LICENSE AGREEMENT




                                     BETWEEN




                           PARAGON TRADE BRANDS, INC.




                                       AND




                           KIMBERLY-CLARK CORPORATION.












<PAGE>


                                LICENSE AGREEMENT

      This  License  Agreement  is made and entered  into as of this 15th day of
March, 1999, between Paragon Trade Brands, Inc., a Delaware Corporation having a
principal place of business at 180 Technology Parkway,  Norcross,  Georgia 30092
("LICENSOR"),  and  Kimberly-Clark  Corporation,  a Delaware  corporation having
offices at 351 Phelps Drive, Irving, Texas 75038 ("LICENSEE").

                                   WITNESSETH
      WHEREAS,  LICENSEE has  requested a license from  LICENSOR  under  certain
patents in order to manufacture disposable products; and

      WHEREAS, the parties desire to enter into this License Agreement under the
terms and conditions hereinafter recited.

      NOW THEREFORE, it is agreed as follows:

                                    ARTICLE I
                                   DEFINITIONS

      As used throughout  this  Agreement,  each term shall have the meaning set
forth in this Article I:

      1.01 "LICENSED  PATENTS" shall mean U.S. Patent  4,977,011 issued December
11, 1990 to Smith;  U.S. Patent 5,209,801 issued May 11, 1993 to Smith; and U.S.
Patent,   4,687,477   issued  August  18,  1987  to  Suzuki;   and/or  any  U.S.
continuations,  divisions,  continuations in-part,  reissues, and reexaminations
thereof.

      1.02 "TERRITORY" shall mean the United States of America,  its territories
and possessions.

      1.03 "VALID  CLAIM" shall mean a claim of the Licensed  Patents  which has
not been found invalid or unenforceable by a U.S.  government tribunal or a U.S.
court of competent jurisdiction in a decision from which no appeal has or may be
taken.

<PAGE>

                                   ARTICLE II
                                     LICENSE

       2.01 LICENSE GRANT: LICENSOR grants to LICENSEE, subject to the terms and
conditions of this  Agreement,  a fully-paid,  non-exclusive,  right and license
under the Licensed  Patents to practice the methods and to make,  have made, use
and sell the products therein  described and claimed in the Territory.  LICENSEE
has no right to grant sublicenses  under the Licensed Patents.  The term for the
license  grant under this  Section  2.01 shall  commence on January 1, 1999 and,
unless  terminated in accordance  with Section 2.03,  shall remain in full force
and effect until the  expiration of the last to expire of the Licensed  Patents.
No implied license is granted to LICENSEE other than under the Licensed Patents.

      2.02 COVENANT NOT TO SUE: So long as LICENSEE is in  compliance  with this
Agreement,  LICENSOR covenants not to sue LICENSEE for infringement,  if any, of
the Licensed  Patents arising from the  manufacture,  use or sale of products by
LICENSEE occurring on or after January 1, 1999.

      2.03  TERMINATION:  LICENSEE  and  LICENSOR  have  entered  into a license
agreement dated March 15, 1999,  relating to the Enloe Patents (as those patents
are defined in that license agreement) ("Enloe License Agreement"). In the event
that the Enloe License  Agreement is  terminated  and is of no further force and
effect pursuant to Section 2.03 of the Enloe License Agreement, then the license
and  covenant not to sue set forth in Section  2.01 and 2.02,  respectively,  of
this Agreement shall, except with respect to products  manufactured prior to the
date of that termination, terminate and be of no further force and effect on and
after the termination date.

                                   ARTICLE III
                             EFFECTIVE DATE AND TERM

      This Agreement  will become  effective on the day first written above and,
unless  previously  terminated in accordance with Section 2.03,  shall remain in
effect for the term of the last of the Licensed Patents to expire.

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<PAGE>

                                   ARTICLE IV
                                   ASSIGNMENT

      4.01  ASSIGNMENT:  This  Agreement  shall be binding upon and inure to the
benefit of the successors and assigns of all or substantially all of one or more
of LICENSEE's disposable products businesses.  This Agreement shall not create a
license for or otherwise  apply to the activities of successors or assigns prior
to the date of any such succession or assignment.

      4.02 CONSENT TO ASSIGNMENT:  The license grant hereunder shall be personal
to LICENSEE and shall be  nontransferable  and  nonassignable  to third  parties
without the prior written consent of LICENSOR,  which consent LICENSOR shall not
unreasonably  withhold or unreasonably  delay. It shall not be unreasonable  for
LICENSOR 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 or sell  disposable
products  in the  United  States  without  entering  into a  mutually  agreeable
settlement  agreement  with  LICENSOR  for any past  infringing  activity by the
transferee or assignee with respect to the Licensed Patents.

                                    ARTICLE V
                                  GOVERNING LAW

      This Agreement shall be construed, and all questions relating hereto shall
be determined, in accordance with the laws of the State of TEXAS.

                                   ARTICLE VI
                   REPRESENTATIONS AND WARRANTIES; LIMITATIONS

      6.01   REPRESENTATIONS   AND  WARRANTIES  OF  LICENSOR:   LICENSOR  hereby
represents and warrants the following:

      (a)  LICENSOR has the full right,  power and  authority to enter into this
Agreement and perform in accordance with its terms.

