Exhibit 10.1

RATIFICATION AND AMENDMENT AGREEMENT

This RATIFICATION AND AMENDMENT AGREEMENT (the “Ratification Agreement”) dated
as of October 4, 2006, is by and among WACHOVIA BANK, NATIONAL ASSOCIATION
(successor by merger to Congress Financial Corporation and hereinafter referred
to as “Lender”), ANVIL KNITWEAR, INC., a Delaware corporation, as Debtor and
Debtor-in-Possession (“Borrower”), ANVIL HOLDINGS, INC, a Delaware corporation,
as Debtor and Debtor-in-Possession (“Holdings”) and SPECTRATEX, Inc., formerly
known as Cottontops, Inc., a Delaware corporation, as Debtor and
Debtor-in-Possession (“Spectratex” and together with Holdings, each
individually, a “Guarantor” and collectively, the “Guarantors”; and together
with Borrower, each individually, a “Debtor” and collectively, the “Debtors”).

W I T N E S S E T H:

WHEREAS, each Debtor has commenced a case under Chapter 11 of Title 11 of the
United States Code in the United States Bankruptcy Court for the Southern
District of New York and Borrowers and Guarantors have retained possession of
their respective assets and each is authorized under the Bankruptcy Code to
continue the operation of its businesses as debtor-in-possession;

WHEREAS, prior to the commencement of the Chapter 11 Cases (as hereinafter
defined), Lender made loans and advances to Borrower secured by substantially
all assets and properties of Borrower and Guarantors as set forth in the
Existing Financing Agreements (as hereinafter defined) and the Existing
Guarantor Documents (as hereinafter defined);

WHEREAS, the Bankruptcy Court (as hereinafter defined) has entered a Financing
Order (as hereinafter defined) pursuant to which Lender may make post-petition
loans, advances and other financial accommodations to Borrower secured by
substantially all the assets and properties of Borrower and Guarantors as set
forth in the Financing Order and the Financing Agreements (as hereinafter
defined);

WHEREAS, the Financing Order provides that as a condition to the making of such
post-petition loans, advances and other financial accommodations, Borrower and
Guarantors shall execute and deliver this Ratification Agreement;

WHEREAS, Borrowers and Guarantors desire to reaffirm their obligations pursuant
to the Existing Financing Agreements and acknowledge their continuing
liabilities to Lender thereunder in order to induce Lender to make such
post-petition loans and advances to Borrower; and

WHEREAS, Borrower and Guarantors have requested that Lender make post-petition
loans to Borrower and make certain amendments to the Loan Agreement (as
hereinafter defined) and Lender is willing to do so subject to the terms and
conditions contained herein.

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NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lender, Borrower and
Guarantors mutually covenant, warrant and agree as follows:

1.             DEFINITIONS.

1.1           ADDITIONAL DEFINITIONS.  AS USED HEREIN, THE FOLLOWING TERMS SHALL
HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BELOW AND THE EXISTING FINANCING
AGREEMENTS SHALL BE DEEMED AND ARE HEREBY AMENDED TO INCLUDE, IN ADDITION AND
NOT IN LIMITATION, EACH OF THE FOLLOWING DEFINITIONS:

(A)           “ASHEVILLE MORTGAGE” SHALL MEAN THE DEED OF TRUST AND SECURITY
AGREEMENT, DATED ON OR ABOUT THE DATE HEREOF, BY BORROWER IN FAVOR OF LENDER
WITH RESPECT TO THE REAL PROPERTY AND RELATED ASSETS OF BORROWER LOCATED IN
BUNCOMBE COUNTY, NORTH CAROLINA.

(B)           “BANKRUPTCY COURT” SHALL MEAN THE UNITED STATES BANKRUPTCY COURT
OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK.

(C)           “CHAPTER 11 CASES” SHALL MEAN THE CHAPTER 11 CASES OF BORROWER AND
GUARANTORS WHICH ARE BEING JOINTLY ADMINISTERED UNDER THE BANKRUPTCY CODE AND
ARE PENDING IN THE BANKRUPTCY COURT.

(D)           “BANKRUPTCY CODE” SHALL MEAN THE UNITED STATES BANKRUPTCY CODE,
BEING TITLE 11 OF THE UNITED STATES CODE AS ENACTED IN 1978, AS THE SAME HAS
HERETOFORE BEEN OR MAY HEREAFTER BE AMENDED, RECODIFIED, MODIFIED OR
SUPPLEMENTED, TOGETHER WITH ALL RULES, REGULATIONS AND INTERPRETATIONS
THEREUNDER OR RELATED THERETO.

(E)           “CAPITAL EXPENDITURES” SHALL MEAN FOR ANY PERSON FOR ANY PERIOD,
THE AGGREGATE OF AMOUNTS THAT WOULD BE REFLECTED AS ADDITIONS TO PROPERTY,
PLANT, OR EQUIPMENT ON A CONSOLIDATED BALANCE SHEET OF SUCH PERSON AND ITS
SUBSIDIARIES, EXCLUDING INTEREST CAPITALIZED DURING CONSTRUCTION.

(F)            “CONSOLIDATED NET INCOME” SHALL MEAN, WITH RESPECT TO ANY PERSON,
FOR ANY PERIOD, THE AGGREGATE OF THE NET INCOME (LOSS) OF SUCH PERSON AND ITS
SUBSIDIARIES, ON A CONSOLIDATED BASIS, FOR SUCH PERIOD, EXCLUDING TO THE EXTENT
INCLUDED THEREIN ANY EXTRAORDINARY, ONE-TIME OR NON-RECURRING GAINS, AFTER
DEDUCTING ALL CHARGES WHICH SHOULD BE DEDUCTED BEFORE ARRIVING AT THE NET INCOME
(LOSS) FOR SUCH PERIOD AND AFTER DEDUCTING THE PROVISION FOR TAXES FOR SUCH
PERIOD, ALL AS DETERMINED IN ACCORDANCE WITH GAAP; PROVIDED, THAT, (I) THE NET
INCOME OF ANY PERSON THAT IS NOT A MAJORITY-OWNED SUBSIDIARY OR THAT IS
ACCOUNTED FOR BY THE EQUITY METHOD OF ACCOUNTING SHALL BE INCLUDED ONLY TO THE
EXTENT OF THE AMOUNT OF DIVIDENDS OR DISTRIBUTIONS PAID OR PAYABLE TO SUCH
PERSON OR A MAJORITY-OWNED SUBSIDIARY OF SUCH PERSON; (II) THE EFFECT OF ANY
CHANGE IN ACCOUNTING PRINCIPLES ADOPTED BY (OR APPLICABLE TO) SUCH PERSON OR ITS
SUBSIDIARIES AFTER THE DATE HEREOF (INCLUDING ANY CUMULATIVE EFFECTS RESULTING
FROM CHANGES IN PURCHASE ACCOUNTING PRINCIPLES) SHALL BE EXCLUDED; AND (III) THE
NET INCOME (IF POSITIVE) OF ANY MAJORITY-OWNED SUBSIDIARY TO THE EXTENT THAT THE
DECLARATION OR PAYMENT OF DIVIDENDS OR SIMILAR DISTRIBUTIONS BY SUCH
MAJORITY-OWNED SUBSIDIARY TO SUCH PERSON OR TO ANY OTHER MAJORITY-OWNED
SUBSIDIARY OF SUCH PERSON IS NOT AT THE TIME PERMITTED BY OPERATION OF THE TERMS
OF ITS CHARTER OR

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any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such majority-owned Subsidiary shall be
excluded.  For the purpose of this definition, net income excludes any gain
together with any related Provision for Taxes for such gain realized upon the
sale or other disposition of any assets or of any Capital Stock of such Person
or a Subsidiary of such Person.

(G)           “EBITDA” SHALL MEAN, AS TO ANY PERSON, WITH RESPECT TO ANY PERIOD,
AN AMOUNT EQUAL TO:(I) THE CONSOLIDATED NET INCOME OF SUCH PERSON AND ITS
SUBSIDIARIES FOR SUCH PERIOD, PLUS (II) DEPRECIATION AND AMORTIZATION, IMPUTED
INTEREST, DEFERRED COMPENSATION FOR SUCH PERIOD (TO THE EXTENT DEDUCTED IN THE
COMPUTATION OF CONSOLIDATED NET INCOME OF SUCH PERSON), ALL IN ACCORDANCE WITH
GAAP, PLUS (III) INTEREST EXPENSE FOR SUCH PERIOD (TO THE EXTENT DEDUCTED IN THE
COMPUTATION OF CONSOLIDATED NET INCOME OF SUCH PERSON), PLUS (IV) THE PROVISION
FOR TAXES FOR SUCH PERIOD (TO THE EXTENT DEDUCTED IN THE COMPUTATION OF
CONSOLIDATED NET INCOME OF SUCH PERSON), PLUS (V) NON-CASH EXPENSES RELATED TO
SEVERANCE PAYMENTS MADE BY BORROWER (TO THE EXTEND DEDUCTED IN THE COMPUTATION
OF CONSOLIDATION NET INCOME).

(H)           “EXISTING FINANCING AGREEMENTS” SHALL MEAN THE FINANCING
AGREEMENTS (AS DEFINED IN THE EXISTING LOAN AGREEMENT), INCLUDING, WITHOUT
LIMITATION, THE EXISTING GUARANTOR DOCUMENTS (AS HEREINAFTER DEFINED), IN EACH
INSTANCE, AS IN EFFECT IMMEDIATELY PRIOR TO THE PETITION DATE.

(I)            “EXISTING GUARANTOR DOCUMENTS” SHALL MEAN, COLLECTIVELY, (I)
GUARANTEE, DATED AS OF MARCH 11, 1999, BY GUARANTORS IN FAVOR OF LENDER, (II)
GENERAL SECURITY AGREEMENT, DATED AS OF MARCH 11, 1999, BY HOLDINGS IN FAVOR OF
LENDER, (III) PLEDGE AND SECURITY AGREEMENT, DATED AS OF MARCH 11, 1999, BY
HOLDINGS IN FAVOR OF LENDER WITH RESPECT TO THE OUTSTANDING CAPITAL STOCK OF
BORROWER, (IV) GENERAL SECURITY AGREEMENT, DATED AS OF MARCH 11, 1999, BY
SPECTRATEX IN FAVOR OF LENDER, AND (V) TRADEMARK COLLATERAL ASSIGNMENT AND
SECURITY AGREEMENT, DATED AS OF MARCH 11, 1999, BY SPECTRATEX IN FAVOR OF
LENDER, IN EACH INSTANCE, AS IN EFFECT IMMEDIATELY PRIOR TO THE PETITION DATE.

(J)            “EXISTING LOAN AGREEMENT” SHALL MEAN THE LOAN AND SECURITY
AGREEMENT, DATED AS OF MARCH 11, 1999, BY AND AMONG BORROWER, GUARANTORS AND
LENDER, AS AMENDED BY AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT, DATED AS
OF MAY 28, 2002 AND AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT, DATED AS OF
MAY 20, 2004, AND OTHERWISE AS IN EFFECT IMMEDIATELY PRIOR TO THE PETITION DATE.

(K)           “FINANCING ORDER” SHALL MEAN THE INTERIM FINANCING ORDER, THE
PERMANENT FINANCING ORDER AND SUCH OTHER ORDERS RELATING THERETO OR AUTHORIZING
THE GRANTING OF CREDIT BY LENDER TO BORROWERS ON AN EMERGENCY, INTERIM OR
PERMANENT BASIS PURSUANT TO SECTION 364 OF THE BANKRUPTCY CODE AS MAY BE ISSUED
OR ENTERED BY THE BANKRUPTCY COURT IN THE CHAPTER 11 CASES.

