Document:

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EXHIBIT 10 (a)

                 FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

         THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is made and entered into on May 12, 2000, by and among DYERSBURG CORPORATION, a
Tennessee corporation ("Dyersburg"), DYERSBURG FABRICS LIMITED PARTNERSHIP, I, a
Tennessee limited partnership ("DFLP"), DYERSBURG FABRICS INC., a Tennessee
corporation ("DFI"), UNITED KNITTING, INC., a Tennessee corporation ("UKI"),
UNITED KNITTING LIMITED PARTNERSHIP, I, a Tennessee limited partnership ("United
Knitting"), IQUE, INC., a Tennessee corporation ("IQUE, Inc."), IQUE LIMITED
PARTNERSHIP, I, a Tennessee limited partnership ("IQUE"), ALAMAC KNIT FABRICS,
INC., a Delaware corporation ("Alamac"), and AIH INC., a Delaware corporation
("AIH") (each of the foregoing individually referred to hereinafter as a
Borrower and collectively as "Borrowers"); various financial institutions that
are parties to the Loan Agreement (as defined below) ("Lenders"); CONGRESS
FINANCIAL CORPORATION (SOUTHERN), a Georgia corporation, in its capacity as
administrative agent for the Lenders (together with its successors in such
capacity, "Administrative Agent"); and FLEET NATIONAL BANK, a national bank
formerly known as BankBoston, N.A., in its capacity as collateral agent for the
Lenders (together with its successors in such capacity, "Collateral Agent";
Administrative Agent and Collateral Agent sometimes collectively referred to
hereinafter as "Agents").

                                    RECITALS:

         Borrowers, Agents and Lenders are parties to a certain Loan and
Security Agreement dated August 17, 1999 (the "Loan Agreement"), pursuant to
which Lenders have made loans and other extensions of credit to Borrowers.

         Concurrently with the execution of this Amendment, Borrowers are
entering into a Forbearance Agreement with Agents and Lenders (the "Forbearance
Agreement"), pursuant to which Agents and Lenders have agreed to forbear from
exercising certain remedies available to Agents and Lenders under the Loan
Agreement as a consequence of Borrowers' defaults thereunder.

         As a condition to their willingness to enter into the Forbearance
Agreement, Agents and Lenders have required that Borrowers execute this
Amendment.

         NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good
and valuable consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:

         1. DEFINITIONS. All capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Loan Agreement.

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         2. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is hereby amended
as follows:

         (a) By deleting the definitions of "Due from Factor Report," "Eligible
Factored Amounts," "Federal Funds Rate," "Letter of Credit Accommodations,"
"Mortgages," "Obligations," "Real Property," "Reference Bank," and "Value" from
Section 1 of the Loan Agreement and by substituting the following new
definitions in lieu thereof, in proper alphabetical sequence:

                  "Due from Factor Report" shall mean a report prepared by
         Borrowers that reflects the amount of Factored Accounts as of the date
         of the report and the aggregate amount standing to the credit of
         Borrowers from all Factors as of such date.

                  "Eligible Factored Amounts" shall mean, on any date of
         determination thereof, an amount equal to the aggregate balance
         standing to the credit of Borrowers as reflected on a Due From Factor
         Report delivered to Agents by Borrowers on or within one (1) Business
         Day prior to such date, or, in the absence of such timely delivery of a
         Due From Factor Report, an amount that is either determined by Agents
         in their sole and absolute discretion or, at Agents' election,
         represents the aggregate amount reflected on the most recent Factor
         Status Statements as the aggregate balance standing to the credit of
         Borrowers from Factors minus the sum of any fees, commissions, reserves
         or other charges due from a Borrower to any Factor on such date under
         its Factoring Agreement.

                  "Federal Funds Rate" shall mean for any period, a fluctuating
         interest rate per annum equal for each date during such period to the
         weighted average of the rates on overnight federal funds transactions
         with members of the Federal Reserve System arranged by federal funds
         brokers, as published for such day (or, if such day is not a Business
         Day, for the next preceding Business Day) in Atlanta, Georgia by the
         Federal Reserve Bank of Atlanta, or if such rate is not so published
         for any day which is a Business Day, the average of the quotations for
         such day on such transactions received by Collateral Agent from three
         (3) federal funds brokers of recognized standing selected by Collateral
         Agent.

                  "Letter of Credit Accommodations" shall mean the Letters of
         Credit, merchandise purchase or other guaranties which are from time to
         time either (a) issued or opened by Congress for the account of any
         Borrower or any other Obligor or (b) with respect to which Congress has
         agreed to indemnify the issuer or guaranteed to the issuer the
         performance by a Borrower of its obligations to such issuer.

                  "Mortgages" shall mean, individually and collectively, each of
         the following: (i) the North Carolina Deed of Trust, Security Agreement
         and Assignment of Rents executed by Alamac in favor of Collateral Agent
         with respect to the Real Property and related assets of Alamac located
         in Martin County, North Carolina,(ii) the North Carolina Deed of Trust,
         Security Agreement and Assignment of Rents executed by Alamac in favor
         of Collateral Agent with respect to the Real Property and related
         assets of Alamac located in Bladen County, North Carolina, (iii) the
         North Carolina Deed of Trust, Security Agreement and Assignment of
         Rents executed by Alamac in favor of Collateral Agent with respect to
         the Real Property and related assets of Alamac located in Robeson
         County, North Carolina, (iv) the North Carolina Deed of Trust, Security
         Agreement and Assignment of Rents executed by Alamac in favor of
         Collateral Agent with respect to the Real Property and related assets
         of Alamac located in Sampson County, North Carolina, (v) the Tennessee
         Deed of Trust, Security Agreement and Assignment of Rents executed by
         DFLP in favor of

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         Collateral Agent with respect to the Real Property and related assets
         of DFLP located in Dyer County, Tennessee, (vi) the Tennessee Deed of
         Trust, Security Agreement and Assignment of Rents executed by DFLP in
         favor of Collateral Agent with respect to the Real Property and related
         assets of DFLP located in Gibson County, Tennessee, (vii) the Tennessee
         Deed of Trust, Security Agreement and Assignment of Rents executed by
         DFLP in favor of Collateral Agent with respect to the Real Property and
         related assets of DFLP located in Bradley County, Tennessee, (viii) the
         Tennessee Leasehold Deed of Trust and Security Agreement executed by
         DFLP in favor of Collateral Agent with respect to DFLP's leasehold
         interest in the Real Property of DFLP located in Dyer County, Tennessee
         and (ix) any other mortgage or deed of trust at any time executed by
         any Obligor in favor of Collateral Agent to secure any of the
         Obligations.

