RECEIVABLE TRANSFER AGREEMENT

     RECEIVABLES  TRANSFER  AGREEMENT,  dated as of May 12, 2000,  between GREAT
AMERICAN  KNITTING  MILLS,  INC.,  a Delaware  corporation  (in its  capacity as
originator of the Receivables and as the seller hereunder, the "Company"; in its
capacity  as  servicer   hereunder,   the   "Servicer"),   and  CLUETT  AMERICAN
RECEIVABLES,  LLC, a Delaware  limited  liability  company,  as  purchaser  (the
"Purchaser").

                              W I T N E S S E T H :

     WHEREAS, in the ordinary course of business, the Company generates accounts
receivable;  WHEREAS,  the  Company  desires  to sell to the  Purchaser  and the
Purchaser  desires to purchase from the Company on the First  Purchase Date, and
the  Purchaser  may  purchase  from the  Company and the Company may sell to the
Purchaser,  at the  Purchaser's  option,  on the Second  Purchase Date (each,  a
"Purchase  Date"),  all of the  Company's  right,  title and interest in, to and
under the Receivables identified in the Assignment dated such Purchase Date, and
in the rights of the Company in, to and under all Related  Security with respect
thereto;

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

DEFINITIONS

     Defined Terms.  i) Capitalized  terms used in this Agreement shall have the
respective meanings assigned to such terms in the Receivables Purchase Agreement
unless otherwise defined herein.

     (a) The following capitalized terms shall have the following meanings:

     "Affiliate"  means with respect to any specified  Person,  any other Person
(i) which  directly  or  indirectly  controls,  or whose  directors  or officers
directly or indirectly  control, or is controlled by, or is under common control
with, such specified  Person,  (ii) which  beneficially  owns or holds, or whose
directors or officers  beneficially  own or hold,  five percent (5%) or more, of
any  class of the  voting  stock  (or,  in the case of an  entity  that is not a
corporation, five percent (5%) or more of the equity interest) of such specified
Person,  or (iii) five percent (5%) or more of the voting stock (or, in the case
of an entity that is not a corporation,  five percent (5%) or more of the equity
interest) of which is owned or held by such specified Person. The term "control"
means the  possession,  directly or indirectly,  of the power to direct or cause
the direction of the  management and policies of a Person,  whether  through the
ownership of voting securities, by contract, or otherwise. In addition, (i) each
department,  branch,  agency or  instrumentality of the United States government
shall be deemed to be an Affiliate  of the United  States  government,  and (ii)
each department,  branch,  agency or instrumentality of a state government shall
be deemed to be an Affiliate of such state government.

     "Assignment" shall mean an assignment in the form of Exhibit A hereto.

     "Code" shall mean the Internal  Revenue Code of 1986,  as amended from time
to time.

     "Commonly  Controlled  Entity"  shall  mean  an  entity,   whether  or  not
incorporated,  which is under common control with the Company within the meaning
of Section  4001 of ERISA or is part of a group which  includes  the Company and
which is treated as a single employer under Section 414 of the Code.

     "Company  Person" shall mean the Company and each of its  Affiliates  other
than the Purchaser.

     "Company  Repurchase  Payment" shall have the meaning  specified in Section
2.6.

     "Credit  and  Collection  Policy"  means,  collectively,  those  credit and
collection  policies and  practices of the Company and the Servicer with respect
to the Receivables as in effect on the First Purchase Date.

     "Cutoff Date" shall mean,  with respect to any Purchased  Receivables,  the
date identified as such in the related Assignment.

     "Defaulted  Receivable"  means any Receivable (i) with respect to which any
payment (or any portion  thereof)  remains unpaid for more than ninety (90) days
past the original due date, (ii) the Obligor of which is subject to a bankruptcy
or  insolvency  proceeding,  or (iii)  which has been  written  off or should be
written off in accordance with the Credit and Collection Policy.

     "Documents" means this Agreement,  the Receivables Purchase Agreement,  the
certificate  of  formation  of the  Purchaser,  the  limited  liability  company
agreement of the Purchaser,  and any other  instrument,  surety bond,  insurance
policy,  surety bond  reimbursement  agreement,  insurance policy  reimbursement
agreement, UCC financing statement,  notice,  certificate,  report, agreement or
document delivered in connection herewith or therewith.

     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
amended from time to time.

     "Face Amount" shall mean, with respect to any Receivable, the dollar amount
thereof as shown on the applicable Assignment.

     "First  Purchase Date" shall mean May 12, 2000, or such  subsequent date as
shall be mutually agreed.

     "Governmental  Authority"  shall mean the federal  government of the United
States,  any  state  or  other  political  subdivision  thereof  and any  entity
exercising  executive,  legislative,   judicial,  regulatory  or  administrative
functions of or pertaining to government.

     "Indemnification  Amounts"  shall  have the  meaning  set forth in  Section
6.2(a).

     "Insolvency" or "Insolvent"  shall mean, with respect to any  Multiemployer
Plan,  the condition  that such Plan is insolvent  within the meaning of Section
4245 of ERISA.

     "Lien" shall mean any ownership or security interest, lien, charge, pledge,
participation, mortgage or encumbrance of any kind.

     "LLC  Agreement"  means the  limited  liability  company  agreement  of the
Purchaser, as the same may be amended,  restated or otherwise modified from time
to time.

     "Material  Adverse Effect" shall mean a material  adverse effect on (i) the
validity or enforceability of this Agreement, (ii) the ability of the Company to
perform its obligations under this Agreement or (iii) the value,  enforceability
or collectibility of any Purchased Receivables.

     "Multiemployer  Plan" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA and covered by Title IV thereof, and to which the Company or
any Commonly Controlled Entity contributes or was obligated to contribute in the
immediately preceding five years.

     "Obligor"  with  respect  to any  Purchased  Receivable  means  the  Person
identified  on the  schedule  to the related  Assignment  as  obligated  to make
payment of such Purchased Receivable.

     "PBGC"  shall mean the Pension  Benefit  Guaranty  Corporation  established
pursuant to Subtitle A of Title IV of ERISA.

     "Permitted  Lien" shall mean any Lien for municipal or other local taxes if
such  taxes  shall not at the time be due and  payable or if the  Company  shall
currently  be  contesting  the  validity  thereof in good  faith by  appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto.

     "Plan" shall mean, at a particular  time, any employee  benefit plan within
the meaning of Section 3(3) of ERISA which is subject to ERISA and in respect of
which the  Company or a  Commonly  Controlled  Entity is (or,  if such plan were
terminated  at such time,  would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.

     "Purchase Date" shall have the meaning given to it in the recitals hereto.

     "Purchase  Price" shall mean, with respect to (a) the Initial  Receivables,
$6,286,414.03,  and (b) the Subsequent Receivables,  (i) the Face Amount of such
Receivables as of the related Cutoff Date less (ii) the product of (A) the Prime
Rate in effect  as of the  Second  Purchase  Date,  (B) the Face  Amount of such
Receivables  and (C) 55 divided by 360,  plus (iii) the product of 0.20% and the
Face Amount of such Receivables.

     "Purchased  Receivable"  shall mean any Receivable sold to the Purchaser by
the Company pursuant to, and in accordance with the terms of, this Agreement and
not resold to the Company pursuant to Section 2.6 or 2.7.

     "Receivables" shall mean amounts due to the Company,  whether  constituting
an  account,  chattel  paper,  instrument,  or  general  intangible,  arising in
connection with the sale of socks.

     "Receivables  Purchase Agreement" means the Receivables  Purchase Agreement
among the Purchaser, the Servicer and the Unaffiliated Buyer, as the same may be
amended, restated or otherwise modified from time to time.

     "Records"  means,  with respect to any  Receivable,  all documents,  books,
records and other information (including, without limitation, computer programs,
tapes,  discs,  punch cards,  data processing  software and related property and
rights) relating to such Receivable or the related Obligor.