(L)            “GUARANTOR DOCUMENTS” SHALL MEAN, COLLECTIVELY, THE EXISTING
GUARANTOR DOCUMENTS, AS AMENDED BY THIS RATIFICATION AGREEMENT, IN EACH
INSTANCE, AS THE SAME NOW EXISTS OR MAY HEREAFTER BE AMENDED, MODIFIED,
SUPPLEMENTED, EXTENDED, RENEWED, RESTATED OR REPLACED.

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(M)          “INTEREST EXPENSE” SHALL MEAN, FOR ANY PERIOD, AS TO ANY PERSON, AS
DETERMINED IN ACCORDANCE WITH GAAP, THE TOTAL INTEREST EXPENSE OF SUCH PERSON,
WHETHER PAID OR ACCRUED DURING SUCH PERIOD BUT WITHOUT DUPLICATION (INCLUDING
THE INTEREST COMPONENT OF CAPITAL LEASES FOR SUCH PERIOD), INCLUDING, WITHOUT
LIMITATION, DISCOUNTS IN CONNECTION WITH THE SALE OF ANY ACCOUNTS THAT ARE SOLD
FOR PURPOSES OTHER THAN COLLECTION, BUT EXCLUDING INTEREST PAID IN PROPERTY
OTHER THAN CASH AND ANY OTHER INTEREST EXPENSE NOT PAYABLE IN CASH.

(N)           “INTERIM FINANCING ORDER” SHALL HAVE THE MEANING SET FORTH IN
SECTION 9.8 HEREOF.

(O)           “INVENTORY SUBLIMIT” SHALL MEAN $20,000,000 EXCEPT THAT COMMENCING
NOVEMBER 1, 2006 THROUGH AND INCLUDING JANUARY 31, 2007, THE INVENTORY SUBLIMIT
SHALL MEAN $24,000,000.”

(P)           “PERMANENT FINANCING ORDER” SHALL HAVE THE MEANING SET FORTH IN
SECTION 9.9 HEREOF.

(Q)           “PETITION DATE” SHALL MEAN THE DATE OF THE COMMENCEMENT OF THE
CHAPTER 11 CASES.

(R)            “POST-PETITION COLLATERAL” SHALL MEAN, COLLECTIVELY, ALL NOW
EXISTING AND HEREAFTER ACQUIRED REAL AND PERSONAL PROPERTY OF EACH DEBTOR’S
ESTATE, WHERESOEVER LOCATED, OF ANY KIND, NATURE OR DESCRIPTION, INCLUDING ANY
SUCH PROPERTY IN WHICH A LIEN IS GRANTED TO LENDER PURSUANT TO THE FINANCING
AGREEMENTS, THE FINANCING ORDER OR ANY OTHER ORDER ENTERED OR ISSUED BY THE
BANKRUPTCY COURT, AND SHALL INCLUDE, WITHOUT LIMITATION:

(I)            ALL OF THE PRE-PETITION COLLATERAL;

(II)           ALL ACCOUNTS;

(III)          ALL GENERAL INTANGIBLES, INCLUDING, WITHOUT LIMITATION, ALL 
INTELLECTUAL PROPERTY;

(IV)          ALL GOODS, INCLUDING, WITHOUT LIMITATION, ALL INVENTORY AND ALL
EQUIPMENT;

(V)           ALL REAL PROPERTY AND FIXTURES;

(VI)          ALL CHATTEL PAPER, INCLUDING, WITHOUT LIMITATION, ALL TANGIBLE AND
ELECTRONIC CHATTEL PAPER;

(VII)         ALL INSTRUMENTS, INCLUDING, WITHOUT LIMITATION, ALL PROMISSORY
NOTES;

(VIII)        ALL DOCUMENTS;

(IX)           ALL DEPOSIT ACCOUNTS;

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(X)            ALL LETTERS OF CREDIT, BANKER’S ACCEPTANCES AND SIMILAR
INSTRUMENTS AND INCLUDING ALL LETTER-OF-CREDIT RIGHTS;

(XI)           ALL SUPPORTING OBLIGATIONS AND ALL PRESENT AND FUTURE LIENS,
SECURITY INTERESTS, RIGHTS, REMEDIES, TITLE AND INTEREST IN, TO AND IN RESPECT
OF RECEIVABLES AND OTHER COLLATERAL, INCLUDING, WITHOUT LIMITATION, (A) RIGHTS
AND REMEDIES UNDER OR RELATING TO GUARANTIES, CONTRACTS OF SURETYSHIP, LETTERS
OF CREDIT AND CREDIT AND OTHER INSURANCE RELATED TO THE COLLATERAL, (B) RIGHTS
OF STOPPAGE IN TRANSIT, REPLEVIN, REPOSSESSION, RECLAMATION AND OTHER RIGHTS AND
REMEDIES OF AN UNPAID VENDOR, LIENOR OR SECURED PARTY, (C) GOODS DESCRIBED IN
INVOICES, DOCUMENTS, CONTRACTS OR INSTRUMENTS WITH RESPECT TO, OR OTHERWISE
REPRESENTING OR EVIDENCING, RECEIVABLES OR OTHER COLLATERAL, INCLUDING RETURNED,
REPOSSESSED AND RECLAIMED GOODS, AND (D) DEPOSITS BY AND PROPERTY OF ACCOUNT
DEBTORS OR OTHER PERSONS SECURING THE OBLIGATIONS OF ACCOUNT DEBTORS;

(XII)          ALL (A) INVESTMENT PROPERTY (INCLUDING SECURITIES, WHETHER
CERTIFICATED OR UNCERTIFICATED, SECURITIES ACCOUNTS, SECURITY ENTITLEMENTS,
COMMODITY CONTRACTS OR COMMODITY ACCOUNTS) AND (B) MONIES, CREDIT BALANCES,
DEPOSITS AND OTHER PROPERTY OF BORROWER AND GUARANTORS NOW OR HEREAFTER HELD OR
RECEIVED BY OR IN TRANSIT TO LENDER OR ITS AFFILIATES OR AT ANY OTHER DEPOSITORY
OR OTHER INSTITUTION FROM OR FOR THE ACCOUNT OF BORROWER OR GUARANTORS, WHETHER
FOR SAFEKEEPING, PLEDGE, CUSTODY, TRANSMISSION, COLLECTION OR OTHERWISE;

(XIII)         ALL COMMERCIAL TORT CLAIMS;

(XIV)        TO THE EXTENT NOT OTHERWISE DESCRIBED ABOVE, ALL RECEIVABLES;

(XV)         ALL CLAIMS, RIGHTS, INTERESTS, ASSETS AND PROPERTIES (RECOVERED BY
OR ON BEHALF OF EACH BORROWER AND GUARANTOR OR ANY TRUSTEE OF SUCH BORROWER OR
GUARANTOR (WHETHER IN THE CHAPTER 11 CASES OR ANY SUBSEQUENT CASE TO WHICH ANY
OF THE CHAPTER 11 CASES IS CONVERTED), INCLUDING, WITHOUT LIMITATION, ALL
PROPERTY RECOVERED AS A RESULT OF TRANSFERS OR OBLIGATIONS AVOIDED OR ACTIONS
MAINTAINED OR TAKEN PURSUANT TO SECTIONS 544, 545, 547, 548, 549, 550, 551 AND
553 OF THE BANKRUPTCY CODE;

(XVI)        ALL RECORDS; AND

(XVII)       ALL PRODUCTS AND PROCEEDS OF THE FOREGOING, IN ANY FORM, INCLUDING
INSURANCE PROCEEDS AND ALL CLAIMS AGAINST THIRD PARTIES FOR LOSS OR DAMAGE TO OR
DESTRUCTION OF OR OTHER INVOLUNTARY CONVERSION OF ANY KIND OR NATURE OF ANY OR
ALL OF THE OTHER COLLATERAL.

(S)           “POST-PETITION OBLIGATIONS” SHALL MEAN ALL LOANS, LETTER OF CREDIT
ACCOMMODATIONS AND OTHER LOANS, ADVANCES, LETTER OF CREDIT ACCOMMODATIONS,
DEBTS, OBLIGATIONS, LIABILITIES, COVENANTS AND DUTIES OF BORROWER AND GUARANTORS
TO LENDER OF EVERY KIND AND DESCRIPTION, HOWEVER EVIDENCED, WHETHER DIRECT OR
INDIRECT, ABSOLUTE OR CONTINGENT, JOINT OR SEVERAL, SECURED OR UNSECURED, DUE OR
NOT DUE, PRIMARY OR SECONDARY, LIQUIDATED OR UNLIQUIDATED, ARISING ON AND AFTER
THE PETITION DATE AND WHETHER ARISING ON OR AFTER THE CONVERSION OR DISMISSAL OF
THE CHAPTER 11 CASES, OR BEFORE, DURING AND AFTER THE CONFIRMATION OF ANY PLAN
OF REORGANIZATION IN THE CHAPTER 11 CASES, AND WHETHER ARISING UNDER OR RELATED
TO THIS RATIFICATION

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AGREEMENT, THE GUARANTOR DOCUMENTS, THE OTHER FINANCING AGREEMENTS, A FINANCING
ORDER, BY OPERATION OF LAW OR OTHERWISE, AND WHETHER INCURRED BY BORROWER OR
SUCH GUARANTOR AS PRINCIPAL, SURETY, ENDORSER, GUARANTOR OR OTHERWISE AND
INCLUDING, WITHOUT LIMITATION, ALL PRINCIPAL, INTEREST, FINANCING CHARGES,
LETTER OF CREDIT FEES, UNUSED LINE FEES, SERVICING FEES, LINE INCREASE FEES, DIP
FACILITY FEES, EARLY TERMINATION FEES, OTHER FEES, COMMISSIONS, COSTS, EXPENSES
AND ATTORNEYS’, ACCOUNTANTS’ AND CONSULTANTS’ FEES AND EXPENSES INCURRED IN
CONNECTION WITH ANY OF THE FOREGOING.

(T)            “PRE-PETITION COLLATERAL” SHALL MEAN, COLLECTIVELY, (I) ALL
“COLLATERAL” AS SUCH TERM IS DEFINED IN THE EXISTING LOAN AGREEMENT AS IN EFFECT
IMMEDIATELY PRIOR TO THE PETITION DATE, (II) ALL “COLLATERAL” AS SUCH TERM IS
DEFINED IN EACH OF THE EXISTING GUARANTOR DOCUMENTS AS IN EFFECT IMMEDIATELY
PRIOR TO THE PETITION DATE, AND (III) ALL OTHER SECURITY FOR THE PRE-PETITION
OBLIGATIONS AS PROVIDED IN THE EXISTING GUARANTOR DOCUMENTS AND EXISTING
FINANCING AGREEMENTS IMMEDIATELY PRIOR TO THE PETITION DATE.

(U)           “PRE-PETITION OBLIGATIONS” SHALL MEAN ALL LOANS, LETTER OF CREDIT
ACCOMMODATION AND OTHER LOANS, ADVANCES, LETTER OF CREDIT ACCOMMODATIONS, DEBTS,
OBLIGATIONS, LIABILITIES, INDEBTEDNESS, COVENANTS AND DUTIES OF BORROWER AND
GUARANTORS TO LENDER OF EVERY KIND AND DESCRIPTION, HOWEVER EVIDENCED, WHETHER
DIRECT OR INDIRECT, ABSOLUTE OR CONTINGENT, JOINT OR SEVERAL, SECURED OR
UNSECURED, DUE OR NOT DUE, PRIMARY OR SECONDARY, LIQUIDATED OR UNLIQUIDATED,
ARISING BEFORE THE PETITION DATE UNDER OR RELATED TO THE EXISTING GUARANTOR
DOCUMENTS, THE OTHER EXISTING FINANCING AGREEMENTS, BY OPERATION OF LAW OR
OTHERWISE, AND WHETHER INCURRED BY BORROWER OR SUCH GUARANTOR AS PRINCIPAL,
SURETY, ENDORSER, GUARANTOR OR OTHERWISE AND INCLUDING, WITHOUT LIMITATION, ALL
PRINCIPAL, INTEREST, FINANCING CHARGES, LETTER OF CREDIT FEES, UNUSED LINE FEES,
SERVICING FEES, LINE INCREASE FEES, EARLY TERMINATION FEES, OTHER FEES,
COMMISSIONS, COSTS, EXPENSES AND ATTORNEYS’, ACCOUNTANTS’ AND CONSULTANTS’ FEES
AND EXPENSES INCURRED IN CONNECTION WITH ANY OF THE FOREGOING.

