Exhibit 10.2.6 Credit Agreement

                                CREDIT AGREEMENT


                          Dated as of November 9, 1999


                                      among


                             Cluett American Corp.,


                       Vestar Capital Partners III, L.P.,


                                       and


                             BANK OF AMERICA, N. A.


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                                TABLE OF CONTENTS


SECTION 1  DEFINITIONS.........................................................1
         1.1  Definitions......................................................1
         1.2  Computation of Time Periods......................................6


SECTION 2 CREDIT FACILITIES....................................................7
         2.1  Loans............................................................7


SECTION 3  OTHER PROVISIONS RELATING TO CREDIT FACILITIES......................8
         3.1  Default Rate.....................................................8
         3.2  Extension and Conversion.........................................8
         3.3  Prepayments......................................................8
         3.4  Termination and Reduction of Commitment..........................8
         3.5  Unused Fee.......................................................9
         3.6  Capital Adequacy.................................................9
         3.7  Limitation on Eurodollar Loans...................................9
         3.8  Illegality.......................................................9
         3.9  Requirements of Law.............................................10
         3.10  Treatment of Affected Loans....................................10
         3.11  Taxes..........................................................11
         3.12  Compensation...................................................11
         3.13  Payments, Computations, Etc....................................12
         3.14  Evidence of Debt...............................................12


SECTION 4  GUARANTY...........................................................12
         4.1  The Guaranty....................................................12
         4.2  Obligations Unconditional.......................................13
         4.3  Reinstatement...................................................13
         4.4  Certain Additional Waivers......................................13
         4.5  Remedies........................................................14
         4.6  Guarantee of Payment; Continuing Guarantee......................14
         4.7  Deposit of Capital Call Notices.................................14


SECTION 5  CONDITIONS.........................................................14
         5.1  Closing Conditions..............................................14
         5.2  Conditions to all Extensions of Credit..........................15


SECTION 6  REPRESENTATIONS AND WARRANTIES.....................................15
         6.1  Existence and Power.............................................15
         6.2  Authorization...................................................16
         6.3  No Conflicts....................................................16
         6.4  Consents........................................................16
         6.5  Enforceable Obligations.........................................16
         6.6  Permitted Investment............................................17
         6.7  Venture Capital Operating Company...............................17
         6.8  Deposited Notices...............................................17
         6.9  Limitations on Actions..........................................17


SECTION 7  AFFIRMATIVE COVENANTS..............................................17
         7.1  Outstanding Subscriptions.......................................17
         7.2  General Partner.................................................17
         7.3  Plan Assets, etc................................................17
         7.4  Receipt of the Funds Pursuant to the Deposited Notices..........18


SECTION 8  NEGATIVE COVENANTS.................................................18
         8.1  Limitations on Actions..........................................18


SECTION 9  EVENTS OF DEFAULT..................................................18
         9.1  Events of Default...............................................18
         9.2  Acceleration; Remedies..........................................19
         9.3  Cash Collateral Account.........................................19
         9.4  Allocation of Fund Payments.....................................20
         9.5  Receipt of Funds Pursuant to the Deposited Notices..............20

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SECTION 10  MISCELLANEOUS.....................................................20
         10.1  Notices........................................................20
         10.2  Right of Set-Off; Adjustments..................................21
         10.3  Benefit of Agreement...........................................21
         10.4  No Waiver; Remedies Cumulative.................................21
         10.5  Expenses; Indemnification......................................22
         10.6  Amendments, Waivers and Consents...............................22
         10.7  Counterparts...................................................22
         10.8  Headings.......................................................22
         10.9  Survival.......................................................22
         10.10  Governing Law; Submission to Jurisdiction; Venue..............23
         10.11  Severability..................................................23
         10.12  Entirety......................................................23
         10.13  Binding Effect; Termination...................................23
         10.14  Limitation on Recourse to the Fund............................23
         10.15  Confidentiality...............................................24


                                    EXHIBITS

Exhibit A                  Form of Capital Call Notice
Exhibit 2.1(b)(i)          Form of Notice of Borrowing
Exhibit 3.2                Form of Notice of Extension/Conversion




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                                CREDIT AGREEMENT


     THIS CREDIT AGREEMENT,  dated as of November 9, 1999 (as amended, modified,
restated or supplemented from time to time, the "Credit  Agreement"),  is by and
among Cluett American Corp., a Delaware  corporation  (the  "Borrower"),  Vestar
Capital  Partners III, L.P., a Delaware limited  partnership  (the "Fund"),  and
BANK OF AMERICA, N. A. (the "Bank").

                               W I T N E S S E T H

     WHEREAS,  the  Borrower  has  requested  that the Bank provide a $3,000,000
revolving credit facility for the purposes hereinafter set forth; and

     WHEREAS,  the  Bank  has  agreed  to make  the  requested  credit  facility
available to the Borrower on the terms and conditions hereinafter set forth;

     NOW,  THEREFORE,  IN  CONSIDERATION  of the  premises  and  other  good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties hereto agree as follows:


SECTION 10

DEFINITIONS

10.1 Definitions.

         As used in this Credit  Agreement,  the following  terms shall have the
meanings specified below unless the context otherwise requires:

               "Adjusted Base Rate" means the Base Rate plus 0.50%.

               "Adjusted Eurodollar Rate" means the Eurodollar Rate plus 1.50%.

               "Affiliate" means,  with respect to any Person,  any other Person
                    (i) directly or indirectly  controlling  or controlled by or
                    under direct or indirect  common control with such Person or
                    (ii)  directly or  indirectly  owning or holding ten percent
                    (10%) or more of the Voting Equity Interests in such Person.
                    For purposes of this  definition,  "control"  when used with
                    respect  to  any  Person  means  the  power  to  direct  the
                    management   and  policies  of  such  Person,   directly  or
                    indirectly,   whether   through  the   ownership  of  voting
                    securities,   by  contract  or  otherwise;   and  the  terms
                    "controlling" and "controlled" have meanings  correlative to
                    the foregoing.

               "Applicable  Lending  Office" means the office of the Bank (or of
                    an  Affiliate of the Bank) as the Bank may from time to time
                    specify to the  Borrower by written  notice as the office by
                    which its Eurodollar Loans are made and maintained.

               "Bankruptcy  Code" means the  Bankruptcy  Code in Title 11 of the
                    United  States  Code,  as amended,  modified,  succeeded  or
                    replaced from time to time.

               "Bank" shall  have  the  meaning  assigned  to  such  term in the
                    heading hereof, together with any successors or assigns.

               "Bankruptcy  Code" means the  Bankruptcy  Code in Title 11 of the
                    United  States  Code,  as amended,  modified,  succeeded  or
                    replaced from time to time.

               "Bankruptcy  Event"  means,  with  respect  to  any  Person,  the
                    occurrence  of any of the  following  with  respect  to such
                    Person:   (i)  a  court  or   governmental   agency   having
                    jurisdiction  in the premises  shall enter a decree or order
                    for relief in respect of such Person in an involuntary  case
                    under any applicable bankruptcy, insolvency or other similar
                    law now or  hereafter in effect,  or  appointing a receiver,
                    liquidator,  assignee,  custodian, trustee, sequestrator (or
                    similar official) of such Person or for any substantial part
                    of its Property or ordering the winding up or liquidation of
                    its affairs;  or (ii) there shall be commenced  against such
                    Person an involuntary case under any applicable  bankruptcy,
                    insolvency  or other similar law now or hereafter in effect,
                    or any case,  proceeding or other action for the appointment

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                    of a receiver,  liquidator,  assignee,  custodian,  trustee,
                    sequestrator (or similar official) of such Person or for any
                    substantial  part of its  Property  or for the winding up or
                    liquidation  of its affairs,  and such  involuntary  case or
                    other  case,   proceeding   or  other  action  shall  remain
                    undismissed,  undischarged or unbonded for a period of sixty
                    (60) consecutive days; or (iii) such Person shall commence a
                    voluntary case under any applicable  bankruptcy,  insolvency
                    or other similar law now or hereafter in effect,  or consent
                    to the entry of an order for relief in an  involuntary  case
                    under any such law, or consent to the  appointment or taking
                    possession by a receiver,  liquidator,  assignee, custodian,
                    trustee,  sequestrator (or similar  official) of such Person
                    or for any  substantial  part of its  Property  or make  any
                    general  assignment  for the benefit of  creditors;  or (iv)
                    such  Person  shall be unable to, or shall  admit in writing
                    its  inability  to, pay its debts  generally  as they become
                    due.

               "BaseRate"  means,  for any day,  the rate per annum equal to the
                    higher  of (a) the  Federal  Funds  Rate  for  such day plus
                    one-half  of one  percent  (0.5%) and (b) the Prime Rate for
                    such day. Any change in the Base Rate due to a change in the
                    Prime Rate or the Federal  Funds Rate shall be  effective on
                    the  effective  date of such  change  in the  Prime  Rate or
                    Federal Funds Rate.

               "BaseRate  Loan"  means  any  Loan  bearing  interest  at a  rate
                    determined by reference to the Base Rate.

               "Borrower"  shall have the  meaning  assigned to such term in the
                    heading  hereof,  together with any permitted  successors or
                    assigns.

               "Borrower Obligations"  means,  without  duplication,  all of the
                    obligations of the Borrower to the Bank,  whenever  arising,
                    under this Credit Agreement (including,  but not limited to,
                    any interest  accruing  after the occurrence of a Bankruptcy
                    Event with respect to the  Borrower,  regardless  of whether
                    such  interest  is an  allowed  claim  under the  Bankruptcy
                    Code).

               "Business Day" means a day other than a Saturday, Sunday or other
                    day on which commercial  banks in Charlotte,  North Carolina
                    or New York,  New York are  authorized or required by law to
                    close,   except  that,   when  used  in  connection  with  a
                    Eurodollar  Loan,  such  day  shall  also be a day on  which
                    dealings  between banks are carried on in Dollar deposits in
                    London, England.

               "Capital Call Notice" means a capital call notice  satisfying the
                    requirements of Section 3.1 of the Partnership Agreement and
                    substantially in the form of Exhibit A attached hereto.

               "CashCollateral  Account" shall have the meaning assigned to such
                    term in Section 9.3.

               "CashEquivalents"  shall have the  meaning  assigned to such term
                    in the Existing Credit Agreement.

               "Closing Date" means the date hereof.

               "Code" means the Internal  Revenue Code of 1986, as amended,  and
                    any successor  statute thereto,  as interpreted by the rules
                    and regulations issued thereunder, in each case as in effect
                    from time to time.  References to sections of the Code shall
                    be construed also to refer to any successor sections.

               "Commitment"  means the  commitment  of the Bank in an  aggregate
                    principal  amount  at  any  time  outstanding  of up to  the
                    Committed   Amount,   to  make  Loans  to  the  Borrower  in
                    accordance with the provisions of Section 2.1(a).

               "Committed Amount"  shall have the meaning  assigned to such term
                    in Section 2.1(a).

               "Continue",  "Continuation",  and "Continued"  shall refer to the

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                    continuation  pursuant to Section 3.2 hereof of a Eurodollar
                    Loan from one Interest Period to the next Interest Period.

               "Convert",  "Conversion",   and  "Converted"  shall  refer  to  a
                    conversion  pursuant to Section 3.2 or Sections  3.7 through
                    3.10, inclusive, of a Base Rate Loan into a Eurodollar Loan.

               "Default" means any event,  act or condition which with notice or
                    lapse  of  time,  or  both,  would  constitute  an  Event of
                    Default.

               "Deposited Notices"  means a collective  reference to the Capital
                    Call Notices  delivered by the Fund to the Bank  pursuant to
                    Section  5.1(b) and  maintained  on deposit with the Bank as
                    contemplated by Section 4.7.

               "Dollars" and "$" means dollars in lawful  currency of the United
                    States of America.

               "Equity Interest" means (i) in the case of a corporation, capital
                    stock,  (ii)  in the  case  of an  association  or  business
                    entity,  any  and  all  shares,  interests,  participations,
                    rights or other equivalents  (however designated) of capital
                    stock,  (iii)  in the  case  of a  partnership,  partnership
                    interests  (whether general or limited) and (iv) in the case
                    of a limited liability company, membership interests.

               "Eurodollar  Loan"  means any Loan that bears  interest at a rate
                    based upon the Eurodollar Rate.

               "Eurodollar Rate" means, for any Eurodollar Loan for any Interest
                    Period  therefor,  the rate per annum (rounded  upwards,  if
                    necessary,  to the nearest  1/100 of 1%)  determined  by the
                    Bank to be equal to the  quotient  obtained by dividing  (a)
                    the Interbank Offered Rate for such Eurodollar Loan for such
                    Interest  Period  by  (b) 1  minus  the  Eurodollar  Reserve
                    Requirement  for such  Eurodollar  Loan  for  such  Interest
                    Period.

               "Eurodollar Reserve  Requirement" means, at any time, the maximum
                    rate at which reserves (including,  without limitation,  any
                    marginal, special,  supplemental, or emergency reserves) are
                    required to be maintained under regulations issued from time
                    to time by the Board of  Governors  of the  Federal  Reserve
                    System (or any  successor)  by member  banks of the  Federal
                    Reserve System against  "Eurocurrency  liabilities" (as such
                    term  is  used  in  Regulation  D of  such  Board).  Without
                    limiting the effect of the foregoing, the Eurodollar Reserve
                    Requirement  shall reflect any other reserves required to be
                    maintained  by such  member  banks  with  respect to (i) any
                    category of liabilities which includes deposits by reference
                    to which the Adjusted  Eurodollar  Rate is to be determined,
                    or (ii) any category of extensions of credit or other assets
                    which include Eurodollar Loans. The Adjusted Eurodollar Rate
                    shall be adjusted  automatically  on and as of the effective
                    date of any change in the Eurodollar Reserve Requirement.