     "Related  Security"  shall mean, with respect to each  Receivable,  (i) all
security  interests or liens and property from time to time purporting to secure
payment of such Receivable,  together with all financing statements signed by an
Obligor  describing  any  collateral  securing  such  Receivable,  and  (ii) all
guarantees,  insurance and other arrangements of whatever character from time to
time supporting or securing payment of such Receivable.

     "Reorganization"  shall mean, with respect to any  Multiemployer  Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.

     "Reportable  Event"  shall  mean any of the  events  set  forth in  Section
4043(b)  of ERISA,  other  than  those  events as to which the thirty day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. '
2615.

     "Requirements  of  Law"  for any  Person  shall  mean  the  certificate  of
incorporation and by-laws or other organizational or governing documents of such
Person,  and  any  law,  treaty,  rule or  regulation,  or  determination  of an
arbitrator or Governmental Authority, in each case applicable to or binding upon
such Person or to which such Person is subject,  whether federal, state or local
(including, without limitation, usury laws, and Regulation Z and Regulation B of
the Board of Governors of the Federal Reserve System).

     "Second  Purchase Date" shall mean the date, if any, on which the Purchaser
shall make a second purchase of Receivables hereunder,  such date being mutually
agreed between the Company and the Seller.

     "Servicing  Documents"  shall  have the  meaning  set  forth in  subsection
2.10(c).

     "Single  Employer Plan" shall mean any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.

     "Solvent" shall mean, when used with respect to any Person,  as of any date
of  determination,  (a) the amount of the "present fair  saleable  value" of the
assets  of  such  Person  will,  as of  such  date,  exceed  the  amount  of all
"liabilities of such Person,  contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing  determinations  of the  insolvency  of debtors,  (b) the present fair
saleable  value of the assets of such Person will,  as of such date,  be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured,  (c) such Person will not have,
as of such date, an  unreasonably  small amount of capital with which to conduct
its business,  and (d) such Person will be able to pay its debts as they mature.
For purposes of this  definition,  (i) "debt" means liability on a "claim",  and
(ii)  "claim"  means any (x) right to  payment,  whether  or not such a right is
reduced to  judgment,  liquidated,  unliquidated,  fixed,  contingent,  matured,
unmatured,  disputed,  undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to  payment,  whether  or not such  right to an  equitable  remedy is
reduced  to  judgment,  fixed,  contingent,   matured  or  unmatured,  disputed,
undisputed, secured or unsecured.

     "Subsidiary"  means, as to any Person,  (i) any corporation more than fifty
percent (50%) of whose stock having by the terms thereof  ordinary  voting power
to elect a  majority  of the  directors  of such  corporation  (irrespective  of
whether  or not at the  time  stock  of any  other  class  or  classes  of  such
corporation  shall have or might have voting power by reason of the happening of
any  contingency)  is at the  time  owned  by  such  Person  and/or  one or more
Subsidiaries of such Person and (ii) any partnership, limited liability company,
association,  joint  venture or other entity in which such Person  and/or one or
more  Subsidiaries  of such  Person has more than  fifty  percent  (50%)  equity
interest at the time.

     "Unaffiliated Buyer" shall mean Banc of America Commercial Corporation.

     Other  Definitional  Provisions.  (a)  The  words  "hereof",  "herein"  and
"hereunder"  and words of similar import when used in this Agreement shall refer
to  this  Agreement  as a  whole  and not to any  particular  provision  of this
Agreement,   "including"  means  including   without   limitation  and  section,
subsection,  schedule  and  exhibit  references  are to  this  Agreement  unless
otherwise specified.

     (b) As  used  herein  and in any  certificate  or  other  document  made or
delivered  pursuant  hereto,  accounting  terms  relating to the Company and the
Purchaser,  unless otherwise defined herein,  shall have the respective meanings
given to them under generally accepted accounting principles.

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

                        PURCHASE AND SALE OF RECEIVABLES

1.1. Purchase and Sale of  Receivables.  (a) Subject to the terms and conditions
     of this Agreement,  the Company shall sell, assign,  transfer and convey to
     the Purchaser,  and the Purchaser  shall purchase from the Company,  on the
     First Purchase Date but as of the related Cutoff Date, all of the Company's
     right, title and interest,  in, to and under (i) the Receivables identified
     in the applicable  Assignment  delivered pursuant to Subsection 3.2(a) (the
     "Initial  Receivables") and all payment and enforcement rights (but none of
     the obligations) with respect to such Initial Receivables, (ii) all Related
     Security  with respect to such Initial  Receivables  and (iii) all proceeds
     (including,  without limitation,  "proceeds" as defined in Section 9-306 of
     the UCC as in effect in the State of New York) of, and any and all  amounts
     received or receivable under, any or all of the foregoing.

     (b) Subject to the terms and conditions of this Agreement, the Company may,
if so  requested  by the  Purchaser,  sell,  assign,  transfer and convey to the
Purchaser,  and the Purchaser  shall  purchase  from the Company,  on the Second
Purchase Date but as of the related  Cutoff Date,  all of the  Company's  right,
title and  interest,  in, to and under  (i) the  Receivables  identified  in the
applicable  Assignment  delivered pursuant to Subsection 3.2(a) (the "Subsequent
Receivables")  and  all  payment  and  enforcement   rights  (but  none  of  the
obligations)  with  respect to such  Subsequent  Receivables,  (ii) all  Related
Security  with  respect to such  Subsequent  Receivables  and (iii) all proceeds
(including,  without  limitation,  "proceeds" as defined in Section 9-306 of the
UCC as in effect in the State of New York) of, and any and all amounts  received
or receivable under, any or all of the foregoing.

     (c) The sale of Receivables and Related  Security by the Company  hereunder
shall be without recourse to, or representation or warranty of any kind (express
or implied) by, the Company,  except as otherwise  specifically provided herein.
The foregoing sale, assignment,  transfer and conveyance does not constitute and
is not intended to result in a creation or  assumption  by the  Purchaser of any
obligation  of  the  Company  or  any  other  Person  in  connection   with  the
Receivables,  the Related Security or any other agreement or instrument relating
thereto, including any obligation to any Obligor.

     (d) In connection  with the foregoing  conveyances,  the Company  agrees to
record and file on or prior to the related  Purchase  Date,  at its own expense,
UCC-1 financing statements (and thereafter  continuation statements with respect
to such financing  statements when  applicable)  with respect to the Receivables
and the  Related  Security  to be  purchased  on such  Purchase  Date,  from the
Company,  meeting the requirements of applicable state law in such manner and in
such offices as are  necessary or as the  Purchaser  may  reasonably  request to
perfect or protect the purchases of such Receivables and the Related Security by
the Purchaser from the Company, to obtain oral confirmation of such filing on or
prior to the related  Purchase Date and to deliver  file-stamped  copies of such
financing statements or other evidence of such filings within five Business Days
after the related Purchase Date.

     (e) In connection with the foregoing conveyances, the Company agrees at its
own  expense  to  indicate  on its  computer  files  relating  to the  Purchased
Receivables  that the Purchased  Receivables and the Related  Security have been
sold to the Purchaser in accordance with this Agreement.

     (f) It is the  express  intent of the Company  and the  Purchaser  that the
conveyance of the Purchased  Receivables and the Related Security by the Company
to the  Purchaser  pursuant  to this  Agreement  be  construed  as a sale of the
Purchased  Receivables and the Related Security by the Company to the Purchaser.
It is,  further,  not the intention of the Company and the  Purchaser  that such
conveyance be deemed a grant of a security interest in the Purchased Receivables
and the Related  Security by the  Company to the  Purchaser  to secure a debt or
other  obligation of the Company.  However,  in the event that the conveyance of
the Purchased  Receivables and Related Security  hereunder is characterized by a
court or other Governmental  Authority as a loan rather than a sale, the Company
shall be deemed  hereunder  to have  granted to the  Purchaser,  and the Company
hereby  grants to the  Purchaser,  a security  interest in all of the  Company's
right,  title  and  interest  in,  to and  under  all of the  items set forth in
subsections  2.1(a)(i)  through  (iii) above,  whether now or  hereafter  owned,
existing or arising and wherever located. The Purchaser shall have, with respect
to the property  described in this subsection 2.1(f), and in addition to all the
other rights and remedies  available to the Purchaser  under this  Agreement and
applicable law, any additional  rights and remedies of a secured party under any
applicable UCC.

