U.S. LICENSE AGREEMENT 

        This  Agreement,  effective as of the date of execution by both parties,
is by and between THE PROCTER & GAMBLE  COMPANY,  an Ohio  Corporation  having a
principal  place of  business at One Procter & Gamble  Plaza,  Cincinnati,  Ohio
45202,  (hereinafter  referred to as "P&G") and PARAGON  TRADE  BRANDS,  INC., a
Delaware  Corporation  having a principal  place of  business at 180  Technology
Parkway, Norcross, Georgia 30092 (hereinafter referred to as "Paragon"). P&G and
Paragon will be jointly referred to as the "parties".

        WHEREAS,  P&G is the owner of U.S. Patent  4,695,278 issued to Lawson on
September 22, 1987 relating to an absorbent article having dual cuffs;

        WHEREAS, P&G owns  patents corresponding  to U.S. 4,695,278 in a  number
of other countries;

        WHEREAS,  Paragon  is aware  that the  presently  extant  claims of U.S.
Patent 4,695,278 to Lawson are 3,8,9,13,15,17,21,25,27 and 28.

        WHEREAS,  P&G is the owner of U.S. Patent  4,795,454 issued to Dragoo on
January 3, 1989 relating to an absorbent  article having dual leakage  resistant
cuffs;

        WHEREAS,  P&G owns  patents  corresponding to U.S. Patent 4,795,454 in a
number of other countries;
<PAGE>
                                       2


        WHEREAS,  P&G is the  owner of  U.S. Patent  Re. 34,920  issued  to Aziz
et al. on  April 25, 1995  relating to  a disposable  absorbent  article  having
elasticized  flaps provided with leakage resistant portions;

        WHEREAS,  P&G owns patents corresponding  to U.S. Patent Re. 34,920 in a
number of other countries;

        WHEREAS,  P&G is the owner of U.S. Patent  5,085,654  issued to Buell on
February 4, 1992 relating to a disposable  absorbent  article having  breathable
leg cuffs;

        WHEREAS, P&G  owns  patents  corresponding  to  U.S. Patent 5,085,654 in
a number of other countries;

        WHEREAS,  Paragon  makes,  uses,  offers  for  sale and  sells  integral
disposable infant diapers having barrier cuffs throughout the United States;

        WHEREAS,  P&G believes  that the  diapers made  and sold by Paragon fall
within the scope of one or more of the extant  claims of U.S.  Patent  4,695,278
to  Lawson,  U.S. Patent 4,795,454  to Dragoo,  U.S.  Patent Re.  34,920 to Aziz
et al. and U.S.  Patent  5,085,654  to Buell;

        WHEREAS,  the United States  District Court for the District of Delaware
has held that certain  diapers made and sold by Paragon fall within the scope of
one or more of the extant claims of U.S.  Patent  4,695,278 to Lawson,  and U.S.
Patent 4,795,454 to Dragoo; and
<PAGE>
                                       3


        WHEREAS,  Paragon desires to obtain from P&G and P&G is willing to grant
to Paragon a royalty  bearing, non-exclusive  right  to make,  to have  made for
Paragon with the  prior written consent of P&G, to use, to offer for sale and to
sell in  the United  States  integral  disposable  absorbent  articles which are
within the scope of one or more of the extant claims of U.S. Patent 4,695,278 to
Lawson,  U.S. Patent 4,795,454 to Dragoo,  U.S. Patent Re. 34,920 to Aziz et al.
and U.S. Patent 5,085,654 to Buell;

        NOW THEREFORE, in consideration of the promises,  mutual covenants,  and
agreements contained herein, the parties agree as follows:

DEFINITIONS

"Licensed Product" as used herein,  shall mean an integral disposable  absorbent
article comprising an infant diaper, an adult diaper, or a training pant falling
within the scope of one or more,  valid and  enforceable  claims of U.S.  Patent
4,695,278 to Lawson,  U.S. Patent 4,795,454 to Dragoo, U.S. Patent Re. 34,920 to
Aziz et al., or U.S.  Patent  5,085,654 to Buell,  including any  continuations,
continuations-in-part,   divisionals,  reexaminations,  reissues  or  extensions
thereof.

