Document:

FIFTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER

               THIS  FIFTH  AMENDMENT  TO  CREDIT  AGREEMENT  AND  WAIVER  (this
          "Amendment"),  dated as of March  29,  2000,  is by and  among  Cluett
          --------- American Corp. (the "Borrower"),  Cluett American Investment
          Corp. (the "Parent"),  Cluett American Group, Inc. ("Interco") and the
          -------- ------ ------- certain  subsidiaries of the Parent identified
          on the signature  pages hereto  (together with the Parent and Interco,
          the "Guarantors"),  ---------- the lenders identified on the signature
          pages hereto (the "Lenders"), Bank of America, N.A. (formerly known as
          NationsBank,  N.A.),  as  -------  agent  for  the  Lenders  (in  such
          capacity,  the "Agent"),  and Gleacher  NatWest Inc., as documentation
          agent (the "Documentation Agent"). ----- ------------------- W I T N E
          S S E T H

         WHEREAS, the Borrower,  the Guarantors,  the Lenders, the Agent and the
Documentation  Agent have entered into that certain Credit Agreement dated as of
May 18, 1998, as amended as of May 27, 1998,  December 18, 1998,  March 19, 1999
and  September  30,  1999  (as  so  previously   amended  the  "Existing  Credit
Agreement"); and

         WHEREAS,  the parties to the Existing  Credit  Agreement have agreed to
amend the Existing  Credit  Agreement  and waive certain  provisions  thereof as
provided herein.

         NOW,  THEREFORE,  in  consideration  of the agreements  hereinafter set
forth, and for other good and valuable  consideration,  the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:

                                     PART 1

                                   DEFINITIONS

         SUBPART 1.1 Certain Definitions. Unless otherwise defined herein or the
context  otherwise  requires,  the  following  terms  used  in  this  Amendment,
including its preamble and recitals, have the following meanings:

                  "Amended Credit Agreement" means the Existing Credit Agreement
                   as amended hereby.
                   ------------------------

                  "Amendment No. 5 Effective Date" is defined in Subpart 4.1.
                   ------------------------------                -----------

         SUBPART 1.2 Other  Definitions.  Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its preamble
and recitals, have the meanings provided in the Amended Credit Agreement.

                                     PART 2

                     AMENDMENTS TO EXISTING CREDIT AGREEMENT

         Effective on (and subject to the  occurrence  of) the  Amendment  No. 5
Effective  Date, the Existing  Credit  Agreement is hereby amended in accordance
with this Part 2.  Except as so  amended  and except as waived  pursuant  to the
terms of Part 3, the Existing  Credit  Agreement and all other Credit  Documents
shall continue in full force and effect.

         SUBPART 2.1 Amendments to Section 1.1.

         (a) The following  definitions appearing in Section 1.1 of the Existing
Credit  Agreement  are  amended  and  restated  in their  entireties  to read as
follows:

                  "Asset Disposition  Prepayment Event" means the receipt by the
         Parent  or any  Consolidated  Party of (i) the  proceeds  of any  Asset
         Disposition  other  than an  Excluded  Asset  Disposition  and (ii) any
         dividend, distribution or other transfer from the Receivables Financing
         Subsidiary pursuant to Section 7.14.

                  "Commitment"  means  (i)  with  respect  to each  Lender,  the
         Revolving Commitment of such Lender, the Tranche A Term Loan Commitment
         of such Lender and the Tranche B Term Loan  Commitment  of such Lender,
         (ii) with respect to the Tranche C Lender,  the Tranche C Commitment of
         such Lender,  (iii) with respect to the Swingline Lender, the Swingline
         Commitment  and  (iv)  with  respect  to the  Issuing  Lender,  the LOC
         Commitment.

                  "Consolidated Cash Taxes" means, for any period, the aggregate
         of all taxes of the  Consolidated  Parties on a consolidated  basis for
         such period,  as determined in accordance  with GAAP, to the extent the
         same are paid in cash during such period.

                  "Consolidated  Interest  Expense" means, for any period,  cash
         interest  expense of the Consolidated  Parties on a consolidated  basis
         for such period,  as  determined in  accordance  with GAAP,  but in any
         event  including the  amortization  of debt  discount and premium,  the
         interest component under Capital Leases, the implied interest component
         under Synthetic Leases and interest expense associated with the Tranche
         C Obligations, but excluding amortization of deferred financing costs.

                  "Consolidated  Parties"  means a  collective  reference to the
         Borrower  and its  Subsidiaries  other than the  Receivables  Financing
         Subsidiary, and "Consolidated Party" means any one of them.

                  "Consolidated Scheduled Funded Debt Payments" means, as of the
         end of  each  fiscal  quarter  of the  Consolidated  Parties,  for  the
         Consolidated  Parties on a consolidated basis, the sum of all scheduled
         payments of principal on Funded  Indebtedness for the applicable period
         ending on such date (including the principal  component of payments due
         on Capital Leases during the applicable period ending on such date); it
         being understood that Consolidated Scheduled Funded Debt Payments shall
         not include voluntary prepayments or the mandatory prepayments required
         pursuant to Section 3.3.

                  "Equity Issuance" means any issuance for cash by the Parent or
         any Consolidated Party to any Person which is not a Credit Party of (a)
         any of its Equity Interests,  (b) any of its Equity Interests  pursuant
         to the  exercise  of  options  or  warrants  or (c)  any of its  Equity
         Interests  pursuant to the conversion of any debt securities to equity;
         provided,  however,  that,  notwithstanding the above, the term "Equity
         Issuance"  shall  also  include  any  transaction  involving  a Sponsor
         Support Payment. The term "Equity Issuance" shall not include any Asset
         Disposition.

                  "Excluded Asset  Disposition"  means (i) any Asset Disposition
         to any  Consolidated  Party if (a) the Credit Parties shall cause to be
         executed and delivered such documents,  instruments and certificates as
         the  Agent  may  request  so as to cause the  Credit  Parties  to be in
         compliance  with the terms of Section 7.13 after giving  effect to such
         Asset   Disposition   and  (b)  after  giving   effect  to  such  Asset
         Disposition,  no Default or Event of Default exists,  (ii) any casualty
         or condemnation event (other than in respect of any Property comprising
         the Shirt Group) with respect to which the net proceeds received by the
         Parent or the Consolidated Parties are less than $1,000,000,  (iii) the
         sale or other  disposition  of any Property  (other than  inventory and
         other than in respect of any Equity  Interests  or Property  comprising
         the Shirt Group) in the ordinary course of business,  provided that the
         aggregate  book value of all  Property  so sold or  disposed  of in any
         twelve consecutive months shall not exceed $2,000,000 and (iv) the sale
         or discount without recourse of accounts  receivable only in connection
         with the compromise  thereof or the assignment of past-due accounts for
         collection.

                  "Funded  Indebtedness"  means,  with  respect  to any  Person,
         without  duplication,  the sum of (a) all  Indebtedness  of such Person
         other than  Indebtedness  of the types  referred to in clause (e), (f),
         (g), (i) and (m) of the definition of "Indebtedness"  set forth in this
         Section 1.1, plus (b) all  Indebtedness  of another  Person of the type
         referred to in clause (a) above  secured by (or for which the holder of
         such  Funded   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,  plus
         (c)  all   Guaranty   Obligations   of  such  Person  with  respect  to
         Indebtedness  of the type  referred  to in clause  (a) above of another
         Person  plus (d)  Indebtedness  of the type  referred  to in clause (a)
         above 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.

                  "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 and other than typical  indemnity
         and repurchase obligations in respect of receivables transferred to the
         Receivables  Financing  Subsidiary  in  accordance  with  Sections 8.5)
         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.

                  "Investment  and  Deposit  Agreement"  means the  Amended  and
         Restated Investment and Deposit Agreement,  dated as of March 29, 2000,
         between the Sponsor and the Agent,  as amended,  modified,  restated or
         supplemented from time to time.

                  "Lender" means any of the Persons  identified as a "Lender" on
         the signature pages hereto,  and any Eligible Assignee which may become
         a Lender by way of  assignment  in  accordance  with the terms  hereof,
         together with their permitted successors and assigns. The term "Lender"
         shall also mean any Revolving Lender,  Tranche A Term Lender, Tranche B
         Term Lender or the Tranche C Lender.

                  "Loan" or "Loans"  means the  Revolving  Loans,  the Tranche A
         Term Loans, the Tranche B Term Loans, the Tranche C Loans (or a portion
         of any  Revolving  Loan,  Tranche A Term  Loan,  Tranche B Term Loan or
         Tranche  C Loan  bearing  interest  at the  Adjusted  Base  Rate or the
         Adjusted  Eurodollar Rate) and/or the Swingline Loans (or any Swingline
         Loan bearing  interest at the Adjusted Base Rate or the Quoted Rate and
         referred  to as a Base  Rate  Loan or a Quoted  Rate  Swingline  Loan),
         individually or collectively, as appropriate.

                  "LOC Documents" means, with respect to any Letter of Credit or
         any  Tranche C Letter of  Credit,  any  application  therefor,  and any
         agreements, instruments, guarantees or other documents (whether general
         in application or applicable only to such Letter of Credit or Tranche C
         Letter  of  Credit)  governing  or  providing  for (i) the  rights  and
         obligations of the parties  concerned or at risk or (ii) any collateral
         security for such obligations.

                  "Material Domestic  Subsidiary" means, at any time, any direct
         or indirect Domestic  Subsidiary (other than the Receivables  Financing
         Subsidiary)  which  (i)  is  not  in  the  process  of  liquidation  in
         accordance  with the terms of this Credit  Agreement and (ii) has total
         assets (as determined in accordance  with GAAP) of at least $500,000 at
         such time and revenues (as  determined in  accordance  with GAAP) of at
         least  $500,000  for  the  most  recently  ended  twelve-month  period;
         provided, however, that (w) at no time shall the aggregate total assets
         (as  determined in accordance  with GAAP) of all Domestic  Subsidiaries
         (other  than  the  Receivables  Financing  Subsidiary)  which  are  not
         Material  Domestic  Subsidiaries  exceed  $5,000,000 and (x) at no time
         shall the aggregate revenues (as determined in accordance with GAAP) of
         all  Domestic   Subsidiaries  (other  than  the  Receivables  Financing
         Subsidiary) which are not Material  Domestic  Subsidiaries for the most
         recently ended twelve-month period exceed $5,000,000; provided further,
         however, that, notwithstanding the above, any Domestic Subsidiary which
         has any Guaranty Obligations with respect to any Funded Indebtedness of
         any Credit Party (other than any of the Credit Party Obligations) shall
         be deemed to be a Material Domestic Subsidiary.

                  "Maturity Date" means (i) as to the Revolving  Loans,  Letters
         of  Credit  (and the  related  LOC  Obligations),  Swingline  Loans and
         Tranche A Term Loan, May 18, 2004,  (ii) as to the Tranche B Term Loan,
         May 18,  2005 and (iii) as to the  Tranche  C Loans  and the  Tranche C
         Letters of Credit (and the related Tranche C LOC  Obligations),  either
         (A) if the Leverage Reduction Requirements are not satisfied as of such
         date, the last day of the Leverage Reduction Period or (B) in all other
         cases, December 31, 2001.

                  "Net Cash Proceeds" means the aggregate cash proceeds received
         by the  Parent or the  Consolidated  Parties  in  respect  of any Asset
         Disposition (other than an Excluded Asset Disposition), Equity Issuance
         or  Debt  Issuance,  net  of  (a)  direct  costs  (including,   without
         limitation,  legal,  accounting and investment  banking fees, and sales
         commissions), (b) taxes paid or payable as a result thereof, (c) in the
         case of any Asset  Disposition,  the  amount  necessary  to retire  any
         Indebtedness  secured  by a  Permitted  Lien  on the  related  Property
         ranking senior to any Lien of the Agent thereon, (d) in the case of any
         Asset  Disposition,  the amount  necessary  to retire any  Indebtedness
         evidenced  by that Loan  Agreement  dated as of August 8, 1997  between
         Cluett,   Peabody  Canada,  Inc.  and  Congress  Financial  Corporation
         (Canada),  (e) in the case of any Asset  Disposition  consisting of the
         sale of receivables to the Receivables Financing Subsidiary, the amount
         of the Investment made by the  Consolidated  Parties in the Receivables
         Financing  Subsidiary to the extent  permitted under clause (xv) of the
         definition of "Permitted Investments" set forth in this Section 1.1 and
         (f) in the case of any Asset Disposition  consisting of the sale of any
         Equity Interests or Property comprising the Shirt Group,  restructuring
         costs such as severance  payments,  lease termination  payments and, to
         the  extent  that the amount  thereof  exceeds  the amount of  accounts
         receivable  associated  with the related Equity  Interests or Property,
         accounts  payable  and  accrued  expenses  associated  with such Equity
         Interests or Property;  it being  understood  that "Net Cash  Proceeds"
         shall include,  without limitation,  any cash received upon the sale or
         other disposition of any non-cash  consideration received by the Parent
         or the Consolidated  Parties in any Asset Disposition,  Equity Issuance
         or Debt Issuance,  but shall not include any licensing fees  (including
         guaranteed  minimum  payments)  payable to the Consolidated  Parties in
         connection with the licensing of any of the intellectual  property.  In
         addition,  the "Net  Cash  Proceeds"  of any  Asset  Disposition  shall
         include  any  other  amounts  defined  as "Net Cash  Proceeds"  of such
         transaction  under the  documents  evidencing  or governing  the Senior
         Subordinated Debt.

                  "Notice of Borrowing"  means (i) with respect to the Revolving
         Loans,  the Tranche A Term Loan or the  Tranche B Term Loan,  a written
         notice of borrowing in substantially the form of Exhibit 2.1(b)(i),  as
         required by, respectively, Section 2.1(b)(i), Section 2.4(b) or Section
         2.5(b) and (ii) with respect to the Tranche C Loans,  a written  notice
         satisfying the requirements of Section 2.6(b).

                  "Permitted Investments" means Investments which are either (i)
         cash and Cash Equivalents;  (ii) accounts receivable created,  acquired
         or made by the Parent or any Consolidated  Party in the ordinary course
         of business and payable or  dischargeable  in accordance with customary
         trade  terms;   (iii)  Investments   consisting  of  Equity  Interests,
         obligations, securities or other property received by the Parent or any
         Consolidated Party in settlement of accounts receivable (created in the
         ordinary course of business) from bankrupt or insolvent obligors;  (iv)
         existing  Investments in Subsidiaries and other Investments existing as
         of the Closing  Date and set forth in  Schedule  1.1B;  (v)  additional
         Investments in any Credit Party other than the Parent or Interco;  (vi)
         additional   Investments   in  Foreign   Subsidiaries   not   exceeding
         $10,000,000 in the aggregate;  (vii) Guaranty Obligations  permitted by
         Section  8.1;  (viii)  transactions  permitted  by  Section  8.9;  (ix)
         advances or loans to directors,  officers, employees, agents, customers
         or suppliers that do not exceed $2,000,000 in the aggregate at any time
         outstanding  for the Parent and all of the  Consolidated  Parties taken
         together;  (x)  advances  or loans by the Parent to  management  of the
         Parent   and  to   Alvarez   and   Marsal  in   conjunction   with  the
         Recapitalization in an aggregate principal of up to $2.5 million;  (xi)
         Investments  which  constitute  capital  expenditures (as determined in
         accordance with GAAP) otherwise  permitted under this Credit Agreement;
         (xii) Investments in Joint Ventures not to exceed  $15,000,000;  (xiii)
         Permitted  Acquisitions;  (xiv) the  purchase  by the  Borrower  of the
         Austell  Property  pursuant  to  the  Austell   Transaction;   (xv)  an
         Investment  in the  Receivables  Financing  Subsidiary  in an aggregate
         amount  not to  exceed  $6,000,000;  and (xvi) an  Investment  of up to
         $250,000  in a Person  organized  under the laws of, or doing  business
         primarily in, the Peoples Republic of China.

                  "Senior  Leverage  Ratio"  means,  as of the  last  day of any
         fiscal quarter of the Consolidated  Parties for the twelve month period
         ending on such date, the ratio of (a) all Funded  Indebtedness  (net of
         cash and Cash  Equivalents,  including  cash  and Cash  Equivalents  on
         deposit in the Cash Collateral Account) of the Consolidated  Parties on
         a  consolidated  basis on the last day of such  period,  excluding  (i)
         Subordinated Indebtedness, (ii) the Tranche C Obligations and (iii) any
         Credit Party  Obligations  in which a  participation  interest has been
         purchased by, or on behalf of, the Sponsor  pursuant to Section  2.1(c)
         or Section  2.2(c) of the  Investment  and  Deposit  Agreement,  to (b)
         Consolidated EBITDA for such period.

                  "Total Leverage Ratio" means, as of the last day of any fiscal
         quarter of the Consolidated  Parties for the twelve month period ending
         on such date, the ratio of (a) all Funded Indebtedness (net of cash and
         Cash Equivalents, including cash and Cash Equivalents on deposit in the
         Cash Collateral Account) of the Consolidated  Parties on a consolidated
         basis  on  the  last  day  of  such  period,   including   Subordinated
         Indebtedness,  but  excluding (i) the Tranche C Loans  Obligations  and
         (ii) any Credit Party Obligations in which a participation interest has
         been  purchased  by, or on behalf of, the  Sponsor  pursuant to Section
         2.1(c) or Section 2.2(c) of the Investment  and Deposit  Agreement,  to
         (b) Consolidated EBITDA for such period.

         (b) Clauses (xiv) and (xv) of the  definition of "Permitted  Liens" set
         forth in Section 1.1 of the Existing  Credit  Agreement are amended and
         restated in their  entireties  to read as follows,  and  the  following
         new clauses (xvi) and (xvii) are added to such  definition  immediately
         succeeding such amended and restated clauses (xiv) and (xv) thereof:

                  "Permitted Liens" means:
                   ---------------

                                                             * * * * * * *

                  (xiv) Liens on Property  of any  Foreign  Subsidiary  securing
         Indebtedness of such Foreign  Subsidiary to the extent  permitted under
         Section 8.1(g);

                  (xv) Liens on Property of the  Borrower or any other  Domestic
         Subsidiary not otherwise permitted  hereunder securing  Indebtedness of
         such Person  permitted  under Section 8.1 not  exceeding  $7,500,000 in
         aggregate at any time outstanding;

                  (xvi)  Liens  on cash and Cash  Equivalents  deposited  by the
         Borrower with the Tranche C Lender  pursuant to and in accordance  with
         the  terms  of   Section   2.6(i),   Section   3.3(b)(vi)(D),   Section
         3.3(b)(vi)(E)  or Section 3.15(b) to secure Tranche C LOC  Obligations;
         and

                  (xvii) any  interest of title of a buyer in  connection  with,
         and Liens arising from UCC financing  statements  relating to, the sale
         of receivables by the Receivables  Financing Subsidiary permitted under
         this Credit Agreement.

               (c) The definitions of  "Application  Period",  "Equity  Issuance
          Prepayment Event", "Eligible  Reinvestment",  "Leverage Grace Period",
          "Sale  Moratorium" and "Sponsor Equity  Issuance" set forth in Section
          1.1 of the Existing Credit Agreement are deleted in their entireties.

                (d) he following new definitions are added to Section 1.1 of the
          Existing Credit  Agreement in appropriate  alphabetical order:

                  "Amendment No. 5 Effective Date" shall mean March 29, 2000.
                   ------------------------------

                  "Cash  Collateral  Account" shall have the meaning assigned to
         such term in the Investment and Deposit Agreement.

                  "General Partner" shall have the meaning assigned to such term
         in the Investment and Deposit Agreement.

                  "Investment  Commitment"  shall have the  meaning  assigned to
         such term in the Investment and Deposit Agreement.

                  "Leverage   Reduction   Period"  means  the  period  from  and
         including the Amendment No. 5 Effective Date through and including June
         30,  2000;  provided,  however,  that  the  Leverage  Reduction  Period
         automatically  shall be extended on June 30, 2000 to August 31, 2000 if
         (A)  either  (1) the  Shirt  Group  Restructuring  shall  not have been
         consummated by June 30, 2000, but there shall exist one or more legally
         binding and  enforceable  definitive  purchase  (or other  appropriate)
         agreements  (as  determined  by  the  Agent  in  its  sole   reasonable
         discretion,  supported by such  opinions of counsel for the  applicable
         Consolidated  Party(ies) and/or the relevant  purchaser(s) as the Agent
         shall reasonably  request)  providing for the consummation of the Shirt
         Group  Restructuring  by  August  31,  2000  or  (2)  the  Shirt  Group
         Restructuring  shall have been  consummated by June 30, 2000, but there
         shall  exist one or more  legally  binding and  enforceable  definitive
         purchase (or other appropriate)  agreements (as determined by the Agent
         in its  sole  reasonable  discretion,  supported  by such  opinions  of
         counsel for the applicable  Consolidated Party(ies) and/or the relevant
         purchaser(s) as the Agent shall reasonably request) providing for Asset
         Disposition(s)  permitted by Section 8.5 not comprising the Shirt Group
         Restructuring,  but relating to Equity Interests or Property comprising
         the Shirt Group for aggregate consideration of at least $2,000,000 (but
         in any event including any transaction  involving the sale or licensing
         of the non-domestic  intellectual  property of the Shirt Group),  after
         June 30, 2000 but on before to August 31, 2000 and (B) cash and/or Cash
         Equivalents  in an  aggregate  amount at least equal to the  Investment
         Commitment  as of  June  30,  2000  shall  be on  deposit  in the  Cash
         Collateral Account.