     (g)  In  consideration  of  the  Purchaser's   purchase  of  the  Purchased
Receivables,  the Company  hereby  acknowledges  and agrees  that the  Purchaser
intends to sell such Receivables and Related Security to the Unaffiliated Buyer,
and the Company  agrees to cooperate  fully with the  Unaffiliated  Buyer in the
exercise of the rights attendant thereto.

     (h) In no event shall the Purchaser be obligated to purchase,  or shall the
Company be obligated  to sell,  Receivables  having an aggregate  Face Amount in
excess of $24,000,000.

1.2. Purchase  Price.  On each Purchase  Date,  the  Purchaser  shall pay to the
     Company, in consideration of the sale hereunder,  in immediately  available
     funds,   the  related   Purchase  Price.   Such  Purchase  Price  shall  be
     non-refundable.

1.3. Payment of Purchase Price.

     (a) Upon the fulfillment of the applicable  conditions set forth in Article
III,  except as provided in  subsection  2.3(b)  below,  the Purchase  Price for
Receivables  and the  Related  Security  shall be due and payable on the related
Purchase  Date. The Purchase Price shall be paid or provided for on each related
Purchase Date in the manner provided in subsections (b) and (c) below.

     (b) The Purchase Price for the  Receivables  and the Related  Security with
respect thereto shall be due and payable on the related  Purchase Date and shall
be paid by the  Purchaser  in cash from  amounts  distributed  to the  Purchaser
pursuant  to the  Receivables  Purchase  Agreement  or  from  amounts  otherwise
available to the Purchaser.

     (c) Whenever any payment to be made under this Agreement shall be stated to
be due on a day other than a Business  Day,  such  payment  shall be made on the
next succeeding Business Day. Amounts not paid when due shall bear interest at a
rate equal at all times to 9%, payable on demand.

1.4. No Repurchase. Except to the extent expressly set forth herein, the Company
     shall not have any right or obligation under this Agreement, by implication
     or otherwise, to repurchase from the Purchaser any Purchased Receivables or
     Related  Security  or to  rescind  or  otherwise  retroactively  affect the
     purchase of any Purchased  Receivables  or Related  Security.  Adjustments.
     Without the Purchaser's  prior written  consent,  the Company will not vary
     the terms  (including,  but not limited to, amount,  maturity and the like)
     on, or grant any  adjustment,  refund or other  indulgence with respect to,
     any Purchased  Receivable.  The Company shall promptly notify the Purchaser
     upon  accepting  returns  or  granting  allowances  under  the terms of any
     Purchased  Receivable.  The Purchaser agrees to use good faith efforts (but
     shall have no  obligation)  to  cooperate  and  assist  the  Company in the
     adjustment of any Customer Dispute.

1.5. Limited  Repurchase  Obligation.  If  (i)  any of  the  representations  or
     warranties  contained in Section 4.2 in respect of any Purchased Receivable
     is not  true and  correct  in any  material  respect  as of the  date  made
     hereunder or (ii) the Company shall have breached the covenant contained in
     Section  5.2 with  respect to any  Purchased  Receivable,  then,  after the
     earlier to occur of the discovery of such event by the Company or notice of
     such event by the Purchaser to the Company,  the Company  shall  repurchase
     such  Receivable on the terms and conditions set forth in this Section 2.6.
     The Company shall  repurchase such Receivable by paying to the Purchaser (a
     "Company  Repurchase  Payment")  an amount equal to the Face Amount of such
     Receivable   (whether  the  Purchaser  paid  the  Purchase  Price  of  such
     Receivable in cash or otherwise), such payment to occur on the Business Day
     after the day on which such repurchase obligation arises. The obligation to
     repurchase any Purchased  Receivable  shall constitute the sole remedy with
     respect to the sale of Purchased  Receivables hereunder respecting an event
     of the type specified above available to the Purchaser. Simultaneously with
     any Company  Repurchase  Payment with respect to any Purchased  Receivable,
     such  Receivable  and the  Related  Security  with  respect  thereto  shall
     immediately and automatically be sold,  assigned,  transferred and conveyed
     by the  Purchaser  to the  Company,  without  recourse,  representation  or
     warranty, without any further action by the Purchaser or any other Person.

1.6. Purchase  of  Receivables.  (a) In the  event of any  breach  of any of the
     representations and warranties set forth in Section 4.1, which breach has a
     Material  Adverse Effect on the interests of the Purchaser in the Purchased
     Receivables,  then the  Purchaser by notice to the Company,  may direct the
     Company to purchase all outstanding  Purchased  Receivables and the Company
     shall be obligated to make such  purchase on the Business Day which is five
     (5) Business Days after the date of such notice on the terms and conditions
     set forth below; provided, however, that no such purchase shall be required
     to be made if, by such date of repurchase, such breach has been remedied in
     all material  respects and any Material  Adverse Effect on the interests of
     the Purchaser in the Purchased  Receivables  caused thereby has been cured.
     (b) The Company shall pay to the  Purchaser,  on the Business Day preceding
     such date of  repurchase,  an amount equal to the aggregate  Face Amount of
     the Purchased  Receivables as of such date. Upon payment of such amount, in
     immediately available funds, to the Purchaser,  the Purchaser's rights with
     respect to the  Purchased  Receivables  shall  terminate  and such interest
     therein shall be transferred to the Company and the Purchaser shall have no
     further  rights  with  respect  thereto.  If  the  Purchaser  gives  notice
     directing  the Company to purchase the  Purchased  Receivables  as provided
     above, the obligation of the Company to purchase the Purchased  Receivables
     pursuant to this Section 2.7 shall  constitute the sole remedy with respect
     to the sale of Purchased  Receivables  hereunder respecting an event of the
     type  specified in the first  sentence of this Section 2.7 available to the
     Purchaser.

1.7. Certain  Charges.  The  Company  and the  Purchaser  agree that late charge
     revenue,  reversals of discounts,  other fees and charges and other similar
     items,  whenever  created or accrued  in respect of  Purchased  Receivables
     shall be the property of the  Purchaser  and all  Collections  with respect
     thereto  shall  continue  to be  allocated  and treated as  Collections  in
     respect of Purchased Receivables.

1.8. Certain Allocations. The Company agrees that, in the event that the Company
     cannot identify a particular Collection to a specific Receivable,  all cash
     collections and other proceeds received with respect to the Obligor on such
     Receivable  that  are not so  identified  to a  Purchased  Receivable  or a
     Receivable  not sold to the Purchaser  shall be applied  first,  to pay the
     outstanding Face Amount of Purchased Receivables of such Obligor until such
     Purchased  Receivables  are  paid in full and  second,  amounts  in  excess
     thereof shall be paid to the Company to pay Receivables of such Obligor not
     sold to the Purchaser.