                  "Obligations" shall mean any and all Revolving Loans, the Term
         Loan, all Settlement Loans, Letter of Credit Accommodations, all
         Extraordinary Expenses, and all other obligations, liabilities and
         indebtedness of every kind, nature and description owing by any or all
         Obligors to either or both Agents, any Lender and/or any Affiliates of
         either or both Agents or any Lender (including any indebtedness of any
         Obligor to either or both Agents or Congress arising from any
         indemnities or other assurances of payment that are given at any time
         by either or both Agents or Congress to another Person with respect to
         any Letters of Credit or cash management arrangements for any Borrower)
         and, including principal, interest, charges, fees, costs and expenses,
         however evidenced, whether as principal, surety, endorser, guarantor or
         otherwise, whether arising under this Agreement or any of the other
         Financing Agreements, whether now existing or hereafter arising,
         whether arising before, during or after the Original Term or any
         Renewal Term of this Agreement or after the commencement of any case
         with respect to any Obligor under the Bankruptcy Code or any similar
         statute (including the payment of interest and other amounts which
         would accrue and become due but for the commencement of such case,
         whether or not such amounts are allowed or allowable in whole or in
         part in such case), whether direct or indirect, absolute or contingent,
         joint or several, due or not due, primary or secondary, liquidated or
         unliquidated, secured or unsecured, and however acquired by either or
         both Agents or any Lender.

                  "Real Property" shall mean all now owned and hereafter
         acquired real property of any Borrower, including leasehold interests,
         together with all buildings, structures, and other improvements located
         thereon and all licenses, easements and appurtenances relating thereto,
         wherever located, including the real property and related assets more
         particularly described in the Mortgages.

                  "Reference Bank" shall mean Fleet National Bank, or such other
         bank as Agents may from time to time designate.

                  "Value" shall mean, as determined by Collateral Agent in good
         faith, with respect to Inventory, the lower of (a) cost computed on a
         first-in-first-out basis in accordance with GAAP or (b) market value.

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         (b) By changing the reference to "Real Estate" wherever it appears in
the Loan Agreement to "Real Property"; by deleting the reference to "Section
2.2(e)" that is contained in "Section 2.2(f)" of the Loan Agreement and by
inserting in lieu thereof a reference to "Section 2.2(f)"; by deleting the
reference to "four (4)" that is contained in Section 3.1(e)(vi) of the Loan
Agreement and by substituting in lieu thereof a reference to "six (6)"; by
adding a closed parentheses after the language "tax duty and refund" in Section
5.1(b) of the Loan Agreement; by deleting the reference to "Agent" that is
contained in Section 7.5(iv) of the Loan Agreement and by substituting in lieu
thereof a reference to "Collateral Agent"; by changing the reference to
"Information Certificate" wherever it appears in the Loan Agreement to
"Information Certificates"; by deleting the reference to "without the prior
written consent of Agents" that is contained in Section 9.16 of the Loan
Agreement and by substituting in lieu thereof a reference to "without the prior
written consent of Required Lenders"; by deleting Exhibit F to the Loan
Agreement and by substituting in lieu thereof a new Exhibit F in the form
attached to this Amendment.

         (c) By deleting Sections 7.2(d) and 7.2(e) of the Loan Agreement and by
inserting in lieu thereof the following news Section 7.2(d) and 7.2(e):

                  (d) Collateral Agent shall have the right at any time or
         times, in Collateral Agent's name or in the name of a nominee of
         Collateral Agent, to verify the validity, amount or any other matter
         relating to any Account or other Collateral, by mail, telephone,
         facsimile transmission or otherwise.

                  (e) Borrowers shall deliver or cause to be delivered to
         Collateral Agent, with appropriate endorsement and assignment, with
         full recourse to Borrowers, all chattel paper and instruments which any
         Borrower now owns or may at any time acquire immediately upon any
         Borrower's receipt thereof, except as Collateral Agent may otherwise
         agree.

         (d) By deleting subsection (ii) of Section 9.11 of the Loan Agreement
and by substituting the following new language in lieu thereof:

                  (ii)(a) Upstream Payments and (b) so long as no Event of
                  Default exists or would result therefrom, dividends payable
                  solely in shares of capital stock to another Borrower or
                  Guarantor.

         (e) By deleting Section 11.9(a) of the Loan Agreement and by
substituting the following new Section 11.9(a) in lieu thereof:

                  (a) No amendment or modification of any provision of this
         Agreement shall be effective without the prior written agreement of the
         Required Lenders and Borrowers, and no waiver of any Default or Event
         of Default shall be effective without the prior written consent of the
         Required Lenders; provided, however, that, (i) without the prior
         written consent of Collateral Agent, no amendment or waiver shall be
         effective with respect to any provision in any of the Financing
         Agreements (including this SECTION 11), to the extent such provision
         relates to the rights, duties or immunities of Collateral Agent; (ii)
         without the prior written consent of Administrative Agent, no amendment
         or waiver shall be effective with respect to any provision in any of
         the Financing Agreements (including THIS SECTION 11), to the extent
         such provision relates to the rights, duties or immunities of
         Administrative Agent; (iii) without the prior written consent of
         Congress, no waiver or amendment with respect to the provisions of
         SECTION 2.2 OR 6.1(C) shall be effective; (iv) without the prior
         consent of all Lenders, no waiver of any Default or Event of Default

