Document:

LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                        CLUETT AMERICAN RECEIVABLES, LLC

     This Limited  Liability  Company  Agreement  (together  with the  schedules
attached hereto, and as amended,  restated or supplemented or otherwise modified
from time to time, this  "Agreement") of Cluett American  Receivables,  LLC (the
"Company"),   is  entered  into  by  Great  American  Knitting  Mills,  Inc.  (a
wholly-owned  subsidiary of Cluett American Corp. (the  "Parent")),  as the sole
equity member (the  "Member"),  and Dwight Jenkins and Lori Rezza as the Special
Members (as defined on Schedule A hereto).

     The Member,  by execution of this Agreement,  hereby forms the Company as a
limited  liability  company  pursuant  to and in  accordance  with the  Delaware
Limited Liability Company Act (6 Del. C. ' 18-101 et seq.), as amended from time
to time (the "Act"), and this Agreement, and the Member, Dwight Jenkins and Lori
Rezza hereby agree as follows:

Section 1.        Name.

     The name of the limited  liability company formed hereby is Cluett American
Receivables, LLC.

Section 2.        Principal Business Office.

     The principal  business office of the Company shall be located at 661 Plaid
Street,  Burlington,  NC  27215  or such  other  location  as may  hereafter  be
determined by the Member.

Section 3.        Registered Office.

     The  address  of the  registered  office  of the  Company  in the  State of
Delaware is c/o The  Corporation  Trust Company,  Corporate  Trust Center,  1209
Orange Street, Wilmington, New Castle County, Delaware 19801.

Section 4.        Registered Agent.

     The name and address of the registered  agent of the Company for service of
process  on the  Company  in the  State of  Delaware  is The  Corporation  Trust
Company,  Corporate  Trust Center,  1209 Orange Street,  Wilmington,  New Castle
County, Delaware 19801.

Section 5.        Members.

     (a) The  mailing  address of the Member is set forth on Schedule B attached
hereto.  The Member was  admitted to the Company as a member of the Company upon
its execution of a counterpart signature page to this Agreement.

     (b) Subject to Section 9(j), the Member may act by written consent.

     (c) Upon the  occurrence of any event that causes the Member to cease to be
a member of the Company  (other than (i) upon an assignment by the Member of all
of its limited  liability  company  interest in the Company and the admission of
the  transferee  pursuant to Sections 21 and 23, or (ii) the  resignation of the
Member and the  admission  of an  additional  member of the Company  pursuant to
Sections 22 and 23), each person acting as an  Independent  Manager  pursuant to
Section 10 shall,  without any action of any Person and simultaneously  with the
Member ceasing to be a member of the Company,  automatically  be admitted to the
Company as a Special Member and shall continue the Company without  dissolution.
No Special  Member may resign from the Company or transfer its rights as Special
Member unless (i) a successor Special Member has been admitted to the Company as
Special  Member by  executing a  counterpart  to this  Agreement,  and (ii) such
successor has also accepted its appointment as an Independent  Manager  pursuant
to Section 10; provided,  however, the Special Members shall automatically cease
to be members (but not  Independent  Managers) of the Company upon the admission
to the Company of a substitute Member.  Each Special Member shall be a member of
the  Company  that has no  interest  in the  profits,  losses and capital of the
Company  and has no  right to  receive  any  distributions  of  Company  assets.
Pursuant to Section 18-301 of the Act, a Special Member shall not be required to
make any  capital  contributions  to the Company and shall not receive a limited
liability company interest in the Company.  A Special Member, in its capacity as
Special  Member,  may not bind the Company.  Except as required by any mandatory
provision of the Act, each Special  Member,  in its capacity as Special  Member,
shall have no right to vote on,  approve or otherwise  consent to any action by,
or matter relating to, the Company,  including,  without limitation, the merger,
consolidation or conversion of the Company.  In order to implement the admission
to the Company of each  Special  Member,  each person  acting as an  Independent
Manager  pursuant to Section 10 shall execute a counterpart  to this  Agreement.
Prior to its admission to the Company as Special  Member,  each person acting as
an  Independent  Manager  pursuant  to  Section  10 shall not be a member of the
Company.

Section 6.        Certificates.

     James G. Leyden, Jr. is hereby designated as an "authorized  person" within
the meaning of the Act, and has executed, delivered and filed the Certificate of
Formation of the Company  with the  Secretary of State of the State of Delaware.
Upon the filing of the  Certificate  of Formation with the Secretary of State of
the State of Delaware,  his powers as an  "authorized  person"  ceased,  and the
Member thereupon became the designated "authorized person" and shall continue as
the  designated  "authorized  person"  within the meaning of the Act. The Member
shall  execute,  deliver  and file any other  certificates  (and any  amendments
and/or restatements thereof) necessary for the Company to qualify to do business
in North Carolina and in any other jurisdiction in which the Company may wish to
conduct business.

     The  existence of the Company as a separate  legal  entity  shall  continue
until cancellation of the Certificate of Formation as provided in the Act.

Section 7.        Purposes.

     The purpose to be  conducted or promoted by the Company is to engage in the
following activities:

     (a)

     (i) to  purchase  from time to time,  pursuant  to a  receivables  transfer
agreement  between the Company  and the Member,  current and future  receivables
(the  "Receivables") and other rights,  assets and property of the Member and to
transfer or sell the Receivables  and such other rights,  assets and property to
commercial  banks,  financial  institutions  other  purchasers  pursuant  to  an
agreement therewith;

     (ii) to acquire,  own, hold, sell,  transfer,  service,  convey,  safekeep,
dispose  of,  pledge,  assign,  borrow  money  against,  finance,  refinance  or
otherwise  deal with,  publicly or privately  and whether with  unrelated  third
parties or with affiliated  entities,  the Receivables and other rights,  assets
and property;

     (iii) to engage in any lawful act or activity  and to  exercise  any powers
permitted to limited liability  companies  organized under the laws of the State
of Delaware  that are related or  incidental  to and  necessary,  convenient  or
advisable for the accomplishment of the above-mentioned  purposes (including the
entering into of interest rate or basis swap,  cap, floor or collar  agreements,
currency  exchange  agreements  or similar  hedging  transactions  and referral,
management, servicing and administration agreements).

     (b) The  Company  may enter into and  perform  any  documents,  agreements,
certificates or financing  statements  relating to the transactions set forth in
paragraph (a) above,  all without any further act, vote or approval of any other
Person  notwithstanding  any  other  provision  of  this  Agreement,  the Act or
applicable  law, rule or regulation.  The foregoing  authorization  shall not be
deemed a restriction on the powers of the Member to enter into other  agreements
on behalf of the Company.

Section 8.        Powers.

     Subject to Section 9(j), the Company (i) shall have and exercise all powers
necessary,  convenient or incidental to accomplish  its purposes as set forth in
Section  7 and (ii)  shall  have  and  exercise  all of the  powers  and  rights
conferred upon limited liability companies formed pursuant to the Act.