1.9. Further Action. The Company agrees that:

     (a) Following the occurrence and during the continuance of a default by the
Servicer in the performance of its obligations  under Section 5.3, the Purchaser
shall have the right to require  that the  Company,  at the  Company's  expense,
notify the Obligors of the Purchaser's ownership of the Purchased Receivables;

     (b) The Purchaser  shall have the right to (i) sue for  collection  on, and
exercise any and all remedies with respect to, any Purchased  Receivables,  (ii)
sell any Purchased  Receivables  to any Person for a price that is acceptable to
the Purchaser or (iii) otherwise  freely exercise all rights of ownership of the
Purchased  Receivables,  in each case  without  any  consent of or notice to the
Company;

     (c) Upon the  occurrence  of any  transfer  of  servicing  pursuant  to the
Receivables Purchase Agreement,  the Company shall, upon the Purchaser's request
and  at the  Company's  expense,  (i)  assemble  all  the  Company's  documents,
instruments  and other  records  (including  credit files and computer  tapes or
disks) that (A)  evidence or will  evidence  or record  Receivables  sold by the
Company  and  (B)  are  otherwise  necessary  or  reasonably  determined  by the
Purchaser  to be useful  to effect  Collections  of such  Purchased  Receivables
(collectively,  the "Servicing Documents"), (ii) deliver the Servicing Documents
to the Purchaser or its designee at a place  designated by the Purchaser,  (iii)
deliver to the  Purchaser  or its  designee  all  computer  programs and related
material necessary or reasonably determined by the Purchaser to be useful to the
immediate  collection of the Purchased  Receivables  by the  Purchaser,  with or
without the  participation of the Company,  and (iv) make such arrangements with
respect to the  collection  of the  Purchased  Receivables  as may be reasonably
required by the  Purchaser.  In recognition of the Company's need to have access
to any Servicing Documents which may be transferred to the Purchaser  hereunder,
as a result of its  continuing  business  relationship  with the  Obligors,  the
Purchaser  hereby  grants  to the  Company a license  to  access  the  Servicing
Documents  transferred  by the Company to the  Purchaser  and to access any such
transferred  computer  software in connection  with any activity  arising in the
ordinary course of the Company's  business,  provided that the Company shall not
disrupt or otherwise  interfere  with the  Purchaser's  use of and access to the
Servicing Documents and its computer software during such license period;

     (d) The Company hereby irrevocably authorizes the Purchaser or its designee
to take any and all steps in the Company's  name  necessary,  in the  reasonable
opinion of the Purchaser,  to collect, in a timely manner, all amounts due under
the Purchased Receivables,  including endorsing the Company's name on checks and
other instruments representing Collections,  enforcing the Purchased Receivables
and exercising all rights and remedies in respect thereof; and

     (e) On or prior to the First  Purchase  Date,  the Company shall have taken
all reasonably  necessary  steps to cause the Purchaser to be satisfied with the
Purchaser's ability to use any computer programs,  tapes,  disks,  cassettes and
data  necessary or advisable to permit the timely  collection  of the  Purchased
Receivables by a servicer without the participation of the Company.

1.10.Further  Assurances by  Purchaser.  From time to time at the request and at
     the expense of the Company, the Purchaser shall deliver to the Company such
     documents,  assignments,  releases and  instruments  of  termination as the
     Company  may  reasonably  request  to  evidence  the  reconveyance  by  the
     Purchaser to the Company of a Purchased Receivable pursuant to the terms of
     Section 2.5,  provided that, the Purchaser shall have been paid all amounts
     due hereunder.

                         CONDITIONS TO PURCHASE AND SALE

1.11.Conditions  Precedent to the First Purchase of Receivables.  The obligation
     of the Purchaser to purchase  Receivables and Related Security hereunder on
     the First  Purchase  Date from the  Company is  subject  to the  conditions
     precedent  that (a) each of this  Agreement  and the  Receivables  Purchase
     Agreement  shall be in full  force and effect  and (b) the  conditions  set
     forth below shall have been satisfied on or before the First Purchase Date:
     (i) the Purchaser shall have received copies of duly adopted resolutions of
     the Board of  Directors  of the Company as in effect on the First  Purchase
     Date and in form and substance  reasonably  satisfactory  to the Purchaser,
     authorizing the execution,  delivery and performance of this Agreement, the
     Assignments,  the other documents to be delivered by the Company  hereunder
     and the  transactions  contemplated  hereby,  certified by the Secretary or
     Assistant Secretary of the Company;  (ii) the Purchaser shall have received
     duly executed  certificates  of the Secretary or an Assistant  Secretary of
     the Company,  dated the date hereof,  and in form and substance  reasonably
     satisfactory to the Purchaser,  certifying the names and true signatures of
     the officers  authorized  on behalf of the Company to sign this  Agreement,
     the Assignments  and any other  instruments or documents to be delivered in
     connection with this Agreement; and (iii) the Purchaser shall have received
     evidence  reasonably  satisfactory  to the Purchaser that the Company shall
     have  obtained all  consents  required in  connection  with the sale of the
     related Receivables contemplated hereby.

1.12.Conditions Precedent to each Purchase of Receivables. The obligation of the
     Purchaser to purchase  Receivables  and Related  Security  hereunder on any
     Purchase Date from the Company is subject to the  fulfillment  on or before
     such Purchase Date of the following  conditions precedent (i) the Purchaser
     shall have received a duly executed  Assignment  setting forth the Obligors
     and Face  Amount  of the  Receivables  to be  purchased  hereunder  on such
     Purchase Date;  (ii) all corporate and other legal matters  incident to the
     execution  and  delivery  of this  Agreement  and to the  purchases  by the
     Purchaser of the related  Receivables on the related Purchase Date from the
     Company shall be reasonably satisfactory to counsel for the Purchaser;  and
     (iii)the  representations  and  warranties  of  the  Company  contained  in
     Sections 4.1 and 4.2 shall be true and correct in all material  respects on
     and as of such Purchase Date as though made on and as of such date,  except
     insofar as such  representations  and warranties are expressly made only as
     of another date.

                         REPRESENTATIONS AND WARRANTIES

1.13.Representations and Warranties of the Company Relating to the Company.  The
     Company  hereby  represents  and warrants to the Purchaser on each Purchase
     Date that:

     (a) Organization and Good Standing. The Company is duly organized,  validly
existing and in good standing  under the laws of the State of Delaware,  and has
full  corporate  power,  authority  and the legal  right to own and  operate its
properties,  to lease the  property  it  operates  as lessee and to conduct  the
business in which it is currently engaged,  and to execute,  deliver and perform
its obligations under this Agreement and to sell the related Receivables and the
Related Security hereunder;

     (b) Due Qualification.  The Company is duly qualified to do business and is
in good standing as a foreign  corporation (or is exempt from such requirements)
and has obtained all necessary  licenses and approvals in each  jurisdiction  in
which the conduct of its business requires such  qualification  except where the
failure to so qualify or obtain  licenses or approvals would not have a Material
Adverse Effect;

     Due  Authorization.  The execution  and delivery of this  Agreement and the
Assignments and the  consummation of the  transactions  provided for herein have
been  duly  authorized  by all  necessary  corporate  action  on the part of the
Company;

     (c) Binding  Obligation.  Each of this Agreement and the Assignments,  when
executed  and  delivered  hereunder,  constitutes  the legal,  valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms,  except as such  enforceability may be limited by applicable  bankruptcy,
insolvency,  reorganization,  moratorium,  fraudulent  transfer or other similar
laws now or hereinafter in effect affecting the enforcement of creditors' rights
in  general  and  except  as  such  enforceability  may be  limited  by  general
principles of equity (whether considered in a proceeding at law or in equity);

     (d) No Violation or Conflict.  The execution and delivery of this Agreement
and  the  Assignments  by the  Company,  the  performance  of  the  transactions
contemplated  hereby and the  fulfillment of the terms hereof  applicable to the
Company  will not  conflict  with,  violate,  result in any breach of any of the
terms and provisions of, or constitute  (with or without notice or lapse of time
or both) a default  under,  any  Requirement of Law applicable to the Company or
any indenture, contract, agreement, mortgage, deed of trust, or other instrument
to which the Company or its parent or any of its  Subsidiaries  is a party or by
which any such Person or its properties are bound;

     (e) Compliance  with  Requirements  of Law. The Company is in compliance in
all material  respects with all  Requirements  of Law, except to the extent that
the failure to comply therewith would not have a Material Adverse Effect;

     (f) No Proceedings.  There are no proceedings or investigations pending or,
to the best knowledge of the Company, threatened, against the Company before any
court or  Governmental  Authority (i) asserting the invalidity of this Agreement
or any  Assignment,  (ii) seeking to prevent the sale of any  Receivables or the
Related  Security  hereunder or (iii) seeking any  determination  or ruling that
would  materially  and adversely  affect the  performance  by the Company of its
obligations under this Agreement;

     (g) Taxes.  No tax Lien has been filed  against  the  Company.  Each of the
statements  in this  sentence is true,  except to the extent that the  potential
liability  to the  Company  as a result of the  circumstances  causing  any such
statement to be untrue would not have a Material Adverse Effect: it has filed or
caused to be filed all tax returns  which are  required to be filed and has paid
all taxes shown to be due and payable on said returns or on any assessments made
against it or any of its  property and all other  taxes,  fees or other  charges
imposed on it or any of its property by any  Governmental  Authority and, to the
best  knowledge of the Company,  no claim is being  asserted with respect to any
such taxes, fees or other charges (other than with respect to Permitted Liens);

     (h) Solvency. The Company is, and the Company and its Subsidiaries taken as
a  whole  are,  and in  each  case  after  giving  effect  to  the  transactions
contemplated  to occur on or prior to any Purchase Date will be,  Solvent and no
sale of  Receivables  hereunder  is made  with the  intent to  hinder,  delay or
defraud any creditor of the Company or its parent or any of its Subsidiaries;

     (i) ERISA.  Each of the  following  statements  is true,  except  where the
amount  involved  in  any  untrue  statement,  either  individually  or  in  the
aggregate, would not have a Material Adverse Effect: Neither a Reportable Event,
an "accumulated  funding  deficiency"  (within the meaning of Section 412 of the
Code or Section 302 of ERISA) nor a failure to make a required  contribution  as
described in Section 412(n) of the Code has occurred during the five-year period
prior to the date on which  this  representation  is made or  deemed  made  with
respect to any Plan,  and each Plan has complied in all material  respects  with
the  applicable  provisions  of ERISA and the Code. No  termination  of a Single
Employer  Plan  has  occurred,  no  steps  have  been  taken  to  institute  the
termination  of any Plan  and no Lien in favor of the PBGC or a Plan has  arisen
during  such  five-year  period,  and no Lien  exists in favor of the PBGC.  The
present value of all accrued  benefits under each Single Employer Plan (based on
those  assumptions  used to fund  such  Plans)  did not,  as of the last  annual
valuation date prior to the date on which this  representation is made or deemed
made,  exceed the value of the  assets of such Plan  allocable  to such  accrued
benefits.  Neither it nor any Commonly  Controlled  Entity has had a complete or
partial withdrawal from any Multiemployer  Plan, and neither it nor any Commonly
Controlled Entity would become subject to any liability under ERISA if it or any
such  Commonly   Controlled   Entity  were  to  withdraw   completely  from  all
Multiemployer  Plans as of the valuation date most closely preceding the date on
which this representation is made or deemed made. To its best knowledge, no such
Multiemployer  Plan  is  in  Reorganization  or  Insolvent.  The  present  value
(determined  using  actuarial  and other  assumptions  which are  reasonable  in
respect  of the  benefits  provided  and  the  employees  participating)  of the
liability of it and each Commonly Controlled Entity for post-retirement benefits
to be  provided  to their  current  and former  employees  under Plans which are
welfare  benefit  plans (as  defined in Section  3(1) of ERISA) does not, in the
aggregate,  exceed the assets under all such Plans allocable to such benefits by
an amount  which would be  reasonably  likely to result in a liability  having a
Material Adverse Effect;

     (j) Location of Chief Executive  Office.  The chief executive office of the
Company is located in  Burlington,  North  Carolina,  which  office is the place
where the Company is "located"  for the purposes of Section  9-103(3)(d)  of the
UCC of the State of New York and the  office of the  Company  where the  Company
keeps its records concerning the Receivables;

     (k) Taxpayer  Identification  Number. The Internal Revenue Service taxpayer
identification number of the Company is 13-4116023; and

     (m) No agreement, document, instrument,  certificate,  report, statement or
other document or information  furnished to the Purchaser in connection herewith
or with the consummation of the transactions  contemplated hereby,  contains any
material  misstatement  of fact or omits to  state a  material  fact or any fact
necessary to make statements contained herein or therein not misleading in light
of the circumstances under which they were made.

1.14.Representations  and Warranties of the Company Relating to the Receivables.
     The  Company  hereby  represents  and  warrants  to the  Purchaser  on each
     Purchase Date with respect to each Receivable purchased by the Purchaser on
     such date, that as of the related Cutoff Date:

     (a) The  Company  is the sole  legal  and  beneficial  owner of and has all
right,  title and interest in and to such  Receivable and any Related  Security,
and upon the sale of such Receivable and Related Security to the Purchaser,  the
Purchaser  will  become the sole legal and  beneficial  owner of such  Purchased
Receivable  and  Related  Security,  free and  clear of any  Liens  (other  than
Permitted  Liens),  and no effective  financing  statement  or other  instrument
similar in effect  covering all or any part of such  Purchased  Receivable,  the
Related  Security or  Collections  with respect  thereto will at such time be on
file against the Company in any filing or recording  office  except such as have
been filed in favor of the  Purchaser in  accordance  with this  Agreement or in
favor of the  Unaffiliated  Buyer in accordance  with the  Receivables  Purchase
Agreement;

     (b)  Such  Receivable  has been  designated  by the  Unaffiliated  Buyer in
writing as an Approved Receivable,  the Face Amount thereof is the dollar amount
thereof  shown on the books and records of the Company,  and such  Receivable is
not a Defaulted Receivable;

     (c) All  consents,  licenses,  approvals,  orders or other  actions  of any
Person or any Governmental Authority required to be obtained,  effected or given
by the  Company  in  connection  with the sale of such  Receivable  and  Related
Security to the Purchaser have been duly obtained,  effected or given and are in
full force and effect;

     (d) The Obligor on such  Receivable is not an Affiliate or in any other way
related to the Company, its parent or any of its Subsidiaries;

     (e) Such  Receivable,  together  with the sale of goods  out of which  such
Receivable  arises,  (i) complies with all applicable  Requirements of Law, (ii)
constitutes a valid and binding  unconditional  obligation of the Obligor to pay
the Face Amount of such Receivable and is not subject to any defense, set-off or
counterclaim, (iii) is based on an actual and bona fide sale and delivery in the
ordinary course of business of goods that have been delivered to and accepted by
such Obligor,  (iv) provides for payment by such Obligor in U.S. Dollars, (v) is
not past its due date,  (vi) is not subject to any Lien,  (vii) does not include
any amount as to which such Obligor is permitted to withhold  payment  until the
occurrence  of a  specified  event or  condition  (including  but not limited to
"guaranteed" or  "conditional"  sales),  unless such Obligor has acknowledged in
writing that such  specified  event or condition has occurred ans such amount is
owing,  (viii) is not the subject of any legal or arbitral  proceeding,  (ix) is
not disputed and (x) is not subject to the Federal  Assignment for Claims Act of
1940 or any other transfer restriction; and

     (f) The  Company  has not  waived any of its  rights  with  respect to such
Receivable  or taken or omitted to take any action  which action or omission may
reduce or impair the rights that the Purchaser would otherwise have with respect
to such Receivable.

                                    COVENANTS

1.15.Affirmative  Covenants of the Company.  The Company  hereby agrees that, so
     long as  there  are any  amounts  outstanding  with  respect  to  Purchased
     Receivables, the Company shall:

     (a) Compliance  with  Requirements  of Law. Duly satisfy all obligations on
its part to be fulfilled  under or in connection with the Receivables and comply
with all  Requirements  of Law  applicable  to the  Receivables  the  failure to
satisfy or to comply with which would have a Material Adverse Effect.

     (b) Keeping of Records. Retain copies of the Records as custodian and agent
for the Purchaser and other Persons with interests in the Purchased  Receivables
and at its own expense  indicate on its computer files relating to the Purchased
Receivables  that the Purchased  Receivables  have been sold to the Purchaser in
accordance with this Agreement.

     (c) Credit and Collection Policy.  Comply in all material respects with its
Credit and Collection Policy in regard to the Purchased Receivables.