               "Event of Default"  shall have the meaning  assigned to such term
                    in Section 9.1.

               "Existing Credit Agreement" means the Credit Agreement,  dated as
                    of May 18, 1998,  among Cluett  American Corp., as borrower,
                    the guarantors party thereto,  the lenders party thereto and
                    Bank of  America,  N.A.,  as  agent  for  such  lenders,  as
                    amended,  modified,  restated or  supplemented  from time to
                    time.

               "Federal  Funds  Rate"  means,  for any day,  the rate per  annum
                    (rounded upwards, if necessary,  to the nearest 1/100 of 1%)
                    equal to the  weighted  average  of the  rates on  overnight
                    Federal  funds  transactions  with  members  of the  Federal
                    Reserve  System  arranged by Federal  funds  brokers on such
                    day, as published by the Federal Reserve Bank of New York on
                    the Business Day next succeeding such day; provided that (a)
                    if such day is not a Business  Day,  the Federal  Funds Rate
                    for such day shall be such rate on such  transactions on the
                    next  preceding  Business  Day as so  published  on the next

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                    succeeding  Business  Day,  and  (b) if no  such  rate is so
                    published on such next succeeding  Business Day, the Federal
                    Funds Rate for such day shall be the average rate charged to
                    the Bank (in its  individual  capacity)  on such day on such
                    transactions as determined by the Bank.

               "Fund" shall  have  the  meaning  assigned  to  such  term in the
                    heading hereof.

               "GAAP" means  generally  accepted  accounting  principles  in the
                    United  States as in  effect  from time to time set forth in
                    the opinions and pronouncements of the Accounting Principles
                    Board  and  the  American   Institute  of  Certified  Public
                    Accountants  and the  statements and  pronouncements  of the
                    Financial  Accounting  Standards  Board  and the  rules  and
                    regulations of the Securities and Exchange  Commission which
                    are applicable as of the date of determination.

               "General Partner" means Vestar  Associates  III, L.P., a Delaware
                    limited partnership, as general partner of the Fund.

               "Governmental  Authority"  means  any  Federal,  state,  local or
                    foreign   court   or   governmental    agency,    authority,
                    instrumentality or regulatory body.

               "Guaranty Obligations" means, with respect to any Person, without
                    duplication,  any  obligations  of such  Person  (other than
                    endorsements   in  the   ordinary   course  of  business  of
                    negotiable    instruments   for   deposit   or   collection)
                    guaranteeing  or intended to guarantee any  Indebtedness  of
                    any other Person in any manner,  whether direct or indirect,
                    and including without limitation any obligation,  whether or
                    not contingent, (i) to purchase any such Indebtedness or any
                    Property constituting security therefor,  (ii) to advance or
                    provide  funds or other  support for the payment or purchase
                    of any such  Indebtedness  or to maintain  working  capital,
                    solvency  or other  balance  sheet  condition  of such other
                    Person (including  without  limitation keep well agreements,
                    maintenance   agreements,   comfort   letters   or   similar
                    agreements or arrangements) for the benefit of any holder of
                    Indebtedness  of  such  other  Person,  (iii)  to  lease  or
                    purchase Property,  securities or services primarily for the
                    purpose of assuring the holder of such Indebtedness, or (iv)
                    to  otherwise  assure or hold  harmless  the  holder of such
                    Indebtedness  against loss in respect thereof. The amount of
                    any  Guaranty  Obligation  hereunder  shall  (subject to any
                    limitations  set  forth  therein)  be deemed to be an amount
                    equal  to  the  outstanding  principal  amount  (or  maximum
                    principal  amount, if larger) of the Indebtedness in respect
                    of which such Guaranty Obligation is made.

               "Hedging Agreements" means any interest rate protection agreement
                    or foreign currency exchange agreement.

               "Indebtedness"  means,  with  respect  to  any  Person,   without
                    duplication, (a) all obligations of such Person for borrowed
                    money,  (b) all  obligations  of such  Person  evidenced  by
                    bonds,  debentures,  notes or similar  instruments,  or upon
                    which  interest  payments  are  customarily  made,  (c)  all
                    obligations of such Person under  conditional  sale or other
                    title retention agreements relating to Property purchased by
                    such Person (other than customary reservations or retentions
                    of title under agreements with suppliers entered into in the
                    ordinary  course of business),  (d) all  obligations of such
                    Person issued or assumed as the deferred  purchase  price of
                    Property or services  purchased  by such Person  (other than
                    trade debt  incurred in the ordinary  course of business and
                    due within six months of the incurrence thereof) which would
                    appear as liabilities on a balance sheet of such Person, (e)
                    all obligations of such Person under  take-or-pay or similar
                    arrangements  or  under  commodities  agreements,   (f)  all
                    Indebtedness  of others  secured by (or for which the holder
                    of such  Indebtedness  has an existing right,  contingent or
                    otherwise,  to be secured by) any Lien on, or payable out of
                    the proceeds of production from,  Property owned or acquired
                    by  such  Person,  whether  or not the  obligations  secured
                    thereby have been assumed,  (g) all Guaranty  Obligations of
                    such Person, (h) the principal portion of all obligations of
                    such Person under any lease by that Person as lessee  which,
                    in  accordance  with  GAAP,  should  be  accounted  for as a
                    capital lease on the balance  sheet of such Person,  (i) all
                    obligations of such Person under Hedging Agreements, (j) the
                    maximum  amount of all standby  letters of credit  issued or
                    bankers'  acceptances  facilities created for the account of
                    such  Person  and,  without  duplication,  all drafts  drawn
                    thereunder (to the extent  unreimbursed),  (k) all preferred
                    Equity  Interests  issued  by such  Person  and which by the
                    terms  thereof  could  be (at  the  request  of the  holders

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                    thereof or  otherwise)  subject to  mandatory  sinking  fund
                    payments,  mandatory redemption or other acceleration (other
                    than as a result of any event or condition  that does not in
                    fact  result  in  a  redemption  of  such  preferred  Equity
                    Interests)  prior to the Maturity  Date,  (l) the  principal
                    portion  of  all   obligations  of  such  Person  under  any
                    synthetic lease, tax retention operating lease,  off-balance
                    sheet loan or similar  off-balance  sheet financing  product
                    where  such   transaction   is  considered   borrowed  money
                    indebtedness  for  tax  purposes  but  is  classified  as an
                    operating   lease  for  accounting   purposes  and  (m)  the
                    Indebtedness  of any  partnership  or  unincorporated  joint
                    venture in which such Person is a general partner or a joint
                    venturer to the extent such Person is liable therefor.

               "Interbank Offered Rate" means,  for any Eurodollar  Loan for any
                    Interest  Period  therefor,  the  rate  per  annum  (rounded
                    upwards, if necessary, to the nearest 1/100 of 1%) appearing
                    on Telerate Page 3750 (or any successor  page) as the London
                    interbank   offered   rate  for   deposits   in  Dollars  at
                    approximately  11:00 a.m.  (London  time) two Business  Days
                    prior to the first day of such  Interest  Period  for a term
                    comparable to such Interest  Period.  If for any reason such
                    rate is not  available,  the term  "Interbank  Offered Rate"
                    shall mean, for any Eurodollar  Loan for any Interest Period
                    therefor, the rate per annum (rounded upwards, if necessary,
                    to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
                    Page as the London  interbank  offered  rate for deposits in
                    Dollars  at  approximately  11:00  a.m.  (London  time)  two
                    Business Days prior to the first day of such Interest Period
                    for a term  comparable  to such Interest  Period;  provided,
                    however,  if more  than one  rate is  specified  on  Reuters
                    Screen  LIBO  Page,  the   applicable   rate  shall  be  the
                    arithmetic  mean of all  such  rates  (rounded  upwards,  if
                    necessary, to the nearest 1/100 of 1%).

               "Interest Payment Date" means (a) as to Base Rate Loans, the last
                    Business Day of each fiscal  quarter of the Borrower and the
                    Maturity Date and (b) as to Eurodollar  Loans,  the last day
                    of each  applicable  Interest  Period and the Maturity Date,
                    and in addition where the applicable  Interest  Period for a
                    Eurodollar Loan is greater than three months,  then also the
                    date three months from the beginning of the Interest  Period
                    and each three months thereafter.

               "Interest Period" means, as to Eurodollar Loans, a period of one,
                    two,  three or six months'  duration,  as the  Borrower  may
                    elect,  commencing,  in  each  case,  on  the  date  of  the
                    borrowing (including continuations and conversions thereof);
                    provided, however, (a) if any Interest Period would end on a
                    day which is not a Business Day, such Interest  Period shall
                    be extended to the next succeeding Business Day (except that
                    where  the next  succeeding  Business  Day falls in the next
                    succeeding  calendar  month,  then  on  the  next  preceding
                    Business  Day),  (b) no Interest  Period shall extend beyond
                    the Maturity Date and (c) where an Interest Period begins on
                    a day for which there is no numerically corresponding day in
                    the calendar  month in which the Interest  Period is to end,
                    such  Interest  Period shall end on the last Business Day of
                    such calendar month.

               "Lien" means, with respect to any Property,  any mortgage,  lien,
                    pledge, charge, security interest or encumbrance of any kind
                    in respect of such Property,  whether or not filed, recorded
                    or otherwise  perfected under  applicable law (including any
                    conditional  sale or other title  retention  agreement,  any
                    lease in the nature  thereof,  any option or other agreement
                    to sell or give a security  interest in and any filing of or
                    agreement to give any financing  statement under the Uniform
                    Commercial   Code   (or   equivalent    statutes)   of   any
                    jurisdiction.

               "Limited Partners" means the limited partners of the Fund.

               "Loans" shall have the  meaning  assigned to such term in Section

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                    2.1(a).  The term  "Loan"  shall  also mean a portion of any
                    Loan  bearing  interest  at the  Adjusted  Base  Rate or the
                    Adjusted Eurodollar Rate and referred to as a Base Rate Loan
                    or a Eurodollar Loan.

               "Material Adverse Effect" means a material  adverse effect on (i)
                    the   condition   (financial  or   otherwise),   operations,
                    business,  assets,  liabilities  or results of operations of
                    the  Fund,  (ii)  the  ability  of the Fund to  perform  any
                    material obligation under this Credit Agreement or (iii) the
                    rights and remedies of the Bank under this CreditAgreement.

               "Maturity Date" means December 31, 2000.

               "Notice of  Borrowing"  means a written  notice of  borrowing  in
                    substantially the form of Exhibit 2.1(b)(i),  as required by
                    Section 2.1(b)(i).

               "Notice of  Extension/Conversion"  means  the  written  notice of
                    extension or conversion in substantially the form of Exhibit
                    3.2, as required by Section 3.2.

               "Obligations" means,  with respect to the Fund, all Indebtedness,
                    all other obligations that would be reflected as liabilities
                    on a balance  sheet of the Fund and the purchase  price that
                    the Fund (directly or indirectly, including, but not limited
                    to,  through  any  Subsidiary  of the  Fund) or the  General
                    Partner has agreed,  pursuant to a binding contract,  to pay
                    for any investment or  acquisition  that has not yet closed.
                    The  Obligations  of the Fund at any time shall  include the
                    payment  obligations  of the Fund  under  Section  4 of this
                    Credit Agreement.

               "Other Taxes"  shall have the  meaning  assigned  to such term in
                    Section 3.11(b).

               "Partners" means a collective  reference  to the General  Partner
                    and the Limited Partners.

               "Partnership  Agreement"  means that certain limited  partnership
                    agreement,  dated as of November 22, 1996, among the General
                    Partner and the individuals  and entities party thereto,  as
                    limited partners.

               "Person" means any individual,  partnership, joint venture, firm,
                    corporation,  limited liability company, association,  trust
                    or other  enterprise  (whether or not  incorporated)  or any
                    Governmental Authority.

               "PlanAsset  Regulations"  means the plan asset regulations of the
                    Department  of  Labor,  29 CFR ss.  2510.3-101  et seq.,  as
                    amended,  and  the  advisory  opinions  and  rulings  issued
                    thereunder.

               "Prime Rate"  means the per annum  rate of  interest  established
                    from time to time by the Bank as its prime rate,  which rate
                    may not be the lowest rate of  interest  charged by the Bank
                    to its customers.

               "Property"  means any  interest in any kind of property or asset,
                    whether real, personal or mixed, or tangible or intangible.

               "Remaining Capital Commitment Balance" means, with respect to any
                    Limited  Partner at any time,  an amount  equal to the total
                    remaining amount of capital  contributions that such Limited
                    Partner  is  obligated  at such  time  to  make to the  Fund
                    pursuant to the terms of the Partnership Agreement.

               "Subsidiary"  means,  as to any  Person  at  any  time,  (a)  any
                    corporation  more than 50% of whose Equity  Interests of any
                    class or classes having by the terms thereof ordinary voting
                    power  to  elect  a  majority  of  the   directors  of  such
                    corporation  (irrespective  of  whether or not at such time,
                    any class or classes of such corporation shall have or might
                    have  voting  power  by  reason  of  the  happening  of  any
                    contingency)  is at such time owned by such Person  directly
                    or indirectly through Subsidiaries, and (b) any partnership,
                    association,  joint  venture  or other  entity of which such

                                       6
<PAGE>
                    Person directly or indirectly  through  Subsidiaries owns at
                    such time more than 50% of the Equity Interests.

               "Taxes" shall have the  meaning  assigned to such term in Section
                    3.11.