                  "Leverage Reduction Requirements" shall be deemed to have been
         satisfied as of the last day of the Leverage Reduction Period if, as of
         the most recent fiscal month end  preceding  the date of  determination
         with respect to which the Agent has  received  the  Required  Financial
         Information,  (i) the Fixed  Charge  Coverage  Ratio is at least 1.0 to
         1.0, (ii) the Interest Coverage Ratio is at least 1.5 to 1.0, (iii) the
         Senior Leverage Ratio is no greater than 3.25 to 1.0 and (iv) the Total
         Leverage  Ratio is no  greater  than 5.5 to 1.0.  For  purposes  of any
         determination under this definition, (1) all calculations shall be made
         on a pro forma basis using the principles set forth in clauses (2), (3)
         and (4) below and Section  1.3, (2) any Asset  Disposition  consummated
         after  the  Amendment  No. 5  Effective  Date and any  prepayment  made
         pursuant  to Section  3.3(b)(v)(B)  of the Credit  Agreement  after the
         Amendment  No. 5 Effective  Date shall be deemed to have occurred as of
         the most recent fiscal month end  preceding  the date of  determination
         with respect to which the Agent has  received  the  Required  Financial
         Information,   (3)  liabilities  for   restructuring   costs  (such  as
         liabilities for severance payments and lease termination  payments and,
         to the extent that the aggregate  amount thereof  exceeds the amount of
         accounts  receivable  associated  with the related Equity  Interests or
         Property,  accounts payable and accrued  expenses  associated with such
         Equity  Interests or Property)  resulting  from all Asset  Dispositions
         relating to any Equity Interests or Property comprising the Shirt Group
         consummated on or before the last day of the Leverage  Reduction Period
         shall be deemed to constitute  Indebtedness of the Consolidated Parties
         and (4) Funded  Indebtedness of the  Consolidated  Parties on such date
         shall be deemed to be  increased  by the  amount  as of such  date,  as
         reasonably  calculated by the Borrower, of the non-recurring benefit to
         leverage  associated  with a sale  of  receivables  to the  Receivables
         Financing  Subsidiary  and the  corresponding  prepayment of the Credit
         Party  Obligations,  provided  that,  in no event  shall such  increase
         exceed the Net Cash Proceeds from such sale of receivables.  Solely for
         purposes of this  definition,  Funded  Indebtedness of the Consolidated
         Parties  shall  be  calculated   without  netting  for  cash  and  Cash
         Equivalents on deposit in the Cash Collateral Account.

                  "Limited  Partners"  shall have the  meaning  assigned to such
         term in the Investment and Deposit Agreement.

                  "Mandatory Investment" shall have the meaning assigned to such
         term in the Investment and Deposit Agreement.

                  "Non-Sponsor  Equity  Issuance  Prepayment  Event"  means  the
         receipt by the Parent or any Consolidated  Party of the proceeds of any
         Equity  Issuance other than (i) a Sponsor  Support  Payment or (ii) any
         Equity  Issuance  to  the  Sponsor  or  its  Affiliates  or  designated
         co-investors  or any of the  officers,  directors  or  employees of the
         Parent or a Consolidated  Party (A) pursuant to the exercise of options
         or  warrants  or (B) the  proceeds  of which are used by the  Parent to
         repurchase  Equity Interests of the Parent in accordance with the terms
         of Section 8.7(v).

                  "Permitted  Austell  Property  Sale" means (i) the sale of the
         Austell  Property  contemplated  by clause  (ii) of the  definition  of
         "Austell  Transaction" set forth in this Section 1.1 and (ii) a sale of
         the Austell Property  otherwise in compliance with the terms of Section
         8.5 and with respect to which the Agent shall have  received an opinion
         from an independent auditor or appraiser  acceptable to the Agent as to
         the fairness of such transaction to the Borrower.

                  "Pro Rata Share" shall have the meaning  assigned to such term
         in the Investment and Deposit Agreement.

                  "Receivables  Financing Subsidiary" means a direct or indirect
         Domestic  Subsidiary  created after the Amendment No. 5 Effective  Date
         and having no business other than, in a single transaction permitted by
         Section  8.5,  acquiring  from the  Consolidated  Parties  receivables,
         related assets,  proceeds and other assets  customarily  transferred in
         connection   with  an   asset-backed   transaction   and  selling  such
         receivables,  related  assets,  proceeds  and  other  assets to a third
         Person, and activities incidental or related thereto.

                  "Shirt Group Restructuring" means the consummation,  in one or
         more  transactions or series of transactions  permitted by Section 8.5,
         of  (i)  the  licensing  of all or  substantially  all of the  domestic
         intellectual  property  of the Shirt  Group and (ii) the sale of all or
         substantially all of the inventory of the Shirt Group.

                  "Sponsor  Support  Payment" means any payment by, or on behalf
         of,  the  Sponsor  pursuant  to  Section  2.1  or  Section  2.2  of the
         Investment and Deposit Agreement.

                  "Tranche C Commitment"  means the  commitment of the Tranche C
         Lender in an aggregate  principal  amount at any time outstanding of up
         to the  Tranche  C  Committed  Amount,  to make  Tranche C Loans to the
         Borrower in accordance  with the provisions of Section 2.6(a) and issue
         Tranche  C  Letters  of  Credit  for the  account  of the  Borrower  in
         accordance with the provisions of Section 2.7(a).

                  "Tranche C Committed  Amount" shall have the meaning  assigned
         to such term in Section 2.6(a).

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

                  "Tranche C Event of Default"  shall have the meaning  assigned
         to such term in Section 2.6(i).

                  "Tranche  C  Guaranty"   means  that   certain   Guaranty  and
         Investment Agreement dated as of March 29, 2000 between the Sponsor and
         the Tranche C Lender.

                  "Tranche C Lender" means Bank of America, N.A.

                  "Tranche  C Letter of  Credit"  means (i) any letter of credit
         issued by the  Tranche C Lender  for the  account  of the  Borrower  in
         accordance  with  the  terms  of  Section  2.7 and  (ii) and any of the
         letters  of  credit  described  by date of  issuance,  letter of credit
         number,  undrawn  amount,  name of  beneficiary  and date of  expiry on
         Schedule 1.1E.

                  "Tranche C Loan" shall have the meaning  assigned to such term
         in Section 2.6(a).

                  "Tranche C LOC Obligations" means, at any time, the sum of (i)
         the  maximum  amount  which is, or at any time  thereafter  may become,
         available  to  be  drawn  under   Tranche  C  Letters  of  Credit  then
         outstanding,  assuming  compliance with all  requirements  for drawings
         referred to in such Tranche C Letters of Credit plus (ii) the aggregate
         amount of all drawings under Tranche C Letters of Credit honored by the
         Tranche C Lender but not theretofore reimbursed by the Borrower.

                  "Tranche C Obligations" means, without duplication, all of the
         obligations of the Borrower to the Tranche C Lender (in its capacity as
         such),  whenever arising,  under this Credit Agreement or any Tranche C
         Letter of Credit or related LOC Documents  (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).

         SUBPART 2.2 Amendments to Section 1.3. The second  paragraph of Section
         1.3 of  the  Existing  Credit  Agreement is amended and restated in its
         entirety to read as follows:

         1.3  Accounting Terms.

                                                             * * * * * * *

         Notwithstanding  the above or the terms of any  definition set forth in
         Section  1.1,  the  parties  hereto  acknowledge  and agree  that,  for
         purposes of all  calculations  made under the  financial  covenants set
         forth in Section 7.11 or Section 8.5 (including  without limitation for
         purposes of the  definitions of "Applicable  Percentage" and "Pro Forma
         Basis" set forth in Section 1.1), without  duplication,  (i)(A) subject
         to the terms of clause  (iv) below,  income  statement  items  (whether
         positive or negative)  attributable to the Property  disposed of in any
         Asset Disposition as contemplated by Section 8.5, as applicable,  shall
         be excluded to the extent relating to any period occurring prior to the
         date  of  such  transaction,  (B)  Indebtedness  which  is  retired  in
         connection with any such Asset Disposition shall be excluded and deemed
         to have been retired as of the first day of the  applicable  period and
         (C) pro forma  adjustments  may be  included  to the  extent  that such
         adjustments  give effect to events that are  directly  attributable  to
         such transaction and are factually  supportable,  (ii) income statement
         items  (whether  positive or  negative)  attributable  to any  Property
         acquired in any Investment transaction  contemplated by Section 8.6 and
         clause (xiii) of the definition of "Permitted  Investment" set forth in
         Section 1.1 shall, to the extent not otherwise  included in such income
         statements items for the  Consolidated  Parties in accordance with GAAP
         or in  accordance  with any defined  terms set forth in Section 1.1, be
         included  to the  extent  relating  to any  period  applicable  in such
         calculations,   (iii)  the  portion  of  Funded   Indebtedness  of  the
         Consolidated Parties as of any date consisting of Revolving Loans shall
         be  deemed  to  be  the  monthly  average  amount  of  Revolving  Loans
         outstanding  for the  twelve-month  period ended as of such date,  (iv)
         following the  consummation of the licensing of any of the intellectual
         property of the Shirt Group,  Consolidated Net Income for any period (a
         "Measurement  Period")  shall  include  the  aggregate  amount  of  all
         scheduled "guaranteed minimum payments" payable by the licensee of such
         intellectual  property to the  Consolidated  Parties  during the twelve
         month period  immediately  succeeding such  Measurement  Period and (v)
         one-time,  non-recurring  costs  directly  attributable  to  any  Asset
         Disposition relating to any Equity Interests or Property comprising the
         Shirt Group may be excluded from the  calculation of  Consolidated  Net
         Income for any period  occurring  after the  consummation of such Asset
         Disposition.

         SUBPART 2.3 New Section  2.6. The  following  new Section 2.6 is hereby
         added to the Existing Credit Agreement immediately  following  existing
         Section 2.5 thereof:

         2.6  Tranche C Loans.

                  (a) Tranche C Commitment.  Subject to the terms and conditions
         of this Credit Agreement, the Tranche C Lender agrees to make available
         to the Borrower  revolving  credit  loans  requested by the Borrower in
         Dollars  ("Tranche C Loans") from time to time from the Amendment No. 5
         Effective  Date until the  Maturity  Date,  or such earlier date as the
         Tranche C Commitment  shall have been  terminated  as provided  herein;
         provided,  however,  that the sum of the aggregate  principal amount of
         outstanding  Tranche C Loans shall not exceed  TWELVE  MILLION  DOLLARS
         ($12,000,000)  (as such  aggregate  maximum  amount may be increased or
         reduced from time to time as provided in Section 2.6(d), the "Tranche C
         Committed  Amount").  Tranche C 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 which
         are  Tranche C 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. Tranche
         C Loans  hereunder may be repaid and reborrowed in accordance  with the
         provisions hereof.

                  (b) Borrowing Procedures. The Borrower shall request a Tranche
         C Loan  borrowing  by written  notice (or  telephonic  notice  promptly
         confirmed in writing) to the Tranche C Lender 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 Tranche C 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. 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 Tranche C Loan  requested,  then such notice
         shall be  deemed to be a request  for a Base Rate Loan  hereunder.  The
         Tranche C Lender shall make the applicable  Tranche C Loan available to
         the Borrower by 1:00 P.M. (Charlotte,  North Carolina time) on the date
         specified  in the  applicable  Notice of  Borrowing  in Dollars  and in
         immediately available funds by crediting the account of the Borrower on
         the books of the Tranche C Lender at the office of the Tranche C Lender
         designated from time to time to the Borrower.

                  (c)      Minimum  Amounts. Each  Eurodollar  Loan or Base Rate
         Loan  that  is  a  Tranche  C  Loan  shall  be in integral multiples of
         $100,000 (or the remaining  amount  of the Tranche C Committed  Amount,
         if less). (d) Repayment and Prepayments of Tranche C Loans;  Reductions
         and Increases of Tranche C Committed Amount.

                           (i) Maturity  Date. The Borrower  hereby  promises to
                  pay to the order of the Bank,  on the  Maturity  Date  (unless
                  accelerated sooner pursuant to Section 2.6(i)),  the aggregate
                  unpaid   principal   amount  of  all   Tranche  C  Loans  then
                  outstanding.

                           (ii)  Termination  of  Tranche C  Commitment.  Unless
                  terminated  sooner pursuant to Section  2.6(i),  the Tranche C
                  Commitment shall automatically terminate on the Maturity Date.

                           (iii) Other.  Subject to any contrary  provisions set
                  forth in Section 3.3 or Section  3.15(b),  the Borrower  shall
                  prepay each Tranche C Loan on or before the date 30 days after
                  such  Tranche  C Loan is  advanced  by the  Tranche  C Lender;
                  provided  that  each of the  parties  hereto  agrees  that the
                  Sponsor may, in its sole  discretion,  waive the obligation of
                  the Borrower  under this Section  2.6(d)(iii)  with respect to
                  any Tranche C Loan.

                           (iv)     Reductions of Tranche C Committed Amount.
                                    ----------------------------------------

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

                              (B)  Mandatory.  On any date  that the  Tranche  C
                    Loans are  required  to be prepaid  pursuant to the terms of
                    Section 3.3(b), the Tranche C Committed Amount automatically
                    shall be permanently  reduced by the amount of such required
                    prepayment and/or reduction.

                           (v) Increases in Tranche C Committed Amount. Upon the
                  occurrence of any permanent  reductions  (other than permanent
                  reductions  effected  with the proceeds of any "Asset Sale" as
                  such term is defined in the documents  evidencing or governing
                  the Senior  Subordinated  Debt) in the  outstanding  principal
                  amount of the Loans  (other than  Tranche C Loans) on or after
                  the  Amendment No. 5 Effective  Date,  the Tranche C Committed
                  Amount  automatically  shall be increased  by a  corresponding
                  amount,  provided that at the time of such  increase,  the sum
                  of,  without  duplication,   (1)  the  aggregate   outstanding
                  principal  amount of the  Tranche C  Obligations  at such time
                  (assuming that the Tranche C Committed  Amount as so increased
                  is fully drawn), (2) the aggregate amount of payments made by,
                  or on  behalf  of,  the  Sponsor  after  the  Amendment  No. 5
                  Effective   Date  through  and   including   such  date  which
                  permanently  reduce  the  Tranche  C  Obligations  (including,
                  without   limitation,   payments   made  in   order   to  cash
                  collateralize  Tranche C LOC  Obligations),  (3) the aggregate
                  amount of capital  contributions made by, or on behalf of, the
                  Sponsor to the Parent after the Amendment No. 5 Effective Date
                  through and including such date which are used by the Borrower
                  to  make a  mandatory  prepayment  of the  Loans  pursuant  to
                  Section  3.3(b)(v)(B) and (4) the aggregate amount of payments
                  made  by,  or  on  behalf   of,  the   Sponsor   to   purchase
                  participation   interests  in  the  Credit  Party  Obligations
                  outstanding  under the Credit  Documents  pursuant  to Section
                  2.1(c)  or  Section  2.2(c)  of  the  Investment  and  Deposit
                  Agreement after the Amendment No. 5 Effective Date through and
                  including such time, shall not exceed $30,000,000.

                  (e)      Interest.  The Tranche C Loans shall bear interest at
                   a per annum rate equal to:
                           --------

                           (i) Base Rate Loans. During such periods as Tranche C
                  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 Base Rate plus 0.50%.

                           (ii) Eurodollar Loans. During such periods as Tranche
                  C 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 Eurodollar Rate plus 1.50%.

                           (iii)  Default  Interest.  Upon the  occurrence,  and
                  during  the  continuance,  of  default  in the  payment of any
                  amount  under this  Section  2.6 or under  Section  2.7,  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 Base Rate plus
                  2%).

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

                         (f)  Tranche C Fee. In  consideration  of the Tranche C
                    Commitment of the Tranche C Lender  hereunder,  the Borrower
                    hereby  promises  to pay to the Tranche C Lender a per annum
                    fee (the  "Tranche  C Fee") on the  amount  by which (i) the
                    then applicable  Tranche C Committed Amount exceeds (ii) the
                    daily  average  sum for such  period of (A) the  outstanding
                    aggregate  principal  amount of all Tranche C Loans plus (B)
                    the outstanding  aggregate principal amount of all Tranche C
                    LOC Obligations  computed for each day during the applicable
                    Tranche C Fee Calculation Period (hereinafter  defined) at a
                    rate  equal to 50 basis  points.  The  Tranche  C Fee  shall
                    commence to accrue on the Amendment No. 5 Effective 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 Tranche C Committed Amount is reduced or terminated
                    as provided in Section  2.6 and the  Maturity  Date) for the
                    immediately  preceding  quarter (or portion  thereof)  (each
                    such quarter or portion  thereof for which the Tranche C Fee
                    is payable  hereunder being herein referred to as a "Tranche
                    C Fee Calculation Period"), beginning with the first of such
                    dates to occur after the Amendment No. 5 Effective Date.

                              (g)  Conditions  to Tranche C Loans and  Tranche C
                    Letters of Credit.  The  obligations of the Tranche C Lender
                    to make  any  Tranche  C Loan and to  issue  or  extend  any
                    Tranche C Letter of Credit are  subject to  satisfaction  of
                    the following conditions:

                           (i) The Borrower shall have delivered (i) in the case
                  of any Tranche C Loan, an appropriate Notice of Borrowing; and
                  (ii) in the  case of any  Tranche  C  Letter  of  Credit,  the
                  Tranche C Lender shall have  received an  appropriate  request
                  for  issuance in  accordance  with the  provisions  of Section
                  2.7(b);

                           (ii) The  representations and warranties set forth in
                  (A) with respect to the Borrower only,  Sections 6.3, 6.4, 6.5
                  and 6.6 and (B) Section 11 of the  Tranche C Guaranty,  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);

                           (iii) There shall not have been commenced against the
                  Sponsor 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;

                           (iv) No  Tranche  C  Default  or  Tranche  C Event of
                  Default shall exist and be continuing either prior to or after
                  giving effect to such extension of credit;

                           (v) Immediately  after giving effect to the making of
                  such  Tranche  C Loan  (and the  application  of the  proceeds
                  thereof)  or to the  issuance  of such  Tranche  C  Letter  of
                  Credit, as the case may be, the aggregate  principal amount of
                  outstanding  Tranche C Loans  plus  Tranche C LOC  Obligations
                  outstanding  shall not exceed the Tranche C Committed  Amount;
                  and

                              The delivery of each Notice of Borrowing  pursuant
                    to Section  2.6(b),  each  request for a Tranche C Letter of
                    Credit  pursuant  to  Section  2.7(b)  and  each  Notice  of
                    Extension/Conversion  with  respect  to any  Tranche  C Loan
                    shall  constitute  a  representation  and  warranty  by  the
                    Borrower  of the  correctness  of the matters  specified  in
                    subsections (ii), (iii), (iv) and (v) above.

                              (h) Tranche C Events of Default. A Tranche C Event
                    of Default shall exist upon the occurrence and  continuation
                    of any of the following  specified events (each a "Tranche C
                    Event of Default"):

                           (i) the  Borrower  shall  default in the payment when
                  due of any Tranche C Obligations  or other amounts owing under
                  Section 2.6,  Section 2.7 or in connection  with the Tranche C
                  Obligations; or

                           (ii) any  representation,  warranty or statement made
                  or  deemed  to be made by the  Borrower  pursuant  to  Section
                  2.6(g) shall prove untrue in any material  respect on the date
                  as of which it was deemed to have been made; or

                           (iii)  any  "Event  of  Default"  shall  occur and be
                  continuing under and as defined in the Tranche C Guaranty.

                              (i)  Remedies  of  Tranche  C  Lender.   Upon  the
                    occurrence of a Tranche C Event of Default,  and at any time
                    thereafter  unless and until such Tranche C Event of Default
                    has been  waived  by the  Tranche  C Lender  or cured to the
                    satisfaction  of the Tranche C Lender,  the Tranche C Lender
                    may, by written notice to the Borrower and the Sponsor, take
                    any of the  following  actions  (subject  to  the  terms  of
                    Section 3.15(b)):

                           (i)      Termination  of the Tranche C  Commitment.
                  Declare the Tranche C Commitment  terminated  whereupon
                                    -----------------------------------------
                  the Tranche C Commitment shall be immediately terminated.

                           (ii)  Acceleration.  Declare the unpaid  principal of
                  and any accrued interest in respect of all Tranche C Loans and
                  any and all other indebtedness or obligations of any and every
                  kind  owing by the  Borrower  to the  Tranche C Lender (in its
                  capacity as such) 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.

                           (iii) Cash  Collateral.  Direct the  Borrower  to pay
                  (and the Borrower hereby promises to pay, upon receipt of such
                  notice) to the Tranche C Lender  additional cash to be held by
                  the  Tranche  C  Lender  in  a  cash  collateral   account  as
                  additional  security  for the  Tranche  C LOC  Obligations  in
                  respect  of  subsequent  drawings  under all then  outstanding
                  Tranche C Letters of Credit in an amount  equal to the maximum
                  aggregate  amount  which  may be drawn  under  all  Tranche  C
                  Letters of  Credits  then  outstanding.  The  Borrower  hereby
                  grants a  security  interest  to the  Tranche  C Lender in any
                  amounts so deposited with the Tranche C Lender.

                           (iv)  Enforcement of Rights.  Enforce (A) any and all
                  rights and  interests of the Tranche C Lender (in its capacity
                  as such) created and existing under this Section 2.6,  Section
                  2.7, the LOC Documents (to the extent  relating to any Tranche
                  C Letters  of Credit)  or the  Tranche C Guaranty  and (B) all
                  rights of set-off.