Section 9.        Management.

     (a) Board of Directors.  Subject to Section 9(j),  the business and affairs
of the Company  shall be managed by or under the  direction of a Board of one or
more Directors  designated by the Member.  Subject to Section 10, the Member may
determine  at any  time in its  sole  and  absolute  discretion  the  number  of
Directors to constitute  the Board.  The  authorized  number of Directors may be
increased  or  decreased  by the  Member  at any time in its  sole and  absolute
discretion,  upon notice to all  Directors,  and subject in all cases to Section
10.  The  initial  number of  Directors  shall be one.  Each  Director  elected,
designated  or  appointed  by the Member  shall hold office until a successor is
elected and  qualified  or until such  Director's  earlier  death,  resignation,
expulsion or removal.  Each Director  shall  execute and deliver the  Management
Agreement.  Directors need not be a Member. The initial Directors  designated by
the Member are listed on Schedule D hereto.

     (b) Powers.  Subject to Section 9(j), the Board of Directors shall have the
power to do any and all acts  necessary,  convenient or incidental to or for the
furtherance of the purposes described herein, including all powers, statutory or
otherwise.  Subject to Section 7, the Board of  Directors  has the  authority to
bind the Company.  A Director is hereby designated as a "manager" of the Company
within the meaning of Section 18-101(10) of the Act.

     (c)  Meeting  of the  Board of  Directors.  The Board of  Directors  of the
Company may hold meetings, both regular and special, within or outside the State
of Delaware.  Regular  meetings of the Board may be held without  notice at such
time and at such  place as shall from time to time be  determined  by the Board.
Special  meetings of the Board may be called by the  President  on not less than
one day's notice to each Director by telephone, facsimile, mail, telegram or any
other  means of  communication,  and  special  meetings  shall be  called by the
President  or  Secretary  in like  manner and with like  notice upon the written
request of any one or more of the  Directors.  The Board of Directors may act by
written consent.

     (d) Quorum:  Acts of the Board. At all meetings of the Board, a majority of
the Directors  shall  constitute a quorum for the  transaction  of business and,
except as otherwise  provided in any other provision of this Agreement,  the act
of a majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Board.  If a quorum  shall not be present at any meeting
of the Board, the Directors present at such meeting may adjourn the meeting from
time to time,  without notice other than  announcement  at the meeting,  until a
quorum  shall be present.  Any action  required or  permitted to be taken at any
meeting of the Board or of any committee  thereof may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing,  and the writing or writings are filed with the minutes of  proceedings
of the Board or committee, as the case may be.

     (e)  Electronic  Communications.  Members  of the Board,  or any  committee
designated  by the Board,  may  participate  in  meetings  of the Board,  or any
committee, by means of telephone conference or similar communications  equipment
that allows all  persons  participating  in the meeting to hear each other,  and
such  participation  in a meeting  shall  constitute  presence  in person at the
meeting.  If all the participants are  participating by telephone  conference or
similar communications  equipment, the meeting shall be deemed to be held at the
principal place of business of the Company.

     (f)      Committees of Directors.

     (i) The Board may, by  resolution  passed by a majority of the whole Board,
designate one or more  committees,  each  committee to consist of one or more of
the Directors of the Company.  The Board may designate one or more  Directors as
alternate  members of any committee,  who may replace any absent or disqualified
member at any meeting of the committee.

     (ii) In the absence or  disqualification  of a member of a  committee,  the
member or members  thereof  present at any  meeting  and not  disqualified  from
voting, whether or not such members constitute a quorum, may unanimously appoint
another  member  of the  Board to act at the  meeting  in the  place of any such
absent or disqualified member.

     (iii) Any such  committee,  to the extent provided in the resolution of the
Board,  shall have and may exercise all the powers and authority of the Board in
the  management  of the business and affairs of the Company.  Such  committee or
committees  shall have such name or names as may be determined from time to time
by resolution adopted by the Board. Each committee shall keep regular minutes of
its meetings and report the same to the Board when required.

     (g) Compensation of Directors; Expenses. The Board shall have the authority
to fix the compensation of Directors.  The Directors may be paid their expenses,
if any, of  attendance  at  meetings of the Board,  which may be a fixed sum for
attendance at each meeting of the Board or a stated salary as Director.  No such
payment  shall  preclude  any  Director  from  serving  the Company in any other
capacity and  receiving  compensation  therefor.  Members of special or standing
committees may be allowed like compensation for attending committee meetings.

     (h) Removal of Directors.  Unless otherwise restricted by law, any Director
or the entire  Board of Directors  may be removed or  expelled,  with or without
cause, at any time by the Member,  and any vacancy caused by any such removal or
expulsion may be filled by action of the Member.

     (i)  Directors  as Agents.  To the extent of their powers set forth in this
Agreement and subject to Section  9(j),  the Directors are agents of the Company
for the purpose of the  Company's  business,  and the  actions of the  Directors
taken in accordance  with such powers set forth in this Agreement shall bind the
Company.  Notwithstanding the last sentence of Section 18-402 of the Act, except
as provided in this  Agreement or in a resolution of the  Directors,  a Director
may not bind the Company.

     (j)      Limitations on the Company's Activities.

     (i) This  Section  9(j) is being  adopted in order to comply  with  certain
provisions  required  in order to qualify  the  Company  as a "special  purpose"
entity.

     (ii) The Member shall not, prior to the date which is one year and one date
after the date on which  all  obligations  of the  Company  under the  documents
referred to in Section 7(a)(i) have been paid in full, amend,  alter,  change or
repeal the definition of "Independent" or Sections 5(c), 7, 8, 10, 20, or 31 (or
Schedule A of this  Agreement to the extent such  modification  would affect the
foregoing  provisions)  without  the prior  written  consent of the  Independent
Managers.  Subject to this Section 9(j), the Member reserves the right to amend,
alter, change or repeal any provisions contained in this Agreement in accordance
with Section 31.

     (iii)  Notwithstanding  any  other  provision  of  this  Agreement  and any
provision of law that otherwise so empowers the Company,  the Member, the Board,
any Officer or any other Person, none of the Company, the Member or the Board or
any Officer or any other Person shall be authorized or empowered, nor shall they
permit the  Company,  to take any of the  following  actions  without  the prior
written consent of the Independent Managers:

     1.  File  or  consent  to the  filing  of  any  bankruptcy,  insolvency  or
reorganization  petition  naming the  Company as debtor or  otherwise  institute
bankruptcy or insolvency proceedings by or against the Company or otherwise seek
with respect to the Company  relief  under any laws  relating to the relief from
debts or the protection of debtors generally;

     2.  Seek  or  consent  to  the  appointment  of  a  receiver,   liquidator,
conservator, assignee, trustee, sequestrator,  custodian or any similar official
for the Company or all or any portion of any of its properties;

     3. Make or  consent to any  assignment  for the  benefit  of the  Company's
creditors;

     4. Take any action that might  reasonably  be expected to cause the Company
to become insolvent;

     5. Admit in writing the inability of the Company to pay its debts generally
as they become due;

     Except as  contemplated  by the documents  referred to in Section  7(a)(i),
engage in any transactions with an Affiliate of the Company;

     Consent to substantive consolidation with the Member or the Parent;

     Declare or permit any  distribution to the Member other than out of legally
available  funds or otherwise in accordance  with the  documents  referred to in
Section 7(a)(i); or

     Take any action in furtherance of any of the preceding actions.