               "Unused Fee"  shall  have the  meaning  assigned  to such term in
                    Section 3.5.

               "Unused Committed  Amount" means,  for any period,  the amount by
                    which (a) the then applicable  Committed  Amount exceeds (b)
                    the daily  average  sum for such  period of the  outstanding
                    aggregate principal amount of all Loans.

               "Unused Fee Calculation  Period" shall have the meaning  assigned
                    to such term in Section 3.5.

               "Voting Equity  Interests"  means,  with  respect to any  Person,
                    Equity  Interests issued by such Person the holders of which
                    are ordinarily, in the absence of contingencies, entitled to
                    vote for the  election of directors  (or persons  performing
                    similar functions) of such Person,  even though the right so
                    to  vote  has  been  suspended  by the  happening  of such a
                    contingency.

10.2 Computation of Time Periods.

     For purposes of computation of periods of time  hereunder,  the word "from"
means  "from and  including"  and the words "to" and  "until"  each mean "to but
excluding."

SECTION 2

CREDIT FACILITIES

2.1 Loans.

          (a)  Commitment.  Subject  to the terms and  conditions  hereof and in
               reliance  upon  the  representations  and  warranties  set  forth
               herein,  the  Bank  agrees  to  make  available  to the  Borrower
               revolving  credit  loans  requested  by the  Borrower  in Dollars
               ("Loans")  from  time to time  from the  Closing  Date  until the
               Maturity Date, or such earlier date as the Commitment  shall have
               been terminated as provided herein;  provided,  however, that the
               sum of the aggregate  principal amount of outstanding Loans shall
               not exceed THREE MILLION DOLLARS  ($3,000,000) (as such aggregate
               maximum  amount may be reduced  from time to time as  provided in
               Section 3.4, the "Committed  Amount").  Loans may consist of Base
               Rate Loans or Eurodollar Loans, or a combination  thereof, as the
               Borrower  may  request;  provided,  however,  that no more than 5
               Eurodollar  Loans shall be outstanding  hereunder at any time (it
               being understood that, for purposes hereof, Eurodollar Loans with
               different  Interest  Periods  shall  be  considered  as  separate
               Eurodollar Loans,  even if they begin on the same date,  although
               borrowings,  extensions and  conversions  may, in accordance with
               the  provisions  hereof,  be  combined  at the  end  of  existing
               Interest  Periods  to  constitute  a new  Eurodollar  Loan with a
               single  Interest  Period).  Loans  hereunder  may be  repaid  and
               reborrowed in accordance with the provisions hereof.

          (b)  Loan Borrowings.

               (i)  Notice  of  Borrowing.  The  Borrower  shall  request a Loan
                    borrowing by written notice (or telephonic  notice  promptly
                    confirmed in writing) to the Bank (a "Notice of  Borrowing")
                    not later than 11:00 A.M.  (Charlotte,  North Carolina time)
                    on the Business Day of the  requested  borrowing in the case
                    of Base Rate Loans,  and on the third  Business Day prior to
                    the  date  of  the  requested   borrowing  in  the  case  of
                    Eurodollar   Loans.   Each  Notice  of  Borrowing  shall  be
                    irrevocable  and shall specify (A) that a Loan is requested,
                    (B) the date of the  requested  borrowing  (which shall be a
                    Business  Day),  (C) the  aggregate  principal  amount to be
                    borrowed,  and (D) whether the borrowing  shall be comprised
                    of  Base  Rate  Loans,  Eurodollar  Loans  or a  combination
                    thereof, and if Eurodollar Loans are requested, the Interest
                    Period(s)  therefor.  Each  Notice  of  Borrowing  shall  be
                    acknowledged  in writing by the Fund. If the Borrower  shall
                    fail to  specify  in any such  Notice  of  Borrowing  (I) an
                    applicable Interest Period in the case of a Eurodollar Loan,
                    then such  notice  shall be  deemed  to be a request  for an
                    Interest  Period  of one  month,  or (II)  the  type of Loan
                    requested,  then such notice shall be deemed to be a request
                    for a Base Rate Loan hereunder.

               (ii) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that
                    is a Loan shall be in integral multiples of $100,000 (or the
                    remaining amount of the Committed Amount, if less).

                                       7
<PAGE>
               (iii)Advances.  The Bank will make each Loan borrowing  available
                    to the Borrower by crediting  the account of the Borrower on
                    the  books  of the  Bank  by  1:00  P.M.  (Charlotte,  North
                    Carolina  time)  on the  date  specified  in the  applicable
                    Notice of  Borrowing  in  Dollars  and in funds  immediately
                    available to the Borrower.

          (c)  Repayment.  The Borrower  hereby  promises to pay to the order of
               the  Bank,  on  the  Maturity  Date  (unless  accelerated  sooner
               pursuant to Section 9.2),  the principal  amount of Three Million
               Dollars  ($3,000,000) or, if less than such principal amount, the
               aggregate unpaid principal amount of all Loans then outstanding.

          (d)  Interest. Subject to the provisions of Section 3.1,

               (i)  Base Rate  Loans.  During  such  periods  as Loans  shall be
                    comprised in whole or in part of Base Rate Loans,  such Base
                    Rate Loans shall bear  interest at a per annum rate equal to
                    the Adjusted Base Rate.

               (ii) Eurodollar  Loans.  During  such  periods as Loans  shall be
                    comprised  in whole  or in part of  Eurodollar  Loans,  such
                    Eurodollar  Loans  shall bear  interest  at a per annum rate
                    equal to the Adjusted Eurodollar Rate.

     The Borrower hereby promises to pay in arrears to the order of the Bank, on
each Interest Payment Date (or at such other times as may be specified  herein),
accrued interest on the Loans.

SECTION 3

OTHER PROVISIONS RELATING TO CREDIT FACILITIES

3.1 Default Rate.

     Upon the occurrence, and during the continuance,  of default in the payment
of any amount  hereunder,  such overdue amount shall bear  interest,  payable on
demand,  at a per annum rate 2% greater  than the rate which would  otherwise be
applicable (or if no rate is applicable, whether in respect of interest, fees or
other amounts, then the Adjusted Base Rate plus 2%).

3.2 Extension and Conversion.

     The Borrower shall have the option, on any Business Day, to extend existing
Loans into a subsequent  permissible  Interest  Period or to convert  Loans into
Loans of another  interest  rate  type;  provided,  however,  that (i) except as
provided in Section 3.8,  Eurodollar Loans may be converted into Base Rate Loans
or extended as Eurodollar Loans for new Interest Periods only on the last day of
the Interest Period applicable  thereto unless the Borrower makes payment of any
amounts  payable  pursuant to Section 3.12 in connection with such conversion or
extension,  (ii) no Eurodollar Loan may be extended and no Base Rate Loan may be
converted  into  Eurodollar  Loans  when any  Default  or Event of Default is in
existence and the Bank has determined  that such  conversion or extension is not
appropriate,  (iii) Loans extended as, or converted into, Eurodollar Loans shall
be subject to the terms of the  definition  of  "Interest  Period"  set forth in
Section  1.1 and  shall  be in such  minimum  amounts  as  provided  in  Section
2.1(b)(ii),  (iv) no more than 5 Eurodollar Loans shall be outstanding hereunder
at any time (it being  understood  that, for purposes  hereof,  Eurodollar Loans
with  different  Interest  Periods shall be  considered  as separate  Eurodollar
Loans, even if they begin on the same date, although borrowings,  extensions and
conversions  may, in accordance with the provisions  hereof,  be combined at the
end of existing  Interest  Periods to  constitute a new  Eurodollar  Loan with a
single  Interest  Period),  and (v) any request for extension or conversion of a
Eurodollar  Loan which shall fail to specify an Interest  Period shall be deemed
to be a request  for an Interest  Period of one month.  Each such  extension  or
conversion   shall  be  effected   by  the   Borrower  by  giving  a  Notice  of
Extension/Conversion (or telephonic notice promptly confirmed in writing) to the
office of the Bank  specified  in specified  in Section  10.1,  or at such other
office as the Bank may  designate  in writing,  prior to 11:00 A.M.  (Charlotte,
North  Carolina time) on the Business Day of, in the case of the conversion of a
Eurodollar  Loan into a Base Rate Loan,  and on the third Business Day prior to,
in the case of the  extension of a Eurodollar  Loan as, or  conversion of a Base
Rate Loan  into,  a  Eurodollar  Loan,  the date of the  proposed  extension  or
conversion,  specifying the date of the proposed  extension or  conversion,  the
Loans to be so extended or  converted,  the types of Loans into which such Loans
are to be converted and, if appropriate,  the applicable  Interest  Periods with
respect thereto.  Each request for extension or conversion shall be irrevocable.
In the event the  Borrower  fails to  request  extension  or  conversion  of any
Eurodollar  Loan in  accordance  with this  Section,  or any such  conversion or
extension is not  permitted or required by this  Section,  then such  Eurodollar
Loan shall be  automatically  converted  into a Base Rate Loan at the end of the
Interest Period applicable thereto.

3.3 Prepayments.

          (a)  Voluntary  Prepayments.  The  Borrower  shall  have the  right to

                                       8
<PAGE>
               prepay Loans in whole or in part from time to time.

          (b)  Mandatory Prepayments.

               (i)  Committed  Amount.If,  at any time, the sum of the aggregate
                    principal  amount of  outstanding  Loans  shall  exceed  the
                    Committed Amount, the Borrower hereby promises to prepay the
                    Loans  immediately in an amount sufficient to eliminate such
                    excess.

               (ii) Other.   Notwithstanding   any   provision  of  this  Credit
                    Agreement to the contrary,  the Borrower  hereby promises to
                    prepay  each Loan on or before  the date 30 days  after such
                    Loan is  advanced  by the  Bank;  provided  that each of the
                    parties  hereto  agrees  that  the  Fund  may,  in its  sole
                    discretion,  waive the obligation of the Borrower under this
                    Section 3.3(b)(ii) with respect to any Loan.

          (c)  Generally.  All  prepayments  under this Section  3.3(a) shall be
               subject  to  Section  3.12,  but  otherwise  without  premium  or
               penalty,  and be accompanied by interest on the principal  amount
               prepaid through the date of prepayment.

3.4 Termination and Reduction of Commitment.

          (a)  Voluntary  Reductions.   The  Borrower  may  from  time  to  time
               permanently  reduce or terminate the Committed Amount in whole or
               in part in integral  multiples of $100,000 (or, if less, the full
               remaining  amount of the then applicable  Committed  Amount) upon
               five Business Days' prior written  notice to the Bank;  provided,
               however,  no such  termination  or reduction  shall be made which
               would cause the aggregate  principal amount of outstanding  Loans
               to exceed the Committed  Amount  unless,  concurrently  with such
               termination  or  reduction,  the Loans are  repaid to the  extent
               necessary to eliminate such excess.

          (b)  Maturity  Date.  The  Commitment of the Bank shall  automatically
               terminate on the Maturity Date.

          (c)  General.  The Borrower  shall pay to the Bank in accordance  with
               the terms of  Section  3.5,  on the date of each  termination  or
               reduction of the Committed Amount, the Unused Fee accrued through
               the date of such  termination  or  reduction on the amount of the
               Committed Amount so terminated or reduced.

3.5 Unused Fee.

     In  consideration  of the  Commitment of the Bank  hereunder,  the Borrower
hereby  promises  to pay to the Bank a fee  (the  "Unused  Fee")  on the  Unused
Committed Amount computed at a per annum rate for each day during the applicable
Unused Fee Calculation Period (hereinafter  defined) at a rate equal to 50 basis
points. The Unused Fee shall commence to accrue on the Closing Date and shall be
due and  payable  in  arrears  on the last  business  day of each  March,  June,
September  and December  (and any date that the  Committed  Amount is reduced as
provided in Section 3.4(a) and the Maturity Date) for the immediately  preceding
quarter (or portion thereof) (each such quarter or portion thereof for which the
Unused Fee is payable  hereunder  being  herein  referred  to as an "Unused  Fee
Calculation Period"),  beginning with the first of such dates to occur after the
Closing Date.

3.6 Capital Adequacy.

     If the Bank has determined, after the date hereof, that the adoption or the
becoming  effective  of, or any  change  in, or any  change by any  Governmental
Authority,  central bank or comparable agency charged with the interpretation or
administration   thereof  in  the   interpretation  or  administration  of,  any
applicable law, rule or regulation regarding capital adequacy,  or compliance by
the Bank with any request or directive  regarding  capital adequacy  (whether or
not having the force of law) of any such  authority,  central bank or comparable
agency,  has the effect of reducing the rate of return on the Bank's  capital or
assets as a consequence of its  commitments or obligations  hereunder to a level
below  that  which  the  Bank  could  have  achieved  but  for  such   adoption,
effectiveness,  change or  compliance  (taking  into  consideration  the  Bank's
policies with respect to capital adequacy) by an amount deemed by the Bank to be
material,  then,  upon notice  from the Bank to the  Borrower  setting  forth in
reasonable detail the change and the calculation of such reduced rate of return,
the Borrower  shall be obligated  to pay to the Bank such  additional  amount or
amounts as will compensate the Bank for such reduction.  Each  determination  by
the Bank of amounts owing under this Section shall,  absent  demonstrable error,
be conclusive and binding on the parties hereto.

