**Exhibit 10(a)**

**FIFTH AMENDMENT AND FORBEARANCE AGREEMENT**

**THIS FIFTH AMENDMENT AND FORBEARANCE AGREEMENT** (this "Agreement"), dated andeffective the 31st day of December, 2002 (the "Effective Date"), by and among **SPEIZMAN INDUSTRIES, INC.,** a Delaware company("Speizman"), **SPEIZMAN YARN EQUIPMENT, INC.**, a South Carolina company ("Speizman Yarn"), **WINK DAVIS EQUIPMENT COMPANY,INC**., a Georgia company ("Wink Davis"), **TODD MOTION CONTROLS, INC.**, a North Carolina company ("Todd Motion" and togetherwith Speizman, Speizman Yarn, Wink Davis and any future or indirect subsidiaries of Speizman or of any other entities listed above,the "Borrowers"), jointly and severally and their respective successors and assigns, and **SOUTHTRUST BANK** ("Lender").

**RECITALS****:**

**WHEREAS**, the Borrowers above entered into that certain Credit FacilityAgreement, dated as of May 31, 2000 (the "Credit Agreement") with Lender for the purpose of establishing a $17,500,000 RevolvingCredit Facility and a $15,000,000 Letter of Credit Facility with the Lender in favor of the Borrowers (collectively, with all otherobligations owed by Borrowers to SouthTrust, the "Obligations") (all terms not otherwise defined herein shall have the meaningascribed to it in the Credit Agreement); and

**WHEREAS**, the parties amended the Credit Agreement pursuant to that certainAmendment and Forbearance Agreement dated as of the 13th day of November, 2000 (the "First Amendment"); and

**WHEREAS**, the parties amended the Credit Agreement pursuant to that certainSecond Amendment and Forbearance Agreement dated July 1, 2001 (the "Second Amendment"); and

**WHEREAS**, the parties amended the Credit Agreement pursuant to that certainThird Amendment and Forbearance Agreement dated February 19, 2002 (the "Third Amendment"); and

**WHEREAS,** the parties amended the Credit Agreement pursuant to that certainFourth Amendment and Forbearance Agreement dated July 31, 2002 (the "Fourth Amendment," and collectively with the First Amendment,the Second Amendment, and the Third Amendment, the "Amendments");

**WHEREAS,** pursuant to the Amendments, Lender’s outstanding commitmentunder the Revolving Credit Facility has been reduced to $15,000,000 (subject to the borrowing base formula set forth in the CreditFacility as amended pursuant to the Amendments and herein, regarding availability under the Revolving Credit Facility), and theoutstanding commitment under the Letter of Credit Facility has been reduced to  $6,000,000; and

**WHEREAS**, the Borrowers have requested the Lender to temporarily modifycertain terms of the Credit Agreement and to forbear from taking remedial actions as a result of their non-compliance with certaincovenants and warranties in the Credit Agreement (the "Existing

 

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Noncompliance") and to extend the Forbearance Period as set forthin the Fourth Amendment; and

**WHEREAS**, the Lender is willing to accommodate the Borrowers under the termsset forth in this Agreement; and

**WHEREAS**,   the Lender is willing to grant the forbearancerequested by the Borrowers, but only upon the terms and conditions set forth in this Agreement.

**NOW, THEREFORE,** the Borrowers and the Lender agree as follows:

1.         Borrowers acknowledge and agree that the foregoing recitals are true, correct, and complete.

2.         “Existing Noncompliance”: Borrowers acknowledge that as of the date hereof, they are not in compliance with Sections10.16, 10.17, 10.18 and 10.19 of the Credit Agreement and as set forth in Sections 4.01(a), (c) and (d) of the SecondAmendment.  These constitute the sole Existing Noncompliance conditions.  As a result, the Lender could declare an eventof default under the Credit Agreement and exercise its rights and remedies thereunder and under the related Loan Documents.

3.         Except as expressly set forth herein, the terms and conditions of the Credit Agreement remain in full force and effect. This Agreement shall be a Loan Document.