                              Notwithstanding  the  foregoing,  if a  Tranche  C
                    Event of Default  occurs as the result of the  occurrence of
                    an Event of Default specified in Section 9.1(f) with respect
                    to  the  Borrower,  then  the  Tranche  C  Commitment  shall
                    automatically   terminate,   all   outstanding   Tranche   C
                    Obligations  automatically  shall immediately become due and
                    payable  without the giving of any notice or other action by
                    the Tranche C Lender and the Borrower automatically shall be
                    obligated  (and  hereby  promises)  to pay to the  Tranche C
                    Lender  additional  cash, to be held by the Tranche C Lender
                    in a cash collateral account as additional  security for the
                    Tranche C LOC Obligations in respect of subsequent  drawings
                    under all then outstanding Tranche C Letters of Credit in an
                    amount  equal to the maximum  aggregate  amount which may be
                    drawn   under  all   Tranche  C  Letters  of  Credits   then
                    outstanding,  and the  Borrower  hereby  grants  a  security
                    interest to the Tranche C Lender in any amounts so deposited
                    with the Tranche C Lender.

                    SUBPART 2.4 New Section 2.7. The  following  new Section 2.7
          is hereby added to the Existing Credit Agreement immediately following
          Section 2.6 thereof:

 2.7 Tranche C Letter of Credit Facility.

                  (a)  Issuance.  Subject  to the terms and  conditions  of this
         Credit  Agreement,  the  Tranche C Lender  agrees to issue  standby and
         trade Tranche C Letters of Credit in Dollars from time to time from the
         Amendment  No. 5  Effective  Date until the date five (5) days prior to
         the Maturity Date as the Borrower may request,  in a form acceptable to
         the Tranche C Lender; provided,  however, that the sum of the aggregate
         principal  amount of  outstanding  Tranche C Loans  plus  Tranche C LOC
         Obligations  outstanding  shall not at any time  exceed  the  Tranche C
         Committed  Amount.  No Tranche C Letter of Credit shall either (x) have
         an original expiry date more than one year from the date of issuance or
         (y) as originally issued or as extended,  have an expiry date extending
         beyond the Maturity Date.  Each Tranche C Letter of Credit shall comply
         with the related LOC  Documents.  The issuance and expiry dates of each
         Tranche C Letter of Credit shall be a Business Day.

                  (b) Notice. The request for the issuance of a Tranche C Letter
         of Credit shall be submitted by the Borrower to the Tranche C Lender at
         least three (3) Business Days prior to the requested date of issuance.

                  (c)  Reimbursement.  In the  event of any  drawing  under  any
         Tranche C Letter of Credit,  the Tranche C Lender will promptly  notify
         the Borrower.  Unless the Borrower shall immediately notify the Tranche
         C Lender that the Borrower intends to otherwise reimburse the Tranche C
         Lender for such drawing, the Borrower shall be deemed to have requested
         that the  Tranche C Lender  make a Tranche C Loan in the  amount of the
         drawing as provided in  subsection  (d) below on the related  Tranche C
         Letter of Credit,  the  proceeds  of which will be used to satisfy  the
         related reimbursement  obligations.  The Borrower promises to reimburse
         the Tranche C Lender on the day on which the Tranche C Lender  notifies
         the Borrower of a drawing under any Tranche C Letter of Credit  (either
         with the proceeds of a Tranche C Loan obtained  hereunder or otherwise)
         in same day funds provided such notice is received by the Borrower from
         the Tranche C Lender on or before 2:00  P.M.(Charlotte,  North Carolina
         time)  (otherwise  such  payment  shall be made on or before 12:00 Noon
         (Charlotte,  North Carolina  time) on the Business Day next  succeeding
         the day such  notice  is  received).  The  unreimbursed  amount  of any
         drawing under a Tranche C Letter of Credit shall bear interest at a per
         annum rate equal to (i) for the first two (2) Business  Days  following
         the date of the  related  drawing,  the Base Rate  plus  0.50% and (ii)
         thereafter,  the Base Rate plus  2.50%.  The  Borrower's  reimbursement
         obligations  hereunder  shall be absolute and  unconditional  under all
         circumstances  irrespective  of any rights of setoff,  counterclaim  or
         defense to payment the Borrower may claim or have against the Tranche C
         Lender, the beneficiary of the Tranche C Letter of Credit drawn upon or
         any other Person, including without limitation any defense based on any
         failure of the  Borrower  to  receive  consideration  or the  legality,
         validity,  regularity  or  unenforceability  of the Tranche C Letter of
         Credit.

                  (d)  Repayment  with Tranche C Loans.  On any day on which the
         Borrower  shall have  requested,  or been deemed to have  requested,  a
         Tranche C Loan advance to reimburse a drawing  under a Tranche C Letter
         of Credit,  a Tranche C Loan  advance  comprised of Base Rate Loans (or
         Eurodollar  Loans to the  extent the  Borrower  has  complied  with the
         procedures of Section 2.6(b) with respect thereto) shall be immediately
         made to the Borrower by the Tranche C Lender.

                  (e)   Designation   of  a  Subsidiary  as  an  Account  Party.
         Notwithstanding  anything  to the  contrary  set  forth in this  Credit
         Agreement,  including  without  limitation  Section 2.7(a), a Tranche C
         Letter of Credit issued hereunder may contain a statement to the effect
         that such  Tranche C Letter of Credit is issued  for the  account  of a
         Subsidiary  of  the  Borrower,   provided  that   notwithstanding  such
         statement,  the  Borrower  shall be the  actual  account  party for all
         purposes of this Credit  Agreement  for such Tranche C Letter of Credit
         and such  statement  shall  not  affect  the  Borrower's  reimbursement
         obligations hereunder with respect to such Tranche C Letter of Credit.

                  (f)      Renewal,  Extension.  The renewal or extension of any
         Tranche C Letter of Credit shall, for purposes hereof,
                           -------------------
         be treated in all respects the same as the issuance of a new Tranche C
         Letter of Credit hereunder.

                  (g) Uniform  Customs and  Practices.  The Tranche C Lender may
         have the Tranche C Letters of Credit be subject to The Uniform  Customs
         and Practice for Documentary  Credits (the "UCP") or the  International
         Standby Practices 1998 (the "ISP98"), in either case as published as of
         the date of issue by the  International  Chamber of Commerce,  in which
         case the UCP or the ISP98, as applicable,  may be incorporated  therein
         and deemed in all respects to be a part thereof.

                  (h)  Incorporation  by Reference.  In issuing or administering
         any Tranche C Letters of Credit, the Tranche C Lender shall be entitled
         to all the rights, authority, privileges and immunities provided to the
         Issuing Lender in Section 2.2(i) and Section  2.2(k),  and the Borrower
         shall be  entitled  to all of the  rights,  privileges  and  immunities
         provided to the Borrower in Section  2.2(i),  in each case as in effect
         on the  Amendment No. 5 Effective  Date,  all of which  provisions  are
         incorporated  by reference  herein with the same force and effect as if
         set forth in full in this Section 2.7.

                  (i)  Tranche C Letter  of Credit  Fees.  The  Borrower  hereby
         promises to pay to the Tranche C Lender (i) a letter of credit issuance
         fee of (A) 1.5% per annum on the average daily maximum amount available
         to be drawn under each standby Tranche C Letter of Credit and (B) 0.75%
         per annum on the average  daily  maximum  amount  available to be drawn
         under each trade Tranche C Letter of Credit,  in each case computed for
         each day from the date of  issuance  to the date of  expiration  (which
         fees shall be payable  quarterly in arrears on the last Business Day of
         each March, June,  September and December and the Maturity Date for the
         immediately  preceding  quarter  (or a portion  thereof))  and (ii) the
         customary  charges  from  time to time of the  Tranche  C  Lender  with
         respect  to  the   issuance,   amendment,   transfer,   administration,
         cancellation  and  conversion  of, and drawings  under,  such Tranche C
         Letters of Credit.

                    SUBPART 2.5  Amendments  to Section 3.3.  Section 3.3 of the
          Existing  Credit  Agreement is amended and restated in its entirety to
          read as follows:

3.3  Prepayments.

                  (a) Voluntary  Prepayments.  The Borrower shall have the right
         to  prepay  Loans  in  whole or in part  from  time to time;  provided,
         however, that each partial prepayment of Loans shall be (i) in the case
         of Revolving  Loans,  in a minimum  principal  amount of $2,000,000 and
         integral  multiples of $100,000 in excess  thereof and (ii) in the case
         of Swingline Loans, in a minimum principal amount of $100,000.  Subject
         to the foregoing terms, amounts prepaid under this Section 3.3(a) shall
         be applied as the Borrower may elect;  provided,  however,  that if the
         Leverage  Reduction  Period shall have been extended to August 31, 2000
         in  accordance  with the  definition  thereof set forth in Section 1.1,
         that the  Tranche C Loans  and  Tranche  C LOC  Obligations  may not be
         prepaid  pursuant to this Section  3.3(a) at any time during the period
         from and  including  June 30, 2000 through and  including the date that
         the Leverage  Reductions  Requirements shall have been satisfied unless
         the Revolving Loans,  the LOC Obligations,  the Tranche A Term Loan and
         the  Tranche B Term Loan  shall  have been paid in full,  no Letters of
         Credit shall be outstanding  and the Revolving  Commitments  shall have
         expired or been terminated.  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.

                  (b)      Mandatory Prepayments.
                           ---------------------

                       (i)Revolving Committed Amount/Tranche C Committed Amount.
                           -----------------------------------------------------

                                    (A) Revolving  Committed Amount.  If, at any
                           time,  the sum of the aggregate  principal  amount of
                           outstanding  Revolving  Loans  plus  LOC  Obligations
                           outstanding  plus  outstanding  Swingline Loans shall
                           exceed the Revolving  Committed Amount,  the Borrower
                           hereby  promises  to prepay the  Revolving  Loans and
                           Swingline  Loans and,  after all Revolving  Loans and
                           Swingline Loans have been repaid,  cash collateralize
                           the  LOC  Obligations  in  an  amount  sufficient  to
                           eliminate such excess (such  prepayment to be applied
                           as set forth in clause (vi)(A) below).

                                    (B) Tranche C Committed  Amount.  If, at any
                           time,  the sum of the aggregate  principal  amount of
                           outstanding  Tranche  C  Loans  plus  Tranche  C  LOC
                           Obligations  outstanding  shall  exceed the Tranche C
                           Committed  Amount,  the Borrower  hereby  promises to
                           prepay the Tranche C Loans immediately and, after all
                           Tranche   C  Loans  and  have   been   repaid,   cash
                           collateralize  the  Tranche C LOC  Obligations  in an
                           amount  sufficient  to  eliminate  such excess  (such
                           prepayment  to be  applied  as set  forth  in  clause
                           (vi)(B) below).

                                        (ii)  Excess  Cash Flow.  Within 90 days
                              after the end of each fiscal year (commencing with
                              the fiscal year ending  December  31,  1998),  the
                              Borrower hereby promises to prepay the Loans in an
                              amount  equal to (x) 50% of the  Excess  Cash Flow
                              earned  during such prior fiscal year less (y) the
                              amount of any voluntary prepayments of the Tranche
                              A Term  Loan,  the  Tranche B Term Loan or (to the
                              extent accompanied by a reduction in the Revolving
                              Committed  Amount) the Revolving Loans during such
                              prior fiscal year (such  prepayment  to be applied
                              as set forth in clause (vi)(C) below).

                           (iii)    Asset Dispositions.
                                    ------------------

                                    (A)  Shirt  Group.   Immediately   upon  the
                           occurrence of any Asset Disposition  Prepayment Event
                           involving any Equity Interests or Property comprising
                           the Shirt Group  (other  than the Austell  Property),
                           the Borrower  hereby  promises to prepay the Loans in
                           an  aggregate  amount  equal  to 100% of the Net Cash
                           Proceeds  of  the  related  Asset  Disposition  (such
                           prepayment  to be  applied  as set  forth  in  clause
                           (vi)(D) below).

                                    (B) Other Asset Sales.  Immediately upon the
                           occurrence  of (1) any Asset  Disposition  Prepayment
                           Event not involving any Equity  Interests or Property
                           comprising   the   Shirt   Group  or  (2)  any  Asset
                           Disposition  Prepayment  Event  involving the Austell
                           Property,  the Borrower hereby promises to prepay the
                           Loans in an aggregate amount equal to 100% of the Net
                           Cash Proceeds of the related Asset  Disposition (such
                           prepayment  to be  applied  as set  forth  in  clause
                           (vi)(C) below).

                                        (iv) Debt  Issuances.  Immediately  upon
                              receipt by the Parent or any Consolidated Party of
                              proceeds  from any  Debt  Issuance,  the  Borrower
                              hereby   promises   to  prepay  the  Loans  in  an
                              aggregate  amount  equal  to 100% of the Net  Cash
                              Proceeds  of such  Debt  Issuance  to the  Lenders
                              (such  prepayment  to be  applied  as set forth in
                              clause (vi)(C) below).

                                        (v)  Issuances  of  Equity  and  Sponsor
                              Support                                  Payments.
                              ------------------------------------------------
                              (A) Non-Sponsor Equity Issuance.  Immediately upon
                              the  occurrence of a Non-Sponsor  Equity  Issuance
                              Prepayment  Event, the Borrower hereby promises to
                              prepay the Loans in an  aggregate  amount equal to
                              100%  of the Net  Cash  Proceeds  of  such  Equity
                              Issuance  (such  prepayment  to be  applied as set
                              forth in clause (vi)(C) below).

                                    (B)  Sponsor  Support  Payment.  Immediately
                           upon the receipt by the Parent or the Borrower of the
                           proceeds of a Sponsor Support  Payment,  the Borrower
                           hereby  promises to prepay the Loans in an  aggregate
                           amount equal to 100% of the Net Cash  Proceeds of the
                           related Sponsor  Support Payment (such  prepayment to
                           be applied as set forth in clause (vi)(C), (D) or (E)
                           below, as applicable).

                                        (vi)     Application     of    Mandatory
                              Prepayments.  All  amounts  required  to  be  paid
                              pursuant  to  Section  3.3(b) and  Section  3.3(c)
                              shall be  applied  as  follows:  (A)  Overadvances
                              under Revolving  Committed Amount. With respect to
                              all   amounts   prepaid    pursuant   to   Section
                              3.3(b)(i)(A),   first,   to  Swingline  Loans  and
                              second,  to the  Revolving  Loans  and,  after all
                              Revolving  Loans  have  been  repaid,  to  a  cash
                              collateral  account in respect of LOC  Obligations
                              (in any such case,  without any  reduction  in the
                              Revolving Committed Amount);

                                    (B)  Overadvances  under Tranche C Committed
                           Amount.  With respect to all amounts prepaid pursuant
                           to  Section  3.3(b)(i)(B),  first,  to the  Tranche C
                           Loans  and,  after  all  Tranche  C Loans  have  been
                           repaid,  to a cash  collateral  account in respect of
                           Tranche C LOC Obligations (in any such case,  without
                           any reduction in the Tranche C Committed Amount);

                                    (C) Excess Cash Flow, Sales of Assets (Other
                           than Shirt  Group),  Sale of Austell  Property,  Debt
                           Issuances,  Non-Sponsor  Equity Issuances and Section
                           3.3(c)  Prepayments.  With  respect  to  all  amounts
                           prepaid  pursuant  to  Section  3.3(b)(ii),   Section
                           3.3(b)(iii)(B),     Section    3.3(b)(iv),    Section
                           3.3(b)(v)(A)  or  Section  3.3(c),  pro  rata  to the
                           Tranche A Term  Loan and the  Tranche B Term Loan (in
                           each  case   ratably  to  the   remaining   Principal
                           Amortization  Payments thereof);  provided,  however,
                           that  notwithstanding  the  foregoing  terms  of this
                           clause  (C),  25% of the Net Cash  Proceeds  from the
                           sale of the  Austell  Property  may, at the option of
                           the  Borrower,   be  applied  pro  rata  to  (1)  the
                           Swingline   Loans   (without  any  reduction  in  the
                           Revolving  Committed  Amount)  and (2) the  Revolving
                           Loans  and,  after  all  Revolving  Loans  have  been
                           repaid,  to a cash  collateral  account in respect of
                           LOC   Obligations   (without  any  reduction  in  the
                           Revolving Committed Amount);

                                    (D) Sale of Shirt Group and Sponsor  Support
                           Payments in Connection with Sale of Shirt Group. With
                           respect to all  amounts  prepaid  pursuant to Section
                           3.3(b)(iii)(A) or amounts prepaid pursuant to Section
                           3.3(b)(v)(B)  with the proceeds of a Sponsor  Support
                           Payment  made  pursuant to Section  2.1(a)(i)  of the
                           Investment   and  Deposit   Agreement  (or,  in  lieu
                           thereof,  a Sponsor  Support Payment made pursuant to
                           Section   2.1(c)  of  the   Investment   and  Deposit
                           Agreement),  first,  pro rata to the  Tranche  A Term
                           Loan  and the  Tranche  B Term  Loan  (in  each  case
                           ratably  to  the  remaining  Principal   Amortization
                           Payments  thereof)  until the ratio  (calculated on a
                           pro forma basis using the principles set forth in the
                           definition of "Leverage  Reduction  Requirements" set
                           forth in Section 1.1) of (1) all Funded  Indebtedness
                           (net   of  cash   and   Cash   Equivalents)   of  the
                           Consolidated  Parties on a consolidated  basis on the
                           date   of   determination   (including   Subordinated
                           Indebtedness, but excluding the Tranche C Obligations
                           and  any  Credit   Party   Obligations   in  which  a
                           participation  interest has been  purchased by, or on
                           behalf of, the Sponsor  pursuant to Section 2.1(c) or
                           Section   2.2(c)  of  the   Investment   and  Deposit
                           Agreement)  to (2)  Consolidated  EBITDA for the four
                           fiscal-quarter  period  ending as of the most  recent
                           fiscal month end preceding the date of  determination
                           with  respect  to which the Agent  has  received  the
                           Required Financial  Information,  has been reduced to
                           6.5 to 1.0,  second,  pro  rata to (1) the  Swingline
                           Loans   (without  any   reduction  in  the  Revolving
                           Committed Amount), (2) the Revolving Loans and, after
                           all  Revolving  Loans  have  been  repaid,  to a cash
                           collateral  account  in  respect  of LOC  Obligations
                           (without  any  reduction in the  Revolving  Committed
                           Amount),  (3) the Tranche A Term Loan (ratably to the
                           remaining  Principal  Amortization  Payments thereof)
                           and (4)  the  Tranche  B Term  Loan  (ratably  to the
                           remaining  Principal  Amortization  Payments thereof)
                           until the Leverage Reduction  Requirements shall have
                           been  satisfied,  third,  pro rata to the  Tranche  C
                           Loans  and,  after  all  Tranche  C Loans  have  been
                           repaid,  to a cash  collateral  account in respect of
                           Tranche C LOC  Obligations,  and fourth,  pro rata to
                           (1) the Swingline Loans (without any reduction in the
                           Revolving Committed Amount),  (2) the Revolving Loans
                           and, after all Revolving Loans have been repaid, to a
                           cash collateral account in respect of LOC Obligations
                           (without  any  reduction in the  Revolving  Committed
                           Amount),  (3) the Tranche A Term Loan (ratably to the
                           remaining  Principal  Amortization  Payments thereof)
                           and (4)  the  Tranche  B Term  Loan  (ratably  to the
                           remaining Principal Amortization Payments thereof);

                                    (E) Sponsor  Support  Payments in Connection
                           with  Non-Sale of Shirt  Group.  With  respect to all
                           amounts prepaid pursuant to Section 3.3(b)(v)(B) with
                           the  proceeds  of  a  Sponsor  Support  Payment  made
                           pursuant  to Section  2.1(a)(ii),  Section  2.1(b) or
                           Section   2.2(c)  of  the   Investment   and  Deposit
                           Agreement,  of the Investment and Deposit  Agreement,
                           pro  rata to (1) the  Swingline  Loans  (without  any
                           reduction in the Revolving  Committed Amount) and (2)
                           the Revolving  Loans and,  after all Revolving  Loans
                           have been  repaid,  to a cash  collateral  account in
                           respect of LOC Obligations  (without any reduction in
                           the Revolving Committed Amount).

                  Solely for purposes of  determining  the pro rata share of any
                  Tranche  A Term  Lender  in  connection  with  any  prepayment
                  referred to in clause (C) above,  subclause  "first" of clause
                  (D) above or subsection (vii) below, the outstanding principal
                  amount of all  Revolving  Loans and LOC  Obligations,  and the
                  outstanding  Participation  Interests in Swingline  Loans,  of
                  such  Tranche A Term  Lender (in its  capacity  as a Revolving
                  Lender) shall be deemed to be  additional  Tranche A Term Loan
                  principal  owing to such Lender.  Within the parameters of the
                  applications set forth above,  prepayments of Revolving Loans,
                  the  Tranche A Term Loan or the  Tranche B Term Loan  shall be
                  applied first to Base Rate Loans and then to Eurodollar  Loans
                  in direct order of Interest Period maturities. All prepayments
                  under this Section 3.3(b) shall be subject to Section 3.12 and
                  be  accompanied  by interest on the principal  amount  prepaid
                  through the date of prepayment.

                           (vii)  No  Purchase  of  Participation  Interests  in
                  Revolving  Loans,  etc.  Notwithstanding  any provision to the
                  contrary  contained  herein or in the  Investment  and Deposit
                  Agreement, the proceeds of a Sponsor Support Payment shall not
                  be applied to pay for the purchase on behalf of the Sponsor of
                  a  participation  interest in any Swingline  Loans,  Revolving
                  Loans or LOC Obligations (or cash collateral  therefor),  and,
                  to the extent that any  provision of this Credit  Agreement or
                  the Investment and Deposit Agreement provides for the proceeds
                  of a Sponsor Support  Payment to be so applied,  such proceeds
                  instead shall be applied, at the Borrower's option, either (a)
                  to the pro rata prepayment of (1) the Swingline Loans (without
                  any reduction in the Revolving  Committed  Amount) and (2) the
                  Revolving  Loans  and,  after all  Revolving  Loans  have been
                  repaid,  to a  cash  collateral  account  in  respect  of  LOC
                  Obligations  (without any reduction in the Revolving Committed
                  Amount),  in which  case  such  proceeds  shall be  deemed  to
                  constitute  a  Mandatory  Investment,  or (b) to  purchase  an
                  undivided, non-voting participation interest in the Term Loans
                  then   outstanding   under   the   Credit   Documents,    such
                  participation  interest  to be  subject  to  an  intercreditor
                  agreement  with the Agent on behalf of the Lenders  containing
                  substantially  the terms and conditions set forth on Exhibit C
                  to the Investment and Deposit Agreement and the purchase price
                  of such  participation  interest  to be  applied  in the  same
                  manner  prescribed for the application of prepayment  proceeds
                  under Section 3.3(b)(vi)(C) above.

