Exhibit 10.3

 

EXECUTION COPY

 

--------------------------------------------------------------------------------

 

FIVE YEAR CREDIT AGREEMENT

 

dated as of October 28, 2005

 

by and among

 

MOHAWK INDUSTRIES, INC.,

as Borrower,

 

the Banks referred to herein,

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent and an Issuer

 

SUNTRUST BANK,

as Syndication Agent,

 

and

 

JPMORGAN CHASE BANK, N.A., LEHMAN COMMERCIAL PAPER INC.

and BANK OF AMERICA, N.A.,

each as a Documentation Agent

 

WACHOVIA CAPITAL MARKETS, LLC, and

SUNTRUST CAPITAL MARKETS, INC.,

as Joint Lead Arrangers and Joint Bookrunners

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

         Page

--------------------------------------------------------------------------------

ARTICLE I DEFINITIONS    1     SECTION 1.01. Definitions    1     SECTION 1.02.
Accounting Terms and Determinations    19     SECTION 1.03. References    20    
SECTION 1.04. Use of Defined Terms    20     SECTION 1.05. Terminology    20    
SECTION 1.06. Determination of Amounts    20 ARTICLE II THE CREDITS    20    
SECTION 2.01. Commitments to Lend    20     SECTION 2.02. Method of Borrowing
Loans    23     SECTION 2.03. Continuation and Conversion Elections    26    
SECTION 2.04. Notes    27     SECTION 2.05. Maturity of Loans.    27     SECTION
2.06. Interest Rates    27     SECTION 2.07. Fees    28     SECTION 2.08.
Optional Termination or Reduction of Revolving Credit Commitments    29    
SECTION 2.09. Mandatory Reduction and Termination of Revolving Credit
Commitments    29     SECTION 2.10. Optional Prepayments    29     SECTION 2.11.
Mandatory Prepayments    30     SECTION 2.12. General Provisions as to Payments
   31     SECTION 2.13. Computation of Interest and Fees    31     SECTION 2.14.
Letters of Credit    31 ARTICLE III CONDITIONS TO BORROWINGS AND ISSUANCE OF NEW
LETTERS OF CREDIT    37     SECTION 3.01. Conditions to Closing    37    
SECTION 3.02. Conditions to All Borrowings and Issuance of New Letters of Credit
   38     SECTION 3.03. Condition Subsequent    39 ARTICLE IV REPRESENTATIONS
AND WARRANTIES    39     SECTION 4.01. Corporate Existence and Power    39    
SECTION 4.02. Corporate and Governmental Authorization; No Contravention    39  
  SECTION 4.03. Binding Effect    39     SECTION 4.04. Financial Information   
40     SECTION 4.05. No Litigation    40     SECTION 4.06. Compliance with ERISA
   40     SECTION 4.07. Taxes    40     SECTION 4.08. Subsidiaries    40    
SECTION 4.09. Not an Investment Company    41     SECTION 4.10. Ownership of
Property; Liens    41     SECTION 4.11. No Default    41     SECTION 4.12. Full
Disclosure    41     SECTION 4.13. Environmental Matters    41     SECTION 4.14.
Capital Stock    42

 

i

--------------------------------------------------------------------------------

    SECTION 4.15. Margin Stock    42     SECTION 4.16. Insolvency    42    
SECTION 4.17. OFAC    42 ARTICLE V COVENANTS    43     SECTION 5.01. Information
   43     SECTION 5.02. Inspection of Property, Books and Records    44    
SECTION 5.03. Debt to Capitalization Ratio    44     SECTION 5.04. Restricted
Payments    45     SECTION 5.05. Investments    45     SECTION 5.06. Negative
Pledge    45     SECTION 5.07. Maintenance of Existence; Lines of Business    46
    SECTION 5.08. Dissolution    46     SECTION 5.09. Consolidations, Mergers
and Sales of Assets    46     SECTION 5.10. Use of Proceeds    47     SECTION
5.11. Compliance with Laws; Payment of Taxes    47     SECTION 5.12. Insurance
   48     SECTION 5.13. Change in Fiscal Year    48     SECTION 5.14.
Maintenance of Property    48     SECTION 5.15. Environmental Notices    48    
SECTION 5.16. Environmental Matters    48     SECTION 5.17. Environmental
Release    48     SECTION 5.18. Debt of Subsidiaries    48 ARTICLE VI DEFAULTS
   49     SECTION 6.01. Events of Default    49     SECTION 6.02. Notice of
Default    52     SECTION 6.03. Crediting of Payments and Proceeds    52 ARTICLE
VII THE AGENT    52     SECTION 7.01. Appointment; Powers and Immunities    52  
  SECTION 7.02. Reliance by Administrative Agent    53     SECTION 7.03.
Defaults    54     SECTION 7.04. Rights of Administrative Agent and its
Affiliates as a Bank    54     SECTION 7.05. Indemnification    54     SECTION
7.06. Intentionally Omitted    55     SECTION 7.07. Payee of Note Treated as
Owner    55     SECTION 7.08. Nonreliance on Administrative Agent and Other
Banks    55     SECTION 7.09. Failure to Act    55     SECTION 7.10. Resignation
of Administrative Agent    55 ARTICLE VIII CHANGE IN CIRCUMSTANCES; TAXES;
COMPENSATION    56     SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair    56     SECTION 8.02. Illegality    57     SECTION 8.03.
Increased Cost and Reduced Return    58     SECTION 8.04. Base Rate Loans
Substituted for Eurocurrency Loans    59     SECTION 8.05. Compensation    59  
  SECTION 8.06. Taxes    60     SECTION 8.07. Replacement of Banks    62    
SECTION 8.08. Alternative Currency Matters    63

