<PAGE>

                                                                    Exhibit 10.2

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                               TERM LOAN AGREEMENT


                            Dated as of May 24, 2002


                                      among


                              PILLOWTEX CORPORATION
                                    Borrower


                              BANK OF AMERICA, N.A.
                              Administrative Agent


                                       and


                            the LENDERS party hereto


                             $150,000,000 Term Loan



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<PAGE>

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                              Page

<S>                                                                                                              <C>
ARTICLE I             Definitions .....................................................................          2

         Section 1.1         Definitions ..............................................................          2

ARTICLE II            Post-Petition Debt Satisfied by Term Loan .......................................         11

         Section 2.1         Satisfaction and Payment of Designated Post-Petition Claims ..............         11
         Section 2.2         The Term Notes ...........................................................         11
         Section 2.3         Repayment of Term Loan ...................................................         11
         Section 2.4         Interest .................................................................         11

ARTICLE III           Payments ........................................................................         12

         Section 3.1         Method of Payment ........................................................         12
         Section 3.2         Voluntary Prepayment .....................................................         12
         Section 3.3         Mandatory Prepayments ....................................................         12
         Section 3.4         Administration Fee .......................................................         13

ARTICLE IV            Interest Provisions .............................................................         14

         Section 4.1         Computation of Interest ..................................................         14

ARTICLE V             Security ........................................................................         14

         Section 5.1         Collateral ...............................................................         14
         Section 5.2         Guaranty Agreement and Supplements .......................................         15
         Section 5.3         Setoff ...................................................................         15
         Section 5.4         Release of Certain Collateral ............................................         15

ARTICLE VI            Conditions Precedent ............................................................         16

         Section 6.1         Conditions to the Term Loan ..............................................         16

ARTICLE VII           Representations and Warranties ..................................................         18

         Section 7.1         Corporate Existence ......................................................         18
         Section 7.2         Financial Condition ......................................................         19
         Section 7.3         Corporate Action; No Breach ..............................................         19
         Section 7.4         Operation of Business ....................................................         19
         Section 7.5         Litigation and Judgments .................................................         20
         Section 7.6         Rights in Properties; Liens ..............................................         20
         Section 7.7         Enforceability ...........................................................         20
         Section 7.8         Approvals ................................................................         20
         Section 7.9         Debt .....................................................................         21
         Section 7.10        Taxes ....................................................................         21
         Section 7.11        Use of Proceeds; Margin Securities .......................................         21
         Section 7.12        ERISA ....................................................................         21
</TABLE>

                                      -i-

<PAGE>

                                TABLE OF CONTENTS
                                  (continued)

<TABLE>

<S>                                                                                                             <C>
         Section 7.13        Disclosure ..............................................................          21
         Section 7.14        Subsidiaries ............................................................          21
         Section 7.15        Agreements ..............................................................          22
         Section 7.16        Compliance with Laws ....................................................          22
         Section 7.17        Investment Company Act ..................................................          22
         Section 7.18        Public Utility Holding Company Act ......................................          22
         Section 7.19        Environmental Matters ...................................................          22
         Section 7.20        No Change ...............................................................          23
         Section 7.21        Patents, Copyrights, Permits, Trademarks and Licenses ...................          23

ARTICLE VIII          Affirmative Covenants ..........................................................          24

         Section 8.1         Reporting Requirements ..................................................          24
         Section 8.2         Maintenance of Existence ................................................          26
         Section 8.3         Maintenance of Properties                                                          27
         Section 8.4         Taxes and Claims ........................................................          27
         Section 8.5         Insurance ...............................................................          27
         Section 8.6         Inspection Rights .......................................................          27
         Section 8.7         Keeping Books and Records ...............................................          27
         Section 8.8         Compliance with Laws ....................................................          27
         Section 8.9         Compliance with Agreements ..............................................          28
         Section 8.10        Further Assurances ......................................................          28
         Section 8.11        ERISA ...................................................................          28
         Section 8.12        Environmental Laws ......................................................          28

ARTICLE IX            Negative Covenants .............................................................          29

         Section 9.1         Debt ....................................................................          29
         Section 9.2         Limitation on Liens                                                                30
         Section 9.3         Mergers, Etc ............................................................          31
         Section 9.4         Restricted Payments .....................................................          31
         Section 9.5         Loans and Investments ...................................................          31
         Section 9.6         Transactions With Affiliates                                                       32
         Section 9.7         Disposition of Assets ...................................................          32
         Section 9.8         Sale and Leaseback ......................................................          33
         Section 9.9         Prepayment of Debt ......................................................          33
         Section 9.10        Nature of Business ......................................................          33
         Section 9.11        Accounting ..............................................................          33

ARTICLE X             Financial Covenants ............................................................          33

         Section 10.1        Interest Coverage Ratio .................................................          34
         Section 10.2        Leverage Ratio ..........................................................          34

ARTICLE XI            Default ........................................................................          34
</TABLE>

                                      -ii-

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
                                                                                                               Page

<S>                                                                                                             <C>
         Section 11.1        Events of Default ........................................................         34
         Section 11.2        Remedies Upon Default ....................................................         36

ARTICLE XII           The Administrative Agent ........................................................         37

         Section 12.1        Appointment, Powers and Immunities .......................................         37
         Section 12.2        Rights of Administrative Agent as a Lender ...............................         38
         Section 12.3        Sharing of Payments, Etc .................................................         38
         Section 12.4        Indemnification ..........................................................         39
         Section 12.5        Independent Credit Decisions .............................................         40
         Section 12.6        Several Commitments ......................................................         40
         Section 12.7        Successor Administrative Agent ...........................................         40

ARTICLE XIII          Miscellaneous ...................................................................         41

         Section 13.1        Expenses .................................................................         41
         Section 13.2        INDEMNIFICATION ..........................................................         41
         Section 13.3        Limitation of Liability ..................................................         41
         Section 13.4        No Duty ..................................................................         42
         Section 13.5        Administrative Agent and Lenders Not Fiduciary ...........................         42
         Section 13.6        Equitable Relief .........................................................         42
         Section 13.7        No Waiver; Cumulative Remedies ...........................................         42
         Section 13.8        Successors and Assigns ...................................................         42
         Section 13.9        Survival .................................................................         45
         Section 13.10       Amendments and Waivers ...................................................         45
         Section 13.11       Maximum Interest Rate ....................................................         46
         Section 13.12       Notices ..................................................................         46
         Section 13.13       Governing Law ............................................................         48
         Section 13.14       Counterparts .............................................................         48
         Section 13.15       Severability .............................................................         48
         Section 13.16       Headings .................................................................         48
         Section 13.17       Non-Application of Chapter 346 of Texas Finance Code .....................         48
         Section 13.18       Construction .............................................................         48
         Section 13.19       WAIVER OF JURY TRIAL .....................................................         48
         Section 13.20       NO ORAL AGREEMENTS .......................................................         48
         Section 13.21       Confidentiality ..........................................................         49
</TABLE>

                                     -iii-

<PAGE>

                               TERM LOAN AGREEMENT

         THIS TERM LOAN AGREEMENT (this "Agreement"), dated as of May 24, 2002,
is among PILLOWTEX CORPORATION, a Delaware corporation (the "Borrower"), the
several lenders from time to time parties hereto (collectively, the "Lenders")
and Bank of America, N.A., as Administrative Agent (in such capacity, the
"Administrative Agent").

                                R E C I T A L S :

         WHEREAS, Pillowtex Corporation, a Texas corporation ("Old Pillowtex"),
the Administrative Agent and certain of the Lenders are party to that certain
Term Credit Agreement dated as of December 19, 1997, as amended, and Old
Pillowtex, the Administrative Agent and certain of the Lenders are party to that
certain Amended and Restated Credit Agreement dated as of December 19, 1997, as
amended (collectively, the "Pre-Petition Credit Agreements");

         WHEREAS, on November 14, 2000 (the "Filing Date") Old Pillowtex filed
with the United States Bankruptcy Court for the District of Delaware, a
voluntary petition for relief under Chapter 11 of the United States Bankruptcy
Code (the "Bankruptcy Code") (the "Voluntary Bankruptcy Case");

         WHEREAS, on the Filing Date, certain of Old Pillowtex's Subsidiaries
filed with the United States Bankruptcy Court for the District of Delaware
voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (together
with the Voluntary Bankruptcy Case, the "Chapter 11 Cases");

         WHEREAS, in connection with the Chapter 11 Cases, $150,000,000 of the
Lenders' secured claims under the Pre-Petition Credit Agreements were repaid and
re-advanced (or deemed repaid and re-advanced) on a post-petition basis and
designated as post-petition administrative claims (the "Designated Post-Petition
Claims");

         WHEREAS, in connection with the Chapter 11 Cases, Old Pillowtex and
certain of its Subsidiaries filed with the United States Bankruptcy Court for
the District of Delaware a Second Amended Joint Plan of Reorganization (the
"Plan of Reorganization") under which it is proposed that, among other things,
(a) Old Pillowtex merge with the Borrower, the Borrower being the surviving
entity, and (b) the Designated Post-Petition Claims be satisfied, in full, by
the issuance to the Lenders of an aggregate principal amount of $150,000,000 in
term notes by the Borrower; and

         WHEREAS, the Lenders have agreed to such treatment of the Designated
Post-Petition Claims, subject to the terms and conditions set forth herein;

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and intending to be legally bound
hereby, the parties hereto agree as follows:

TERM LOAN AGREEMENT - Page 1

<PAGE>

                                   ARTICLE I

                                   Definitions

     Section 1.1 Definitions. As used in this Agreement, the following terms
have the following meanings:

          "Administrative Agent" means Bank of America, N.A., as administrative
     agent for the Lenders, and any of its successors or assigns serving in such
     capacity.

          "Affiliate" means, as to any Person, (a) any Person (other than a
     Subsidiary) which, directly or indirectly, is in control of, is controlled
     by, or is under common control with such Person, or (b) any Person who is a
     director or officer (i) of such Person, (ii) of any Subsidiary of such
     Person or (iii) of any Person described in clause (a) above. For purposes
     of this definition, control of a Person shall mean the power, direct or
     indirect, (i) to vote 10% or more of the securities having ordinary voting
     power for the election of directors of such Person, whether by ownership of
     securities, contract, proxy or otherwise or (ii) to direct or cause the
     direction of the management and policies of such Person, whether by
     ownership of securities, contract, proxy or otherwise. Notwithstanding
     anything in this definition to the contrary, in no event shall the
     Administrative Agent or any Lender be considered an Affiliate of Borrower
     or any of its Subsidiaries.

          "Agreement" has the meaning specified in the recitals hereto.

          "Alabama Bonds" means those certain Revenue Bonds (Fieldcrest Cannon,
     Inc. Textile Mill Financing) issued by The Industrial Development Board of
     the City of Phenix City, Alabama (the "Issuer") pursuant to a Trust
     Indenture dated July 1, 1994 between the Issuer and Columbus Bank & Trust
     Company, as trustee, as modified by that certain First Supplemental Trust
     Indenture dated December 1, 1998 between the Issuer and Synovus Trust
     Company, as successor trustee.

          "Assignment Agreement" means an assignment agreement substantially in
     the form of Exhibit B hereto.

          "Borrower" means Pillowtex Corporation, a Delaware corporation, and
     any of its permitted successors and assigns.

          "Business Day" means a day other than a Saturday, Sunday or other day
     on which commercial lenders in Dallas, Texas, or Charlotte, North Carolina
     are authorized or required by law to close.

          "Bond Pledge Agreement" means the bond pledge agreement of the
     Borrower in favor of the Administrative Agent in substantially the form of
     Exhibit "F" hereto, as the same may be amended, supplemented, or modified.

          "Capital Expenditures" means, for any Person, all expenditures for
     assets which, in accordance with GAAP, are properly classified as
     equipment, real property,

TERM LOAN AGREEMENT - Page 2

<PAGE>

     improvements, fixed assets or a similar type of capitalized asset and which
     would be required to be capitalized and shown on the balance sheet of such
     Person.

          "Capital Lease Obligations" means, as to any Person, the obligations
     of such Person to pay rent or other amounts under a lease of (or other
     agreement conveying the right to use) real and/or personal property, which
     obligations are required to be classified and accounted for as a capital
     lease on a balance sheet of such Person under GAAP. For purposes of this
     Agreement, the amount of such Capital Lease Obligations shall be the
     capitalized amount thereof, determined in accordance with GAAP.

          "Cash Equivalents" means (a) obligations issued or fully guaranteed or
     insured by the United States Government or any state thereof, the District
     of Columbia or the Commonwealth of Puerto Rico or any agency or
     instrumentality thereof having maturities of not more than 12 months from
     the date of acquisition, (b) certificates of deposit and Eurodollar time
     deposits with maturities of 12 months or less from the date of acquisition,
     bankers' acceptances with maturities not exceeding 12 months and other
     interest bearing deposits or accounts, in each case with any Lender or with
     any commercial bank organized under the laws of the United States of
     America or any state thereof, the District of Columbia or the Commonwealth
     of Puerto Rico, each having capital and surplus in excess of $100,000,000,
     (c) repurchase obligations with a term of not more than seven days for
     underlying securities of the types described in clauses (a) and (b) entered
     into with any financial institution meeting the qualifications specified in
     clause (b) above, (d) commercial paper issued by any Lender or any
     Affiliate of any Lender and commercial paper rated A/1 or the equivalent
     thereof by Standard & Poor's Ratings Group or P-1 or the equivalent thereof
     by Moody's Investors Service, Inc. on the date of investment and in each
     case maturing within 12 months after the date of acquisition; and (e) money
     market funds that invest exclusively in securities of the type described in
     any of the foregoing clauses (a)-(d).

          "Chapter 11 Cases" has the meaning specified in the recitals to this
     Agreement.

          "Code" means the Internal Revenue Code of 1986, as amended, and the
     regulations promulgated and rulings issued thereunder.

          "Collateral" has the meaning specified in Section 5.1.

          "Company Property" has the meaning specified in Section 7.6.

          "Debt" means as to any Person at any time (without duplication): (a)
     all obligations of such Person for borrowed money, (b) all obligations of
     such Person evidenced by bonds, notes, debentures, or other similar
     instruments, (c) all obligations of such Person to pay the deferred
     purchase price of property or services, except trade and other accounts
     payable and current accrued expenses payable of such Person arising in the
     ordinary course of business which are not past due by more than ninety (90)
     days, (d) all Capital Lease Obligations of such Person, provided that,
     solely for purposes of calculating the Leverage Ratio for periods ending on
     or prior to March 31, 2003, Capital Lease Obligations permitted by Section
     9.1(f) shall be excluded from this definition of

TERM LOAN AGREEMENT - Page 3

<PAGE>

          "Debt", (e) all Debt or other obligations of others guaranteed by such
     Person, (f) all obligations secured by a Lien existing on property owned by
     such Person, whether or not the obligations secured thereby have been
     assumed by such Person or are non-recourse to the credit of such Person,
     (g) all reimbursement obligations of such Person (whether contingent or
     otherwise) in respect of letters of credit, bankers' acceptances, surety or
     other bonds and similar instruments, and (h) the aggregate amount of
     preferred stock issued by such Person.

          "Default" means an Event of Default or the occurrence of an event or
     condition which with notice or lapse of time or both would become an Event
     of Default.

          "Default Rate" means a fixed rate equal to 12% per annum.

          "Designated Post-Petition Claims" has the meaning specified in the
     recitals to this Agreement.

          "Dollars" and "$" mean lawful money of the United States of America.

          "Earnings From Operations" has the meaning given to such term pursuant
     to GAAP.

          "EBITDA" means, for any period, determined in accordance with GAAP on
     a consolidated basis for the Borrower and its Subsidiaries the sum of (a)
     Earnings From Operations plus (b) depreciation and amortization to the
     extent included in determining Earnings From Operations, plus (c)
     restructuring charges and impairment of long-lived assets up to and
     including the date of this Agreement, to the extent included in determining
     Earnings From Operations, plus (d) other non-cash charges (excluding any
     such non-cash charge to the extent it represents an accrual of or reserve
     for cash charges in any future period or amortization of a prepaid cash
     expense that was paid in a prior period except as noted in (c), above) to
     the extent included in determining Earnings From Operations, plus (e)
     professional fees incurred outside the ordinary course of business up to
     and including the date of this Agreement including legal counsel, financial
     advisors, human resource consultants, manufacturing consultants and cash
     management consultants to the extent included in determining Earnings From
     Operations, plus (f) Operational Restructuring Costs incurred on or before
     March 31, 2003, to the extent included in determining Earnings From
     Operations but not included in (c) and (e) above, not to exceed the amounts
     set forth in Schedule 1.2 for the applicable 12-month periods described in
     Schedule 1.2, plus (g) non-cash compensation expense, to the extent
     included in determining Earnings From Operations, plus (h) solely for the
     twelve-month period ending on the last day of the Borrower's third fiscal
     quarter of 2002, charges taken in the Borrower's fourth fiscal quarter of
     2001 as a result of the write-down of accounts receivable owed to the
     Borrower and its Subsidiaries by Kmart Corporation, to the extent included
     in determining Earnings From Operations, plus (i) costs incurred in
     connection with the preparation of an S-1 securities registration offering.

          "Environmental Laws" means any and all applicable Federal, state,
     local or municipal laws, rules, orders, regulations, statutes, ordinances,
     codes, decrees or other

TERM LOAN AGREEMENT - Page 4

<PAGE>

     applicable requirements of any Governmental Authority regulating, or
     imposing liability or standards of conduct concerning environmental
     protection matters, as now or may at any time hereafter be in effect,
     including, without limitation, any applicable provisions of the Clean Water
     Act, the Comprehensive Environmental Response, Compensation and Liability
     Act, the Superfund Amendment and Reauthorization Act of 1986, the Emergency
     Planning and Community Right to Know Act, the Resource Conservation and
     Recovery Act of 1976, the Safe Drinking Water Act, and the Toxic Substances
     Control Act, together, in each case, with each amendment, supplement or
     other modification thereto, and the regulations adopted and publications
     promulgated thereunder and all substitutions therefor.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
     amended from time to time, and the regulations thereunder.

          "ERISA Affiliate" means any corporation or trade or business which is
     a member of the same controlled group of corporations (within the meaning
     of Section 414(b) of the Code) as the Borrower or is under common control
     (within the meaning of Section 414(c) of the Code) with the Borrower.

          "Event of Default" has the meaning specified in Section 11.1.

          "Excess Cash Flow" means, for the Borrower and its Subsidiaries on a
     consolidated basis for any fiscal year of the Borrower, an amount equal to
     (a) EBITDA for such period, minus (b) the sum of the following, without
     duplication: (i) payments made on Debt during such period; (ii) the portion
     of Interest Expense for such period actually paid in cash during such
     period; (iii) the portion of Tax Expense for such period actually paid in
     cash during such period; (iv) actual non-financed Capital Expenditures for
     such period; (v) payments and prepayments of the Term Loan paid in cash;
     (vi) payments of charges included in clauses (c), (e) and (f) of the EBITDA
     definition above; and (vii) payments of any items included as
     "Reorganization Items" related to the Chapter 11 Cases in accordance with
     GAAP in the Borrower's and its Subsidiaries' consolidated statements of
     earnings and payments required by the Plan of Reorganization.