                  (c)      Additional Mandatory Prepayments of the Term Loans.
                           --------------------------------------------------

                           (i) In the event that the Shirt  Group  Restructuring
                  has not occurred by June 30, 2000 and the  Leverage  Reduction
                  Period  shall not have been  extended  to August  31,  2000 in
                  accordance  with the  definition  thereof set forth in Section
                  1.1, the Borrower  hereby promises to prepay the Term Loans in
                  the amounts and on the dates set forth below:

                                    Date                       Payment

                                    June 30, 2000             $4,000,000
                                    July 31, 2000             $3,000,000
                                    September 30, 2000        $4,000,000
                                    December 31, 2000         $9,000,000.

                  Such  prepayments  shall be  applied  as set forth in  Section
                  3.3(b)(vi)(C)  above;  provided,  however,  the Borrower shall
                  have the right,  in lieu of making the  prepayment of the Term
                  Loans required by this Section  3.3(c)(i) on June 30, 2000, to
                  cause  the  Sponsor  to  purchase  an  undivided,   non-voting
                  participation  interest  in the Term  Loans  then  outstanding
                  under the Credit  Documents for a purchase  price equal to the
                  amount  of the  prepayment  that  otherwise  would  have  been
                  required,  such  participation  interest  to be  subject to an
                  intercreditor  agreement  with  the  Agent  on  behalf  of the
                  Lenders containing  substantially the terms and conditions set
                  forth on Exhibit C to the Investment and Deposit Agreement and
                  the purchase  price of such  participation  interest  shall be
                  applied in the same manner  prescribed for the  application of
                  prepayment proceeds under Section 3.3(b)(vi)(C) above.

                           (ii) In the event that the Leverage  Reduction Period
                  shall have been extended to August 31, 2000 in accordance with
                  the definition  thereof set forth in Section 1.1 and the Shirt
                  Group  Restructuring  has not occurred by August 31, 2000, the
                  Borrower  hereby  promises  to  prepay  the Term  Loans in the
                  amounts and on the dates set forth below:

                                    Date                               Payment

                                    August 31, 2000           $7,000,000
                                    September 30, 2000        $4,000,000
                                    December 31, 2000         $9,000,000.

                  Such  prepayments  shall be  applied  as set forth in  Section
                  3.3(b)(vi)(C)  above;  provided,  however,  the Borrower shall
                  have the right,  in lieu of making the  prepayment of the Term
                  Loans required by this Section  3.3(c)(ii) on August 31, 2000,
                  to cause the  Sponsor to  purchase  an  undivided,  non-voting
                  participation  interest  in the Term  Loans  then  outstanding
                  under the Credit  Documents for a purchase  price equal to the
                  amount  of the  prepayment  that  otherwise  would  have  been
                  required,  such  participation  interest  to be  subject to an
                  intercreditor  agreement  with  the  Agent  on  behalf  of the
                  Lenders containing  substantially the terms and conditions set
                  forth on Exhibit C to the Investment and Deposit Agreement and
                  the purchase  price of such  participation  interest  shall be
                  applied in the same manner  prescribed for the  application of
                  prepayment proceeds under Section 3.3(b)(vi)(C) above.

                  (d) Escrow  Account.  If the  Borrower  is  required to make a
         mandatory  prepayment  under  Section  3.3(b)  that  would  result in a
         payment by the Borrower  under Section  3.12,  the Borrower may, at its
         option,  elect to deposit funds  constituting  such prepayment with the
         Agent to be held by the Agent in a cash collateral  account and applied
         (including  any  income  or  gains  earned  on  amounts  in the  Escrow
         Account),  upon  the  earliest  to  occur  of (A)  the  request  of the
         Borrower,  (B) the last day of any Interest Period,  (C) the occurrence
         of an Event of Default or (D) the  Maturity  Date,  to the Credit Party
         Obligations in accordance with the terms of Section 3.3(b)(vi).

                    SUBPART 2.6 Amendments to Section  3.13(a).  Section 3.13(a)
          of the  Existing  Credit  Agreement  is amended  and  restated  in its
          entirety to read as follows:

3.13  Pro Rata Treatment.

         Except to the extent otherwise provided herein:

                  (a) Loans. Each Loan, each payment or (subject to the terms of
         Section  3.3)  prepayment  of  principal  of any Loan or  reimbursement
         obligations arising from drawings under Letters of Credit, each payment
         of  interest on the Loans or  reimbursement  obligations  arising  from
         drawings  under  Letters of Credit,  each payment of Unused Fees,  each
         payment of the Standby  Letter of Credit Fee, each payment of the Trade
         Letter of Credit Fee, each reduction of the Revolving  Committed Amount
         and each  conversion  or extension of any Loan,  shall be allocated pro
         rata among the  Lenders in  accordance  with the  respective  principal
         amounts  of  their  outstanding  Loans  and  Participation   Interests.
         Payments made to the Tranche C Lender in respect of the  obligations of
         the Sponsor  arising under the Tranche C Guaranty  shall not be subject
         to the  provisions  of this  Section  3.13 and shall be solely  for the
         account of the Tranche C Lender.

                    SUBPART  2.7  Amendments  to  Section  3.14.  The  following
          sentence is added at the end of Section  3.14 of the  Existing  Credit
          Agreement:

3.14  Sharing of Payments.

                                                                *******

         Payments made to the Tranche C Lender in respect of the  obligations of
         the Sponsor  arising under the Tranche C Guaranty  shall not be subject
         to the  provisions  of this  Section  3.14 and shall be solely  for the
         account of the Tranche C Lender.

                    SUBPART 2.8 Amendments to Section  3.15(b).  Section 3.15(b)
          of the  Existing  Credit  Agreement  is amended  and  restated  in its
          entirety to read as follows:

3.15  Payments, Computations, Etc.

                                                             * * * * * * *

                    (b)   Allocation   of  Payments   After  Event  of  Default.
          Notwithstanding  any other  provisions of this Credit Agreement to the
          contrary,  after the occurrence and during the continuance of an Event
          of  Default,  all  amounts  collected  or received by the Agent or any
          Lender on account of the Credit Party Obligations or any other amounts
          outstanding  under any of the  Credit  Documents  or in respect of the
          Collateral shall be paid over or delivered as follows:

                           FIRST, to the payment of all reasonable out-of-pocket
                  costs and expenses  (including without  limitation  reasonable
                  attorneys' fees) of the Agent in connection with enforcing the
                  rights of the Lenders  (excluding  the Tranche C Lender in its
                  capacity  as  such)  under  the  Credit   Documents   and  any
                  protective  advances  made by the Agent  with  respect  to the
                  Collateral  under or pursuant  to the terms of the  Collateral
                  Documents;

                           SECOND, to payment of any  fees  payable to the Agent
                  then due and owing;

                           THIRD, to the payment of all reasonable out-of-pocket
                  costs and expenses (including without  limitation,  reasonable
                  attorneys' fees) of each of the Lenders (excluding the Tranche
                  C Lender in its capacity as such) in connection with enforcing
                  its  rights  under the  Credit  Documents  or  otherwise  with
                  respect to the Credit Party Obligations owing to such Lender;

                           FOURTH,  to the  payment of all of the  Credit  Party
                  Obligations  (excluding the Tranche C Obligations)  consisting
                  of accrued fees and interest then due and owing;

                           FIFTH,  to the payment of the  outstanding  principal
                  amount of the Credit Party Obligations  (including the payment
                  or cash  collateralization of the outstanding LOC Obligations,
                  but excluding the Tranche C Obligations) then due and owing;

                           SIXTH, to all other Credit Party  Obligations  (other
                  than the Tranche C Obligations)  and other  obligations  which
                  shall have become due and payable  under the Credit  Documents
                  or  otherwise  and not  repaid  pursuant  to  clauses  "FIRST"
                  through "FIFTH" above;

                           SEVENTH,   to   the   payment   of   all   reasonable
                  out-of-pocket    costs   and   expenses   (including   without
                  limitation,  reasonable  attorneys'  fees)  of the  Tranche  C
                  Lender in connection  with  enforcing its rights under Section
                  2.6,  Section  2.7,  the LOC  Documents  related  to Tranche C
                  Letters of Credit,  the Tranche C Guaranty or  otherwise  with
                  respect to the Tranche C Obligations;

                           EIGHTH,  to  the  payment  of  all  of  the Tranche C
                  Obligations  consisting  of accrued fees and interest then due
                  and owing;

                           NINTH,  to the payment of the  outstanding  principal
                  amount of the Tranche C Obligations  (including the payment or
                  cash  collateralization  of  the  outstanding  Tranche  C  LOC
                  Obligations) then due and owing;

                           TENTH,  to all other Tranche C Obligations  and other
                  obligations  which shall have become due and payable under the
                  Credit  Documents  or  otherwise  and not repaid  pursuant  to
                  clauses "FIRST" through "NINTH" above; and

                           ELEVENTH,  to the payment of the surplus,  if any, to
                  whoever may be lawfully entitled to receive such surplus.

         In carrying out the foregoing, (i) amounts received shall be applied in
         the numerical  order provided until  exhausted  prior to application to
         the next succeeding category; (ii) each of the Lenders shall receive an
         amount  equal to its pro rata share (based on the  proportion  that the
         then   outstanding   Loans   (other  than  Tranche  C  Loans)  and  LOC
         Obligations,  as applicable, held by such Lender bears to the aggregate
         then outstanding  Loans and LOC Obligations,  as applicable) of amounts
         available to be applied pursuant to clauses "THIRD", "FOURTH", "FIFTH",
         "SIXTH",  "SEVENTH",  "EIGHTH", "NINTH" and "TENTH" above; (iii) to the
         extent that any amounts  available for distribution  pursuant to clause
         "FIFTH"  above are  attributable  to the issued but  undrawn  amount of
         outstanding  Letters of Credit, such amounts shall be held by the Agent
         in a cash  collateral  account and applied (A) first,  to reimburse the
         Issuing Lender from time to time for any drawings under such Letters of
         Credit and (B) then, following the expiration of all Letters of Credit,
         to all other  obligations  of the types  described in clauses  "FIFTH",
         "SIXTH",  "SEVENTH",  "EIGHTH", "NINTH" and "TENTH" above in the manner
         provided  in this  Section  3.15(b)  and  (iv) to the  extent  that any
         amounts available for distribution pursuant to clause "NINTH" above are
         attributable to the issued but undrawn amount of outstanding  Tranche C
         Letters of Credit,  such amounts  shall be held by the Tranche C Lender
         in a cash collateral account, and the Borrower hereby grants a security
         interest to the Tranche C Lender in any amounts so  deposited  with the
         Tranche C Lender,  and applied (A) first,  to  reimburse  the Tranche C
         Lender from time to time for any drawings  under such Tranche C Letters
         of Credit  and (B) then,  following  the  expiration  of all  Tranche C
         Letters of Credit,  to all other  obligations of the types described in
         clauses  "NINTH"  and  "TENTH"  above in the  manner  provided  in this
         Section 3.15(b).

         Payments made to the Tranche C Lender in respect of the  obligations of
         the Sponsor  arising under the Tranche C Guaranty  shall not be subject
         to the  provisions of this Section  3.15(b) and shall be solely for the
         account of the Tranche C Lender.

         The  provisions  of this Section 3.15 are solely for the benefit of the
         Lenders and their respective successors and assigns. Except as provided
         in the  preceding  sentence,  none of the  Credit  Parties or any other
         Person other than the Lenders shall have any right,  benefit,  priority
         or other  interest  under or because of the  existence  of this Section
         3.15.  This Section 3.15 shall solely define the relative rights of the
         Lenders  as amongst  themselves  and shall not define the rights of the
         Lenders  vis-a-vis  any of the Credit  Parties.  For the  avoidance  of
         doubt,  each of the Credit  Parties  expressly  agrees  that the Credit
         Party  Obligations  constitute  unsubordinated   indebtedness  of  such
         Person.

                    SUBPART 2.9  Amendments  to Section 5.2.  Section 5.2 of the
          Existing  Credit  Agreement is amended and restated in its entirety to
          read as follows:

5.2       Conditions  to  Extensions  of Credit  (other than Tranche C Loans and
          Tranche C Letters of Credit).

                    The  obligations of each Lender to make any Loan (other than
          any Tranche C Loan) and of the  Issuing  Lender to issue or extend any
          Letter of Credit  (including  the initial Loans and the initial Letter
          of Credit) 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 (i) in the case of any
         Revolving  Loan,  any portion of the Tranche A Term Loan or any portion
         of the Tranche B Term Loan, an appropriate Notice of Borrowing; (ii) in
         the case of any  Letter  of  Credit,  the  Issuing  Lender  shall  have
         received an  appropriate  request for issuance in  accordance  with the
         provisions  of Section  2.2(b);  and (iii) in the case of any Swingline
         Loan, the Swingline  Lender shall have received an appropriate  request
         for a Swingline  Loan  advance in  accordance  with the  provisions  of
         Section 2.3(b);

                  (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 Parent or
         any  Consolidated  Party  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) or to the issuance of
         such Letter of Credit, as the case may be, (i) the sum of the aggregate
         principal  amount of outstanding  Revolving  Loans plus LOC Obligations
         outstanding   plus  the  aggregate   principal  amount  of  outstanding
         Swingline Loans shall not exceed the Revolving  Committed Amount,  (ii)
         the LOC Obligations shall not exceed the LOC Committed Amount and (iii)
         the aggregate principal amount of outstanding Swingline Loans shall not
         exceed the Swingline Committed Amount.

          The delivery of each Notice of Borrowing (other than in respect of any
          Tranche C Loan),  each Notice of  Extension/Conversion  (other than in
          respect of any  Tranche C Loan),  each  request for a Letter of Credit
          pursuant  to Section  2.2(b) and each  request  for a  Swingline  Loan
          pursuant to Section  2.3(b)  shall  constitute  a  representation  and
          warranty  by the Credit  Parties  of the  correctness  of the  matters
          specified in subsections (b), (c), (d) and (e) above.

                    SUBPART 2.10 Amendments to Section 7.1. Subsections (a), (b)
          and (c) of Section 7.1 of the Existing  Credit  Agreement  are amended
          and restated in their entireties to read as follows:

7.1 Information Covenants.

                  (a) Annual Financial Statements.  As soon as available, and in
         any event  within 90 days  after the close of each  fiscal  year of the
         Consolidated Parties, a consolidated balance sheet and income statement
         of the  Consolidated  Parties,  as of  the  end of  such  fiscal  year,
         together  with related  consolidated  statements of cash flows for such
         fiscal  year,   in  each  case  setting  forth  in   comparative   form
         consolidated  figures  for the  preceding  fiscal  year  and  including
         footnotes  setting  forth  related  consolidating  information,  all in
         reasonable form and detail and, in the case of  consolidated  financial
         information only,  audited by independent  certified public accountants
         of recognized national standing reasonably  acceptable to the Agent and
         whose  opinion  shall be to the effect that such  financial  statements
         have been  prepared in  accordance  with GAAP  (except for changes with
         which such accountants concur) and shall not be limited as to the scope
         of the audit or qualified as to the status of the Consolidated  Parties
         as a going concern.

                  (b)      Interim Financial Statements.
                           ----------------------------

                           (i)  Quarterly  Financial  Statements.   As  soon  as
                  available,  and in any event within 45 days after the close of
                  each of the first three fiscal quarters of each fiscal year of
                  the  Consolidated  Parties a  consolidated  balance  sheet and
                  income statement of the Consolidated Parties, as of the end of
                  such  fiscal  quarter,   together  with  related  consolidated
                  statements of cash flows for such fiscal quarter, in each case
                  setting forth in comparative form consolidated figures for the
                  corresponding   period  of  the  preceding   fiscal  year  and
                  including   footnotes  setting  forth  related   consolidating
                  information,  all in reasonable form and detail and reasonably
                  acceptable to the Agent,  and  accompanied by a certificate of
                  the chief financial officer of the Borrower to the effect that
                  such  quarterly  financial  statements  fairly  present in all
                  material  respects the financial  position of the Consolidated
                  Parties  and have  been  prepared  in  accordance  with  GAAP,
                  subject to changes  resulting  from audit and normal  year-end
                  adjustments.

                           (ii)  Monthly  Financial   Statements.   As  soon  as
                  available,  and in any event within 45 days after the close of
                  each fiscal month of the  Consolidated  Parties a consolidated
                  balance  sheet  and  income   statement  of  the  Consolidated
                  Parties,  as of the end of such fiscal  month,  together  with
                  related consolidated  statements of cash flows for such fiscal
                  month,  in  each  case  setting  forth  in  comparative   form
                  consolidated  figures  for  the  corresponding  period  of the
                  preceding  fiscal year and including  footnotes  setting forth
                  related consolidating information,  all in reasonable form and
                  detail and reasonably acceptable to the Agent, and accompanied
                  by a  certificate  of  the  chief  financial  officer  of  the
                  Borrower to the effect that such monthly financial  statements
                  fairly present in all material respects the financial position
                  of  the  Consolidated   Parties  and  have  been  prepared  in
                  accordance with GAAP,  subject to changes resulting from audit
                  and normal year-end adjustments.

                  (c)  Officer's  Certificate.  At the time of  delivery  of the
         financial  statements  provided  for in Sections  7.1(a) and  7.1(b)(i)
         above,  a certificate  of the chief  financial  officer of the Borrower
         substantially  in  the  form  of  Exhibit  7.1(c),   (i)  demonstrating
         compliance  with the financial  covenants  contained in Section 7.11 by
         calculation  thereof as of the end of each such fiscal  period and (ii)
         stating that no Default or Event of Default  exists,  or if any Default
         or Event of  Default  does  exist,  specifying  the  nature  and extent
         thereof and what action the Credit Parties propose to take with respect
         thereto.

                    SUBPART 2.11 Amendments to Section 7.11. Section 7.11 of the
          Existing  Credit  Agreement is amended and restated in its entirety to
          read as follows:

7.11  Financial Covenants.

         The Credit Parties shall cause:

                  (a)      Fixed  Charge  Coverage   Ratio.    The  Fixed Charge
                           Coverage  Ratio, as  of  the last  day of each fiscal
                           quarter of the Consolidated  Parties,  to be at least
                           1.00 to 1.00 for the  period  from  December 31, 2000
                           and at all times thereafter.

                  (b)      Interest  Coverage  Ratio.     The Interest  Coverage
                           Ratio, as of the last day of each fiscal  quarter  of
                           the Consolidated Parties, to be greater than or equal
                           to:
<TABLE>
                           <S>      <C>
                           (i)      for the period from June 30, 2000 to and including September 29, 2000, 1.00 to 1.00;

                           (ii)     for the period from September 30, 2000 to and including December 30, 2000, 1.30 to 1.00;

                           (iii)    for the period from December 31, 2000 to and including December 30, 2001, 1.50 to 1.00;

                           (iv)     for the period from December 31, 2001 to and including December 30, 2002, 1.85 to 1.0;

                           (v)      for the period from December 31, 2002 to and including December 30, 2003, 2.00 to 1.0;

                           (vi)     for the period from December 31, 2003 to and including December 30, 2004, 2.25 to 1.0; and

                           (vii)    at all times thereafter, 2.50 to 1.00.
</TABLE>

                  (c)      Senior   Leverage  Ratio. The Senior Leverage  Ratio,
                           as of the last  day  of each  fiscal  quarter  of the
                           Consolidated Parties, to be less than or equal to:
<TABLE>
                           <S>      <C>
                           (i)      for the period from June 30, 2000 to and including September 29, 2000, 6.00 to 1.00;

                           (ii)     for the period from September 30, 2000 to and including December 30, 2000, 4.50 to 1.00;

                           (iii)    for the period from December 31, 2000 to and including December 30, 2001, 3.25 to 1.00;

                           (iv)     for the period from December 31, 2001 to and including December 30, 2002, 3.00 to 1.00;

                           (v)      for the period from December 31, 2002 to and including December 30, 2003, 2.75 to 1.00; and

                           (vi)     at all times thereafter, 2.50 to 1.00.
</TABLE>

                  (d)      Total  Leverage  Ratio.  The  Total  Leverage  Ratio,
                           as of the  last  day of each  fiscal  quarter  of the
                           Consolidated Parties, to be less than or equal to:
<TABLE>
                           <S>      <C>
                           (i)      for the period from June 30, 2000 to and including September 29, 2000, 11.00 to 1.00;

                           (ii)     for the period from September 30, 2000 to and including December 30, 2000, 8.50 to 1.00;

                           (iii)    for the period from December 31, 2000 to and including December 30, 2001, 6.00 to 1.00;

                           (iv)     for the period from December 31, 2001 to and including December 30, 2002, 5.50 to 1.00;

                           (v)      for the period from December 31, 2002 to and including December 30, 2003, 4.75 to 1.00; and

                           (vi)     at all times thereafter, 4.00 to 1.00.
</TABLE>

                  (e) Minimum  Sock Group  EBITDA.  The portion of  Consolidated
         EBITDA  attributable  to the  Sock  Group,  as of the  last day of each
         fiscal quarter of the Consolidated  Parties for the twelve month period
         ending on such date, to be greater than or equal to:

                           (i)      for the  period  from  September 30, 1999 to
                               and including December 31, 2000, $32,000,000; and

                           (ii)     at all times thereafter, $33,000,000.
         SUBPART 2.12  Amendments to Section 7.14.  Section 7.14 of the Existing
Credit Agreement is amended and restated in its entirety to read as follows:

7.14  Furtherance Assurances.

         Following the  consummation of any Asset  Disposition of receivables to
the  Receivables  Financing  Subsidiary,  the  Credit  Parties  will  cause  the
Receivables  Financing Subsidiary to dividend,  distribute or otherwise transfer
to the Credit Parties any Property of the Receivables  Financing  Subsidiary not
required to be pledged to the  purchaser  of  receivables  from the  Receivables
Financing Subsidiary.