     (d) Inspection of Property;  Discussions. At any time and from time to time
during the Company's  regular  business  hours,  on reasonable  advance  notice,
permit the Purchaser or the agents or  representatives of the Purchaser to visit
the offices of the Company in order (i) to examine and make  abstracts  from any
of the Records and (ii) to discuss  matters  relating to the Receivables and the
Company's  performance  hereunder  with  officers  and  employees of the Company
having knowledge of such matters.

     (e)  Corporate   Existence.   Maintain  its  corporate   existence  in  the
jurisdiction of its incorporation, and qualify and remain qualified as a foreign
corporation  in each  jurisdiction  where it does  business,  except  where  the
failure to maintain such existence and qualifications  would not have a Material
Adverse Effect.

     (f ) Notices. Furnish to the Purchaser:

     (i)  promptly upon determining that any  representation or warranty made by
          the  Company  hereunder  was  incorrect  or the  Company has failed to
          comply with any of the agreements or provisions  hereof  applicable to
          it, written notice of such determination;

     (ii) promptly after becoming aware of any Lien on any Purchased Receivable;
     (iii)promptly if any failure to make a contribution occurs that could

          constitute an accumulated  funding  deficiency or could give rise to a
          Lien under Section 412 of the Code or Section 302 of ERISA;

     (iv) promptly  upon the  institution  of any  steps by any  Person  to
          terminate a Plan;
     (v)  promptly upon the occurrence of a Reportable Event; and
     (vi) promptly upon the institution of any steps by the Company or
          any  Commonly   Controlled  Entity  to  make  a  complete  or  partial
          withdrawal from a Multiemployer Plan.

     (g)  Further Action. At its expense, promptly execute and deliver all
     further instruments and documents, and take all further action, that may be
     necessary  or, in the  reasonable  opinion of the  Purchaser,  desirable in
     order to fully  effect  the  purposes  of this  Agreement  and to  perfect,
     protect or more fully evidence the Purchaser's right, title and interest in
     the  Purchased  Receivables  and the  Related  Security,  or to enable  the
     Purchaser  to  exercise  or enforce  any of its rights in respect  thereof.
     Without limiting the generality of the foregoing,  the Company will execute
     and  file  such  financing  or  continuation  statements  relating  to  the
     Receivables and the Related Security for filing under the provisions of the
     UCC, or amendments  thereto,  and such other instruments or notices, as may
     be necessary or, in the reasonable opinion of the Purchaser, desirable. The
     Company  hereby  irrevocably  authorizes  the Purchaser to file one or more
     financing or continuation statements,  and amendments thereto,  relating to
     all or any  part of the  Purchased  Receivables  sold or to be sold and the
     Related Security without the signature of the Company.

1.16.Negative Covenants of the Company.  The Company hereby agrees that, so long
     as there are any amounts outstanding with respect to Purchased Receivables,
     it shall not, directly or indirectly:

     (a) Liens.  Except as otherwise herein provided,  sell,  pledge,  assign or
transfer to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on, any  Receivable  or the Related  Security,  whether now existing or
hereafter created, with respect thereto, and the Company shall defend the right,
title and interest of the Purchaser  in, to and under any  Purchased  Receivable
and the Related Security, whether now existing or hereafter created, against all
claims of third parties  claiming through or under the Company;  provided,  that
nothing in this paragraph (a) shall prevent or be deemed to prohibit the Company
from suffering to exist upon any of the Receivables any Permitted Liens.

     (b) Extension or Amendment of Receivables.  Extend, rescind,  cancel, amend
or otherwise modify, or attempt or purport to extend, amend or otherwise modify,
the terms of any Purchased Receivables (including, without limitation, extending
the due dates  thereof  or  impairing  the  collectibility  thereof);  provided,
however, that the Company, as Servicer under the Receivables Purchase Agreement,
may do so in accordance with the terms of the Credit and Collection Policy or as
required by any Requirement of Law.

     (c) Change in Name.  Change (i) its name or  identity in any manner or (ii)
its  corporate  structure  in any manner that would or might make any  financing
statement  or  continuation  statement  relating  to  this  Agreement  seriously
misleading  within the  meaning of Section  9-402(7) of the UCC in effect in the
relevant jurisdiction, in each case without 20 days' prior written notice to the
Purchaser.

     (d) Location of Records. Move the location of its chief executive office or
the  location  of the  office  where it keeps its  records  with  respect to the
Receivables outside of Alamance County,  North Carolina,  without 20 days' prior
written notice to the Purchaser, and the Company shall promptly take all actions
reasonably  required  (including  but not  limited to all filings and other acts
necessary or advisable under the UCC of each relevant  jurisdiction) in order to
protect the Purchaser's interest in the Purchased Receivables. The Company shall
give the  Purchaser  prompt  notice  of a change  of the  location  of its chief
executive  office or any office  where it keeps its records  with respect to the
Receivables within the city or county where such office is located.

     (e) Accounting of Purchases.  Prepare any financial  statements which shall
account for the  transactions  contemplated  hereby in any manner  other than as
sales of the  Purchased  Receivables  by the Company to the Purchaser or account
for or treat the transactions  contemplated  hereby for accounting purposes and,
where taxes are not consolidated, for tax reporting purposes, except as required
by law, in any manner other than as sales of the  Purchased  Receivables  by the
Company to the Purchaser.

     (f) Chattel Paper.  Take any action to cause any Receivable to be evidenced
by any  instrument  or chattel paper (each as defined in the UCC as in effect in
the State of New York) except in connection  with its  enforcement or collection
of a Receivable.

     (g) Credit and Collection  Policy.  Make any change or  modification to the
Credit and  Collection  Policy  that could  reasonably  be  expected  to have an
adverse effect on the interests of the Purchaser in the Purchased Receivables or
the Related Security.

     (h)  Separate  Existence  of  Purchaser.  Violate  or  interfere  with  the
Purchaser's  compliance with clauses 1 through 14 of subsection  9(j)(iv) of the
LLC Agreement.

1.17.Covenants  of the  Servicer.  The  Servicer  hereby  agrees to collect  and
     service   (including   the  remittance  of  collections  on  the  Purchased
     Receivables)  the Purchased  Receivables in accordance  with Section 4.1 of
     the Receivables Purchase Agreement.

1.18.Accounting  of Purchases.  The  Purchaser  hereby agrees that the Purchaser
     shall not  prepare any  financial  statements  which shall  account for the
     transactions  contemplated  hereby in any manner other than as purchases of
     the Purchased  Receivables by the Purchaser or in any other respect account
     for or treat such  transactions  (including  for  accounting  purposes and,
     where taxes are not  consolidated,  for tax reporting  purposes,  except as
     required by law) in any manner  other than as  purchases  of the  Purchased
     Receivables by the Purchaser.

                                  MISCELLANEOUS

1.19.Payments.  Each cash  payment to be made by the  Purchaser  or the  Company
     hereunder  shall be made not later  than 3:00 p.m.  (New York  time) on the
     required  payment date in Dollars by wire transfer to a bank account of the
     Purchaser or the Company,  as the case may be, designated in writing by the
     Purchaser to the Company or the Company to the  Purchaser,  as the case may
     be.