          "Fee Property" has the meaning specified in Section 7.6.

          "Fixed Rate" means a fixed rate equal to 10.00% per annum.

          "GAAP" means generally accepted accounting principles, applied on a
     consistent basis, as set forth in Opinions of the Accounting Principles
     Board of the American Institute of Certified Public Accountants and/or in
     statements of the Financial Accounting Standards Board and/or their
     respective successors and which are applicable in the circumstances as of
     the date of this Agreement. Accounting principles are applied on a
     "consistent basis" when the accounting principles applied in a current
     period are comparable in all material respects to those accounting
     principles applied in a preceding period.

TERM LOAN AGREEMENT - Page 5

<PAGE>

          "Governmental Authority" means any nation or government, any state or
     political subdivision thereof and any entity exercising executive,
     legislative, judicial, regulatory, or administrative functions of or
     pertaining to government.

          "Guarantors" means all of Borrower's direct and indirect domestic
     Subsidiaries (whether presently existing or hereafter formed or acquired),
     other than the Fieldcrest Cannon Foundation.

          "Guaranty Agreement" means the guaranty agreement executed by
     Guarantors in favor of the Administrative Agent in substantially the form
     of Exhibit "E" hereto, as the same may be amended, supplemented, or
     modified.

          "Hazardous Materials" means any hazardous materials, hazardous wastes,
     hazardous or toxic substances, defined or regulated as such in or under any
     Environmental Law, including, without limitation, asbestos, gasoline and
     any other petroleum products (including crude oil or any fraction thereof).

          "Intellectual Property Security Agreements" means intellectual
     property security agreement of the Borrower and any applicable Subsidiary
     in favor of the Administrative Agent in substantially the form of Exhibit
     "D" hereto, as the same may be amended, supplemented, or modified.

          "Intercreditor Agreement" means an intercreditor agreement among the
     Borrower, the other Obligated Parties, the Administrative Agent, the
     Revolving Lenders and Congress Financial Corporation, as the agent under
     the Revolving Credit Agreement, in form and substance satisfactory to the
     Administrative Agent, the Revolving Lenders, the agent for such Revolving
     Lenders and the Borrower, setting forth the relative rights of the
     Administrative Agent and Lenders hereunder and the Revolving Lenders, and
     the agent for such Revolving Lenders, under the Revolving Credit Agreement,
     with respect to the Collateral.

          "Interest Coverage Ratio" means, as of any date of determination, for
     the 12-month period then ended for the Borrower and its Subsidiaries, the
     ratio of (a) EBITDA for such 12-month period, to (b) Interest Expense
     during such 12-month period.

          "Interest Expense" means, for any period, the aggregate amount of all
     interest paid or accrued as a liability during such period in respect of
     indebtedness for borrowed money, including, without limitation, the portion
     of payments of Capital Lease Obligations which constitutes imputed
     interest, all as determined by GAAP.

          "Leased Property" has the meaning specified in Section 7.6.

          "Lender Affiliate" means (a) with respect to any Lender, (i) an
     Affiliate of such Lender or (ii) any entity (whether a corporation,
     partnership, trust or otherwise) that is engaging in making, purchasing,
     holding or otherwise investing in bank loans and similar extensions of
     credit in the ordinary course of its business and is administered or
     managed by a Lender or an Affiliate of such Lender and (b) with respect to
     any Lender that is a

TERM LOAN AGREEMENT - Page 6

<PAGE>

       fund that invests in bank loans and similar extensions of credit, any
       other fund that invests in bank loans and similar extensions of credit
       and is managed by the same investment advisor as such Lender or by an
       Affiliate of such investment advisor.

                "Lenders" has the meaning specified in the recitals to this
       Agreement.

                "Leverage Ratio" means, as of any date of determination, for the
       12-month period then ended for the Borrower and its Subsidiaries, the
       ratio of (a) Debt of the Borrower and its Subsidiaries on a consolidated
       basis as of the last day of such period, to (b) EBITDA during such
       period.

                "Lien" means any lien, mortgage, security interest, tax lien,
       financing statement, pledge, charge, hypothecation, assignment,
       preference, priority, or other encumbrance of any kind or nature
       whatsoever (including, without limitation, any conditional sale or title
       retention agreement), whether arising by contract, operation of law, or
       otherwise, other than financing statements filed in connection with
       operating leases to the extent such financing statements relate only to
       the property subject to such operating leases.

                "Loan Documents" means this Agreement and all promissory notes,
       pledge and security agreements, deeds of trust, mortgages, assignments,
       guaranties, and other instruments, documents, and agreements executed and
       delivered pursuant to or in connection with this Agreement, as such
       instruments, documents, and agreements may be amended, modified, renewed,
       extended, or supplemented from time to time.

                "Material Adverse Effect" means (a) a material adverse change
       in, or a material adverse effect upon, the business, prospects,
       operations, results of operations, assets, liabilities or condition
       (financial or otherwise) of the Borrower and its Subsidiaries taken as a
       whole, other than the Chapter 11 Cases or (b) a material adverse effect
       upon the validity, binding effect or enforceability against the Borrower
       or any other Obligated Party of any Loan Document.

                "Maturity Date" means May 24, 2007.

                "Maximum Borrowing Base" means the amount available to be loaned
       to the Borrower pursuant to the terms of the Revolving Credit Agreement.

                "Maximum Rate" means, at any time, with respect to each Lender,
       the maximum nonusurious interest rate, if any, that at any time or from
       time to time may be contracted for, taken, reserved, charged or received
       on the Term Loan or on other Debt under laws applicable to such Lender
       which are presently in effect or, to the extent allowed by law, under
       such applicable laws which may hereafter be in effect and which allow a
       higher maximum nonusurious interest rate than applicable laws now allow.

                "Merger Agreement" means the Agreement and Plan of Merger, dated
       to be effective as of May 24, 2002 between Old Pillowtex and the
       Borrower, as amended through the date hereof, and any agreements,
       documents or instruments executed or delivered in connection therewith
       and any renewals, extensions, amendments, restatements or other
       modifications of any of the above.

TERM LOAN AGREEMENT - Page 7

<PAGE>

                "Mortgages" means mortgages, deeds of trust, leasehold
       mortgages, or leasehold deeds of trust, as appropriate, executed by the
       Borrower or the applicable Subsidiary, as the case may be, in form and
       substance satisfactory to the Administrative Agent, granting a first or
       second priority lien, as applicable, to the Administrative Agent for the
       benefit of the Lenders on the applicable real property.

                "Moveable Assets" means all right, title and interest of the
       Borrower and its Subsidiaries in the machinery and equipment described on
       Schedule 1.4 and located as of March 15, 2002 at (i) the China Grove,
       North Carolina facility known as Plant #16, (ii) the Kannapolis, North
       Carolina sheet mill known as Plant #4, (iii) the Phenix City, Alabama
       facility and (iv) the Columbus, Georgia facility.

                "Multiemployer Plan" means a multiemployer plan defined as such
       in Section 4001(a)(3) of ERISA to which contributions have been made by
       the Borrower or any ERISA Affiliate and which is covered by Title IV of
       ERISA.

                "Net Cash Proceeds" means, with respect to any sale or other
       transfer or disposition of any asset of a Person to a third party, the
       aggregate amount of cash and Cash Equivalents received by such Person in
       connection with such transaction minus reasonable fees, commissions,
       costs and expenses and related taxes paid or payable as a result of such
       transaction.

                "Obligated Party" means the Borrower, any Guarantor and any
       other Person who is or becomes a party to any agreement that guarantees
       or secures payment and performance of the Obligations or any part
       thereof.

                "Obligations" means all (a) obligations, indebtedness, and
       liabilities of the Borrower and Guarantors to the Administrative Agent or
       any Lender (other than those, if any, arising under the Revolving Credit
       Agreement), now existing or hereafter arising, whether direct, indirect,
       related, unrelated, fixed, contingent, liquidated, unliquidated, joint,
       several, or joint and several (i) under this Agreement and the other Loan
       Documents, or (ii) pursuant to any cash management or treasury management
       arrangements, (b) all interest accruing on any of the above and (c) all
       reasonable out-of-pocket third party attorneys' fees, financial advisors'
       fees and other expenses incurred in the enforcement or collection of any
       of the above, including interest accruing after the commencement of any
       bankruptcy proceeding, whether or not allowed as a claim in such
       proceeding.

                "Old Pillowtex" has the meaning specified in the recitals to
       this Agreement.

                "Operational Restructuring Costs" for any period, on a
       consolidated basis for the Borrower and its Subsidiaries, the costs
       related to the permanent closure of a facility or facilities and the
       relocation of the production to an alternative facility or facilities to
       the extent included in determining Earnings From Operations consisting of
       the sum of (a) payments or accruals for severance and benefit
       continuation, plus (b) payments or accruals for employee retention
       bonuses, plus (c) expenses incurred to relocate equipment and inventory
       from a closed facility or facilities to an alternative manufacturing
       location

TERM LOAN AGREEMENT - Page 8

<PAGE>

       or locations, and to retrofit relocated equipment and alternative
       manufacturing location assets, plus (d) payments or accruals to resolve
       any environmental issues related to a closed facility or facilities, plus
       (e) employee training costs for the relocated equipment, plus (f)
       increased quality costs due to the start-up of production at the new
       facility or facilities and the phase-down of production at the closed
       facility or facilities, plus (g) increased labor and workers compensation
       costs during the phase-down of production at the closed facility or
       facilities, plus (h) payments or accruals for a general reduction in
       force.

                "PBGC" means the Pension Benefit Guaranty Corporation or any
       entity succeeding to all or any of its functions under ERISA.

                "Percentage" means, with respect to each Lender, the percentage
       set forth opposite such Lender's name on Schedule 1.1 attached hereto, or
       on any applicable Assignment Agreement.

                "Permitted Liens" has the meaning specified in Section 9.2.

                "Person" means any individual, corporation, business trust,
       association, company, partnership, joint venture, Governmental Authority,
       or other entity.

                "Pillowtex Merger" means the merger of Old Pillowtex into the
       Borrower pursuant to the Merger Agreement.

                "Plan" means any employee benefit or other plan established or
       maintained by the Borrower or any ERISA Affiliate and which is covered by
       Title IV of ERISA.

                "Plan of Reorganization" has the meaning specified in the
       recitals to this Agreement.

                "Pledge and Security Agreement" means the pledge and security
       agreement of the Borrower and the Guarantors in favor of the
       Administrative Agent in substantially the form of Exhibit "C" hereto, as
       the same may be amended, supplemented, or modified.

                "Prohibited Transaction" means any transaction set forth in
       Section 406 of ERISA or Section 4975 of the Code, other than a
       transaction exempt under Section 408 of ERISA or Section 4975 of the
       Code.

                "Reportable Event" means any of the events set forth in Section
       4043 of ERISA for which reporting requirements have not been waived.

                "Required Lenders" means, as of any date, Lenders on such date
       having Percentages aggregating in excess of 50%.

                "Revolving Credit Agreement" means the Revolving Credit
       Agreement of even date herewith among the Borrower, certain of its
       Subsidiaries, the Revolving Lenders, and Congress Financial Corporation,
       as agent for such Revolving Lenders, providing for

TERM LOAN AGREEMENT - Page 9

<PAGE>

       an aggregate commitment to lend of no greater than $200,000,000, as
       amended, extended, renewed, restated, replaced or refinanced as permitted
       hereby.

                "Revolving Lenders" means, as of any date, the lenders that are
       party to the Revolving Credit Agreement.

                "Revolving Loan Assets" means all of the assets of the Borrower
       and its Subsidiaries (other than the Subject Assets) which are subject to
       first priority Liens pursuant to the Revolving Credit Agreement and
       related documents executed in connection therewith.

                "RICO" means the Racketeer Influenced and Corrupt Organization
       Act of 1970, as amended from time to time.

                "Subject Assets" means all right, title and interest of the
       Borrower and its Subsidiaries in the fixed assets (including certain real
       estate) described on Schedule 1.3, located as of March 15, 2002 at (i)
       the Phenix City, Alabama facility and at the Columbus, Georgia facility,
       (ii) the Scottsboro, Alabama facility, and (iii) the Mauldin, South
       Carolina warehouse facility, the Tarboro, North Carolina yarn mill, the
       Salisbury, North Carolina facility known as Plant #7, the China Grove,
       North Carolina facility known as Plant #16 (not including the real estate
       or certain equipment), the Rocky Mount, North Carolina facility, the
       Kannapolis, North Carolina sheet mill known as Plant #4, and the Dallas,
       Texas ASL Facility.

                "Subordinated Debt" means with respect to the Borrower or any
       Guarantor, Debt of the Borrower or such Guarantor which is subordinated
       to the Obligations on terms and conditions and containing such
       amortization, covenants, events of default and other terms as are
       satisfactory to the Required Lenders.

                "Subsidiary" means, as to any Person, any corporation or other
       entity of which shares of stock (or analogous ownership interests) of
       each class having ordinary voting power (other than stock having such
       power only by reason of the happening of a contingency) to elect a
       majority of the board of directors or other managers of such corporation
       or other entity are at the time owned by such Person or by one or more
       Subsidiaries of such Person or by such Person and one or more
       Subsidiaries of such Person. A Subsidiary shall be deemed wholly-owned by
       a Person who owns all of the shares of stock (or analogous ownership
       interests) entitled to vote for the election of directors or other
       managers of such Subsidiary except for directors' qualifying shares.

                "Tax Expense" means, for any period, all expenses incurred
       during such period by the Borrower and its Subsidiaries, on a
       consolidated basis, in connection with income tax obligations, all as
       determined in accordance with GAAP applied consistently.

                "Term Loan" has the meaning specified in Section 2.1.

                "Term Notes" means the promissory notes payable to the order of
       the Lenders, each in substantially the form of Exhibit "A" hereto, and
       all extensions, renewals, and modifications thereof.

TERM LOAN AGREEMENT - Page 10

<PAGE>

                "UCC" means the Uniform Commercial Code as in effect from time
       to time in the State of Texas and the Uniform Commercial Code applicable
       in such other states as any Collateral may be located.

                Other Definitional Provisions. All definitions contained in this
Agreement are equally applicable to the singular and plural forms of the terms
defined. The words "hereof", "herein", and "hereunder" and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Unless otherwise specified, all
Article and Section references pertain to this Agreement. All accounting terms
not specifically defined herein shall be construed in accordance with GAAP.
Terms used herein that are defined in the UCC, unless otherwise defined herein,
shall have the meanings specified in the UCC.

                                   ARTICLE II

                    Post-Petition Debt Satisfied by Term Loan

       Section 2.1 Satisfaction and Payment of Designated Post-Petition Claims.
Subject to the terms and conditions of this Agreement, the Lenders severally
(but not jointly) agree to make to the Borrower on the date hereof a
$150,000,000 principal amount term loan (the "Term Loan"), which shall be used
solely to pay in full the Debt evidenced by the Designated Post-Petition Claims.
The Borrower and each Lender agree that upon the making of the Term Loan on the
date hereof, the Designated Post-Petition Claims shall be fully satisfied.

       Section 2.2 The Term Notes. The obligation of the Borrower to repay the
Term Loan shall be evidenced by the Term Notes executed by the Borrower, one
payable to the order of each Lender in the stated principal amount of such
Lender's Percentage of the Term Loan, and dated the date hereof.

       Section 2.3 Repayment of Term Loan. The Term Loan shall mature, and the
outstanding principal amount thereof shall be due and payable (together with
interest accrued thereon), on the Maturity Date. In addition, on the last day of
each December and June, commencing on December 31, 2002 and continuing until the
Term Loan is paid, in full, the Borrower shall repay, and there shall become due
and payable, a principal installment consisting of the original principal amount
of the Term Loan (less any amounts paid pursuant to Section 3.3(c) hereof),
multiplied by the percentage set forth below opposite the payment date:

--------------------------------------------------------------------------------
                     Payment Dates                        Installment Amount Due
--------------------------------------------------------------------------------
 December 31, 2002 and June 30, 2003                            0.5% each
--------------------------------------------------------------------------------
 December 31, 2003 and June 30, 2004                            2.5% each
--------------------------------------------------------------------------------
 December 31, 2004 through and including December 31, 2006      5.0% each
--------------------------------------------------------------------------------
 May 24, 2007                                                      69%
--------------------------------------------------------------------------------

       Section 2.4 Interest. The unpaid principal amount of the Term Loan shall
bear interest prior to maturity or the occurrence of an Event of Default at a
fixed rate per annum equal to the Fixed Rate. After maturity of the Term Loan or
upon the occurrence and during the continuance of an Event of Default, any
outstanding principal of the Term Loan and (to the fullest extent

TERM LOAN AGREEMENT - Page 11

<PAGE>

permitted by law) any other amount payable by the Borrower under this Agreement
or any other Loan Document shall bear interest at the Default Rate until the
same is paid in full. Interest payable at the Fixed Rate shall be payable on the
last day of each March, June, September, and December, commencing September 30,
2002, and continuing on to the Maturity Date. Interest payable at the Default
Rate shall be payable from time to time on demand. The interest due under this
Section 2.4 will be calculated taking into account any interest paid in
accordance with Sections 3.2 and 3.3(d) such that there will be no duplication
of interest paid.

                                  ARTICLE III

                                    Payments

     Section 3.1  Method of Payment. All payments of principal, interest, and
other amounts to be made by the Borrower under this Agreement and the other Loan
Documents shall be made to the Administrative Agent at its office located at 901
Main Street, Dallas, Texas 75202 for the account of each Lender in Dollars and
in immediately available funds, without setoff, deduction, or counterclaim, not
later than 12 Noon., Dallas, Texas time on the date on which such payment shall
become due (each such payment made after such time on such due date to be deemed
to have been made on the next succeeding Business Day). Each payment received by
the Administrative Agent under this Agreement or any other Loan Document for the
account of a Lender shall be paid promptly to such Lender, in immediately
available funds. Whenever any payment under this Agreement or any other Loan
Document shall be stated to be due on a day that is not a Business Day, such
payment may be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of the payment of
interest and commitment fee, as the case may be.

     Section 3.2  Voluntary Prepayment. The Borrower may prepay the Term Loan in
whole or in part at any time or from time to time without premium or penalty
together with accrued interest from the last interest payment date (per Section
2.4) to the date of prepayment on the amount so prepaid, provided that (a) the
Borrower shall give the Administrative Agent prior notice of such prepayment and
such notice shall be received by the Administrative Agent before 12 Noon,
Dallas, Texas time, one Business Day before the date of such prepayment, (b) the
date of such prepayment shall be a Business Day, and (c) each partial prepayment
shall be in the principal amount of $500,000 or an integral multiple thereof,
and shall be applied to principal installments of the Term Loan in inverse order
of maturity.

     Section 3.3  Mandatory Prepayments.


             (a)  Promptly upon receipt by the Borrower or any of its
     Subsidiaries of the Net Cash Proceeds from any sale or other transfer or
     disposition of any of the Subject Assets or Moveable Assets, the Borrower
     shall prepay the Term Loan in accordance with Section 3.3(d) of this
     Agreement in a principal amount equal to 100% of such Net Cash Proceeds.