         SUBPART 2.13  Amendments  to Section  8.5.  Section 8.5 of the Existing
Credit Agreement is amended and restated in its entirety to read as follows:

8.5  Asset Dispositions.

         The Credit Parties will not permit the Parent or any Consolidated Party
to make any  Asset  Disposition  (including,  without  limitation,  any Sale and
Leaseback  Transaction)  other than Excluded Asset  Dispositions and a Permitted
Austell Property Sale, unless (a) except in connection with the licensing of any
of the  intellectual  property  of the Shirt  Group on terms  providing  for the
reversion  to  the  applicable  Consolidated  Parties  of  all  rights  to  such
intellectual  property  at the end of the license  term and upon  default in the
payment of licensing fees by the applicable licensee thereof,  the consideration
paid in connection  therewith is at least 75% cash or Cash  Equivalents,  (b) if
such  transaction  is a Sale and  Leaseback  Transaction,  such  transaction  is
permitted  by the  terms of  Section  8.13  and (c) the  Credit  Parties  shall,
immediately following the consummation of such Asset Disposition apply (or cause
to be  applied)  an  amount  equal  to the  Net  Cash  Proceeds  of  such  Asset
Disposition to prepay the Credit Party  Obligations in accordance with the terms
of Section  3.3(b)(iii).  Notwithstanding any provision of this Credit Agreement
to the  contrary,  (i) no Asset  Disposition  involving  any portion of the Sock
Group  shall  be  permitted  unless  simultaneously  all  of  the  Credit  Party
Obligations  are repaid and this Credit  Agreement is  terminated  in accordance
with the terms of Section  11.13(b) except  pursuant to a transaction  permitted
under clause (ii)(A) below and (ii) none of the  Consolidated  Parties may sell,
lease,  transfer or otherwise dispose of accounts  receivable except pursuant to
(A) a single Asset  Disposition of  receivables  having an aggregate fair market
value of not greater than $24,000,000 by one or more Consolidated Parties to the
Receivables  Financing  Subsidiary in a transaction which (1) is non-recourse to
the Consolidated Parties (except for representations,  warranties, covenants and
indemnities   which  are   reasonably   customary  in  an  accounts   receivable
transaction),  (2) complies with the foregoing terms of this Section 8.5 and (3)
does not  constitute  an "Asset  Sale"  under and as  defined  in the  documents
evidencing  or  governing  the Senior  Subordinated  Debt and (B) a  transaction
constituting an Excluded Asset Disposition.

         Upon a sale of Property  (including,  without  limitation,  the sale of
Equity  Interests of a  Consolidated  Party)  permitted by this Section 8.5, the
Agent  shall (to the extent  applicable  and  provided  that such Person is also
released  from any and all of its  obligations,  if any, in respect of all other
Indebtedness  of the Credit  Parties)  deliver to the Credit  Parties,  upon the
Credit Parties' request and at the Credit Parties' expense,  such  documentation
as is  reasonably  necessary  to evidence  the  release of the Agent's  security
interest,  if any, in such  Property  or Equity  Interests,  including,  without
limitation,  amendments or terminations of UCC financing statements, if any, the
return of stock certificates, if any, and the release of such Consolidated Party
from all of its obligations, if any, under the Credit Documents.

         SUBPART 2.14  Amendments  to Section  8.9.  Section 8.9 of the Existing
Credit Agreement is amended and restated in its entirety to read as follows:

8.9  Transactions with Affiliates.

         The Credit Parties will not permit the Parent or any Consolidated Party
to enter into or permit to exist any transaction or series of transactions  with
any officer,  director,  shareholder,  Foreign  Subsidiary  or Affiliate of such
Person other than (a) advances of working capital to any Credit Party other than
the Parent or  Interco,  (b)  transfers  of cash and assets to any Credit  Party
other than the Parent or Interco,  (c)  transactions  permitted  by Section 8.1,
Section 8.4,  Section 8.5,  Section 8.6, Section 8.7 or Section 8.13, (d) normal
compensation and reimbursement of expenses of employees, officers and directors,
(e) provided  that no Default or Event of Default  exists either before or after
giving  effect  thereto,  payment  on the  Closing  Date  to the  Sponsor  of an
investment  banking  fee  in an  amount,  together  with  transaction  fees  and
out-of-pocket  expenses of the Sponsor,  including those previously paid, not to
exceed  $4,500,000,  (f) payments to the Sponsor or its Affiliate  designee of a
annual management fee, together with out-of-pocket  expenses of all such Persons
for the  applicable  year,  not to exceed  $600,000,  (g)  except  as  otherwise
specifically  limited in this Credit  Agreement,  other  transactions  which are
entered  into in the  ordinary  course of such  Person's  business  on terms and
conditions  substantially  as favorable to such Person as would be obtainable by
it in a comparable arms-length  transaction with a Person other than an officer,
director, shareholder,  Subsidiary or Affiliate and (h) the Consolidated Parties
may service receivables sold to the Receivables Financing Subsidiary and receive
a fee from the Receivables Financing Subsidiary for such services.

         SUBPART 2.15  Amendments to Section 8.13.  Section 8.13 of the Existing
Credit Agreement is amended and restated in its entirety to read as follows:

8.13  Sale Leasebacks.

         Except in connection with the Austell  Transaction,  the Credit Parties
will not permit the Parent or any Consolidated Party to, directly or indirectly,
become or remain  liable as lessee or as  guarantor or other surety with respect
to any lease,  whether an Operating  Lease or a Capital  Lease,  of any Property
(whether real, personal or mixed),  whether now owned or hereafter acquired, (a)
which the Parent or such  Consolidated  Party has sold or  transferred  or is to
sell or transfer to a Person  other than the Parent or a  Consolidated  Party or
(b) which the Parent or such Consolidated Party intends to use for substantially
the same purpose as any other  Property  which has been sold or is to be sold or
transferred by such  Consolidated  Party to another Person other than the Parent
or a  Consolidated  Party in  connection  with such lease.  Notwithstanding  the
above,  the Borrower may enter into a Sale and  Leaseback  Transaction  with any
Affiliate  with  respect to the  Austell  Property  in a  transaction  otherwise
permitted under Section 8.5.

         SUBPART 2.16 Amendments to Section 9.1.  Subsections (a), (b), (c)(ii),
(d), (h) and (m) of Section 9.1 of the Existing Credit Agreement are amended and
restated  in  their  entireties  to  read as  follows,  and  the  following  new
subsection  (n)  is  added  to  Section  9.1 of the  Existing  Credit  Agreement
immediately following subsection (m) thereof:

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.  Any Credit Party shall

                           (i) default in the payment when due of any  principal
                  of any of the Loans (other than the Tranche C Loans) or of any
                  reimbursement  obligations arising from drawings under Letters
                  of Credit, or

                           (ii)  default in the payment when due of any interest
                  on the  Loans  (other  than the  Tranche  C  Loans)  or on any
                  reimbursement  obligations arising from drawings under Letters
                  of Credit (other than Tranche C Letters of Credit),  or of any
                  Fees or other amounts owing hereunder,  under any of the other
                  Credit Documents or in connection herewith or therewith (other
                  than any such Fees or other amounts  relating to the Tranche C
                  Loans); or

                  (b) Representations. Any representation, warranty or statement
         made or deemed to be made by any  Credit  Party  herein,  in any of the
         other Credit Documents, or in any statement or certificate delivered or
         required to be  delivered  pursuant  hereto or thereto  (other than the
         representations,  warranties  and  statements  made in Section  2.6 and
         Section 2.7) shall prove untrue in any material  respect on the date as
         of which it was made or deemed to have been made;

                  (c)      Covenants.  Any Credit Party shall

                                                             * * * * * * *

                           (ii) default in the due  performance or observance by
                  it of any term,  covenant or  agreement  (other than those set
                  forth in Section 2.6,  Section 2.7 or 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 a
                  Credit Party  becoming aware of such default or notice thereof
                  by the Agent; or

                  (d) Other Credit Documents. (i) Any Credit Party shall default
         in the due performance or observance of any term, covenant or agreement
         in any of the other  Credit  Documents  (other  than the LOC  Documents
         relating to Tranche C Letters of Credit)  (subject to applicable  grace
         or  cure  periods,  if  any),  or  (ii)  except  as a  result  of or in
         connection  with a  dissolution,  merger or disposition of a Subsidiary
         permitted  under Section 8.4 or Section 8.5, any Credit Document (other
         than the LOC  Documents  relating to Tranche C Letters of Credit) shall
         fail to be in full  force and  effect or to give the Agent  and/or  the
         Lenders  the Liens,  rights,  powers  and  privileges  purported  to be
         created thereby, or any Credit Party shall so state in writing; or

                                                             * * * * * * *

                  (h)  Defaults  under  Other  Agreements.  With  respect to any
         Indebtedness  (including  the Tranche C Loans,  but excluding any other
         than Indebtedness outstanding under this Credit Agreement) in excess of
         $2,500,000 in the aggregate for the Parent and the Consolidated Parties
         taken as a whole,  (i) the Parent or any  Consolidated  Party shall (A)
         default in any payment (beyond the applicable grace period with respect
         thereto,  if any) with  respect  to any such  Indebtedness,  or (B) 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 (ii) 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; or

                                                             * * * * * * *

                  (m)      Investment and Deposit  Agreement.  There shall occur
         and be continuing any "Event of Default" under, and as
                           ---------------------------------
         defined in, Section 8.1(a) of the Investment and Deposit Agreement; or

                  (n)      Leverage   Reduction  Requirements.  The Shirt  Group
         Restructuring  shall have  occurred  and the  Leverage
                           ---------------------------------
         Reduction Requirements shall not be satisfied as of the last day of the
         Leverage Reduction Period.

                    SUBPART 2.17 Amendments to Section 9.2. Sections 9.2(a), (b)
          and (d) of the Existing  Credit  Agreement are amended and restated in
          their entireties to read as follows:

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
          requisite  Lenders  (pursuant  to the voting  requirements  of Section
          11.6) or cured to the satisfaction of the requisite  Lenders (pursuant
          to the voting  procedures in Section 11.6), the Agent shall,  upon the
          request and direction of the Required  Lenders,  by written  notice to
          the Credit Parties take any of the following actions:

                  (a)      Termination of Commitments.  Declare  the Commitments
        (other than the Tranche C Commitment) terminated
                           --------------------------
         whereupon such Commitments shall be immediately terminated.

                  (b)  Acceleration.  Declare  the unpaid  principal  of and any
         accrued  interest  in respect of all Loans  (other  than the  Tranche C
         Loans),  any  reimbursement  obligations  arising from  drawings  under
         Letters of Credit (but not Tranche C Letters of Credit) and any and all
         other  indebtedness  or  obligations of any and every kind owing by the
         Credit  Parties to the Agent and/or any of the Lenders  (other than the
         Tranche C  Lender)  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 Credit
         Parties.

                                                             * * * * * * *

                  (d)  Enforcement  of  Rights.  Enforce  any and all rights and
         interests  created and existing under the Credit  Documents  including,
         without  limitation,   all  rights  and  remedies  existing  under  the
         Collateral  Documents,  all rights and remedies against a Guarantor and
         all rights of set-off,  but  excluding,  all rights and remedies of the
         Tranche C Lender  arising  under  Section  2.6,  Section  2.7,  the LOC
         Documents  relating to the Tranche C Letters of Credit or the Tranche C
         Guaranty.

                    SUBPART 2.18 Amendments to Section 11.1. Section 11.1 of the
          Existing  Credit  Agreement is amended and restated in its entirety to
          read as follows:

11.1  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,  in the case of the Credit  Parties and the Agent,  set forth
          below, and, in the case of the Lenders,  set forth on Schedule 2.1(a),
          or at such other  address as such party may specify by written  notice
          to the other parties hereto:

         if to any Credit Party:

                  Cluett American Corp.
                  48 W. 38th Street
                  New York, New York  10018
                  Attn:  President and 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:  Jack Feder
                  Telephone:        (212) 351-1630
                  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 Sponsor:

                  Vestar Capital Partners III, L.P.
                  245 Park Avenue
                  41st Floor
                  New York, New York  10167
                  Attn:  Jack Feder
                  Telephone:        (212) 351-1630
                  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 Agent:

                  Bank of America, N.A.
                  Independence Center, 15th Floor

                  NC1-001-15-04
                  101 North Tryon Street
                  Charlotte, North Carolina  28255
                  Attn:  Agency Services
                  Telephone:        (704) 388-2374
                  Telecopy:         (704) 388-9607

         with a copy to:

                  Bank of America, N.A.
                  NY1-503-06-07
                  335 Madison Ave
                  New York, New York 10017
                  Attn: Fred Zagar
                  Telephone:        (212) 503-8242
                  Telecopy:         (212) 503-7080

                    SUBPART 2.19  Amendments to Section 11.3.  The following new
          subsection  (h) is  added  to  Section  11.3  of the  Existing  Credit
          Agreement immediately following existing subsection (g) thereof:

11.3  Benefit of Agreement.

                                                             * * * * * * *

                  (h) The Tranche C Lender may not assign or transfer any of its
         interests and  obligations  hereunder  without prior written consent of
         the Borrower except during the continuance of an Event of Default.

                    SUBPART 2.20 Amendments to Section 11.6. Section 11.6 of the
          Existing  Credit  Agreement is amended and restated in its entirety to
          read as follows:

11.6  Amendments, Waivers and Consents.

          Neither this Credit Agreement nor any other Credit Document nor any of
          the  terms  hereof  or  thereof  may  be  amended,   changed,  waived,
          discharged  or  terminated  unless  such  amendment,  change,  waiver,
          discharge or termination is in writing entered into by, or approved in
          writing by, the Required Lenders and the Borrower,  provided, however,
          that:

                  (i)      without the consent of each Lender affected  thereby,
                  neither this Credit  Agreement  nor any other  Credit Document
                  may be amended to

                        (a)  extend  the  final  maturity  of any Loan or of any
                  reimbursement obligation, or any portion thereof, arising from
                  drawings  under  Letters  of  Credit,  or  extend or waive any
                  Principal  Amortization  Payment of any Loan,  or any  portion
                  thereof,

                        (b)  reduce  the rate or extend  the time of  payment of
                  interest (other than as a result of waiving the  applicability
                  of any  post-default  increase in interest  rates)  thereon or
                  Fees hereunder,

                        (c)     reduce  or waive  the  principal  amount  of any
                  Loan or of any  reimbursement  obligation,  or any     portion
                  thereof, arising from drawings under Letters of Credit,

                        (d) increase the  Commitment of a Lender over the amount
                  thereof  in effect  (it being  understood  and  agreed  that a
                  waiver  of any  Default  or  Event  of  Default  or  mandatory
                  reduction in the Commitments  shall not constitute a change in
                  the terms of any Commitment of any Lender),

                        (e)     except as the  result of or in  connection  with
                  an Asset  Disposition  permitted  by  Section 8.5, release all
                  or substantially all of the Collateral,

                        (f)  except  as the  result of or in  connection  with a
                  dissolution,  merger or disposition  of a  Consolidated  Party
                  permitted   under   Section  8.4,   release  the  Borrower  or
                  substantially  all of the  other  Credit  Parties  from its or
                  their obligations under the Credit Documents,

                        (g) amend, modify or waive any provision of this Section
                  11.6 or Section 3.6, 3.7, 3.8, 3.9, 3.10,  3.11,  3.12,  3.13,
                  3.14, 3.15, 9.1(a), 11.2, 11.3, 11.5, 11.9 or 11.16,

                        (h)     reduce any percentage specified in, or otherwise
                  modify, the definition of Required Lenders, or

                        (i)  consent  to  the  assignment  or  transfer  by  the
                  Borrower  or all or  substantially  all  of the  other  Credit
                  Parties of any of its or their  rights and  obligations  under
                  (or in respect of) the Credit  Documents  except as  permitted
                  thereby;

                  (ii) without the consent of Lenders  holding in the  aggregate
         more than 50% of the outstanding Tranche A Term Loans and more than 50%
         of the  outstanding  Tranche B Term  Loans,  extend the time for or the
         amount or the manner of  application  of proceeds of (A) any  mandatory
         prepayment required by Section 3.3(b)(ii), (iii), (iv) or (v) hereof or
         (B) any  payment  by,  or on behalf  of,  the  Sponsor  to  purchase  a
         participation  interest  in the Credit  Party  Obligations  pursuant to
         Section  2.1(c)  or  Section  2.2(c)  of  the  Investment  and  Deposit
         Agreement;

                  (iii)    without  the  consent  of  the Agent, no provision of
                           Section 10 may be amended;

                  (iv)     without the consent of the Issuing Lender, no provi-
                           sion of Section 2.2 may be amended;

                  (v)     without the consent of the Swingline Lender, no provi-
                          sion of Section 2.3 may be amended;

                  (vi) the Tranche C Lender shall be the only Lender entitled to
         effectuate, with the Borrower, any amendment, change, waiver, discharge
         or termination of any of the following: (A) Section 2.6, Section 2.7 or
         Section  3.3(b)(i)(B)  or (B)  any of the  definitions  of  "Tranche  C
         Commitment",   "Tranche  C  Committed  Amount",  "Tranche  C  Default",
         "Tranche  C Event of  Default",  "Tranche C  Guaranty",  "Tranche C LOC
         Obligations",  "Tranche C Obligations",  "Tranche C Lender", "Tranche C
         Letters of Credit",  "Tranche C Lender" and  "Tranche C Loan" set forth
         in Section 1.1; and

                  (vii)  without  the  consent  of  the  Tranche  C  Lender,  no
         amendment,  change,  waiver,  discharge  or  termination  of any of the
         following  which  would have an adverse  effect on the Tranche C Lender
         shall  be  effective:  (A)  any of  the  definitions  of  "Commitment",
         "Lender",  "Loan",  "LOC  Documents" and "Maturity  Date" (clause (iii)
         thereof only) set forth in Section 1.1 or (B) Section 3.3(b)(vi)(D).

          Notwithstanding  the  fact  that the  consent  of all the  Lenders  is
          required in certain  circumstances as set forth above, (x) each Lender
          is  entitled  to  vote  as  such  Lender  sees  fit on any  bankruptcy
          reorganization   plan  that   affects  the  Loans,   and  each  Lender
          acknowledges  that the provisions of Section 1126(c) of the Bankruptcy
          Code supersedes the unanimous consent  provisions set forth herein and
          (y) the  Required  Lenders may consent to allow a Credit  Party to use
          cash   collateral  in  the  context  of  a  bankruptcy  or  insolvency
          proceeding.

                    SUBPART 2.21 New Section  11.16.  The  following new Section
          11.16 is added to the Existing Credit Agreement  immediately following
          existing Section 11.15 thereof:

11.16  General Provisions regarding Tranche C Obligations.

                  (a)  Notwithstanding  any provision to the contrary  contained
         herein or in any other of the Credit  Documents,  Tranche C Loans shall
         not be included in the determination of the total number of outstanding
         Eurodollar  Loans for purposes of the limitations on the maximum number
         of Eurodollar  Loans set forth in Sections 2.1(a),  2.4(a),  2.5(a) and
         3.2.

                  (b) The Lenders  acknowledge and agree among  themselves that,
         notwithstanding  any provision to the contrary  contained  herein or in
         any  other of the  Credit  Documents,  the  Tranche  C  Lender  (in its
         capacity as such) and the Tranche C  Obligations  shall not be entitled
         to the benefit of (i) any Collateral  subject to a Lien in favor of the
         Agent pursuant to any of the Collateral Documents or (ii) the guarantee
         of any  Guarantor  pursuant to Section 4. The  agreement of the Lenders
         set forth in this  clause  (b) shall  not inure to the  benefit  of the
         Borrower or any other Credit Party.

                    SUBPART 2.22 Additional  Restrictions.  Notwithstanding  any
          provision of the Amended Credit Agreement to the contrary  (including,
          without  limitation,   the  definition  of  "Permitted  Acquisitions",
          "Permitted Investments" and "Permitted Liens" appearing in Section 1.1
          of the  Amended  Credit  Agreement  and  Sections  8.1  and 8.6 of the
          Amended Credit Agreement),  until the later of (i) the last day of the
          Leverage Reduction Period and (ii) such time as the Leverage Reduction
          Requirements  shall have been  satisfied,  the Credit Parties will not
          permit the Parent or any Consolidated Party to:

                  (i)      consummate any Acquisition;

                  (ii) except as otherwise  permitted  under clause (xvi) of the
         definition of "Permitted  Investments"  appearing in Section 1.1 of the
         Amended Credit  Agreement,  make any additional  Investments in Foreign
         Subsidiaries;

                  (iii)      make any additional advances or loans to directors,
         officers, employees, agents, customers or suppliers;

                  (iv) except as otherwise  permitted  under clause (xvi) of the
         definition of "Permitted  Investments"  appearing in Section 1.1 of the
         Amended  Credit  Agreement,  make any  additional  Investments in Joint
         Ventures;

                  (v)  grant or permit to exist any  additional  Liens  pursuant
         to clause  (xv) of the  definition  of  "Permitted
         Liens" contained in Section 1.1 of the Amended Credit Agreement; or

                  (vi) incur or become  liable  with  respect to any  additional
         Indebtedness  of the types  described  in  clauses  (f),  (g) or (l) of
         Section 8.1 of the Amended Credit Agreement.