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         shall be effective if the Default or Event of Default relates to
         Borrower's failure to observe or perform any covenant that may not be
         amended without the unanimous written consent of Lenders as hereinafter
         set forth in this SECTION 11.9; and (v) the written agreement of all
         Lenders (except defaulting Lenders as provided in SECTION 6.2 of this
         Agreement) shall be required to effectuate any amendment, modification
         or waiver that would (a) alter the provisions of SECTIONS 2.1(A),
         3.1(F), 6.9, 10, 11 or 14, the definitions of "Availability Reserve,"
         and the other defined terms used in such definitions, "Pro Rata,"
         "Required Lenders" or any provision of this Agreement obligating Agents
         to take certain actions at the direction of the Required Lenders, or
         any provision of any of the Financing Agreements regarding the Pro Rata
         treatment or obligations of Lenders; (b) increase or otherwise modify
         any provision of any Lender's Commitment (other than to reduce
         proportionately each Lender's Commitment in connection with any overall
         reduction in the amount of this Agreement); (c) alter or amend (other
         than to increase) the rate of interest payable in respect of the Loans
         (except as may be expressly authorized by the Financing Agreements or
         as may be necessary, in Collateral Agent's judgement, to comply with
         Applicable Law); (d) waive or agree to defer collection of any fee,
         termination charge or other charge provided for under any of the
         Financing Agreements (except to the extent that the Required Lenders
         agree after and during the continuance of any Event of Default to a
         waiver or deferral of any termination charge provided for in SECTION
         14.1 hereof) or the unused line fee in Section 3 hereof; (e)
         subordinate the payment of any of the Obligations to any other debt or
         the priority of any Liens granted to Collateral Agent under any of the
         Financing Agreements to Liens granted to any other Person, except as
         currently provided in or contemplated by the Financing Agreements in
         connection with Borrowers' incurrence of permitted purchase money debt,
         and except for Liens granted by an Obligor to financial institutions
         with respect to amounts on deposit with such financial institutions to
         cover returned items, processing and analysis charges and other charges
         in the ordinary course of business that relate to deposit accounts with
         such financial institutions; (f) alter the time or amount of repayment
         of any of the Loans or waive any Event of Default resulting from
         nonpayment of the Loans on the due date thereof (or within any
         applicable period of grace); (g) forgive any of the Obligations, except
         any portion of the Obligations held by a Lender who consents in writing
         to such forgiveness; or (h) release any Obligor from liability for any
         of the Obligations. No Lender shall be authorized to amend or modify
         any Note held by it, unless such amendment or modification is consented
         to in writing by all Lenders; provided, however, that the foregoing
         shall not be construed to prohibit an amendment or modification to any
         provision of this Agreement that may be effected pursuant to this
         SECTION 11.9 by agreement of Borrowers and the Required Lenders even
         though such an amendment or modification results in an amendment or
         modification of the Notes by virtue of the incorporation by reference
         in each of the Notes of this Agreement. The making of any Loans
         hereunder by any Lender during the existence of a Default or Event of
         Default shall not be deemed to constitute a waiver of such Default or
         Event of Default. Any waiver or consent granted by Lenders hereunder
         shall be effective only if in writing and then only in the specific
         instance and for the specific purpose for which it was given.

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         3. SUSPENSION OF CERTAIN TRANSACTIONS. Notwithstanding anything to the
contrary contained in the Loan Agreement or any of the other Financing
Agreements, unless otherwise consented to by Agents in writing after the date
hereof, no Borrower nor any other Obligor shall: (i) make any Permitted Property
Transfers (other than those consisting of Offshore Equipment so long as the
aggregate value of such Permitted Property Transfers does not exceed $100,000),
any Permitted Supplemental Investments, or any Permitted Affiliate Investments
(other than up to $500,000 in the aggregate during the Forbearance Period under
(and as defined in) the Forbearance Agreement); (ii) sell or otherwise dispose
of any Property other than sales of Inventory in the ordinary course of business
and sales or other dispositions of worn-out or obsolete Equipment to the extent
permitted by the Loan Agreement and provided that the proceeds thereof are
delivered to Collateral Agent for application to the Obligations; (iii) merge or
otherwise consolidate with any other Person; (iv) change its name; or (v) open
any new business location.

         4. REFERENCES TO BANKBOSTON, N.A. Effective March 1, 2000, Fleet
National Bank merged into BankBoston, N.A. and BankBoston, N.A., the survivor of
such merger, changed its name to Fleet National Bank. Wherever in the Loan
Agreement or any of the other Financing Agreement reference is made to
"BankBoston, N.A.," such reference shall be deemed to refer to "Fleet National
Bank."

         5. RATIFICATION AND REAFFIRMATION. Each Borrower hereby ratifies and
reaffirms the Obligations, each of the Financing Agreements and all of such
Borrower's covenants, duties, indebtedness and liabilities under the Financing
Agreements.

         6. ACKNOWLEDGMENTS AND STIPULATIONS. Each Borrower acknowledges and
stipulates that the Loan Agreement and the other Financing Agreements executed
by such Borrower are legal, valid and binding obligations of such Borrower that
are enforceable against such Borrower in accordance with the terms thereof; all
of the Obligations are owing and payable without defense, offset or counterclaim
(and to the extent there exists any such defense, offset or counterclaim on the
date hereof, the same is hereby waived by such Borrower); as of the opening of
business on May 11, 2000, the unpaid principal amount of the Revolving Loans
totaled $44,938,508.50, and the aggregate principal balance owing under the Term
Notes totaled $24,300,000; and the amount of all Letter of Credit Accommodations
on and as of May 11, 2000, totaled $9,890,094.50, of which $8,056,903.00
represents Letter of Credit Accommodations in respect of the Bond Letter of
Credit.

         7. REPRESENTATIONS AND WARRANTIES. Each Borrower represents and
warrants to Agents and Lenders, to induce Agents and Lenders to enter into this
Amendment and the Forbearance Agreement, that no Default or Event of Default
exists on the date hereof other than the Stipulated Defaults under (and as
defined in) the Forbearance Agreement; the execution, delivery and performance
of this Amendment have been duly authorized by all requisite corporate or
partnership action on the part of such Borrower and this Amendment has been duly
executed and delivered by such Borrower; and all of the representations and
warranties made by such Borrower in the Loan Agreement are true and correct on
and as of the date hereof, except for (i) representations and warranties that
speak as of a specified earlier date, which remain true and correct in all
material respects as of such earlier date, and (ii) changes in facts and
circumstances permitted by the terms of the Financing Agreements.

         8. REFERENCE TO LOAN AGREEMENT. Upon the effectiveness of this
Amendment, each reference in the Loan Agreement to "this Agreement,"
"hereunder," or words of like import shall mean and be a reference to the Loan
Agreement, as amended by this Amendment.

         9. BREACH OF AMENDMENT. This Amendment shall be part of the Loan
Agreement and a breach of any of any representation, warranty or covenant herein
shall constitute an Event of Default.