3.7 Limitation on Eurodollar Loans.

     If on or prior to the first day of any Interest  Period for any  Eurodollar
Loan:

                                       9
<PAGE>
          (a)  the Bank  determines  (which  determination  shall be conclusive)
               that by reason of  circumstances  affecting the relevant  market,
               adequate and reasonable  means do not exist for  ascertaining the
               Eurodollar Rate for such Interest Period; or

          (b)  the Bank  determines  (which  determination  shall be conclusive)
               that the  Eurodollar  Rate will not adequately and fairly reflect
               the  cost to the  Bank  of  funding  Eurodollar  Loans  for  such
               Interest Period;

then the Bank shall give the Borrower prompt notice thereof, and so long as such
condition  remains in  effect,  the Bank  shall be under no  obligation  to make
additional  Eurodollar  Loans,  Continue  Eurodollar Loans, or Convert Base Rate
Loans into  Eurodollar  Loans and the Borrower  shall, on the last day(s) of the
then current Interest  Period(s) for the outstanding  Eurodollar  Loans,  either
prepay such  Eurodollar  Loans or Convert such  Eurodollar  Loans into Base Rate
Loans in  accordance  with the  terms of this  Credit  Agreement.  The Bank will
promptly  withdraw  any  determination  pursuant to this  Section 3.7 as soon as
circumstances allow.

3.8 Illegality.
     Notwithstanding any other provision of this Credit Agreement,  in the event
that it becomes unlawful for the Bank or its Applicable  Lending Office to make,
maintain or fund Eurodollar Loans hereunder, then the Bank shall promptly notify
the Borrower thereof and the Bank's obligation to make,  Convert into,  Continue
or maintain  Eurodollar Loans shall be suspended until such time as the Bank may
again make, maintain, and fund Eurodollar Loans (in which case the provisions of
Section 3.10 shall be applicable).

3.9 Requirements of Law.

     If, after the date hereof,  the adoption of any  applicable  law,  rule, or
regulation,  or any change in any applicable  law,  rule, or regulation,  or any
change in the  interpretation  or  administration  thereof  by any  Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration  thereof,  or compliance by the Bank (or its  Applicable  Lending
Office) with any request or  directive  (whether or not having the force of law)
of any such Governmental Authority, central bank, or comparable agency:

               (i)  shall subject the Bank (or its Applicable Lending Office) to
                    any tax,  duty, or other charge with respect to any Loans or
                    its  obligation  to make  Loans,  or  change  the  basis  of
                    taxation  of  any  amounts  payable  to  the  Bank  (or  its
                    Applicable  Lending  Office) under this Credit  Agreement in
                    respect of any Loans  (other  than Taxes  defined in Section
                    3.11(a)  and taxes  imposed on the overall net income of the
                    Bank  by  the  jurisdiction  in  which  such  Bank  has  its
                    principal office or such Applicable Lending Office);

               (ii) shall  impose,  modify,  or  deem  applicable  any  reserve,
                    special deposit,  assessment,  or similar requirement (other
                    than the  Eurodollar  Reserve  Requirement  utilized  in the
                    determination  of the Adjusted  Eurodollar Rate) relating to
                    any extensions of credit or other assets of, or any deposits
                    with or other  liabilities or commitments  of, such Bank (or
                    its Applicable Lending Office),  including the Commitment of
                    the Bank hereunder; or

               (iii)shall impose on the Bank (or its Applicable  Lending Office)
                    or the London interbank market any other condition affecting
                    this Credit Agreement or any of such extensions of credit or
                    liabilities or commitments;

and the result of any of the  foregoing is to increase,  by an amount  deemed by
the Bank (or its Applicable Lending Office) to be material, the cost to the Bank
(or its Applicable Lending Office) of making,  Converting into,  Continuing,  or
maintaining any Eurodollar  Loans or to reduce any sum received or receivable by
such Bank (or its Applicable  Lending Office) under this Credit Agreement,  then
the  Borrower  shall pay to the Bank on demand  such  amount or  amounts as will
compensate the Bank for such  increased cost or reduction.  If the Bank requests
compensation by the Borrower under this Section 3.9, the Borrower may, by notice
to the Bank, suspend the obligation of the Bank to make, Convert into,  Continue
or maintain the affected Loans, until the event or condition giving rise to such
request  ceases to be in effect (in which case the  provisions  of Section  3.10
shall be applicable);  provided that such suspension  shall not affect the right
of the Bank to receive the  compensation  so requested.  The Bank shall promptly
notify the Borrower of any event of which it has knowledge,  occurring after the
date  hereof,  which will  entitle  the Bank to  compensation  pursuant  to this
Section 3.9 and will  designate a different  Applicable  Lending  Office if such
designation will avoid the need for, or reduce the amount of, such  compensation
and will not, in the judgment of the Bank, be otherwise  disadvantageous  to it.
If the Bank claims  compensation under this Section 3.9, it shall furnish to the
Borrower a statement  setting forth in reasonable  detail the calculation of the
additional  amount  or  amounts  to be  paid  to it  hereunder  which  shall  be

                                       10
<PAGE>
conclusive in the absence of demonstrable error. In determining such amount, the
Bank may use any reasonable averaging and attribution methods.

3.10 Treatment of Affected Loans.

     If the obligation of the Bank to make,  Convert into,  Continue or maintain
Eurodollar Loans shall be suspended  pursuant to Section 3.8 or 3.9 hereof,  the
Bank's Eurodollar Loans shall be automatically Converted into Base Rate Loans on
the last day(s) of the then current Interest Period(s) for such Eurodollar Loans
(or, in the case of a Conversion required by Section 3.8 hereof, on such earlier
date  required by law as the Bank may specify to the Borrower)  and,  unless and
until the Bank gives notice as provided below that the  circumstances  specified
in Section 3.8 or 3.9 hereof that gave rise to such Conversion no longer exist:

          (a)  to the  extent  that the  Bank's  Eurodollar  Loans  have been so
               Converted,  all payments and  prepayments of principal that would
               otherwise  be  applied to the Bank's  Eurodollar  Loans  shall be
               applied instead to its Base Rate Loans; and

          (b)  all Loans that would  otherwise  be made or Continued by the Bank
               as  Eurodollar  Loans shall be made or Continued  instead as Base
               Rate  Loans,  and all Base  Rate  Loans of the  Bank  that  would
               otherwise be Converted into Eurodollar Loans shall remain as Base
               Rate Loans.

3.11 Taxes.

          (a)  Any and all payments by the Borrower to or for the account of the
               Bank  hereunder  shall  be made  free and  clear  of and  without
               deduction  for any and  all  present  or  future  taxes,  duties,
               levies,  imposts,  deductions,  charges or withholdings,  and all
               liabilities with respect thereto,  excluding taxes imposed on the
               Bank as a result of a present or former connection between it and
               the jurisdiction of the Governmental  Authority imposing such tax
               or any  political  subdivision  or taxing  authority  thereof  or
               therein (other than any such  connection  arising solely from the
               Bank having  executed,  delivered or performed its obligations or
               received a payment  under,  or enforced,  this Credit  Agreement)
               (all  such   non-excluded   taxes,   duties,   levies,   imposts,
               deductions,   charges,   withholdings,   and  liabilities   being
               hereinafter  referred to as "Taxes").  If the  Borrower  shall be
               required by law to deduct any Taxes from or in respect of any sum
               payable  under this  Credit  Agreement  to the Bank,  (i) the sum
               payable  shall be increased as necessary so that after making all
               required deductions (including deductions for Taxes applicable to
               additional  sums  payable  under  this  Section  3.11)  the  Bank
               receives an amount equal to the sum it would have received had no
               such  deductions  been made,  (ii) the  Borrower  shall make such
               deductions, (iii) the Borrower shall pay the full amount deducted
               to  the  relevant  taxation   authority  or  other  authority  in
               accordance  with  applicable  law,  and (iv) the  Borrower  shall
               furnish to the Bank, at its address  referred to in Section 10.1,
               the original or a certified copy of a receipt  evidencing payment
               thereof.  Notwithstanding the foregoing, no additional sums shall
               be payable pursuant to Section 3.11(a)(i) or 3.11(c) with respect
               to Taxes unless imposed as a result of a change in treaty, law or
               regulation.

          (b)  In addition,  the  Borrower  agrees to pay any and all present or
               future  stamp  or  documentary  taxes  and any  other  excise  or
               property  taxes or charges or similar levies which arise from any
               payment made under this Credit Agreement or from the execution or
               delivery of, or otherwise with respect to, this Credit  Agreement
               (hereinafter referred to as "Other Taxes").

          (c)  The Borrower  agrees to indemnify the Bank for the full amount of
               Taxes and Other Taxes (including,  without limitation,  any Taxes
               or Other Taxes imposed or asserted by any jurisdiction on amounts
               payable  under  this  Section  3.11)  paid  by the  Bank  and any
               liability for penalties, interest, and expenses arising therefrom
               or with respect thereto.

          (d)  If the Borrower is required to pay  additional  amounts to or for
               the account of the Bank pursuant to this Section  3.11,  then the
               Bank  will  agree  to  use  reasonable   efforts  to  change  the
               jurisdiction of its Applicable  Lending Office so as to eliminate
               or reduce any such additional payment which may thereafter accrue
               if such change,  in the  reasonable  judgment of the Bank, is not
               otherwise materially disadvantageous to the Bank.

          (e)  Within  thirty  (30) days after the date of any payment of Taxes,
               the  Borrower  shall  furnish  to  the  Bank  the  original  or a
               certified copy of a receipt evidencing such payment.

          (f)  Without  prejudice to the survival of any other  agreement of the
               Borrower  hereunder,   the  agreements  and  obligations  of  the
               Borrower  contained  in  this  Section  3.11  shall  survive  the
               repayment  of the Loans and other  obligations  under this Credit
               Agreement and the termination of the Commitment hereunder.

                                       11
<PAGE>
          (g)  If the Bank  receives a refund with  respect to Taxes paid by the
               Borrower,  which  in the  good  faith  judgment  of the  Bank  is
               allocable  to such  payment,  the Bank  shall  promptly  pay such
               refund,  together  with any other amounts paid by the Borrower in
               connection with such refunded Taxes, to the Borrower,  net of all
               out-of-pocket  expenses of the Bank  incurred in  obtaining  such
               refund,  provided,  however, that the Borrower agrees to promptly
               return  such  refund to the Bank if it  receives  notice from the
               Bank that the Bank is  required  to repay such  refund.  The Bank
               agrees that it will contest such Taxes or liabilities if the Bank
               determines,  in its  reasonable  judgment,  that it would  not be
               materially  disadvantaged  or  prejudiced  as a  result  of  such
               contest.

3.12 Compensation.

     Upon the  request  of the  Bank,  the  Borrower  shall pay to the Bank such
amount or amounts as shall be sufficient (in the reasonable opinion of the Bank)
to compensate it for any loss,  cost, or expense  (excluding loss of anticipated
profits) incurred by it as a result of:

          (a)  any payment,  prepayment,  or Conversion of a Eurodollar Loan for
               any reason (including,  without  limitation,  the acceleration of
               the Loans  pursuant to Section 9.2) on a date other than the last
               day of the Interest Period for such Loan; or

          (b)  any failure by the  Borrower for any reason  (including,  without
               limitation,  the failure of any condition  precedent specified in
               Section 5 to be  satisfied)  to  borrow,  Convert,  Continue,  or
               prepay  a  Eurodollar  Loan  on  the  date  for  such  borrowing,
               Conversion, Continuation, or prepayment specified in the relevant
               notice of  borrowing,  prepayment,  Continuation,  or  Conversion
               under this Credit Agreement.

Such  indemnification  may include an amount equal to the excess, if any, of (a)
the amount of interest which would have accrued on the amount so prepaid, or not
so  borrowed,  converted  or  continued,  for the  period  from the date of such
prepayment or of such failure to borrow,  convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to borrow,  convert
or continue,  the Interest  Period that would have commenced on the date of such
failure) in each case at the Eurodollar Rate over (b) the amount of interest (as
reasonably  determined by the Bank) which would have accrued to the Bank on such
amount by placing  such amount on deposit for a  comparable  period with leading
banks in the interbank  Eurodollar market. If the Bank claims compensation under
this Section 3.12, it shall furnish to the Borrower a statement setting forth in
reasonable  detail the  calculation  of the  amounts to be paid to it  hereunder
which shall be conclusive in the absence of demonstrable error. The covenants of
the Borrower set forth in this Section 3.12 shall  survive the  repayment of the
Loans and other  obligations  under this Credit Agreement and the termination of
the Commitment hereunder.

3.13 Payments, Computations, Etc.

     Except as otherwise  specifically  provided herein,  all payments hereunder
shall  be made to the  Bank in  immediately  available  funds,  without  setoff,
deduction,  counterclaim  or  withholding  of any  kind,  at the  Bank's  office
specified in Section 10.1 not later than 2:00 P.M.  (Charlotte,  North  Carolina
time) on the date when due. Any payment received after such time shall be deemed
to have been received on the next  succeeding  Business Day. The Borrower shall,
at the time it makes any  payment  under this Credit  Agreement,  specify to the
Bank the Borrower Obligations to which such payment is to be applied (and in the
event that it fails so to specify,  or if such application would be inconsistent
with the terms  hereof,  the Bank shall apply such payment in such manner as the
Bank may determine to be appropriate).  Whenever any payment  hereunder shall be
stated  to be due on a day which is not a  Business  Day,  the due date  thereof
shall be extended to the next  succeeding  Business  Day  (subject to accrual of
interest and fees for the period of such extension),  except that in the case of
Eurodollar  Loans,  if the  extension  would cause the payment to be made in the
next following  calendar  month,  then such payment shall instead be made on the
next preceding  Business Day. Except as expressly provided otherwise herein, all
computations of interest and fees shall be made on the basis of actual number of
days elapsed  over a year of 360 days,  except with  respect to  computation  of
interest  on Base  Rate  Loans  which  (unless  the Base Rate is  determined  by
reference to the Federal Funds Rate) shall be calculated  based on a year of 365
or 366 days, as appropriate.  Interest shall accrue from and include the date of
borrowing, but exclude the date of payment.