 

ii

--------------------------------------------------------------------------------

ARTICLE IX MISCELLANEOUS    65     SECTION 9.01. Notices    65     SECTION 9.02.
No Waivers    66     SECTION 9.03. Expenses    67     SECTION 9.04.
Indemnification; Waiver of Consequential Damages    67     SECTION 9.05. Sharing
of Setoffs    67     SECTION 9.06. Amendments and Waivers    69     SECTION
9.07. No Margin Stock Collateral    70     SECTION 9.08. Successors and Assigns
   70     SECTION 9.09. Confidentiality    72     SECTION 9.10. Representation
by Banks    73     SECTION 9.11. Obligations Several    73     SECTION 9.12.
Georgia Law    73     SECTION 9.13. Interpretation    73     SECTION 9.14.
WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION    73     SECTION 9.15. Judgment
Currency    74     SECTION 9.16. Counterparts    74     SECTION 9.17. Reversal
of Payments    74     SECTION 9.18. Survival of Indemnities    74     SECTION
9.19. Integration    74     SECTION 9.20. USA Patriot Act    75

 

iii

--------------------------------------------------------------------------------

Exhibits     EXHIBIT A-1   Form of Revolving Credit Note EXHIBIT A-2   Form of
Dollar Term Note EXHIBIT A-3   Form of Euro Term Note EXHIBIT A-4   Form of
Swing Loan Note EXHIBIT B   Form of Opinion of Counsel for the Borrower EXHIBIT
C   Form of Assignment and Acceptance EXHIBIT D-1   Form of Notice of Borrowing
EXHIBIT D-2   Form of Notice of Continuation or Conversion EXHIBIT E   Form of
Compliance Certificate Schedules     Schedule 1.01(a)   Revolving Credit
Commitments, Term Loan Amounts and Lending Offices Schedule 1.01(b)   Existing
Letters of Credit Schedule 1.01(c)   Mandatory Cost Formulae Schedule 4.05  
Litigation Schedule 4.08   Subsidiaries Schedule 5.06   Existing Liens

 

iv

--------------------------------------------------------------------------------

FIVE YEAR CREDIT AGREEMENT

 

THIS FIVE YEAR CREDIT AGREEMENT dated as of October 28, 2005, by and among
MOHAWK INDUSTRIES, INC., as Borrower, WACHOVIA BANK, NATIONAL ASSOCIATION, as
Administrative Agent, and the other Banks from time to time party hereto.

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01. Definitions. The terms as defined in this Section 1.01 shall, for
all purposes of this Agreement and any amendment hereto (except as herein
otherwise expressly provided or unless the context otherwise requires), have the
meanings set forth herein:

 

“364-Day Credit Facility” means that 364-Day Credit Agreement dated as of even
date herewith among Mohawk Industries, Inc., Wachovia Bank, National
Association, as Administrative Agent and the other lenders party thereto from
time to time, as amended, restated, supplemented or otherwise modified from time
to time.

 

“Additional Issuer” means up to two (2) Revolving Credit Banks, in addition to
the Administrative Agent, each designated by the Borrower as an additional
issuer of New Letters of Credit pursuant to Section 2.14(h).

 

“Adjusted London Interbank Offered Rate” means, with respect to any Interest
Period, a rate per annum equal to the quotient obtained (rounded upwards, if
necessary, to the next higher  1/100th of 1%) by dividing (i) the applicable
London Interbank Offered Rate for such Interest Period by (ii) 1.00 minus the
Euro-Dollar Reserve Percentage.

 

“Administrative Agent” means Wachovia, in its capacity as administrative agent
for the Banks hereunder, and its successors and permitted assigns in such
capacity.

 

“Administrative Agent’s Correspondent” shall mean Wachovia Bank, National
Association, London Branch, or any other financial institution designated by the
Administrative Agent to act as its correspondent hereunder with respect to the
distribution and payment of Alternative Currency Loans.

 

“Affected Bank” has the meaning set forth in Section 8.07.

 

“Affiliate” means (a) any Person that directly, or indirectly through one or
more intermediaries, controls the Borrower (a “Controlling Person”), (b) any
Person (other than the Borrower or a Subsidiary) which is controlled by or is
under common control with a Controlling Person, or (c) any Person (other than a
Subsidiary) of which the Borrower owns, directly or indirectly, 20% or more of
the common stock or equivalent equity interests. As used herein, the term
“control” means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.

 

“Agreement” means this Five Year Credit Agreement, together with all amendments
and modifications hereto.

--------------------------------------------------------------------------------

“Aladdin” means Aladdin Manufacturing Corporation, a Delaware corporation.

 

“Alternative Currency” shall mean (a) Euro, (b) Sterling, (c) Canadian Dollar
and (d) with the prior written consent of each Revolving Credit Bank, any other
lawful currency (other than Dollars); provided that such currency is freely
transferable and convertible into Dollars in the United States currency market
and freely available to each Revolving Credit Bank in the London interbank
deposit market.

 

“Alternative Currency Amount” shall mean, at any time, with respect to any
amount denominated in Dollars, the equivalent amount thereof in the applicable
Alternative Currency at the most favorable spot exchange rate for the purchase
of such Alternative Currency with Dollars, as determined by the Administrative
Agent or the applicable Issuer, as applicable, at approximately 11:00 A.M. (the
time of the Administrative Agent’s Correspondent) 2 Business Days prior to the
date on which the foreign exchange computation is made.

 

“Alternative Currency Letter of Credit” shall mean any Letter of Credit
denominated in an Alternative Currency.

 

“Alternative Currency Loan” shall mean any Loan denominated in an Alternative
Currency.

 

“Applicable Margin” means at all times:

 

(a) for the period commencing on the Closing Date to and including the first
Performance Pricing Determination Date, (i) for each Base Rate Loan 0.0%,
(ii) for each Eurocurrency Loan that is a Term Loan 0.750%, and (iii) for each
Eurocurrency Loan that is a Revolving Credit Loan 0.500%; and

 

(b) from and after the first Performance Pricing Determination Date, for each
Base Rate Loan and for each Eurocurrency Loan, the percentage determined on each
Performance Pricing Determination Date by reference to the table set forth below
as to such type of Loan with respect to the Borrower’s senior unsecured
long-term debt rating as determined by Moody’s and S&P and in effect as of such
date (the “Debt Rating”); provided, that (i) if either, but not both, of Moody’s
or S&P shall not have in effect a Debt Rating, then the lower level
corresponding to such single Debt Rating shall be used, and (ii) if both Moody’s
and S&P shall not have in effect a Debt Rating, then the Borrower and the Banks
shall negotiate in good faith to amend this definition to reflect the
unavailability of ratings and, pending the effectiveness of any such amendment,
the Applicable Margin shall be determined by reference to the Debt Rating most
recently in effect prior to such event.

 

2

--------------------------------------------------------------------------------

        Revolving Credit Loans

--------------------------------------------------------------------------------

    Term Loans

--------------------------------------------------------------------------------

  Level

--------------------------------------------------------------------------------

  Debt Rating
(S&P/Moody’s)

--------------------------------------------------------------------------------

  Base Rate
Loan

--------------------------------------------------------------------------------

    Eurocurrency
Loan

--------------------------------------------------------------------------------

    Base Rate
Loan

--------------------------------------------------------------------------------

    Eurocurrency
Loan

--------------------------------------------------------------------------------

  I   ³ A/A2   0.000 %   0.190 %   0.000 %   0.300 % II   A-/A3   0.000 %  
0.270 %   0.000 %   0.400 % III   BBB+/Baa1   0.000 %   0.350 %   0.000 %  
0.500 % IV   BBB/Baa2   0.000 %   0.400 %   0.000 %   0.625 % V   BBB-/Baa3  
0.000 %   0.500 %   0.000 %   0.750 % VI   BBB-/Ba1 or
BB+/Baa3   0.000 %   0.550 %   0.000 %   0.875 % VII   £ BB+/Ba1   0.000 %  
0.625 %   0.000 %   1.000 %

 

Except as otherwise set forth above, in the event of a split Debt Rating between
S&P and Moody’s: (a) if there is a one level difference between the Debt
Ratings, then the level corresponding to the higher Debt Rating shall be used,
and (b) if there is a greater than one level difference between the Debt
Ratings, then the level corresponding to the Debt Rating one level immediately
below the higher Debt Rating shall be used. The “Performance Pricing
Determination Date” is the Business Day on which a change in the applicable Debt
Rating is announced or is made publicly available. Any such required change in
interest and fees shall become effective on such Performance Pricing
Determination Date, and shall be in effect until the next Performance Pricing
Determination Date, provided that no fees or interest shall be decreased
pursuant hereto or to Section 2.07 if an Event of Default is in existence on any
Performance Pricing Determination Date.