"Training Pant", as used herein, shall mean a disposable absorbent pant marketed
for use in transitioning children from diapers to underwear.

"Net Sales Price",  as used herein,  shall mean the revenue  received by Paragon
from the sale of Licensed  Products to  independent  third parties in the United
States less the following amounts: (i) discounts,  including cash discounts,  or
rebates actually allowed or granted, (ii) credits or 


<PAGE>
                                       4


allowances  actually  granted  upon  claims or returns  regardless  of the party
requesting the return, (iii) freight charges paid for delivery, (iv) revenue for
defective   articles  sold   exclusively  as  scrap,  and  (v)  taxes  or  other
governmental  charges  levied on or  measured  by the  invoiced  amount  whether
absorbed by the billing or the billed party.

"Settlement  Agreement",  as used herein,  shall mean the  Settlement  Agreement
entered into between Paragon and P&G concurrently with this License Agreement.

REPRESENTATIONS AND WARRANTIES

With the  exception  of  non-exclusive  license  rights  granted to others,  P&G
represents  and  warrants  that:  1) it is the  owner of all  right,  title  and
interest in and to U.S. Patent  4,695,278 to Lawson,  U.S.  Patent  4,795,454 to
Dragoo,  U.S.  Patent Re.  34,920 to Aziz et al., and U.S.  Patent  5,085,654 to
Buell;  and 2) it has the right to enter this  Agreement  without  breaching any
other agreement or obligation to a third party.

Paragon represents and warrants that it is an independent entity and that it has
the right to enter into this Agreement  without breaching any other agreement or
obligation to a third party.

LICENSE GRANT

1.  Upon  execution  of  this  License   Agreement  by  both  parties,   and  in
    consideration of Paragon's agreement to pay prospective running royalties on
    Licensed  Products in accordance  with  Paragraph  (2) below,  P&G agrees to
    grant  and  hereby  does  grant  to  Paragon,  as  of  January  7,  1999,  a
    non-exclusive  license  to make,  to have  made for  Paragon  with the prior
    written 


<PAGE>
                                       5


    consent of P&G, to use, to offer for sale and to sell in the United  States,
    without the right to grant sublicenses, Licensed Products.

2.  As consideration  for the prospective  license rights herein granted by P&G,
    Paragon agrees that it will,  commencing upon January 7, 1999,  begin to pay
    to P&G a running royalty in accordance with each applicable provision of the
    following schedule:

        (A)    For a  restricted,  non-exclusive  license in the  United  States
               under P&G's U.S. Patent 4,695,278 to Lawson to make, to have made
               for  Paragon  with the prior  written  consent of P&G, to use, to
               offer  for  sale  and  to  sell,   without  the  right  to  grant
               sublicenses,  Licensed  Products  restricted to the configuration
               and characteristics specifically depicted in attached Drawing No.
               105674-2  identified as Appendix No. 1 -- One Percent  (1.00%) of
               the Net Sales Price of Licensed Products;

        (B)    For an  unrestricted,  non-exclusive license in the United States
               under P&G's U.S. Patent 4,695,278 to Lawson to make, to have made
               for Paragon  with the  prior  written  consent of P&G, to use, to
               offer  for  sale  and  to   sell,  without  the  right  to  grant
               sublicenses, Licensed Products which fall within the scope of one
               or more valid and enforceable claims of U.S. Patent 4,695,278  to
               Lawson,  other  than  those  exhibiting  the  configurations  and
               characteristics  specifically  depicted  in  attached Drawing No.
               105674-2  identified as Appendix  No.  1 -- One  and One  Quarter
               Percent  (1.25%)  of the Net  Sales  Price  of Licensed Products;
<PAGE>
                                       6


        (C)    For an unrestricted,  non-exclusive  license in the United States
               to make, to have made for Paragon with the prior written  consent
               of P&G, to use, to offer for sale and to sell,  without the right
               to grant  sublicenses,  Licensed  Products  which are  within the
               scope of the license granted in section (B) above, but which also
               fall within the scope of one or more valid and enforceable claims
               of U.S. Patent  4,795,454 to Dragoo -- Two percent (2.00%) of the
               Net Sales Price of Licensed Products;

        (D)    For an unrestricted,  non-exclusive  license in the United States
               under  P&G's U.S.  Patent Re.  34,920 to Aziz et al. to make,  to
               have made for Paragon with the prior  written  consent of P&G, to
               use,  to offer for sale and to sell,  without  the right to grant
               sublicenses, Licensed Products:

               (i)    No  additional  royalty for  Licensed  Products  for which
                      Paragon has paid a royalty to P&G pursuant to Section (A),
                      (B) or (C) above, for the period in question; or

               (ii)   Three  Eighths of One  Percent  (0.375%)  of the Net Sales
                      Price of Licensed  Products  which  Licensed  Products are
                      within  the  scope of one or more  valid  and  enforceable
                      claims  of the  aforementioned  Aziz et al.  Patent,  U.S.
                      Patent  Re.  34,920,  and for  which  Paragon  has paid no
                      royalty to P&G under Section (A), (B) or (C),  above,  for
                      the period in question.
<PAGE>
                                       7


        (E)    For an unrestricted,  non-exclusive  license in the United States
               under P&G's U.S. Patent 5,085,654 to Buell, to make, to have made
               for  Paragon  with the prior  written  consent of P&G, to use, to
               offer  for  sale  and  to  sell,   without  the  right  to  grant
               sublicenses, Licensed Products:


               (i)    No  additional  royalty for  Licensed  Products  for which
                      Paragon has paid a royalty to P&G pursuant to Section (A),
                      (B) or (C) above, for the period in question; or

               (ii)   Three  Eighths of One  Percent  (0.375%)  of the Net Sales
                      Price of Licensed Products for Licensed Products which are
                      within  the  scope of one or more  valid  and  enforceable
                      claims of the  aforementioned  Buell Patent,  U.S.  Patent
                      5,085,654,  and for which  Paragon  has paid no royalty to
                      P&G under Section (A), (B) or (C) above, for the period in
                      question.

    The parties agree that non-limiting  examples  of  Licensed Products falling
    within  subsection (C) are  Paragon's Ultra  products sold  prior to July 6,
    1998 (a sample of which is attached  hereto as Appendix 2). In addition,  it
    is Paragon's intention  to  transition  from its current product design with
    a unitary  cuff  design, which  it began  manufacturing for sale on or about
    July 6, 1998 (a sample of which is attached  hereto  as Appendix  3), to the
    Ultra  product  design as described  above.  The  parties,  therefore, agree
    that Paragon will pay to P&G a royalty of two percent  (2%) of the Net Sales
    Price for sales of the  current  Paragon  product  line with a unitary  cuff
    design from January 7, 1999 until the transition to 


<PAGE>
                                       8


    the  Ultra product  design is complete  and  Paragon  no  longer  sells such
    unitary cuff design product. Paragon agrees to notify P&G in  writing within
    ten (10) days if it changes any of its product lines  in such a  way that it
    no longer intends to make running royalty  payments  pursuant to subsections
    (A), (B) or (C) hereof.

3.  The license  rights  granted in Paragraph  (1) under U.S.  Patent  4,695,278
    to Lawson  shall  automatically   expire on the  date of expiration  of said
    patent,  including any continuations,  continuations-in-part,   divisionals,
    reexaminations, reissues or extensions thereof.  The license rights  granted
    in Paragraph (1) under U.S.  Patent 4,795,454 to Dragoo  shall automatically
    expire  on  the  date  of  expiration  of  said   patent,    including   any
    continuations, continuations-in-part, divisionals, reexaminations,  reissues
    or extensions  thereof.  The license  rights granted  in Paragraph (1) under
    U.S. Patent Re. 34,920 to Aziz et al. shall automatically expire on the date
    of    expiration    of   said    patent,    including   any   continuations,
    continuations-in-part,  divisionals, reexaminations,  reissues or extensions
    thereof.  The license  rights  granted in  Paragraph  (1) under U.S.  Patent
    5,085,654 to Buell shall  automatically  expire on the date of expiration of
    said   patent,   including    any   continuations,    continuations-in-part,
    divisionals,  reexaminations,  reissues  or extensions  thereof.  Should any
    patent  licensed  hereunder  be  held  to have lapsed for the failure to pay
    maintenance  fees, royalties for said patent shall not be due for the period
    of any such lapse.  However,  should any such  lapsed patent subsequently be
    considered  by the U.S. Patent  and Trademark Office as not  having  expired
    by its acceptance  of delayed  payment of the  maintenance  fee, the license
    rights granted under said patent  shall automatically  revive and  royalties
    shall  again  accrue  beginning on the  date that the term of the patent has
    been   maintained  as  a  result  of  the acceptance  of  a  payment  of the
    maintenance  fee by the U.S.

<PAGE>
                                       9


    Patent and Trademark   Office.  P&G  agrees to   provide  written  notice to
    Paragon of  the lapse  of any  such patent, and if applicable, the date that
    the  patent  has been  maintained as  a result of the acceptance by the U.S.
    Patent and Trademark  Office of a delayed payment of  the maintenance fee.

4.  Within thirty (30) days of June 28, 1999, Paragon shall provide P&G with  an
    initial  statement reporting  Paragon's Net Sales Price of Licensed Products
    covered by this License  Agreement  for the period  beginning on  January 7,
    1999 and  ending  on June 27,  1999 and be  accompanied  by the  appropriate
    royalty  payment.  On an ongoing basis,  the Paragon fiscal year ends on the
    last  Sunday  of December.  Therefore,  after making  said  initial  report,
    Paragon shall,  within  30 days  after  the end of each  subsequent  Paragon
    fiscal  year,  commencing  on  December 26, 1999, provide P&G with an annual
    statement reporting Paragon's Net Sales Price of  Licensed Products  covered
    by this  License  Agreement  for the preceding one year period.  The parties
    recognize  that  the report and payment  for the 1999 fiscal year will cover
    only the six month period commencing on June 28, 1999 and ending on December
    26, 1999 in  light of the  previous initial report and payment.  Each report
    shall  specify  the Net Sales Price of Licensed  Products attributable on an
    individual  basis to each of the  categories  (A), (B), (C), (D)(i) and (ii)
    and  (E)(i) and (ii) set forth in  Paragraph  (2) of this License Agreement.
    Each such report is due within  thirty (30) days of the close of the  fiscal
    year for which the report is made, and shall be  accompanied  by the royalty
    payment owed to P&G by Paragon.

        Each such  report  shall  be  treated as  confidential  and  proprietary
    information  of Paragon  and shall  only  be used for the purposes set forth
    herein.  The report shall only be shared within P&G with such persons at P&G
    who need to  know such information for the 

<PAGE>
                                       10


    purposes set forth herein. Each such report may be shared with P&G's outside
    counsel or auditors who need  to know such  information  for the  purpose of
    verifying  such  report.

5.  Once  each  year,  at  P&G's  election  and  expense,  Paragon's independent
    public accountant  shall  certify to  P&G that  the  annual  report  for the
    previous  period or year is true, complete and that royalties have been paid
    for  Licensed  Products sold during  the  previous year.  Paragon shall keep
    correct  and  complete  records   containing  all  information  required for
    computation  and  verification  of the  amounts to  be paid  hereunder for a
    period of at least  three (3) years after  making  each such  report.   Upon
    reasonable  notice, during  regular  business  hours, independent  "Big Six"
    public  accountants  selected  by P&G,  and paid for by P&G in the event the
    Paragon  payment being  verified  proves  accurate  to  within  two  percent
    (2.00%),  may  make  such  examinations  of  Paragon's   records,  not  more
    frequently than once a year, as P&G deems necessary  to  verify such reports
    and  payments   provided  for  hereunder.  Such  examination shall  occur at
    such location  as designated  by Paragon,  and such verification  shall only
    state the amount of payments due in each of categories (A), (B), (C), (D)(i)
    and (ii) and (E)(i)  and (ii) of  Paragraph  (2) of this  License Agreement.
    If the  Paragon payment  does  not  prove  accurate to  within  two  percent
    (2.00%),  royalties  being  underpaid,  then  Paragon  shall  pay  for  such
    independent public accountants.

6.  If Paragon shall be in default in making any payments hereunder at the times
    and in  the manner  herein   provided  or in  complying  with  the financial
    obligations it assumed   pursuant to the  concurrently  executed  Settlement
    Agreement  with P&G, P&G may give written  notice to Paragon  specifying the
    particulars of such default, and in the event  Paragon does 

<PAGE>
                                       11


    not fully remedy such  default within  thirty (30) days  after such  notice,
    P&G may  at its  option,  terminate this  License  Agreement by  giving  ten
    (10)  days prior written notice to Paragon to that effect.  In addition, P&G
    may proceed  to  enforce the  defaulted obligation of Paragon by any legally
    available means.  No  waiver on the  part of P&G in  respect to a default by
    Paragon  shall be construed as a waiver of P&G's right to proceed under this
    Paragraph  with respect to  subsequent defaults.

7.  Neither  expiration  of  this  License  Agreement  in  accordance  with  its
    provisions  nor termination of this License  Agreement shall relieve Paragon
    of its  obligations  for  payment of  unpaid  royalties  under Paragraph (2)
    or for  enforcement  of any other  obligation or liability accrued hereunder
    prior to the  effective  date of such  expiration or termination.

8.  The failure of either party to strictly enforce this License  Agreement,  or
    to insist upon the strict compliance with its terms shall not at any time be
    considered a waiver or  condonation by such party of the default or  failure
    by the  other  party to  strictly  perform  the  covenants,   conditions and
    agreements on its part to be performed.

9.  Paragon agrees, when its existing supply of packaging has been exhausted, to
    mark the packages  of its  Licensed  Products to be sold  within  the United
    States  with  the following  statement:  "Licensed  under one or more of the
    following  U.S. Patents  (with  appropriate  patent  numbers  filled  in per
    Paragraph  (2))",  and if a  reexamination certificate  or a reissue  of any
    such  patent  occurs,  to  place  on its  packages    appropriate statements
    relating to that reexamination certificate and/or that reissue patent. There
    shall be no reference to "The 

<PAGE>
                                       12


    Procter  &  Gamble  Company",  "Procter  &  Gamble",  "P&G",  any  variation
    or affiliate  thereof,  or any trademark or tradename owned or controlled by
    P&G on the packaging.

10. No patent  rights  outside  the  United  States  are granted  by P&G in this
    License  Agreement.  However, P&G agrees  that  it  will,  upon  request  by
    Paragon,  negotiate in  good  faith  in an  attempt  to  establish  mutually
    acceptable terms and conditions for Paragon to obtain  non-exclusive royalty
    bearing license rights under P&G's foreign patents corresponding to the U.S.
    Patents  licensed herein on a case by case basis. The parties recognize that
    the terms  and  conditions,  including the  royalty  rates, for said foreign
    license  rights  may not be the same as those  herein set forth nor the same
    with respect to one another.

11. Should  U.S.  Patent No.  4,695,278  to Lawson  expire or all extant  claims
    covering Licensed Products be held invalid or  unenforceable  in a  decision
    by a court of  competent  jurisdiction  from which no appeal can or has been
    taken,  each provision  of Paragraph (2) shall  remain valid and enforceable
    with a  royalty rate  reduction  of  One Percent for  Licensed  Products  in
    category (A) and One and One Quarter Percent (1.25%) for  Licensed  Products
    in category  (B) or (C).  Should U.S.  Patent No. 4,795,454 to Dragoo expire
    or all claims covering Licensed Products be held invalid or unenforceable in
    a decision by a court of competent  jurisdiction from which no appeal can or
    has been taken,  each  provision  of Paragraph (2)  shall  remain  valid and
    enforceable with a royalty rate reduction  for Licensed Products in category
    (C) of Three  Quarters of One Percent (.75%). Should U.S.  Patent Re. 34,920
    to Aziz  et al. expire or all  claims covering   Licensed Products  be  held
    invalid or unenforceable in a decision  by a court of competent jurisdiction
    from which no appeal can or has been taken, the royalty rate will be reduced
<PAGE>
                                       13


    Three  Eighths of One Percent  (0.375%) for   Licensed  Products in category
    (D)(ii). Should U.S. Patent 5,085,654 to Buell expire or all claims covering
    Licensed Products be held invalid or  unenforceable in a decision by a court
    of  competent  jurisdiction  from which no appeal can or has been taken, the
    royalty  rate  will  be reduced  Three  Eighths of One Percent  (0.375%) for
    Licensed  Products in  category  (E)(ii).  Should all claims of the  patents
    covering  Licensed  Products expire or be held invalid or unenforceable in a
    decision by a court of competent  jurisdiction  from which no appeal  can or
    has been taken this  License Agreement  will  terminate.  Any such  decision
    shall have no impact  upon  Paragon's liability to pay any running royalties
    accrued prior  thereto pursuant to Paragraph (2), nor shall Paragon have any
    right to recover any portion of the running  royalties already  paid to P&G.
    Other than as expressly  set forth in this  License  Agreement, P&G makes no
    warranties whatsoever with respect to Paragon's  manufacture, use, offer for
    sale or sale of Licensed Products pursuant to this License Agreement.

12. P&G hereby waives any and all rights to sue (including,  but not limited to,
    actions to enjoin and/or  recover damages  from) Paragon for making,  having
    made for Paragon  with the prior  written  consent of P&G,  using,  offering
    for sale,  and/or selling Licensed Products in the United States,  provided:
    (1) this  License  Agreement has  not been  terminated by either party;  (2)
    Paragon  is in full compliance  with all material terms of the  concurrently
    executed  Settlement  Agreement  with P&G  and is  current  in  meeting  its
    obligation to  pay the  running royalties  provided in Paragraph (2) hereof;
    and (3) Paragon is  otherwise  in full compliance  with the  material  terms
    of this License Agreement.
<PAGE>
                                       14


13. Notices  relating  to  this  Agreement  shall  be  in  writing  and shall be
    considered  served  when deposited  as  certified  or registered  U.S. mail,
    return  receipt  requested,  in  a sealed envelope  with  sufficient postage
    affixed, addressed as follows:


        P&G:          Attention:  Vice President & General Counsel - Patents
                      The Procter & Gamble Company
                      Winton Hill Technical Center
                      6090 Center Hill Avenue
                      Cincinnati, Ohio 45224

        Paragon:      Attention:  Vice President & General Counsel
                      Paragon Trade Brands, Inc.
                      180 Technology Parkway
                      Norcross, GA   30092

14. The  parties  agree  that this  License  shall be  personal  to  Paragon and
    shall  be nontransferable  and nonassignable  to third  parties  without the
    prior  written consent  of P&G, which consent P&G agrees not to unreasonably
    withhold or unreasonably delay.  In this context,  the parties agree that it
    is not an  unreasonable  ground for P&G to withhold or delay its  consent if
    the  effect of  the  proposed transfer  or assignment  would  be  to allow a
    transferee or assignee to obtain the prospective right to make, import, use,
    offer for sale and/or sell Licensed  Products  in the United  States without
    entering  into  a mutually  agreeable  settlement  agreement  for  any  past
    infringing  activity  by the transferee  or  assignee  with  respect  to the
    patents  included in the  definition  of "Licensed  Products".  In addition,
    the  parties agree  that this  License  shall  not apply to the manufacture,
    import,  use or  sale  of Licensed  Products  by any other  business  entity
    acquired  by  Paragon,  by which  Paragon is  acquired, merged with Paragon,
    consolidated with Paragon,  partnered with Paragon, or in any other business
    arrangement with Paragon after the effective  date of this Agreement without
    the  prior  written  consent  of  P&G,  which  consent  P&G  agrees  not  to
<PAGE>
                                       15


    unreasonably  withhold  or unreasonably delay. In this context,  the parties
    agree that it is not an unreasonable  ground  for P&G to  withhold  or delay
    its  consent if the effect of the  proposed  transaction would  be to  allow
    an  acquiring,  merging  or   consolidating  entity or partner to obtain the
    prospective right to make, import, use, offer for sale and/or sell  Licensed
    Products in the United States  without  entering into a  mutually  agreeable
    settlement  agreement  with P&G  for any  past  infringing   activity by the
    acquiring,  merging or consolidating entity or partner with respect to   the
    patents included in the definition of "Licensed Products".

15. In the event the Settlement Agreement executed  concurrently herewith is not
    approved by the Bankruptcy Court (as defined in the Settlement Agreement) or
    in the event that  the order  approving the  Settlement  Agreement  does not
    become  a  Final Order  by  July 31, 1999  (as  defined  in  the  Settlement
    Agreement),  this License  Agreement  shall be terminable  by P&G,  at P&G's
    option.  Termination in such circumstance shall  not relieve  Paragon of its
    obligation  to  pay  royalties  accrued  hereunder  for  the  period  before
    termination.  P&G  agrees to provide  Paragon with a three month  conversion
    period after the date of termination.  Royalties,  as set forth above, shall
    be  due  on  the  Licensed Products  manufactured  and/or  sold  during  the
    conversion period and such  royalties shall be payable within 30 days of the
    end of the conversion period.

16. P&G  agrees to  give Paragon  notice of  all future  running  royalty  based
    private label  or brand  manufacturer  licenses granted under any of the P&G
    U.S. patents  herein,  and, upon  written  request,  provide Paragon  copies
    of all such subsequent running royalty  based agreements within thirty  (30)
    days of execution of any  such  agreements.  Paragon shall be 

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                                       16


    entitled, upon thirty (30) days written request to P&G, to have this License
    Agreement brought into conformity with  any such subsequent  running royalty
    based license to any private label or brand manufacturer other  than Paragon
    in the event P&G grants any license under any of the P&G U.S. patents herein
    under terms more favorable than those set forth herein.

17. This   Agreement  and  the   Settlement  Agreement   set  forth  the  entire
    understanding  of the parties with respect to the subject  matter herein set
    forth.  There are no ancillary understandings or agreements  with respect to
    the subject matter of this License Agreement.

18. This Agreement may be executed in  counterparts.  Each part shall constitute
    an original.

19. This  Agreement  shall become  effective as of the date of acceptance by the
    last party to sign.


FOR: PARAGON TRADE BRANDS, INC.            FOR: THE PROCTER & GAMBLE COMPANY



By  /S/ B.V. ABRAHAM                        By  /S/ MARK D. KETCHUM             
    --------------------------------            --------------------------------

Title  CHAIRMAN AND CEO                     Title  PRESIDENT - GLOBAL BABY CARE 
      ------------------------------              ------------------------------

Date  FEBRUARY 2, 1999                      Date  FEBRUARY 2, 1999              
      ------------------------------              ------------------------------