(V)           “RATIFICATION AGREEMENT” SHALL MEAN THIS RATIFICATION AGREEMENT BY
AND AMONG BORROWERS, GUARANTORS AND LENDER, AS THE SAME NOW EXISTS OR MAY
HEREAFTER BE AMENDED, MODIFIED, SUPPLEMENTED, EXTENDED, RENEWED, RESTATED OR
REPLACED.

1.2           AMENDMENTS TO DEFINITIONS IN FINANCING AGREEMENTS.

(A)           ALL REFERENCES TO THE TERM “COLLATERAL” IN ANY OF THE EXISTING
FINANCING AGREEMENTS OR ANY OTHER TERM REFERRING TO THE SECURITY FOR THE
PRE-PETITION OBLIGATIONS SHALL BE DEEMED AND EACH SUCH REFERENCE IS HEREBY
AMENDED TO MEAN, COLLECTIVELY, THE PRE-PETITION COLLATERAL AND THE POST-PETITION
COLLATERAL.

(B)           ALL REFERENCES TO DEBTORS, INCLUDING, WITHOUT LIMITATION, TO THE
TERMS “BORROWER,” “GUARANTOR,” OR “GUARANTORS” IN ANY OF THE EXISTING FINANCING
AGREEMENTS, SHALL BE DEEMED, AND EACH SUCH REFERENCE IS HEREBY AMENDED, TO MEAN
AND INCLUDE THE DEBTORS AS DEFINED HEREIN, AND THEIR SUCCESSORS AND ASSIGNS
(INCLUDING ANY TRUSTEE OR OTHER FIDUCIARY HEREAFTER APPOINTED AS ITS LEGAL
REPRESENTATIVE OR WITH RESPECT TO THE PROPERTY OF THE ESTATE OF SUCH CORPORATION
WHETHER UNDER CHAPTER 11 OF THE BANKRUPTCY CODE OR ANY SUBSEQUENT CHAPTER 7 CASE
AND ITS SUCCESSOR UPON CONCLUSION OF THE 2006 CHAPTER 11 CASES OF SUCH
CORPORATION).

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(C)           ALL REFERENCES TO THE TERM “FINANCING AGREEMENTS” IN ANY OF THE
EXISTING FINANCING AGREEMENTS, SHALL BE DEEMED, AND EACH SUCH REFERENCE IS
HEREBY AMENDED, TO INCLUDE, IN ADDITION AND NOT IN LIMITATION, THIS RATIFICATION
AGREEMENT AND ALL OF THE EXISTING FINANCING AGREEMENTS, AS RATIFIED, ASSUMED AND
ADOPTED BY BORROWER AND EACH GUARANTOR PURSUANT TO THE TERMS HEREOF, AS AMENDED
AND SUPPLEMENTED HEREBY, AND THE FINANCING ORDER, AS EACH OF THE SAME NOW EXISTS
OR MAY HEREAFTER BE AMENDED, MODIFIED, SUPPLEMENTED, EXTENDED, RENEWED, RESTATED
OR REPLACED.

(D)           ALL REFERENCES TO THE TERM “LOAN AGREEMENT” IN ANY OF THE EXISTING
FINANCING AGREEMENTS AND THE FINANCING AGREEMENTS, SHALL BE DEEMED, AND EACH
SUCH REFERENCE IS HEREBY AMENDED, TO MEAN THE EXISTING LOAN AGREEMENT, AS
AMENDED BY THIS RATIFICATION AGREEMENT AND AS RATIFIED, ASSUMED AND ADOPTED BY
BORROWER AND EACH GUARANTOR PURSUANT TO THE TERMS HEREOF AND THE FINANCING
ORDER, AS THE SAME NOW EXISTS OR MAY HEREAFTER BE AMENDED, MODIFIED,
SUPPLEMENTED, EXTENDED, RENEWED, RESTATED OR REPLACED.

(E)           ALL REFERENCES TO THE TERM “MATERIAL ADVERSE EFFECT,” “MATERIAL
ADVERSE EFFECT” AND “MATERIAL ADVERSE CHANGE” IN THIS RATIFICATION AGREEMENT AND
IN ANY OF THE EXISTING FINANCING AGREEMENTS, SHALL BE DEEMED, AND EACH SUCH
REFERENCE IN THE EXISTING FINANCING AGREEMENTS IS HEREBY AMENDED, TO ADD AT THE
END THEREOF:  “PROVIDED, THAT, THE COMMENCEMENT OF THE CHAPTER 11 CASES SHALL
NOT CONSTITUTE A MATERIAL ADVERSE EFFECT”.

(F)            ALL REFERENCES TO THE TERM “OBLIGATIONS” IN THIS RATIFICATION
AGREEMENT AND IN ANY OF THE FINANCING AGREEMENTS SHALL BE DEEMED, AND EACH SUCH
REFERENCE IN THE FINANCING AGREEMENTS IS HEREBY AMENDED, TO MEAN BOTH THE
PRE-PETITION OBLIGATIONS AND THE POST-PETITION OBLIGATIONS.

1.3           INTERPRETATION.

(A)           FOR PURPOSES OF THIS RATIFICATION AGREEMENT, UNLESS OTHERWISE
DEFINED OR AMENDED HEREIN, INCLUDING, BUT NOT LIMITED TO, THOSE TERMS USED
AND/OR DEFINED IN THE RECITALS HERETO, ALL TERMS USED HEREIN SHALL HAVE THE
RESPECTIVE MEANINGS ASSIGNED TO SUCH TERMS IN THE LOAN AGREEMENT.

(B)           ALL REFERENCES TO THE TERM “LENDER,” “BORROWER,” “GUARANTORS,”
“DEBTORS” OR ANY OTHER PERSON PURSUANT TO THE DEFINITIONS IN THE RECITALS HERETO
OR OTHERWISE SHALL INCLUDE ITS RESPECTIVE SUCCESSORS AND ASSIGNS.

(C)           ALL REFERENCES TO ANY TERM IN THE SINGULAR SHALL INCLUDE THE
PLURAL AND ALL REFERENCES TO ANY TERM IN THE PLURAL SHALL INCLUDE THE SINGULAR
UNLESS THE CONTEXT OF SUCH USAGE REQUIRES OTHERWISE.

(D)           ALL TERMS NOT SPECIFICALLY DEFINED HEREIN WHICH ARE DEFINED IN THE
UNIFORM COMMERCIAL CODE, AS IN EFFECT IN THE STATE OF NEW YORK AS OF THE DATE
HEREOF, SHALL HAVE THE MEANING SET FORTH THEREIN, EXCEPT THAT THE TERM “LIEN” OR
“LIEN” SHALL HAVE THE MEANING SET FORTH IN § 101(37) OF THE BANKRUPTCY CODE.

 

 

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2.             ACKNOWLEDGMENT.

2.1           PRE-PETITION OBLIGATIONS.  BORROWER AND EACH GUARANTOR HEREBY
ACKNOWLEDGE, CONFIRM AND AGREE THAT, AS OF OCTOBER 2, 2006, BORROWER IS INDEBTED
TO LENDER IN RESPECT OF ALL PRE-PETITION OBLIGATIONS IN THE AGGREGATE PRINCIPAL
AMOUNT OF NOT LESS THAN $25,818,730.34, CONSISTING OF (A) REVOLVING LOANS MADE
PURSUANT TO THE EXISTING FINANCING AGREEMENTS IN THE AGGREGATE PRINCIPAL AMOUNT
OF NOT LESS THAN $23,404,449.01, TOGETHER WITH INTEREST ACCRUED AND ACCRUING
THEREON, AND (B) LETTER OF CREDIT ACCOMMODATIONS IN THE AMOUNT OF NOT LESS THAN
$2,414,281.33, TOGETHER WITH INTEREST ACCRUED AND ACCRUING THEREON, AND ALL
COSTS, EXPENSES, FEES (INCLUDING ATTORNEYS’ FEES AND LEGAL EXPENSES) AND (C)
OTHER CHARGES NOW OR HEREAFTER OWED BY BORROWER TO LENDER, ALL OF WHICH ARE
UNCONDITIONALLY OWING BY BORROWER TO LENDER, WITHOUT OFFSET, DEFENSE OR
COUNTERCLAIM OF ANY KIND, NATURE AND DESCRIPTION WHATSOEVER.

2.2           GUARANTEED OBLIGATIONS.  EACH GUARANTOR HEREBY ACKNOWLEDGES,
CONFIRMS AND AGREES THAT:

(A)           ALL OBLIGATIONS OF SUCH GUARANTOR UNDER THE GUARANTOR DOCUMENTS
ARE UNCONDITIONALLY OWING BY SUCH GUARANTOR TO LENDER WITHOUT OFFSET, DEFENSE OR
COUNTERCLAIM OF ANY KIND, NATURE AND DESCRIPTION WHATSOEVER, AND

(B)           THE ABSOLUTE AND UNCONDITIONAL GUARANTEE OF THE PAYMENT OF THE
PRE-PETITION OBLIGATIONS BY SUCH GUARANTOR PURSUANT TO THE GUARANTOR DOCUMENTS
EXTENDS TO ALL POST-PETITION OBLIGATIONS, SUBJECT ONLY TO THE LIMITATIONS SET
FORTH IN THE GUARANTOR DOCUMENTS.

2.3           ACKNOWLEDGMENT OF SECURITY INTERESTS.  BORROWER AND EACH GUARANTOR
HEREBY ACKNOWLEDGE, CONFIRM AND AGREE THAT LENDER HAS AND SHALL CONTINUE TO HAVE
VALID, ENFORCEABLE AND PERFECTED FIRST PRIORITY AND SENIOR SECURITY INTERESTS IN
AND LIENS UPON ALL PRE-PETITION COLLATERAL HERETOFORE GRANTED TO LENDER PURSUANT
TO THE EXISTING FINANCING AGREEMENTS AS IN EFFECT IMMEDIATELY PRIOR TO THE
PETITION DATE TO SECURE ALL OF THE OBLIGATIONS, AS WELL AS VALID AND ENFORCEABLE
FIRST PRIORITY AND SENIOR SECURITY INTERESTS IN AND LIENS UPON ALL POST-PETITION
COLLATERAL GRANTED TO LENDER UNDER THE FINANCING ORDER OR HEREUNDER OR UNDER ANY
OF THE OTHER FINANCING AGREEMENTS OR OTHERWISE GRANTED TO OR HELD BY LENDER, IN
EACH CASE, SUBJECT ONLY TO LIENS OR ENCUMBRANCES EXPRESSLY PERMITTED BY THE LOAN
AGREEMENT AND ANY OTHER LIENS OR ENCUMBRANCES EXPRESSLY PERMITTED BY THE
FINANCING ORDER THAT MAY HAVE PRIORITY OVER THE LIENS IN FAVOR OF LENDER.