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         10. EXPENSES OF AGENTS AND LENDERS. Borrowers agrees to pay, ON DEMAND,
all costs and expenses incurred by Agents and Lenders in connection with the
preparation, negotiation and execution of this Amendment, the Forbearance
Agreement, and any other Financing Agreements executed pursuant hereto and any
and all amendments, modifications, and supplements thereto, including, without
limitation, the reasonable costs and fees of Agents' and Lenders' legal counsel
and any taxes or expenses associated with or incurred in connection with any
instrument or agreement referred to herein or contemplated hereby.

         11. EFFECTIVENESS; GOVERNING LAW. This Amendment shall be effective
upon acceptance by Agents and Lenders in Atlanta, Georgia (notice of which
acceptance is hereby waived), whereupon the same shall be governed by and
construed in accordance with the internal laws of the State of Georgia.

         12. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

         13. NO NOVATION, ETC.. Except as otherwise expressly provided in this
Amendment, nothing herein shall be deemed to amend or modify any provision of
the Loan Agreement or any of the other Financing Agreements, each of which shall
remain in full force and effect. This Amendment is not intended to be, nor shall
it be construed to create, a novation or accord and satisfaction, and the Loan
Agreement as herein modified shall continue in full force and effect.

         14. COUNTERPARTS; TELECOPIED SIGNATURES. This Amendment may be executed
in any number of counterparts and by different parties to this Amendment on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same agreement.
Any signature delivered by a party by facsimile transmission shall be deemed to
be an original signature hereto.

         15. FURTHER ASSURANCES. Borrowers agree to take such further actions as
Agents and Lenders shall reasonably request from time to time in connection
herewith to evidence or give effect to the amendments set forth herein or any of
the transactions contemplated hereby.

         16. SECTION TITLES. Section titles and references used in this
Amendment shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreements among the parties hereto.

         17. RELEASE OF CLAIMS. TO INDUCE AGENTS AND LENDERS TO ENTER INTO THIS
AMENDMENT, EACH BORROWER HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES EACH
AGENT AND EACH LENDER, AND ALL OFFICERS, DIRECTORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS OF EACH AGENT AND EACH LENDER, FROM ANY AND ALL
LIABILITIES, CLAIMS, DEMANDS, ACTIONS OR CAUSES OF ACTION OF ANY KIND OR NATURE
(IF THERE BE ANY), WHETHER ABSOLUTE OR CONTINGENT, DISPUTED OR UNDISPUTED, AT
LAW OR IN EQUITY, OR KNOWN OR UNKNOWN, THAT ANY BORROWER NOW HAS OR EVER HAD
AGAINST EITHER OR BOTH AGENTS OR ANY LENDER AND THAT ARISE OUT OF OR RELATE TO
ANY ACT OR FAILURE TO ACT OF EITHER OR BOTH AGENTS OR ANY LENDER UNDER OR IN
CONNECTION WITH ANY OF THE FINANCING AGREEMENTS. EACH BORROWER REPRESENTS AND
WARRANTS TO AGENTS AND LENDERS THAT SUCH BORROWER HAS NOT TRANSFERRED OR
ASSIGNED TO ANY PERSON ANY CLAIM THAT SUCH BORROWER EVER HAD OR CLAIMED TO HAVE
AGAINST EITHER OR BOTH AGENTS OR ANY LENDER.

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         18. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE PARTIES HERETO EACH HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, COUNTERCLAIM OR PROCEEDING ARISING OUT OF OR RELATED TO THIS
AMENDMENT.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal, and delivered by their respective duly authorized
officers, on the date first written above.

                                     DYERSBURG CORPORATION
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     DYERSBURG FABRICS INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     UNITED KNITTING, INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     IQUE, INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                    [Signatures continued on following page]

                                       8
<PAGE>   9

                                     ALAMAC KNIT FABRICS, INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     AIH INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     DYERSBURG FABRICS LIMITED
                                     PARTNERSHIP, I

ATTEST:                              By:      DYERSBURG FABRICS INC., its sole
                                              General Partner

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     UNITED KNITTING LIMITED
                                     PARTNERSHIP, I

ATTEST:                              By:      UNITED KNITTING, INC., its sole
                                              General Partner

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                    [Signatures continued on following page]

                                       9
<PAGE>   10

                                     IQUE LIMITED PARTNERSHIP, I

ATTEST:                              By:    IQUE, INC., its sole General Partner

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                         Accepted:

                                         FLEET NATIONAL BANK, as Collateral
                                         Agent

                                         By: /s/ David Rich
                                             -----------------------------------
                                               Title: Vice President
                                                      -------------------------

                                         CONGRESS FINANCIAL CORPORATION
                                         (SOUTHERN), as Administrative Agent and
                                         a Lender

                                         By: /s/ Morris P. Holloway
                                             -----------------------------------
                                               Title: Senior Vice President
                                                      -------------------------

                                         GENERAL ELECTRIC CAPITAL
                                         CORPORATION, as a Lender

                                         By: /s/ Patrick Aarons
                                             -----------------------------------
                                               Title: Vice President
                                                      -------------------------

                                         THE CIT GROUP/COMMERCIAL
                                          SERVICES, INC., as a Lender

                                         By: /s/ John Suchaniak
                                             -----------------------------------
                                               Title: Vice President
                                                      -------------------------

                                         MELLON BANK, N.A., as a Lender

                                         By: /s/ Steve Bellah
                                             -----------------------------------
                                               Title: Managing Director
                                                      -------------------------

                                         FLEET CAPITAL CORPORATION, as a
                                         Lender

                                         By: /s/ David Rich
                                             -----------------------------------
                                               Title: Vice President
                                                      -------------------------

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                            CONSENT AND REAFFIRMATION

         Each of the undersigned guarantors of the Obligations of Borrowers at
any time owing to Agents and Lenders hereby (i) acknowledges receipt of a copy
of the foregoing First Amendment to Loan and Security Agreement; (ii) consents
to Borrowers' execution and delivery thereof and of the other documents,
instruments or agreements Borrowers agrees to execute and deliver pursuant
thereto; (iii) agrees to be bound thereby; and (iv) affirms that nothing
contained therein shall modify in any respect whatsoever its guaranty of the
Obligations and reaffirms that such guaranty is and shall remain in full force
and effect.

         IN WITNESS WHEREOF, each of the undersigned has executed this Consent
and Reaffirmation as of the date of such First Amendment to Loan and Security
Agreement.