3.14 Evidence of Debt.

          (a)  The Bank shall  maintain an account or accounts  evidencing  each
               Loan made by the Bank from time to time,  in which such  accounts

                                       12
<PAGE>
               shall be recorded  (i) the amount,  type and  Interest  Period of
               each such Loan  hereunder,  (ii) the amount of any  principal  or
               interest  payable  and paid or to become  due and  payable to the
               Bank  hereunder  and (iii) the amount of any sum  received by the
               Bank hereunder from or for the account of the Borrower.  The Bank
               will make  reasonable  efforts to  maintain  the  accuracy of its
               account  or  accounts  and to  promptly  update  its  account  or
               accounts from time to time, as necessary.

          (b)  The  entries  made  in  the  accounts   maintained   pursuant  to
               subsection (a) of this Section 3.14 shall be prima facie evidence
               of the existence and amounts of the  obligations  of the Borrower
               therein recorded; provided, however, that the failure of the Bank
               to maintain any such account, or any error therein,  shall not in
               any  manner  affect the  obligation  of the  Borrower  to pay the
               Borrower Obligations owing to the Bank.

SECTION 4

GUARANTY

4.1 The Guaranty.

     The Fund hereby guarantees to the Bank as hereinafter  provided, as primary
obligor and not as surety,  the prompt  payment of the Borrower  Obligations  in
full when due  (whether  at  stated  maturity,  as a  mandatory  prepayment,  by
acceleration or otherwise)  strictly in accordance  with the terms thereof.  The
Fund hereby further agrees that if any of the Borrower  Obligations are not paid
in full when due  (whether at stated  maturity,  as a mandatory  prepayment,  by
acceleration  or  otherwise),  the Fund will promptly pay the same,  without any
demand or notice  whatsoever,  and that in the case of any  extension of time of
payment or renewal of any of the Borrower Obligations, the same will be promptly
paid in full when due (whether at extended maturity,  as a mandatory prepayment,
by  acceleration or otherwise) in accordance with the terms of such extension or
renewal.

4.2 Obligations Unconditional.

     The   obligations   of  the  Fund  under   Section  4.1  are  absolute  and
unconditional,  irrespective of the value, genuineness,  validity, regularity or
enforceability  of any of this Credit Agreement,  or any substitution,  release,
impairment  or exchange  of any other  guarantee  of or security  for any of the
Borrower  Obligations,  and, to the fullest extent  permitted by applicable law,
irrespective  of  any  other  circumstance   whatsoever  which  might  otherwise
constitute a legal or equitable  discharge or defense of a surety or  guarantor,
it being  the  intent  of this  Section  4.2 that  the  obligations  of the Fund
hereunder shall be absolute and unconditional  under any and all  circumstances.
The  Fund  agrees  that  it  shall  have no  right  of  subrogation,  indemnity,
reimbursement  or contribution  against the Borrower for amounts paid under this
Section  4 until  such time as the Bank has been  paid in full,  the  Commitment
under this Credit  Agreement has been  terminated and no Person or  Governmental
Authority shall have any right to request any return or  reimbursement  of funds
from the Bank in connection  with monies  received under this Credit  Agreement.
Without  limiting the  generality  of the  foregoing,  it is agreed that, to the
fullest  extent  permitted  by  law,  the  occurrence  of any one or more of the
following  shall not alter or impair the liability of the Fund  hereunder  which
shall remain absolute and unconditional as described above:

          (a)  at any time or from time to time, without notice to the Fund, the
               time  for  any  performance  of or  compliance  with  any  of the
               Borrower  Obligations  shall be extended,  or such performance or
               compliance shall be waived;

          (b)  any of the acts mentioned in any of the provisions of this Credit
               Agreement shall be done or omitted;

          (c)  the  maturity  of  any  of  the  Borrower  Obligations  shall  be
               accelerated,   or  any  of  the  Borrower  Obligations  shall  be
               modified,  supplemented  or amended in any respect,  or any right
               under this Credit  Agreement or any other agreement or instrument
               referred to in this Credit Agreement shall be waived or any other
               guarantee  of any of the  Borrower  Obligations  or any  security

                                       13
<PAGE>
               therefor shall be released,  impaired or exchanged in whole or in
               part or otherwise dealt with;

          (d)  any Lien granted to, or in favor of, the Bank as security for any
               of the Borrower Obligations shall fail to attach or be perfected;
               or

          (e)  any of the Borrower Obligations shall be determined to be void or
               voidable (including,  without limitation,  for the benefit of any
               creditor of the Fund) or shall be  subordinated  to the claims of
               any Person (including,  without  limitation,  any creditor of the
               Fund).

With respect to its  obligations  hereunder,  the Fund hereby  expressly  waives
diligence,  presentment,  demand of payment, protest and all notices whatsoever,
and any requirement that the Bank exhaust any right,  power or remedy or proceed
against  any Person  under  this  Credit  Agreement  or any other  agreement  or
instrument  referred to in this Credit  Agreement,  or against any other  Person
under any other guarantee of, or security for, any of the Borrower Obligations.

4.3 Reinstatement.

The  obligations  of the  Fund  under  this  Section  4 shall  be  automatically
reinstated  if and to the extent that for any reason any payment by or on behalf
of any Person in respect of the  Borrower  Obligations  is  rescinded or must be
otherwise restored by any holder of any of the Borrower Obligations,  whether as
a result of any proceedings in bankruptcy or  reorganization  or otherwise,  and
the Fund agrees  that it will  indemnify  the Bank on demand for all  reasonable
costs and expenses (including, without limitation, fees and expenses of counsel)
incurred  by the  Bank  in  connection  with  such  rescission  or  restoration,
including  any such costs and expenses  incurred in defending  against any claim
alleging  that such payment  constituted a  preference,  fraudulent  transfer or
similar payment under any bankruptcy, insolvency or similar law.

4.4 Certain Additional Waivers.

     Without  limiting the  generality of the  provisions of this Section 4, the
Fund hereby  specifically  waives the benefits of N.C. Gen.  Stat.  ss.ss.  26-7
through 26-9, inclusive, to the extent applicable.  The Fund further agrees that
it shall have no right of  recourse to security  for the  Borrower  Obligations,
except through the exercise of rights of subrogation pursuant to Section 4.2.

4.5 Remedies.

     The Fund agrees that,  to the fullest  extent  permitted by law, as between
the  Fund,  on the one hand,  and the Bank,  on the  other  hand,  the  Borrower
Obligations  may be  declared  to be  forthwith  due and  payable as provided in
Section 9.2 (and shall be deemed to have become automatically due and payable in
the  circumstances  provided in said  Section  9.2) for  purposes of Section 4.1
notwithstanding  any  stay,  injunction  or other  prohibition  preventing  such
declaration (or preventing the Borrower Obligations from becoming  automatically
due and  payable)  as against  any other  Person and that,  in the event of such
declaration   (or  the  Borrower   Obligations   being  deemed  to  have  become
automatically due and payable), the Borrower Obligations (whether or not due and
payable by any other Person) shall forthwith  become due and payable by the Fund
for purposes of Section 4.1.

4.6 Guarantee of Payment; Continuing Guarantee.

     The  guarantee  in this  Section  4 is a  guaranty  of  payment  and not of
collection,  is  a  continuing  guarantee,  and  shall  apply  to  all  Borrower
Obligations whenever arising.

4.7 Deposit of Capital Call Notices.

     The Fund hereby  agrees that each of the Capital Call Notices  delivered by
the Fund to the Bank  pursuant  to Section  5.1(b)  shall be held by the Bank on
deposit  and  shall be  delivered  by the Bank to the  Partners  only  under the
circumstances  contemplated  by, and otherwise in accordance  with the terms of,
Section 9.2.


SECTION 5

CONDITIONS

5.1 Closing Conditions.

     The obligation of the Bank to enter into this Credit  Agreement and to make
the initial Loans shall be subject to satisfaction  of the following  conditions
(in form and substance acceptable to the Bank):

          (a)  Executed Credit  Agreement.  Receipt by the Bank of duly executed
               copies of this Credit Agreement.

          (b)  Deposited  Notices.  Receipt by the Bank of an  original  Capital
               Call Notice for each Limited  Partner,  in each case  executed by

                                       14
<PAGE>
               the General  Partner and directing  such Limited  Partner to wire
               transfer  funds to the Bank in an  amount  equal to such  Limited
               Partner's  pro  rata  share  of  the  original  Committed  Amount
               ($3,000,000).

          (c)  Legal  Opinion.  Receipt of a legal opinion of Simpson  Thacher &
               Bartlett,  counsel for the Fund, in form and substance reasonably
               satisfactory to the Bank.

          (d)  Partnership  Documents.  Receipt  by the  Bank  of all  documents
               reasonably requested by the Bank relating to the existence of the
               Fund,  the  enforceability  of  this  Credit  Agreement  and  the
               Deposited Notices and other matters relating thereto, in form and
               substance  satisfactory to the Bank,  including,  but not limited
               to:

               (i)  Certificates of Authorization. Certificates of authorization
                    of the General Partner as of the Closing Date, approving and
                    adopting  this  Credit  Agreement  and the  delivery  of the
                    Deposited Notices and authorizing the execution and delivery
                    thereof by the General Partner on behalf of the Fund.

               (ii) Partnership  Agreement.  A copy,  certified by an officer of
                    the general  partner of the General Partner on behalf of the
                    Fund as true and  complete,  of the  Partnership  Agreement,
                    together with all amendments thereto, if any.

               (iii)Incumbency  Certificate.  An incumbency  certificate  of any
                    two duly  authorized  officers of the general partner of the
                    General Partner who will be executing this Credit Agreement,
                    any Deposited  Notice or any other  document,  instrument or
                    certificate  to be  delivered  pursuant to the terms  hereof
                    (including  the  name,  title  and  signature  of each  such
                    officer).

          (e)  Remaining  Capital   Commitments.   Receipt  by  the  Bank  of  a
               certificate  executed by an officer of the general partner of the
               General  Partner  on behalf of the  Fund,  in form and  substance
               satisfactory  to the Bank,  stating that the aggregate  Remaining
               Capital  Commitments  of all  Limited  Partners as of the Closing
               Date equals or exceeds the sum of (i) the  Committed  Amount plus
               (ii) all other Obligations of the Fund.

5.2 Conditions to all Extensions of Credit.

     The  obligations of the Bank to make any Loan (including the initial Loans)
are  subject  to  satisfaction  of  the  following  conditions  in  addition  to
satisfaction on the Closing Date of the conditions set forth in Section 5.1:

          (a)  The  Borrower  shall  have  delivered  an  appropriate  Notice of
               Borrowing;

          (b)  The  representations and warranties set forth in Section 6 shall,
               subject to the limitations set forth therein, be true and correct
               in all material  respects as of such date (except for those which
               expressly relate to an earlier date);

          (c)  There shall not have been  commenced  against the Borrower or the
               Fund  an  involuntary  case  under  any  applicable   bankruptcy,
               insolvency  or other  similar law now or hereafter in effect,  or
               any case,  proceeding  or other action for the  appointment  of a
               receiver, liquidator,  assignee, custodian, trustee, sequestrator
               (or similar  official) of such Person or for any substantial part
               of its  Property  or for the  winding  up or  liquidation  of its
               affairs,  and such involuntary case or other case,  proceeding or
               other action shall remain undismissed, undischarged or unbonded;

          (d)  No  Default  or Event of Default  shall  exist and be  continuing
               either prior to or after giving effect thereto; and

          (e)  Immediately  after giving  effect to the making of such Loan (and
               the application of the proceeds thereof), the aggregate principal
               amount of  outstanding  Loans  shall  not  exceed  the  Committed
               Amount.

The delivery of each Notice of Borrowing and each Notice of Extension/Conversion
shall constitute a representation  and warranty by the Borrower (with respect to
itself  only)  and the  Fund of the  correctness  of the  matters  specified  in
subsections (b), (c), (d) and (e) above.


SECTION 6

REPRESENTATIONS AND WARRANTIES

6.1 Existence and Power.

                                       15
<PAGE>
          (a)  The Fund hereby  represents to the Bank that each of the Fund and
               the  General  Partner is a limited  partnership  duly  organized,
               validly existing and in good standing under the laws of the State
               of  Delaware,  and  is in  good  standing  as a  foreign  limited
               partnership  in each other  jurisdiction  where  ownership of its
               properties  or the conduct of its  business  requires it to be so
               other  than in such  jurisdictions  where  failure  to be in good
               standing  could not  reasonably  be  expected  to have a Material
               Adverse  Effect,  and has all power and authority under such laws
               and  its  partnership  agreement  and all  material  governmental
               licenses,  authorizations,  consents  and  approvals  required to
               carry on its business as now conducted.

          (b)  The Fund hereby  represents to the Bank that the general  partner
               of the General Partner (i) is duly incorporated, validly existing
               and  in  good  standing  under  the  laws  of  the  state  of its
               incorporation,  (ii) has all corporate  power  pursuant to proper
               authorization  to enable it to act as the general  partner of the
               General  Partner and to enter into this Credit  Agreement  on the
               Fund's behalf,  and (iii) is duly qualified to do business and is
               in good standing in each other  jurisdiction where it is required
               to be  qualified  in order to act as the  general  partner of the
               General  Partner,  other  than in such  jurisdictions  where  the
               failure  to be so  qualified  and  in  good  standing  could  not
               reasonably be expected to have a Material Adverse Effect.