          The Credit Parties hereby acknowledge and agree that,  notwithstanding
          any provision of the Amended  Credit  Agreement to the  contrary,  the
          failure of the Credit  Parties to comply with any of the terms of this
          Subpart  2.22 shall  constitute  an Event of Default  under the Credit
          Agreement  without  the need for the giving of any notice or the lapse
          of any period of time.

                    SUBPART 2.23 New  Schedule  1.1E. A new schedule in the form
          of  Schedule  1.1E  attached  hereto is added to the  Existing  Credit
          Agreement immediately following existing Schedule 1.1D thereof.

                                     PART 3

                                     WAIVER

                    Subject to the  occurrence  of the Amendment No. 5 Effective
          Date,  the  Lenders  hereby  waive the  requirements  that the  Credit
          Parties  comply  with  Sections  7.11(a)  through  (d) of  the  Credit
          Agreement for the fiscal  quarter ended  December 31, 1999.  This is a
          one-time waiver and is granted only for the limited purposes set forth
          herein  and  shall be  effective  only in the  specific  circumstances
          provided for above and only for the purpose for which given. Except as
          waived  pursuant  to the terms of this Part 3 or amended  pursuant  to
          Part 2, the Existing Credit  Agreement and all other Credit  Documents
          shall continue in full force and effect.  The waiver  pursuant to this
          Part 3 shall be deemed to be effective as of December 30, 1999.

                                     PART 4

                           CONDITIONS TO EFFECTIVENESS

                    SUBPART 4.1 Amendment No. 5 Effective  Date.  This Amendment
          shall be and become  effective  as of the date hereof (the  "Amendment
          No. 5 Effective  Date") when all of the  conditions  set forth in this
          Part 4 shall have been satisfied,  and thereafter this Amendment shall
          be known, and may be referred to, as "Amendment No. 5."

                  SUBPART 4.1.1  Execution of  Counterparts  of  Amendment.  The
         Agent  shall  have  received   counterparts  of  this  Amendment  which
         collectively  shall  have been duly  executed  on behalf of each of the
         Borrower,  the  Guarantors,  the  Tranche  C  Lender  and the  Required
         Lenders.

                  SUBPART 4.1.2  Tranche C Guaranty.  The Tranche C Lender shall
         have  received an original  copy of the Tranche C Guaranty  which shall
         have been duly executed on behalf of the Sponsor.

                  SUBPART 4.1.3 Legal Opinions.  The Agent shall have received a
         legal opinion of legal counsel to the Credit Parties and the Sponsor in
         form and  substance  reasonably  satisfactory  to it, and the Tranche C
         Lender  shall  have  received a legal  opinion of legal  counsel to the
         Borrower and the Sponsor in form and substance reasonably  satisfactory
         to it.

                  SUBPART 4.1.4 Other Items.  The Agent shall have received such
         other  documents,  agreements  or  information  which may be reasonably
         requested by the Agent.

                  SUBPART 4.1.5 Payment of Amendment  Fees. The Agent shall have
         received, for the account of each Lender that has delivered an executed
         counterpart  of this  Amendment  to the Agent on or before  12:00  Noon
         (Charlotte, North Carolina time) on the Amendment No. 5 Effective Date,
         an amendment fee equal to 0.25% of the Commitment of each such Lender.

                                     PART 5

                                  MISCELLANEOUS

                    SUBPART 5.1 Representations and Warranties.  Borrower hereby
          represents  and  warrants  to the Agent and the  Lenders  that,  after
          giving  effect to this  Amendment,  (a) no Default or Event of Default
          exists under the Credit Agreement or any of the other Credit Documents
          and (b) the  representations  and warranties set forth in Section 6 of
          the Existing  Credit  Agreement are,  subject to the  limitations  set
          forth  therein,  true and correct in all  material  respects as of the
          date hereof  (except for those  which  expressly  relate to an earlier
          date).

                    SUBPART 5.2 Reaffirmation of Credit Party Obligations.  Each
          Credit Party hereby ratifies the Credit Agreement and acknowledges and
          reaffirms  (a) that it is bound by all terms of the  Credit  Agreement
          applicable to it and (b) that it is responsible for the observance and
          full performance of its respective Credit Party Obligations.

                    SUBPART 5.3  Cross-References.  References in this Amendment
          to any Part or Subpart are, unless otherwise  specified,  to such Part
          or Subpart of this Amendment.

                    SUBPART  5.4   Instrument   Pursuant   to  Existing   Credit
          Agreement.  This Amendment is a Credit Document  executed  pursuant to
          the Existing Credit  Agreement and shall (unless  otherwise  expressly
          indicated   therein)  be  construed,   administered   and  applied  in
          accordance  with the  terms  and  provisions  of the  Existing  Credit
          Agreement.

                    SUBPART 5.5  References in Other Credit  Documents.  At such
          time as this  Amendment No. 5 shall become  effective  pursuant to the
          terms of Subpart 4.1, all  references  in the Credit  Documents to the
          "Credit Agreement" shall be deemed to refer to the Credit Agreement as
          amended by this Amendment No. 5.

                    SUBPART 5.6  Counterparts/Telecopy.  This  Amendment  may be
          executed by the parties hereto in several counterparts,  each of which
          shall be deemed to be an original  and all of which  shall  constitute
          together  but  one  and  the  same  agreement.  Delivery  of  executed
          counterparts  of this  Amendment by telecopy  shall be effective as an
          original and shall constitute a representation  that an original shall
          be delivered.

                    SUBPART 5.7 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO
          BE A CONTRACT  MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW
          YORK.

                    SUBPART 5.8 Successors and Assigns.  This Amendment shall be
          binding upon and inure to the benefit of the parties  hereto and their
          respective successors and assigns.

<PAGE>

         IN WITNESS  WHEREOF  the  Borrower,  the  Guarantors  and the  Required
Lenders have caused this  Amendment to be duly  executed on the date first above
written.

CREDIT PARTIES:                     CLUETT AMERICAN Corp.
--------------
                                            Cluett American Investment Corp.
                                            Cluett American Group, Inc.
                                            CONSUMER DIRECT CORPORATION
                                            ARROW FACTORY STORES, INC.
                                            GAKM RESOURCES CORPORATION
                                            CLUETT PEABODY RESOURCES CORPORATION
                                            CLUETT PEABODY HOLDING CORP.
                                            CLUETT, PEABODY & CO., INC.
                                            BIDERTEX SERVICES INC.
                                            GREAT AMERICAN KNITTING MILLS, INC.
                                            CLUETT DESIGNER GROUP, INC.
                                            BIDERMANN TAILORED CLOTHING, INC.

                                            By: /s/ Bryan P. Marsal

                                            Name: Bryan P. Marsal

                   Title:Director and Chief Executive Officer

LENDERS:                            BANK OF AMERICA, N.A.
-------
                                          (formerly known as NationsBank, N. A.)

                                            By:/s/ F.A.Zagar
                                            Name: F.A. Zagar
                                            Title: Managing Directory

                                            NATIONAL WESTMINSTER BANK PLC

                                            By:/s/ Andrew S. Weinberg
                                            Name: Andrew S. Weinberg
                                            Title: Senior Vice President

                                            FLEET BANK, N.A.

                                            By: /s/ Timothy A. Clarke
                                            Name: Timothy A. Clarke
                                            Title: Vice President

                                            BANKBOSTON, N.A.

                                            By: /s/ Richard D. Hill, Jr.
                                            Name: Richard D. Hill, Jr.
                                            Title: Managing Director

                                            FLEET BUSINESS CREDIT CORPORATION
                                 (successor in interest to Sanwa Business Credit
Corporation)

                                            By: /s/ Roland J. Robinson
                                            Name:Roland J. Robinson
                                            Title: Senior Vice President

                                            BANK AUSTRIA CREDITANSTALT
                                            CORPORATE FINANCE, INC.

                                            By: /s/ Richard W. Verella
                                            Name: Richard W. Verella
                                            Title: Senior Associate

                                            By: /s/ William E. McCollum, Jr.
                                            Name: William E. McCollum, Jr.
                                            Title: Vice President

                                            FIRST SOURCE FINANCIAL LLP,
                  By: First Source Financial Inc., its manager

                                            By: /s/ John P. Thacker
                                            Name: John P. Thacker
                                            Title: Senior Vice President

                                            GENERAL ELECTRIC CAPITAL

                                            CORPORATION

                                            By: /s/ Thomas E. Johnstone
                                            Name: Thomas E. Johnstone
                                            Title: Duly Authorized Signatory

                                            SUMMIT BANK

                                            By: /s/ Segi Nakamura
                                            Name: Segi Nakamura
                                            Title: Vice President

                                            HSBC BANK USA

                                            By: /s/ J.B. Lyons
                                            Name: J.B. Lyons
                                            Title: Senior Vice President

                                            AG CAPITAL FUNDING PARTNERS, L.P.

               By: Angelo Gordon & Co., L.P. as Investment Advisor

                                            By:
                                            Name:
                                            Title:

                                            NORTHWOODS CAPITAL LIMITED

               By: Angelo Gordon & Co., L.P. as Collateral Manager

                                            By:
                                            Name:
                                            Title:
                                            NEW YORK LIFE INSURANCE COMPANY

                                            By:
                                            Name:
                                            Title:

                                            SENIOR DEBT PORTFOLIO
                                            By:  Boston Management and Research,
                                                    as Investment Advisor

                                            By: /s/ Payson F. Swaffield
                                            Name: Payson F. Swaffield
                                            Title: Vice President

                                         ML CLO XX PILGRIM AMERICA (CAYMAN) LTD.

                                            By:
                                            Name:
                                            Title:

                                            TORONTO DOMINION (TEXAS), INC.

                                            By: /s/ Lynn Chasin
                                            Name: Lynn Chasin
                                            Title: Vice President

                                            GREAT POINT CLO 1999-1 LTD.

                                            By:      Sankaty Advisors, Inc., as
                                                     Collateral Managers

                                            By: /s/ Diane J. Exter
                                            Name: Diane J. Exter

                Title:Executive Vice President, Portfolio Manager

                                            EATON VANCE SENIOR INCOME TRUST

                                            By:
                                            Name:
                                            Title:

                                  Schedule 1.1E

                      Existing Tranche C Letters of Credit

                                      None.
<PAGE>AMENDED AND RESTATED

                                   INVESTMENT

                                       AND

                                DEPOSIT AGREEMENT

                           Dated as of March 29, 2000

                                     between

                        Vestar Capital Partners III, L.P.

                                       and

                                                  BANK OF AMERICA, N. A.,
                        in its capacity as Agent for the Lenders herein defined

<PAGE>

ii

                                TABLE OF CONTENTS

SECTION 1 DEFINITIONS                                                   3
         Section 1.1       Definitions.                                 3
         Section 1.2       Terms Generally.                             5
         Section 1.3       Accounting Terms.                            5
SECTION 2 MANDATORY INVESTMENTS                                         5
         Section 2.1       Leverage Reduction relating to Shirt Group
                           Restructuring or Vestar Default.             5
         Section 2.2       Leverage Reduction in Bankruptcy.            7
         Section 2.3       Cash Collateral Account.                     7
         Section 2.4       Limitation on Investment Obligations.        7
SECTION 3 CONDITIONS                                                    8
         Section 3.1       Conditions to Effectiveness.                 8
SECTION 4 DEPOSIT OF CAPITAL CALL NOTICES WITH AGENT                    9
         Section 4.1       Deposit of Capital Call Notices.             9
SECTION 5 REPRESENTATIONS AND WARRANTIES                                9
         Section 5.1       Existence and Power.                         9
         Section 5.2       Authorization.                               9
         Section 5.3       No Conflicts.                                10
         Section 5.4       Consents.                                    10
         Section 5.5       Enforceable Obligations.                     10
         Section 5.6       Permitted Investment.                        10
         Section 5.7       Venture Capital Operating Company.           10
         Section 5.8       Deposited Notices.                           10
         Section 5.9       Limitations on Actions.                      11
SECTION 6 AFFIRMATIVE COVENANTS                                         11
         Section 6.1       Outstanding Subscriptions.                   11
         Section 6.2       General Partner.                             11
         Section 6.3       Plan Assets, etc.                            11
         Section 6.4       Receipt of the Funds Pursuant to the
                           Deposited Notices.                           11
         Section 6.5       Partners and Pro Rata Shares.                11
SECTION 7 NEGATIVE COVENANTS                                            11
         Section 7.1       Limitations on Actions.                      12
SECTION 8 EVENTS OF DEFAULT                                             12
         Section 8.1       Events of Default.                           12
         Section 8.2       Remedies.                                    13
         Section 8.3       Receipt of the Funds Pursuant to the
                           Deposited Notices.                           13
SECTION 9 MISCELLANEOUS                                                 13
         Section 9.1       Notices.                                     13
         Section 9.2       Payments.                                    15
         Section 9.3       Benefit of Agreement.                        15
         Section 9.4       No Waiver; Remedies Cumulative.              15
         Section 9.5       Payment of Expenses, etc.                    15
         Section 9.6       Amendments, Waivers and Consents.            16
         Section 9.7       Counterparts.                                16
         Section 9.8       Headings.                                    16
         Section 9.9       Survival.                                    16
         Section 9.10      Governing Law; Submission to Jurisdiction;
                           Venue.                                       16
         Section 9.11      Severability.                                17
         Section 9.12      Entirety.                                    17
         Section 9.13      Binding Effect; Termination.                 17
         Section 9.14      Limitation on Recourse.                      17
         Section 9.15      Confidentiality.                             18

                                     ANNEXES

Exhibit A                  Form of Capital Call Notice
Exhibit B                  Terms of Preferred Stock
Exhibit C                  Terms of Subordination

<PAGE>

                              AMENDED AND RESTATED

                                   INVESTMENT

                                       AND

                                DEPOSIT AGREEMENT

         THIS AMENDED AND RESTATED INVESTMENT AND DEPOSIT AGREEMENT, dated as of
March 29, 2000 (the  "Agreement"),  amends and restates that certain  Investment
and Deposit  Agreement  dated as of September  30, 1999 by and among the parties
hereto (the "Existing  Investment and Deposit  Agreement"),  and is executed and
entered  into by and between  Vestar  Capital  Partners  III,  L.P.,  a Delaware
limited partnership (the "Sponsor"),  and Bank of America,  N.A. (formerly known
as  NationsBank,  N.A.),  in its  capacity as Agent  under the Credit  Agreement
hereinafter defined (in such capacity, the "Agent").

                               W I T N E S S E T H

               WHEREAS, Cluett American Corp. (the "Borrower"),  Cluett American
          Investment  Corp.  (the "Parent"),  Cluett  American  Group,  --------
          ------ Inc.  ("Interco"),  the Subsidiary  Guarantors parties thereto,
          the  Lenders   parties   thereto  and  Gleacher   NatWest   Inc.,   as
          Documentation  -------  Agent,  have entered into that certain  Credit
          Agreement  dated as of May 18,  1998 and  amended as of May 27,  1998,
          December  18,  1998,  March 19,  1999 and  September  30,  1999 (as so
          previously   amended,   the   "Existing   Credit   Agreement");    and

         WHEREAS,  the parties to the Existing  Credit  Agreement have agreed to
further amend the Existing Credit  Agreement by entering into that certain Fifth
Amendment, dated as of the date hereof (such amendment herein referred to as the
"Fifth  Amendment"  and,  together  with the Existing  Credit  Agreement and any
further  amendments  entered into  subsequent  to the date  hereof,  the "Credit
Agreement"); and

         WHEREAS,  as a condition to the  effectiveness  of the Fifth Amendment,
the Lenders have required that the Existing  Investment and Deposit Agreement be
amended and restated in the manner set forth below;

         NOW,  THEREFORE,  for  and in  consideration  of the  mutual  promises,
covenants and representations and warranties contained herein and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  and intending to be legally  bound,  the parties  hereto agree as
follows:

                                                                   SECTION 1
                                                                  DEFINITIONS

Section 1.1  Definitions.

         All  capitalized  terms not  defined in this  Agreement  shall have the
meanings  ascribed  to  such  terms  in the  Credit  Agreement.  As used in this
Agreement,  the following  terms shall have the meanings  specified below unless
the context otherwise requires:

                  "Amendment  No. 5  Effective  Date"  shall  have  the  meaning
assigned to such term in the Fifth Amendment.

                  "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.

                  "Cash  Collateral  Account" shall have the meaning assigned to
such term in Section 2.3.

                  "Deposited  Notices"  means  a  collective  reference  to  the
         Capital Call Notices  delivered by the Sponsor to the Agent pursuant to
         Section 3.1(b) and maintained on deposit with the Agent as contemplated
         by Section 4.1.

                  "Event of Default" means such term as defined in Section 8.1.

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

                  "Investment Commitment" means, on any date, $30,000,000 minus,
         without duplication, the sum of (i) the aggregate outstanding principal
         amount of the Tranche C  Obligations  on such date,  (ii) the aggregate
         amount of  payments  made by, or on behalf  of, the  Sponsor  after the
         Amendment No. 5 Effective  Date through and  including  such date which
         permanently  reduce  the  Tranche  C  Commitment  (including,   without
         limitation,  pursuant  to  payments  under the  Tranche C Guaranty  and
         payments   made  in  order  to  cash   collateralize   Tranche   C  LOC
         Obligations),  (iii) the aggregate amount of capital contributions made
         by, or on behalf of, the Sponsor to the Parent after the  Amendment No.
         5 Effective  Date through and including such date which are used by the
         Borrower to make a mandatory  prepayment of the Loans outstanding under
         the Credit Agreement pursuant to Section  3.3(b)(v)(B) thereof and (iv)
         the  aggregate   amount  of  Credit  Party   Obligations   in  which  a
         participation  interest  has been  purchased  by, or on behalf  of, the
         Sponsor pursuant to Section 2.1(c) or Section 2.2(c).

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

                  "Mandatory  Investment" means a capital contribution by, or on
         behalf  of,  the  Sponsor  to  the  Parent  in  Dollars  and  in  funds
         immediately available to the Parent on the terms set forth in Exhibit B
         attached hereto made for the purpose of enabling the Borrower to make a
         mandatory   prepayment  of  the  Loans  outstanding  under  the  Credit
         Agreement pursuant to Section 3.3(b)(v)(B) thereof.

                  "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 Sponsor,  (ii) the
         ability of the Sponsor to perform any  material  obligation  under this
         Agreement  or (iii) the rights  and  remedies  of the Agent  under this
         Agreement.

                  "Obligations"   means,  with  respect  to  the  Sponsor,   all
         Indebtedness,   all  other  obligations  that  would  be  reflected  as
         liabilities  on a balance  sheet of the Sponsor and the purchase  price
         that the Sponsor  (directly or indirectly,  including,  but not limited
         to, through any  Subsidiary of the Sponsor) 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 Sponsor on
         any date  shall  include  (i) the  obligations  of the  Sponsor to make
         Mandatory  Investments  (and other  payments  to the Agent  pursuant to
         Section  2.1  or  Section  2.2)  in  an  amount  up to  the  Investment
         Commitment  on such date and any and all other payment  obligations  of
         the  Sponsor  to the  Agent  (on  behalf  of the  Lenders)  under  this
         Agreement on such date and (ii) the  obligations  of the Sponsor  under
         the Tranche C Guaranty.

                  "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.

                  "Plan Asset  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.

                  "Pro Rata Share"  means,  with  respect to any  Partner,  such
         Partner's   share,   expressed  as  a  percentage,   of  the  aggregate
         obligations of all of the Partners to make capital contributions to the
         Sponsor in accordance with the terms of the Partnership Agreement.  The
         Pro Rata Share of each Partner  shall be based on the  proportion  that
         such Partner's  Total Capital  Commitment  bears to the aggregate Total
         Capital Commitments of all of the Partners. In determining the Pro Rata
         Shares of the Partners for purposes of completing  Deposited Notices as
         contemplated by Section 8.2, the Agent shall (and shall be entitled to)
         rely on the  information  delivered  to the Agent  pursuant  to Section
         3.1(f)  unless the Sponsor  shall have  provided the Agent with updated
         information regarding Pro Rata Shares pursuant to Section 6.5, in which
         case the Agent  shall (and shall be entitled  to) rely on such  updated
         information.

                  "Subsidiary" means, at any time, (i) 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 the Sponsor, directly or indirectly through Subsidiaries,
         and (ii) any partnership, association, joint venture or other entity of
         which the Sponsor, directly or indirectly through Subsidiaries, owns at
         such time more than 50% of the Equity Interests.

                  "Total Capital  Commitment" means, with respect to any Limited
         Partner,  an amount equal to the total amount of capital  contributions
         that such Limited Partner is obligated to make to the Sponsor  pursuant
         to the terms of the Partnership Agreement.

Section 1.2  Terms Generally.

                    All references  herein to Articles,  Sections,  Exhibits and
          Schedules shall be deemed  references to Articles and Sections of, and
          Exhibits and  Schedules  to, this  Agreement  unless the context shall
          otherwise  require.  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 1.3  Accounting Terms.

         Except as otherwise  expressly  provided  herein,  all accounting terms
used herein shall be interpreted in accordance with GAAP.

