alan J. Cyron
                                           Title:  Chief Financial Officer




ACCEPTED AND AGREED:

CITICORP USA, INC., as Administrative Agent


By: /S/ SHAPLEIGH SMITH
   -----------------------
     Name:  Shapleigh SMith
     Title:  Managing Director - Global Structured Products