          (c)  The Borrower hereby  represents to the Bank that the Borrower (i)
               is duly incorporated, validly existing and in good standing under
               the laws of the  State  of  Delaware  and (ii) has all  corporate
               power pursuant to proper  authorization to enter into this Credit
               Agreement.

6.2 Authorization.

          (a)  The Fund  hereby  represents  to the  Bank  that the Fund has the
               partnership or other necessary power and authority, and the legal
               right,  to enter into this  Credit  Agreement  and to perform its
               obligations    hereunder   and   consummate   the    transactions
               contemplated  hereby and has by proper action duly authorized the
               execution and delivery of this Credit Agreement and the Deposited
               Notices.  Without  limiting the generality of the above, the Fund
               has by  proper  action  duly  authorized  (i) the  execution  and
               delivery of one or more  Capital  Call Notices to each Partner in
               order to fund the  obligations  of the Fund under Section 4, (ii)
               the  depositing of such Capital Call Notices with the Bank in the
               manner  contemplated  by Section 4.7 and (iii) the authorizing of
               the Bank to deliver  such  Capital  Call Notices on behalf of the
               Fund in accordance with the terms of Section 9.2(c).

          (b)  The Borrower hereby  represents to the Bank that the Borrower has
               the corporate power and authority,  and the legal right, to enter
               into  this  Credit  Agreement  and  to  perform  its  obligations
               hereunder,  to  obtain  extensions  of  credit  hereunder  and to
               consummate the transactions contemplated hereby and has by proper
               action duly  authorized the execution and delivery of this Credit
               Agreement.

6.3 No Conflicts.

          (a)  The Fund hereby represents to the Bank that neither the execution
               and  delivery  by the  Fund  of  this  Credit  Agreement  nor the
               consummation  of  the  transactions   contemplated   herein,  nor
               performance  by the Fund of and  compliance  with the  terms  and
               provisions hereof will (i) violate or conflict with any provision
               of the Partnership  Agreement or other governance document,  (ii)
               violate any material  law,  regulation,  order,  writ,  judgment,
               injunction,  decree or permit  applicable to it, (iii) violate or
               conflict  with  contractual  provisions  of, or cause an event of
               default under, any indenture,  loan agreement,  mortgage, deed of
               trust, contract or other agreement or instrument to which it is a
               party or by which it may be bound,  the  violation of which could
               reasonably be expected to have a Material  Adverse Effect or (iv)
               result in or require  the  creation of any Lien (other than those
               contemplated in or in connection with this Credit Agreement) upon
               or with respect to the Fund's Properties.

          (b)  The  Borrower  hereby  represents  to the Bank that  neither  the
               execution  and delivery by the Borrower of this Credit  Agreement
               nor the consummation of the transactions contemplated herein, nor
               performance by the Borrower of and compliance  with the terms and
               provisions hereof will (i) violate or conflict with any provision
               of its  articles or  certificate  of  incorporation  or bylaws or
               other  organizational  or governing  documents,  (ii) violate any
               material law,  regulation,  order,  writ,  judgment,  injunction,

                                       16
<PAGE>
               decree or permit applicable to it, (iii) violate or conflict with
               contractual  provisions  of, or cause an event of default  under,
               any indenture, loan agreement,  mortgage, deed of trust, contract
               or other  agreement  or  instrument  to which it is a party or by
               which it may be bound, the violation of which could reasonably be
               expected  to have a  material  adverse  effect  on the  business,
               assets, operations,  results of operations or financial condition
               of the  Borrower  and its  Subsidiaries  taken as a whole or (iv)
               result in or require  the  creation of any Lien (other than those
               contemplated in or in connection with this Credit Agreement) upon
               or with respect to the Borrower's Properties.

6.4 Consents.

          (a)  The Fund hereby represents to the Bank that no consent, approval,
               authorization   or  order  of,   or   filing,   registration   or
               qualification with, any court or Governmental  Authority or other
               Person is required in connection with the execution,  delivery or
               performance  by the  Fund of this  Credit  Agreement  or with the
               execution  and  delivery  by the  General  Partner  on the Fund's
               behalf of the Deposited Notices.

          (b)  The  Borrower  hereby  represents  to the Bank  that no  consent,
               approval,  authorization or order of, or filing,  registration or
               qualification with, any court or Governmental  Authority or other
               Person is required in connection with the execution,  delivery or
               performance by the Borrower of this Credit Agreement.

6.5 Enforceable Obligations.

          (a)  The Fund hereby represents to the Bank that this Credit Agreement
               has been duly executed and delivered by the Fund and  constitutes
               legal,  valid and binding  obligations  of the Fund,  enforceable
               against  the  Fund in  accordance  with  its  terms,  subject  to
               applicable   bankruptcy,   insolvency,   fraudulent   conveyance,
               reorganization,  moratorium or laws affecting  creditors'  rights
               generally and subject to general principles of equity, regardless
               of whether  considered in  proceedings in equity or at law and by
               an implied covenant of good faith and fair dealing.

          (b)  The  Borrower  hereby  represents  to the Bank that  this  Credit
               Agreement  has been duly  executed and  delivered by the Borrower
               and  constitutes  legal,  valid and  binding  obligations  of the
               Borrower, enforceable against the Borrower in accordance with its
               terms, subject to applicable bankruptcy,  insolvency,  fraudulent
               conveyance,   reorganization,   moratorium   or  laws   affecting
               creditors' rights generally and subject to general  principles of
               equity, regardless of whether considered in proceedings in equity
               or at law and by an  implied  covenant  of good  faith  and  fair
               dealing.

6.6 Permitted Investment.

     The Fund  hereby  represents  to the Bank  that (a) the  incurrence  of the
obligations of the Fund set forth in this Credit  Agreement are permitted by the
Partnership  Agreement,  and (b) the Limited Partners shall be obligated to make
additional  capital  contributions  (each in a pro rata amount in  proportion to
such Limited Partner's total capital commitment obligation to the Fund under the
Partnership  Agreement) for the purpose of providing funds to or for the account
of the Fund in an aggregate  amount at least equal to the  Committed  Amount for
the  purpose  of  providing  funds to the Fund  sufficient  to repay in full the
Borrower Obligations, if so requested by the General Partner.

6.7 Venture Capital Operating Company.

     The Fund hereby  represents to the Bank that the Fund is a venture  capital
operating company within the meaning of the Plan Asset Regulations, or, the Fund
satisfies  another  exception  under the Plan  Asset  Regulations  such that the
assets of the Fund are not "plan  assets"  within the  meaning and as defined in
the Plan Asset Regulations.

6.8 Deposited Notices.

     The Fund hereby  represents to the Bank that each  Deposited  Notice,  when
delivered by the Bank to the applicable  Limited  Partner in accordance with the
terms of Section 9.2(c), will give rise to a legal, valid and binding obligation
on the part of such  Limited  Partner to pay to the Bank (for the account of the
Fund) such Limited  Partner's  pro rata share of the original  Committed  Amount
($3,000,000),  enforceable  against such Limited  Partner in accordance with the
terms of such Deposited Notice and the Partnership Agreement.

6.9 Limitations on Actions.

     The Fund  hereby  represents  to the Bank that the Fund is not aware of any
event or condition that could (i) have a material  adverse effect on the ability

                                       17
<PAGE>
of the Fund to perform its obligations under this Credit Agreement,  (ii) render
invalid or unenforceable  any of the Deposited Notices or (iii) otherwise modify
the  obligations  of any of the  Partners  and/or any Person  becoming  Partners
subsequent  to the  Closing  Date which arise upon the due  delivery  of, and as
contemplated by, the Deposited Notices.


SECTION 7

AFFIRMATIVE COVENANTS

     The Fund hereby  covenants and agrees that so long as this Credit Agreement
is in effect:

7.1 Outstanding Subscriptions.

     The Fund will cause the  aggregate  Remaining  Capital  Commitments  of all
Limited  Partners  to equal or exceed the sum of (i) the  Committed  Amount plus
(ii) all other Obligations of the Fund.

7.2 General Partner.

     The Fund will cause (i) Vestar  Associates III, L.P. to be the sole general
partner of the Fund at all times and (ii) Vestar  Associates  Corporation III to
be the sole general partner of the General Partner at all times.

7.3 Plan Assets, etc.

     The Fund shall either (i) be a venture capital operating company within the
meaning of the Plan Asset  Regulations,  or (ii) satisfy another exception under
the Plan  Asset  Regulations  such  that the  assets  of the Fund are not  "plan
assets" within the meaning and as defined in the Plan Asset Regulations.

7.4 Receipt of the Funds Pursuant to the Deposited Notices.

     Immediately upon receipt by the Fund or any of its Affiliates of payment by
any  Limited  Partner in respect of a  Deposited  Notice  delivered  by the Bank
pursuant  to  Section  9.2(c),  the Fund  shall (i)  notify  the Bank in writing
specifying  the Limited  Partner  making such payment and the amount thereof and
(ii) forward,  or cause to be forwarded,  the funds representing such payment to
the Parent.


SECTION 8

NEGATIVE COVENANTS

     The Fund hereby  covenants and agrees that so long as this Credit Agreement
is in effect:

8.1 Limitations on Actions.

     The Fund  shall not take any  action  that  could  (i)  render  invalid  or
unenforceable  any of  the  Deposited  Notices  or  (ii)  otherwise  modify  the
obligations  of  any  of  the  Partners  and/or  any  Person  becoming  Partners
subsequent  to the  Closing  Date which arise upon the due  delivery  of, and as
contemplated by, the Deposited Notices.


SECTION 19

EVENTS OF DEFAULT


9.1 Events of Default.

     An Event of Default shall exist upon the occurrence and continuation of any
of the following specified events (each an "Event of Default"):

          (a)  Payment. The Borrower shall

               (i)  default in the payment  when due of any  principal of any of
                    the Loans, or

               (ii) default,  and such  default  shall  continue for five (5) or
                    more Business  Days, in the payment when due of any interest
                    on  the  Loans,  or of  any  fees  or  other  amounts  owing
                    hereunder or in connection herewith; or

          (b)  Representations.  Any representation,  warranty or statement made
               or deemed to be made by the Borrower or the Fund herein or in any
               statement  or  certificate  delivered or required to be delivered
               pursuant  hereto or thereto  shall prove  untrue in any  material
               respect  on the date as of which  it was made or  deemed  to have
               been made; or

          (c)  Covenants.

               (i)  The Fund shall default in the due  performance or observance

                                       18
<PAGE>
                    of any term, covenant or agreement contained in Section 7 or
                    Section 8; or

               (ii) The   Borrower  or  the  Fund  shall   default  in  the  due
                    performance  or  observance  by it of any term,  covenant or
                    agreement  (other than those referred to in subsections (a),
                    (b) or (c)(i) of this Section 9.1)  contained in this Credit
                    Agreement and such default shall  continue  unremedied for a
                    period  of  at  least  30  days  after  the   earlier  of  a
                    responsible  officer of the  Borrower  or the Fund  becoming
                    aware of such default or notice thereof by the Bank; or

          (d)  Guaranties.  The  guaranty  given  by the Fund  hereunder  or any
               provision  thereof shall cease to be in full force and effect, or
               the Fund or any  Person  acting by or on behalf of the Fund shall
               deny or disaffirm the Fund's obligations under such guaranty,  or
               the Fund shall  default in the due  performance  or observance of
               any term,  covenant or  agreement  on its part to be performed or
               observed pursuant to Section 4; or

          (e)  Bankruptcy, etc. Any Bankruptcy Event shall occur with respect to
               the Borrower or the Fund; or

          (f)  Defaults under Other Agreements. With respect to any Indebtedness
               (other than Indebtedness outstanding under this Credit Agreement)
               in excess of $20 million in the  aggregate  for the Fund,  (A)(1)
               the Fund shall  default in any  payment  (beyond  the  applicable
               grace  period with respect  thereto,  if any) with respect to any
               such  Indebtedness,  or (2) the occurrence  and  continuance of a
               default  in  the  observance  or  performance  relating  to  such
               Indebtedness   or  contained  in  any   instrument  or  agreement
               evidencing,  securing or relating thereto,  or any other event or
               condition  shall occur or  condition  exist,  the effect of which
               default or other event or condition is to cause,  or permit,  the
               holder or holders of such  Indebtedness  (or  trustee or agent on
               behalf of such holders) to cause  (determined  without  regard to
               whether  any  notice  or  lapse  of time is  required),  any such
               Indebtedness to become due prior to its stated  maturity;  or (B)
               any such  Indebtedness  shall be  declared  due and  payable,  or
               required  to be  prepaid  other  than  by a  regularly  scheduled
               required  prepayment,  prior  to  the  stated  maturity  thereof;
               provided, however, that notwithstanding the foregoing, no Default
               or Event of Default  shall exist under this  Section  9.1(f) with
               respect to a default  which is being  contested  in good faith by
               appropriate proceedings; or

          (g)  Judgments. The Fund shall fail within 30 days of the date due and
               payable  to  pay,  bond  or  otherwise  discharge  any  judgment,
               settlement  or order for the  payment of money (to the extent not
               paid or fully covered by insurance  provided by a carrier who has
               acknowledged  coverage  and has the  ability  to  perform)  which
               judgment,  settlement or order,  when  aggregated  with all other
               such  judgments,  settlements  or orders  due and  unpaid at such
               time, exceeds $20 million,  and which is not stayed on appeal (or
               for  which no motion  for stay is  pending)  or is not  otherwise
               being executed.

9.2 Acceleration; Remedies.

     Upon the  occurrence  of an Event of  Default,  and at any time  thereafter
unless and until such Event of Default  has been  waived by the Bank or cured to
the  satisfaction  of the Bank, the Bank shall by written notice to the Borrower
and the Fund take any of the following actions:

          (a)  Termination of the Commitment.  Declare the Commitment terminated
               whereupon the Commitment shall be immediately terminated.