                                    SECTION 2

                              MANDATORY INVESTMENTS

Section 2.1  Leverage Reduction relating to  Shirt Group Restructuring or Vestar
             Default.
            --------------------------------------------------------------------

                  (a) In the  event  that the  Leverage  Reduction  Requirements
         shall not have been satisfied by the last day of the Leverage Reduction
         Period, the Sponsor shall make a Mandatory Investment on such day in an
         amount  equal to (i) if the Shirt Group  Restructuring  shall have been
         consummated by such date, the amount  necessary (after giving effect to
         all prepayments made pursuant to Section  3.3(b)(iii)(A)  of the Credit
         Agreement  after  the  Amendment  No.  5  Effective  Date  through  and
         including such date) to enable  satisfaction of the Leverage  Reduction
         Requirements  or (ii) if the Shirt Group  Restructuring  shall not have
         been consummated by such date, the then current Investment Commitment.

                  (b) Upon the occurrence of any Event of Default hereunder, the
         Sponsor  immediately  shall,  upon written demand by the Agent,  make a
         Mandatory  Investment in an amount equal to the then current Investment
         Commitment.

                  (c) The  Sponsor  may,  at its  option,  in lieu of  making  a
         Mandatory Investment required by Section 2.1(a)(i), pay directly to the
         Agent and direct the Agent to purchase on behalf of the Sponsor,  on or
         before the time that such Mandatory  Investment is required to be made,
         an  undivided,  non-voting  participation  interest in the Credit Party
         Obligations then outstanding  under the Credit Documents for a purchase
         price equal to the amount of the Mandatory  Investment  that  otherwise
         would have been  required.  The Sponsor may, at its option,  in lieu of
         making a  portion  of the  Mandatory  Investment  required  by  Section
         2.1(a)(ii) in an amount equal to the amount of the prepayment  required
         to be made on the last day of the Leverage Reduction Period pursuant to
         Section 3.3(c) of the Credit  Agreement,  pay directly to the Agent and
         direct the Agent to purchase on behalf of the Sponsor, on or before the
         time  that  such  Mandatory  Investment  is  required  to be  made,  an
         undivided,  non-voting  participation  interest  in  the  Credit  Party
         Obligations then outstanding  under the Credit Documents for a purchase
         price equal to the amount of the prepayment  required to be made on the
         last day of the Leverage Reduction Period pursuant to Section 3.3(c) of
         the Credit Agreement.  Any  participation  interest in the Credit Party
         Obligations  acquired on behalf of the Sponsor in  accordance  with the
         terms of this  Section  2.1(c)  shall be  subject  to an  intercreditor
         agreement   with  the  Agent  on  behalf  of  the  Lenders   containing
         substantially the terms and conditions set forth on Exhibit C.

                  (d) In the event that the Sponsor  shall fail,  at its option,
         to either (A) make a Mandatory Investment when due as required pursuant
         to Section  2.1(a) or Section  2.1(b) or (B) to the extent  applicable,
         make a payment to the Agent for the  purchase  on behalf of the Sponsor
         of a  participation  interest  in the Credit  Party  Obligations  on or
         before the time that such  Mandatory  Investment is required to be made
         in  accordance  with the terms of Section  2.1(c),  the Sponsor  hereby
         promises to pay on demand to the Agent (for the benefit of the Lenders)
         an  amount  equal  to the  amount  of  the  Mandatory  Investment  that
         otherwise would have been required.

                  (e) All amounts  paid by the Sponsor to the Agent  pursuant to
         Section  2.1(a) or  Section  2.1(b)  shall be  applied  by the Agent on
         behalf of the Lenders to the prepayment of the Loans  outstanding under
         the  Credit   Agreement  in  accordance   with  the  terms  of  Section
         3.3(b)(v)(B)  thereof.  Subject  to the terms of  Section  2.1(f),  all
         amounts  paid by the Sponsor to the Agent  pursuant  to Section  2.1(c)
         shall be applied  by the Agent on behalf of the  Lenders to pay for the
         purchase  by the  Sponsor  of an  undivided,  non-voting  participation
         interest in the Credit Party  Obligations  then  outstanding  under the
         Credit Documents which shall be subject to an  intercreditor  agreement
         with the Agent on behalf of the Lenders  containing  substantially  the
         terms and conditions set forth on Exhibit C and, in making the purchase
         of such participation  interest in the Credit Party Obligations,  shall
         be  applied  (i) in the case of any such  payment  pursuant  to Section
         2.1(c)  made in lieu of a  Mandatory  Investment  required  by  Section
         2.1(a)(i),  in the  same  manner  prescribed  for  the  application  of
         prepayment proceeds under Section 3.3(b)(vi)(D) of the Credit Agreement
         and (ii) in the case of any such  payment  pursuant  to Section  2.1(c)
         made in lieu of a portion of a Mandatory Investment required by Section
         2.1(a)(ii),  in the  same  manner  prescribed  for the  application  of
         prepayment   proceeds  under  Section   3.3(b)(vi)(C)   of  the  Credit
         Agreement.

                  (f)  Notwithstanding  any provision to the contrary  contained
         herein or in the Credit  Agreement,  amounts paid by the Sponsor to the
         Agent  pursuant to Section  2.1(c)  shall not be applied to pay for the
         purchase  on behalf of the Sponsor of a  participation  interest in any
         Swingline Loans, Revolving Loans or LOC Obligations (or cash collateral
         therefor),  and, to the extent that any provision of this  Agreement or
         the Credit Agreement  provides for such amounts to be so applied,  such
         amounts instead shall be applied,  at the Sponsor's option,  either (i)
         to the pro rata  prepayment  of (A) the  Swingline  Loans  (without any
         reduction  in the  Revolving  Committed  Amount) and (B) the  Revolving
         Loans  and,  after all  Revolving  Loans  have been  repaid,  to a cash
         collateral account in respect of LOC Obligations (without any reduction
         in the Revolving  Committed Amount),  in which case such proceeds shall
         be deemed to constitute a Mandatory Investment,  or (ii) to purchase an
         undivided,  non-voting  participation  interest  in the Term Loans then
         outstanding under the Credit Documents,  such participation interest to
         be subject to an  intercreditor  agreement  with the Agent on behalf of
         the Lenders containing substantially the terms and conditions set forth
         on Exhibit C and the purchase price of such  participation  interest to
         be  applied  in the  same  manner  prescribed  for the  application  of
         prepayment   proceeds  under  Section   3.3(b)(vi)(C)   of  the  Credit
         Agreement.

Section 2.2  Leverage Reduction in Bankruptcy.

         Notwithstanding any provision to contrary set forth in this Agreement:

                  (a) The obligations of the Sponsor under Section 2.1 shall not
         be  satisfied  by the making of a  Mandatory  Investment  (or any other
         capital  contribution  to or  investment  in the  Parent  or any of the
         Consolidated  Parties) at any time after the Business  Day  immediately
         preceding  the first day that a  Bankruptcy  Event with  respect to the
         Parent or the Borrower shall have occurred.

                  (b) If a  Bankruptcy  Event with  respect to the Parent or the
         Borrower shall occur prior to the end of the Leverage Reduction Period,
         the Sponsor  hereby  promises to pay  immediately to the Agent (for the
         benefit of the Lenders) an amount equal to the then current  Investment
         Commitment.

                  (c) All amounts  paid by the Sponsor to the Agent  pursuant to
         this  Section  2.2  immediately  shall be applied by the Agent (for the
         benefit of the  Lenders)  to pay for the  purchase by the Sponsor of an
         undivided,  non-voting  participation  interest  in  the  Credit  Party
         Obligations  then  outstanding  under  the  Credit  Documents  shall be
         subject to an  intercreditor  agreement with the Agent on behalf of the
         Lenders containing  substantially the terms and conditions set forth on
         Exhibit C and, in making the purchase of such participation interest in
         the Credit  Party  Obligations,  shall be  applied  in the same  manner
         prescribed  for the  application  of prepayment  proceeds under Section
         3.3(b)(vi)(E) of the Credit Agreement.

Section 2.3  Cash Collateral Account.

                    To the extent that the Sponsor shall have deposited with the
          Agent on June 30, 2000 cash and/or Cash  Equivalents  in an  aggregate
          amount at least equal to the  Investment  Commitment  as of such date,
          the Leverage  Reduction Period shall be extended until August 31, 2000
          as provided in the definition of the term "Leverage  Reduction Period"
          set forth in Section 1.1 of the Credit Agreement. All cash and/or Cash
          Equivalents  so deposited with the Agent shall be held by the Agent in
          a cash collateral  account subject to the sole dominion and control of
          the Agent (the "Cash  Collateral  Account")  until this  Agreement  is
          terminated in accordance  with the terms of Section 9.13.  The Sponsor
          hereby  authorizes  the Agent to apply  amounts on deposit in the Cash
          Collateral Account to the payment, on behalf of the Sponsor,  when due
          of  all  amounts   payable  under  Section  2.1  or  Section  2.2,  as
          applicable,  and, in the case of amounts  payable under Section 2.1(a)
          or  Section  2.1(c) (in lieu of a  Mandatory  Investment  (or  portion
          thereof)  required by Section 2.1(a)),  if so directed by the Sponsor,
          the  amount so applied  by the Agent  shall be used by the  Agent,  on
          behalf of the  Sponsor,  to purchase  participation  interests  in the
          Credit Party Obligations  pursuant to Section 2.1(c),  and any balance
          remaining in the Cash Collateral Account promptly shall be turned over
          by the Agent to the  Sponsor in such manner as the Sponsor at the time
          shall specify to the Agent. At the request of the Sponsor,  amounts on
          deposit in the Cash Collateral  Account shall be invested by the Agent
          in Cash  Equivalents.  Any income earned on such Cash Equivalents will
          be for the account of the Sponsor  and shall be  distributed  not less
          than  quarterly  by the Agent to the  Sponsor.  To the extent that any
          loss is incurred in respect of such investments by the Agent on behalf
          of the Sponsor,  the Sponsor not less than  quarterly  will deliver to
          the Agent,  for  deposit in the Cash  Collateral  Account,  additional
          amounts sufficient to offset such losses.

Section 2.4  Limitation on Investment Obligations.

                    Notwithstanding  any provision to contrary set forth in this
          Agreement,  the  Sponsor  shall not be  obligated  at any time to make
          Mandatory  Investments (or any other payments to the Agent pursuant to
          Section 2.1 or Section  2.2) in an amount in excess of the  Investment
          Commitment at such time.
                                    SECTION 3
                                   CONDITIONS

Section 3.1  Conditions to Effectiveness.

                    This Agreement shall become effective on the Amendment No. 5
          Effective Date provided the following conditions are satisfied in form
          and substance reasonably acceptable to the Agent:

                  (a)      Execution of this  Agreement.  Receipt  by  the Agent
         of an executed copy of this  Agreement  signed by a duly
                           ----------------------------
         authorized officer of the General Partner.

                  (b)  Deposited  Notices.  Receipt by the Agent of an  original
         Capital Call Notice for each Limited Partner,  in each case executed by
         the  General  Partner and  uncompleted  in respect of the amount of the
         total capital  contribution  to be made by all of the Limited  Partners
         pursuant  to such  Capital  Call  Notices  and the  applicable  Limited
         Partner's  Pro Rata  Share of such  total  capital  contribution.  Upon
         satisfaction  of the  requirements  of this clause (b), the Agent shall
         promptly  return to the  Sponsor  the  original  Capital  Call  Notices
         delivered to the Agent pursuant to the Existing  Investment and Deposit
         Agreement.

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

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

                           (i)  Certificates of  Authorization.  Certificates of
                  authorization of the General Partner as of the Amendment No. 5
                  Effective Date,  approving and adopting this Agreement and the
                  delivery  of  the  Deposited   Notices  and   authorizing  the
                  execution  and  delivery  thereof  by the  General  Partner on
                  behalf of the Sponsor.

                           (ii)  Partnership  Agreement.  A  certificate  of the
                  President or any duly authorized  officer and Secretary of the
                  general partner of the General Partner providing that the copy
                  of the  Partnership  Agreement,  together with all  amendments
                  thereto,  delivered  to  the  Agent  in  connection  with  the
                  Existing  Investment  and  Deposit  Agreement  is a  true  and
                  complete copy of the Partnership Agreement and that there have
                  been no amendments to the Partnership Agreement since the date
                  of the Existing Investment and Deposit Agreement.

                           (iii)   Incumbency    Certificate.    An   incumbency
                  certificate  of the President or any duly  authorized  officer
                  and  Secretary of the general  partner of the General  Partner
                  who will be executing this 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)  Total  Capital  Commitments.  Receipt  by the  Agent of a
         certificate  executed  by an  officer  of the  general  partner  of the
         General  Partner  on  behalf  of the  Sponsor,  in form  and  substance
         satisfactory  to the Agent,  stating that the  aggregate  Total Capital
         Commitments of all Limited Partners as of the Amendment No. 5 Effective
         Date equals or exceeds the sum of (i) the  Investment  Commitment  plus
         (ii) all other Obligations of the Sponsor.

                  (f) Partners  and Pro Rata  Shares.  Receipt by the Agent of a
         certificate  executed  by an  officer  of the  general  partner  of the
         General  Partner  on  behalf  of the  Sponsor,  in form  and  substance
         satisfactory to the Agent, setting forth a list of Limited Partners and
         their  respective  Pro Rata Shares as of the  Amendment No. 5 Effective
         Date. Except as otherwise permitted under Section 9.15, the information
         contained in the certificate  delivered to the Agent as contemplated by
         this  Section  3.1(f)  shall not be disclosed by the Agent to any other
         Person (including,  without limitation,  the Lenders) without the prior
         written consent of the Sponsor.

                                    SECTION 4

                   DEPOSIT OF CAPITAL CALL NOTICES WITH AGENT

Section 4.1  Deposit of Capital Call Notices.

                    The Sponsor  hereby  agrees  that each of the  Capital  Call
          Notices  delivered  by the  Sponsor to the Agent  pursuant  to Section
          3.1(b) shall be held by the Agent on deposit and shall be delivered by
          the Agent to the Partners  only under the  circumstances  contemplated
          by, and otherwise in accordance with the terms of, Section 8.2.

                                    SECTION 5

                         REPRESENTATIONS AND WARRANTIES

                    The Sponsor hereby represents and warrants to the Agent (for
          the benefit of the Lenders) that:

Section 5.1  Existence and Power.

                  (a) Each of the Sponsor  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  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  Agreement on the Sponsor'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  jurisdiction  where the  failure to be so
         qualified and in good standing could not reasonably be expected to have
         a Material Adverse Effect.

Section 5.2  Authorization.

                    The Sponsor has the partnership or other necessary power and
          authority,  and the legal right,  to enter into this  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  Agreement  and the Deposited  Notices.
          Without  limiting  the  generality  of the above,  the  Sponsor 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 Sponsor to make Mandatory  Investments  (and other
          payments  to the Agent  pursuant  to Section  2.1 or  Section  2.2) in
          accordance  with the terms of this  Agreement,  (ii) the depositing of
          such Capital Call Notices with the Agent in the manner contemplated by
          Section 4.1 and (iii) the  authorizing  of the Agent to  complete  and
          deliver  such  Capital  Call  Notices  on  behalf  of the  Sponsor  in
          accordance with the terms of Section 8.2.

Section 5.3  No Conflicts.

                    Neither the execution and delivery of this Agreement nor the
          consummation of the transactions  contemplated herein, nor performance
          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,  (iv) result
          in or require  the  creation of any lien,  security  interest or other
          charge  or  encumbrance  (other  than  those  contemplated  in  or  in
          connection  with this Agreement) upon or with respect to the Sponsor's
          properties.

Section 5.4  Consents.

                    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  of this  Agreement  or with the
          execution and delivery of the Deposited Notices.

Section 5.5  Enforceable Obligations.

                    This  Agreement  has been duly executed and delivered by the
          Sponsor and constitutes  legal,  valid and binding  obligations of the
          Sponsor,   enforceable  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.

Section 5.6  Permitted Investment.

                    (a) The  incurrence  of the  obligations  of the Sponsor set
          forth in this Agreement and the making by the Sponsor of any Mandatory
          Investment (and other payments to the Agent pursuant to Section 2.1 or
          Section 2.2) 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) for the purpose of providing funds
          to or for the account of the Sponsor in an aggregate amount sufficient
          to pay in full the amount  required to satisfy the  obligation  of the
          Sponsor to make Mandatory Investments (and other payments to the Agent
          pursuant to Section 2.1 or Section 2.2) in an  aggregate  amount of up
          to the Investment Commitment, if so requested by the General Partner.

Section 5.7  Venture Capital Operating Company.

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

Section 5.8  Deposited Notices.

                    Each  Deposited  Notice,  when  completed  by the  Agent and
          delivered by the Agent to the applicable Limited Partner in accordance
          with the terms of Section 8.2 and the  definition  of "Pro Rata Share"
          set forth in Section 1.1, will give rise to a legal, valid and binding
          obligation  on the part of such  Limited  Partner to pay such  Limited
          Partner's Pro Rata Share of each Mandatory  Investment (and each other
          payment  to  the  Agent  pursuant  to  Section  2.1 or  Section  2.2),
          enforceable  against such Limited Partner in accordance with the terms
          of such Deposited Notice and the Partnership Agreement.

Section 5.9  Limitations on Actions.

                    The  Sponsor  is not  aware of any event or  condition  that
          could (i) have a material adverse effect on the ability of the Sponsor
          to perform its obligations  under this 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 date hereof which arise upon the
          due delivery of, and as contemplated by, the Deposited Notices.

                                    SECTION 6

                              AFFIRMATIVE COVENANTS

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

Section 6.1  Outstanding Subscriptions.

                    At all times prior to the  termination  of this Agreement in
          accordance  with the terms of Section 9.13, the Sponsor will cause the
          aggregate Total Capital  Commitments of all Limited  Partners to equal
          or exceed the sum of (i) the Investment Commitment plus (ii) all other
          Obligations of the Sponsor.

Section 6.2  General Partner.

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

Section 6.3  Plan Assets, etc.

                    The  Sponsor  shall at all  times  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 Sponsor are not "plan assets"
          within the meaning and as defined in the Plan Asset Regulations.

Section 6.4  Receipt of the Funds Pursuant to the Deposited Notices.
             ------------------------------------------------------

                    Immediately  upon  receipt  by  the  Sponsor  or  any of its
          Affiliates of payment by any Limited Partner in respect of a Deposited
          Notice  delivered  by the Agent  pursuant to Section  8.2, the Sponsor
          shall (i) notify the Agent 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 6.5  Partners and Pro Rata Shares.

                    Upon the reasonable  request of the Agent from time to time,
          the Sponsor  shall  promptly  deliver to the Agent an updated  list of
          Limited Partners and their respective Pro Rata Shares, certified by an
          officer of the general partner of the General Partner on behalf of the
          Sponsor as true and complete.

                                    SECTION 7

                               NEGATIVE COVENANTS

Section 7.1  Limitations on Actions.

                    So  long  as  this  Agreement  is  in  effect,  the  Sponsor
          covenants  and agrees that it 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 date hereof which arise
          upon the due  delivery  of,  and as  contemplated  by,  the  Deposited
          Notices.

                                    SECTION 8

                                EVENTS OF DEFAULT

Section 8.1  Events of Default.

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

                  (a)      Payment.  The Sponsor  shall  default in the  payment
         when due of any amounts  owing under  Section 2.1  or
                           -------
         Section 2.2; or

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

                  (c)      Covenants.
                           ---------

                           (i)     Default in the due  performance or observance
                  of any term,  covenant or  agreement  contained in
                  Section 6 or Section 7, or

                           (ii) 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
                  8.1)  contained  in this  Agreement  and  such  default  shall
                  continue unremedied for a period of at least 30 days after the
                  earlier of an officer of the  Sponsor  becoming  aware of such
                  default or notice thereof by the Agent; or

                    (d) Effectiveness of Documents. This Agreement or any of the
          Deposited    Notices    shall    fail    to   be   in    full    force
          ---------------------------  and  effect or to give the Agent (for the
          benefit of the Lenders) any  material  part of the rights,  powers and
          privileges purported to be created hereby; or

                  (e)      Bankruptcy, etc.  A Bankruptcy Event shall occur with
         respect to the Sponsor; or
                           ---------------

                    (f)  Defaults  under Other  Agreements.  With respect to any
          Indebtedness (other than Indebtedness outstanding under this Agreement
          or the Credit Agreement (but including the Guaranty Obligations of the
          Sponsor  arising  under  the  Tranche  C  Guaranty))  in excess of $20
          million in the  aggregate  for the Sponsor,  (A)(1) the Sponsor  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  8.1(f) with  respect to a default  which is
          being contested in good faith by appropriate proceedings; or

                  (g)  Judgments.  The Sponsor  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.

Section 8.2  Remedies.

                    Upon the occurrence and during the  continuance of any Event
          of Default, the Agent may, and shall be authorized to: (i) declare the
          unpaid amount of any of the Sponsor's  obligations  arising under this
          Agreement  (including,  without limitation,  the Sponsor's obligations
          under Section 2.1 and Section 2.2) 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
          Sponsor;  (ii) complete appropriate  Deposited Notices for the Limited
          Partners  based on each Limited  Partner's  Pro Rata Share of the then
          current amount of the Investment Commitment;  and (iii) after at least
          2 Business  Days'  prior  written  notice  thereof by the Agent to the
          Sponsor,  deliver such Deposited Notices to the Limited Partners.  The
          rights of the Agent  under this  Section  8.2 are  independent  and in
          addition  to such  rights as the Agent may have at law or in equity or
          otherwise based on the failure of the Sponsor to perform any covenant,
          agreement or undertaking  made by it in this Agreement,  including the
          right to seek  specific  performance  of such covenant or agreement or
          seek any other equitable relief.