                                     DFIC, INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     IQUEIC, INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     UKIC, INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                    [Signatures continued on following page]

                                       11
<PAGE>   12

                                     ALAMAC ENTERPRISES, INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     ALAMAC KNIT FABRICS LLC
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                       12
<PAGE>   13

                                    EXHIBIT F

                             COMPLIANCE CERTIFICATE

                            [Letterhead of Borrowers]

                                                        __________________, 20__

Congress Financial Corporation (Southern), as Administrative Agent
200 Galleria Parkway
Suite 1500
Atlanta, Georgia  30339
Attention: Office Head

Fleet National Bank, as Collateral Agent
200 Galleria Parkway
Suite 800
Atlanta, Georgia 30339
Attention: Mr. David Rich

         The undersigned, the chief financial officer of Dyersburg Corporation,
Dyersburg Fabrics Limited Partnership, I, Dyersburg Fabrics Inc., United
Knitting, Inc., United Knitting Limited Partnership, I, IQUE, Inc., IQUE Limited
Partnership, I, Alamac Knit Fabrics, Inc. and AIH Inc. ("Borrowers"), gives this
certificate to Agents in accordance with the requirements of SECTION 9.6 of that
certain Loan and Security Agreement dated August 17, 1999, among Borrowers,
Agents and the Lenders referenced therein (as at any time amended, the "Loan
Agreement"). Capitalized terms used in this Certificate, unless otherwise
defined herein, shall have the meanings ascribed to them in the Loan Agreement.

                  1. Based upon my review of the balance sheets and statements
of income of Borrowers and their Subsidiaries for the [Fiscal Year] [quarterly
period] ending __________________, ____, copies of which are attached hereto, I
hereby certify that:

                  (a)      Consolidated Adjusted Tangible Net Worth is
                           $____________;

                  (b)      Consolidated EBITDA is $___________;

                  (c)      Consolidated Fixed Charge Coverage Ratio is ____ to
                           1;

                  (d)      Excess Availability is $____________.

                  2. No Default exists on the date hereof, other than:
__________________ ________________________________________________ [if none, so
state]; and

<PAGE>   14

                  3. No Event of Default exists on the date hereof, other than
__________ ____________________________________________________ [if none, so
state].

                  4. As of the date hereof, Borrowers are current in their
payment of all accrued rent and other charges to Persons who own or lease any
premises where any of the Collateral is located, and there are no pending
disputes or claims regarding any Borrower's failure to pay or delay in payment
of any such rent or other charges.

                                       Very truly yours,

                                       ---------------------------------------
                                       Chief Financial Officer<PAGE>   1

EXHIBIT 10 (b)

                              FORBEARANCE AGREEMENT

         THIS FORBEARANCE AGREEMENT is made and entered into on May 12, 2000, by
and among DYERSBURG Corporation, a Tennessee corporation ("Dyersburg"),
DYERSBURG FABRICS LIMITED PARTNERSHIP, I, a Tennessee limited partnership
("DFLP"), DYERSBURG FABRICS INC., a Tennessee corporation ("DFI"), UNITED
KNITTING, INC., a Tennessee corporation ("UKI"), UNITED KNITTING LIMITED
PARTNERSHIP, I, a Tennessee limited partnership ("United Knitting"), IQUE, INC.,
a Tennessee corporation ("IQUE, Inc."), IQUE LIMITED PARTNERSHIP, I, a Tennessee
limited partnership ("IQUE"), ALAMAC KNIT FABRICS, INC., a Delaware corporation
("Alamac"), and AIH INC., a Delaware corporation ("AIH") (each of the foregoing
individually referred to hereinafter as a "Borrower" and collectively as
"Borrowers"); DFIC, INC., a Delaware corporation ("DFIC"), IQUEIC, INC., a
Delaware corporation ("IQUEIC"), UKIC, INC., a Delaware corporation ("UKIC"),
ALAMAC ENTERPRISES INC., a Delaware corporation ("Alamac Enterprises"), and
ALAMAC KNIT FABRICS LLC, a Delaware limited liability company ("Alamac LLC";
DFIC, IQUEIC, UKIC, Alamac Enterprises, and Alamac LLC are individually referred
to hereinafter as "Guarantor" and collectively as "Guarantors"); various
financial institutions that are parties to the Loan Agreement (as defined below)
("Lenders"); CONGRESS FINANCIAL CORPORATION (SOUTHERN), a Georgia corporation,
in its capacity as administrative agent for the Lenders (together with its
successors in such capacity, "Administrative Agent"); and FLEET NATIONAL BANK,
formerly known as BankBoston, N.A., a national bank, in its capacity as
collateral agent for the Lenders (together with its successors in such capacity,
"Collateral Agent"; Administrative Agent and Collateral Agent sometimes
collectively referred to hereinafter as "Agents").

                                    RECITALS:

         Agents, Lenders and Borrowers entered into a certain Loan and Security
Agreement dated August 17, 1999 (as amended from time to time, the "Loan
Agreement"), pursuant to which Lenders have made loans and other extensions of
credit to Borrowers, which loans and extensions of credit are secured by
security interests in and liens upon all or substantially all of the assets of
Borrowers and guaranteed unconditionally by Guarantors.

         Events of Default under (and as defined in) the Loan Agreement exist
and may continue to exist, in consequence of which Agents and Lenders are
entitled to terminate further advances to Borrowers, to declare the entire
balance owing to them from Borrowers to be immediately due and payable, to
enforce Collateral Agent's liens and security interests in the collateral
securing their claims against Borrowers, and to enforce their claims against
Guarantors.

         Borrowers and Guarantors desire that Agents and Lenders forbear from
exercising certain remedies available to Agents and Lenders under the Loan
Agreement as a consequence of Borrowers' default in order to afford Borrowers an
opportunity to reorganize their affairs and to pay the indebtedness owing to
Lenders pursuant to the Loan Agreement.

         Borrowers and Guarantors desire that Lenders continue, during the
period of Agents' and Lenders' forbearance, to make loans and other credit
accommodations to Borrowers pursuant to the Loan Agreement.

                                      -1-
<PAGE>   2

         Agents and Lenders are willing to forbear, in accordance with the terms
of this Agreement, from exercising remedies available to them as a result of
Borrowers' defaults under the Loan Agreement and Lenders are willing to continue
making loans in accordance with the Loan Agreement and this Agreement.

         NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and in
consideration of the premises and the mutual covenants herein contained, the
parties hereto, intending to be legally bound hereby, agree as follows:

         1.       DEFINITIONS; RULES OF CONSTRUCTION.

                  (a) All capitalized terms used in this Agreement, unless
otherwise defined, shall have the meaning ascribed to such terms in the Loan
Agreement. In addition, as used herein, the following terms shall have the
meanings ascribed to them:

                  "Agreement" shall mean this Forbearance Agreement.

                  "Collections" shall mean all sums received by Borrowers as the
         result of payments made by third parties in respect of that portion of
         the Collateral constituting Accounts.

                  "Forbearance Conditions" shall mean the conditions to
         forbearance set forth in Section 4 of this Agreement.

                  "Forbearance Period" shall mean the period commencing on the
         date of this Agreement and ending at 5:00 p.m. on August 25, 2000,
         unless extended in writing by Agents and Lenders in their sole
         discretion.

                  "Forbearance Termination Date" shall mean the sooner to occur
         of (a) 5:01 p.m. on the last day of the Forbearance Period or (b) the
         date on which Agents' and Lenders' agreement to forbear terminates as
         provided in Paragraph 5 of this Agreement.

                  "Obligors" shall mean Borrowers and Guarantors.

                  "Payroll Taxes" shall mean all taxes and deposits required to
         be paid or withheld from the wages or salaries of Borrowers' employees.

                  "Stipulated Defaults" shall mean the Events of Default
         referenced in Paragraph 2(d) of this Agreement.

                  (b) 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. Any pronoun used shall be deemed
to cover all genders. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations; to
any of the Financing Agreements shall include any and all modifications thereto
and any and all restatements, extensions or renewals thereof; to any Person
shall mean and include the successors and permitted assigns of such Person; to
"including" and "include" shall be understood to mean "including, without
limitation" (and, for purposes of this Agreement and each other Financing
Agreement, the parties agree that the rule of ejusdem generis shall not be
applicable to limit a general statement, which is followed by or referable to an
enumeration of specific matters to matters similar to the matters specifically
mentioned); or to the time of day shall mean the time of day on the day in
question in Atlanta, Georgia, unless otherwise expressly provided in this
Agreement.

                                      -2-
<PAGE>   3

         2. ACKNOWLEDGMENTS AND STIPULATIONS BY OBLIGORS. Each Obligor
acknowledges, stipulates and agrees that (a) as of the opening of business on
May 11, 2000, the aggregate principal balance of Revolving Loans outstanding
under the Loan Agreement, exclusive of costs and attorneys' fees chargeable to
Borrowers under the Financing Agreements, totaled $44,938,508.50 and the
aggregate amount of Letter of Credit Accommodations totaled $9,890,094.50; (b)
as of the opening of business on May 11, 2000, the aggregate principal balance
owing by Borrowers to Lenders under the Term Notes totaled $24,300,000; (c) all
of the Obligations are absolutely due and owing by Borrowers to Agents and
Lenders without any defense, deduction, offset or counterclaim (and, to the
extent Borrowers had any defense, deduction, offset or counterclaim on the date
hereof, the same is hereby waived by each Borrower); (d) Events of Default have
occurred and now exist under the Financing Agreements and are continuing by
reason of Borrowers breach of the Consolidated EBITDA covenant that is set forth
in Section 9.15 of the Loan Agreement for the periods ending April 1, 2000 and
April 29, 2000, and Events of Default may hereafter occur by reason of
Borrowers' breach of the Consolidated EBITDA covenant for the periods ending May
27, 2000, July 1, 2000, and July 29, 2000, and by reason of Borrowers' breach of
the Consolidated Adjusted Tangible Net Worth covenant that is set forth in
Section 9.16 of the Loan Agreement at any time during the Forbearance Period;
(e) the Financing Agreements executed by Borrowers are legal, valid and binding
obligations of Borrowers enforceable against Borrowers in accordance with their
terms; (f) the Liens granted by Borrowers to Collateral Agent in the Accounts,
Inventory, General Intangibles, Real Property and other Collateral are duly
perfected, first priority Liens, subject only to those Permitted Liens that were
in existence prior to the Closing Date, constitute purchase money security
interests or constitute non-consensual statutory Liens having priority under
Applicable Law over the Liens in favor of Collateral Agent; (g) each Guaranty
Agreement is a legal, valid and binding obligation of the Guarantor party
thereto and is enforceable against such Guarantor in accordance with its terms;
(h) each of the recitals contained at the beginning of this Agreement is true
and correct; and (i) prior to executing this Agreement, Borrowers and Guarantors
consulted with and had the benefit of advice of legal counsel of their own
selection and each has relied upon the advice of such counsel and in no part
upon any representation of Agents and Lenders concerning the legal effects of
this Agreement or any provision hereof.

         3. AGREEMENT TO FORBEAR. If and for so long as each of the Forbearance
Conditions is satisfied, Agents and Lenders agree that during the Forbearance
Period they will not, solely by reason of the occurrence or existence of any of
the Stipulated Defaults (a) exercise any default remedy available to Agents and
Lenders under the Loan Agreement, any of the other Financing Agreements or
Applicable Law to enforce collection from Borrowers or Guarantors of any of the
Obligations or to foreclose Collateral Agent's security interest in any of the
Collateral during the Forbearance Period or (b) charge the Default Rate with
respect to the principal balance of any of the Obligations. Neither this
Agreement nor Agents' and Lenders' forbearance hereunder shall be deemed to be a
waiver of or a consent to any Default or Event of Default.

         4. CONDITIONS TO FORBEARANCE. The following conditions shall constitute
Forbearance Conditions, the timely satisfaction of each and every one of which
during the Forbearance Period shall be a condition to the agreement of Agents
and Lenders to forbear as set forth in Paragraph 3 of this Agreement:

                  (a) each Borrower and each Guarantor duly and punctually
         observes, performs and discharges each and every obligation and
         covenant on its part to be performed under this Agreement;

                  (b) no Event of Default occurs or exists other than the
         Stipulated Defaults;

                  (c) no event shall occur and no condition shall exist which
         has a Material Adverse Effect;

                                      -3-
<PAGE>   4

                  (d) no Guarantor revokes or attempts to revoke or terminate,
         or disputes its liability under, its Guaranty Agreement;

                  (e) Borrowers achieve Consolidated EBITDA of at least
         $5,000,000 for the three-month period ending July 1, 2000 and at least
         $7,000,000 for the four-month period ending July 29, 2000;

                  (f) Borrowers maintain a Consolidated Adjusted Tangible Net
         Worth of at least $110,000,000, tested on a monthly basis, commencing
         May 31, 2000;

                  (g) no representation or warranty made by any Borrower or any
         Guarantor in this Agreement proves to have been false or misleading in
         any material respect;

                  (h) each Borrower timely deducts from the wages of its
         employees and makes timely and proper deposits for all Payroll Taxes as
         the same became due and payable, and if, as and when requested to do so
         by Agents and Lenders, provides Agents and Lenders with proof of all
         deposits for Payroll Taxes;

                  (i) Borrowers are able to pay and do pay, as the same shall
         become due and payable, all debts incurred by Borrowers on or after the
         date hereof;

                  (j) Borrowers do not prepay any of the Subordinated Debt,
         except as may be required by any instrument or agreement evidencing
         such Subordinated Debt on the date hereof;

                  (k) no default by any Obligor under any agreement relating to
         indebtedness for borrowed money shall occur and result in the holder of
         such indebtedness accelerating the maturity or demanding payment of
         such indebtedness, in whole or in part; and

                  (l) concurrently with their execution of this Agreement,
         Borrowers shall enter into (and Guarantors shall consent to the
         execution and delivery by Borrowers of) a First Amendment to Loan and
         Security Agreement in the form presented to Borrowers and Guarantors by
         Agents and Lenders.

         5. TERMINATION OF FORBEARANCE. If any one or more of the Forbearance
Conditions is not satisfied, Agents' and Lenders' agreement to forbear as set
forth in Paragraph 3 of this Agreement shall, at Agents' and Lenders' election
but without further notice to or demand upon Borrowers, terminate, and Agents
and Lenders shall thereupon have and may exercise from time to time all of the
remedies available to them under the Financing Agreements and Applicable Law as
a consequence of an Event of Default. On and after the Forbearance Termination
Date, Agents and Lenders shall be authorized, at any time and without further
notice to or demand upon Borrowers or any other Person, to enforce all of their
remedies under the Financing Agreements and Applicable Law, including
repossession, suit, foreclosure and charging of the Default Rate.

         6. CREDIT ACCOMMODATIONS TO BORROWERS. Notwithstanding the occurrence
or existence of the Stipulated Defaults, but subject to the satisfaction of each
of the Forbearance Conditions, Lenders agree to continue during the Forbearance
Period to honor requests by Borrowers for Revolving Loans and Letter of Credit
Accommodations pursuant to the Loan Agreement, not to exceed on any date the
maximum amount permitted under the Loan Agreement to be outstanding on such
date. In no event shall Agents' and Lenders' honoring of any such requests be
deemed a waiver of the Stipulated Defaults.

                                      -4-
<PAGE>   5

         7. REPORTING. In addition to providing to Agents and Lenders the
information, notices and reports set forth in the Financing Agreements,
Borrowers shall provide to Agents and Lenders, on a daily basis, a Borrowing
Base Certificate. Any information that is to be provided by Borrowers under the
Loan Agreement solely to either or both Agents shall be provided to both Agents
and all Lenders during the Forbearance Period.

         8. APPLICATION OF PROCEEDS. Each Obligor hereby waives the right, if
any, to direct the manner in which Agents and Lenders apply any payments,
Collections or Collateral proceeds to the Obligations and agrees that Agents and
Lenders may apply and reapply all such payments, Collections or proceeds to the
Obligations as Agents and Lenders in their sole and absolute discretion elect
from time to time.

         9. REPRESENTATIONS AND WARRANTIES OF OBLIGORS. Each Obligor represents
and warrants that (a) no Default or Event of Default exists under the Financing
Agreements, except for Stipulated Defaults that are in existence on the date
hereof; (b) subject to the existence of the Stipulated Defaults, the
representations and warranties of Borrowers contained in the Financing
Agreements were true and correct in all material respects when made and continue
to be true and correct in all material respects on the date hereof, except for
(i) representations and warranties that speak as of a specified earlier date,
which remain true and correct in all material respects as of such earlier dated
and (ii) changes in facts and circumstances permitted by the terms of the
Financing Agreements; (c) the execution, delivery and performance by Obligors of
this Agreement and the consummation of the transactions contemplated hereby are
within the corporate or partnership power of each Obligor and have been duly
authorized by all necessary corporate or partnership action on the part of each
Obligor, do not require any approval or consent, or filing with, any
governmental agency or authority, do not violate any provisions of any law, rule
or regulation or any provision of any order, writ, judgment, injunction, decree,
determination or award presently in effect in which any Borrower is named or any
provision of the charter or partnership documents of any Obligor and do not
result in a breach of or constitute a default under any agreement or instrument
to which any Obligor is a party or by which it or any of its properties are
bound; (d) this Agreement constitutes the legal, valid and binding obligation of
Obligors, enforceable against Obligors in accordance with its terms; (e) all
Payroll Taxes required to be withheld from the wages of Borrowers' employees
have been paid or deposited when due; (f) each Obligor is entering into this
Agreement freely and voluntarily with the advice of legal counsel of its own
choosing; and (g) each Obligor has freely and voluntarily agreed to the
releases, waivers and undertakings set forth in this Agreement.

         10. REAFFIRMATION OF OBLIGATIONS. Each Borrower hereby ratifies and
reaffirms the Financing Agreements and all of its obligations and liabilities
thereunder. Each Guarantor hereby ratifies and reaffirms the validity, legality
and enforceability of its Guaranty Agreement and agrees that such Guaranty
Agreement is and shall remain in full force and in effect until all the
Obligations have been paid in full.

         11. WAIVER OF LIMITATIONS PERIOD. To the fullest extent permitted by
Applicable Law, each Obligor hereby waives the benefit of any statute of
limitations that might otherwise bar the recovery of any of the Obligations from
any one or more of them.

         12. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARIES. Nothing in
this Agreement shall be construed to alter the existing debtor-creditor
relationship among Borrowers, Agents and Lenders, nor is this Agreement intended
to change or affect in any way the relationship among Agents, Lenders and
Guarantors to one other than a debtor-creditor relationship. This Agreement is
not intended, nor shall it be construed, to create a partnership or joint
venture relationship between or among any of the parties hereto. No Person other
than a party hereto is intended to be a beneficiary hereof and no Person other
than a party hereto shall be authorized to rely upon or enforce the contents of
this Agreement.