4.         Lender agrees that, in respect of the Existing Noncompliance, during the Forbearance Period (as defined below), Lender will notenforce or exercise any remedies available to it under the Loan Documents, and will not seek collection of the Loans from theBorrowers, except as set forth herein.  As used herein, the term "Forbearance Period" means the period of time commencing onas of the date of this Agreement and ending on March 31, 2003, subject to an earlier termination of the Forbearance Period asprovided in Section 6 below.

5.         Interest shall continue to accrue on the principal of the Loans, as set forth in the Credit Agreement, as amended, until suchprincipal is paid in full. During the Forbearance Period, Borrowers shall make all payments in accordance with the payment termsset forth in the respective Loan Documents.

6.         Notwithstanding the provisions of Section 2 above, the Forbearance Period shall  automatically terminate without furthernotice to the Borrowers or any other person (all notice otherwise required by the Loan Documents or otherwise being hereby waived)if (*i*) any case or other proceeding is instituted by or against Borrowers under any state or federal law relating to thebankruptcy or insolvency of debtors, including, without limitation, the United States Bankruptcy Code, 11 U.S.C. § 101*et seq.*; (*ii*) any "Event of Default" (as defined in the Loan Documents) occurs under any of the Loan Documents otherthan the Existing Noncompliance; (*iii*) any of the acknowledgments, warranties, or representations of Borrowers set forthherein shall be untrue or inaccurate in any material respect as of the date made; or (*iv*) Borrowers breach, default, orfailure to perform any other obligation or agreement contained in this Agreement in a material way arising to an Event of Defaultunder the Loan Documents,

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including, without limitation, the failure to meet its EBITDA projections as set forth in more detail inparagraph 10.

7.         During the Forbearance Period, SouthTrust can require Borrowers, at Borrowers' sole expense, to hire an independent outsideconsulting firm to assist Borrowers with financial reporting, soliciting alternative financing opportunities, and seeking potentialinvestors and/or purchasers.  SouthTrust shall notify Borrowers in writing of such request.  Borrowers will thereafternotify SouthTrust in writing of the name and address of the consultant that Borrowers intends to hire.

8.         The Credit Agreement, as amended, is hereby amended as follows:

                       (a)        The “Facility Number 1 Termination Date” means March 31, 2003.

                       (b)        The “Facility Number 2 Termination Date” means March 31, 2003.

9.         In addition to the reports required under Section 10.1 of the Credit Agreement, as amended by the Amendments, the Borrowers willprovide within 20 days after the end of each month, all financial information and reporting currently required under the CreditAgreement on a quarterly basis, including EBITDA calculations, on a monthly basis with financial information for the immediatelyproceeding month.

10.         Borrowers have provided Lender month-end EBITDA projections for all months covered by the Forbearance Agreement (the "EBITDAProjections").  A copy of the EBITDA Projections are attached hereto as Exhibit A.  It shall constitute an Event ofDefault hereunder, and cause the termination of this Agreement, if the actual EBITDA numbers for any one month do not fall within avariance of $100,000 of the EBITDA Projections for that month.

11.         The Lender shall have no further obligation to provide additional financing to the Borrowers except as set forth under the LoanDocuments or herein.  Nothing contained herein shall constitute a commitment or guarantee by Lender to extend any futurefinancing to Borrowers, except as set forth in the Loan Documents.

12.         Borrowers acknowledge and agree that (*i*) this Agreement is not intended to be, and shall not be deemed or construed tobe, a novation or release of the Loan Documents or any of them; (*ii*) except as expressly provided in this Agreement, thisAgreement is not intended to be, and shall not be deemed or construed to be, a modification, amendment, or waiver of the LoanDocuments or any of them; (*iii*) neither this Agreement nor any payments made or other actions taken pursuant to thisAgreement shall be deemed to cure the Existing Noncompliance unless and until all sums payable with respect thereto pursuant to theLoan Documents are paid in full or Borrowers shall have met the conditions of this Agreement with respect thereto; (*iv*)except as otherwise expressly provided in this Agreement, Lender reserves all available rights and remedies, at law, in equity, andunder the Loan Documents, in connection with any Event of Default, including the Existing Noncompliance, whether now existing orhereafter occurring, under the Loan Documents; and *(v)* all requirements in the Loan Documents for notice by Lender to theBorrowers, or any of them, are hereby waived, except as set forth herein.