2.4           BINDING EFFECT OF DOCUMENTS.  BORROWER AND EACH GUARANTOR HEREBY
ACKNOWLEDGE, CONFIRM AND AGREE THAT: (A) EACH OF THE EXISTING FINANCING
AGREEMENTS TO WHICH IT IS A PARTY WAS DULY EXECUTED AND DELIVERED TO LENDER BY
SUCH BORROWER OR GUARANTOR AND EACH IS IN FULL FORCE AND EFFECT AS OF THE DATE
HEREOF, (B) THE AGREEMENTS AND OBLIGATIONS OF SUCH BORROWER OR GUARANTOR
CONTAINED IN THE EXISTING FINANCING AGREEMENTS CONSTITUTE THE LEGAL, VALID AND
BINDING OBLIGATIONS OF SUCH BORROWER OR GUARANTOR ENFORCEABLE AGAINST SUCH
BORROWER OR GUARANTOR IN ACCORDANCE WITH ITS RESPECTIVE TERMS AND SUCH BORROWER
OR GUARANTOR HAS NO VALID DEFENSE, OFFSET OR COUNTERCLAIM TO THE ENFORCEMENT OF
SUCH OBLIGATIONS, AND (C) LENDER IS AND SHALL BE ENTITLED TO ALL OF THE RIGHTS,
REMEDIES AND BENEFITS PROVIDED FOR IN THE FINANCING AGREEMENTS AND THE FINANCING
ORDER.

8

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3.             ADOPTION AND RATIFICATION

Borrower and each Guarantor hereby (a) ratifies, assumes, adopts and agrees to
be bound by the Existing Financing Agreements applicable to it and (b) agrees to
pay all of the Pre-Petition Obligations in accordance with the terms of such
Existing Financing Agreements, as amended by this Ratification Agreement, and in
accordance with the Financing Order.  All of the Existing Financing Agreements
are hereby incorporated herein by reference and hereby are and shall be deemed
adopted and assumed in full by Borrower and Guarantors, each as Debtor and
Debtor-in-Possession, and considered as agreements between such Borrower or
Guarantor and Lender, as applicable.  Borrower and each Guarantor hereby
ratifies, restates, affirms and confirms all of the terms and conditions of the
Existing Financing Agreements, as amended and supplemented pursuant hereto and
the Financing Order, and Borrower and each Guarantor agrees to be fully bound,
as Debtor and Debtor-in-Possession, by the terms of the Financing Agreements to
which such Borrower or Guarantor is a party.

4.             GRANT OF SECURITY INTEREST.

Upon the entry of the Financing Order, as collateral security for the prompt
performance, observance and payment in full of all of the Obligations (including
the Pre-Petition Obligations and the Post-Petition Obligations), Borrower and
each Guarantor, each as Debtor and Debtor-in-Possession, hereby grants, pledges
and assigns to Lender, and also confirms, reaffirms and restates the prior grant
to Lender of, continuing security interests in and liens upon, and rights of
setoff against, all of the Collateral.

5.             ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS.

In addition to the continuing representations, warranties and covenants
heretofore and hereafter made by Borrower and each Guarantor to Lender, whether
pursuant to the Financing Agreements or otherwise, and not in limitation
thereof, Borrower and each Guarantor hereby represents, warrants and covenants
to Lender the following (which shall survive the execution and delivery of this
Ratification Agreement), the truth and accuracy of which, or compliance with, to
the extent such compliance does not violate the terms and provisions of the
Bankruptcy Code, shall be a continuing condition of the making of Loans by
Lender:

5.1           FINANCING ORDER.  THE INTERIM FINANCING ORDER (AND, FOLLOWING THE
EXPIRATION OF THE INTERIM FINANCING PERIOD (AS DEFINED IN THE INTERIM FINANCING
ORDER), THE PERMANENT FINANCING ORDER) HAS BEEN DULY ENTERED, IS VALID,
SUBSISTING AND CONTINUING AND HAS NOT BEEN VACATED, MODIFIED, REVERSED ON
APPEAL, OR VACATED OR MODIFIED BY ANY ORDER OF THE BANKRUPTCY COURT (OTHER THAN
AS CONSENTED TO BY LENDER) AND IS NOT SUBJECT TO ANY PENDING APPEAL OR STAY.

5.2           USE OF PROCEEDS.  ALL LOANS AND LETTER OF CREDIT ACCOMMODATIONS
PROVIDED BY LENDER TO BORROWER PURSUANT TO THE FINANCING ORDERS, THE LOAN
AGREEMENT OR OTHERWISE, SHALL BE USED BY BORROWER FOR GENERAL OPERATING AND
WORKING CAPITAL PURPOSES IN THE ORDINARY COURSE OF BUSINESS OF BORROWER.  UNLESS
AUTHORIZED BY THE BANKRUPTCY COURT AND APPROVED BY LENDER IN WRITING, NO PORTION
OF ANY ADMINISTRATIVE EXPENSE CLAIM OR OTHER CLAIM RELATING TO THE CHAPTER 11
CASES SHALL BE PAID WITH THE PROCEEDS OF SUCH LOANS AND LETTER OF

 

9

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CREDIT ACCOMMODATIONS PROVIDED BY LENDER TO BORROWER, OTHER THAN THOSE
ADMINISTRATIVE EXPENSE CLAIMS AND OTHER CLAIMS RELATING TO THE CHAPTER 11 CASES
DIRECTLY ATTRIBUTABLE TO THE OPERATION OF THE BUSINESS OF BORROWER OR ANY
GUARANTOR IN THE ORDINARY COURSE OF SUCH BUSINESS IN ACCORDANCE WITH THE
FINANCING AGREEMENTS.

5.3           RATIFICATION OF BLOCKED ACCOUNT AGREEMENT.   TO THE EXTENT LENDER
DEEMS IT NECESSARY IN ITS DISCRETION AND UPON LENDER’S REQUEST, BORROWER AND
GUARANTORS SHALL PROMPTLY PROVIDE LENDER WITH EVIDENCE, IN FORM AND SUBSTANCE
SATISFACTORY TO LENDER, THAT THE BLOCKED ACCOUNT AGREEMENT (AS DEFINED IN THE
FINANCING ORDER) AND OTHER DEPOSIT ACCOUNT ARRANGEMENTS PROVIDED FOR UNDER
SECTION 6.3 OF THE LOAN AGREEMENT HAVE BEEN RATIFIED AND AMENDED BY THE PARTIES
THERETO, OR THEIR RESPECTIVE SUCCESSORS IN INTEREST, IN FORM AND SUBSTANCE
SATISFACTORY TO LENDER, TO REFLECT THE COMMENCEMENT OF THE CHAPTER 11 CASES,
THAT BORROWER AND EACH GUARANTOR, EACH AS DEBTOR AND DEBTOR-IN-POSSESSION, IS
THE SUCCESSOR IN INTEREST TO SUCH BORROWER OR GUARANTOR, THAT THE OBLIGATIONS
INCLUDE BOTH THE PRE-PETITION OBLIGATIONS AND THE POST-PETITION OBLIGATIONS,
THAT THE COLLATERAL INCLUDES BOTH THE PRE-PETITION COLLATERAL AND THE
POST-PETITION COLLATERAL AS PROVIDED FOR HEREIN AND THE OTHER TERMS AND
CONDITIONS OF THIS RATIFICATION AGREEMENT.

5.4           ERISA.   BORROWER AND GUARANTORS HEREBY REPRESENT AND WARRANT
WITH, TO AND IN FAVOR OF LENDER THAT (A) THERE ARE NO LIENS, SECURITY INTERESTS
OR ENCUMBRANCES UPON, IN OR AGAINST ANY ASSETS OR PROPERTIES OF BORROWER OR ANY
GUARANTOR ARISING UNDER ERISA, WHETHER HELD BY THE PENSION BENEFIT GUARANTY
CORPORATION (THE “PBGC”) OR THE CONTRIBUTING SPONSOR OF, OR A MEMBER OF THE
CONTROLLED GROUP THEREOF, ANY PENSION BENEFIT PLAN OF BORROWER OR ANY GUARANTOR
AND (B) NO NOTICE OF LIEN HAS BEEN FILED BY THE PBGC (OR ANY OTHER PERSON)
PURSUANT TO ERISA AGAINST ANY ASSETS OR PROPERTIES OF BORROWER OR ANY GUARANTOR.

5.5           REAL PROPERTY.  BORROWER AND GUARANTORS HEREBY REPRESENT AND
WARRANT WITH, TO AND IN FAVOR OF LENDER THAT EXCEPT WITH RESPECT TO THE REAL
PROPERTY OF BORROWER LOCATED AT P.O. BOX 367, 850 WARREN WILSON COLLEGE ROAD,
SWANNANOA, NORTH CAROLINA, 28778, ALL OF THE REAL PROPERTY OF BORROWER
IDENTIFIED ON SCHEDULE 1.40 AND SCHEDULE 9.70 OF THE LOAN AGREEMENT (AS IN
EFFECT IMMEDIATELY PRIOR TO THE DATE HEREOF) HAS BEEN SOLD PRIOR TO THE DATE
HEREOF AND IS NO LONGER OWNED BY BORROWER.

6.             DIP FACILITY FEE.

Borrower shall pay Lender a closing fee in respect of the financing provided by
Lender to Borrower in the Chapter 11 Cases in the amount of $200,000, which
shall be fully earned and payable on the date hereof.

7.             AMENDMENTS.

7.1           AVAILABILITY RESERVES.  SECTION 1.4 OF THE LOAN AGREEMENT IS
HEREBY AMENDED TO ADD THE FOLLOWING CLAUSE (G) AT THE END OF THE FIRST SENTENCE
THEREOF:

“ or (g) to establish the reserve provided for in Section 2.4 of the Financing
Order.”

10

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7.2           ELIGIBLE ACCOUNTS.  SECTION 1.22(M) OF THE LOAN AGREEMENT IS
HEREBY DELETED IN ITS ENTIRETY AND THE FOLLOWING SUBSTITUTED THEREFOR:

“(M)        THE AGGREGATE AMOUNT OF (I) SUCH ACCOUNTS OWING BY A SINGLE ACCOUNT
DEBTOR (OTHER THAN NEW BUFFALO, FORTUNE FASHION, IMPRINTS WHOLESALE AND BRODER
BROS. CO., ITS DIVISIONS, AFFILIATES AND SUBSIDIARIES) DO NOT CONSTITUTE MORE
THAN FIFTEEN (15%) PERCENT OF THE AGGREGATE AMOUNT OF ALL OTHERWISE ELIGIBLE
ACCOUNTS, (II) SUCH ACCOUNTS OWING BY EACH OF NEW BUFFALO, FORTUNE FASHION, AND
IMPRINTS WHOLESALE DO NOT, IN EACH CASE, CONSTITUTE MORE THAN TWENTY (20%)
PERCENT OF THE AGGREGATE AMOUNT OF ALL OTHERWISE ELIGIBLE ACCOUNTS, AND (III)
SUCH ACCOUNTS OWING BY BRODER BROS. CO., ITS DIVISIONS, AFFILIATES AND
SUBSIDIARIES, COLLECTIVELY, DO NOT CONSTITUTE MORE THAN THIRTY-FIVE (35%)
PERCENT OF THE AGGREGATE AMOUNT OF ALL OTHERWISE ELIGIBLE ACCOUNTS; PROVIDED
HOWEVER, THAT, IN EACH OF THE FOREGOING CLAUSES (I), (II) AND (III), THE PORTION
OF THE ACCOUNTS NOT IN EXCESS OF THE APPLICABLE PERCENTAGES MAY BE DEEMED
ELIGIBLE ACCOUNTS.”

7.3           ELIGIBLE INVENTORY.  SECTION 1.25 OF THE LOAN AGREEMENT IS HEREBY
AMENDED BY DELETING THE WORD “AND” FROM BEFORE CLAUSE (L) AND ADDING THE
FOLLOWING CLAUSE (M) TO THE SECOND SENTENCE THEREOF:

“and (m) Inventory located outside the United States of America.”

7.4           EXISTING REAL PROPERTY.  SCHEDULE 1.40 OF THE LOAN AGREEMENT IS
HEREBY AMENDED BY DELETING THE TEXT OF SUCH SCHEDULE IN ITS ENTIRETY AND
SUBSTITUTING THE FOLLOWING THEREFOR:

“NONE.”

7.5           DEFINITION OF GAAP.  THE DEFINITION OF GAAP SET FORTH AT SECTION
1.42 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY ADDING THE FOLLOWING LANGUAGE TO
THE END OF SUCH DEFINITION:

“except that, for purposes of Sections 9.20 and 9.21 hereof, GAAP shall be
determined on the basis of such principles in effect on the date of the
Ratification Agreement and consistent with those used in the preparation of the
most recent audited financial statements delivered to Agent prior to the date
hereof.”

7.6           MORTGAGES.  THE DEFINITION OF MORTGAGES SET FORTH AT SECTION 1.58
OF THE LOAN AGREEMENT IS HEREBY AMENDED BY DELETING THE “.” AT THE END THEREOF
AND SUBSTITUTING THE FOLLOWING THEREFOR:

“, AND (C) THE ASHEVILLE MORTGAGE.”

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7.7           BORROWING BASE.  SECTION 2.1(A)(II)OF THE LOAN AGREEMENT IS HEREBY
DELETED IN ITS ENTIRETY AND THE FOLLOWING SUBSTITUTED THEREFOR:

“(ii) the lesser of:

(A) Inventory Sublimit or

(B) the sum of :

(1) the lesser of (aa) sixty (60%) percent multiplied by the Value of the
Eligible Inventory of Borrower consisting of finished goods or (bb) eighty-five
(85%) percent of the Net Recovery Percentage multiplied by the Value of such
Eligible Inventory, plus

(2) the lesser of (aa) $2,000,000 or (bb) the lesser of (i) fifty (50%) percent
multiplied by the Value of the Eligible Inventory of Borrower consisting of raw
materials or (ii) eighty-five (85%) percent of the Net Recovery Percentage
multiplied by the Value of such Inventory.”

7.8           LIMITS AND SUBLIMITS.  SECTION 3 OF THE LOAN AGREEMENT IS HEREBY
AMENDED BY ADDING THE FOLLOWING NEW SECTION 3.6 AT THE END THEREOF:

“3.6         All limits and sublimits set forth in the Loan Agreement, and any
formula or other provision to which a limit or sublimit may apply, shall be
determined on an aggregate basis considering together both the Pre-Petition
Obligations and the Post-Petition Obligations.”

7.9           FOREIGN SUBSIDIARIES.  SECTION 5 OF THE LOAN AGREEMENT IS HEREBY
AMENDED TO ADD THE FOLLOWING SUBSECTION 5.10 THERETO:

“5.10  No later than sixty (60) days after the entry date of the Interim
Financing Order (or such later date as the Lender, in its discretion, shall
agree), (i) Borrower and Guarantors shall execute and deliver to Lender in form
and substance satisfactory to Lender, a pledge and security agreement (and/or
other appropriate documentation, in accordance with the jurisdiction of
incorporation of such Foreign Subsidiary) granting to Lender a first pledge of
and lien on sixty-five percent (65%) of the issued and outstanding shares of
Capital Stock of each Foreign Subsidiary (including, without limitation, A.K.H.
S.A., LIVNA, Limitada, Estrella Mfg. Ltda. S.A., Star, S.A., Annic LLC, S.A.,
and Anvil GmbH), and (ii) to the extent the capital stock of such foreign
subsidiaries are certificated, Borrower and such Guarantor shall deliver the
original stock certificates evidencing such shares of Capital Stock together
with stock powers (or other appropriate instrument) with respect thereto duly
executed in blank, and (iii) Lender shall have received

12

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all other documents, instruments and opinions, Lender deems desirable in order
to obtain a perfected first priority security interest in such Capital Stock.”

7.10         PAYMENTS.  SECTION 6.4 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY
ADDING THE FOLLOWING AT THE END THEREOF:

“Without limiting the generality of the foregoing, Lender may, in its
discretion, apply any such payments or proceeds first to the Pre-Petition
Obligations (as such term is defined in this Agreement) until such Pre-Petition
Obligations are paid and satisfied in full.”

7.11         INVENTORY APPRAISALS.  SECTION 7.3(D) OF THE LOAN AGREEMENT IS
HEREBY DELETED IN ITS ENTIRETY AND THE FOLLOWING SUBSTITUTED THEREFOR:

“(d) upon Lender’s request, Borrower shall, at its expense, no more than once in
any consecutive six (6) month period but at any time or times as Lender may
request on or after and during the continuance of an Event of Default, deliver
or cause to be delivered to Lender written reports or appraisals as to the
Inventory in form, scope and methodology reasonably acceptable to Lender and by
an appraiser reasonably acceptable to Lender, addressed to Lender and upon which
Lender is expressly permitted to rely;”

7.12         EQUIPMENT COVENANTS.  NOTWITHSTANDING SECTION 7.4 OF THE LOAN
AGREEMENT TO THE CONTRARY, BORROWER SHALL BE PERMITTED TO TRANSFER EQUIPMENT
FROM THE “ASHEVILLE” FACILITY LOCATED AT 850 WARREN WILSON COLLEGE ROAD,
SWANNANOA, NORTH CAROLINA, 28778 TO THE “HONDURAS” FACILITY LOCATED AT 800 MTS.
CARRETERS A LA JUTOSA, ZONE LIBRE INHDELVA, CHOLOMA CORTES, HONDURAS, C.A;
PROVIDED, HOWEVER, THAT NOT LESS THAN THIRTY (30) DAYS PRIOR TO TRANSFERRING ANY
SUCH EQUIPMENT FROM THE ASHEVILLE FACILITY TO THE HONDURAS FACILITY, BORROWER
SHALL PROVIDE LENDER WITH A SCHEDULE OF THE EQUIPMENT TO BE MOVED AND THE
MONTH(S) IN WHICH SUCH EQUIPMENT WILL BE MOVED.

7.13         ADDITIONAL FINANCIAL REPORTING REQUIREMENTS.

(A)           SECTION 9.6(A)(I) OF THE LOAN AGREEMENT IS HEREBY AMENDED BY
ADDING THE FOLLOWING LANGUAGE TO THE END OF SUCH SECTION:

“along with a schedule in form reasonably satisfactory to Lender of the
calculations used in determining, as of the end of such month, whether Borrower
and Guarantors were in compliance with the covenants set forth in Sections 9.20
and 9.21 of this Agreement for such month,”

(B)           SECTION 9.6 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY ADDING THE
FOLLOWING NEW SECTION 9.6(F):

 

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“(f)  Borrower and each Guarantor shall also provide Lender with copies of all
financial reports, schedules and other materials and information at any time
furnished by or on behalf of Borrower or any Guarantor to the Bankruptcy Court,
or the U.S. Trustee or to any creditors’ committee or such Borrower’s or
Guarantor’s shareholders, concurrently with the delivery thereof to the
Bankruptcy Court, creditors’ committee, U.S. Trustee or shareholders, as the
case may be.”

7.14         REAL PROPERTY.  SCHEDULE 9.7 OF THE LOAN AGREEMENT IS HEREBY
AMENDED BY DELETING THE TEXT OF SUCH SCHEDULE IN ITS ENTIRETY AND SUBSTITUTING
THE FOLLOWING THEREFOR:

“NONE.”

7.15         COSTS AND EXPENSES.  SECTION 9.16(F) OF THE LOAN AGREEMENT IS
HEREBY AMENDED BY ADDING THE FOLLOWING NEW LANGUAGE AT THE END THEREOF:

“PROVIDED, HOWEVER, THAT LENDER SHALL CONDUCT, AT BORROWER’S SOLE COST AND
EXPENSE, NOT MORE THAN THREE (3) FIELD EXAMINATIONS DURING ANY CONSECUTIVE
TWELVE (12) MONTH PERIOD, BUT AS MANY FIELD EXAMINATIONS AS LENDER MAY DEEM
NECESSARY (EACH AT BORROWER’S SOLE COST AND EXPENSE) ON OR AFTER AN EVENT OF
DEFAULT;”

7.16         SALE OF ASSETS, CONSOLIDATION, MERGER, DISABILITIES, ETC. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTION 9.7(B) OF THE LOAN
AGREEMENT OR ANY OTHER PROVISION OF THE LOAN AGREEMENT OR THE OTHER FINANCING
AGREEMENTS, BORROWER AND GUARANTORS SHALL NOT DIRECTLY OR INDIRECTLY SELL,
TRANSFER, LEASE, ENCUMBER, RETURN OR OTHERWISE DISPOSE OF ANY PORTION OF THE
COLLATERAL OR ANY OTHER ASSETS OF BORROWER AND GUARANTORS, INCLUDING, WITHOUT
LIMITATION, ASSUME, REJECT OR ASSIGN ANY LEASEHOLD INTEREST OR ENTER INTO ANY
AGREEMENT TO RETURN INVENTORY TO VENDOR, WHETHER PURSUANT TO SECTION 546 OF THE
BANKRUPTCY CODE OR OTHERWISE, WITHOUT THE PRIOR WRITTEN CONSENT OF LENDER (AND
NO SUCH CONSENT SHALL BE IMPLIED, FROM ANY OTHER ACTION, INACTION OR
ACQUIESCENCE BY LENDER) EXCEPT FOR SALES OF BORROWER’S AND GUARANTORS’ INVENTORY
IN THE ORDINARY COURSE OF THEIR BUSINESS.

7.17         CAPITAL EXPENDITURES.  SECTION 9 OF THE LOAN AGREEMENT IS HEREBY
AMENDED BY ADDING THE FOLLOWING NEW SECTION 9.20 AT THE END THEREOF:

“9.20  Maximum Capital Expenditures.  Borrower shall not during any period set
forth in Schedule 9.20 hereto, directly or indirectly, make or commit to make,
whether through purchases, capital leases or otherwise, Capital Expenditures in
an aggregate amount in excess of the amount for such period set forth on
Schedule 9.20, excluding Capital Expenditures financed with the proceeds of
Indebtedness or equity from third parties permitted under the terms of this
Agreement.

7.18         EBITDA.  SECTION 9 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY
ADDING THE FOLLOWING NEW SECTION 9.21 AT THE END THEREOF:

 

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“9.21  Minimum EBITDA.  At any time, the EBITDA of Holdings and its Subsidiaries
(on a consolidated basis) for each period set forth on Schedule 9.21 hereto
shall be not less than amounts set forth on Schedule 9.21 hereto with respect to
such period.”

7.19         EVENTS OF DEFAULT.  SECTION 10.1 OF THE LOAN AGREEMENT IS HEREBY
AMENDED AS FOLLOWS:

(A)           SECTIONS 10.1(G) AND (H) ARE HEREBY AMENDED TO DELETE ALL
REFERENCES TO “ANY BORROWER OR ANY OBLIGOR” AND SUBSTITUTE “ANY OBLIGOR (OTHER
THAN DEBTORS)” THEREFOR.

(B)           SECTION 10.1 IS HEREBY AMENDED BY DELETING THE REFERENCE TO THE
WORD “OR” AT THE END OF SECTION 10.1(M), REPLACING THE PERIOD APPEARING AT THE
END OF SECTION 10.1(N) WITH A SEMICOLON, AND ADDING THE FOLLOWING:

“10.1(o)  the occurrence of any condition or event which permits Lender to
exercise any of the remedies set forth in the Financing Order, including,
without limitation, any “Event of Default” (as defined in the Financing Order);

10.1(p)  the termination or non-renewal of the Financing Agreements as provided
for in the Financing Order;

10.1(q) Borrower or any Guarantor suspends or discontinues or is enjoined by any
court or governmental agency from continuing to conduct all or any material part
of its business, or a trustee, receiver or custodian is appointed for Borrower
or any Guarantor, or any of their respective properties;

10.1(r)  any act, condition or event occurring after the date of the
commencement of the Chapter 11 Cases that has or would reasonably expect to have
a Material Adverse Effect upon the assets of Borrower or any Guarantor, or the
Collateral or the rights and remedies of Lender under the Loan Agreement or any
other Financing Agreements or the Financing Order;

10.1(s)  conversion of any Chapter 11 Case to a Chapter 7 case under the
Bankruptcy Code;

10.1(t)  dismissal of any Chapter 11 Case or any subsequent Chapter 7 case
either voluntarily or involuntarily;

10.1(u)  the grant of a lien on or other interest in any property of Borrower or
any Guarantor other than a lien or encumbrance permitted by Section 9.8 hereof
or by the Financing Order or an administrative expense claim other than such

 

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administrative expense claim permitted by the Financing Order or this
Ratification Agreement by the grant of or allowance by the Bankruptcy Court
which is superior to or ranks in parity with Lender’s security interest in or
lien upon the Collateral or Lender’s Superpriority Claim (as defined in the
Financing Order);

10.1(v)  the Financing Order shall be modified, reversed, revoked, remanded,
stayed, rescinded, vacated or amended on appeal or by the Bankruptcy Court
without the prior written consent of Lender (and no such consent shall be
implied from any other authorization or acquiescence by Lender);

10.1(w)  the appointment of a trustee pursuant to Sections 1104(a)(1) or
1104(a)(2) of the Bankruptcy Code;

10.1(x)  the appointment of an examiner with special powers pursuant to Section
1104(a) of the Bankruptcy Code;

10.1(y)  the filing of a plan of reorganization by or on behalf of Borrower or
any Guarantor, to which Lender has not consented in writing, which does not
provide for payment in full of all Obligations on the effective date thereof in
accordance with the terms and conditions contained herein; or

10.1(z) the confirmation of any plan of reorganization in the Chapter 11 Case of
Borrower or any Guarantor, to which Lender has not consented to in writing,
which does not provide for payment in full of all Obligations on the effective
date thereof in accordance with the terms and conditions contained herein.”

7.20         GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL
WAIVER.

(A)           SECTION 11.1(A) OF THE LOAN AGREEMENT IS HEREBY AMENDED BY ADDING
THE FOLLOWING AT THE END THEREOF:  “EXCEPT TO THE EXTENT THAT THE PROVISIONS OF
THE BANKRUPTCY CODE ARE APPLICABLE AND SPECIFICALLY CONFLICT WITH THE
FOREGOING.”

(B)           SECTION 11.1(B) OF THE LOAN AGREEMENT IS HEREBY AMENDED BY
DELETING THE PHRASE “UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK” AND REPLACING IT WITH THE PHRASE “UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND UNITED STATES BANKRUPTCY COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK” THEREFOR.

7.21         TERM OF LOAN AGREEMENT.  THE FIRST TWO SENTENCES OF SECTION 12.1(A)
OF THE LOAN AGREEMENT ARE HEREBY DELETED IN THEIR ENTIRETY AND THE FOLLOWING
SUBSTITUTED THEREFOR:

“This Agreement and the other Financing Agreements shall become effective as of
the date set forth on the first page hereof and shall continue in full force and
effect for a term ending on the earlier to occur of (i) September 28, 2007, or
(ii) the last

 

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termination date set forth in the Interim Financing Order, unless the Permanent
Financing Order has been entered prior to such date, and in such event, then the
last termination date set forth in the Permanent Financing Order; provided,
however that this Agreement and all other Financing Agreements must be
terminated simultaneously.”

7.22         NOTICES.  SECTION 12.2 OF THE LOAN AGREEMENT IS HEREBY AMENDED BY
ADDING THAT ANY NOTICES, REQUESTS AND DEMANDS ALSO BE SENT TO THE FOLLOWING
PARTIES:

If to Borrowers or Guarantors:

Anvil Knitwear, Inc.
228 East 45th Street
New York, New York 10017
Facsimile No.:212.885.9411
Attn: President
Attn: General Counsel

 

 

with a copy to:

Dechert LLP
30 Rockefeller Plaza
New York, NY 10112
Facsimile No.:212.698.3599
Attn: Joel H. Levitin, Esq.

 

 

If to Lender:

Wachovia Bank, National Association
1133 Avenue of the Americas
New York, New York 10036
Attention: Portfolio Manager -ANVIL
Facsimile No.: (212) 545-4283

 

 

with a copy to:

Otterbourg, Steindler, Houston & Rosen, P.C.
230 Park Avenue
New York, New York 10169
Facsimile No.: (212) 682-6104
Attn: Jonathan N. Helfat, Esq.

8.             RELEASE.

8.1           RELEASE OF PRE-PETITION CLAIMS.

(A)           UPON THE EARLIER OF (I) THE ENTRY OF THE PERMANENT FINANCING ORDER
OR (II) UPON ENTRY OF AN ORDER EXTENDING THE TERM OF THE INTERIM FINANCING ORDER
BEYOND THIRTY (30) CALENDAR DAYS AFTER THE DATE OF THE INTERIM FINANCING ORDER,
IN CONSIDERATION OF THE AGREEMENTS OF LENDER CONTAINED HEREIN AND THE MAKING OF
ANY LOANS BY LENDER, EACH OF BORROWER AND EACH GUARANTOR, PURSUANT TO THE LOAN
AGREEMENT, AND FOR OTHER GOOD AND VALUABLE

 

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CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, ON
BEHALF OF ITSELF AND ITS RESPECTIVE SUCCESSORS, ASSIGNS, AND OTHER LEGAL
REPRESENTATIVES, HEREBY ABSOLUTELY, UNCONDITIONALLY AND IRREVOCABLY RELEASES,
REMISES AND FOREVER DISCHARGES THE LENDER, ITS SUCCESSORS AND ASSIGNS, AND THEIR
RESPECTIVE PRESENT AND FORMER SHAREHOLDERS, AFFILIATES, SUBSIDIARIES, DIVISIONS,
PREDECESSORS, DIRECTORS, OFFICERS, ATTORNEYS, EMPLOYEES AND OTHER
REPRESENTATIVES (LENDER AND ALL SUCH OTHER PARTIES BEING HEREINAFTER REFERRED TO
COLLECTIVELY AS THE “RELEASEES” AND INDIVIDUALLY AS A “RELEASEE”), OF AND FROM
ALL DEMANDS, ACTIONS, CAUSES OF ACTION, SUITS, COVENANTS, CONTRACTS,
CONTROVERSIES, AGREEMENTS, PROMISES, SUMS OF MONEY, ACCOUNTS, BILLS, RECKONINGS,
DAMAGES AND ANY AND ALL OTHER CLAIMS, COUNTERCLAIMS, DEFENSES, RIGHTS OF
SET-OFF, DEMANDS AND LIABILITIES WHATSOEVER (INDIVIDUALLY, A “PRE-PETITION
RELEASED CLAIM” AND COLLECTIVELY, “PRE-PETITION RELEASED CLAIMS”) OF EVERY NAME
AND NATURE, KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, BOTH AT LAW AND IN
EQUITY, WHICH BORROWER AND EACH GUARANTOR, OR ANY OF ITS RESPECTIVE SUCCESSORS,
ASSIGNS, OR OTHER LEGAL REPRESENTATIVES MAY NOW OR HEREAFTER OWN, HOLD, HAVE OR
CLAIM TO HAVE AGAINST THE RELEASEES OR ANY OF THEM FOR, UPON, OR BY REASON OF
ANY NATURE, CAUSE OR THING WHATSOEVER WHICH ARISES AT ANY TIME ON OR PRIOR TO
THE DAY AND DATE OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, FOR OR ON
ACCOUNT OF, OR IN RELATION TO, OR IN ANY WAY IN CONNECTION WITH THE LOAN
AGREEMENT, AS AMENDED AND SUPPLEMENTED THROUGH THE DATE HEREOF, AND THE OTHER
FINANCING AGREEMENTS.

(B)           UPON THE EARLIER OF (I) THE ENTRY OF THE PERMANENT FINANCING ORDER
OR (II) UPON ENTRY OF AN ORDER EXTENDING THE TERM OF THE INTERIM FINANCING ORDER
BEYOND THIRTY (30) CALENDAR DAYS AFTER THE DATE OF THE INTERIM FINANCING ORDER,
BORROWER AND EACH GUARANTOR, ON BEHALF OF ITSELF AND ITS SUCCESSORS, ASSIGNS,
AND OTHER LEGAL REPRESENTATIVES, HEREBY ABSOLUTELY, UNCONDITIONALLY AND
IRREVOCABLY, COVENANTS AND AGREES WITH EACH RELEASEE THAT IT WILL NOT SUE (AT
LAW, IN EQUITY, IN ANY REGULATORY PROCEEDING OR OTHERWISE) ANY RELEASEE ON THE
BASIS OF ANY PRE-PETITION RELEASED CLAIM RELEASED, REMISED AND DISCHARGED BY
BORROWER AND EACH GUARANTOR PURSUANT TO THIS SECTION 8.1.  IF BORROWER OR ANY
GUARANTOR VIOLATES THE FOREGOING COVENANT, BORROWER AND GUARANTORS AGREE TO PAY,
IN ADDITION TO SUCH OTHER DAMAGES AS ANY RELEASEE MAY SUSTAIN AS A RESULT OF
SUCH VIOLATION, ALL ATTORNEYS’ FEES AND COSTS INCURRED BY ANY RELEASEE AS A
RESULT OF SUCH VIOLATION.

8.2           RELEASE OF POST-PETITION CLAIMS. UPON (A) THE RECEIPT BY LENDER OF
PAYMENT IN FULL OF ALL OBLIGATIONS IN CASH OR OTHER IMMEDIATELY AVAILABLE FUNDS,
PLUS CASH COLLATERAL OR OTHER COLLATERAL SECURITY ACCEPTABLE TO LENDER TO SECURE
ANY OBLIGATIONS THAT SURVIVE OR CONTINUE BEYOND THE TERMINATION OF THE FINANCING
AGREEMENTS, AND (B) THE TERMINATION OF THE FINANCING AGREEMENTS (THE “PAYMENT
DATE”), IN CONSIDERATION OF THE AGREEMENTS OF LENDER CONTAINED HEREIN AND THE
MAKING OF ANY LOANS BY LENDER, BORROWER AND EACH GUARANTOR HEREBY COVENANTS AND
AGREES TO EXECUTE AND DELIVER IN FAVOR OF LENDER A VALID AND BINDING TERMINATION
AND RELEASE AGREEMENT, IN FORM AND SUBSTANCE SATISFACTORY TO LENDER.  IF
BORROWER OR ANY GUARANTOR VIOLATES SUCH COVENANT, BORROWER AND GUARANTORS AGREE
TO PAY, IN ADDITION TO SUCH OTHER DAMAGES AS ANY RELEASEE MAY SUSTAIN AS A
RESULT OF SUCH VIOLATION, ALL ATTORNEYS’ FEES AND COSTS INCURRED BY ANY RELEASEE
AS A RESULT OF SUCH VIOLATION.