1.20.Costs  and  Expenses.  (a) The  Company  hereby  agrees  to  indemnify  the
     Purchaser from and against any and all claims, damages,  expenses,  losses,
     liabilities,  penalties,  judgments,  suits,  actions,  costs, charges, and
     disbursements  (including  all  reasonable  fees and all other  charges and
     disbursements  of  any  law  firm  or  other  counsel  for  the  Purchaser)
     (collectively,  "Indemnification Amounts") of any kind or nature whatsoever
     arising  out  of,  relating  to or  resulting  from  (whether  directly  or
     indirectly) this Agreement or the transactions contemplated hereby, or with
     respect to the use of proceeds of purchases, or in respect of any Purchased
     Receivable and Related Security purchased hereunder,  including any and all
     Indemnification Amounts relating to or resulting from any of the following:

               (i)the failure  of any  Purchased  Receivable  to be an  Approved
                    Receivable,  the failure of any information contained in any
                    report  delivered  under  this  Agreement  to  be  true  and
                    correct, or the failure of any other information provided to
                    the Purchaser  with respect to the Purchased  Receivables or
                    pursuant to or in connection  with this Agreement to be true
                    and correct;

               (ii)the failure of any representation or warranty or statement or
                    certification

               (iii)made or deemed made by the Company (or any of its  officers)
                    under or in connection with this Agreement to have been true
                    and correct in all material respects when made;

               (iv)the failure by the Company to comply with any applicable law,
                    rule  or  regulation  (including  without  limitation  "bulk
                    sales" or analogous laws of any  jurisdiction)  with respect
                    to any Purchased Receivable; or the failure of any Purchased
                    Receivable  to conform to any such  applicable  law, rule or
                    regulation;

               (iv)the failure to vest in the Purchaser a valid and  enforceable
                    ownership  interest in the  Purchased  Receivables,  in each
                    case  free  and  clear  of any Lien  (other  than  Permitted
                    Liens);

               (v)the failure to have filed,  or any delay in filing,  financing
                    statements or other similar  instruments or documents  under
                    the UCC of any applicable  jurisdiction or other  applicable
                    laws with respect to any Purchased  Receivables,  whether at
                    the time of purchase or at any subsequent time;

               (vi)(A) any dispute, claim, offset, billing adjustment or defense
                    of the  Obligor to the payment of any  Purchased  Receivable
                    (including,  without  limitation,  a  defense  based on such
                    Receivable not being a legal,  valid and binding  obligation
                    of such Obligor  enforceable  against it in accordance  with
                    its terms),  (B) or any other claim  resulting from the sale
                    of  the  goods  or  services   related  to  such   Purchased
                    Receivable  or the  furnishing  or failure  to furnish  such
                    goods or services or relating to collection  activities with
                    respect to such  Purchased  Receivable,  or (C) any Customer
                    Dispute;

               (vii)any  failure of the  Company  to perform or comply  with its
                    duties or obligations  in accordance  with the provisions of
                    this Agreement;
               (viii)any claim, investigation,  litigation or proceeding arising
                    out  of  or in  connection  with  the  goods,  insurance  or
                    services relating to any Purchased Receivable;

               (ix)the  commingling  of any portion of  Collections  at any time
                    with other funds;
               (x)any  investigation,  litigation or proceeding  (including  any
                    bankruptcy  proceeding,  insolvency  proceeding or appellate
                    proceeding)  related to this Agreement,  the use of proceeds
                    of  purchases  of   Receivables  or  the  ownership  of  the
                    Purchased Receivables and Related Security;

               (xi)the failure to notify any  Obligor of the  assignment  of any
                    Receivable from the Company to the Purchaser, or the failure
                    to require that payments (including without limitation under
                    insurance  policies) be made directly to the  Purchaser,  as
                    permitted by law;

               (xii)any taxes  asserted  or imposed in respect of the  Purchased
                    Receivables   or  purchases  and  sales  of  Receivables  or
                    interests therein; or
               (xiii) any action or  omission by the  Company  which  reduces or
                    impairs  the  rights of the  Purchaser  with  respect to any
                    Purchased Receivable or Related Security; provided, however,
                    that in no event  shall the  Company be  required to pay any
                    Indemnification  Amount  hereunder to the extent such amount
                    (A) results from the gross negligence or willful  misconduct
                    on the part of the Purchaser, (B) relates to any overall net
                    income taxes or franchise  taxes imposed on the Purchaser by
                    the  State of  Delaware  or (C)  results  from an  Obligor's
                    failure  to  pay  amounts  in  respect  of  such   Purchased
                    Receivable because of such Obligor's  financial inability to
                    pay such amounts.

     (b) In addition to the rights of  indemnification  granted under  paragraph
(a) above, the Company hereby agrees to pay:

               (i)  all  reasonable  costs  and  expenses  (including,   without
                    limitation,  all  reasonable  fees and all other charges and
                    disbursements  of any law  firm  or  other  counsel  for the
                    Purchaser)  of the  Purchaser  in  connection  with  (A) the
                    preparation,    negotiation,    execution,    delivery   and
                    administration  (including,  without  limitation,   periodic
                    auditing)  of this  Agreement  and any  potential  or actual
                    amendment, modification or waiver of this Agreement; (B) the
                    Purchaser's  obtaining  advice as to the rights and remedies
                    of  any  Person  under  this  Agreement  (including  without
                    limitation   in   connection   with  any  "workout"  or  any
                    bankruptcy  or insolvency  proceeding  or any  litigation or
                    other  adversary  proceeding);  and (iii) the enforcement of
                    this Agreement; and

               (ii) any and all  stamp  and  other  taxes  and fees  payable  in
                    connection   with  the  execution,   delivery,   filing  and
                    recording of this Agreement;  and the Company agrees to save
                    the Purchaser harmless from and against any liabilities with
                    respect to or resulting from any delay in paying or omission
                    to pay such taxes and fees.

     (c) The benefits of this Section 6.2 may be assigned by the  Purchaser  and
enforced by the assignees of the Purchaser.

1.21.Successors and Assigns.  This Agreement  shall be binding upon and inure to
     the  benefit  of  the  Company  and  the  Purchaser  and  their  respective
     successors (whether by merger, consolidation or otherwise) and assigns. The
     Company  agrees that it will not assign or  transfer  all or any portion of
     its rights or delegate any of its obligations  hereunder  without the prior
     written consent of the Purchaser.

     The Company  acknowledges that the Purchaser will,  concurrently  herewith,
assign to the  Unaffiliated  Purchaser all of the Purchaser's  right,  title and
interest  in, to and  under  (but none of the  Purchaser's  obligations  under),
whether now or hereafter  owned,  existing or arising,  this  Agreement  and the
Assignments.  The  Company  consents  to such  assignment  and  agrees  that the
Unaffiliated  Purchaser,  to the extent  provided  in the  Receivables  Purchase
Agreement,  shall be  entitled to enforce  the terms of this  Agreement  and the
Assignments and the rights (including, without limitation, the right to grant or
withhold any consent or waiver) of the Purchaser  directly  against the Company.
The  Company  hereby  consents to all of the terms of the  Receivables  Purchase
Agreement.

1.22.GOVERNING  LAW.  THIS  AGREEMENT  AND THE  RIGHTS  AND  OBLIGATIONS  OF THE
     PARTIES  UNDER THIS  AGREEMENT  SHALL BE  GOVERNED  BY, AND  CONSTRUED  AND
     INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

1.23.No Waiver;  Cumulative  Remedies.  No failure to  exercise  and no delay in
     exercising,  on the part of the  Purchaser,  any  right,  remedy,  power or
     privilege  hereunder,  shall  operate  as a waiver  thereof,  nor shall any
     single  or  partial  exercise  of any  right,  remedy,  power or  privilege
     hereunder preclude any other or further exercise thereof or the exercise of
     any other right, remedy, power or privilege. The rights,  remedies,  powers
     and  privileges  herein  provided are  cumulative and not exhaustive of any
     rights, remedies, powers and privileges provided by law.

1.24.Amendments and Waivers.  Neither this Agreement nor any terms hereof may be
     amended,  supplemented  or  modified  except  in a  writing  signed  by the
     Purchaser and the Company.