     (iv) The Board and the Member  shall cause the Company to do or cause to be
done all  things  necessary  to  preserve  and keep in full force and effect its
existence,  rights  (charter and statutory) and franchises;  provided,  however,
that the Company  shall not be required to preserve  any such right or franchise
following  the date  which is one year and one date  after the date on which all
obligations  of the Company under the documents  referred to in Section  7(a)(i)
have  been  paid in full if the  Board  shall  determine  that the  preservation
thereof is no longer desirable for the conduct of its business and that the loss
thereof is not  disadvantageous  in any  material  respect to the  Company.  The
Company shall, and the Board shall cause the Company to:

     1. At all times have at least two Independent Managers.

     2.  At all  times  have  sufficient  personnel  to  run  its  business  and
operations.  Compensate its employees (if any) from its own available  funds for
services  provided to it. In the event  employees of the Company  participate in
pension,  insurance  and other  benefit plans of the Member or the Parent or any
Affiliates  of the Member or the  Parent,  the Company  will on a current  basis
reimburse the Member, the Parent or the relevant Affiliate,  as the case may be,
for its pro rata share of the costs thereof.

     3. Pay its own liabilities out of its own funds and assets.

     4.  Maintain a separate  office (a) which if leased  from the Member or the
Parent will be on terms no more or less  favorable  to the Company than could be
obtained in a comparable  arm's-length  transaction with an unaffiliated  Person
and (b) which will be conspicuously identified as the Company's office so it can
be  easily  located  by  outsiders.  The  Company  will use its own  stationery,
invoices, checks and telephone and facsimile numbers.

     5. The Company will hold itself out and  identify  itself as a separate and
distinct  entity  under its own name and not as a division  or part of any other
Person.

     6. The Company will  promptly  correct any  misunderstanding  regarding its
separate existence and identity.

     7. The Company will  prepare and maintain its own full and complete  books,
records and financial  statements  separate from any other Person. The Company's
financial statements will comply with generally accepted accounting principles.

     8. The Company will maintain a bank account in its name.

     9. Except for the  servicing of the  Receivables  pursuant to the documents
referred to in Section 7(a)(i),  all business  transactions  entered into by the
Company with any of its Affiliates will be on terms that are intrinsically  fair
and not more or less  favorable to the  Company,  as the case may be, than terms
and conditions available at the time to the Company for comparable  arm's-length
transactions with unaffiliated Persons.

     10. The Company will not assume or guarantee or become  obligated for debts
of the Member or the Parent and neither the Member nor the Parent will assume or
guarantee  or become  obligated  for the  debts of the  Company,  other  than as
provided in the documents  referred to in Section 7(a)(i).  The Company will not
hold its credit out as being  available to satisfy the  obligations of any other
Persons.

     11. The Company will not acquire  obligations  or securities of the Member,
the Parent or any of their  respective  Affiliates.  The  Company  will not make
loans to the Member or the Parent.

     12. Except to the limited extent  provided in the documents  referred to in
Section 7(a)(i), the Company will not commingle any of its money or other assets
with the money or assets of the Member or the Parent.  The  Company  will ensure
that  its  funds  will  be  clearly  traceable  at each  step  in any  financial
transaction.

     13. The Company will engage in transactions  and conduct all other business
activities  solely in its own name and through its own  authorized  officers and
agents and will present  itself to the public as a separate  company.  Except to
the limited  extent  provided in the documents  referred to in Section  7(a)(i),
neither the Member nor the Parent will be appointed agent of the Company.

     14.  The  Company  will  not  engage  in any  transaction  with  any of its
Affiliates involving any intent to hinder, delay or defraud any Person.

     Failure of the  Company or the Member or the Board on behalf of the Company
to comply with any of the foregoing  covenants or any other covenants  contained
in this Agreement shall not affect the status of the Company as a separate legal
entity or the limited liability of the Member or the Directors.

     (v)  Prior to the date  which  is one year and one date  after  the date on
which all obligations of the Company under the documents  referred to in Section
7(a)(i) have been paid in full,  the Company  shall not and the Member shall not
cause or permit the Company to:

     1. Except as contemplated by the documents  referred to in Section 7(a)(i),
guarantee any obligation of any Person, including any Affiliate;

     2. Engage,  directly or indirectly,  in any business other than the actions
required or permitted to be performed under Section 7 or this Section 9(j);

     3.  Incur,  create or  assume  any  indebtedness  other  than as  expressly
permitted under the documents referred to in Section 7(a)(i);

     4. Make or permit to remain outstanding  any loan or advance  to, or own or
acquire  any stock or  securities  of, any  Person,  except that the Company may
invest in those investments permitted under the documents referred to in Section
7(a)(i);

     5. To the  fullest  extent  permitted  by law,  engage in any  dissolution,
liquidation,   consolidation,  merger,  asset  sale  or  transfer  of  ownership
interests other than such activities as are expressly  permitted pursuant to any
provision of the documents referred to in Section 7(a)(i); or

     6. Form, acquire or hold any subsidiary  (whether  corporate,  partnership,
limited liability company or other).

Section 10.       Independent Managers.

     Prior to the date  which is one year and one date  after  the date on which
all  obligations  of the  Company  under the  documents  referred  to in Section
7(a)(i) have been paid in full,  the Member shall cause the Company at all times
to have at least two managers,  appointed by the Member, who will be (x) natural
persons  and (y)  Independent  (each,  an  "Independent  Manager").  The initial
Independent  Managers appointed by the Member are Dwight Jenkins and Lori Rezza.
Each  Independent  Manager is hereby  designated  as a "manager"  of the Company
within the meaning of Section  18-101(10) of the Act. Each  Independent  Manager
shall execute and deliver the Management Agreement.

     To the fullest extent permitted by law, including Section 18-1101(c) of the
Act, the Independent  Managers shall consider only the interests of the Company,
including its respective creditors, in acting or otherwise voting on the matters
referred to in Section 9(j)(iii).

     The  Independent  Managers  may be removed  by the  Member at any time.  No
resignation  or removal of an  Independent  Manager  shall be effective  until a
successor  Independent  Manager is appointed  and such  successor (i) shall have
accepted  his  or  her  appointment  as  an  Independent  Manager  by a  written
instrument,  which  may  be a  counterpart  signature  page  to  the  Management
Agreement,  and (ii) shall have  executed a  counterpart  to this  Agreement  as
required  by  Section  5(c).  In the event of a vacancy  in the  position  of an
Independent  Manager,  the  Member  shall,  as soon as  practicable,  appoint  a
successor Independent Manager.

     All right, power and authority of the Independent Managers shall be limited
to the extent  necessary  to  exercise  those  rights and perform  those  duties
specifically  set forth in this  Agreement.  Except as  provided  in the  second
paragraph of this Section 10, in exercising its rights and performing its duties
under this Agreement,  each  Independent  Manager shall have a fiduciary duty of
loyalty  and  care  similar  to that of a  director  of a  business  corporation
organized  under  the  General  Corporation  Law of the  State of  Delaware.  No
Independent  Manager  shall at any time serve as trustee in  bankruptcy  for the
Company or any Affiliate of the Company.

Section 11.       Officers.

     (a)  Officers.  The initial  Officers of the Company shall be designated by
the Member.  The additional or successor Officers of the Company shall be chosen
by the  Board and shall  consist  of at least a  President,  a  Secretary  and a
Treasurer.  The Board of Directors may also choose one or more Vice  Presidents,
Assistant  Secretaries  and Assistant  Treasurers.  Any number of offices may be
held by the same person.  The Board shall choose a President,  a Secretary and a
Treasurer. The Board may appoint such other Officers and agents as it shall deem
necessary  or  advisable  who shall hold their  offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board.  The salaries of all Officers and agents of the Company shall
be fixed by or in the  manner  prescribed  by the  Board.  The  Officers  of the
Company shall hold office until their  successors are chosen and qualified.  Any
Officer may be removed at any time,  with or without cause,  by the  affirmative
vote of a majority  of the Board.  Any  vacancy  occurring  in any office of the
Company  shall be filled by the  Board.  The  initial  Officers  of the  Company
designated by the Member are listed on Schedule E hereto.

     (b) President.  The President shall be the chief  executive  officer of the
Company,  shall preside at all meetings of the Board,  shall be responsible  for
the general and active  management  of the business of the Company and shall see
that all  orders and  resolutions  of the Board are  carried  into  effect.  The
President or any other  Officer  authorized  by the President or the Board shall
execute all bonds, mortgages and other contracts,  except: (i) where required or
permitted  by law  or  this  Agreement  to be  otherwise  signed  and  executed,
including  Section  7(b);  (ii) where  signing and  execution  thereof  shall be
expressly  delegated by the Board to some other Officer or agent of the Company,
and (iii) as otherwise permitted in Section 11(c).

     (c) Vice President.  In the absence of the President or in the event of the
President's inability to act, the Vice President,  if any (or in the event there
be more than one Vice President,  the Vice Presidents in the order designated by
the Directors, or in the absence of any designation,  then in the order of their
election),  shall perform the duties of the President, and when so acting, shall
have  all  the  powers  of and be  subject  to all  the  restrictions  upon  the
President. The Vice Presidents, if any, shall perform such other duties and have
such other powers as the Board may from time to time prescribe.

     (d) Secretary and Assistant  Secretary.  The Secretary shall be responsible
for  filing  legal  documents  and  maintaining  records  for the  Company.  The
Secretary  shall attend all meetings of the Board and record all the proceedings
of the  meetings  of the  Company and of the Board in a book to be kept for that
purpose and shall perform like duties for the standing committees when required.
The Secretary shall give, or shall cause to be given,  notice of all meetings of
the Member,  if any, and special  meetings of the Board,  and shall perform such
other duties as may be  prescribed  by the Board or the  President,  under whose
supervision the Secretary shall serve. The Assistant  Secretary,  or if there be
more than one, the Assistant  Secretaries  in the order  determined by the Board
(or if there be no such determination,  then in order of their election), shall,
in the absence of the Secretary or in the event of the Secretary's  inability to
act,  perform  the duties and  exercise  the powers of the  Secretary  and shall
perform  such other duties and have such other powers as the Board may from time
to time prescribe.

     (e) Treasurer and Assistant Treasurer. The Treasurer shall have the custody
of the Company funds and securities and shall keep full and accurate accounts of
receipts and  disbursements  in books belonging to the Company and shall deposit
all  moneys  and other  valuable  effects  in the name and to the  credit of the
Company in such  depositories  as may be designated by the Board.  The Treasurer
shall  disburse the funds of the Company as may be ordered by the Board,  taking
proper vouchers for such disbursements, and shall render to the President and to
the Board, at its regular meetings or when the Board so requires,  an account of
all of the  Treasurer's  transactions  and of  the  financial  condition  of the
Company.  The  Assistant  Treasurer,  or if there  shall be more than  one,  the
Assistant  Treasurers  in the order  determined  by the Board (or if there be no
such determination,  then in the order of their election), shall, in the absence
of the Treasurer or in the event of the  Treasurer's  inability to act,  perform
the duties and exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Board may from time to time prescribe.

     (f)  Officers as Agents.  The  Officers,  to the extent of their powers set
forth in this  Agreement or otherwise  vested in them by action of the Board not
inconsistent  with this Agreement,  are agents of the Company for the purpose of
the Company's business and, subject to Section 9(j), the actions of the Officers
taken in accordance with such powers shall bind the Company.

     (g) Duties of Board and Officers.  Except to the extent otherwise  provided
herein,  each  Director and Officer  shall have a fiduciary  duty of loyalty and
care  similar  to  that of  directors  and  officers  of  business  corporations
organized  under  the  General  Corporation  Law of the  State of  Delaware.  No
director  or officer  shall at any time serve as trustee in  bankruptcy  for any
Affiliate of the Company.

Section 12.       Limited Liability.

     Except as otherwise  expressly provided by the Act, the debts,  obligations
and liabilities of the Company,  whether arising in contract, tort or otherwise,
shall be the debts,  obligations  and  liabilities  solely of the  Company,  and
neither  the  Member,  the  Independent  Managers,  any  Special  Member nor any
Director  shall  be  obligated  personally  for any  such  debt,  obligation  or
liability  of the Company  solely by reason of being a Member,  Special  Member,
Independent Manager or Director of the Company.

Section 13.       Capital Contributions.

     The Member has  contributed  to the Company  property of an agreed value as
listed on Schedule B attached hereto.  In accordance with Section 5(c),  Special
Members shall not be required to make any capital contributions to the Company.

Section 14.       Additional Contributions.

     The Member is not required to make any additional  capital  contribution to
the Company.  However,  the Member may make additional capital  contributions to
the  Company at any time upon the written  consent of the Member.  To the extent
that the Member makes an additional  capital  contribution  to the Company,  the
Member  shall  revise  Schedule  B of this  Agreement.  The  provisions  of this
Agreement, including this Section 14, are intended to benefit the Member and the
Special  Members  and,  to the fullest  extent  permitted  by law,  shall not be
construed  as  conferring  any benefit  upon any creditor of the Company (and no
such  creditor  of the  Company  shall  be a  third-party  beneficiary  of  this
Agreement)  and the Member and the  Special  Members  shall not have any duty or
obligation  to any  creditor  of the  Company  to make any  contribution  to the
Company or to issue any call for capital pursuant to this Agreement. Section 15.
Allocation of Profits and Losses.

         The Company's profits and losses shall be allocated to the Member.

Section 16.       Distributions.

     Distributions shall be made to the Member at the times and in the aggregate
amounts determined by the Board.  Notwithstanding  any provision to the contrary
contained  in this  Agreement,  the  Company  shall  not be  required  to make a
distribution  to the Member on account of its  interest  in the  Company if such
distribution would violate Section 18-607 of the Act or any other applicable law
or any agreement referred to in Section 7(a)(i).

Section 17.       Books and Records.

     The Board shall keep or cause to be kept  complete  and  accurate  books of
account and records with  respect to the  Company's  business.  The books of the
Company shall at all times be  maintained by the Board.  The Member and its duly
authorized  representatives  shall have the right to examine the Company  books,
records and documents during normal business hours.  The Company,  and the Board
on behalf of the Company, shall not have the right to keep confidential from the
Member any  information  that the Board would  otherwise  be  permitted  to keep
confidential  from the Member  pursuant  to Section  18-305(c)  of the Act.  The
Company's  books of  account  shall  be kept  using  the  method  of  accounting
determined by the Member. The Company's independent auditor, if any, shall be an
independent public accounting firm selected by the Member.

Section 18.       Reports.

     (a) Within 60 days after the end of each  fiscal  quarter,  the Board shall
cause to be prepared an  unaudited  report  setting  forth as of the end of such
fiscal quarter:

     (i) unless such quarter is the last fiscal quarter,  a balance sheet of the
Company; and

     (ii) unless such quarter is the last fiscal quarter, an income statement of
the Company for such fiscal quarter.

     (b) The Board shall use diligent efforts to cause to be prepared and mailed
to the Member,  within 120 days after the end of each fiscal year, an audited or
unaudited report setting forth as of the end of such fiscal year:

     (i) a balance sheet of the Company;

     (ii) an income statement of the Company for such fiscal year; and

     (iii) a statement of the Member's capital account.

     (c) The Board  shall,  after the end of each fiscal  year,  use  reasonable
efforts to cause the Company's independent  accountants,  if any, to prepare and
transmit to the Member as promptly as possible any such tax  information  as may
be reasonably  necessary to enable the Member to prepare its federal,  state and
local income tax returns relating to such fiscal year.

Section 19.       Other Business.

     The Member, the Special Members, the Independent Managers and any Affiliate
of the Member,  Special Members or Independent Managers may engage in or possess
an interest in other business  ventures  (unconnected with the Company) of every
kind and description,  independently or with others.  The Company shall not have
any rights in or to such independent ventures or the income or profits therefrom
by virtue of this Agreement.

Section 20.       Exculpation and Indemnification.

     (a) Neither the Member, the Special Members,  the Independent  Managers nor
any agent of the Company nor any employee, representative, agent or Affiliate of
the Member, Special Members or Independent Managers (collectively,  the "Covered
Persons") shall be liable to the Company or any other Person who has an interest
in or claim against the Company for any loss, damage or claim incurred by reason
of any act or omission performed or omitted by such Covered Person in good faith
on behalf of the  Company and in a manner  reasonably  believed to be within the
scope of the  authority  conferred  on such  Covered  Person by this  Agreement,
except that a Covered Person shall be liable for any such loss,  damage or claim
incurred  by  reason  of such  Covered  Person's  gross  negligence  or  willful
misconduct.

     (b) To the fullest  extent  permitted by applicable  law, a Covered  Person
shall be entitled to  indemnification  from the Company for any loss,  damage or
claim incurred by such Covered Person by reason of any act or omission performed
or omitted by such Covered  Person in good faith on behalf of the Company and in
a manner reasonably  believed to be within the scope of the authority  conferred
on such Covered Person by this Agreement, except that no Covered Person shall be
entitled to be indemnified  in respect of any loss,  damage or claim incurred by
such  Covered  Person by reason of such Covered  Person's  gross  negligence  or
willful  misconduct with respect to such acts or omissions;  provided,  however,
that any indemnity under this Section 20 by the Company shall be provided out of
and to the extent of Company  assets only, and the Member,  the Special  Members
and the  Independent  Managers  shall not have  personal  liability  on  account
thereof; and provided further,  that prior to the date which is one year and one
date after the date on which all  obligations of the Company under the documents
referred  to in  Section  7(a)(i)  have been  paid in full,  no  payment  of any
indemnity  (or advance of expenses)  from funds of the Company (as distinct from
funds from other  sources,  such as  insurance)  under this  Section 20 shall be
payable  from  amounts  allocable  to any  other  Person  pursuant  to the  such
documents.

     (c) To the fullest extent permitted by applicable law, expenses  (including
legal fees) incurred by a Covered Person  defending any claim,  demand,  action,
suit or proceeding shall, from time to time, be advanced by the Company prior to
the final  disposition of such claim,  demand,  action,  suit or proceeding upon
receipt by the Company of an  undertaking  by or on behalf of the Covered Person
to repay such amount if it shall be  determined  that the Covered  Person is not
entitled to be indemnified as authorized in this Section 20.

     (d) A Covered Person shall be fully protected in relying in good faith upon
the  records of the  Company  and upon such  information,  opinions,  reports or
statements  presented  to the  Company by any Person as to matters  the  Covered
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Company, including information,  opinions, reports or statements as to the value
and amount of the  assets,  liabilities,  or any other  facts  pertinent  to the
existence  and amount of assets  from which  distributions  to the Member  might
properly be paid.

     (e) To the extent that,  at law or in equity,  a Covered  Person has duties
(including  fiduciary duties) and liabilities relating thereto to the Company or
to any other Covered Person,  a Covered Person acting under this Agreement shall
not be liable to the Company or to any other  Covered  Person for its good faith
reliance on the  provisions of this  Agreement or any approval or  authorization
granted by the  Company or any other  Covered  Person.  The  provisions  of this
Agreement,  to the extent that they  restrict  the duties and  liabilities  of a
Covered Person otherwise  existing at law or in equity, are agreed by the Member
and the Special  Members to replace  such other duties and  liabilities  of such
Covered Person.

     (f)  The  foregoing  provisions  of  this  Section  20  shall  survive  any
termination of this Agreement.

Section 21.       Assignments.

     Subject  to  Section  23,  the  Member  may  assign in whole or in part its
limited liability  company interest in the Company.  If the Member transfers all
of its  limited  liability  company  interest  in the  Company  pursuant to this
Section 21, the  transferee  shall be admitted to the Company as a member of the
Company upon its execution of an instrument signifying its agreement to be bound
by the  terms  and  conditions  of this  Agreement,  which  instrument  may be a
counterpart  signature page to this  Agreement.  Such admission  shall be deemed
effective  immediately  prior to the transfer and,  immediately  following  such
admission,  the  transferor  Member  shall cease to be a member of the  Company.
Notwithstanding anything in this Agreement to the contrary, any successor to the
Member by merger or  consolidation in compliance with the documents set forth in
Section 7(a)(i) shall,  without further act, be the Member  hereunder,  and such
merger or consolidation  shall not constitute an assignment for purposes of this
Agreement and the Company shall continue without dissolution.

Section 22.       Resignation.

     Prior to the date which is one year and one day after the date on which all
obligations of the Company under the documents  referred to in Section 7(a) have
been paid in full,  the Member may not resign,  except as  permitted  under such
documents.  If the Member is permitted to resign pursuant to this Section 22, an
additional  member of the Company  shall be admitted to the Company,  subject to
Section 23, upon its execution of an instrument  signifying  its agreement to be
bound by the terms and conditions of this Agreement,  which  instrument may be a
counterpart  signature page to this  Agreement.  Such admission  shall be deemed
effective  immediately prior to the resignation and, immediately  following such
admission, the resigning Member shall cease to be a member of the Company.

Section 23.       Admission of Additional Members.

     One or more  additional  members  of the  Company  may be  admitted  to the
Company with the written consent of the Member.

Section 24.       Dissolution.

     (a)  Subject to Section  9(j),  the  Company  shall be  dissolved,  and its
affairs  shall be wound up upon  the  first to occur of the  following:  (i) the
termination of the legal  existence of the last remaining  member of the Company
or the occurrence of any other event which  terminates the continued  membership
of the last  remaining  member of the Company in the Company unless the business
of the Company is continued in a manner  permitted by this  Agreement or the Act
or (ii) the entry of a decree of judicial  dissolution  under Section  18-802 of
the Act. Upon the occurrence of any event that causes the last remaining  member
of the Company to cease to be a member of the  Company,  to the  fullest  extent
permitted  by  law,  the  personal  representative  of  such  member  is  hereby
authorized to, and shall,  within 90 days after the occurrence of the event that
terminated  the  continued  membership  of such member in the Company,  agree in
writing (i) to continue  the Company and (ii) to the  admission  of the personal
representative  or its nominee or designee,  as the case may be, as a substitute
member  of the  Company,  effective  as of the  occurrence  of  the  event  that
terminated the continued  membership in the Company of the last remaining member
of the Company.

     (b) Notwithstanding  any other provision of this Agreement,  the Bankruptcy
of the  Member or the  Special  Members  shall not cause the  Member or  Special
Members,  respectively,  to  cease to be a member  of the  Company  and upon the
occurrence of such an event,  the business of the Company shall continue without
dissolution.

     (c) In the  event of  dissolution,  the  Company  shall  conduct  only such
activities  as are necessary to wind up its affairs  (including  the sale of the
assets of the Company in an orderly manner), and the assets of the Company shall
be applied in the  manner,  and in the order of  priority,  set forth in Section
18-804 of the Act.

     (d) The Company shall  terminate when (i) all of the assets of the Company,
after payment of or due provision for all debts,  liabilities and obligations of
the Company shall have been distributed to the Member in the manner provided for
in this Agreement and (ii) the Certificate of Formation shall have been canceled
in the manner required by the Act.

Section 25.       Waiver of Partition; Nature of Interest.

     Except as otherwise  expressly  provided in this Agreement,  to the fullest
extent  permitted  by law,  each of the Member and the  Special  Members  hereby
irrevocably  waives any right or power that such Person  might have to cause the
Company or any of its assets to be  partitioned,  to cause the  appointment of a
receiver for all or any portion of the assets of the Company, to compel any sale
of all or any  portion of the assets of the Company  pursuant to any  applicable
law or to file a complaint or to institute any proceeding at law or in equity to
cause the  dissolution,  liquidation,  winding up or termination of the Company.
The Member shall not have any  interest in any  specific  assets of the Company,
and the  Member  shall not have the  status of a  creditor  with  respect to any
distribution  pursuant to Section 16 hereof.  The  interest of the Member in the
Company is personal property.

Section 26.       Benefits of Agreement; No Third-Party Rights.

     None of the  provisions  of this  Agreement  shall be for the benefit of or
enforceable  by any  creditor of the Company or by any creditor of the Member or
the Special  Members.  Nothing in this  Agreement  shall be deemed to create any
right in any Person (other than Covered  Persons) not a party  hereto,  and this
Agreement  shall not be construed in any respect to be a contract in whole or in
part for the benefit of any third Person (except as provided in Section 29).

Section 27.       Severability of Provisions.

     Each provision of this Agreement  shall be considered  severable and if for
any reason any  provision or  provisions  herein are  determined  to be invalid,
unenforceable  or illegal  under any  existing or future law,  such  invalidity,
unenforceability or illegality shall not impair the operation of or affect those
portions of this Agreement which are valid, enforceable and legal.

Section 28.       Entire Agreement.

     This Agreement constitutes the entire agreement of the parties with respect
to the subject matter hereof.

Section 29.       Binding Agreement.

     Notwithstanding  any other provision of this  Agreement,  the Member agrees
that this  Agreement  constitutes  a legal,  valid and binding  agreement of the
Member,  and is enforceable  against the Member by the  Independent  Managers in
accordance with its terms.  In addition,  each  Independent  Manager shall be an
intended beneficiary of this Agreement.

Section 30.       Governing Law.

     This  Agreement  shall be governed by and  construed  under the laws of the
State of Delaware  (without regard to conflict of laws  principles),  all rights
and remedies being governed by said laws.

Section 31.       Amendments.

     Subject  to  Section  9(j),  this  Agreement  may  be  modified,   altered,
supplemented or amended pursuant to a written  agreement  executed and delivered
by the  Member  except  that no such  modification,  alteration,  supplement  or
amendment  may  modify,  alter,  supplement  or amend  the  rights,  duties  and
limitations of the Independent  Managers without the consent of each Independent
Manager.

Section 32.       Counterparts.

     This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original of this  Agreement and all of which  together  shall
constitute one and the same instrument.

Section 33.       Notices.

     Any notices  required  to be  delivered  hereunder  shall be in writing and
personally  delivered,  mailed  or sent by  telecopy,  electronic  mail or other
similar form of rapid transmission,  and shall be deemed to have been duly given
upon  receipt (a) in the case of the  Company,  to the Company at its address in
Section 2, (b) in the case of the Member, to the Member at its address as listed
on Schedule B attached hereto and (c) in the case of either of the foregoing, at
such other address as may be designated by written notice to the other party.

Section 34.       Effectiveness.

     Pursuant to Section 18-201(d) of the Act, this Agreement shall be effective
as of the time of the filing of the  Certificate of Formation with the Office of
the Delaware Secretary of State on May 8, 2000.

     IN WITNESS WHEREOF, the undersigned,  intending to be legally bound hereby,
has duly executed this Limited Liability Company Agreement as of the 12th day of
May, 2000.

                                             MEMBER:

                                             GREAT AMERICAN KNITTING MILLS, INC.

                                              By:_______________________________
                                              Name:
                                              Title:

                                              SPECIAL MEMBERS:

                                              --------------------
                                              Name: Dwight Jenkins

                                              --------------------
                                              Name: Lori Rezza

<PAGE>

                                   SCHEDULE A

                                   Definitions

A.       Definitions

     When used in this  Agreement,  the following  terms not  otherwise  defined
herein have the following meanings:

     "Act" has the meaning set forth in the preamble to this Agreement.

     "Affiliate" means, with respect to any Person, any other Person directly or
indirectly  Controlling  or  Controlled  by or under  direct or indirect  common
Control with such Person.

     "Bankruptcy" means, with respect to any Person, if such Person (i) makes an
assignment  for the benefit of  creditors,  (ii) files a  voluntary  petition in
bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against it
an order for relief, in any bankruptcy or insolvency  proceedings,  (iv) files a
petition  or  answer  seeking  for  itself  any   reorganization,   arrangement,
composition,  readjustment, liquidation or similar relief under any statute, law
or  regulation,  (v) files an answer or other  pleading  admitting or failing to
contest  the  material  allegations  of a  petition  filed  against  it  in  any
proceeding  of  this  nature,  (vi)  seeks,  consents  to or  acquiesces  in the
appointment of a trustee,  receiver or liquidator of the Person or of all or any
substantial part of its properties,  or (vii) if 120 days after the commencement
of any  proceeding  against  the  Person  seeking  reorganization,  arrangement,
composition,  readjustment, liquidation or similar relief under any statute, law
or regulation,  if the proceeding has not been  dismissed,  or if within 90 days
after the  appointment  without  such  Person's  consent  or  acquiescence  of a
trustee, receiver or liquidator of such Person or of all or any substantial part
of its properties,  the appointment is not vacated or stayed,  or within 90 days
after the  expiration  of any such stay,  the  appointment  is not vacated.  The
foregoing  definition of "Bankruptcy" is intended to replace and shall supersede
and replace the definition  of"Bankruptcy"  set forth in Sections  18-101(1) and
18-304 of the Act.

     "Board"  or  "Board of  Directors"  means  the  Board of  Directors  of the
Company.

     "Certificate  of  Formation"  means the  Certificate  of  Formation  of the
Company  filed with the  Secretary  of State of the State of  Delaware on May 8,
2000, as amended or amended and restated from time to time.

     "Company"  means  Cluett  American  Receivables,  LLC, a  Delaware  limited
liability company.

     "Control"  means the  possession,  directly or indirectly,  of the power to
direct or cause the direction of management, policies or activities of a Person,
whether through ownership of voting securities, by contract or otherwise.

     "Covered Persons" has the meaning set forth in Section 20(a).

     "Directors"  means the persons  elected to the Board of Directors from time
to time by the Member,  in their  capacity as managers of the Company within the
meaning of Section 18-101(10) of the Act.

     "Independent" means, with respect to a manager of the Company, a Person who
shall not have been at the time of such Person's  appointment,  and may not have
been at any time  during  the  preceding  five years and shall not be as long as
such  Person  is a manager  of the  Company  (i) a  director,  member,  officer,
manager, partner, shareholder or employee of the Member or any of its directors,
members, partners,  subsidiaries,  shareholders or Affiliates (collectively, the
"Independent Parties"), (ii) a supplier to any of the Independent Parties, (iii)
a person  Controlling  or under  common  Control  with any  directors,  members,
partners,  shareholder or supplier of any of the  Independent  Parties or (iv) a
member of the immediate family of any director,  member,  partner,  shareholder,
officer, manager, employee or supplier of the Independent Parties.

     "Independent Manager" has the meaning set forth in Section 10.

     "Management  Agreement"  means the  agreement of the  Directors in the form
attached  hereto  as  Schedule  C. The  Management  Agreement  shall  be  deemed
incorporated into, and a part of, this Agreement.

     "Member" means Great American  Knitting Mills,  Inc., as the initial member
of the Company,  and includes any Person admitted as an additional member of the
Company or a substitute member of the Company pursuant to the provisions of this
Agreement, each in its capacity as a member of the Company,  provided,  however,
the term "Member" shall not include any Special Member.

     "Officer" means an officer of the Company described in Section 11.

     "Parent" has the meaning set forth in the preamble to this Agreement.

     "Person" means any  individual,  corporation,  partnership,  joint venture,
limited liability company,  limited liability  partnership,  association,  joint
stock  company,  trust,  unincorporated  organization,  or  other  organization,
whether or not a legal entity, and any governmental authority.

     "Special  Member" means,  upon such Person's  admission to the Company as a
member  of  the  Company  pursuant  to  Section  5(c),  a  Person  acting  as an
Independent  Manager,  in such Person's  capacity as a member of the Company.  A
Special Member shall only have the rights and duties expressly set forth in this
Agreement.

     B. Rules of Construction

     Definitions in this Agreement apply equally to both the singular and plural
forms of the defined terms. The words "include" and "including"  shall be deemed
to be followed by the phrase "without  limitation." The terms "herein," "hereof"
and  "hereunder"  and other words of similar import refer to this Agreement as a
whole and not to any particular Section,  paragraph or subdivision.  The Section
titles  appear  as a  matter  of  convenience  only and  shall  not  affect  the
interpretation of this Agreement.  All Section,  paragraph,  clause,  Exhibit or
Schedule  references not attributed to a particular document shall be references
to such parts of this Agreement.