Section 8.3  Receipt of the Funds Pursuant to the Deposited Notices.
             ------------------------------------------------------

                    The Agent agrees that,  promptly  after receipt by the Agent
          of any capital  contribution  by any Limited  Partner  pursuant to the
          exercise of the Agent's  rights  under  Section  8.2,  the Agent shall
          notify the Sponsor of the amount of such capital  contribution and the
          identity of the Limited Partner making such capital contribution.

                                    SECTION 9
                                  MISCELLANEOUS

Section 9.1  Notices.

                    Except as otherwise  expressly  provided herein, all notices
          and other  communications  shall have been duly  received and shall be
          effective (i) when delivered,  (ii) when  transmitted via telecopy (or
          other  facsimile  device) to the  number set out below,  (iii) the day
          following  the day on which the same has been  delivered  prepaid to a
          reputable  national  overnight air courier service,  or (iv) 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 Sponsor:

                           Vestar Capital Partners III, L.P.
                           245 Park Avenue
                           41st Floor
                           New York, New York  10167
                           Attn:  Jack Feder
                           Telephone:  (212) 351-1630
                           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 Agent:

                           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

         with a copy to:

                           Bank of America, N.A.
                           NY1-503-06-07
                           335 Madison Ave
                           New York, New York 10017
                           Attn: Fred Zagar
                           Telephone: (212) 503-8242
                           Telecopy:  (212) 503-7080

Section 9.2  Payments.

         Except as otherwise  specifically  provided  herein,  all payments made
pursuant  to any  Deposited  Notice  shall be made to the  Agent in  Dollars  in
immediately  available  funds,  without  offset,   deduction,   counterclaim  or
withholding  of any kind,  not later than 2:00 P.M.  (Charlotte,  North Carolina
time).  Payments  received after such time shall be deemed to have been received
on the next succeeding Business Day.

Section 9.3  Benefit of Agreement.

         This Agreement shall be binding upon and inure to the benefit of and be
enforceable  by the  respective  successors  and  assigns  of the  Agent and the
Sponsor;  provided  that (i) the Sponsor  may not assign or transfer  any of its
interests and obligations  hereunder  without prior written consent of the Agent
and  (ii)  the  Agent  may not  assign  or  transfer  any of its  interests  and
obligations hereunder without prior written consent of the Sponsor except to any
Person which  becomes a successor  Agent  pursuant to Section 10.7 of the Credit
Agreement and except during the continuance of an Event of Default.

Section 9.4  No Waiver; Remedies Cumulative.

         No  failure  or  delay  on the  part of the  Agent  or the  Lenders  in
exercising  any right,  power or  privilege  hereunder  and no course of dealing
between  the Agent or any  Lender  and the  Sponsor  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 Agent or the Lenders  would  otherwise  have.  No
notice to or demand on the Sponsor in any case shall  entitle the Sponsor to any
other  or  further  notice  or  demand  in  similar  or other  circumstances  or
constitute  a waiver of the rights of the Agent and the  Lenders to any other or
further action in any circumstances without notice or demand.

Section 9.5  Payment of Expenses, etc.

         The  Sponsor  shall  cause  the  Borrower  to (i)  pay  all  reasonable
out-of-pocket  costs  and  expenses  (A) of the  Agent  in  connection  with the
negotiation,  preparation,  execution  and delivery and  administration  of this
Agreement  and the  documents  and  instruments  referred to herein  (including,
without limitation, the reasonable fees and expenses of Moore & Van Allen, PLLC,
special  counsel  to the Agent) and any  amendment,  waiver or consent  relating
hereto including,  but not limited to, any such amendments,  waivers or consents
resulting from or related to any work-out, renegotiation or restructure relating
to the  performance  by the Sponsor under this Agreement and (B) of the Agent in
connection with  enforcement of this Agreement and the documents and instruments
referred to herein (including,  without limitation,  in connection with any such
enforcement,  the reasonable fees and  disbursements  of counsel for the Agent);
and  (ii)  indemnify  the  Agent,  its  officers,   directors,   employees,  and
representatives  from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses incurred by any of them as a result of,
or arising out of, or in any way related to, or by reason of any  investigation,
litigation  or other  proceeding  (whether or not the Agent is a party  thereto)
related  to the  entering  into  and/or  performance  of this  Agreement  or the
consummation  of  any  other   transactions   contemplated  in  this  Agreement,
including,  without limitation, the reasonable fees and disbursements of counsel
incurred  in  connection  with  any  such  investigation,  litigation  or  other
proceeding  (but  excluding  any such losses,  liabilities,  claims,  damages or
expenses  to the  extent  incurred  by reason  of gross  negligence  or  willful
misconduct on the part of the Person to be indemnified).

Section 9.6  Amendments, Waivers and Consents.

         Except  pursuant to the terms of Section 9.13,  this  Agreement and the
provisions hereof may not be amended, waived, modified,  changed,  discharged or
terminated unless such amendment,  waiver,  modification,  change,  discharge or
termination is in writing entered into, or approved in writing, by the Agent and
the Sponsor.

Section 9.7  Counterparts.

         This Agreement may be executed in any number of  counterparts,  each of
which when 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  Agreement  to produce  or account  for more than one such
counterpart.

Section 9.8  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 Agreement.

Section 9.9  Survival.

         All indemnities set forth herein,  including,  without  limitation,  in
Section 9.5,  shall  survive the  execution  and delivery of this  Agreement and
other obligations under this Agreement.

Section 9.10  Governing Law; Submission to Jurisdiction; Venue.

                  (a) THIS  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 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 Agreement, each of the Sponsor and the Agent hereby irrevocably
         accepts  for  itself  and in respect  of its  property,  generally  and
         unconditionally,  the nonexclusive jurisdiction of such courts. Each of
         the Sponsor and the Agent 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 9.1, such service to become effective three
         (3) days after such mailing.  Nothing  herein shall affect the right of
         the Agent,  as the case may be, to serve  process  in any other  manner
         permitted  by law or to  commence  legal  proceedings  or to  otherwise
         proceed  against  the  Sponsor,  as the  case  may  be,  in  any  other
         jurisdiction.

                  (b)  Each of the  Sponsor  and the  Agent  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 Agreement  brought in the courts referred to
         in subsection (a) of this Section 9.10 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 AGENT 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
         AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 9.11  Severability.

         If any provision of this 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.

Section 9.12  Entirety.

         This Agreement  represents the entire  agreement of the parties hereto,
and supersedes all prior agreements and understandings, oral or written, if any,
including the Existing Investment and Deposit Agreement.

Section 9.13  Binding Effect; Termination.

         This  Agreement  shall  become  effective  at such date  determined  in
accordance  with  Section  3.1.  The term of this  Agreement  shall be until the
earliest of (i) the date that the Credit  Agreement is  terminated in accordance
with the  terms of  Section  11.13(b)  thereof,  (ii)  the date  that the  Agent
receives the proceeds of a Mandatory  Investment  (and/or a payment to the Agent
in order to purchase a participation  interest in the Credit Party  Obligations)
in an aggregate  amount that is equal to or exceeds the then current  Investment
Commitment,  (iii) the date that (A) the ratio  (calculated on a pro forma basis
using  the  principles  set  forth  in the  definition  of  "Leverage  Reduction
Requirements"  set forth in  Section  1.1 of the  Credit  Agreement)  of (1) all
Funded  Indebtedness (net of cash and Cash Equivalents,  but without netting for
cash  and Cash  Equivalents  on  deposit  in the Cash  Collateral  Account,  and
excluding (x) Subordinated  Indebtedness,  (y) the Tranche C Obligations and (z)
any  Credit  Party  Obligations  in  which a  participation  interest  has  been
purchased by, or on behalf of, the Sponsor pursuant to Section 2.1(c) or Section
2.2(c))  of the  Consolidated  Parties  on a  consolidated  basis on the date of
determination,  to (2) Consolidated  EBITDA for the four  fiscal-quarter  period
ending  as  of  the  most  recent   fiscal  month  end  preceding  the  date  of
determination  with  respect  to which  the  Agent  has  received  the  Required
Financial  Information,  is equal to or less  than 3.25 to 1.0 and (B) the ratio
(calculated  on a pro  forma  basis  using  the  principles  set  forth  in  the
definition of "Leverage Reduction Requirements" set forth in Section 1.1) of (1)
all Funded  Indebtedness (net of cash and Cash Equivalents,  but without netting
for cash and Cash Equivalents on deposit in the Cash Collateral  Account) of the
Consolidated  Parties  on a  consolidated  basis  on the  date of  determination
(including  Subordinated  Indebtedness,  but excluding the Tranche C Obligations
and any Credit  Party  Obligations  in which a  participation  interest has been
purchased by, or on behalf of, the Sponsor pursuant to Section 2.1(c) or Section
2.2(c)) to (2) Consolidated EBITDA for the four fiscal-quarter  period ending as
of the most recent  fiscal month end preceding  the date of  determination  with
respect to which the Agent has received the Required  Financial  Information  is
equal to or less  than 5.5 to 1.0 and  (iv)  the date  that the sum of,  without
duplication,  (A) the aggregate amount of capital  contributions  made by, or on
behalf of, the Sponsor to the Parent after the  Amendment  No. 5 Effective  Date
through  and  including  such  date  which  are used by the  Borrower  to make a
mandatory prepayment of the Loans pursuant to Section 3.3(b)(v)(B) of the Credit
Agreement and (B) the aggregate amount of payments made by, or on behalf of, the
Sponsor to purchase  participation  interests  in the Credit  Party  Obligations
after the Amendment No. 5 Effective Date through and including such time,  shall
equal or exceed the then current Investment Commitment.

Section 9.14  Limitation on Recourse.

         The Agent  agrees that its rights in respect of any claim or  liability
under this  Agreement  asserted  against  the  Sponsor by it shall be limited to
satisfaction  out of,  and  enforcement  against,  the  assets  of the  Sponsor.
Notwithstanding  anything  to the  contrary  contained  herein  or in any  other
document, certificate or instrument executed by the Sponsor pursuant hereto, the
Agent  acknowledges  and agrees that no  officer,  employee,  partner,  servant,
controlling Person, manager,  agent,  authorized  representative or Affiliate of
the Sponsor (collectively,  the "Non-Recourse Persons") shall have any liability
to the Agent (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 Sponsor under this  Agreement or for the  performance of any of the
obligations  of the Sponsor  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 Agent against the Sponsor or alleged  liability to the Agent of the
Sponsor shall be asserted under this  Agreement,  the Agent 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 9.14
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
Sponsor pursuant to the terms of the Partnership  Agreement,  (ii) to impair the
enforceability  of any of the rights  arising  from this  Agreement  or (iii) to
restrict the  remedies  available to the Agent to realize upon the assets of the
Sponsor. The foregoing acknowledgments, agreements and waivers shall survive the
termination  of this  Agreement  and shall be  enforceable  by any  Non-Recourse
Person.

Section 9.15  Confidentiality.

         The Agent agrees to keep confidential any information furnished or made
available to it by or on behalf of the Sponsor  pursuant to this  Agreement that
is marked  confidential,  provided  that nothing  herein shall prevent the Agent
from  disclosing  such  information  (a)  as  required  by  any  law,  rule,  or
regulation,  (b) upon the order of any court or administrative  agency, (c) upon
the request or demand of any regulatory agency or authority having  jurisdiction
over the Agent or any Affiliate thereof, (d) that is or becomes available to the
public or that is or becomes  available  to the Agent or any  Affiliate  thereof
other  than  as a  result  of a  disclosure  by the  Agent  prohibited  by  this
Agreement,  (e) in connection  with any  litigation to which the Agent or any of
its Affiliates may be a party,  (f) to the extent  necessary in connection  with
the exercise of any remedy under this Agreement, and (g) to any Affiliate of the
Agent.

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

                                    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 of America, N.A.

                                    By: ________________________________
                                    Name:
                                    Title:

<PAGE>

                                    Exhibit A

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

[Name and address of partner]

Re:  [Vestar/Cluett-American Corp.]

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
              NC1-007-13-06                         ABA Routing No.: 053-000-196
              Bank of America Corporate Center      Account No.: 1366212250600
              Charlotte, North Carolina 28255  For Credit to: Corporate Services
              Attn: Bob Klawinski                     Reference:  Vestar Capital
              Telephone: (704) 387-0467                       Partners III, L.P.
              Account No. 1366212250600             Amount: $______________
              For Credit to: Corporate Services
              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>

22

                                    Exhibit B

                   Illustrative Terms of New Equity Securities

Issuer                        Cluett American Investment Corp. (the "Issuer").
                                                                 ------

--------------------------------------------------

Security                 Junior Preferred Stock, par value $.01 per share (the
                         "Preferred Stock").
                         ----------------

Offering                 Private offering of the Preferred Stock by the Issuer.

Liquidation              Preference  Per Share $100.00
                         per share,  plus an amount in
                         cash equal to all accrued and
                         unpaid dividends.

Use of Proceeds          All the net proceeds of the Preferred Stock will be
                         invested by the Issuer in  its wholly-owned subsidiary
                         Cluett American Corp.
                                                   ("Cluett").
                                                     ------

Optional                                           Redemption  Unless prohibited
                                                   by the Credit Agreement,  the
                                                   Issuer    may    redeem   the
                                                   Preferred  Stock  in whole or
                                                   in part at any  time and from
                                                   time to time,  pro rata, at a
                                                   redemption price equal to the
                                                   liquidation        preference
                                                   thereof, payable in cash.

Mandatory  Redemption  The  Preferred  Stock will not be  subject  to  mandatory
redemption.

Dividend Rate                                      Dividends on the Preferred
                                                   Stock will accrue at the rate
                                                   of 22?% per annum compounded
                                                   quarterly ("Dividend Rate").
                                                              -------------

Dividends                                          Dividends  on  the  Preferred
                                                   Stock will be payable only if
                                                   declared   by  the   Issuer?s
                                                   Board of Directors.  Upon any
                                                   such  declaration,  dividends
                                                   are payable in cash, at a per
                                                   annum   rate   equal  to  the
                                                   Dividend    Rate    of    the
                                                   liquidation       preference.
                                                   Dividends  will be cumulative
                                                   and will  accumulate from the
                                                   date of issuance.

Voting                                             The  Preferred  Stock will be
                                                   non-voting,     except     as
                                                   otherwise required by law and
                                                   except in  certain  customary
                                                   circumstances,      including
                                                   amendments  to the  rights of
                                                   the holders of the  Preferred
                                                   Stock  and  the  creation  of
                                                   equivalent     and     senior
                                                   securities.

Ranking                                            The   Preferred   Stock  will
                                                   rank,  with  respect  to  the
                                                   dividend  rights,  redemption
                                                   and    distributions     upon
                                                   liquidation,  winding-up  and
                                                   dissolution  of  the  Issuer,
                                                   senior  to  all   classes  of
                                                   common  stock  of the  Issuer
                                                   and to  the  Class  C  Junior
                                                   Preferred Stock and junior to
                                                   the Class A Senior  Preferred
                                                   Stock.

Covenants
The Issuer may not repurchase,  redeem or otherwise acquire or retire securities
of  equal  or  junior  ranking,   other  than   repurchases  of  employee  stock
substantially  on the same basis as provided for in the Issuer?s  Class A Senior
Preferred Stock; the Issuer may not permit any subsidiary to make any payment or
distribution  on  securities  of the Issuer that the Issuer would be  prohibited
from making itself.

Remedies                                           Until  all  Non-Sponsor  Debt
                                                   (as defined in Exhibit C) has
                                                   been  paid  or  purchased  in
                                                   full   in   cash    and   the
                                                   Commitments  under the Credit
                                                   Agreement   shall  have  been
                                                   terminated,  holders  of  the
                                                   Preferred   Stock   may   not
                                                   exercise  remedies other than
                                                   increasing     pricing    and
                                                   acceleration.

------------------------------------------------------------------------------

<PAGE>

                                    Exhibit C

                  Illustrative Terms of Intercreditor Agreement

o    All payments or prepayments  of principal or interest on the  participation
     interests of the Sponsor,  the Partners and/or their respective  Affiliates
     (collectively,  the "Sponsor Lenders") in the Credit Party Obligations (the
     "Sponsor  Participation  Interests")  received  by the Agent or the Sponsor
     Lenders shall be used to purchase additional  participation  interests from
     the Lenders other than the Sponsor Lenders (collectively,  the "Non-Sponsor
     Lenders") in the Credit Party  Obligations held by the Non-Sponsor  Lenders
     (the  "Non-Sponsor  Debt")  until  the  Non-Sponsor  Debt has been  paid or
     purchased  in full in cash,  no  Letters  of Credit or Tranche C Letters of
     Credit shall be outstanding and the Commitments  under the Credit Agreement
     shall have been terminated.

o    Interest on the Sponsor Participation Interests shall be PIK only until all
     Non-Sponsor  Debt has been paid or purchased in full in cash, no Letters of
     Credit  or  Tranche  C  Letters  of  Credit  shall be  outstanding  and the
     Commitments under the Credit Agreement shall have been terminated.

o    Until all  Non-Sponsor  Debt has been paid or purchased in full in cash, no
     Letters of Credit or Tranche C Letters of Credit shall be  outstanding  and
     the Commitments under the Credit Agreement shall have been terminated,  the
     Sponsor  Lenders  shall have no voting  rights in  respect  of the  Sponsor
     Participation Interests.

o    Until  the  date 91 days  after  all  Non-Sponsor  Debt  has  been  paid or
     purchased  in full in cash,  no  Letters  of Credit or Tranche C Letters of
     Credit shall be outstanding and the Commitments  under the Credit Agreement
     shall have been  terminated,  the Sponsor Lenders shall not take any action
     in their  capacity as holders of the  Sponsor  Participation  Interests  to
     initiate  an  involuntary  bankruptcy  proceeding  in respect of any Credit
     Party.

o    The  Non-Sponsor  Lenders  shall have the right,  if not  exercised  by the
     Sponsor  Lenders,  to file proofs of claim (and any notice of assignment of
     the right to receive  payments)  in respect  of the  Sponsor  Participation
     Interests in any bankruptcy proceeding in respect of any Credit Party.

o    In  any  bankruptcy   proceeding  in  respect  of  any  Credit  Party,  the
     Non-Sponsor Lenders shall be entitled to payment in full in cash before the
     Sponsor Lenders, in their capacity as holders of the Sponsor  Participation
     Interests,  shall be entitled to receive any  payments,  property or assets
     (other than (i) debt  securities  having payment terms no more favorable to
     the  Sponsor  Lenders  vis-a-vis  the  Non-Sponsor  Lenders  than the terms
     provided  in  this  Exhibit  C and  (ii)  equity  securities  that  are not
     redeemable  for  cash,  and in  respect  of  which  no cash  dividends  are
     payable),  until all  Non-Sponsor  Debt has been  paid in full in cash,  no
     Letters of Credit or Tranche C Letters of Credit shall be  outstanding  and
     the Commitments under the Credit Agreement shall have been terminated.

o    Any payments received by the Sponsor Lenders,  in their capacity as holders
     of the Sponsor Participation  Interests,  in contravention of the foregoing
     provisions  shall  be held in  trust  for the  benefit  of the  Non-Sponsor
     Lenders,  and immediately  turned over to, the Agent for the benefit of the
     Non-Sponsor Lenders.

o    Until the Credit Party  Obligations  have been paid or purchased in full in
     cash,  no  Letters  of Credit  or  Tranche  C  Letters  of Credit  shall be
     outstanding  and the  Commitments  under  the  Credit  Agreement  have been
     terminated,  in any  reorganization  proceeding  in  respect  of any Credit
     Party,  the Non-Sponsor  Lenders shall be entitled to approve (on behalf of
     the  Sponsor  Lenders,   in  their  capacity  as  holders  of  the  Sponsor
     Participation Interests) the use of cash collateral by such Credit Party.

o    Until the Credit Party  Obligations  have been paid or purchased in full in
     cash,  no  Letters  of Credit  or  Tranche  C  Letters  of Credit  shall be
     outstanding  and the  Commitments  under  the  Credit  Agreement  have been
     terminated,  in any  bankruptcy  proceeding in respect of any Credit Party,
     the  Sponsor  Lenders,   in  their  capacity  as  holders  of  the  Sponsor
     Participation   Interests,   shall  not  (i)  vote   against  any  plan  of
     reorganization or liquidation  supported by the Non-Sponsor Lenders or (ii)
     vote  for  any  plan  of  reorganization  or  liquidation  opposed  by  the
     Non-Sponsor Lenders.

     o Until the Credit Party Obligations have been paid or purchased in full in
     cash,  no  Letters  of Credit  or  Tranche  C  Letters  of Credit  shall be
     outstanding  and the  Commitments  under  the  Credit  Agreement  have been
     terminated,  in any  bankruptcy  proceeding in respect of any Credit Party,
     (i) the  Sponsor  Lenders,  in their  capacity  as holders  of the  Sponsor
     Participation  Interests,  shall not file any motion,  application or other
     pleading seeking affirmative  relief,  including without limitation for the
     appointment  of a trustee or examiner,  for the conversion of the case to a
     liquidation  proceeding,  for the substantive  consolidation of such Credit
     Party's bankruptcy case with the case of any other entity, for the creation
     of a separate official  committee  representing only the Sponsor Lenders or
     any other form of  affirmative  relief of any other kind or nature and (ii)
     the  Sponsor  Lenders,   in  their  capacity  as  holders  of  the  Sponsor
     Participation  Interests,  shall not file any objection or other responsive
     pleading opposing any relief requested by the Non-Sponsor  Lenders.  o If a
     Bankruptcy  Event shall occur with  respect to the Parent or the  Borrower,
     the Sponsor Lenders shall, subject to obtaining any necessary consents from
     the holders of the Senior  Subordinated  Debt or as  otherwise  required by
     law,  take such action as the Agent shall  reasonably  request to cause the
     Sponsor  Participation  Interests  to  rank  pari  passu  with  the  Senior
     Subordinated Debt.

<PAGE>

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