          (b)  Acceleration.  Declare  the unpaid  principal  of and any accrued
               interest   in  respect  of  all  Loans  and  any  and  all  other
               indebtedness  or  obligations  of any and every kind owing by the
               Borrower and the Fund to the Bank  hereunder to be due  whereupon
               the  same  shall  be   immediately   due  and   payable   without
               presentment,  demand, protest or other notice of any kind, all of
               which are hereby waived by the Borrower and the Fund.

          (c)  Delivery of Deposited  Notices.  After at least 2 Business  Days'
               prior written notice thereof by the Bank to the Fund, deliver the
               Deposited Notices to the Limited Partners.

     Notwithstanding the foregoing,  if an Event of Default specified in Section
9.1(f) shall occur,  then the Commitment shall  automatically  terminate and all
Loans, all accrued interest in respect thereof,  all accrued and unpaid fees and
other  indebtedness  or obligations  owing to the Bank  hereunder  automatically
shall  immediately  become due and  payable  without the giving of any notice or
other action by the Bank. In the event any of the Borrower  Obligations  are not
paid when due at any stated or accelerated maturity, the Borrower agrees to pay,
in addition to the principal and interest,  all costs of  collection,  including
reasonable  attorneys'  fees.  The rights of the Bank under this Section 9.2 are

                                       19
<PAGE>
independent  and in  addition  to such  rights as the Bank may have at law or in
equity or  otherwise  based on the failure of the Fund to perform any  covenant,
agreement or undertaking made by it in this Credit Agreement.

9.3 Cash Collateral Account.

     To  the  extent  that  payments  made  by  the  Fund   (including   capital
contributions  made by the  Partners)  pursuant to the exercise of rights by the
Bank under Section 4 and Section 9.2(c) exceed the amounts  necessary to satisfy
the obligations of the Fund to make payment in full of the Borrower Obligations,
such amounts shall be held by the Bank in a cash  collateral  account subject to
the sole dominion and control of the Bank (the "Cash Collateral  Account") until
this Credit  Agreement is  terminated  in  accordance  with the terms of Section
10.13(b).  The Bank shall charge the Cash  Collateral  Account from time to time
for the  payment  when due of all  amounts  payable by the Fund  hereunder.  Any
balance  remaining in the Cash  Collateral  Account at the time that this Credit
Agreement  is  terminated  in  accordance  with the  terms of  Section  10.13(b)
promptly shall be turned over by the Bank to the Fund in such manner as the Fund
at the time shall  specify to the Bank.  At the request of the Fund,  amounts on
deposit in the Cash  Collateral  Account  shall be  invested by the Bank in Cash
Equivalents.  Any income earned on such Cash Equivalents will be for the account
of the Fund and shall be distributed  not less than quarterly by the Bank to the
Fund. To the extent that any loss is incurred in respect of such  investments by
the Bank on behalf of the Fund, the Fund not less than quarterly will deliver to
the  Bank,  for  deposit  in the Cash  Collateral  Account,  additional  amounts
sufficient to offset such losses.
9.4 Allocation of Fund Payments.

     All amounts  collected or received by the Bank from the Fund or any Partner
pursuant  to or in  connection  with this  Credit  Agreement  and the  Deposited
Notices shall be applied by the Bank solely to the payment of the obligations of
the Fund under Section 4.1.

9.5 Receipt of Funds Pursuant to the Deposited Notices.

     The Bank agrees  that,  promptly  after  receipt by the Bank of any capital
contribution  by any  Limited  Partner  pursuant  to the  exercise of the Bank's
rights under Section 4.1 and Section  9.2(c),  the Bank shall notify the Fund of
the amount of such capital  contribution and the identity of the Limited Partner
making such capital contribution.


SECTION 10

MISCELLANEOUS

10.1 Notices.

     Except as  otherwise  expressly  provided  herein,  all  notices  and other
communications  shall  have been duly  given  and  shall be  effective  (a) when
delivered,  (b) when transmitted via telecopy (or other facsimile device) to the
number set out below,  (c) the Business Day  following the day on which the same
has been  delivered  prepaid  to a  reputable  national  overnight  air  courier
service,  or (d) the third  Business Day  following the day on which the same is
sent by certified  or  registered  mail,  postage  prepaid,  in each case to the
respective  parties at the address set forth below,  or at such other address as
such party may specify by written notice to the other parties hereto:

         if to the Borrower:

                  Cluett American Corp.
                  48 W. 38th Street
                  New York, New York  10018
                  Attn:  Chief Executive Officer
                  Telephone:        (212) 984-8915
                  Telecopy:         (212) 984-8925

         with copies to:

                  Vestar Capital Partners III, L.P.
                  245 Park Avenue
                  41st Floor
                  New York, New York  10167
                  Attn:  Norman W. Alpert
                  Telephone:  (212) 351-1606
                  Telecopy:  (212) 808-4922

                  and

                  Vestar Capital Partners III, L.P.
                  245 Park Avenue
                  41st Floor
                  New York, New York  10167
                  Attn:  Brian P. Schwartz
                  Telephone:  (212) 351-1651
                  Telecopy:  (212) 808-4922

                  and


                                       20
<PAGE>
                  Simpson Thacher & Bartlett
                  425 Lexington Avenue
                  New York, New York  10017
                  Attn:  Marissa Wesely
                  Telephone:  (212) 455-7173
                  Telecopy:  (212) 455-2502

         if to the Fund:

                  Vestar Capital Partners III, L.P.
                  245 Park Avenue
                  41st Floor
                  New York, New York  10167
                  Attn:  Norman W. Alpert
                  Telephone:  (212) 351-1606
                  Telecopy:  (212) 808-4922

                  with copies to:

                  Vestar Capital Partners III, L.P.
                  245 Park Avenue
                  41st Floor
                  New York, New York  10167
                  Attn:  Brian P. Schwartz
                  Telephone:  (212) 351-1651
                  Telecopy:  (212) 808-4922

                  and

                  Simpson Thacher & Bartlett
                  425 Lexington Avenue
                  New York, New York  10017
                  Attn:  Marissa Wesely
                  Telephone:  (212) 455-7173
                  Telecopy:  (212) 455-2502

         if to the Bank:

                  Bank of America, N. A.
                  Independence Center, 15th Floor
                  NC1-001-15-04
                  101 North Tryon Street
                  Charlotte, North Carolina 28255
                  Attn:  Agency Services--Kathy Mumpower
                  Telephone:  (704) 386-6837
                  Telecopy:    (704) 409-0021

         with a copy to:

                  Bank of America, N.A.
                  100 North Tryon Street
                  Bank of America Corporate Center, 13th Floor
                  NC1-007-13-06
                  Charlotte, North Carolina  28255
                  Attn:  Bob Klawinski
                  Telephone:  (704) 387-0467
                  Telecopy:   (704) 386-9607

10.2 Right of Set-Off; Adjustments.

     Upon the  occurrence  and  during the  continuance  of any Event of Default
under Section 9.1(a), the Bank (and each of its Affiliates) is hereby authorized
at any time and from time to time,  to the fullest  extent  permitted by law, to
set off and apply any and all  deposits  (general  or  special,  time or demand,
provisional or final) at any time held and other  indebtedness at any time owing
by the Bank (or any of its  Affiliates)  to or for the credit or the  account of
the Borrower or the Fund against any and all of the  obligations  of such Person
now or hereafter existing under this Credit Agreement or otherwise, irrespective
of whether the Bank shall have made any demand under hereunder or thereunder and
although such  obligations may be unmatured.  The Bank agrees promptly to notify
the Borrower or the Fund, as applicable,  after any such set-off and application
made by the Bank; provided,  however, that the failure to give such notice shall
not affect the validity of such set-off and application.  The rights of the Bank
under this Section 10.2 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) that the Bank may have.

10.3 Benefit of Agreement.

     This Credit Agreement shall be binding upon and inure to the benefit of and
be enforceable by the respective  successors and assigns of the parties  hereto;
provided  that (i) neither the  Borrower nor the Fund may assign or transfer any
of its interests and  obligations  without prior written consent of the Bank and
(ii) the Bank may not assign or transfer any of its  interests  and  obligations

                                       21
<PAGE>
hereunder  without  prior  written  consent of the  Borrower and the Fund except
during the continuance of an Event of Default.

10.4 No Waiver; Remedies Cumulative.

     No failure or delay on the part of the Bank in exercising any right,  power
or  privilege  hereunder  and no  course  of  dealing  between  the Bank and the
Borrower or the Fund shall operate as a waiver thereof;  nor shall any single or
partial exercise of any right,  power or privilege  hereunder preclude any other
or  further  exercise  thereof  or the  exercise  of any other  right,  power or
privilege  hereunder or thereunder.  The rights and remedies provided herein are
cumulative  and not  exclusive  of any rights or  remedies  which the Bank would
otherwise  have.  No notice to or demand on the Borrower or the Fund in any case
shall entitle the Borrower or the Fund to any other or further  notice or demand
in similar or other  circumstances  or  constitute a waiver of the rights of the
Bank to any other or  further  action  in any  circumstances  without  notice or
demand.

10.5 Expenses; Indemnification.

          (a)  The  Borrower  agrees to pay on demand all costs and  expenses of
               the Bank in connection with the preparation, execution, delivery,
               administration,   modification,  and  amendment  of  this  Credit
               Agreement  and the other  documents  to be  delivered  hereunder,
               including,  without limitation,  the reasonable fees and expenses
               of counsel for the Bank (including the cost of internal  counsel)
               with respect  thereto and with respect to advising the Bank as to
               its rights and responsibilities under this Credit Agreement.  The
               Borrower  further  agrees to pay on demand all costs and expenses
               of the  Bank  (including  the  reasonable  fees and  expenses  of
               counsel) in  connection  with the  enforcement  (whether  through
               negotiations,  legal  proceedings,  or  otherwise) of this Credit
               Agreement and the other documents to be delivered hereunder.

          (b)  The Borrower  agrees to indemnify  and hold harmless the Bank and
               each of its Affiliates and their respective officers,  directors,
               employees,  agents,  and advisors (each, an "Indemnified  Party")
               from  and   against  any  and  all   claims,   damages,   losses,
               liabilities,  costs, and expenses (including, without limitation,
               reasonable  attorneys'  fees  and  excluding  taxes)  that may be
               incurred by or asserted or awarded against any Indemnified Party,
               in each case arising out of or in connection with or by reason of
               (including,   without   limitation,   in   connection   with  any
               investigation,   litigation,  or  proceeding  or  preparation  of
               defense in connection  therewith) this Credit  Agreement,  any of
               the  transactions  contemplated  herein or the actual or proposed
               use of the  proceeds  of the  Loans,  except to the  extent  such
               claim, damage, loss, liability, cost, or expense results from any
               Indemnified  Party's gross negligence or willful  misconduct.  In
               the case of an  investigation,  litigation or other proceeding to
               which the indemnity in this Section 10.5 applies,  such indemnity
               shall be effective whether or not such investigation,  litigation
               or  proceeding  is brought  by the  Borrower  or the Fund,  their
               respective directors, shareholders or creditors or an Indemnified
               Party or any other Person or any Indemnified Party is otherwise a
               party  thereto.  The  Borrower  and the Fund each  agrees  not to
               assert any claim against the Bank, any of its Affiliates,  or any
               of their respective directors,  officers,  employees,  attorneys,
               agents,  and advisers,  on any theory of liability,  for special,
               indirect,  consequential,  or punitive  damages arising out of or
               otherwise   relating  to  this  Credit  Agreement,   any  of  the
               transactions contemplated herein or the actual or proposed use of
               the proceeds of the Loans.

          (c)  Without  prejudice to the survival of any other  agreement of the
               Borrower or the Fund hereunder, the agreements and obligations of
               the  Borrower  and the Fund  contained in this Section 10.5 shall
               survive the  repayment of the Loans and other  obligations  under
               this  Credit  Agreement  and the  termination  of the  Commitment
               hereunder.

10.6 Amendments, Waivers and Consents.

     Except as otherwise provided in Section 3.3(b)(ii),  none of the provisions
of  this  Credit  Agreement  may be  amended,  changed,  waived,  discharged  or
terminated unless such amendment, change, waiver, discharge or termination is in
writing and executed by the Bank, the Borrower and the Fund.

10.7 Counterparts.

     This Credit Agreement may be executed in  counterparts,  each of which when

                                       22
<PAGE>
so  executed  and  delivered  shall  be an  original,  but  all of  which  shall
constitute  one and the same  instrument.  It shall not be  necessary  in making
proof of this  Credit  Agreement  to produce  or account  for more than one such
counterpart for each of the parties hereto.  Delivery by facsimile by any of the
parties hereto of an executed  counterpart of this Credit  Agreement shall be as
effective  as an  original  executed  counterpart  hereof  and shall be deemed a
representation that an original executed counterpart hereof will be delivered.

10.8 Headings.

     The  headings of the  sections  and  subsections  hereof are  provided  for
convenience  only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.

10.9 Survival.

     All indemnities set forth herein, including, without limitation, in Section
3.11,  3.12 or 10.5 shall  survive  the  execution  and  delivery of this Credit
Agreement,  the  making  of the  Loans,  the  repayment  of the  Loans and other
obligations  under this Credit  Agreement and the  termination of the Commitment
hereunder,  and all  representations  and warranties made by the Borrower or the
Fund herein shall  survive  delivery of this Credit  Agreement and the making of
the Loans hereunder.