8.3           RELEASES GENERALLY.

(A)           BORROWER AND EACH GUARANTOR UNDERSTANDS, ACKNOWLEDGES AND AGREES
THAT THE RELEASES SET FORTH ABOVE IN SECTIONS 8.1 AND 8.2 HEREOF  MAY BE PLEADED
AS A FULL

 

18

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AND COMPLETE DEFENSE AND MAY BE USED AS A BASIS FOR AN INJUNCTION AGAINST ANY
ACTION, SUIT OR OTHER PROCEEDING WHICH MAY BE INSTITUTED, PROSECUTED OR
ATTEMPTED IN BREACH OF THE PROVISIONS OF SUCH RELEASES.

(B)           BORROWER AND EACH GUARANTOR AGREES THAT NO FACT, EVENT,
CIRCUMSTANCE, EVIDENCE OR TRANSACTION WHICH COULD NOW BE ASSERTED OR WHICH MAY
HEREAFTER BE DISCOVERED SHALL AFFECT IN ANY MANNER THE FINAL AND UNCONDITIONAL
NATURE OF THE RELEASES SET FORTH IN SECTION 8.1 HEREOF AND, WHEN MADE, SECTION
8.2 HEREOF.

9.             CONDITIONS PRECEDENT.

In addition to any other conditions contained herein or the Loan Agreement, as
in effect immediately prior to the Petition Date, with respect to the Loans and
other financial accommodations available to Borrower (all of which conditions,
except as modified or made pursuant to this Ratification Agreement shall remain
applicable to the Loans and be applicable to other financial accommodations
available to Borrower), the following are conditions to Lender’s obligation to
extend further loans, advances or other financial accommodations to Borrower
pursuant to the Loan Agreement:

9.1           BORROWER AND GUARANTORS SHALL FURNISH TO LENDER ALL FINANCIAL
INFORMATION, PROJECTIONS, BUDGETS, BUSINESS PLANS, CASH FLOWS AND SUCH OTHER
INFORMATION AS LENDER SHALL REASONABLY REQUEST FROM TIME TO TIME;

9.2           AS OF THE PETITION DATE, THE EXISTING FINANCING AGREEMENTS SHALL
NOT HAVE BEEN TERMINATED;

9.3           NO TRUSTEE, EXAMINER OR RECEIVER OR THE LIKE SHALL HAVE BEEN
APPOINTED OR DESIGNATED WITH RESPECT TO BORROWER OR ANY GUARANTOR, AS DEBTOR AND
DEBTOR-IN-POSSESSION, OR ITS RESPECTIVE BUSINESS, PROPERTIES AND ASSETS AND NO
MOTION OR PROCEEDING SHALL BE PENDING SEEKING SUCH RELIEF;

9.4           THE EXECUTION AND DELIVERY OF THIS RATIFICATION AGREEMENT AND ALL
OTHER FINANCING AGREEMENTS TO BE DELIVERED IN CONNECTION HEREWITH BY BORROWER
AND GUARANTORS IN FORM AND SUBSTANCE SATISFACTORY TO LENDER;

9.5           THE INTERIM FINANCING ORDER OR OTHER ORDER(S) OF THE BANKRUPTCY
COURT SHALL RATIFY AND AMEND THE BLOCKED ACCOUNT AGREEMENT AND DEPOSIT ACCOUNT
ARRANGEMENTS OF BORROWER AND GUARANTORS TO REFLECT THE COMMENCEMENT OF THE
CHAPTER 11 CASES, THAT EACH DEBTOR, AS DEBTOR AND DEBTOR-IN-POSSESSION, IS THE
SUCCESSOR IN INTEREST TO SUCH BORROWER OR GUARANTOR, AS THE CASE MAY BE, THAT
THE OBLIGATIONS INCLUDE BOTH THE PRE-PETITION OBLIGATIONS AND THE POST-PETITION
OBLIGATIONS, THAT THE COLLATERAL INCLUDES BOTH THE PRE-PETITION COLLATERAL AND
THE POST-PETITION COLLATERAL AS PROVIDED FOR HEREIN AND THE OTHER TERMS AND
CONDITIONS OF THIS RATIFICATION AGREEMENT;

9.6           THE EXECUTION OR DELIVERY TO LENDER OF ALL OTHER FINANCING
AGREEMENTS, AND OTHER AGREEMENTS, DOCUMENTS AND INSTRUMENTS WHICH, IN THE GOOD
FAITH JUDGMENT, OF LENDER ARE NECESSARY OR APPROPRIATE.  THE IMPLEMENTATION OF
THE TERMS OF THIS RATIFICATION AGREEMENT AND THE OTHER FINANCING AGREEMENTS, AS
MODIFIED PURSUANT TO THIS RATIFICATION AGREEMENT, ALL OF

 

19

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WHICH CONTAINS PROVISIONS, REPRESENTATIONS, WARRANTIES, COVENANTS AND EVENTS OF
DEFAULT, AS ARE SATISFACTORY TO LENDER AND ITS COUNSEL;

9.7           SATISFACTORY REVIEW BY COUNSEL FOR LENDER OF LEGAL ISSUES
ATTENDANT TO THE POST-PETITION FINANCING TRANSACTIONS CONTEMPLATED HEREUNDER;

9.8           BORROWER AND EACH GUARANTOR SHALL COMPLY IN FULL WITH THE NOTICE
AND OTHER REQUIREMENTS OF THE BANKRUPTCY CODE AND THE APPLICABLE BANKRUPTCY
RULES WITH RESPECT TO ANY RELEVANT  FINANCING ORDER IN A MANNER ACCEPTABLE TO
LENDER AND ITS COUNSEL, AND AN INTERIM FINANCING ORDER SHALL HAVE BEEN ENTERED
BY THE BANKRUPTCY COURT (THE “INTERIM FINANCING ORDER”) AUTHORIZING THE SECURED
FINANCING UNDER THE FINANCING AGREEMENTS AS RATIFIED AND AMENDED HEREUNDER ON
THE TERMS AND CONDITIONS SET FORTH IN THIS RATIFICATION AGREEMENT AND, AMONG
OTHER THINGS, MODIFYING THE AUTOMATIC STAY, AUTHORIZING AND GRANTING THE SENIOR
SECURITY INTEREST IN LIENS IN FAVOR OF LENDER DESCRIBED IN THIS RATIFICATION
AGREEMENT AND IN THE FINANCING ORDER, AND GRANTING SUPER-PRIORITY EXPENSE CLAIMS
TO LENDER WITH RESPECT TO ALL OBLIGATIONS DUE LENDER.  THE INTERIM FINANCING
ORDER SHALL AUTHORIZE POST-PETITION FINANCING UNDER THE TERMS SET FORTH IN THIS
RATIFICATION AGREEMENT IN AN AMOUNT ACCEPTABLE TO LENDER, IN ITS SOLE
DISCRETION, AND IT SHALL CONTAIN SUCH OTHER TERMS OR PROVISIONS AS LENDER AND
ITS COUNSEL SHALL REQUIRE;

9.9           WITH RESPECT TO FURTHER CREDIT AFTER EXPIRATION OF THE INTERIM
FINANCING ORDER, ON OR BEFORE THE EXPIRATION OF THE INTERIM FINANCING ORDER, THE
BANKRUPTCY COURT SHALL HAVE ENTERED A PERMANENT FINANCING ORDER AUTHORIZING THE
SECURED FINANCING ON THE TERMS AND CONDITIONS SET FORTH IN THIS RATIFICATION
AGREEMENT, GRANTING TO LENDER THE SENIOR SECURITY INTEREST AND LIENS DESCRIBED
ABOVE AND SUPER-PRIORITY ADMINISTRATIVE EXPENSE CLAIMS DESCRIBED ABOVE (EXCEPT
AS OTHERWISE SPECIFICALLY PROVIDED IN THE INTERIM FINANCING ORDER), AND
MODIFYING THE AUTOMATIC STAY AND OTHER PROVISIONS REQUIRED BY LENDER AND ITS
COUNSEL (“PERMANENT FINANCING ORDER”).  LENDER SHALL NOT PROVIDE ANY LOANS (OR
OTHER FINANCIAL ACCOMMODATIONS) OTHER THAN THOSE AUTHORIZED UNDER THE INTERIM
FINANCING ORDER UNLESS, ON OR BEFORE THE EXPIRATION OF THE INTERIM FINANCING
ORDER, THE PERMANENT FINANCING ORDER SHALL HAVE BEEN ENTERED, AND THERE SHALL BE
NO APPEAL OR OTHER CONTEST WITH RESPECT TO EITHER THE INTERIM FINANCING ORDER OR
THE PERMANENT FINANCING ORDER AND THE TIME TO APPEAL TO CONTEST SUCH ORDER SHALL
HAVE EXPIRED;

9.10         OTHER THAN THE VOLUNTARY COMMENCEMENT OF THE CHAPTER 11 CASES, NO
MATERIAL IMPAIRMENT OF THE PRIORITY OF LENDER’S SECURITY INTERESTS IN THE
COLLATERAL SHALL HAVE OCCURRED FROM THE DATE OF THE LATEST FIELD EXAMINATIONS OF
LENDER TO THE PETITION DATE;

9.11         NO EVENT OF DEFAULT SHALL HAVE OCCURRED OR BE EXISTING UNDER ANY OF
THE EXISTING FINANCING AGREEMENTS, AS MODIFIED PURSUANT HERETO, AND ASSUMED BY
BORROWERS AND GUARANTORS; AND

9.12         THE EXECUTION AND/OR DELIVERY IN FAVOR OF LENDER OF THE ASHEVILLE
MORTGAGE, IN FORM AND SUBSTANCE SATISFACTORY TO LENDER AND IN FORM APPROPRIATE
FOR RECORDING IN THE REAL ESTATE RECORDS OF THE JURISDICTION IN WHICH SUCH REAL
PROPERTY IS LOCATED; PROVIDED, HOWEVER, THAT, UNTIL SUCH TIME AS LENDER SHALL
PROVIDE BORROWER WITH WRITTEN NOTICE TO THE CONTRARY, SECTIONS 4.1(I) AND 4.1(J)
OF THE LOAN AGREEMENT SHALL NOT BE APPLICABLE TO THE ASHEVILLE MORTGAGE.

 

20

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10.           MISCELLANEOUS.

10.1         AMENDMENTS AND WAIVERS.  NEITHER THIS RATIFICATION AGREEMENT NOR
ANY OTHER INSTRUMENT OR DOCUMENT REFERRED TO HEREIN OR THEREIN MAY BE CHANGED,
WAIVED, DISCHARGED OR TERMINATED ORALLY, BUT ONLY BY AN INSTRUMENT IN WRITING
SIGNED BY THE PARTY AGAINST WHOM ENFORCEMENT OF THE CHANGE, WAIVER, DISCHARGE OR
TERMINATION IS SOUGHT.

10.2         FURTHER ASSURANCES.  BORROWER AND EACH GUARANTOR SHALL, AT ITS
EXPENSE, AT ANY TIME OR TIMES DULY EXECUTE AND DELIVER, OR SHALL USE ITS BEST
EFFORTS TO CAUSE TO BE DULY EXECUTED AND DELIVERED, SUCH FURTHER AGREEMENTS,
INSTRUMENTS AND DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ADDITIONAL SECURITY
AGREEMENTS, COLLATERAL ASSIGNMENTS, UCC FINANCING STATEMENTS OR AMENDMENTS OR
CONTINUATIONS THEREOF, LANDLORD’S OR MORTGAGEE’S WAIVERS OF LIENS AND CONSENTS
TO THE EXERCISE BY LENDER OF ALL THE RIGHTS AND REMEDIES HEREUNDER, UNDER ANY OF
THE OTHER FINANCING AGREEMENTS, ANY FINANCING ORDER OR APPLICABLE LAW WITH
RESPECT TO THE COLLATERAL, AND DO OR USE ITS BEST EFFORTS TO CAUSE TO BE DONE
SUCH FURTHER ACTS AS MAY BE REASONABLY NECESSARY OR PROPER IN LENDER’S OPINION
TO EVIDENCE, PERFECT, MAINTAIN AND ENFORCE THE SECURITY INTERESTS OF LENDER, AND
THE PRIORITY THEREOF, IN THE COLLATERAL AND TO OTHERWISE EFFECTUATE THE
PROVISIONS OR PURPOSES OF THIS RATIFICATION AGREEMENT, ANY OF THE OTHER 
FINANCING AGREEMENTS OR THE FINANCING ORDER.  UPON THE REQUEST OF LENDER, AT ANY
TIME AND FROM TIME TO TIME, BORROWER AND EACH GUARANTOR SHALL, AT ITS COST AND
EXPENSE, DO, MAKE, EXECUTE, DELIVER AND RECORD, REGISTER OR FILE, UPDATES TO THE
FILINGS OF LENDER WITH RESPECT TO THE INTELLECTUAL PROPERTY WITH THE UNITED
STATES PATENT AND TRADEMARK OFFICE, THE FINANCING STATEMENTS, MORTGAGES, DEEDS
OF TRUST, DEEDS TO SECURE DEBT, AND OTHER INSTRUMENTS, ACTS, PLEDGES,
ASSIGNMENTS AND TRANSFERS (OR USE ITS BEST EFFORTS TO CAUSE THE SAME TO BE DONE)
AND WILL DELIVER TO LENDER SUCH INSTRUMENTS EVIDENCING ITEMS OF COLLATERAL AS
MAY BE REQUESTED BY LENDER.

10.3         HEADINGS.  THE HEADINGS USED HEREIN ARE FOR CONVENIENCE ONLY AND DO
NOT CONSTITUTE MATTERS TO BE CONSIDERED IN INTERPRETING THIS RATIFICATION
AGREEMENT.

10.4         COUNTERPARTS.  THIS RATIFICATION AGREEMENT MAY BE EXECUTED IN ANY
NUMBER OF COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED TO BE AN ORIGINAL, BUT ALL
OF WHICH SHALL TOGETHER CONSTITUTE ONE AND THE SAME AGREEMENT.  IN MAKING PROOF
OF THIS RATIFICATION AGREEMENT, IT SHALL NOT BE NECESSARY TO PRODUCE OR ACCOUNT
FOR MORE THAN ONE COUNTERPART THEREOF SIGNED BY EACH OF THE PARTIES HERETO. 
DELIVERY OF AN EXECUTED COUNTERPART OF THIS RATIFICATION AGREEMENT BY
TELEFACSIMILE SHALL HAVE THE SAME FORCE AND EFFECT AS DELIVERY OF AN ORIGINAL
EXECUTED COUNTERPART OF THIS RATIFICATION AGREEMENT.  ANY PARTY DELIVERING AN
EXECUTED COUNTERPART OF THIS RATIFICATION AGREEMENT BY TELEFACSIMILE ALSO SHALL
DELIVER AN ORIGINAL EXECUTED COUNTERPART OF THIS RATIFICATION AGREEMENT, BUT THE
FAILURE TO DELIVER AN ORIGINAL EXECUTED COUNTERPART SHALL NOT AFFECT THE
VALIDITY, ENFORCEABILITY, AND BINDING EFFECT OF THIS RATIFICATION AGREEMENT AS
TO SUCH PARTY OR ANY OTHER PARTY.

10.5         ADDITIONAL EVENTS OF DEFAULT.  THE PARTIES HERETO ACKNOWLEDGE,
CONFIRM AND AGREE THAT THE FAILURE OF BORROWER OR ANY GUARANTOR TO COMPLY WITH
ANY OF THE COVENANTS, CONDITIONS AND AGREEMENTS CONTAINED HEREIN OR IN ANY OTHER
AGREEMENT, DOCUMENT OR INSTRUMENT AT ANY TIME EXECUTED BY SUCH BORROWER OR
GUARANTOR IN CONNECTION HEREWITH SHALL CONSTITUTE AN EVENT OF DEFAULT UNDER THE
FINANCING AGREEMENTS.

 

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10.6         COSTS AND EXPENSES.  BORROWER SHALL PAY TO LENDER ON DEMAND ALL
COSTS AND EXPENSES THAT LENDER PAYS OR INCURS IN CONNECTION WITH THE
NEGOTIATION, PREPARATION, CONSUMMATION, ADMINISTRATION, ENFORCEMENT, AND
TERMINATION OF THIS RATIFICATION AGREEMENT AND THE OTHER FINANCING AGREEMENTS
AND THE FINANCING ORDER, INCLUDING, WITHOUT LIMITATION: (A) REASONABLE
ATTORNEYS’ AND PARALEGALS’ FEES AND DISBURSEMENTS OF COUNSEL TO, AND REASONABLE
FEES AND EXPENSES OF CONSULTANTS, ACCOUNTANTS AND OTHER PROFESSIONALS RETAINED
BY, LENDER; (B) COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ AND
PARALEGALS’ FEES AND DISBURSEMENTS) FOR ANY AMENDMENT, SUPPLEMENT, WAIVER,
CONSENT, OR SUBSEQUENT CLOSING IN CONNECTION WITH THIS RATIFICATION AGREEMENT,
THE OTHER FINANCING AGREEMENTS, THE FINANCING ORDER AND THE TRANSACTIONS
CONTEMPLATED THEREBY; (C) TAXES, FEES AND OTHER CHARGES FOR RECORDING ANY
AGREEMENTS OR DOCUMENTS WITH ANY GOVERNMENTAL AUTHORITY, AND THE FILING OF UCC
FINANCING STATEMENTS AND CONTINUATIONS, AND OTHER ACTIONS TO PERFECT, PROTECT,
AND CONTINUE THE SECURITY INTERESTS AND LIENS OF LENDER IN THE COLLATERAL; (D)
SUMS PAID OR INCURRED TO PAY ANY AMOUNT OR TAKE ANY ACTION REQUIRED OF BORROWER
AND GUARANTORS UNDER THE FINANCING AGREEMENTS OR THE FINANCING ORDER THAT
BORROWER AND GUARANTORS FAIL TO PAY OR TAKE; (E) COSTS OF APPRAISALS,
INSPECTIONS AND VERIFICATIONS OF THE COLLATERAL AND INCLUDING TRAVEL, LODGING,
AND MEALS FOR INSPECTIONS OF THE COLLATERAL AND THE DEBTORS’ OPERATIONS BY
LENDER OR ITS AGENT AND TO ATTEND COURT HEARINGS OR OTHERWISE IN CONNECTION WITH
THE CHAPTER 11 CASES; (F) COSTS AND EXPENSES OF PRESERVING AND PROTECTING THE
COLLATERAL; (G) ALL OUT-OF-POCKET EXPENSES AND COSTS HERETOFORE AND FROM TIME TO
TIME HEREAFTER INCURRED BY THE LENDER DURING THE COURSE OF PERIODIC FIELD
EXAMINATIONS OF THE COLLATERAL AND DEBTORS’ OPERATIONS, PLUS A PER DIEM CHARGE
AT THE RATE OF $750 PER PERSON PER DAY FOR LENDER’S EXAMINERS IN THE FIELD AND
OFFICE; AND (H) COSTS AND EXPENSES (INCLUDING ATTORNEYS’ AND PARALEGALS’ FEES
AND DISBURSEMENTS) PAID OR INCURRED TO OBTAIN PAYMENT OF THE OBLIGATIONS,
ENFORCE THE SECURITY INTERESTS AND LIENS OF LENDER, SELL OR OTHERWISE REALIZE
UPON THE COLLATERAL, AND OTHERWISE ENFORCE THE PROVISIONS OF THIS RATIFICATION
AGREEMENT, THE OTHER FINANCING AGREEMENTS AND THE FINANCING ORDER, OR TO DEFEND
ANY CLAIMS MADE OR THREATENED AGAINST LENDER ARISING OUT OF THE TRANSACTIONS
CONTEMPLATED HEREBY (INCLUDING, WITHOUT LIMITATION, PREPARATIONS FOR AND
CONSULTATIONS CONCERNING ANY SUCH MATTERS).  THE FOREGOING SHALL NOT BE
CONSTRUED TO LIMIT ANY OTHER PROVISIONS OF THE FINANCING AGREEMENTS REGARDING
COSTS AND EXPENSES TO BE PAID BY BORROWERS.  ALL SUMS PROVIDED FOR IN THIS
SECTION 10.6 SHALL BE PART OF THE OBLIGATIONS, SHALL BE PAYABLE ON DEMAND, AND
SHALL ACCRUE INTEREST AFTER DEMAND FOR PAYMENT THEREOF AT THE HIGHEST RATE OF
INTEREST THEN PAYABLE UNDER THE FINANCING AGREEMENTS.  LENDER IS HEREBY
IRREVOCABLY AUTHORIZED TO CHARGE ANY AMOUNTS PAYABLE HEREUNDER DIRECTLY TO ANY
OF THE ACCOUNT(S) MAINTAINED BY LENDER WITH RESPECT TO BORROWER OR ANY
GUARANTOR.

10.7         EFFECTIVENESS.  THIS RATIFICATION AGREEMENT SHALL BECOME EFFECTIVE
UPON THE EXECUTION HEREOF BY LENDER AND THE ENTRY OF THE INTERIM FINANCING
ORDER.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Ratification Agreement
to be duly executed as of the day and year first above written.

 

BORROWER

 

 

 

ANVIL KNITWEAR, INC.

 

as Debtor and Debtor-in-Possession

 

 

 

By:

/s/ ANTHONY CORSANO

 

 

 

 

Title:

President

 

 

 

 

 

 

 

GUARANTORS

 

 

 

ANVIL HOLDINGS, INC.

 

as Debtor and Debtor-in-Possession

 

 

 

By:

/s/ ANTHONY CORSANO

 

 

 

 

Title:

President

 

 

 

 

 

 

 

SPECTRATEX, INC.

 

as Debtor and Debtor-in-Possession

 

 

 

By:

/s/ ANTHONY CORSANO

 

 

 

 

Title:

President

 

 

 

 

 

 

 

LENDER:

 

 

 

WACHOVIA BANK, NATIONAL

 

ASSOCIATION, successor by merger to Congress

 

Financial Corporation

 

 

 

By:

/s/ THOMAS GRABOSKY

 

 

 

 

Title:

Director

 

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SCHEDULE 9.20

Period

 

Maximum CapEx

One month ended October 2006

 

$1,000,000

One month ended November 2006

 

$1,000,000

One month ended December 2006

 

$1,000,000

One month ended January 2007

 

$1,000,000

One month ended February 2007

 

$700,000

One month ended March 2007

 

$700,000

One month ended April 2007

 

$500,000

One month ended May 2007

 

$500,000

One month ended June 2007

 

$300,000

One month ended July 2007

 

$300,000

One month ended August 2007

 

$300,000

One month ended September 2007

 

$300,000

 

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SCHEDULE 9.21

Period

 

Cumulative Minimum EBITDA

One month ended October 2006

 

($500,000)

Two months ended November 2006

 

($1,250,000)

Three months ended December 2006

 

($1,000,000)

Four months ended January 2007

 

($250,000)

One month ended February 2007

 

$250,000

Two months ended March 2007

 

$500,000

Three months ended April 2007

 

$1,000,000

Four months ended May 2007

 

$1,500,000

Five Months ended June 2007

 

$2,000,000

Six Months ended July 2007

 

$2,500,000

Seven Months ended August 2007

 

$3,000,000

Eight Months ended September 2007

 

$3,500,000

 

 

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