             (b)  Commencing on March 31, 2004 and on each March 31 thereafter
     subject to the minimum excess availability requirements set forth in the
     Revolving Credit Agreement, the Borrower shall prepay the Term Loan in
     accordance with Section 3.3(d)

TERM LOAN AGREEMENT - Page 12

<PAGE>

         of this Agreement in a principal amount equal to 50% of Excess Cash
         Flow, if any, for the fiscal year of the Borrower ending immediately
         preceding each such March 31. Notwithstanding any of the above to the
         contrary, if the Borrower does not have sufficient availability under
         the Revolving Credit Agreement to obtain an advance thereunder for
         purposes of making 100% of the prepayment described herein on March 31
         of any applicable calendar year, such that giving effect to such
         advance, the minimum excess availability requirements set forth in the
         Revolving Credit Agreement are not satisfied, then (i) the Borrower
         shall make a prepayment on March 31 in an amount equal to the amount
         the Borrower may borrow under the Revolving Credit Agreement for such
         purpose in accordance with such requirements, and (ii) on the Business
         Day immediately following any day thereafter on which the Borrower has
         sufficient availability under the Revolving Credit Agreement to obtain
         an advance thereunder in accordance with such requirements for purposes
         of making all or a portion of the remainder of such prepayment
         described herein, the Borrower shall make a payment hereunder in the
         amount of such availability until the prepayment described herein is
         paid, in full.

              (c)  Subject to any minimum excess availability requirements set
         forth in the Revolving Credit Agreement, if the aggregate amount of the
         initial commitment obtained by the Borrower pursuant to the Revolving
         Credit Agreement and the Maximum Borrowing Base shall both exceed
         $150,000,000, the Borrower shall, on the date hereof, prepay the Term
         Loan in accordance with Section 3.3(d) of this Agreement in a principal
         amount equal to 100% of the lesser of (i) the amount by which the
         initial commitment obtained by the Borrower under the Revolving Credit
         Agreement exceeds $150,000,000 or (ii) the amount by which the Maximum
         Borrowing Base exceeds $150,000,000.

              (d)  Any prepayment made under Section 3.3(a), Section 3.3(b) or
         Section 3.3(c) shall (i) include accrued interest from the last
         interest payment date (per Section 2.4) to the date of such prepayment
         on the principal amount prepaid, (ii) not be subject to any minimum
         payment provisions contained in this Agreement and (iii) be in addition
         to the scheduled payments of the Term Loan required under Section 2.3
         of this Agreement. Any prepayment made under Section 3.3(a) and Section
         3.3(b) shall be applied to the unpaid principal installments of the
         Term Loan in inverse order of maturity. Any prepayment made under
         Section 3.3(c) shall reduce the amount of the Term Loan subject to the
         scheduled amortization set forth in Section 2.3 of this Agreement.
         Nothing in this Section 3.3 shall be deemed to permit any violation of
         any other provision contained in this Agreement.

         Section 3.4 Administration Fee. The Borrower shall pay to the
Administrative Agent, solely for the Administrative Agent's account, an annual
administration fee in the amount of $150,000, payable in advance on May 24 of
each calendar year, commencing on the date hereof so long as the Term Loan is
outstanding hereunder.

TERM LOAN AGREEMENT - Page 13

<PAGE>

                                   ARTICLE IV

                               Interest Provisions

         Section 4.1 Computation of Interest. Interest on the Term Loan and all
other amounts payable by the Borrower hereunder shall be computed on the basis
of a year of 360 days and the actual number of days elapsed (including the first
day but excluding the last day) unless such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a year
of 365 or 366 days, as the case may be.

                                   ARTICLE V

                                    Security

         Section 5.1 Collateral. To secure full and complete payment and
performance of the Obligations, the Borrower hereby agrees to execute and
deliver or cause to be executed and delivered the documents described below
covering the property and collateral described in this Section 5.1 (which,
together with any other property and collateral which may now or hereafter
secure the Obligations or any part thereof, is sometimes herein called the
"Collateral"):

              (a) The Borrower shall grant or cause to be granted to the
         Administrative Agent, for the benefit of the Lenders, a first priority
         Lien, subject to Permitted Liens, on all right, title and interest of
         the Borrower or the applicable Subsidiary in and to the Subject Assets,
         pursuant to the Pledge and Security Agreement, appropriate Mortgages
         and other collateral documents.

              (b) The Borrower shall grant to the Administrative Agent, for the
         benefit of the Lenders, a first priority security interest in all of
         the Alabama Bonds, pursuant to the Bond Pledge Agreement and any other
         documents, agreements, or instruments reasonably required by the
         Administrative Agent in connection therewith.

              (c) The Borrower shall grant or cause to be granted to the
         Administrative Agent, for the benefit of the Lenders, a second priority
         security interest, subject to Permitted Liens, in all of the Revolving
         Loan Assets, pursuant to the Pledge and Security Agreement, the
         Intellectual Property Security Agreements and appropriate Mortgages and
         other collateral documents.

              (d) To evidence the Administrative Agent's first priority security
         interest, subject to Permitted Liens, in certain Subject Assets and its
         second priority security interest, subject to Permitted Liens, in the
         Revolving Loan Assets, to the extent applicable, the Borrower will
         cause each of its Subsidiaries created or acquired after the date
         hereof to execute (i) a Security Agreement Supplement in substantially
         the form of Exhibit G to the Pledge and Security Agreement, (ii) an
         Intellectual Property Security Agreement, if requested by the
         Administrative Agent or the Required Lenders, and (iii) any applicable
         Mortgages, and deliver such documents to the Administrative Agent
         within 10 Business Days after such Subsidiary is created or acquired.
         Any title insurance policies, surveys, environmental site assessments
         and other matters incident to the

TERM LOAN AGREEMENT - Page 14

<PAGE>

         Mortgages must be reasonably satisfactory to the Administrative Agent
         in its reasonable discretion and shall be completed within such time
         after such Subsidiary is acquired or created that the Administrative
         Agent reasonably determines. The Borrower will also cause each such
         Subsidiary to obtain and deliver to the Administrative Agent such
         landlord lien waivers or subordinations as the Administrative Agent may
         reasonably require which waivers or subordinations shall be delivered
         to the Administrative Agent within such time after such Subsidiary is
         acquired or created that the Administrative Agent reasonably
         determines.

              (e)      The Borrower shall execute and cause to be executed such
         further documents and instruments, including, without limitation,
         Uniform Commercial Code financing statements, as the Administrative
         Agent, in its sole discretion, deems necessary or desirable to create,
         evidence, preserve, and perfect its liens and security interests in the
         Collateral.

         Section 5.2  Guaranty Agreement and Supplements.

              (a)     The Borrower shall cause the Guarantors to execute and
         deliver the Guaranty Agreement in favor of the Administrative Agent,
         for the benefit of the Lenders, guaranteeing full payment and
         performance of the Obligations.

              (b)     The Borrower will cause each of its domestic Subsidiaries
         created or acquired after the date hereof to execute a Guaranty
         Supplement in substantially the form of Exhibit A to the Guaranty
         Agreement and deliver such Guaranty Supplement to the Administrative
         Agent within 10 Business Days after such Subsidiary is created or
         acquired.

         Section 5.3 Setoff. If an Event of Default shall have occurred and be
continuing, the Administrative Agent and each Lender are hereby authorized to
set off and apply at any time and from time to time, without notice to the
Borrower (any such notice being hereby expressly waived by the Borrower), to set
off and apply any and all deposits (general, time or demand, provisional or
final, but excluding trust and escrow accounts) at any time held and other
indebtedness at any time owing by the Administrative Agent or such Lender to or
for the credit or the account of the Borrower against any and all of the
Obligations in such manner as the Administrative Agent or such Lender may
determine. The rights and remedies of the Administrative Agent and the Lenders
hereunder are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which the Administrative Agent and the
Lenders may have.

         Section 5.4 Release of Certain Collateral. In the event that, pursuant
to Section 3.3(a) of this Agreement, the Lenders receive an aggregate amount of
$7,000,000 in Net Cash Proceeds from the sale or sales of assets located at the
facilities described in clause (iii) of the definition of "Subject Assets" in
Section 1.1 of this Agreement, then the Administrative Agent will release all of
its Liens on the machinery and equipment located at the Phenix City, Alabama
facility (or formerly located there in the event such machinery and equipment
has been moved). Upon any sale or disposal of assets constituting Collateral
that is permitted pursuant to Section 9.7 of this Agreement, the Administrative
Agent will release all of its Liens on such assets.

TERM LOAN AGREEMENT - Page 15

<PAGE>

                                   ARTICLE VI

                              Conditions Precedent

      Section 6.1 Conditions to the Term Loan. The obligation of the Lenders to
make the Term Loan is subject to the condition precedent that the Administrative
Agent shall have received on or before the date of the Term Loan all of the
following, each dated (unless otherwise indicated) the date hereof, in form and
substance satisfactory to the Administrative Agent:

           (a) Resolutions. Resolutions of the Board of Directors (or
      evidence of other equivalent partnership action) of the Borrower and
      each Guarantor certified by the Secretary or an Assistant Secretary of
      such Person which authorize (i) the execution, delivery, and
      performance by the Borrower of this Agreement and the other Loan
      Documents to which the Borrower is or is to be a party, and (ii) the
      execution, delivery and performance by such Guarantor of the Guaranty
      Agreement and the other Loan Documents to which such Guarantor is or is
      to be a party;

           (b) Incumbency Certificate. Certificates of incumbency certified
      by the Secretary or an Assistant Secretary of the Borrower and each
      Guarantor certifying the names of (i) the officers of the Borrower
      authorized to sign this Agreement and each of the other Loan Documents
      to which the Borrower is or is to be a party (including the
      certificates contemplated herein) together with specimen signatures of
      such officers, and (ii) the officers of such Guarantor authorized to
      sign the Guaranty Agreement and the other Loan Documents to which such
      Guarantor is or is to be a party (including the certificates
      contemplated herein) together with specimen signatures of such
      officers;

           (c) Organizational Documents. The organizational documents of the
      Borrower and each Guarantor certified by the jurisdiction of
      incorporation/organization of the Borrower and such Guarantor and dated
      within 30 days prior to the date hereof;

           (d) Bylaws. The bylaws of the Borrower and each Guarantor
      certified by the Secretary or an Assistant Secretary of such Person;

           (e) Governmental Certificates. Certificates of the appropriate
      government officials of the Borrower's and each Guarantor's
      jurisdiction of incorporation/organization as to the existence and good
      standing of the Borrower and such Guarantor, each dated within 30 days
      prior to the date hereof;

           (f) Term Notes. The Term Notes executed by the Borrower;

           (g) Pledge and Security Agreement. The Pledge and Security
      Agreement executed by the Borrower and the Guarantors;

           (h) Bond Pledge Agreement. The Bond Pledge Agreement executed by
      the Borrower, and any other documents, agreements, or instruments
      reasonably required by the Administrative Agent in connection
      therewith;

TERM LOAN AGREEMENT - Page 16

<PAGE>

          (i) Alabama Bonds. The Alabama Bonds, together with any endorsements,
     assignments, or other evidences of the Administrative Agent's security
     interest in such Alabama Bonds reasonably required by the Administrative
     Agent;

          (j) Intellectual Property Security Agreements. The Intellectual
     Property Security Agreements executed by the Borrower and/or the applicable
     Guarantors;

          (k) Mortgages. The Mortgages executed by the Borrower and/or the
     applicable Guarantors;

          (l) Financing Statements. Uniform Commercial Code financing statements
     in proper form for filing and covering the Collateral;

          (m) Guaranty Agreement. The Guaranty Agreement executed by the
     Guarantors;

          (n) Insurance Policies. Copies of all insurance policies required by
     Section 8.5, together with certificates from insurers naming the
     Administrative Agent as an additional named insured with respect to all
     insurance policies covering Collateral;

          (o) Real Estate Appraisal. Appraisals of the Fee Properties
     constituting the Collateral to the extent requested by the Administrative
     Agent;

          (p) Title Insurance. Mortgagee Policies of Title Insurance, with such
     endorsements as the Administrative Agent may require, issued by a company
     and in form and substance satisfactory to the Administrative Agent,
     insuring the Administrative Agent's Lien on (i) the Fee Properties and
     Leased Properties constituting Subject Assets to be of first priority,
     subject only to Permitted Liens and such exceptions as Administrative Agent
     shall approve in its discretion, and (ii) the Fee Properties and Leased
     Properties constituting Revolving Loan Assets to be of second priority,
     subject only to Permitted Liens and the Liens required by the Revolving
     Credit Agreement and related documents and such other exceptions as the
     Administrative Agent shall approve in its discretion, with all costs
     thereof to be paid by Borrower;

          (q) Survey. With respect to each parcel of Fee Property and Leased
     Property constituting Collateral, a survey with such certification as the
     Administrative Agent may reasonably require;

          (r) Environmental Site Assessment. With respect to each parcel of Fee
     Property and Leased Property constituting Collateral, a Phase I and/or
     Phase II Environmental Site Assessment to the extent requested by the
     Administrative Agent;

          (s) Merger Agreement. Evidence satisfactory to the Administrative
     Agent that all conditions precedent to the closing of the Pillowtex Merger
     have been satisfied, including without limitation (i) certified executed
     copies of the Merger Agreement, and (ii) the Certificate of Merger issued
     by the Secretary of State of the appropriate state or states;

TERM LOAN AGREEMENT - Page 17

<PAGE>

          (t)  Intercreditor Agreement. The Intercreditor Agreement executed by
     the Borrower, the Guarantors, the Administrative Agent, the Revolving
     Lenders, and Congress Financial Corporation as administrative agent under
     the Revolving Credit Agreement;

          (u)  Revolving Loan Documents. Fully executed counterparts of the
     Revolving Credit Agreement and other loan documents evidencing or executed
     and delivered in connection with the Revolving Credit Agreement;

          (v)  Opinion of Counsel. A favorable opinion of legal counsel to the
     Borrower and the Guarantors as to such matters as the Administrative Agent
     may reasonably request;

          (w)  Plan of Reorganization. The Plan of Reorganization shall have
     been confirmed and shall have become effective;

          (x)  Administrative Agent's Fee. The initial annual administration fee
     described in Section 3.4 shall have been paid in full by the Borrower;

          (y)  Attorneys' Fees and Expenses. Evidence that the costs and
     expenses (including reasonable attorneys' fees) referred to in Section
     13.1, to the extent incurred, shall have been paid in full by the Borrower;

          (z)  No Default. No Default shall have occurred and be continuing, or
     would result from the Term Loan;

          (aa) Representations and Warranties. All of the representations and
     warranties contained in Article VII hereof and in the other Loan Documents
     shall be true and correct; and

          (bb) Additional Documentation. The Administrative Agent shall have
     received such additional approvals, opinions, or documents as the
     Administrative Agent or its legal counsel, Winstead Sechrest & Minick P.C.,
     may reasonably request.

                                  ARTICLE VII

                         Representations and Warranties

     To induce the Lenders to enter into this Agreement, the Borrower represents
and warrants to the Administrative Agent and the Lenders that:

     Section 7.1 Corporate Existence. The Borrower and each of the Guarantors
(a) is a corporation or other Person duly organized and validly existing under
the laws of the jurisdiction of its organization, (b) has full legal power and
authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to use its corporate name
and to own, lease or otherwise hold its properties and assets and to carry on
its business as now conducted other than such franchises, licenses, permits,
authorizations and approvals the lack of which, individually or in the
aggregate, would not have a Material Adverse

TERM LOAN AGREEMENT - Page 18

<PAGE>

Effect, (c) is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership, leasing or
holding of its properties makes such qualification necessary, except such
jurisdictions where the failure so to qualify would not have a Material Adverse
Effect, and (d) is in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Authority or instrumentality,
domestic or foreign, except where noncompliance would not have a Material
Adverse Effect. Neither the Borrower nor any of its Subsidiaries has received
any written communication from a Governmental Authority that alleges that the
Borrower or any of the Borrower's Subsidiaries is not in compliance, in all
material respects, with all material Federal, state, local or foreign laws,
ordinances, rules and regulations.

     Section 7.2 Financial Condition. The audited consolidated financial
statements of the Borrower and its Subsidiaries for the fiscal year ended on or
about December 31, 2001, the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as at March 30, 2002 and the related unaudited
consolidated statements of income and of cash flows for the periods ended on
such date, certified by the chief financial officer or controller of the
Borrower, copies of which have heretofore been furnished to each Lender, present
fairly the consolidated financial condition of the Borrower and its Subsidiaries
as of the respective dates indicated therein, and the consolidated results of
their operations and their consolidated cash flows for the respective periods
indicated therein (subject to normal year-end audit adjustments in the case of
unaudited financial statements). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by such
accountants or such officer, as the case may be, and as disclosed therein).

     Section 7.3 Corporate Action; No Breach. The execution, delivery, and
performance by (a) the Borrower of this Agreement and the other Loan Documents
to which the Borrower is or may become a party and (b) each Guarantor of the
Loan Documents to which such Guarantor is or may become a party and compliance
with the terms and provisions hereof and thereof have been duly authorized by
all requisite action on the part of the Borrower and such Guarantor and do not
and will not (i) violate or conflict with, or result in a breach of, or
constitute a default under, or require any consent under (A) the articles of
incorporation, bylaws or other organizational documents of the Borrower or such
Guarantor, (B) any applicable law, rule, or regulation or any order, writ,
injunction, or decree of any Governmental Authority or arbitrator, or (C) any
agreement or instrument to which the Borrower or such Guarantor is a party or by
which any of them or any of their property is bound or subject, or (ii) result
in the creation or imposition of any Lien (except as provided in Article V and
except Permitted Liens) upon any of the revenues or assets of the Borrower or
such Guarantor.

     Section 7.4 Operation of Business. The Borrower and each of its
Subsidiaries possess all material licenses, permits, franchises, patents,
copyrights, trademarks, and tradenames, or rights thereto, necessary to conduct
their respective businesses substantially as now conducted and as presently
proposed to be conducted, except those, the failure of which would not have a
Material Adverse Effect, and the Borrower and each of its Subsidiaries are not
in violation of any valid rights of others with respect to any of the foregoing
that would result in a Material Adverse Effect.

TERM LOAN AGREEMENT - Page 19

<PAGE>

     Section 7.5 Litigation and Judgments. Except as disclosed on Schedule 7.5
hereto, and except for the Chapter 11 Cases and the filing and prosecution of
claims therein, there is no action, suit, investigation, or proceeding before or
by any Governmental Authority or arbitrator pending, or to the knowledge of the
Borrower, threatened against or affecting the Borrower or any of its
Subsidiaries, that would, if adversely determined, have a Material Adverse
Effect. There are no outstanding judgments against the Borrower or any of its
Subsidiaries.