10.10 Governing Law; Submission to Jurisdiction; Venue.

          (a)  THIS  CREDIT  AGREEMENT  AND THE  RIGHTS AND  OBLIGATIONS  OF THE
               PARTIES   HEREUNDER  SHALL  BE  GOVERNED  BY  AND  CONSTRUED  AND
               INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
               Any legal  action  or  proceeding  with  respect  to this  Credit
               Agreement  may be  brought in the courts of the State of New York
               in New York  County,  or of the United  States  for the  Southern
               District of New York,  and,  by  execution  and  delivery of this
               Credit  Agreement,  each of the  Borrower,  the Fund and the Bank
               hereby  irrevocably  accepts  for  itself  and in  respect of its
               property,   generally  and   unconditionally,   the  nonexclusive
               jurisdiction of such courts.  Each of the Borrower,  the Fund and
               the Bank further  irrevocably  consents to the service of process
               out of any of the  aforementioned  courts  in any such  action or
               proceeding  by the  mailing of copies  thereof by  registered  or
               certified mail, postage prepaid, to it at the address set out for
               notices   pursuant  to  Section  10.1,  such  service  to  become
               effective three (3) days after such mailing. Nothing herein shall
               affect the right of the Bank to serve process in any other manner
               permitted by law or to commence legal proceedings or to otherwise
               proceed   against   the   Borrower  or  the  Fund  in  any  other
               jurisdiction.

          (b)  Each of the  Borrower,  the Fund and the Bank hereby  irrevocably
               waives any  objection  which it may now or hereafter  have to the
               laying of venue of any of the  aforesaid  actions or  proceedings
               arising  out  of or in  connection  with  this  Credit  Agreement
               brought in the courts  referred  to in  subsection  (a) above and
               hereby  further  irrevocably  waives  and  agrees not to plead or
               claim  in any such  court  that any  such  action  or  proceeding
               brought  in any such court has been  brought  in an  inconvenient
               forum.

          (c)  TO THE EXTENT  PERMITTED BY LAW,  EACH OF THE BANK,  THE BORROWER
               AND THE FUND HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
               IN ANY  ACTION,  PROCEEDING  OR  COUNTERCLAIM  ARISING  OUT OF OR
               RELATING   TO  THIS   CREDIT   AGREEMENT   OR  THE   TRANSACTIONS
               CONTEMPLATED HEREBY.

10.11 Severability.

     If any  provision  of any of this  Credit  Agreement  is  determined  to be
illegal,  invalid or unenforceable,  such provision shall be fully severable and
the  remaining  provisions  shall  remain in full  force and effect and shall be
construed  without  giving  effect  to the  illegal,  invalid  or  unenforceable
provisions.

10.12 Entirety.

     This Credit Agreement represents the entire agreement of the parties hereto
and thereto,  and supersedes all prior  agreements and  understandings,  oral or
written, if any, including any commitment letters or correspondence  relating to
this Credit Agreement or the transactions contemplated herein.

10.13 Binding Effect; Termination.

          (a)  This Credit  Agreement shall become  effective at such time on or

                                       23
<PAGE>
               after the  Closing  Date when it shall have been  executed by the
               Borrower,  the Fund and the  Bank,  and  thereafter  this  Credit
               Agreement  shall be binding  upon and inure to the benefit of the
               Borrower,  the Fund and the Bank and their respective  successors
               and assigns.

          (b)  The term of this  Credit  Agreement  shall  be  until  all of the
               Borrower  Obligations  then  outstanding  have  been  irrevocably
               satisfied in full and the Commitment hereunder shall have expired
               or been terminated.

10.14 Limitation on Recourse to the Fund.

     The Bank agrees that its rights in respect of any claim or liability  under
this  Credit  Agreement  asserted  by it  against  the Fund  shall be limited to
satisfaction  out  of,  and  enforcement   against,  the  assets  of  the  Fund.
Notwithstanding  anything  to the  contrary  contained  herein  or in any  other
document,  certificate or instrument  executed by the Fund pursuant hereto,  the
Bank  acknowledges  and agrees  that no  officer,  employee,  partner,  servant,
controlling Person, manager,  agent,  authorized  representative or Affiliate of
the Fund (collectively,  the "Non-Recourse Persons") shall have any liability to
the Bank (such liability, including such as may arise by operation of law, being
hereby  expressly  waived) for the payment of any sums now or hereafter owing by
the Fund  under  this  Credit  Agreement  or for the  performance  of any of the
obligations  of the Fund  contained  herein  or shall  otherwise  be  liable  or
responsible with respect thereto.  If any Event of Default shall occur or if any
claim of the Bank against the Fund or alleged  liability to the Bank of the Fund
shall be asserted under this Credit Agreement, the Bank agrees that it shall not
have the right to  proceed  directly  or  indirectly  against  the  Non-Recourse
Persons or against their  respective  properties and assets for the satisfaction
of any such claim or liability or for any deficiency  judgment in respect of any
such claim or liability.  Notwithstanding any of the foregoing,  it is expressly
understood  and agreed,  however,  that nothing  contained in this Section 10.14
shall in any  manner  or any way  constitute  or be  deemed  (i) to  excuse  any
obligations of any Partner to make additional capital  contributions to the Fund
pursuant  to  the  terms  of the  Partnership  Agreement,  (ii)  to  impair  the
enforceability  of any of the rights arising from this Credit Agreement or (iii)
to restrict the remedies available to the Bank to realize upon the assets of the
Fund.  The foregoing  acknowledgments,  agreements and waivers shall survive the
termination   of  this  Credit   Agreement  and  shall  be  enforceable  by  any
Non-Recourse Person.

10.15 Confidentiality.

     The Bank agrees to keep confidential any non-public  information  furnished
or made  available  to it by the  Borrower  or the Fund  pursuant to this Credit
Agreement;  provided that nothing herein shall prevent the Bank from  disclosing
such  information  (a) to  any of its  Affiliate,  (b) to any  other  Person  if
reasonably  incidental to the  administration  of the credit  facility  provided
herein,  (c) as required by any law, rule, or regulation,  (d) upon the order of
any  court or  administrative  agency,  (e) upon the  request  or  demand of any
regulatory agency or authority having jurisdiction over the Bank, (f) that is or
becomes  available  to the  public or that is or becomes  available  to the Bank
other than as a result of a  disclosure  by the Bank  prohibited  by this Credit
Agreement, (g) in connection with any litigation to which the Bank or any of its
Affiliates may be a party,  (h) to the extent  necessary in connection  with the
exercise of any remedy under this Credit Agreement and (i) subject to provisions
substantially similar to those contained in this Section 10.15, to any actual or
proposed participant or assignee.





                                                     [Signature Pages to Follow]

                                       24
<PAGE>




     IN WITNESS WHEREOF,  each of the parties hereto has caused a counterpart of
this Credit  Agreement to be duly  executed  and  delivered as of the date first
above written.

BORROWER:                          Cluett American Corp.,
                                   a Delaware corporation

                                   By:
                                   Name:
                                   Title:


GUARANTOR:                         Vestar Capital Partners III, L.P.,
                                   a Delaware limited partnership

                                   By: Vestar Associates III, L.P.,
                                       its General Partner

                                   By: Vestar Associates corporation III,
                                       its General Partner


                                   By:
                                   Name:
                                   Title:


BANK:                              BANK OF AMERICA, N. A.

                                   By:
                                   Name:
                                   Title:


                                       25
<PAGE>


                                    Exhibit A

                   [Letterhead of Vestar Associates III, L.P.]

[Name and address of partner]

Re: Vestar Capital Partners III, L.P.--Cluett American Corp. $3 Million Line of
    Credit

Dear ___________:

         Pursuant to Section  3.1(a) of the Agreement of Limited  Partnership of
Vestar Capital  Partners III, L.P.,  Vestar  Associates  III, L.P. (the "General
Partner")  is calling  for  payment of the  Capital  Contribution  to be made in
connection  with  Vestar/Cluett  American  Corp.  Your  pro  rata  share  of the
$__________ Capital Contribution for your $__________ commitment is $__________.
Kindly  pay  either by  certified  or  cashier's  check or by wire  transfer  of
immediately  available  funds to the  account  set forth below (or to such other
account as Bank of America,  N.A.  shall have  notified you in writing) no later
than the tenth (10th) business day following the date of this letter.

Via Check:                                                    or Via Bank Wire:

Payable to:  Bank of America, N.A.          Payable to: Bank of America, N.A.

Send to: Bank of America, N.A..                        Bank of America, N.A.
         100 North Tryon Street                        Charlotte, North Carolina
         Bank of America Corporate Center  ABA Routing No.: 053-000-196
         Charlotte, North Carolina 28255       Account No.: 1366212250600
         Attn: Leesa Sluder                    For Credit to: Corporate Services
         Telephone: (704) 388-8330         Reference:  Vestar Capital
         Account No. 1366212250600                    Partners III, L.P.
         For Credit to: Corporate Services Amount: $______________
         Reference:  Vestar Capital
                     Partners III, L.P.
         Amount: $______________

If you have any questions, please feel free to call me at (212) 351-1651.

                            Very truly yours,

                            Vestar Associates III, L.P.,
                            General Partner of Vestar Capital Partners III, L.P.

                            By:      Vestar Associates Corporation III,
                                     its General Partner

                                     By: __________________________________
                                     Name:  Brian P. Schwartz
                                     Title:    Chief Financial Officer



<PAGE>



                               Exhibit 2.1(b)(i)

                           FORM OF NOTICE OF BORROWING

                                     [Date]

Bank of America, N.A.
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina  28255
Attention:  Agency Services

Ladies and Gentlemen:

     The  undersigned,  Cluett  American Corp. (the  "Borrower"),  refers to the
Credit Agreement dated as of November 9, 1999 (as amended, modified, restated or
supplemented  from time to time,  the "Credit  Agreement"),  among the Borrower,
Vestar Capital  Partners III, L.P. (the "Fund") and Bank of America,  N. A. (the
"Bank").  Capitalized  terms used herein and not otherwise  defined herein shall
have the meanings assigned to such terms in the Credit  Agreement.  The Borrower
hereby  gives  notice  pursuant to Section 2.1 of the Credit  Agreement  that it
requests a Loan under the Credit  Agreement,  and in connection  therewith  sets
forth below the terms on which such Loan is requested to be made:

(A)      Date of Borrowing (which is a Business Day)     _______________________

(B)      Principal Amount of Borrowing                   _______________________

(C)      Interest rate basis                             _______________________

(D)      Interest Period and the last day thereof          _____________________

     In accordance with the  requirements of Section 5.2, (i) the Borrower (with
respect to itself  only) and the Fund hereby  reaffirm the  representations  and
warranties  set forth in the Credit  Agreement as provided in subsection  (b) of
such  Section and (ii) the Borrower  (with  respect to itself only) and the Fund
confirm  that the matters  referenced  in  subsections  (c), (d) and (e) of such
Section are true and correct.

     This Notice of  Borrowing  may be executed in  counterparts,  each of which
when so executed  and  delivered  shall be an  original,  but all of which shall
constitute one and the same instrument.

                                                     Cluett American Corp.

                                                     By:
                                                     Name:
                                                     Title:


Acknowledged and consented to this __ day of ________, ____:

Vestar Capital Partners III, L.P.,
a Delaware limited partnership

By:      Vestar Associates III, L.P.,
         its General Partner

         By:      Vestar Associates corporation III,
                  its General Partner

                  By:
                  Name:
                  Title:


<PAGE>




                                   Exhibit 3.2

                     FORM OF NOTICE OF EXTENSION/CONVERSION

                                     [Date]

Bank of America, N.A.
101 North Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina  28255
Attention:  Agency Services

Ladies and Gentlemen:

     The  undersigned,  Cluett  American Corp. (the  "Borrower"),  refers to the
Credit Agreement dated as of November 9, 1999 (as amended, modified, restated or
supplemented  from time to time,  the "Credit  Agreement"),  among the Borrower,
Vestar Capital  Partners III, L.P. (the "Fund") and Bank of America,  N. A. (the
"Bank").  Capitalized  terms used herein and not otherwise  defined herein shall
have the meanings assigned to such terms in the Credit  Agreement.  The Borrower
hereby  gives  notice  pursuant to Section 3.2 of the Credit  Agreement  that it
requests an  extension  or  conversion  of a Loan  outstanding  under the Credit
Agreement,  and in connection therewith sets forth below the terms on which such
extension or conversion is requested to be made:

(A)      Date of Extension or Conversion
         (which is the last day of the
         the applicable Interest Period)                 _______________________

(C)      Principal Amount of Extension or Conversion     _______________________

(D)      Interest rate basis                             _______________________

(E)      Interest Period and the last day thereof           ____________________

     In accordance with the  requirements of Section 5.2, (i) the Borrower (with
respect to itself  only) and the Fund hereby  reaffirm the  representations  and
warranties  set forth in the Credit  Agreement as provided in subsection  (b) of
such  Section and (ii) the Borrower  (with  respect to itself only) and the Fund
confirm  that the matters  referenced  in  subsections  (c), (d) and (e) of such
Section are true and correct.

     This Notice of Extension/Conversion  may be executed in counterparts,  each
of which when so executed and delivered  shall be an original,  but all of which
shall constitute one and the same instrument.

                                                     Cluett American Corp.

                                                     By:
                                                     Name:
                                                     Title:

Acknowledged and consented to this __ day of ________, ____:

Vestar Capital Partners III, L.P.,
a Delaware limited partnership

By:      Vestar Associates III, L.P.,
         its General Partner

         By:      Vestar Associates corporation III,
                  its General Partner

                  By:
                  Name:
                  Title: