Terms and Conditions of Sale

All sales shall be evidenced by a written sales order confirmation issued by Pharr
Yarns, LLC (the “Company”). The terms and conditions of sale in Company’s written sales
order confirmation shall be the sole and exclusive terms and conditions of sale and no
purchase order shall be effective or otherwise binding upon Company in absence of a
signed written agreement by Company expressly agreeing to be bound by the terms of any
such purchase order. Any purchase order issued by Customer shall be deemed to
incorporate the terms and conditions of sale set forth in Company’s sales order
confirmation as the sole and exclusive terms and conditions of sale. Customer expressly
agrees that the terms and conditions of sale set forth in Company’s sales order
confirmation are the sole and exclusive terms and conditions of sale and no other terms
and conditions of sale shall be effective unless expressly agreed to in a signed writing by
Company notwithstanding anything to the contrary in any purchase order, confirmatory
memorandum or other document evidencing such sale.

1. PAYMENT: All invoices are payable in United States dollars. No discount may be taken
unless specified on face of Company’s invoice. Customer shall have no authority to assert any
offsets against an invoice, except as expressly agreed by Company in a signed writing or as set
forth in a credit memo issued by Company. On all invoices not paid by the maturity date set forth
on the face of the Company’s sales order confirmation (and if no such terms are stated on the face,
the terms shall be net thirty (30) days), Customer shall pay a late fee of 1.5% per month (but not to
exceed the maximum rate allowed by law) from and after the maturity date of said invoice. Any
check or remittance received from or for the account of Customer may be accepted and applied by
Company or its factor against any indebtedness or obligation owing by Customer, as shown by the
books and records of Company or its factor, without prejudice to or the discharge of the remainder
of any such indebtedness or obligation regardless of any condition, proviso, statement, legend or
notation appearing on, referring to or accompanying such check or remittance. Any delivery not in
dispute shall be paid for regardless of any controversy relating to other delivered or undelivered
merchandise.

2. CREDIT AND DEFAULT: Customer represents and warrants to Company that it is solvent at
the time this contract is made and Customer hereby makes a continuing representation and
warranty of its solvency at the time of each tender or delivery hereunder. In the Event of a Default
by Customer of these terms and conditions of sale, Company may elect its rights and remedies
under the Uniform Commercial Code including, but not limited to the following: (a) cancel this
and/or any other contracts (or any part thereof) with Customer (Customer remaining liable for
damages); (b) defer any shipments or other tenders hereunder; (c) declare forthwith due and
payable all outstanding invoices to Customer under this or any other contract; (d) bill at contract
price (on a cash before delivery basis if Company so elects) all or any part of the yarn covered by
this or any other contracts (Company to have the right to assort, specify and/or complete the
manufacture of any of such yarn) and require Customer to specifically perform the contract by
taking in and paying for such yarn; in the case of yarn not yet completed, Company shall have the
additional right to require payment at the contract price sixty (60) days prior to tender of such yarn;
(e) sell all or any part of the yarn covered by this or any other contract, without notice, at public or
private sale; Customer to be responsible for the costs and expenses of such sale including: (i) five
percent (5%) of the contract price to cover Company’s additional overhead, and (ii) any deficiency.
(Company shall account to Customer, subject to Company’s security interest, for any excess and
Company shall have the right to purchase such yarn at any such sale); (f) obtain damages from
Customer equal to the difference between the market price of yarn covered by this or any other
contract as of the date of default, breach or repudiation and the contract price plus five percent
(5%) of the contract price to cover Company’s cost of reselling and additional overhead; (g) sell in
the open market, at auction or otherwise, any material or supplies purchased for the contract either
as raw stock, top or sliver and Customer shall be liable for any loss, and/or damage; and/or (h)
recover Company’s reasonable attorney’s fees.
All rights and remedies of Company under this contract shall be in addition to all other rights and
remedies of Company under the Uniform Commercial Code or under other applicable law, all of
which rights and remedies shall be non-exclusive and cumulative and may be exercised or
asserted as Company shall elect. Approval of credit for one or more deliveries shall not be
deemed a waiver of the provisions of this paragraph. Any property of Customer, including but not
limited to merchandise billed and held (whether paid for or not) at any time in Company’s
possession, or the possession of any parent, subsidiary, affiliate or agent of Company, either as
principal or agent shall be deemed held as security for, and may, at Company’s option, be set off
against, any and all of Customer’s obligation to Company or to any parent, subsidiary, affiliate,
principal or agent of Company.

3. DELIVERIES: (a) Delivery or tender of delivery of any installment within fifteen (15) days after
date specified on Company’s confirmation of this order shall be deemed timely delivery. Thereafter,
shipment or tender of delivery prior to receipt of written cancellation by Customer shall constitute
good delivery. (b) The terms of delivery shall be as specified in the Company’s sales order
confirmation. Title shall pass to Customer, in accordance with the terms of delivery specified on
Company’s sales order confirmation and Article 2 of the Uniform Commercial Code, subject to: (i)
Company’s rights under Article 2 of the Uniform Commercial Code, including, but not limited to the
rights to withhold or refuse delivery, stop in transit and/or reclaim; and (ii) Company’s security
interest in property in the possession, custody or control of Company in accordance with paragraph
2 above. With respect to yarn for which payment is to be made on or before delivery, title passes
only upon receipt of full payment. In the instance of yarn held subject to Customer’s instructions, or
for which Customer has failed to supply shipping instructions, or in any case where Company, in its
sole discretion, determines that any part of the yarn purchased by Customer should be held for
Customer’s account, Company may invoice the yarn and Customer agrees to make payment at the
maturity of the invoice so rendered. Yarn invoiced and held at any location, for whatever reason,
shall be at Customer’s risk and expense (and Company may charge storage at prevailing rates). If
Company has a blanket policy insuring against loss, such yarn shall be included thereunder,
Customer may be charged the premium allocable thereto, and in the event of loss, if Customer has
paid for such yarn, Company may tender to customer, as customer’s sole remedy, customer’s pro
rata portion of any loss paid by the insurer. (c) All freight, express and delivery charges shall be
paid as a separate item by Customer and shall not be subject to discount. (d) Company will make
every effort to limit quantity to weight specified. However, delivery of a quantity which does not vary
more than five percent (5%) of the contract weight greater or less than contracted for shall
constitute compliance under this contract and payment shall be made on the actual pounds
invoiced. (e) Partial deliveries shall be accepted by Customer and paid for at contract prices and
terms. All sample requirements furnished on this order shall be charged by the Company and paid
by Customer at contract price. Delay in delivering samples or other sample requirements shall not
constitute a breach of this agreement. Any defect in quality or delay in delivery shall not affect the
balance of this contract. Where Customer has declared or manifested an intention that it will not
accept delivery in accordance with the provisions of this contract, no tender shall be necessary, but
Company may, at its option, give notice in writing to Customer that the Company is ready and
willing to deliver in accordance with the provisions of the contract and such notice shall constitute a
valid tender of delivery.
Company shall not be liable if any aspect of performance by Company under this contract is
delayed or prevented due to casualty, accident, labor disturbance, embargo, lack of shipping
facilities, delay or inability to obtain supplies, labor, raw materials or energy through Company’s
usual and regular sources, fires, floods, war, governmental requests, requirements or regulations
or by Company’s acceptance of governmental contracts or subcontracts, acts of God or any cause
or circumstance whatsoever (whether like or unlike the foregoing) beyond Company’s control. In
such event, Company may, in its discretion: (i) extend Company’s time for performance for a time
which is reasonable under all of the circumstances; (ii) cancel all or any portion of this and any
other contracts with Customer; or (iii) apportion Company’s available supply among its customers
in any reasonable manner. If embargo or lack of shipping facilities prevents or delays shipment of
any yarn ready for shipment, Company may immediately invoice the yarn, at which time title to the
yarn shall pass to Customer (subject to Company’s rights referred throughout this contract), and
Company shall hold the yarn for the account of Customer, who shall pay the invoices rendered
when due. Customer shall not be entitled to damages for late delivery or nonperformance unless
Customer actually purchases the same merchandise elsewhere at a fair market price which is
higher than the price payable to the Company under this contract.

4. EXCLUSION OF WARRANTIES: CUSTOMER AGREES THAT THERE ARE NO
WARRANTIES, EXPRESS OR IMPLIED, GIVEN BY COMPANY BEYOND THE DESCRIPTION
ON THE FACE OF COMPANY’S WRITTEN SALES ORDER CONFIRMATION. COMPANY
EXPRESSLY EXCLUDES ALL IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION,
ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
FASTNESS OF COLOR, UNIFORMITY OF SHADE FROM LOT TO LOT, BREAKING,
STRENGTH, SHRINKAGE, YIELD, ABSENCE OF MINOR CONTAMINATION, PHYSICAL OR
CHEMICAL QUALITIES OR VARIATION IN THICKNESS, SIZE OR COUNT, OR TPI OF YARN.
IT IS THE SOLE RESPONSIBILITY OF CUSTOMER TO ASCERTAIN THE SUITABILITY OF
THE YARN FOR ANY USE BY HIS OWN SAMPLING AND TESTING. CUSTOMER
ACKNOWLEDGES THAT COMPANY HAS NOT MADE ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE TITLE, MERCHANTABILITY,
CONDITION, QUALITY, DESCRIPTION, DURABILITY OR SUITABILITY OF THE GOODS
WHICH CUSTOMER HAS PURCHASED FROM COMPANY. Company shall not be liable for
normal manufacturing defects nor for customary variations from specifications. Customer
understands and agrees that yarn made in part or wholly or man-made fibers is sold subject to the
inherent imperfections in such man-made fibers, including without limitation its potential for pilling
or causing pilling. Customer further acknowledges that exact matches of colors are not
guaranteed, nor is percentage or type of sizing, wax or lubricant used. Yarn may vary in shade,
lubrication, sizing or wax content, and Company assumes no responsibility for such variations.
Company assumes no responsibility for imperfections due to insufficient removal of gums, waxes,
yarn sizing materials, tint, lubricant or other stains which can be removed in boil off, scouring,
dyeing or other finishing process, nor for latent defects inherent in the raw materials used.

5. CLAIMS: (a) All claims must be in writing and state with particularity the basis for customer’s
claim. All claims relating to weight or excessive moisture or lubricant content must be made within
ten (10) days from date of delivery or such claims shall be forever barred. All claims concerning
weight or moisture content shall be referred to Pharr Yarn’s Quality Control Department, whose
test reports shall be made on previously unopened cases or other containers of yarn and these
tests shall be conclusive. (b) All claims relating to count, twist or shade variations or other
elements of quality must be made within forty-five (45) days from date of delivery or such claims
shall be forever barred. In no case will any claim be considered after yarn has been dyed, woven,
knitted, tufted or processed in any manner. (c) Within thirty (30) days after receipt of written notice
of claim for defects in yarn, Customer shall make the yarn available at a point in the Continental
United States convenient to and without cost to Company. Company may, in its discretion,
examine and accept such yarn for return or make allowances agreeable to both parties. If the yarn
is accepted for return, Company, at its option, may either refund the amounts paid by Customer for
such yarn or replace the same within a reasonable time in full satisfaction of all claims of
Customer. (d) The limit of Company’s liability for defective yarn shall be the difference in value on
the contract date of delivery between the yarn specified and the yarn actually delivered. (e) The
limit of liability of Company for late or non-delivery shall be the difference, if any, between the
contract price and the fair market price on the contract date of delivery of the yarn to be delivered.
(f) IN NO EVENT SHALL CUSTOMER BE ENTITLED TO CLAIM CONSEQUENTIAL OR
INDIRECT DAMAGES, AND IN NO EVENT SHALL DAMAGES INCLUDE LOSS OF PROFIT ON
CONTEMPLATED USE OR LOSS OF PROFIT OF ANY DESCRIPTION.

6. WEIGHT DETERMINATION: Yarn shall be billed at scale weight and moisture content may
not exceed those in ASTM current Standard Table of Commercial Moisture Regains for Textile
Fibers, or it may be billed on a standard moisture regain basis as provided in that ASTM standard,
and in either case including processing lubricants and oils but net of packaging and wrapping
materials.

7. BEAMS, WARPS, ETC.: All spools, bobbins, tubes, section beams, loom beams, beam racks,
beam cases and other special shipping units owned by Company shall remain Company’s property
and shall be included in invoice at theoretical weight, but Company guarantees actual weight will
be within 2% of theoretical weight. Customer shall be responsible for their loss or damage from
any cause and within forty-five (45) days from the date of shipment shall reship said articles in
good condition to Company, freight prepaid, unless otherwise agreed to. For any such property
damage or not reshipped within said time, Customer shall pay Company the cost of replacement.

8. INTELLECTUAL PROPERTY: Company, at its option, may cancel this or other contracts with
Customer for the delivery of any products, the manufacture, sale or use of which, in Company’s
opinion, infringes any patent, trademark or other intellectual property under which Company is not
licensed. Customer agrees to hold Company harmless against all damages and expenses arising
from claims for infringement of intellectual property rights on materials specifically produced upon
Customer’s order and against all damages or expenses arising from any infringement or from any
misuse of any trade name, trademark, symbol, identification of material content or other labeling
used by Company at Customer’s instructions.

9. TECHNICAL ADVICE: Company may, upon Customer’s request, furnish technical advice with
respect to the use of yarns sold hereunder, to the extent that Company has such advice
conveniently available. However, it is expressly understood by Customer that Company is under no
obligation to furnish technical advice and Customer further understands that such advice is given
by Company and accepted by Customer at Customer’s sole risk. Under no circumstances shall
Company be responsible to Customer, or liable, for the advice or assistance given or the results
thereof.

10. NOTICES: All communications provided for hereunder shall be in writing, and if to Company,
mailed or delivered to Company at the address stated on the face hereof, or to such other address
as Company or its agent may designate, or if to Customer, mailed or delivered to Customer at its
address designated on the face of this contract or at such other address as Customer may
hereafter designate.

11. ENTIRE AGREEMENT; CHANGES: This contract contains all of the terms and conditions of
the contract between Customer and Company, and supersedes any and all other prior agreements
and undertakings, both written and oral, among the parties, or any of them, with respect to the
subject matter hereof. It may not be altered nor modified by Customer except in writing, signed by
the Company. No waiver by either party of any default shall be deemed a waiver of any
subsequent default. There are no options, warranties or conditions, express or implied, statutory or
otherwise, except those herein specifically contained.

12. ASSIGNMENT: No rights of Customer under, or arising out of, this contract may be assigned
without the express written consent of Company or Company’s agent.

13. GOVERNING LAW AND ARBITRATION: This contract and each Purchase Order and
Agreement or any other matter between the parties shall be governed and construed in
accordance with the laws of the State of North Carolina, without giving affect to any conflict of law
provisions. Both parties acknowledge expressly that the United Nations Convention on Contracts
for the International Sale of Goods shall not apply to this contract, Agreement or any Purchase
Order or any other matter between the parties. Both parties agree that if they cannot resolve a
dispute arising from this contract agreement, purchase order or any other matter they will submit
the dispute to binding arbitration under the Rules of the American Arbitration Association to be heard by one (1) arbitrator
in Charlotte, North Carolina. In the event that this arbitration provision is unenforceable or
otherwise waived by the parties, each party hereto submits to the exclusive jurisdiction in the State
and Federal courts having jurisdiction in Mecklenburg County, North Carolina and irrevocably
waive any defenses to such venue including any defense based upon the principals forum non
conveniens.

14. RETENTION OF TITLE: Customer hereby agrees to grant Company all retention of title rights
applicable in their respective country. In the event of an act of insolvency by the customer,
Company shall have authority to retake, sell or otherwise deal with and/or dispose of all or any part
of the Company’s goods in unopened condition at the time of the insolvency; Company and its
agents and employees shall be entitled at any time, upon reasonable notice, enter upon the
property upon which the goods are stored to inspect the goods; Customer shall store or mark the
unopened goods in a manner reasonably satisfactory to Customer indicating that title to the goods
covered remains vested in the Company; and Customer shall ensure the goods for their full
replacement value.

15. FUTURE TRANSACTIONS: Except to the extent a future transaction is governed by a signed
contract between the parties, the terms and conditions hereof, including, without limitation, the
arbitration provision, shall govern all future transactions.