     Section 7.6 Rights in Properties; Liens. The Borrower and each Guarantor
has good title to all its material assets (other than real property or interests
in real property, or goods sold on a consignment basis), in each case free and
clear of all Liens of any nature whatsoever except Permitted Liens. With respect
to real property or interests in real property, each of the Borrowers has (i)
good and marketable fee title to all of its material owned real property, (each,
a "Fee Property"), and (ii) a valid leasehold interest in all of the material
real property leased by it (each, a "Leased Property"), each such Fee Property
and each such Leased Property being referred to individually as a "Company
Property" in this Section 7.6), in each case free and clear of all Liens,
easements, covenants, rights-of-way and other similar restrictions of any nature
whatsoever, except (A) Permitted Liens, (B) easements, covenants, rights-of-way
and other similar restrictions of record, (C) any conditions that may be shown
by a current, accurate survey or physical inspection of any Company Property
made prior to the date of this Agreement, (D) any immaterial condemnation or
eminent domain proceeding affecting any real property that does not prevent such
real property from being utilized by the Borrower or any of its Subsidiaries
substantially for the purposes for which it was being utilized prior to such
proceeding, and (E) (I) zoning, building and other similar restrictions, (II)
Liens that have been placed by any developer, landlord or other third party on
property over which the Borrower or any of its Subsidiaries have easement rights
or on any Leased Property and subordination or similar agreements relating
thereto, and (III) unrecorded easements, covenants, rights-of-way or other
similar restrictions, none of which items set forth in clauses (I), (II) and
(III), individually or in the aggregate, materially impair the continued use and
operation of the property to which they relate in the business of the Borrower
or any Subsidiary, as now conducted.

     Section 7.7 Enforceability. This Agreement constitutes, and the other Loan
Documents to which the Borrower or any Guarantor is party, when delivered, shall
constitute legal, valid, and binding obligations of the Borrower or the
applicable Guarantor, as the case may be, enforceable against the Borrower or
the applicable Guarantor, as the case may be, in accordance with their
respective terms, except as limited by bankruptcy, insolvency, or other laws of
general application relating to the enforcement of creditors' rights.

     Section 7.8 Approvals. Other than with respect to certain industrial
revenue bond financings, no authorization, approval, or consent of, and no
filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by the Borrower or
any Guarantor of this Agreement and the other Loan Documents to which the
Borrower or the applicable Guarantor, as the case may be, is or may become a
party or the validity or enforceability thereof, other than (i) those already
obtained, (ii) the filing of financing statements and other Loan Documents, and
(iii) those the failure to obtain would not have a Material Adverse Effect.

TERM LOAN AGREEMENT - Page 20

<PAGE>

     Section 7.9 Debt. The Borrower and its Subsidiaries have no Debt other than
that permitted under this Agreement, except as disclosed on Schedule 7.9 hereto.

     Section 7.10 Taxes. Except for those tax claims being addressed in the
Chapter 11 Cases, the Borrower and each of its Subsidiaries have filed all tax
returns (federal, state, and local) required to be filed, including all income,
franchise, employment, property, and sales tax returns, and have paid all of
their respective liabilities for taxes, assessments, governmental charges, and
other levies that are due and payable (other than (i) for which an extension for
filing is available and the Borrower or the applicable Subsidiary has taken
necessary steps to qualify for such extension, and (ii) the amount or validity
of which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have been provided on
the books of the Borrower or its Subsidiaries, as applicable). The Borrower
knows of no pending investigation of the Borrower or any of its Subsidiaries by
any taxing authority or of any pending but unassessed tax liability as a result
of any investigation by a taxing authority of the Borrower or any of its
Subsidiaries, except as disclosed on Schedule 7.10.

     Section 7.11 Use of Proceeds; Margin Securities. Neither the Borrower nor
any of its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations U or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of the
Term Loan will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying margin stock.

     Section 7.12 ERISA. The Borrower and each of its Subsidiaries are in
compliance in all material respects with all applicable provisions of ERISA.
Other than the event that occurred as a result of the Chapter 11 Cases and the
event that could occur as a result of a decrease in the number of participants
covered by the Plans, neither a Reportable Event nor a Prohibited Transaction
has occurred and is continuing with respect to any Plan. No notice of intent to
terminate a Plan has been filed, nor has any Plan been terminated. To the
Borrower's knowledge, no circumstances exist which constitute grounds entitling
the PBGC to institute proceedings to terminate, or appoint a trustee to
administer, a Plan, nor has the PBGC instituted any such proceedings. Neither
the Borrower nor any ERISA Affiliate has completely or partially withdrawn from
a Multiemployer Plan. The Borrower and each ERISA Affiliate have met their
minimum funding requirements under ERISA with respect to all of their Plans.

     Section 7.13 Disclosure. No statement, information, report, representation,
or warranty made by the Borrower in this Agreement or in any other Loan Document
or furnished to the Lenders in connection with this Agreement or any of the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state any material fact necessary to make the statements herein
or therein not misleading. There is no fact known to the Borrower which could
reasonably be expected to have a Material Adverse Effect that has not been
disclosed in writing to the Lenders.

     Section 7.14 Subsidiaries. The Borrower has no Subsidiaries other than
those listed on Schedule 7.14 hereto, and Schedule 7.14 sets forth the
jurisdiction of organization of each Subsidiary of Borrower and the percentage
of the Borrower's or applicable Subsidiary's

TERM LOAN AGREEMENT - Page 21

<PAGE>

ownership of the outstanding voting stock of each Subsidiary. All of the
outstanding capital stock of each Subsidiary of Borrower has been validly
issued, is fully paid, and is nonassessable.

       Section 7.15 Agreements. Other than with respect to certain cotton
contracts, neither the Borrower nor any of its Subsidiaries is a party to any
indenture, loan, or credit agreement, or to any lease or other agreement or
instrument, or subject to any charter or corporate restriction which could
reasonably be expected to have a Material Adverse Effect. Neither the Borrower
nor any of its Subsidiaries is in default in any respect in the performance,
observance, or fulfillment of any of the obligations, covenants, or conditions
contained in any agreement or instrument material to its business to which it is
a party, the result of which would be a Material Adverse Effect.

       Section 7.16 Compliance with Laws. Neither the Borrower nor any of its
Subsidiaries is in violation in any material respect of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator.

       Section 7.17 Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.

       Section 7.18 Public Utility Holding Company Act. Neither the Borrower nor
any of its Subsidiaries is a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or a "public utility"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.

       Section 7.19 Environmental Matters. Except as disclosed in Schedule 7.19,
and subject to clause (f) below:


               (a)  To the best knowledge of the Borrower after reasonable
       inquiry, (i) the Fee Properties do not contain, in, on or under,
       including, without limitation, the soil and groundwater under the Fee
       Properties, any Hazardous Materials, and (ii) neither the Borrower nor
       any of its Subsidiaries have placed any Hazardous Materials on any Leased
       Properties, in each case which result in a currently existing violation
       of Environmental Laws.

               (b)  To the best knowledge of the Borrower after reasonable
       inquiry, the Borrower and its Subsidiaries are not in material violation
       of any Environmental Law which could materially interfere with the
       continued operation of any of the Company Properties or materially impair
       the fair saleable value of any thereof.

               (c)  Neither the Borrower nor any of its Subsidiaries have
       received any complaint, notice of violation, alleged violation, notice of
       investigation or of potential liability under Environmental Laws with
       regard to any of the Company Properties which has not been cured or is in
       the process of being cured and has been disclosed in writing by the
       Borrower to the Administrative Agent, nor do the Borrower or any of its
       Subsidiaries have knowledge that any Governmental Authority is
       contemplating delivering to the Borrower or any of its Subsidiaries any
       such notice.


TERM LOAN AGREEMENT - Page 22

<PAGE>

               (d)  Except for violations which have been cured or are in the
       process of being cured and have been disclosed in writing by the Borrower
       to the Administrative Agent, to the best knowledge of the Borrower after
       reasonable inquiry, Hazardous Materials have not been generated, treated,
       stored, disposed of (in the case of Leased Properties, by the Borrower or
       any of its Subsidiaries), at, on or under any of the Company Properties
       in violation of any Environmental Laws nor, to the best knowledge of the
       Borrower after reasonable inquiry, have any Hazardous Materials been
       transported (in the case of Leased Properties, by the Borrower or any of
       its Subsidiaries) from any of the Company Properties to any other
       location in violation of any Environmental Laws.

               (e)  There are no governmental administrative actions or judicial
       proceedings pending under any Environmental Law to which Borrower or any
       of its Subsidiaries thereof is a party with respect to any of the Company
       Properties, nor are there any consent decrees or other decrees, consent
       orders, administrative orders or other orders, or other administrative or
       judicial requirements outstanding against Borrower or any of its
       Subsidiaries thereof under any Environmental Law with respect to any of
       the Company Properties.

               (f)  Each of the representations and warranties set forth in
       paragraphs (a) through (e) of this Section 7.19 is true and correct in
       all material respects with respect to each parcel of Company Property.

       Section 7.20 No Change. Except as set forth in the Plan of
Reorganization, since March 30, 2002 (a) other than as otherwise disclosed in
the financial statements previously provided to the Lenders, there has been no
change, which has had or could reasonably be expected to have a Material Adverse
Effect and (b) no dividends or other distributions have been declared, paid or
made upon the capital stock of the Borrower or any of its Subsidiaries nor has
any of the capital stock of the Borrower or any of its Subsidiaries been
redeemed, retired, purchased or otherwise acquired for value by the Borrower or
any of its Subsidiaries.

       Section 7.21 Patents, Copyrights, Permits, Trademarks and Licenses.
Schedule 7.21 sets forth a true and complete list of all material patents,
trademarks (registered or unregistered), trade names, service marks and
copyrights and applications therefor owned, used or filed by or licensed to the
Borrower and its Subsidiaries and, with respect to such material registered
trademarks, contains a list of all jurisdictions in which such trademarks are
registered or applied for and all registration and application numbers. Except
as disclosed on Schedule 7.21, the Borrower and its Subsidiaries own or have the
right to use the patents, trademarks (registered or unregistered), trade names,
service marks, copyrights and applications therefor referred to in such
Schedule. To the best knowledge of the Borrower after reasonable inquiry, no
material claims are pending by any Person with respect to the ownership,
validity, enforceability or use of any such patents, trademarks (registered or
unregistered), trade names, service marks, copyrights, or applications therefor,
challenging or questioning the validity or effectiveness of any of the
foregoing, in any domestic jurisdiction.

TERM LOAN AGREEMENT - Page 23

<PAGE>

                                  ARTICLE VIII

                              Affirmative Covenants

       The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding, the Borrower will perform and observe the
following positive covenants, unless the Required Lenders shall otherwise
consent in writing:

       Section 8.1  Reporting Requirements. The Borrower will furnish to the
Administrative Agent for distribution to the Lenders:

                (a) Annual Financial Statements. As soon as practical, but in
       any event within 90 days after the end of each fiscal year of the
       Borrower, the audited consolidated balance sheet of the Borrower and its
       Subsidiaries as at the end of such fiscal year and the related audited
       consolidated statements of stockholders' equity, cash flows and income of
       the Borrower and its Subsidiaries for such fiscal year, setting forth in
       each case in comparative form the figures for the previous year,
       certified by independent certified public accountants reasonably
       acceptable to the Administrative Agent (it being hereby agreed that KPMG
       is acceptable to the Administrative Agent), accompanied by the opinion of
       such independent certified public accountants, which opinion shall be in
       scope and substance in accordance with generally accepted auditing
       standards and shall be unqualified.

                (b) Quarterly Financial Statements. As soon as practical, but in
       any event not later than 45 days after the end of each of the first three
       quarterly periods of each fiscal year of the Borrower the unaudited
       consolidated balance sheet of the Borrower and its Subsidiaries as at the
       end of such quarter and the related unaudited consolidated statements of
       income and cash flows of the Borrower and its Subsidiaries for such
       quarterly period and the portion of the fiscal year of the Borrower and
       its Subsidiaries through such date subject only to usual year-end
       adjustments and the absence of footnotes, setting forth in each case in
       comparative form the figures for the corresponding quarter in, and year
       to date portion of, the previous year, certified by the chief financial
       officer, controller or treasurer of the Borrower as being fairly stated
       in all material respects.

                (c) Monthly Financial Statements. As soon as practical, but in
       any event within 20 Business Days after the end of each fiscal month of
       each year, other than the last fiscal month of each fiscal quarter,
       commencing as of the fiscal month ending on or about May 31, 2002, the
       internal monthly financial statements comprising the unaudited
       consolidated balance sheet of the Borrower and its Subsidiaries as at the
       end of such month and the related unaudited consolidated statements of
       income and cash flows of the Borrower and its Subsidiaries for such month
       and for the portion of the fiscal year of the Borrower and its
       Subsidiaries through such date, in comparative form the consolidated
       figures for the corresponding month of, and year to date portion of, the
       previous year, certified by the chief financial officer, controller or
       treasurer of the Borrower as being fairly stated in all material
       respects.

TERM LOAN AGREEMENT - Page 24

<PAGE>

                (d) Monthly Cotton Purchase Information. As soon as practical,
       but in any event within 20 Business Days after the end of each fiscal
       month of each year, commencing as of the fiscal month ending on or about
       June 30, 2002, a report detailing the amount of cotton purchased during
       such fiscal month and the aggregate notional amount of forward purchase
       contracts for cotton outstanding as of the last day of such fiscal month.

                (e) Monthly Capital Lease and Letter of Credit Information. As
       soon as practical, but in any event within 20 Business Days after the end
       of each fiscal month of each year, other than the last fiscal month of
       each fiscal quarter, and in any event within 45 days after the end of the
       last month of each fiscal quarter, commencing as of the fiscal month
       ending on or about June 30, 2002, a report detailing (a) the amount of
       Capital Lease Obligations outstanding as of the end of such fiscal month,
       including the names of each lessor, the amount outstanding under each
       capital lease, and the term of each capital lease, and (b) the amount
       available to be drawn under commercial letters of credit outstanding
       under the Revolving Credit Agreement, including the beneficiary of each
       such letter of credit and the term of each such letter of credit.

                (f) Certificates of No Default. Concurrently with the delivery
       of the consolidated financial statements referred to in Section 8.1(a), a
       letter from the Borrower's independent certified public accountants
       reporting on such financial statements stating that in making the
       examination necessary to express their opinion on such financial
       statements no knowledge was obtained of any Default, except as specified
       in such letter, and concurrently with each delivery of the financial
       statements referred to in Sections 8.1(a), (b) and (c), a certificate of
       the vice president and controller, the vice president and treasurer or
       the chief financial officer of the Borrower stating that, to the best of
       such officer's knowledge after reasonable inquiry and review, the
       Borrower and its Subsidiaries have observed or performed all of their
       covenants and other agreements, and satisfied every condition, contained
       in this Agreement and the other Loan Documents to be observed, performed
       or satisfied by them, and that such officer has obtained no knowledge of
       any Default except as specified in such certificate.

                (g) Accountant Reports. Promptly upon receipt thereof, copies of
       all final reports submitted to the Borrower or to any of its Subsidiaries
       by the Borrower's independent certified public accountants in connection
       with each annual, interim or special audit of the books of the Borrower
       or its Subsidiaries made by such accountants, including, without
       limitation, any final comment letter submitted by such accountants to
       management in connection with their annual audit.

                (h) Public Reports. Promptly upon their becoming available,
       copies of all financial statements, reports, notices and proxy statements
       sent or made available to the public generally by the Borrower and all
       regular and periodic reports and all final registration statements and
       final prospectuses, if any, filed by the Borrower with any securities
       exchange or with the Securities and Exchange Commission or any
       Governmental Authority succeeding to any of its functions.

TERM LOAN AGREEMENT - Page 25

<PAGE>

                (i) Notice of Litigation. Promptly after the commencement
       thereof, notice of all actions, suits, and proceedings before any
       Governmental Authority or arbitrator affecting the Borrower or any of its
       Subsidiaries which, if determined adversely to the Borrower or such
       Subsidiary, could reasonably be expected to have a Material Adverse
       Effect.

                (j) Notice of Default. As soon as possible and in any event
       within five (5) Business Days after the occurrence of each Default of
       which Borrower has knowledge, a written notice setting forth the details
       of such Default and the action that the Borrower has taken and proposes
       to take with respect thereto.

                (k) ERISA Reports. Promptly after the filing or receipt thereof,
       copies of all reports, including annual reports, and notices which the
       Borrower or any of its Subsidiaries files with or receives from the PBGC
       or the U.S. Department of Labor under ERISA; and as soon as possible and
       in any event within five (5) Business Days after the Borrower or any of
       its Subsidiaries knows or has reason to know that any Reportable Event or
       Prohibited Transaction has occurred with respect to any Plan or that the
       PBGC or the Borrower or any of its Subsidiaries has instituted or will
       institute proceedings under Title IV of ERISA to terminate any Plan, a
       certificate of the chief financial officer, controller or treasurer of
       the Borrower setting forth the details as to such Reportable Event or
       Prohibited Transaction or Plan termination and the action that the
       Borrower proposes to take with respect thereto.

                (l) Reports to Other Creditors. Promptly after the furnishing
       thereof, to the extent the Administrative Agent so requests, copies of
       any statement or report furnished to any other party pursuant to the
       terms of any indenture, loan, or credit or similar agreement, including
       without limitation the Revolving Credit Agreement, and not otherwise
       required to be furnished to the Lenders pursuant to any other clause of
       this Section.

                (m) Notice of Material Adverse Effect. As soon as possible and
       in any event within five (5) Business Days after the occurrence thereof
       which Borrower has knowledge, written notice of any matter that could
       reasonably be expected to have a Material Adverse Effect.

                (n) Landlord Waivers. Within 60 days after the date hereof, the
       Borrower will use its best efforts to provide landlord lien waivers or
       subordinations, as the case may be, with respect to each location of
       equipment and inventory of Borrower and the Guarantors which is leased by
       Borrower or any such Guarantor and for which a landlord lien waiver or
       subordination is required by the Revolving Credit Agreement.

                (o) General Information. Promptly, such other information
       concerning the Borrower or any of its Subsidiaries as the Administrative
       Agent or any Lender may from time to time reasonably request.

       Section 8.2  Maintenance of Existence. Except as otherwise permitted
pursuant to Section 9.3, the Borrower will preserve and maintain, and will cause
each of its Subsidiaries to

TERM LOAN AGREEMENT - Page 26

<PAGE>

preserve and maintain, its corporate existence and all of its leases,
privileges, licenses, permits, franchises, qualifications, and rights that are
necessary or desirable in the ordinary conduct of its business, the loss of
which would have a Material Adverse Effect.

     Section 8.3 Maintenance of Properties. Except as otherwise permitted
pursuant to Sections 9.3 and 9.7, the Borrower will maintain, keep, and
preserve, and cause each of its Subsidiaries to maintain, keep, and preserve,
all of its properties (tangible and intangible) necessary or useful in the
proper conduct of its business in good working order and condition.

     Section 8.4 Taxes and Claims. Except for tax claims being addressed in the
Chapter 11 Cases, the Borrower will pay or discharge, and will cause each of its
Subsidiaries to pay or discharge, at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments, and governmental charges imposed
on it or its income or profits or any of its property, and (b) all lawful claims
for labor, material, and supplies, which, if unpaid, might become a Lien upon
any of its property; provided, however, that neither the Borrower nor any of its
Subsidiaries shall be required to pay or discharge any tax, levy, assessment, or
governmental charge which is being contested in good faith by appropriate
proceedings diligently pursued, and for which adequate reserves have been
established in accordance with GAAP.