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13.         Borrowers ratify and confirm all terms and conditions of the Loan Documents (as amended hereby).  Borrowers acknowledgethat: (i) all the Loan Documents are in full force and effect, and (ii) the Loan Documents constitute the legal, valid and bindingobligations of Borrowers enforceable against Borrowers in accordance with their terms.  Borrowers represent and warrant toLender that as of the date hereof, Borrowers have no defenses, setoffs, rights of recoupment, counterclaims or claims of any naturewhatsoever in respect to the Loan Documents, and to the extent any such defenses, setoffs, rights of recoupment, counterclaims orclaims may exist, whether known or unknown, the same are hereby expressly waived, released and discharged.  Borrowersrepresents and warrants to Lender that the Loans continue to be secured by the Loan Documents, and that except with respect to theExisting Noncompliance, no Event of Default has occurred and is continuing under the Loan Documents, and no event has occurred orfailed to occur that, with the lapse of time, giving of notice or both, would constitute an Event of Default under the LoanDocuments.

14.         Borrowers, in consideration of Lender's agreement to forebear and modify the Agreements as set forth above and herein, and as amaterial inducement therefore, does hereby release, remise and forever discharge Lender and its affiliates, parents, divisions,subsidiaries, successors, predecessors, stockholders, officers, directors, agents, employees, attorneys, successors, and assigns(Lender and such other parties being collectively referred to herein as the "Released Parties") of and from any and all claims,liabilities, actions, and causes of action, if any, of whatever kind or nature, whether known or unknown, those that arecontingent, suspected, or unsuspected, and whether concealed or hidden, which have existed,  arising out of or in any wayconnected with any occurrences, acts, omissions, or transactions involving, directly or indirectly, the Loan Documents, or any ofthe Obligations, or any other transactions and dealings between the Borrower.

15.         Borrowers further acknowledge and agree that all of the Loan Documents will continue to secure all of the Obligations, andBorrowers have heretofore and do hereby waive any right for a marshaling of any Collateral now or hereafter subject to the liensand security interests of the Loan Documents.

16.         In recognition of Lender's right to have all its attorneys' fees and other expenses incurred in connection with the preparation,negotiations and drafting of this Agreement secured by the Collateral, notwithstanding payment in full of all Obligations byBorrowers, Lender shall not be required to record any terminations or satisfactions of any of its liens on the Collateral unlessand until Borrowers has executed and delivered to Lender releases of all claims, known and unknown which exist as of the datethereof.  **Borrowers understand that this provision constitutes a waiver of its rights under § 7-9A-513 of theAlabama Code.**

17.         Borrowers acknowledge and agree that, if Lender shall, pursuant to the rights granted to Lender hereunder, under the LoanDocuments, or under applicable law, dispose of any or all of the Collateral after the occurrence of an Event of Default, suchdisposition shall be deemed commercially reasonable if, in the written opinion of three (3) commercial loan officers with three (3)years of experience each, the manner of the disposition is not inconsistent with the manner in which such commercial loan officerswould have handled the disposition.

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18.         Borrowers represent and warrant to Lender that: (i) Borrowers are, respectively, corporations organized, validly existing and ingood standing under the laws of the State set forth above and have full power and authority to execute, deliver and perform thisAgreement and the other Loan Documents, and the same have been duly authorized pursuant to all requisite corporate action; (ii)this Agreement and the other Loan Documents constitute valid and legally binding obligations of the Borrowers, enforceable inaccordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affectingthe enforcement of creditors' rights generally, and general principles of equity; (iii) the execution, delivery and performance bythe Borrowers of this Agreement and the other Loan Documents, will not and did not, violate, conflict with, or constitute anydefault under any law (including laws relating to usury), government regulation, or any other agreement or instrument binding uponthe Borrowers; and (iv) no approval, authorization or other action by, or filing with, any governmental official, board orauthority is required in connection with the execution and delivery of this Agreement or any of the other Loan Documents, and theperformance of the provisions thereof, except such approvals and authorizations as have been received, such actions as have beentaken, and such filings as have been made.