<PAGE>

                                       B-1
                                   SCHEDULE B

                                     Member

<TABLE>

<S>                             <C>                                  <C>                         <C>
                                                                           Agreed Value of            Membership
           Name                           Mailing Address               Capital Contribution          Interest
----------------------------- -------------------------------------- ---------------------------- ------------------

Great American                661 Plaid Street

Knitting Mills, Inc.          Burlington, NC 27215                         $318,057.88                  100%
                              Attention:  Bryan P. Marsal
----------------------------- -------------------------------------- ---------------------------- ------------------

</TABLE>

<PAGE>

                                   SCHEDULE C

                              Management Agreement

Cluett American Receivables, LLC
661 Plaid Street

Burlington, NC 27215

Re: Management Agreement -- Cluett American Receivables, LLC

Ladies and Gentlemen:

     For good and valuable consideration, each of the undersigned, who have been
designated as [Directors] [Independent Managers] of Cluett American Receivables,
LLC, a Delaware limited  liability  company (the "Company"),  in accordance with
and as defined in the Limited Liability Company Agreement of the Company,  dated
as of May 10, 2000, as it may be amended or restated from time to time (the "LLC
Agreement"), hereby agree as follows:

     1. Each of the  undersigned  accepts his or her rights and  authority  as a
[Director]  [Independent  Manager] under the LLC Agreement and agrees to perform
and discharge  his or her duties and  obligations  as a [Director]  [Independent
Manager]  under  the  LLC  Agreement,  and  further  agrees  that  such  rights,
authorities, duties and obligations under the LLC Agreement shall continue until
his or her successor as a [Director]  [Independent  Manager] is  designated  [or
until his or her resignation or removal as a Director in accordance with the LLC
Agreement].  Each of the undersigned  agrees and acknowledges that he or she has
been designated as a "manager" of the Company within the meaning of the Delaware
Limited Liability Company Act. [For Independent Managers: The undersigned hereby
represents  and  warrants  that  the  undersigned  has read  the  definition  of
"Independent"  set forth in the LLC  Agreement  and is  Independent  within  the
meaning thereof].

     2.  Prior to the date which is one year and one day after the date on which
all  obligations  of the  Company  under the  documents  referred  to in Section
7(a)(i)  have  been  paid  in  full,  the  undersigned  agrees,  solely  in  the
undersigned's  capacity  as  a  creditor  of  the  Company  on  account  of  any
indemnification or other payment owing to the undersigned by the Company, not to
acquiesce,  petition  or  otherwise  invoke or cause the  Company  to invoke the
process of any court or governmental  authority for the purpose of commencing or
sustaining  a case  against the Company  under any federal or state  bankruptcy,
insolvency  or similar  law or  appointing  a  receiver,  liquidator,  assignee,
trustee, custodian, sequestrator or other similar official of the Company or any
substantial  part of the property of the Company,  or ordering the winding up or
liquidation of the affairs of the Company.

     3.  THIS  MANAGEMENT  AGREEMENT  SHALL  BE  GOVERNED  BY AND  CONSTRUED  IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF DELAWARE,  AND ALL RIGHTS AND REMEDIES
SHALL BE GOVERNED BY SUCH LAWS  WITHOUT  REGARD TO  PRINCIPLES  OF  CONFLICTS OF
LAWS.

     Initially  capitalized terms used and not otherwise defined herein have the
meanings set forth in the LLC Agreement.

     This  Management  Agreement may be executed in any number of  counterparts,
each of which shall be deemed an original of this  Management  Agreement and all
of which together shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the undersigned have executed this Management Agreement
as of the day and year first above written.

                                                -------------------------------
                                                Name:

                                                Agreed  and  accepted  as of the
                                                date first above written:

                                                CLUETT AMERICAN RECEIVABLES, LLC

                                                By:    ________________________
                                                Name:  ________________________
                                                Title: ________________________

<PAGE>
                                       D-1

                                   SCHEDULE D

                                    DIRECTORS

1. Bryan P. Marsal

                                       E-1

                                   SCHEDULE E

                                    OFFICERS

NAME                             TITLE
-------------------------------- ----------------------------------------------

James Williams                   President and Chief Executive Officer
Scott Coleman                    Secretary
Tony Bernice                     Treasurer
Kathy Wilson                     Vice President

                                TABLE OF CONTENTS

                                                                            Page

Section 1.       Name.........................................................4
Section 2.       Principal Business Office....................................4
Section 3.       Registered Office............................................4
Section 4.       Registered Agent.............................................4
Section 5.       Members......................................................4
Section 6.       Certificates.................................................5
Section 7.       Purposes.....................................................5
Section 8.       Powers.......................................................6
Section 9.       Management...................................................6
Section 10.    Independent Managers..........................................10
Section 11.    Officers......................................................12
Section 12.    Limited Liability.............................................12
Section 13.    Capital Contributions.........................................12
Section 14.    Additional Contributions......................................12
Section 15.    Allocation of Profits and Losses..............................12
Section 16.    Distributions.................................................12
Section 17.    Books and Records.............................................12
Section 18       Reports.....................................................13
Section 19.    Other Business................................................13
Section 20.    Exculpation and Indemnification...............................13
Section 21.    Assignments...................................................14
Section 22.    Resignation...................................................14
Section 23.    Admission of Additional Members...............................15
Section 24.    Dissolution...................................................15
Section 25.    Waiver of Partition; Nature of Interest.......................15
Section 26.    Benefits of Agreement; No Third-Party Rights..................16
Section 27.    Severability of Provisions....................................16
Section 28.    Entire Agreement..............................................16
Section 29.    Binding Agreement.............................................16
Section 30.    Governing Law.................................................16
Section 31.    Amendments....................................................16
Section 32.    Counterparts..................................................16
Section 33.    Notices.......................................................16
Section 34.    Effectiveness.................................................16

<PAGE>RECEIVABLE TRANSFER AGREEMENT

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

                              W I T N E S S E T H :

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

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

DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                        PURCHASE AND SALE OF RECEIVABLES

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

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

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

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

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

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

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

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

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

1.3. Payment of Purchase Price.

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

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

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

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

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

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

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

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

1.9. Further Action. The Company agrees that:

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

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

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

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

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

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

                         CONDITIONS TO PURCHASE AND SALE

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

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

                         REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                    COVENANTS

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

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

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

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

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

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

     (f ) Notices. Furnish to the Purchaser:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                  MISCELLANEOUS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                             GREAT AMERICAN KNITTING MILLS, INC.

                                              By:      ________________________
                                              Name:
                                              Title:

                                              CLUETT AMERICAN RECEIVABLES, LLC

                                              By:      ________________________
                                              Name:
                                              Title:

<PAGE>

                                    EXHIBIT A

                                   Assignment

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

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

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

                                        GREAT AMERICAN KNITTING MILLS, INC.

                                        By ________________________________
                                        Title:

                                        GREAT AMERICAN KNITTING MILLS, INC.

                                        RECEIVABLES TRANSFER AGREEMENT

                                        Dated as of May 12, 2000

<PAGE>
                                TABLE OF CONTENTS
                                                                           Page

         ARTICLE I

         DEFINITIONS

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

         ARTICLE II

         PURCHASE AND SALE OF RECEIVABLES

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

         ARTICLE III

         CONDITIONS TO PURCHASE AND SALE

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

         ARTICLE IV

         REPRESENTATIONS AND WARRANTIES

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

         ARTICLE V

         COVENANTS

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

         ARTICLE VI

         MISCELLANEOUS

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

                                     EXHIBIT

A  -  Form Assignment

<PAGE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00009-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00009-of-00352.parquet"}]]