                                      -5-
<PAGE>   6

         13. ENTIRE AGREEMENT; MODIFICATION OF AGREEMENT. This Agreement and the
other Financing Agreements constitute the entire understanding of the parties
with respect to the subject matter hereof and thereof. This Agreement may not be
modified, altered or amended except by agreement in writing signed by all the
parties hereto.

         14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Georgia.

         15. NON-WAIVER OF DEFAULT. Neither this Agreement, Agents' and Lenders'
forbearance hereunder nor Agents' and Lenders' continued making of loans or
other extensions of credit to Borrowers in accordance with this Agreement and
the Financing Agreements shall be deemed a waiver of or consent to the
Stipulated Defaults or any other Event of Default. Obligors agree that such
Events of Default shall not be deemed to have been waived, released or cured by
virtue of any Loans or other extensions of credit at any time to Borrowers,
Agents' and Lenders' agreement to forbear pursuant to the terms of this
Agreement or the execution of this Agreement.

         16. NO NOVATION, ETC. This Agreement is not intended to be, nor shall
it be construed to create, a novation or accord and satisfaction and the Loan
Agreement and the other Financing Agreements shall remain in full force and
effect. Notwithstanding any prior mutual temporary disregard of any of the terms
of any of the Financing Agreements, the parties agree that the terms of each of
the Financing Agreements shall be strictly adhered to on and after the date
hereof, except as expressly modified by this Agreement.

         17. COUNTERPARTS; WAIVERS OF NOTICE OF ACCEPTANCE. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall constitute an
original, but all of which taken together shall be one and the same instrument.
In proving this Agreement or any of the Financing Agreements, it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought. Any signature delivered by a party by
facsimile transmission shall be deemed to be an original signature hereto.
Notice of Agents' and Lenders' acceptance hereof is hereby waived.

         18. REIMBURSEMENT FOR LEGAL EXPENSES. Borrowers agree to reimburse
Agents and Lenders, on demand, for any costs and expenses, including reasonable
legal fees, incurred by Agents and Lenders in connection with the drafting,
negotiation, execution and closing of this Agreement.

         19. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

         20. RELEASE OF CLAIMS. TO INDUCE AGENTS AND LENDERS TO ENTER INTO THIS
AGREEMENT, EACH OBLIGOR HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES AGENTS
AND LENDERS, AND AGENTS' AND LENDERS' RESPECTIVE OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL LIABILITIES, CLAIMS, DEMANDS,
ACTIONS OR CAUSES OF ACTION OF ANY KIND (IF ANY THERE BE), WHETHER ABSOLUTE OR
CONTINGENT, DUE OR TO BECOME DUE, DISPUTED OR UNDISPUTED, LIQUIDATED OR
UNLIQUIDATED, AT LAW OR IN EQUITY, OR KNOWN OR UNKNOWN, THAT ANY ONE OR MORE OF
THEM NOW HAVE OR EVER HAVE HAD AGAINST EITHER AGENT OR ANY LENDER, AND THAT
ARISE OUT OF OR RELATE TO ANY ACT OR FAILURE TO ACT OF EITHER AGENT OR ANY
LENDER UNDER OR IN CONNECTION WITH ANY OF THE FINANCING AGREEMENTS.

                                      -6-
<PAGE>   7

         21. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE PARTIES HERETO EACH HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE LOAN
AGREEMENT OR THE GUARANTY AGREEMENTS.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the date first written above.

                                     BORROWERS:

                                     DYERSBURG CORPORATION
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     DYERSBURG FABRICS INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     UNITED KNITTING, INC.
                                     IQUE, INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     ALAMAC KNIT FABRICS, INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                    [Signatures continued on following page]

                                      -7-
<PAGE>   8

                                     AIH INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     DYERSBURG FABRICS LIMITED
                                     PARTNERSHIP, I

ATTEST:                              By:      DYERSBURG FABRICS INC., its sole
                                              General Partner

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     UNITED KNITTING LIMITED
                                      PARTNERSHIP, I

ATTEST:                              By:      UNITED KNITTING, INC., its sole
                                              General Partner

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     IQUE LIMITED PARTNERSHIP, I

ATTEST:                              By:    IQUE, INC., its sole General Partner

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                    [Signatures continued on following page]

                                      -8-
<PAGE>   9

                                     GUARANTORS:

                                     DFIC, INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     IQUEIC, INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     UKIC, INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     ALAMAC ENTERPRISES, INC.
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                                     ALAMAC KNIT FABRICS LLC
ATTEST:

/s/ Paul L. Hallock                  By: /s/ William S. Shropshire, Jr.
--------------------------------         ---------------------------------------
PAUL L. HALLOCK                          WILLIAM S., SHROPSHIRE, JR.
Vice President-Finance and               Executive Vice President,
Assistant Secretary                      Chief Financial Officer, Secretary and
                                         Treasurer
         [CORPORATE SEAL]

                    [Signatures continued on following page]

                                      -9-
<PAGE>   10

                                       Accepted:

                                       FLEET NATIONAL BANK, as Collateral
                                       Agent

                                       By: /s/ David Rich
                                           ----------------------------------
                                             Title: Vice President
                                                    -------------------------

                                       CONGRESS FINANCIAL CORPORATION
                                       (SOUTHERN), as Administrative Agent and
                                       a Lender

                                       By: /s/ Morris P. Holloway
                                           ----------------------------------
                                             Title: Senior Vice President
                                                    -------------------------

                                       GENERAL ELECTRIC CAPITAL
                                       CORPORATION, as a Lender

                                       By: /s/ Patrick Aarons
                                           ----------------------------------
                                             Title: Vice President
                                                    -------------------------

                                       THE CIT GROUP/COMMERCIAL
                                        SERVICES, INC., as a Lender

                                       By: /s/ John Suchaniak
                                           ----------------------------------
                                             Title: Vice President
                                                    -------------------------

                                       MELLON BANK, N.A., as a Lender

                                       By: /s/ Steve Bellah
                                           ----------------------------------
                                             Title: Managing Director
                                                    -------------------------

                                       FLEET CAPITAL CORPORATION, as a
                                       Lender

                                       By: /s/ David Rich
                                           ----------------------------------
                                             Title: Vice President
                                                    -------------------------

                                      -10-

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