19.         This Agreement shall be construed in accordance with, and shall in all respects be governed by, the laws of the State of NorthCarolina.  The Loans owing under the Loan Documents are payable to Lender by Borrowers at Lender's principal place of businessin Birmingham, Jefferson County, Alabama, and the Loan Documents and this Agreement shall be enforceable in the state and federalcourts presiding in Jefferson County, Alabama, and any other court of competent jurisdiction.  Borrowers agree to pay allexpenses, including reasonable attorney's fees, incurred by Lender in connection with the negotiation and preparation of thisAgreement.

20.         Borrowers agree to pay all expenses, including reasonable attorneys' fees, incurred by Lender in connection with thenegotiations and preparation of this Agreement.  The validity and effectiveness of this Agreement is conditioned uponBorrowers paying all outstanding expenses of Lender as of the Effective Date, including attorneys' fees.

*21.         ****WAIVER**OF**JURY**TRIAL*.  BORROWERS AND LENDER HEREBY EXPRESSLY WAIVE ANY RIGHT THEY MAY HAVETO A TRIAL BY JURY IN ANY LAWSUIT OR OTHER COURT ACTION RELATED TO THE LOANS, THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS OR ANYTRANSACTION CONTEMPLATED HEREBY OR THEREBY, INCLUDING, WITHOUT LIMITATION, IN RESPECT TO ANY CLAIM, COUNTERCLAIM, THIRD-PARTYCLAIM, DEFENSE, OR SET-OFF ASSERTED IN ANY SUCH LAWSUIT OR COURT ACTION.  ANY SUCH LAWSUIT OR COURT ACTION SHALL BE TRIEDEXCLUSIVELY TO A COURT WITHOUT A JURY.  BORROWERS SPECIFICALLY ACKNOWLEDGE THAT THEIR EXECUTION OF THIS WAIVER OF JURY TRIALIS A MATERIAL PORTION OF THE CONSIDERATION RECEIVED BY THE LENDER IN EXCHANGE FOR ITS ENTERING INTO THIS AGREEMENT.**

22.         This Agreement may be executed in any number of counterparts, but it shall not be necessary that each counterpart be executed byall the parties hereto as long as each party executes at least one such counterpart. When each of the parties hereto has executedat least one

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counterpart hereof, this Agreement shall thereupon be deemed executed by all parties, and together all suchcounterparts shall comprise but a single instrument.  No provision of this Agreement shall be construed against or interpretedto the disadvantage of any party to this Agreement by any court or other governmental or judicial authority by reason of suchparty's having or being deemed to have structured or dictated such provision.  This Agreement will inure to the benefit of theparties hereto, their respective successors and assigns.  This Agreement and the obligations of the parties hereunder shall beinterpreted, construed and enforced in accordance with the laws of the State of North Carolina.  Time is of the essence in theperformance of this Agreement.

**IN WITNESS WHEREOF,** the parties hereto have executed this Agreement as ofthe day and year first above written.

**COMPANY AND SUBSIDIARIES:                      LENDER:**

**SPEIZMAN INDUSTRIES, INC.(SEAL)               SOUTHTRUST BANK (SEAL)**

By:  /s/ Paul Demmink                                                 By:  /s/ ColeTaylor                                                    PaulDemmink                                                             Cole Taylor          Title:   VicePresident                                                   Title:   Vice President

**SPEIZMAN YARN EQUIPMENT, INC.(SEAL)**

By:  /s/ Paul Demmink                                                PaulDemmink          Title:   VicePresident

**TODD MOTION CONTROLS, INC.(SEAL)**

By:  /s/ Paul Demmink                                                PaulDemmink          Title:   VicePresident

**WINK DAVIS EQUIPMENTCOMPANY, INC. (SEAL)**

By:  /s/ PaulDemmink                                                  PaulDemmink          Title:   VicePresident

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| **STATE OF NORTH CAROLINACOUNTY OF MECKLENBURG ** | )      )      ) |
|--------------------------------------------------------|-----------------|

I, L. Gail Gormly, a Notary Public in and for said County in said State, hereby certifythat Paul R.M. Demmink, whose name as Vice President of **SPEIZMAN INDUSTRIES, INC.**, a Delaware corporation, is signed to theforegoing Forbearance Agreement, and who is known to me, acknowledged before me on this day that, being informed of the contents ofsuch instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of saidcorporation.

Given under my hand and seal, this 31st day of December, 2002

                                                                     NOTARY PUBLIC – /s/ L. Gail Gormly[SEAL]                                                                                    My Commission Expires: November 11, 2005

| **STATE OF NORTH CAROLINACOUNTY OF MECKLENBURG ** | )      )      ) |
|--------------------------------------------------------|-----------------|

I, L. Gail Gormly, a Notary Public in and for said County in said State, hereby certifythat Paul R.M. Demmink, whose name as Vice President of **SPEIZMAN YARN EQUIPMENT, INC.**, a South Carolina corporation, issigned to the foregoing Forbearance Agreement, and who is known to me, acknowledged before me on this day that, being informed ofthe contents of such instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act ofsaid corporation.

Given under my hand and seal, this 31st day of December, 2002.

                                                                     NOTARY PUBLIC – /s/ L. Gail Gormly[SEAL]                                                                                    My Commission Expires: November 11, 2005

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| **STATE OF NORTH CAROLINACOUNTY OF MECKLENBURG ** | )      )      ) |
|--------------------------------------------------------|-----------------|

I, L. Gail Gormly, a Notary Public in and for said County in said State, hereby certifythat Paul R.M. Demmink, whose name as Vice President of **TODD MOTION CONTROLS, INC.**, a North Carolina corporation, is signedto the foregoing Forbearance Agreement, and who is known to me, acknowledged before me on this day that, being informed of thecontents of such instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of saidcorporation.

Given under my hand and seal, this 31st day of December, 2002.

                                                                     NOTARY PUBLIC – /s/ L. Gail Gormly[SEAL]                                                                                    My Commission Expires: November 11, 2005

| **STATE OF NORTH CAROLINACOUNTY OF MECKLENBURG ** | )      )      ) |
|--------------------------------------------------------|-----------------|

I, L. Gail Gormly, a Notary Public in and for said County in said State, hereby certifythat Paul R.M. Demmink, whose name as Vice President of **WINK DAVIS EQUIPMENT, INC.,** a Georgia corporation, is signed to theforegoing Forbearance Agreement, and who is known to me, acknowledged before me on this day that, being informed of the contents ofsuch instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of saidcorporation.

Given under my hand and seal, this 31st day of December, 2002.

                                                                     NOTARY PUBLIC – /s/ L. Gail Gormly[SEAL]                                                                                    My Commission Expires: November 11, 2005

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| **STATE OF ALABAMACOUNTY OFJEFFERSON ** | )      )      ) |
|----------------------------------------------|-----------------|

I, Terri Y. Williams, a Notary Public in and for said County in said State, hereby certifythat Cole Taylor, whose name as Vice President of **SOUTHTRUST BANK** is signed to the foregoing Forbearance, and who is known tome, acknowledged before me on this day that, being informed of the contents of such instrument, he, as such officer and with fullauthority, executed the same voluntarily for and as the act of said SOUTHTRUST BANK.

Given under my hand and seal, this 31st day of December, 2002.

                                                                     NOTARY PUBLIC - /s/ Terri Y. Williams[SEAL]                                                                                    My Commission Expires: February 5, 2005

 

 

 

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**EXHIBIT A**

**EBITDA PROJECTIONS**