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

1.26.Notices.  All demands,  notices and  communications  hereunder  shall be in
     writing  delivered by hand or by facsimile and shall be deemed to have been
     duly given,  in the case of notice by  facsimile,  when  telecopied  to the
     following  number,  or,  in the  case of  notice  by  hand,  if  personally
     delivered at the following  addresses or to such other  addresses as may be
     hereafter notified by the respective parties hereto:

         The Purchaser:
                                    Cluett American Receivables, LLC
                                    661 Plaid Street
                                    Burlington, NC 27215
                                    Attention:  Bryan P. Marsal

         The Company:
                                    Great American Knitting Mills, Inc.
                                    661 Plaid Street
                                    Burlington, NC 27215
                                    Attention:  Bryan P. Marsal


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

1.28.WAIVERS OF JURY  TRIAL.  EACH PARTY  HERETO  HEREBY  WAIVES ITS RIGHTS TO A
     TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION  BASED UPON OR ARISING OUT OF
     OR RELATED TO THIS  AGREEMENT  OR ANY OTHER  DOCUMENT  OR THE  TRANSACTIONS
     CONTEMPLATED  HEREBY  OR  THEREBY,  IN  ANY  ACTION,  PROCEEDING  OR  OTHER
     LITIGATION  OF ANY TYPE  BROUGHT BY ANY OF THE PARTIES  HERETO  AGAINST ANY
     OTHER PARTY OR ANY PARTY,  WHETHER  WITH RESPECT TO CONTRACT  CLAIMS,  TORT
     CLAIMS,  OR OTHERWISE.  EACH PARTY HERETO HEREBY AGREES THAT ANY SUCH CLAIM
     OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.  WITHOUT
     LIMITING THE FOREGOING,  EACH OF THE PARTIES HERETO FURTHER AGREES THAT ITS
     RESPECTIVE  RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
     AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR
     IN PART, TO CHALLENGE THE VALIDITY OR  ENFORCEABILITY  OF THIS AGREEMENT OR
     ANY OTHER  DOCUMENT OR ANY PROVISION  HEREOF OR THEREOF.  THIS WAIVER SHALL
     APPLY  TO  ANY  SUBSEQUENT  AMENDMENTS,  AMENDMENTS  AND  RESTATEMENTS,  OR
     MODIFICATIONS  TO THIS AGREEMENT OR ANY OTHER DOCUMENT  (INCLUDING  WITHOUT
     LIMITATION ANY EXTENSION OR PROPOSED EXTENSION OF THE FACILITY  TERMINATION
     DATE).

1.29.No Bankruptcy  Petition.  The Company  covenants and agrees that,  prior to
     the date  which is one year and one day  after  payment  in full of all its
     obligations  hereunder,  it will not institute  against,  or join any other
     Person in  instituting  against,  or  encourage  or  solicit  any Person to
     institute   against,   the   Purchaser  any   bankruptcy,   reorganization,
     arrangement,  insolvency or liquidation  proceedings,  or other proceedings
     under any federal or state bankruptcy or similar law.

1.30.Limited  Recourse;  Survival.  The  obligations of the Purchaser  hereunder
     shall be due and payable only to the extent that the Purchaser's assets are
     sufficient to pay such obligations.  Without  limitation of the obligations
     of the  Purchaser,  no recourse  shall be had for the payment of any amount
     owing in  respect  of this  Agreement  or any other  Document  against  any
     member,  manager,  director,  officer,  employee or agent of the  Purchaser
     based solely on their status as such.  The  provisions of this Section 6.12
     and the other  provisions of this Article VI shall survive the  termination
     of this Agreement.

1.31.Termination.  This Agreement will terminate on the earlier of (i) the first
     anniversary  of the  date  hereof  and  (ii) the  first  date on which  all
     Receivables  sold hereunder  have been  collected and the proceeds  thereof
     turned over to the  Purchaser  and all other amounts owing to the Purchaser
     hereunder  shall have been paid in full or, if  Receivables  sold hereunder
     have not been collected such Receivables have become Defaulted  Receivables
     and the Servicer  shall have  completed its  collection  efforts in respect
     thereto;  provided,  however,  that the  indemnities  of the Company to the
     Purchaser set forth in this Agreement  shall survive such  termination  and
     provided  further that the Purchaser  shall remain  entitled to receive any
     collections  on  Receivables  sold  hereunder  which have become  Defaulted
     Receivables after the Servicer shall have completed its collection  efforts
     in respect thereof.

1.32.Headings.  The headings and captions of sections,  subsections and articles
     in this  Agreement,  of  schedules  to this  Agreement,  and the  table  of
     contents of this  Agreement,  are for purposes of reference  only and shall
     not  affect  the  meaning  or  interpretation  of  any  provision  of  this
     Agreement.

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be executed by their respective officers thereunto duly authorized,
all as of the day and year first above written.

                                             GREAT AMERICAN KNITTING MILLS, INC.


                                              By:      ________________________
                                              Name:
                                              Title:

                                              CLUETT AMERICAN RECEIVABLES, LLC


                                              By:      ________________________
                                              Name:
                                              Title:

<PAGE>


                                    EXHIBIT A

                                   Assignment

                   For Value Received,  the undersigned does hereby sell, assign
  and transfer unto Cluett American Receivables, LLC, its successors or assigns,
  all the right, title and interest of the undersigned in, to and under each and
  every Receivable (as defined in the Receivables Transfer Agreement dated as of
  May 12, 2000  between the  undersigned  and said LLC)  described in Schedule I
  annexed  hereto and in, to and under all  guarantees  thereof  and  collateral
  security  therefor,  effective  as of the close of  business  on  [insert  the
  related Cutoff Date] (the "Cutoff Date").

                   This Assignment is made without  recourse but pursuant to and
  upon all the warranties, representations, covenants and agreements on the part
  of the undersigned  contained in said Receivables Transfer Agreement and is to
  be governed  by, and  construed  and  interpreted  in  accordance  with,  said
  Receivables Transfer Agreement and the law of the State of New York.

                   IN WITNESS WHEREOF, the undersigned has caused these presents
  to be duly executed this 12th day of May, 2000.


                                        GREAT AMERICAN KNITTING MILLS, INC.



                                        By ________________________________
                                        Title:





                                        GREAT AMERICAN KNITTING MILLS, INC.



                                        RECEIVABLES TRANSFER AGREEMENT


                                        Dated as of May 12, 2000



<PAGE>
                                TABLE OF CONTENTS
                                                                           Page

         ARTICLE I

         DEFINITIONS

         1.1    Defined Terms.................................................1
         1.2    Other Definitional Provisions.................................4


         ARTICLE II

         PURCHASE AND SALE OF RECEIVABLES

         2.1    Purchase and Sale of Receivables..............................5
         2.2    Purchase Price................................................6
         2.3    Payment of Purchase Price.....................................7
         2.4    No Repurchase.................................................7
         2.5   Adjustments....................................................7
         2.6    Limited Repurchase Obligation.................................7
         2.7    Purchase of Receivables.......................................8
         2.8    Certain Charges. .............................................8
         2.10  Further Action.................................................8
         2.11  Further Assurances by Purchaser................................9


         ARTICLE III

         CONDITIONS TO PURCHASE AND SALE

         3.1  Conditions Precedent to the First Purchase of Receivables......10
         3.2  Conditions Precedent to each Purchase of Receivables...........10

         ARTICLE IV

         REPRESENTATIONS AND WARRANTIES

         4.1  Representations and Warranties of the Company Relating to the
                                        Company..............................11
         4.2  Representations and Warranties of the Company Relating to the
                                        Receivables .........................13



         ARTICLE V

         COVENANTS

         5.1  Affirmative Covenants of the Company...........................14
         5.2  Negative Covenants of the Company..............................15
         5.3  Covenants of the Servicer......................................17
         5.4  Accounting of Purchases........................................17



         ARTICLE VI

         MISCELLANEOUS

         6.1   Payments......................................................17
         6.2   Costs and Expenses............................................17
         6.3   Successors and Assigns........................................19
         6.4   GOVERNING LAW.................................................19
         6.5   No Waiver; Cumulative Remedies................................20
         6.6   Amendments and Waivers........................................20
         6.7   Severability..................................................20
         6.8   Notices.......................................................20
         6.9   Counterparts..................................................20
         6.10  WAIVERS OF JURY TRIAL.........................................20
         6.11  No Bankruptcy Petition........................................21
         6.12  Limited Recourse; Survival....................................21
         6.13  Termination...................................................21
         6.14  Headings......................................................22


                                     EXHIBIT

A  -  Form Assignment

<PAGE>