     Section 8.5 Insurance. The Borrower will maintain, and will cause each of
its Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as is usually
carried by corporations engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower and its Subsidiaries
operate, provided that in any event the Borrower will maintain and cause each of
its Subsidiaries to maintain workmen's compensation insurance, property
insurance, comprehensive general liability insurance, products liability
insurance, and business interruption insurance reasonably satisfactory to the
Administrative Agent. Each insurance policy covering the Collateral shall name
the Administrative Agent as an additional loss payee and shall provide that such
policy will not be canceled or reduced without thirty (30) days' prior written
notice to the Administrative Agent.

     Section 8.6 Inspection Rights. At any reasonable time and from time to
time, upon reasonable notice to the Borrower, the Borrower will permit, and will
cause each of its Subsidiaries to permit, representatives of the Administrative
Agent or any Lender to examine, copy, and make extracts from its books and
records, to visit and inspect its properties, and to discuss its business,
operations, and financial condition with its officers, employees, and
independent certified public accountants. In addition, the Borrower will permit,
and will cause each of its Subsidiaries to permit, representatives of the
Administrative Agent or any Lender to visit and inspect any of its properties
for the purpose of performing periodic collateral audits.

     Section 8.7 Keeping Books and Records. The Borrower will maintain, and will
cause each of its Subsidiaries to maintain, proper books of record and account
in which full, true, and correct entries in conformity with GAAP shall be made
of all dealings and transactions in relation to its business and activities.

     Section 8.8 Compliance with Laws. The Borrower will comply, and will cause
each of its Subsidiaries to comply with all applicable laws, rules, regulations,
orders, and decrees of

TERM LOAN AGREEMENT - Page 27

<PAGE>

any Governmental Authority or arbitrator, except to the extent that the failure
to comply therewith would not have a Material Adverse Effect.

     Section 8.9 Compliance with Agreements. The Borrower will comply, and will
cause each of its Subsidiaries to comply with the Revolving Credit Agreement,
all agreements related thereto, and all other agreements, contracts, and
instruments binding on it or affecting its properties or business, except to the
extent that the failure to comply therewith would not have a Material Adverse
Effect.

     Section 8.10 Further Assurances. The Borrower will, and will cause each of
its Subsidiaries to, execute and deliver such further agreements and instruments
and take such further action as may be reasonably requested by the
Administrative Agent to carry out the provisions and purposes of this Agreement
and the other Loan Documents and to create, preserve, and perfect the Liens of
the Administrative Agent in the Collateral.

     Section 8.11 ERISA. The Borrower will comply, and will cause each of its
Subsidiaries to comply, with all minimum funding requirements, and all other
material requirements, of ERISA, if applicable, so as not to give rise to any
liability thereunder.

     Section 8.12 Environmental Laws.

          (a) The Borrower and its Subsidiaries will comply in all material
     respects with, and use reasonable efforts to insure compliance in all
     material respects by all its tenants and subtenants, if any, with, all
     applicable Environmental Laws and obtain and comply in all material
     respects with and maintain, and use reasonable efforts to insure that all
     of their respective tenants and subtenants obtain and comply in all
     material respects with and maintain, any and all licenses, approvals,
     registrations or permits required by Environmental Laws.

          (b) The Borrower and its Subsidiaries will conduct and complete all
     investigations, studies, sampling and testing, and all remedial, removal
     and other actions required under Environmental Laws and promptly comply
     with all lawful orders and directives of all Governmental Authorities
     respecting Environmental Laws, except to the extent that the same are being
     contested in good faith by appropriate proceedings.

          (c) THE BORROWER AND ITS SUBSIDIARIES WILL DEFEND, INDEMNIFY AND HOLD
     HARMLESS ADMINISTRATIVE AGENT AND EACH LENDER, AND THEIR RESPECTIVE
     EMPLOYEES, AGENTS, OFFICERS AND DIRECTORS (COLLECTIVELY, THE "LENDER
     PARTIES"), FROM AND AGAINST ANY CLAIMS, DEMANDS, PENALTIES, FINES,
     LIABILITIES, SETTLEMENTS, DAMAGES, COSTS AND EXPENSES OF WHATEVER KIND OR
     NATURE KNOWN OR UNKNOWN, CONTINGENT OR OTHERWISE (INCLUDING AS A RESULT OF
     THE ORDINARY NEGLIGENCE OF ANY OF THE LENDER PARTIES) ACTUALLY ASSERTED
     AGAINST OR INCURRED BY THE LENDER PARTIES (OR ANY ONE OR MORE OF THEM),
     ARISING OUT OF, OR IN ANY WAY RELATING TO THE VIOLATION OF OR NONCOMPLIANCE
     WITH ANY ENVIRONMENTAL LAWS APPLICABLE TO

TERM LOAN AGREEMENT - Page 28

<PAGE>

     THE REAL PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS
     SUBSIDIARIES, OR ANY ORDERS, REQUIREMENTS OR DEMANDS OF GOVERNMENTAL
     AUTHORITIES RELATED THERETO, INCLUDING, WITHOUT LIMITATION, REASONABLE
     ATTORNEY'S AND CONSULTANT'S FEES, INVESTIGATION AND LABORATORY FEES, COURT
     COSTS AND LITIGATION EXPENSES, EXCEPT TO THE EXTENT THAT ANY OF THE
     FOREGOING ARISE OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
     PARTY SEEKING INDEMNIFICATION THEREFOR OR RELATE TO VIOLATIONS OR ALLEGED
     VIOLATIONS OF ENVIRONMENTAL LAWS OR HAZARDOUS MATERIALS FIRST USED,
     RELEASED, SPILLED, EMITTED OR OTHERWISE LOCATED ON ANY REAL PROPERTY OWNED
     OR OPERATED BY THE BORROWER ANY OF ITS SUBSIDIARIES AFTER SUCH PROPERTY IS
     TRANSFERRED TO A LENDER PARTY OR ITS SUCCESSOR OR ASSIGN BY FORECLOSURE,
     DEED-IN-LIEU OF FORECLOSURE OR SIMILAR TRANSFER UNLESS CAUSED BY THE
     BORROWER ANY OF ITS SUBSIDIARIES.

                                   ARTICLE IX

                               Negative Covenants

     The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding, the Borrower will perform and observe the
following negative covenants, unless the Required Lenders shall otherwise
consent in writing:

     Section 9.1 Debt. The Borrower will not incur, create, assume, or permit to
exist, and will not permit any of its Subsidiaries to incur, create, assume, or
permit to exist, any Debt, except:

          (a) The Obligations;

          (b) Debt incurred under the Revolving Credit Agreement, and any
     renewals, extensions, replacements or refinancings thereof (except those
     that result in an increase to the original commitment amount thereunder);
     provided that the aggregate amount available to be drawn under commercial
     letters of credit issued for the account of the Borrower or any of its
     Subsidiaries thereunder shall not exceed $15,000,000 at any time prior to
     the Borrower's delivery to the Administrative Agent of a strategic plan
     regarding usage of commercial letters of credit, which is satisfactory to
     the Required Lenders;

          (c) Subordinated Debt;

          (d) Purchase money debt incurred after the date hereof in the ordinary
     course of business not to exceed an aggregate amount of $5,000,000;

          (e) Capital Lease Obligations incurred after the date hereof in the
     ordinary course of business not to exceed an aggregate amount of
     $5,000,000;

TERM LOAN AGREEMENT - Page 29

<PAGE>

          (f) Debt existing on the date hereof and Debt resulting from the
     conversion or termination, within 30 days after the date hereof of any
     operating leases existing on the date hereof, which is described on
     Schedule 7.9 hereof, including renewals, extensions, replacements or
     refinancings (but not increases) thereof, provided that the maximum amount
     of Capital Lease Obligations included on such Schedule 7.9 (including any
     Capital Lease Obligations resulting from the conversion or termination,
     within 30 days after the date hereof, of any operating leases existing on
     the date hereof included on such Schedule 7.9) shall not exceed
     $40,000,000;

          (g) Debt in respect of endorsement of negotiable instruments in the
     ordinary course of business;

          (h) Debt owing to the Borrower or any of the Guarantors by the
     Borrower or any Guarantor;

          (i) Guaranties by the Borrower or its Subsidiaries, to the extent the
     underlying Debt is permitted hereunder;

          (j) Debt associated with insurance premium financing;

          (k) Debt consisting of interest rate hedging contracts for purposes of
     fixing floating rate obligations under the Revolving Credit Agreement,
     provided that the aggregate notional amount of all such arrangements and
     contracts shall not exceed 50% of outstanding advances under the Revolving
     Credit Agreement at the time the arrangement or contract is entered into;

          (l) Debt consisting of foreign currency exchange hedging contracts
     with terms of no longer than 180 days, provided that the aggregate notional
     amount of all such contracts shall not exceed $5,000,000 at any time;

          (m) Debt consisting of forward purchase contracts for cotton and
     natural gas for amounts not exceeding 18 months of reasonably expected use;
     and

          (n) Debt associated with performance, surety and appeals bonds in the
     ordinary course of business.

     Section 9.2 Limitation on Liens. The Borrower will not incur, create,
assume, or permit to exist, and will not permit any of its Subsidiaries to
incur, create, assume, or permit to exist, any Lien upon any of its property,
assets, or revenues, whether now owned or hereafter acquired, except the
following (collectively, the "Permitted Liens"):

          (a) Liens disclosed on Schedule 9.2 hereto and any replacements or
     renewals thereof;

          (b) Liens in favor of the Administrative Agent for the benefit of the
     Lenders;

TERM LOAN AGREEMENT - Page 30

<PAGE>

          (c) First priority Liens on the Revolving Loan Assets and second
     priority Liens on the Subject Assets granted pursuant to the Revolving
     Credit Agreement, or any documents executed in connection therewith, and
     any replacements or renewals thereof;

          (d) Encumbrances consisting of minor easements, rights-of-way, zoning
     restrictions, or other restrictions on the use of real property that do not
     (individually or in the aggregate) materially affect the value of the
     assets encumbered thereby or materially impair the ability of the Borrower
     or its Subsidiaries to use such assets in their respective businesses, and
     none of which is violated in any material respect by existing or proposed
     structures or land use;

          (e) Liens for taxes, assessments, or other governmental charges which
     are not delinquent or which are being contested in good faith and for which
     adequate reserves have been established;

          (f) Liens of mechanics, materialmen, warehousemen, carriers, laborers,
     landlords, or other similar Liens securing obligations that are not yet due
     and are incurred in the ordinary course of business or by operation of law;

          (g) Liens resulting from good faith deposits to secure payments of
     workmen's compensation unemployment insurance, pensions or other social
     security programs or to secure the performance of tenders, statutory
     obligations, surety and appeal bonds, bids, or contracts (other than for
     payment of Debt), or leases made in the ordinary course of business; and

          (h) Liens securing Debt permitted by Section 9.1(d) or 9.1(e) hereof,
     so long as such Liens cover only the assets being acquired with such Debt.

     Section 9.3 Mergers, Etc. The Borrower will not, and will not permit any of
its Subsidiaries to, become a party to a merger or consolidation, or purchase or
otherwise acquire all or any part of the assets of any Person or any shares or
other evidence of beneficial ownership of any Person, or wind-up, dissolve, or
liquidate, except that (a) a Subsidiary of the Borrower may merge, consolidate,
dissolve, or liquidate into the Borrower or a Guarantor and (b) a Subsidiary of
the Borrower may dissolve if substantially all of its assets have been conveyed
pursuant to Section 9.7(d) hereof. It is understood and agreed that the
Pillowtex Merger will occur prior to or simultaneously with the effective date
of this Agreement.

     Section 9.4 Restricted Payments. Borrower will not declare, and will not
permit any of its Subsidiaries to declare, any dividends on any shares of any
class of stock, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, retirement or
other acquisition of any shares of any class of stock, or any warrants or
options to purchase such stock, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower or any of its
Subsidiaries; except that Guarantors may pay dividends to the Borrower or
another Guarantor.

     Section 9.5 Loans and Investments. The Borrower will not make, and will not
permit any of its Subsidiaries to make, any advance, loan, extension of credit,
or capital contribution to

TERM LOAN AGREEMENT - Page 31

<PAGE>

or investment in, or purchase, or permit any of its Subsidiaries to purchase,
any stock, bonds, notes, debentures, or other securities of any Person, except:

          (a)    any of the foregoing existing on the date hereof;

          (b)    the Borrower and its Subsidiaries may invest in, acquire and
     hold cash and Cash Equivalents;

          (c)    investments arising from transactions by the Borrower or any of
     its Subsidiaries with customers or suppliers in the ordinary course of
     business, including endorsements of negotiable instruments, debt
     obligations and other investments received in connection with the
     bankruptcy or reorganization of customers and suppliers and in settlement
     of delinquent obligations of, and other disputes with, customers and
     suppliers;

          (d)    the Borrower or any of its Subsidiaries may acquire and hold
     receivables owing to it, if created or acquired in the ordinary course of
     business and payable or dischargeable in accordance with customary trade
     terms;

          (e)    Loans or advances to directors, officers and employees of the
     Borrower or any of its Subsidiaries that do not exceed $1,000,000 in
     aggregate amount outstanding at any time;

          (f)    Investments in Guarantors;

          (g)    Investments in the form of hedging agreements (permitted by
     Section 9.1); and

          (h)    Investments in joint ventures, partnerships and other entities
     engaged in the same line of business as the Borrower and its Subsidiaries,
     which do not exceed $5,000,000 in the aggregate.

     Section 9.6 Transactions With Affiliates. The Borrower will not, and will
not permit its Subsidiaries to, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any Affiliate except for transactions which are not
prohibited under this Agreement and which are in the ordinary course of the
Borrower's or applicable Subsidiary's business and which are upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than it
would obtain in a hypothetical comparable arm's length transaction with a Person
not an Affiliate.

     Section 9.7 Disposition of Assets. The Borrower will not sell, lease,
assign, transfer, or otherwise dispose of any of its assets, or permit any of
its Subsidiaries to do so with any of its assets (including through a
transaction of merger or consolidation of any Subsidiary of the Borrower and
including, without limitation, tax benefits, receivables and leasehold
interests), whether now owned or hereafter acquired, except for (a) sales of
inventory made in the ordinary course of business; (b) sales of assets that are
obsolete, worn-out or are no longer in use and that are not material in value
nor significant to the continuation of Borrower's or the applicable Subsidiary's
business; (c) sales and dispositions from any of the Borrower's Subsidiaries to
the Borrower or any Guarantor; (d) sales, transfers or dispositions of any of
the Moveable Assets,

TERM LOAN AGREEMENT - Page 32

<PAGE>

provided the Borrower gives notice thereof to the Administrative Agent and in
the case of any sale of such assets, the Net Cash Proceeds received therefrom by
the Borrower are used to prepay the Obligations in accordance with Section
3.3(a), (e) so long as an Event of Default has not occurred and is continuing,
sales of certain residential properties that comprise a portion of the property
encumbered by the Mortgages, provided that (i) Borrower or the applicable
Subsidiary obtains all governmental approvals in order to subdivide the
residential property from the remainder of the property, (ii) Borrower provides
Administrative Agent with ten (10) days' advance written notice of such
contemplated sale together with a release instrument in form and substance
reasonably satisfactory to Administrative Agent, (iii) the remainder of the
property shall continue to remain subject to the lien of the applicable
Mortgage, and (iv) the Net Cash Proceeds received from by the Borrower from such
sale are used to prepay the Obligations in accordance with Section 3.3(a), and
(f) asset sales from which the aggregate amount of Net Cash Proceeds never
exceeds $5,000,000, so long as such Net Cash Proceeds are used to prepay the
Obligations in accordance with Section 3.3(a). If any Moveable Assets are moved
to a jurisdiction outside of the United States of America, neither the
Administrative Agent nor any Lender will perfect or attempt to perfect a Lien on
such Moveable Assets under the laws of the applicable jurisdiction.

     Section 9.8 Sale and Leaseback. The Borrower will not enter into, and will
not permit any of its Subsidiaries to enter into, any arrangement with any
Person pursuant to which it leases from such Person real or personal property
that has been or is to be sold or transferred, directly or indirectly, by it to
such Person, other than such arrangements the aggregate outstanding amount of
which do not exceed $5,000,000 at any one time.

     Section 9.9 Prepayment of Debt. Subject to the Intercreditor Agreement, the
Borrower will not prepay, and will not permit any of its Subsidiaries to prepay,
any Debt, except the Obligations and the Debt incurred under the Revolving
Credit Agreement.

     Section 9.10 Nature of Business. The Borrower will not, and will not permit
any of its Subsidiaries to, engage in any business other than the businesses in
which they are engaged as of the date hereof and activities reasonably related
thereto.

     Section 9.11 Accounting. The Borrower will not, and will not permit any of
its Subsidiaries to, change its fiscal year or make any change (a) in accounting
treatment or reporting practices, except as required by GAAP and disclosed to
the Administrative Agent, or (b) in tax reporting treatment, except as required
by law and disclosed to the Administrative Agent.

                                   ARTICLE X

                               Financial Covenants

     The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding, the following financial covenants will be observed
and performed, unless the Required Lenders shall otherwise consent in writing:

TERM LOAN AGREEMENT - Page 33

<PAGE>

     Section 10.1 Interest Coverage Ratio. The Borrower will not permit its
Interest Coverage Ratio, on a consolidated basis, at the end of the applicable
fiscal quarter of the Borrower described below to be less than the ratio set
forth opposite such fiscal quarter below:

--------------------------------------------------------------------------------
    Fiscal Quarters Ending On or About:                             Ratio
    -----------------------------------                             -----
--------------------------------------------------------------------------------
September 30, 2002                                               0.80 to 1.00
--------------------------------------------------------------------------------
December 31, 2002                                                1.25 to 1.00
--------------------------------------------------------------------------------
March 31, 2003                                                   2.10 to 1.00
--------------------------------------------------------------------------------
June 30, 2003 through and including March 31, 2007               3.00 to 1.00
--------------------------------------------------------------------------------

     Section 10.2 Leverage Ratio. The Borrower will not permit its Leverage
Ratio, on a consolidated basis, at the end of the applicable fiscal quarter of
the Borrower described below to be greater than the ratio set forth opposite
such fiscal quarter below:

--------------------------------------------------------------------------------
   Fiscal Quarters Ending On or About:                                Ratio
   -----------------------------------                                -----
--------------------------------------------------------------------------------
September 30, 2002                                               6.65 to 1.00
--------------------------------------------------------------------------------
December 31, 2002                                                5.20 to 1.00
--------------------------------------------------------------------------------
March 31, 2003                                                   4.50 to 1.00
--------------------------------------------------------------------------------
June 30, 2003                                                    3.70 to 1.00
--------------------------------------------------------------------------------
September 30, 2003                                               3.60 to 1.00

--------------------------------------------------------------------------------
December 31, 2003                                                3.10 to 1.00
--------------------------------------------------------------------------------
March 31, 2004 through and including March 31, 2007              3.00 to 1.00
--------------------------------------------------------------------------------

                                   ARTICLE XI

                                     Default

     Section 11.1 Events of Default. Each of the following shall be deemed an
"Event of Default":

          (a) The Borrower shall fail to pay when due the Obligations or any
     part thereof.

          (b) Any representation or warranty made or deemed made by the Borrower
     or any Obligated Party (or any of their respective officers) in any Loan
     Document or in any certificate, report, notice, or financial statement
     furnished at any time in connection with this Agreement shall be false,
     misleading, or erroneous in any material respect when made or deemed to
     have been made.

          (c) The Borrower or any Obligated Party shall fail to perform,
     observe, or comply with any covenant, agreement, or term contained in
     Section 8.1, Article IX or Article X of this Agreement.

TERM LOAN AGREEMENT - Page 34

<PAGE>

          (d) Any Obligated Party shall fail to perform, observe or comply with
     any covenant, agreement, or term contained in this Agreement or any other
     Loan Document not specifically referred to elsewhere in this Section 11.1
     and such failure shall not be remedied within a period of 30 days after the
     earlier of notice from the Administrative Agent or such time as the
     Borrower or such Obligated Party reasonably should have known of the
     occurrence thereof.

          (e) Except for the Chapter 11 Cases, the Borrower, any of its
     Subsidiaries, or any Obligated Party shall commence a voluntary proceeding
     seeking liquidation, reorganization, or other relief with respect to itself
     or its debts under any bankruptcy, insolvency, or other similar law now or
     hereafter in effect or seeking the appointment of a trustee, receiver,
     liquidator, custodian, or other similar official of it or a substantial
     part of its property or shall consent to any such relief or to the
     appointment of or taking possession by any such official in an involuntary
     case or other proceeding commenced against it or shall make a general
     assignment for the benefit of creditors or shall generally fail to pay its
     debts as they become due or shall take any corporate action to authorize
     any of the foregoing.

          (f) An involuntary proceeding shall be commenced against the Borrower,
     any of its Subsidiaries, or any Obligated Party seeking liquidation,
     reorganization, or other relief with respect to it or its debts under any
     bankruptcy, insolvency, or other similar law now or hereafter in effect or
     seeking the appointment of a trustee, receiver, liquidator, custodian, or
     other similar official for it or a substantial part of its property, and
     such involuntary proceeding shall remain undismissed and unstayed for a
     period of 60 days.

          (g) One or more final judgments or decrees shall be entered against
     the Borrower or any of its Subsidiaries involving in the aggregate a
     liability (not paid or fully covered by insurance) of $1,000,000 or more,
     and all such judgments or decrees shall not have been vacated, discharged,
     stayed or bonded pending appeal within 30 days after the entry of such
     judgment.

          (h) The Borrower, any of its Subsidiaries, or any Obligated Party
     shall fail to pay when due (beyond any grace period provided with respect
     thereto) any principal of or interest on any Debt (other than the
     Obligations) in excess of $1,000,000, or the maturity of any such Debt
     shall have been accelerated, or any such Debt shall have been required to
     be prepaid prior to the stated maturity thereof, or any event shall have
     occurred that permits (or, with the giving of notice or lapse of time or
     both, would permit) any holder or holders of such Debt or any Person acting
     on behalf of such holder or holders to accelerate the maturity thereof or
     require any such prepayment and such event has not been waived or cured.

          (i) This Agreement or any other Loan Document shall cease to be in
     full force and effect or shall be declared null and void or the validity or
     enforceability thereof shall be contested or challenged by the Borrower,
     any Subsidiary, any Obligated Party or any of their respective
     shareholders, or the Borrower or any Obligated Party shall deny that it has
     any further liability or obligation under any of the Loan Documents, or any
     lien or security interest created by the Loan Documents shall for any
     reason cease to be a

TERM LOAN AGREEMENT - Page 35

<PAGE>

     valid, perfected security interest in and lien upon any of the Collateral
     purported to be covered thereby, other than (A) as a result of an action or
     inaction by the Administrative Agent, any Lender or any representative
     thereof, or (B) as expressly provided or permitted in the Loan Documents.

          (j) Any of the following events shall occur or exist with respect to
     the Borrower or any ERISA Affiliate: (i) any Prohibited Transaction
     involving any Plan; (ii) any Reportable Event with respect to any Plan;
     (iii) the filing under Section 4041 of ERISA of a notice of intent to
     terminate any Plan or the termination of any Plan; (iv) any event or
     circumstance that might constitute grounds entitling the PBGC to institute
     proceedings under Section 4042 of ERISA for the termination of, or for the
     appointment of a trustee to administer, any Plan, or the institution by the
     PBGC of any such proceedings; or (v) complete or partial withdrawal under
     Section 4201 or 4204 of ERISA from a Multiemployer Plan or the
     reorganization, insolvency, or termination of any Multiemployer Plan; and
     in each case above, such event or condition, together with all other events
     or conditions, if any, have subjected or could in the reasonable opinion of
     the Administrative Agent subject the Borrower to any tax, penalty, or other
     liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
     combination thereof) which in the aggregate exceed or could reasonably be
     expected to exceed $500,000.

          (k) An event of default shall occur under the Revolving Credit
     Agreement or any document, agreement or instrument executed and delivered
     in connection therewith which has not been waived or cured.

          (l) The Borrower, any of its Subsidiaries, or any Obligated Party, or
     any of their properties, revenues, or assets, shall become subject to an
     order of forfeiture, seizure, or divestiture (whether under RICO or
     otherwise) and the same shall not have been discharged within thirty (30)
     days from the date of entry thereof.

     Section 11.2 Remedies Upon Default. If any Event of Default shall occur and
be continuing, subject to the Intercreditor Agreement, with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, without the necessity of
notice, (a) declare the Obligations or any part thereof to be immediately due
and payable, and the same shall thereupon become immediately due and payable,
without notice, demand, presentment, notice of dishonor, notice of acceleration,
notice of intent to accelerate, notice of intent to demand, protest, or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that upon the occurrence of an Event of Default
under Section 11.1(e) or Section 11.1(f), the Obligations shall become
immediately due and payable without notice, demand, presentment, notice of
dishonor, notice of acceleration, notice of intent to accelerate, notice of
intent to demand, protest, or other formalities of any kind, all of which are
hereby expressly waived by the Borrower, (b) foreclose or otherwise enforce any
Lien granted to the Administrative Agent for the benefit of the Lenders to
secure payment and performance of the Obligations in accordance with the terms
of the Loan Documents, or (c) exercise all rights and remedies available to it
in law or in equity, under the Loan Documents, or otherwise.

TERM LOAN AGREEMENT - Page 36

<PAGE>

                                  ARTICLE XII

                            The Administrative Agent

       Section 12.1 Appointment, Powers and Immunities. In order to expedite the
various transactions contemplated by this Agreement, the Lenders hereby
irrevocably appoint and authorize the Administrative Agent to act as their agent
hereunder and under each of the other Loan Documents. The Administrative Agent
consents to such appointment and agrees to perform the duties of the
Administrative Agent as specified herein. The Lenders authorize and direct the
Administrative Agent to take such action in their name and on their behalf under
the terms and provisions of the Loan Documents and to exercise such rights and
powers thereunder as are specifically delegated to or required of the
Administrative Agent for the Lenders, together with such rights and powers as
are reasonably incidental thereto. The Administrative Agent is hereby expressly
authorized to act as the Administrative Agent on behalf of the Lenders:

                (a) To receive on behalf of each of the Lenders and the
       Administrative Agent any payment of principal, interest, fees or other
       amounts paid pursuant to this Agreement and the Term Loan Notes and to
       distribute to each Lender and the Administrative Agent, or any or some of
       them its share of all payments so received as provided in this Agreement;

                (b) To receive all documents and items to be furnished under the
       Loan Documents;

                (c) To act as nominee for and on behalf of the Lenders and the
       Administrative Agent in and under the Loan Documents;

                (d) To arrange for the means whereby the funds of the Lenders
       are to be made available to the Borrower;

                (e) To distribute to the Lenders information, requests, notices,
       payments, prepayments, documents and other items received from the
       Borrower, the other Obligated Parties, and other Persons;

                (f) To execute and deliver to the Borrower, the other Obligated
       Parties, and other Persons, all requests, demands, approvals, notices,
       and consents received from the Lenders;

                (g) To the extent permitted by the Loan Documents, to exercise
       on behalf of each Lender all rights and remedies of such Lender upon the
       occurrence of any Event of Default;

                (h) To enter into the Intercreditor Agreement;

                (i) To accept, execute, and deliver any security documents as
       the secured party, including, without limitation all financing
       statements; and

                (j) To take such other actions as may be requested by Required
       Lenders.

TERM LOAN AGREEMENT - Page 37

<PAGE>

       Neither the Administrative Agent nor any of its Affiliates, officers,
directors, employees, attorneys, financial advisors or agents shall be liable
for any action taken or omitted to be taken by any of them hereunder or
otherwise in connection with this Agreement or any of the other Loan Documents
except for its or their own gross negligence or willful misconduct. Without
limiting the generality of the preceding sentence, the Administrative Agent (i)
may treat the payee of any Term Loan Note as the holder thereof until the
Administrative Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the Administrative
Agent; (ii) shall have no duties or responsibilities except those expressly set
forth in this Agreement and the other Loan Documents, and shall not by reason of
this Agreement or any other Loan Document be a trustee or fiduciary for any
Lender; (iii) shall not be required to initiate any litigation or collection
proceedings hereunder or under any other Loan Document except to the extent
requested by the Required Lenders; (iv) shall not be responsible to the Lenders
for any recitals, statements, representations or warranties contained in this
Agreement or any other Loan Document, or any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or any other Loan Document or for the value, validity, effectiveness,
enforceability, or sufficiency of this Agreement or any other Loan Document or
any other document referred to or provided for herein or therein or for any
failure by any Person to perform any of its obligations hereunder or thereunder;
(v) may consult with legal counsel (including counsel for the Borrower),
independent public accountants, and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants, or experts; and (vi)
shall incur no liability under or in respect of any Loan Document by acting upon
any notice, consent, certificate, or other instrument or writing believed by it
to be genuine and signed or sent by the proper party or parties. As to any
matters not expressly provided for by this Agreement, the Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions signed by the Required Lenders, and
such instructions of the Required Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders; provided, however, that
the Administrative Agent shall not be required to take any action which exposes
the Administrative Agent to personal liability or which is contrary to this
Agreement or any other Loan Document or applicable law.

       Section 12.2 Rights of Administrative Agent as a Lender. With respect to
its commitment to lend hereunder and the Term Loan Note issued to it, the
Administrative Agent in its capacity as a Lender hereunder shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not acting as the Administrative Agent and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the
Administrative Agent in its individual capacity. The Administrative Agent and
its Affiliates may (without having to account therefor to any Lenders) accept
deposits from, lend money to, act as trustee under indentures of, provide
merchant banking services to, and generally engage in any kind of business with
the Borrower, any of its Subsidiaries, any other Obligated Party, and any other
Person who may do business with or own securities of the Borrower, any
Subsidiary, or any other Obligated Party, all as if it were not acting as the
Administrative Agent and without any duty to account therefor to the Lenders.

       Section 12.3 Sharing of Payments, Etc. If any Lender shall obtain any
payment of any principal of or interest on the Term Loan or payment of any other
obligation under the Loan Documents then owed by the Borrower or any other
Obligated Party to such Lender, whether

TERM LOAN AGREEMENT - Page 38

<PAGE>

voluntary, involuntary, through the exercise of any right of setoff, banker's
lien, counterclaim or similar right, or otherwise, in excess of its pro rata
share, such Lender shall promptly purchase from the other Lenders participations
in the portion of the Term Loan held by them hereunder in such amounts, and make
such other adjustments from time to time as shall be necessary to cause such
purchasing Lender to share the excess payment ratably with each of the other
Lenders in accordance with its pro rata portion thereof. To such end, all of the
Lenders shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if all or any portion of such excess payment
is thereafter rescinded or must otherwise be restored. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any
Lender so purchasing such participation may exercise all rights of setoff,
banker's lien, counterclaim, or similar rights with respect to such
participation as fully as if such Lender were a direct holder of the amount of
such participation. Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Borrower.

       Section 12.4 Indemnification. THE LENDERS HEREBY SEVERALLY AGREE TO
INDEMNIFY THE ADMINISTRATIVE AGENT FROM AND HOLD THE ADMINISTRATIVE AGENT
HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED UNDER SECTIONS 13.1 AND 13.2, BUT
WITHOUT LIMITING THE OBLIGATIONS OF THE BORROWER UNDER SECTIONS 13.1 AND 13.2),
RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE PERCENTAGES, ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES), AND
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED
BY, OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN ANY WAY RELATING TO OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE
TAKEN BY THE ADMINISTRATIVE AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN
DOCUMENTS; PROVIDED, THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF THE
FOREGOING TO THE EXTENT CAUSED BY THE ADMINISTRATIVE AGENT'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE EXPRESS
INTENTION OF THE LENDERS THAT THE ADMINISTRATIVE AGENT SHALL BE INDEMNIFIED
HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS,
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND
OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR RESULTING FROM THE SOLE OR
CONTRIBUTORY NEGLIGENCE OF THE ADMINISTRATIVE AGENT. WITHOUT LIMITING ANY OTHER
PROVISION OF THIS SECTION, EACH LENDER AGREES TO REIMBURSE THE ADMINISTRATIVE
AGENT PROMPTLY UPON DEMAND FOR ITS PERCENTAGE OF ANY AND ALL OUT-OF-POCKET
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) INCURRED BY THE ADMINISTRATIVE
AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL
PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL

TERM LOAN AGREEMENT - Page 39

<PAGE>

ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO
THE EXTENT THAT THE ADMINISTRATIVE AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY
THE BORROWER.

       Section 12.5 Independent Credit Decisions. Each Lender agrees that it has
independently and without reliance on the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and the Obligated
Parties and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. The Administrative Agent shall not be required to keep itself
informed as to the performance or observance by the Borrower or any Obligated
Party of this Agreement or any other Loan Document or to inspect the properties
or books of the Borrower or any Obligated Party. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Administrative Agent hereunder or under the other Loan Documents,
the Administrative Agent shall not have any duty or responsibility to provide
any Lender with any credit or other financial information concerning the
affairs, financial condition or business of the Borrower or any Obligated Party
(or any of their Affiliates) which may come into the possession of the
Administrative Agent or any of its Affiliates.

       Section 12.6 Several Commitments. The commitments to lend and other
obligations of the Lenders under this Agreement are several. No Lender shall be
responsible for any act or omission of any other Lender.

       Section 12.7 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders, and the
Required Lenders may remove the Administrative Agent upon notice to the
Administrative Agent. If the Administrative Agent shall resign as Administrative
Agent under the Loan Documents or be removed by the Required Lenders, then the
Required Lenders shall appoint from among the Lenders a successor agent to the
Administrative Agent for the Lenders which successor agent shall be approved by
the Borrower, which shall not unreasonably withhold its approval and shall not
be required during the existence of any Default hereunder, whereupon such
successor agent shall succeed to the rights, powers and duties of the resigning
Administrative Agent and the term "Administrative Agent" shall mean such
successor agent effective upon its appointment, and the former Administrative
Agent's rights, powers and duties as the Administrative Agent shall be
terminated, without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement. After the retiring
Administrative Agent's resignation hereunder as Agent the provisions of this
Article XII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under the Loan Documents.

TERM LOAN AGREEMENT - Page 40

<PAGE>

                                  ARTICLE XIII

                                  Miscellaneous

       Section 13.1 Expenses. The Borrower hereby agrees to pay on demand: (a)
all out-of-pocket costs and expenses of the Administrative Agent in connection
with the preparation, negotiation, execution, and delivery of this Agreement and
the other Loan Documents and any and all amendments, modifications, renewals,
extensions, and supplements thereof and thereto, including, without limitation,
the reasonable fees and expenses of legal counsel for the Administrative Agent,
(b) all reasonable out-of-pocket costs and expenses of the Administrative Agent
and each Lender in connection with any Default and the enforcement of this
Agreement or any other Loan Document, including, without limitation, the
reasonable out-of-pocket fees and expenses of legal counsel for the
Administrative Agent and each Lender, (c) all transfer, stamp, documentary, or
other similar taxes, assessments, or charges levied by any Governmental
Authority in respect of this Agreement or any of the other Loan Documents, (d)
all reasonable out-of-pocket costs, expenses, assessments, and other charges
incurred in connection with any filing, registration, recording, or perfection
of any security interest or Lien contemplated by this Agreement or any other
Loan Document, and (e) all other reasonable out-of-pocket costs and expenses
incurred by the Administrative Agent in connection with this Agreement or any
other Loan Document, including, without limitation, all reasonable costs,
expenses, and other charges incurred in connection with obtaining any mortgagee
title insurance policy, survey, audit, or appraisal in respect of the
Collateral.

       Section 13.2 INDEMNIFICATION. EXCEPT FOR ACTS OR OMISSIONS CONSTITUTING
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A COURT OF COMPETENT
JURISDICTION, THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT AND THE
LENDERS AND EACH OF THEIR RESPECTIVE AFFILIATES AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS
AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, REASONABLE COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES) TO
WHICH ANY OF THEM MAY BECOME SUBJECT (INCLUDING AS A RESULT OF THE ORDINARY
NEGLIGENCE OF ANY OF THEM) WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO
(A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR
ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS
CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY THE BORROWER OR ANY
SUBSIDIARY OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT
CONTAINED IN ANY OF THE LOAN DOCUMENTS, OR (D) ANY INVESTIGATION, LITIGATION, OR
OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION,
LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY OF THE FOREGOING.

       Section 13.3 Limitation of Liability. Neither the Administrative Agent
nor any of the Lenders nor any Affiliate, officer, director, employee, attorney,
or agent of the Administrative Agent or any of the Lenders shall have any
liability with respect to, and the Borrower hereby

TERM LOAN AGREEMENT - Page 41

<PAGE>

waives, releases, and agrees not to sue any of them upon, any claim for any
special, indirect, incidental, or consequential damages suffered or incurred by
the Borrower in connection with, arising out of, or in any way related to, this
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement or any of the other Loan Documents. The Borrower
hereby waives, releases, and agrees not to sue the Administrative Agent or the
Lenders or any of such Person's Affiliates, officers, directors, employees,
attorneys, or agents for punitive damages in respect of any claim in connection
with, arising out of, or in any way related to, this Agreement or any of the
other Loan Documents, or any of the transactions contemplated by this Agreement
or any of the other Loan Documents. Nothing contained in this Section shall
affect the rights of the Borrower to collect actual damages awarded to them
against any of the Administrative Agent, the Lenders or any Affiliate of any of
the foregoing Persons.

       Section 13.4 No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Administrative Agent or any
of the Lenders shall have the right to act exclusively in the interest of such
Persons and shall have no duty of disclosure, duty of loyalty, duty of care, or
other duty or obligation of any type or nature whatsoever to the Borrower or any
other Person.

       Section 13.5 Administrative Agent and Lenders Not Fiduciary. The
relationship between the Borrower, on one hand, and the Administrative Agent and
the Lenders, on the other hand, is solely that of debtor and creditor, and no
such Person has any fiduciary or other special relationship with the Borrower,
and no term or condition of any of the Loan Documents shall be construed so as
to deem the relationship between the Borrower and such Persons to be other than
that of debtor and creditor

       Section 13.6 Equitable Relief. The Borrower recognizes that in the event
the Borrower fails to pay, perform, observe, or discharge any or all of the
Obligations, any remedy at law may prove to be inadequate relief to the
Administrative Agent and the Lenders. The Borrower therefore agrees that the
Administrative Agent and the Lenders, if the Administrative Agent or the Lenders
so request, shall be entitled to temporary and permanent injunctive relief in
any such case without the necessity of proving actual damages.

       Section 13.7 No Waiver; Cumulative Remedies. No failure on the part of
the Administrative Agent or any Lender to exercise and no delay in exercising,
and no course of dealing with respect to, any right, power, or privilege under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power, or privilege under this Agreement preclude
any other or further exercise thereof or the exercise of any other right, power,
or privilege. The rights and remedies provided for in this Agreement and the
other Loan Documents are cumulative and not exclusive of any rights and remedies
provided by law.

       Section 13.8 Successors and Assigns.

                (a) This Agreement shall be binding upon and inure to the
       benefit of the parties hereto and their respective successors and
       assigns. The Borrower may not assign or transfer any of its rights or
       obligations hereunder without the prior written consent of the
       Administrative Agent and all of the Lenders. Any Lender may sell
       participations to one or more banks or other institutions in or to all or
       a portion of its rights and obligations

TERM LOAN AGREEMENT - Page 42

<PAGE>

       under this Agreement and the other Loan Documents (including, without
       limitation, all or a portion of its Percentage of the outstanding Term
       Loan); provided, however, that (i) such Lender's obligations under this
       Agreement and the other Loan Documents (including, without limitation,
       its Percentage of the outstanding Term Loan) shall remain unchanged, (ii)
       such Lender shall remain solely responsible to the Borrower for the
       performance of such obligations, (iii) such Lender shall remain the
       holder of its Term Loan Note for all purposes of this Agreement, and (iv)
       the Borrower shall continue to deal solely and directly with such Lender
       in connection with such Lender's rights and obligations under this
       Agreement and the other Loan Documents. Participants have no rights under
       the Loan Documents except as provided below. No Lender may sell any
       participating interest under which the participant has any rights to
       approve any amendment, modification, or waiver of any Loan Document
       except as to matters in Section 13.10(a), (b) and (c).

                (b) The Borrower and each of the Lenders agree that any Lender
       (the "Assigning Lender") may, with the Administrative Agent's consent
       (which consent shall not be unreasonably withheld or delayed) and unless
       an Event of Default has occurred or the proposed assignment is to be made
       to another Lender or to a Lender Affiliate, the Borrower's consent, which
       consent of the Borrower shall not be unreasonably withheld or delayed, at
       any time assign to one or more other banks, or financial institutions or
       other entities all, or a proportionate part of all, of its rights and
       obligations under this Agreement and the other Loan Documents (including,
       without limitation, its Percentage of the outstanding Term Loan) (each an
       "Assignee"); provided, however, that (i) each such assignment shall be of
       a consistent, and not a varying, percentage of all of the Assigning
       Lender's Percentage of the outstanding Term Loan, rights and obligations
       under this Agreement and the other Loan Documents, (ii) except in the
       case of an assignment of all of a Lender's rights and obligations under
       this Agreement and the other Loan Documents, the amount of the
       outstanding Term Loan being assigned pursuant to each assignment
       (determined as of the date of the Assignment and Acceptance with respect
       to such assignment) shall in no event be less than $1,000,000, and (iii)
       the parties to each such assignment shall execute and deliver to the
       Administrative Agent for its acceptance and recording in the Register (as
       defined below), an Assignment Agreement, together with the Term Note
       subject to such assignment, and a processing and recordation fee of
       $3,500 to be paid by the Assignee. Upon such execution, delivery,
       acceptance, and recording, from and after the effective date specified in
       each Assignment Agreement, which effective date shall be at least five
       Business Days after the execution thereof, or, if so specified in such
       Assignment Agreement the date of acceptance thereof by the Administrative
       Agent, (x) the assignee thereunder shall be a party hereto as a "Lender"
       and, to the extent that rights and obligations hereunder have been
       assigned to it pursuant to such Assignment Agreement, have the rights and
       obligations of a Lender hereunder and under the Loan Documents and (y)
       the Lender that is an assignor thereunder shall, to the extent that
       rights and obligations hereunder have been assigned by it pursuant to
       such Assignment Agreement, relinquish its rights and be released from its
       obligations under this Agreement and the other Loan Documents (and, in
       the case of an Assignment Agreement covering all or the remaining portion
       of a Lender's rights and obligations under the Loan Documents, such
       Lender shall cease to be a party thereto); provided that

TERM LOAN AGREEMENT - Page 43

<PAGE>

       the obligations of the Borrower under Section 13.1, 13.2 and 13.3 shall
       continue to apply to such Lender.

                (c) By executing and delivering an Assignment Agreement the
       Lender that is an assignor thereunder and the assignee thereunder confirm
       to and agree with each other and the other parties hereto as follows: (i)
       other than as provided in such Assignment Agreement, such Assigning
       Lender makes no representation or warranty and assumes no responsibility
       with respect to any statements, warranties, or representations made in or
       in connection with the Loan Documents or the execution, legality,
       validity, and enforceability, genuineness, sufficiency, or value of the
       Loan Documents or any other instrument or document furnished pursuant
       thereto; (ii) such Assigning Lender makes no representation or warranty
       and assumes no responsibility with respect to the financial condition of
       the Borrower or any Obligated Party or the performance or observance by
       the Borrower or any Obligated Party of its obligations under the Loan
       Documents; (iii) such assignee confirms that it has received a copy of
       the other Loan Documents, together with copies of the current financial
       statements dated a date acceptable to such assignee and such other
       documents and information as it has deemed appropriate to make its own
       credit analysis and decision to enter into such Assignment Agreement;
       (iv) such assignee will, independently and without reliance upon the
       Administrative Agent or such assignor and based on such documents and
       information as it shall deem appropriate at the time, continue to make
       its own credit decisions in taking or not taking action under this
       Agreement and the other Loan Documents; (v) such assignee appoints and
       authorizes the Administrative Agent to take such action as agent on its
       behalf and exercise such powers under the Loan Documents as are delegated
       to the Administrative Agent by the terms thereof, together with such
       powers as are reasonably incidental thereto; and (vi) such assignee
       agrees that it will perform in accordance with their terms all of the
       obligations which by the terms of the Loan Documents are required to be
       performed by it as a Lender.

                (d) The Administrative Agent shall maintain a copy of each
       Assignment Agreement delivered to and accepted by it and a register for
       the recordation of the names and addresses of the Lenders and the
       principal amount of the Term Loan owing to each Lender from time to time
       (the "Register"). The entries in the Register shall be conclusive and
       binding for all purposes, absent manifest error, and the Borrower, the
       Administrative Agent, and the Lenders may treat each Person whose name is
       recorded in the Register as a Lender hereunder for all purposes under the
       Loan Documents. The Register shall be available for inspection by the
       Borrower or any Lender at any reasonable time and from time to time upon
       reasonable prior notice.

                (c) Upon its receipt of an Assignment Agreement executed by an
       Assigning Lender and assignee, together with any Term Loan Note subject
       to such assignment, the Administrative Agent shall, if such Assignment
       Agreement has been completed and is in the form satisfactory to the
       Administrative Agent in its reasonable discretion, (i) accept such
       Assignment Agreement, (ii) record the information contained therein in
       the Register, and (iii) give prompt written notice thereof to the
       Borrower. Within five (5) Business Days after its receipt of such notice,
       the Borrower, at its expense, shall execute and deliver to the
       Administrative Agent in exchange for the surrendered Term Loan

TERM LOAN AGREEMENT - Page 44

<PAGE>

       Notes, new Term Loan Notes to the order of such assignee in an amount
       equal to the Percentage of the outstanding Term Loan assumed by it
       pursuant to such Assignment Agreement and, if the Assigning Lender has
       retained a portion of its Percentage of the outstanding Term Loan, new
       Term Loan Notes to the order of the Assigning Lender in an amount equal
       to the amount of the outstanding Term Loan retained by it hereunder (each
       such promissory note shall constitute a "Term Loan Note" for purposes of
       the Loan Documents). Such new Term Loan Notes shall be in an aggregate
       principal amount of the surrendered Term Loan Notes, shall be dated the
       last interest payment date prior to the effective date of such Assignment
       Agreement and shall otherwise be in substantially the form of the
       appropriate Term Loan Notes initially issued pursuant hereto with
       appropriate changes.

                (f)  Any Lender may, in connection with any assignment or
       participation or proposed assignment or participation pursuant to this
       Section, disclose to the assignee or participant or proposed assignee or
       participant, any information relating to the Borrower or its Subsidiaries
       furnished to such Lender by or on behalf of the Borrower or its
       Subsidiaries, so long as such assignee, participant or proposed assignee
       or participant agrees in writing to be bound the provisions of Section
       13.21 of this Agreement.

                (g)  Any Lender may at any time pledge or assign a security
       interest in all or any portion of its rights under this Agreement to
       secure obligations of such Lender, including any pledge or assignment to
       secure obligations to a Federal Reserve Bank and this Section shall not
       apply to any such pledge or assignment of a security interest; provided
       that no such pledge or assignment of a security interest shall release a
       Lender from any of its obligations hereunder or substitute any such
       pledgee or assignee for such Lender as a party hereto.

       Section 13.9  Survival. All representations and warranties made in this
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Administrative Agent or any closing shall affect the
representations and warranties or the right of the Lenders to rely upon them.
Without prejudice to the survival of any other obligation of the Borrower
hereunder, the obligations of the Borrower under Sections 13.1 and 13.2 shall
survive repayment of the Term Loan.

       Section 13.10 Amendments and Waivers. No amendment, modification or
waiver of, or consent with respect to, any provision of this Agreement or the
other Loan Documents shall in any event be effective unless the same shall be in
writing and signed and delivered by the Borrower and the Required Lenders, and
then any such amendment, modification, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. No
amendment, modification, waiver or consent shall change the Percentage of any
Lender without the consent of such Lender. No amendment, modification, waiver or
consent shall (a) increase the amount of the Term Loan, (b) extend the date for
payment of any principal of or interest on the Term Loan or any fees or other
amounts payable hereunder, (c) reduce the principal amount of the Term Loan, the
rate of interest thereof or any fees or other amounts payable hereunder, (d)
release a Guaranty Agreement (other than as a result of a transaction permitted
hereunder) or all or substantially all of the Collateral, (e) amend, modify or
otherwise

TERM LOAN AGREEMENT - Page 45

<PAGE>

alter this Section, or (f) reduce the aggregate Percentage required to effect an
amendment, modification, waiver or consent without, in each case, the consent of
all Lenders. No provisions of Article XII or other provision of this Agreement
affecting the Administrative Agent in its capacity as such shall be amended,
modified or waived without the consent of the Administrative Agent.

       Section 13.11 Maximum Interest Rate. No provision of this Agreement or
any other Loan Document shall require the payment or the collection of interest
in excess of the maximum amount permitted by applicable law. If any excess of
interest in such respect is hereby provided for, or shall be adjudicated to be
so provided, in any Loan Document or otherwise in connection with this loan
transaction, the provisions of this Section shall govern and prevail and neither
the Borrower nor the sureties, guarantors, successors, or assigns of the
Borrower shall be obligated to pay the excess amount of such interest or any
other excess sum paid for the use, forbearance, or detention of sums loaned
pursuant hereto. In the event any Lender ever receives, collects, or applies as
interest any such sum, such amount which would be in excess of the maximum
amount permitted by applicable law shall be applied as a payment and reduction
of the principal of the indebtedness evidenced by such Lender's Term Note; and,
if the principal of such Lender's Term Note has been paid in full, any remaining
excess shall forthwith be paid to the Borrower. In determining whether or not
the interest paid or payable exceeds the Maximum Rate, the Borrower, the
Administrative Agent and the Lenders shall, to the extent permitted by
applicable law, (a) characterize any non-principal payment as an expense, fee,
or premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread in equal or
unequal parts the total amount of interest throughout the entire contemplated
term of the indebtedness evidenced by the Term Notes so that interest for the
entire term does not exceed the Maximum Rate.

       Section 13.12 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three Business Days
after being deposited in the mail, postage prepaid, or one day after being
entrusted to a reputable commercial overnight delivery service, or, in the case
of telecopy notice, when sent, confirmation of receipt received, addressed as
follows in the case of the Borrower and its Subsidiaries, the Administrative
Agent and the Lenders, or to such other address as may be hereafter notified by
such respective parties hereto:

The Borrower and its Subsidiaries:

            Pillowtex Corporation
            One Lake Circle Drive
            Kannapolis, NC 28081
            Attn: Treasurer
            Telephone: (704) 939-2976
            Telecopier: (704) 939-4441

TERM LOAN AGREEMENT - Page 46

<PAGE>

With copies to:

                  Pillowtex Corporation
                  4111 Mint Way
                  Dallas, TX 75236
                  Attn: John F. Sterling, Esq.
                  Telephone:  (214) 333-3225
                  Telecopier: (214) 467-0823

and

                  Jones, Day, Reavis & Pogue
                  2727 North Harwood Street
                  Dallas, TX 75201-1515
                  Attn: Thomas E. Gillespie, Esq.
                  Telephone:  (214) 969-5076
                  Telecopier: (214) 969-5100

Bank of America, in its capacities as the Administrative Agent and a Lender:

                  Bank of America, N.A.
                  1455 Market Street, 12th Floor
                  Mail Code CA5-701-12-09
                  San Francisco, California 94103
                  Attn: Gary Gordon Flieger
                  Telephone:  (415) 436-3484
                  Telecopier: (415) 503-5005

With a copy to:
                  Bank of America, N.A.
                  901 Main Street, 66th Floor
                  Dallas, Texas 75202
                  Attn: William E. Livingstone, IV
                  Telephone:  (214) 209-2023
                  Telecopier: (214) 209-3533

With a copy to:
                  Winstead Sechrest & Minick, P.C.
                  5400 Renaissance Tower
                  1201 Elm Street
                  Dallas, Texas 75270
                  Attn: Douglass T. Wingo, Esq.
                  Telephone:  (214) 745-5135
                  Telecopier: (214) 745-5390

The Other Lenders: At the addresses set forth on the signature pages hereof and
                   the signature page of each Assignment Agreement;

TERM LOAN AGREEMENT - Page 47

<PAGE>

provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders, as the case may be, shall not be effective until received.

     Section 13.13 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas and the applicable
laws of the United States of America.

     Section 13.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

     Section 13.15 Severability. Any provision of this Agreement held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.

     Section 13.16 Headings. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.

     Section 13.17 Non-Application of Chapter 346 of Texas Finance Code. The
provisions of Chapter 346 of the Texas Finance Code (Vernon's Texas Finance Code
Ann.) are specifically declared by the parties hereto not to be applicable to
this Agreement or any of the other Loan Documents or to the transactions
contemplated hereby.

     Section 13.18 Construction. The parties hereto acknowledge that each of
them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement and the other Loan Documents
with its legal counsel and that this Agreement and the other Loan Documents
shall be construed as if jointly drafted by the Borrower, the Administrative
Agent and the Lenders.

     Section 13.19 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER
BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF
THE BORROWER, ADMINISTRATIVE AGENT OR ANY LENDER IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.

     Section 13.20 NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT, THE TERM NOTES,
THE OTHER LOAN DOCUMENTS, AND THE INSTRUMENTS AND DOCUMENTS EXECUTED IN
CONNECTION HEREWITH, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

TERM LOAN AGREEMENT - Page 48

<PAGE>

     Section 13.21 Confidentiality. Each Lender and the Administrative Agent
agrees (on behalf of itself and each of its Affiliates, directors, officers,
employees and representatives) to use reasonable efforts to keep confidential,
in accordance with customary procedures for handling confidential information of
this nature and in accordance with safe and sound banking or investment
practices, any non-public information supplied to it by the Borrower or any of
its Affiliates pursuant to this Agreement, provided that nothing herein shall
limit the disclosure of any such information (a) to the extent required by
statute, rule, regulation or judicial process, (b) to counsel for any Lender or
the Administrative Agent, (c) to bank or other examiners, regulatory bodies,
auditors or accountants of any Lender, (d) to the Administrative Agent or any
other Lender or any Affiliate thereof, (e) in connection with any litigation
relating to the transactions contemplated by the Loan Documents to which any one
or more of Lenders is a party, (f) to the extent necessary in connection with
the exercise of any rights or remedies under this Agreement or any other Loan
Document, or (g) to any Assignee or participant (or prospective Assignee or
participant) or to any direct or indirect contractual counterparties in swap
agreements or to the professional advisors of such swap counterparties so long
as such Assignee or participant (or prospective Assignee or participant) or
direct or indirect contractual counterparties in swap agreements or such swap
counterparties' professional advisors agrees to handle such information in
accordance with the provisions of this Section 13.21.

                     Remainder of page intentionally blank.
                             Signature pages follow.

TERM LOAN AGREEMENT - Page 49

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

                                            BORROWER:
                                            ---------

                                            PILLOWTEX CORPORATION



                                            By: /s/ MICHAEL R. HARMON
                                                --------------------------------
                                                Executive Vice President and
                                                Chief Financial Officer


                                            ADMINISTRATIVE AGENT:
                                            ---------------------

                                            BANK OF AMERICA, N.A., as
                                            Administrative Agent and a Lender



                                            By: /s/ WILLIAM E. LIVINGSTONE, IV
                                                --------------------------------
                                                Managing Director

TERM LOAN AGREEMENT - Page 50

<PAGE>

                                  OTHER LENDERS

                                 [SEE ATTACHED]

TERM LOAN AGREEMENT - Page 51

<PAGE>

OCM ADMINISTRATIVE SERVICES II, L.L.C.

                              By:   Oaktree Capital Management, LLC,
                              Its:  Manager


                              By:   /s/ MARIUSZ J. MAZUREK
                                    --------------------------------
                                    Senior Vice President


                              By:   /s/ KENNETH LIANG
                                    --------------------------------
                                    Managing Director


                              Address for Notices:

                              c/o Oaktree Capital Management, LLC
                              333 South Grand Avenue, 28th Floor
                              Los Angeles, California 90071
                              Attn:  Mariusz Mazurek
                              Telephone:  (213) 830-6405
                              Telecopier: (213) 830-6494



TERM LOAN AGREEMENT - Page 52

<PAGE>

                                    LEHMAN COMMERCIAL PAPER, INC.


                                    By:    /s/ G. ANDREW KEITH
                                           --------------------------------
                                           Authorized Signatory


                                    Address for Notices:


                                           745 Seventh Avenue
                                           New York, NY 10019
                                    Attn:  Andrew Keith
                                    Telephone:  212-526-4059
                                                -----------------------------
                                    Telecopier: _____________________________



                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                BANC OF AMERICA STRATEGIC SOLUTIONS, INC.


                                      /s/ WILLIAM E. LIVINGSTONE, IV
                                      --------------------------------------
                                      Managing Director


                                Address for Notices:

                                Bank of America, N.A.
                                901 Main Street, 66th Floor
                                Dallas, Texas 75202
                                Attn: William E. Livingstone, IV
                                Telephone:  (214) 209-2023
                                Telecopier: (214) 209-3533



                              Term Loan Agreement
                                 Signature Page

<PAGE>

                               PW WILLOW LLC, by Bond Street Capital, LLC,
                               as agent


                               By:   /s/ SAM KIM
                                     -----------------------------------
                                     Managing Member


                               Address for Notices:

                               700 Palisade Avenue
                               Englewood Cliffs, NJ 07632
                               Attn: Sam Kim (or/and Mark Black)
                               Telephone:  (201) 567-5050
                               Telecopier: (201) 567-5055



                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                 GENERAL ELECTRIC CAPITAL CORPORATION


                                 By:   /s/ WILLIAM S. RICHARDSON
                                       -------------------------------------
                                       Duly Authorized Signatory


                                 Address for Notices:

                                 GE Capital - Bank Loan Group
                                 60 Long Ridge Road, 4th Floor
                                 Stamford, CT 06927
                                 Attn: William S. Richardson
                                 Telephone:  (203) 316-7589
                                 Telecopier: (203) 316-7978



                              Term Loan Agreement
                                 Signature Page

<PAGE>

                           CREDIT LYONNAIS - NEW YORK BRANCH


                           By:    /s/ JOHN-CHARLES VAN ESSCHE
                                  -----------------------------------------
                                  Vice President


                           Address for Notices:

                           ________________________________________________

                           ________________________________________________

                           ________________________________________________
                           Attn:  Simone Kerner
                           Telephone:  (212) 261-7731
                           Telecopier: (212) 261-3259



                                 Term Loan Agreement
                                    Signature Page


<PAGE>

                            WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION


                            By:   /s/ MICHAEL B. SULLIVAN
                                  ----------------------------------------
                                  Senior Vice President


                            Address for Notices:

                            MAC: T5303-047
                            1445 Ross Avenue - Suite 400
                            Dallas, Texas 75202-2812
                            Attn: Michael Sullivan
                            Telephone:  (214) 740-1595
                            Telecopier: (214) 969-0906

                              Term Loan Agreement
                                 Signature Page

<PAGE>

                          FRANKLIN FLOATING RATE TRUST


                          By:  /s/ RICHARD HSU
                               -----------------------------------
                               Assistant Vice President


                          Address for Notices:

                          Franklin Templeton Investments
                          One Franklin Parkway Bldg. 920, Floor 2
                          San Mateo, CA 94403
                          Attn: Matthew Gregory
                          Telephone:  (650) 312-3309
                          Telecopier: (650) 312-3346



                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                  SOCIETE GENERALE


                                  By:   /s/ ROBERT H. TAPLETT
                                        -----------------------------------
                                        Director

                                  Address for Notices:

                                  2001 Ross Avenue, #4800
                                  Dallas, TX 75201
                                  Attn: Trina Hoover
                                  Telephone:  (214) 979-2742
                                  Telecopier: (214) 754-0171

                                  cc:    1221 Avenue of the Americas
                                         New York, NY 10020

                                  Attn: Robert H. Taplett
                                  Telephone:  (212) 278-7278
                                  Telecopier: (212) 278-6462



                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                   COMERICA BANK


                                   By:   /s/ JOE W. SULLIVAN
                                         -------------------------------
                                         Senior Vice President


                                   Address for Notices:

                                   Comerica Bank - Texas
                                   1508 W. Mockingbird
                                   Dallas, Texas 75235
                                   Attn: Robin Kain - MC 6510
                                   Telephone:  (214) 589-4708
                                   Telecopier: (214) 589-4724


                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                            UBS AG, STAMFORD BRANCH


                                            By: /s/ ANTHONY N. JOSEPH
                                                --------------------------------
                                                Associate Director
                                                Banking Products Services, US


                                            By: /s/ LYNNE B. ALFARONE
                                                --------------------------------
                                                Associate Director
                                                Banking Products Services, US


                                            Address for Notices:

                                            677 Washington Boulevard
                                            Stamford, CT 06901
                                            Telephone:  (203) 719-3176
                                            Telecopier: (203) 719-3180

                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                  B III CAPITAL PARTNERS, L.P.

                                  By: DDJ Capital III, LLC, its General Partner

                                  By: DDJ Capital Management, LLC, Manager

                                  By: /s/ ROBERT L. HOCKETT
                                      ------------------------------------------
                                      Authorized Signatory

                                  By: /s/ WENDY SCHNIPPER CLAYTON
                                      ------------------------------------------
                                      Authorized Signatory

                                  Address for Notices:

                                  c/o DDJ Capital Management, LLC
                                  141 Linden Street, Suite 4
                                  Wellesley, MA 02482-7910
                                  Attn: Wendy Schnipper Clayton, Esq.
                                  Telephone:  781-283-8500
                                  Telecopier: 781-283-8541

                               Term Loan Agreement
                                 Signature Page

<PAGE>

                                            CONTINENTAL CASUALTY COMPANY


                                            By: /s/ MARILOU R. MCGIRR
                                                --------------------------------
                                                Vice President


                                            Address for Notices:

                                            333 South Wabash Avenue
                                            Chicago, IL 60685
                                            Attn:  Karla Kambic
                                            Telephone:  (312) 822-1337
                                            Telecopier: (312) 817-1680

                               Term Loan Agreement
                                 Signature Page

<PAGE>

                                            FLEET NATIONAL BANK


                                            By:  /s/ G. CHRISTOPHER MILLER
                                                 -------------------------------
                                                 Vice President


                                            Address for Notices:

                                            777 Main Street
                                            Mail Stop: CT EH 40221A
                                            Hartford, CT 06115
                                            Attn:  Christopher Miller
                                            Telephone:  (860) 986-1563
                                            Telecopier: (860) 986-2435

                               Term Loan Agreement
                                 Signature Page


<PAGE>

                                       ARK CLO 2000-1, LIMITED

                                       By: Patriarch Partners, LLC
                                           Collateral Manager to ARK CLO 2000-1,
                                           Limited


                                       By: /s/ LYNN TILTON
                                           ---------------------------------
                                           Authorized Signatory


                                       Address for Notices:

                                       40 Wall Street - 25th Floor
                                       New York, NY 10005
                                       Attn:  Lynn Tilton
                                       Telephone:  (212) 825-0550
                                       Telecopier: (212) 825-2038

                              Term Loan Agreement
                                 Signature Page

<PAGE>

                               REGIMENT CAPITAL LTD.

                               By:  Regiment Capital Management, LLC
                                    as its Investment Advisor

                               By:  Regiment Capital Advisors, LLC
                                    its Manager and pursuant to delegated
                                    authority

                               By:  /s/ TIMOTHY PETERSON
                                    --------------------------------------
                                    President


                               Contact & Address for Notices:

                               70 Federal Street, 7th Floor
                               Boston, MA 02110
                               Attn: Brooke Carroll
                               Telephone:  (617) 488-1600
                               Telecopier: (617) 488-1660



                              Term Loan Agreement
                                 Signature Page

<PAGE>

                               VAN KAMPEN CLO I, LIMITED

                               By:   VAN KAMPEN MANAGEMENT, INC.
                                     as Collateral Manager


                               By:   /s/ WILLIAM LENGA
                                     ---------------------------------------
                                     Vice President


                               Address for Notices:


                               __________________________________________

                               __________________________________________

                               __________________________________________

                               Attn: ____________________________________

                               Telephone:________________________________

                               Telecopier:_______________________________


                              Term Loan Agreement
                                 Signature Page

<PAGE>

                               KZH CYPRESSTREE-1 LLC


                               By:   /s/ SUSAN LEE
                                     ----------------------------------
                                     Authorized Agent


                               Address for Notices:

                               140 E. 45th Street, 11th Floor
                               New York, NY 10017
                               Attn: Virginia R. Conway
                               Telephone:  (212) 622-9353
                               Telecopier: (212) 622-0123



                              Term Loan Agreement
                                 Signature Page

<PAGE>

                               VAN KAMPEN CLO II, LIMITED


                               By:   Van Kampen Management, Inc.,
                                     as Collateral Manager


                               By:   /s/ WILLIAM LENGA
                                     --------------------------------------
                                     Vice President


                               Address for Notices:

                               ____________________________________________

                               ____________________________________________

                               ____________________________________________

                               Attn: ______________________________________

                               Telephone:__________________________________

                               Telecopier:_________________________________



                              Term Loan Agreement
                                 Signature Page

<PAGE>

                               T. ROWE PRICE RECOVERY FUND II, L.P.


                               By:   /s/ KIM Z. GOLDEN
                                     ------------------------------------
                                     Managing Director


                               Address for Notices:

                               T. Rowe Price Recovery Fund II, L.P.
                               100 E. Pratt St.
                               Baltimore, MD 21202
                               Attn: Mr. Kim Z. Golden
                               Telephone:  (410) 345-6703
                               Telecopier: (410) 783-4285



                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                          WILLIAM E. SIMONS & SONS SPECIAL
                                          SITUATION PARTNERS, II, L.P.


                                          By: /s/ DALE LESHAW
                                              ----------------------------------
                                              Principal

                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                            SATELLITE SENIOR INCOME FUND, LLC


                                            By: /s/ MARK D. SONNINO
                                                --------------------------------
                                                Principal


                                            Address for Notices:

                                            Satellite Asset Management, L.P.
                                            10 East 50th Street, 21st Floor
                                            New York, NY 10022
                                            Attn: Gene Ko
                                            Telephone:  (212) 209-2032
                                            Telecopier: (212) 209-2010

                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                     B III-A CAPITAL PARTNERS, L.P.

                                     By: GP III-A, LLC, its General Partner

                                     By: DDJ Capital Management, LLC, Manager


                                     By: /s/ ROBERT L. HOCKETT
                                         ---------------------------------------
                                         Authorized Signatory


                                     By: /s/ WENDY SCHNIPPER CLAYTON
                                         ---------------------------------------
                                         Authorized Signatory


                                     Address for Notices:

                                     c/o DDJ Capital Management, LLC
                                     141 Linden Street, Suite 4
                                     Wellesley, MA 02482
                                     Attn: Wendy Schnipper Clayton
                                     Telephone:  (781) 283-8500
                                     Telecopier: (781) 283-8541

                               Term Loan Agreement
                                 Signature Page

<PAGE>

                                              MARINER LDC


                                              By: /s/ C. HOWE II
                                                  ------------------------------
                                                  Director


                                              Address for Notices:

                                              __________________________________
                                              __________________________________
                                              __________________________________
                                              Attn: ____________________________
                                              Telephone:  ______________________
                                              Telecopier: ______________________

                               Term Loan Agreement
                                 Signature Page


<PAGE>

                                             BALANCED HIGH-YIELD FUND II LTD.

                                             By: ING CAPITAL ADVISORS, LLC,
                                                 as Asset Manager


                                             By: /s/ JOHN J. D'ANGELO
                                                 -------------------------------
                                                 Vice President


                                             Address for Notices:

                                             ING Capital Advisors, LLC
                                             New York, NY 10169
                                             Attn: John J. D'Angelo
                                             Telephone:  (212) 309-8576
                                             Telecopier: (212) 309-6482

                               Term Loan Agreement
                                 Signature Page

<PAGE>

                                                 BANKERS TRUST COMPANY


                                                 By:  /s/ PETER SCHELLBACH
                                                      --------------------------
                                                      Director

                                                 Address for Notices:

                                                 Bankers Trust Company
                                                 90 Hudson Street, 5th Floor
                                                 Jersey City, NJ 07302
                                                 Mail Stop: JCY05-0511
                                                 Attn:  John Pineiro
                                                 Telephone:  (201) 593-2183
                                                 Telecopier: (201) 593-2315

                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                             BALANCED HIGH-YIELD FUND I LTD.


                                             By: ING CAPITAL ADVISORS, LLC,
                                                 as Asset Manager


                                             By: /s/ JOHN J. D'ANGELO
                                                 --------------------------
                                                 Vice President


                                             Address for Notices:

                                             ING Capital Advisors, LLC
                                             New York, NY 10169
                                             Attn: John J. D'Angelo
                                             Telephone:  (212) 309-8576
                                             Telecopier: (212) 309-6482

                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                             WILLIAM E. SIMONS & SONS SPECIAL
                                             SITUATION PARTNERS, L.P.


                                             By: /s/ DALE LESHAW
                                                 -------------------------------
                                                 Principal

                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                           BANK POLSKA KASA OPIEKI, S.A., NEW
                                           YORK BRANCH


                                           By: /s/ Harvey Winter
                                               --------------------------------
                                               Vice President


                                           Address for Notices:

                                           470 Park Avenue South
                                           New York, NY 10016
                                           Attn:  Harvey Winter
                                           Telephone:  (212) 251-1222
                                           Telecopier: (212) 679-5910

                               Term Loan Agreement
                                 Signature Page

<PAGE>

                                              CREDIT INDUSTRIEL ET COMMERCIAL


                                              By: /s/ ANTHONY ROCK
                                                  ------------------------------
                                                  Vice President


                                              By: /s/ MARCUS EDWARD
                                                  ------------------------------
                                                  Vice President


                                              Address for Notices:

                                              520 Madison Avenue, 37th Floor
                                              New York, NY 10022
                                              Attn: Anthony Rock
                                              Telephone: (212) 715-4666
                                              Telecopier: (212) 715-4535

                               Term Loan Agreement
                                 Signature Page

<PAGE>

                                                 CREDIT SUISSE FIRST BOSTON


                                                 By: /s/ DONALD E. POLLARD
                                                     ---------------------------
                                                     Managing Director


                                                 By: /s/ HOWARD SHAMS
                                                     ---------------------------
                                                     Authorized Signatory


                                                 Address for Notices:

                                                 Credit Suisse First Boston
                                                 11 Madison Avenue
                                                 New York, NY 10010
                                                 Attn: Ashwinee Sawh
                                                 Telephone:  (212) 538-2905
                                                 Telecopier: (212) 561-8926


                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                             BANK OF AMERICA, N.A., as a Lender


                                             By: /s/ LAURA T. SWEET
                                                 -------------------------------
                                                 Assistant Vice President


                                             Address for Notices:

                                             Bank of America, N.A.
                                             101 N. Tryon Street NC1-001-15-01
                                             Charlotte, NC 28255
                                             Attn: Bobbie Boratea
                                             Telephone:  (704) 386-3933
                                             Telecopier: (704) 409-0072

                               Term Loan Agreement
                                 Signature Page

<PAGE>

                                         FIDELITY ADVISOR SERIES II: Fidelity
                                         Advisor Floating Rate High Income Fund


                                         By: /s/ JOHN H. COSTELLO
                                             -----------------------------------
                                                Assistant Treasurer


                                         Address for Notices:

                                         _______________________________________
                                         _______________________________________
                                         _______________________________________
                                         Attn: Lisa Rymut
                                         Telephone:  (617) 392-8134
                                         Telecopier: (617) 476-5174

                               Term Loan Agreement
                                 Signature Page

<PAGE>

                                                FIDELITY FIXED INCOME TRUST
                                                Fidelity High Income Fund


                                                By: /s/ JOHN H. COSTELLO
                                                    ----------------------------
                                                    Assistant Treasurer


                                                Address for Notices:

                                                ________________________________
                                                ________________________________
                                                ________________________________
                                                Attn: Lisa Rymut
                                                Telephone:  (617) 392-8134
                                                Telecopier: (617) 476-5174

                               Term Loan Agreement
                                 Signature Page

<PAGE>

                                                 LAZARD DEBT RECOVERY FUND, LP


                                                 By: /s/ DAVID L. TASHJIAN
                                                     ---------------------------
                                                     Managing Director


                                                 Address for Notices:

                                                 30 Rockefeller Plaza
                                                 New York, NY 10020
                                                 Attn: Linda Gillin
                                                 Telephone:  (212) 632-6832
                                                 Telecopier: (212) 632-6655

                               Term Loan Agreement
                                 Signature Page

<PAGE>

                                            MOUNTAIN CAPITAL CLO I LTD.


                                            By:  /s/ GUY MAJOR
                                                 -------------------------------
                                                 Director


                                            Address for Notices:

                                            Mountain Capital CLO I Ltd.,
                                            c/o Mizuho Financial Group,
                                            32nd Floor, 1251 Avenue of the
                                            Americas, New York, NY 10020
                                            Attn: Mark Hanslin
                                            Telephone:  (212) 282-4977
                                            Telecopier: (212) 282-9710

                               Term Loan Agreement
                                 Signature Page

<PAGE>

                                        VAN KAMPEN
                                        SENIOR INCOME TRUST


                                        By: Van Kampen Investment Advisory Corp.

                                        By: /s/ BRAD LANGS
                                            ------------------------------------
                                            Vice President


                                        Address for Notices:

                                        ________________________________________
                                        ________________________________________
                                        Attn: __________________________________
                                        Telephone:  ____________________________
                                        Telecopier: ____________________________

                               Term Loan Agreement
                                 Signature Page

<PAGE>

                                            SILVER OAK CAPITAL, L.L.C.


                                            By:  /s/ JEFFREY H. ARONSON
                                                 -------------------------------
                                                 Authorized Signatory


                                            Address for Notices:

                                            Angelo Gordon & Co.
                                            245 Park Avenue, 26th Floor
                                            New York, NY 10167
                                            Attn: James Malley
                                            Telephone:  (212) 692-2034
                                            Telecopier: (212) 867-6395

                               Term Loan Agreement
                                 Signature Page

<PAGE>

                                     MIZUHO CORPORATE BANK, LTD.


                                     By:  /s/ CHRISTOPHER FAHEY
                                          --------------------------------------
                                          Vice President


                                     Address for Notices before April 15, 2002:

                                     1633 Broadway, 40th Floor
                                     New York, NY 10019
                                     Attn: Christopher Fahey
                                     Telephone:  (212) 649-0347
                                     Telecopier: (212) 541-4805

                                     Address for Notices after April 15, 2002:

                                     1251 Avenue of the Americas, 30th Floor
                                     New York, NY 10019
                                     Attn: Christopher Fahey
                                     Telephone:  _______________________________
                                     Telecopier: _______________________________

                              Term Loan Agreement
                                 Signature Page

<PAGE>

                                            PB CAPITAL CORPORATION


                                            By: /s/ EVON M. CONTOS
                                                --------------------------------
                                                Managing Director


                                            By: /s/ CHRISTOPHER J. RUZZI
                                                --------------------------------
                                                Vice President

                                            Address for Notices:

                                            590 Madison Avenue
                                            New York, NY 10022
                                            Attn: Ms. Lilianne Badette
                                            Telephone:  (212) 756-5503
                                            Telecopier: (212) 756-5536

                               Term Loan Agreement
                                 Signature Page