FIELDCREST CANNON, INC.

                           INTER-OFFICE CORRESPONDENCE

                                  July 15, 1996



PERSONAL & CONFIDENTIAL

Mr. R. E. Dellinger
Bath Division
Kannapolis


RE:      1996 AMENDMENT TO EMPLOYEE RETENTION AGREEMENT


Dear Bob:

         Fieldcrest  Cannon,  Inc.  (the  "Company")  and  you  entered  into an
Employee  Retention  Agreement  effective July 9, 1993. The Company now deems it
appropriate to amend the Agreement as follows:

         1.       Delete Section 7 and substitute the following therefor:

                  SALE OF  BUSINESS OR ASSETS.
                  If the Company sells all or substantially all of its business
         or assets or if the Company sells all or substantially all of its
         business or assets of a Division of which you are an employee to an
         entity (the "Purchaser"), you will be entitled to receive the Change in
         Control Severance Benefits on the effective date of such sale. In
         determining such benefits, the hospitalization or medical reimbursement
         plan in effect immediately preceding such effective date shall be
         continued in effect without change (except any change that may be
         mandated by law) for the period for which you are entitled to coverage.
         Notwithstanding the foregoing, the Change in Control Severance Benefits
         shall not be payable if you enter the employment of the Purchaser, or
         if you fail to enter such employment but the Purchaser offers you the
         following: (i) employment in a senior executive position having
         authority and responsibility comparable to your authority and
         responsibility with the Company immediately preceding the sale, and
         (ii) compensation and benefits at least as great as provided to you by
         the Company immediately preceding the sale, including without
         limitation severance benefits in the event of your termination of
         employment with the Purchaser at least as great as herein provided (but
         not conditioned on a change in control of the Purchaser).
         Notwithstanding the preceding sentence, the vesting set forth in
         Subsection 5(d) shall be required on the effective date of the sale,
         regardless of any subsequent events.



                                                                        Page 109


<PAGE>




         2.       Delete Section 9(a) and substitute the following therefor:

                  SUCCESSORS; BINDING AGREEMENT.
                  (a) The Company will require any successor (whether direct or
         indirect, by purchase, merger, consolidation or otherwise) to all or
         substantially all of the business or assets of the Company or all or
         substantially all of the business or assets of a Division expressly to
         assume and agree to perform this Agreement to the same extent that the
         Company would be required to perform it if no such succession had taken
         place. Failure of the Company to obtain an assumption of this Agreement
         prior to the effectiveness of any succession shall be a breach of this
         Agreement and shall entitle you to compensation from the Company in the
         same amount and on the same terms as you would be entitled hereunder if
         you had terminated your employment for Good Reason immediately after a
         Change in Control of the Company, except that for purposes of
         implementing the foregoing, the date on which any such succession
         becomes effective shall be deemed the Date of Termination. As used in
         this Agreement, "Company" shall mean the Company as defined above and
         any successor to its business or assets or to its business or assets of
         a Division as aforesaid which assumes and agrees to perform this
         Agreement by operation of law, or otherwise.

         Kindly sign and return this letter to the Company, which signature will
then constitute our agreement on this subject.

                                                     Sincerely,

                                                        FIELDCREST CANNON, INC.


                                                   By: /s/ James M. Fitzgibbons
                                                        James M. Fitzgibbons
                                                           Chairman and
                                                     Chief Executive Officer

AGREED TO THIS 11TH DAY OF
 OCTOBER, 1996:


/s/ R. E. Dellinger
         Signature

R. E. Dellinger
         Print Name

Address:

18712 Head Sail Court

Cornelius, NC  28031


                                                                        Page 110


<PAGE>