      (b) LICENSOR has good and complete title in and to (or beneficial interest
to) the  Licensed  Patents  and has the right to  license  them to  LICENSEE  in
accordance with the term of this Agreement.

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<PAGE>

       6.02 REPRESENTATION AND WARRANTIES OF LICENSEE:

      (a)  LICENSEE has the full right,  power and  authority to enter into this
Agreement and perform in accordance with its terms.

      (b) LICENSEE has no knowledge of any existing or contingent  impediment to
its performing in accordance with the terms of this Agreement.

      6.03 LIMITATIONS:

      (a) Except as set forth above, neither party has made, or intends to make,
any express or implied  warranty to the other. In particular,  LICENSOR has made
no express or implied  warranty that  LICENSEE's  making,  using,  or selling of
products  will not infringe  another  patent held by LICENSOR or held by a third
party.

      (b)  Nothing  in  this  Agreement   shall  be  construed  as  granting  by
implication,  estoppel,  or  otherwise,  any licenses or rights under patents of
LICENSOR other than the Licensed Patents.

                                   ARTICLE VII
                                     NOTICES

      Any notice  required or permitted to be given under this  Agreement by one
of the parties to the other shall be in writing and shall be deemed to have been
sufficiently given for all purposes hereunder if personally  delivered or mailed
by registered or certified mail, postage prepaid, addressed to such party at its
address below or as from time to time may be directed otherwise by such party by
notice to the other party.  Any such mailed  notice shall be deemed to have been
given three (3) business days after mailing.

      All notices to LICENSEE shall be addressed as follows:
                  Kimberly-Clark Corporation
                  351 Phelps Drive
                  Irving, Texas  75038
                  Attention:  Senior Vice President, Law and Government Affairs

      All notices to LICENSOR shall be addressed as follows:
                  Paragon Trade Brands, Inc.
                  180 Technology Parkway
                  Norcross, Georgia 30092
                  Attention:  General Counsel

                                  ARTICLE VIII
                                 PATENT MARKING

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<PAGE>

      LICENSEE shall mark each package  containing  products which, but for this
license, would infringe a Valid Claim with a statement substantially  equivalent
to one of the following:

      "The  products  are  made under one or more of the following U.S. Patents:
      4,687,477"

      "The  products  are  made under one or more of the following U.S. Patents:
      4,977,011 and 5,209,801."

       LICENSEE  shall modify such  statement  upon request of LICENSOR to add a
reference  to Licensed  Patents  which cover  LICENSEE's  product and that issue
after the date of this Agreement.

       LICENSEE shall commence the marking program upon exhaustion of LICENSEE's
current supply of packaging  materials  provided,  however,  such marking of all
packages shall commence no later than June 1, 1999.

                                   ARTICLE IX
                                     WAIVER

      The waiver by either of the parties to this Agreement of any breach of any
provision hereof by the other party shall not be construed to be a waiver of any
succeeding breach of such provision or a waiver of the provision itself.

                                    ARTICLE X
                                 ENFORCEABILITY

      If and to the extent that any court or governmental  tribunal of competent
jurisdiction holds any of the terms, provisions or conditions or part thereof of
this Agreement, or the application hereof to any circumstances, to be invalid or
unenforceable  in a final  nonappealable  order, the remainder of this Agreement
and the  application  of such term,  provision  or  condition or part thereof to
circumstances  other  than those as to which it is held  invalid or  enforceable
shall not be  affected  thereby,  and each of the other  terms,  provisions  and
conditions of this Agreement shall


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<PAGE>



be valid and enforceable to the extent it is consonant with the intention of the
parties upon entering into this Agreement.

                                   ARTICLE XI
                                    HEADINGS

      The  headings   appearing   herein  have  been  inserted  solely  for  the
convenience of the parties hereto and shall not affect the construction, meaning
or interpretation of this Agreement.

                                   ARTICLE XII
                                ENTIRE AGREEMENT

      This  Agreement  is entered into as part of a  Settlement  Agreement.  The
terms and provisions  contained in this  Agreement and the Settlement  Agreement
(including its  attachments)  attached hereto as Exhibit A constitute the entire
agreement and understanding between the parties to this Agreement. Neither party
has relied, or will rely, on any representation or agreement of the other except
to the extent set forth herein or in the  Settlement  Agreement  (including  its
attachments),  and  neither  party  shall be bound by or charged  with any oral,
written  or implied  agreements,  representations,  warranties,  understandings,
commitments  or  obligations  not  specifically  set  forth  herein  or  in  the
Settlement  Agreement  (including its attachments).  These Agreements may not be
released, discharged,  abandoned, changed or modified in any manner except by an
instrument in writing signed by a duly authorized officer of each of the parties
hereto.

      Each of the parties  hereto has caused this  instrument  to be executed by
its respective duly authorized representative as of the day and year first above
written.

KIMBERLY-CLARK CORPORATION                  PARAGON TRADE BRANDS, INC.


BY:        /s/ O. George Everbach                  BY: /s/ B. V. Abraham
        --------------------------                    ------------------------
           O. George Everbach                          B. V. Abraham
        --------------------------                    ------------------------
           (print)                                     (print)

TITLE:     Senior Vice President -              TITLE: Chairman and CEO
           Law and Government Affairs
        --------------------------                    ------------------------
           (print)                                       (print)






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