 

“Approved Investment” means an Investment in compliance with the Investment
Guidelines.

 

“Asset Securitization” means any sale, assignment or other transfer by the
Borrower or a Subsidiary thereof of accounts receivable or other payment
obligations owing to the Borrower or such Subsidiary or any interest in any of
the foregoing, together in each case with any collections and other proceeds
thereof, any collection or deposit accounts related thereto, and any collateral,
guaranties or other property or claims in favor of the Borrower or such
Subsidiary supporting or securing payment by the obligor thereon of, or
otherwise related to, any such receivables, payment obligations or other related
property.

 

“Assignee” has the meaning set forth in Section 9.08(c).

 

“Assignment and Acceptance” means an Assignment and Acceptance executed in
accordance with Section 9.08(c) in the form of Exhibit C.

 

“Authority” has the meaning set forth in Section 8.02.

 

3

--------------------------------------------------------------------------------

“Average Utilization” means, for any calendar quarter, the average daily
aggregate amount of Revolving Credit Loans, Swing Loans and Letter of Credit
Obligations outstanding during such quarter.

 

“Banks” means, collectively, each Person executing this Agreement as a “Bank”
(including, without limitation, each Issuer, unless the context otherwise
requires) set forth on the signature pages hereto and each Person that hereafter
becomes a party to this Agreement as a Bank pursuant to Section 9.08(c).

 

“Base Rate” means, at any time, the higher of (a) that interest rate as
denominated and publicly announced by the Administrative Agent from time to time
as its “prime rate” and (b) the Federal Funds Rate plus 1/2 of 1%. Each change
in the Base Rate shall take effect simultaneously with the corresponding change
or changes in the Administrative Agent’s “prime rate” or the Federal Funds Rate.
The Administrative Agent’s “prime rate” is an index or base rate and shall not
necessarily be its lowest or best rate charged to its customers or other banks.

 

“Base Rate Loan” means a Loan to be made as a Base Rate Loan pursuant to the
applicable Notice of Borrowing, Section 2.01(d), Section 2.02(i), or Article
VIII, as applicable.

 

“Borrower” means Mohawk Industries, Inc., a Delaware corporation, and its
successors and permitted assigns.

 

“Borrowing” means a borrowing hereunder consisting of Loans made to the Borrower
at the same time by the Banks pursuant to Article II. A Borrowing is a “Base
Rate Borrowing” if such Loans are Base Rate Loans or a “Eurocurrency Borrowing”
if such Loans are Eurocurrency Loans, or a “Swing Loan Borrowing” if such Loan
is made pursuant to Section 2.01(b).

 

“Business Day” shall mean a day:

 

(a) other than a Saturday, Sunday or other day on which commercial banks in
Charlotte, North Carolina or New York, New York are authorized or required by
law to close;

 

(b) if such day relates to any interest rate settings as to a Eurocurrency Loan
denominated in Dollars, any fundings, disbursements, settlements and payments in
Dollars in respect of any such Eurocurrency Loan, or any other dealings in
Dollars to be carried out pursuant to this Agreement in respect of any such
Eurocurrency Loan, on which dealings in deposits in Dollars are conducted by and
between banks in the London interbank eurodollar market;

 

(c) if such day relates to any interest rate settings as to a Eurocurrency Loan
denominated in Euros, any fundings, disbursements, settlements and payments in
Euros in respect of any such Eurocurrency Loan, or any other dealings in Euro to
be carried out pursuant to this Agreement in respect of any such Eurocurrency
Loan, which is a TARGET Day;

 

(d) if such day relates to any interest rate settings as to a Eurocurrency Loan
denominated in a Permitted Currency other than Dollars or Euros, on which
dealings in deposits in the relevant currency are conducted by and between banks
in the London or other applicable offshore interbank market for such Permitted
Currency; and

 

4

--------------------------------------------------------------------------------

(e) if such day relates to any fundings, disbursements, settlements and payments
in a Permitted Currency other than Dollars or Euro in respect of a Eurocurrency
Loan denominated in a Permitted Currency other than Dollars or Euros, or any
other dealings in any currency other than Dollars or Euros to be carried out
pursuant to this Agreement in respect of any such Eurocurrency Loan (other than
any interest rate settings), on which banks are open for foreign exchange
business in the principal financial center of the country of such Permitted
Currency.

 

“Canadian Dollar” means, at any time of determination, the then official
currency of Canada.

 

“Capital Stock” means any nonredeemable capital stock of the Borrower or any
Consolidated Subsidiary (to the extent issued to a Person other than the
Borrower), whether common or preferred.

 

“Catoosa Co. IRB” means that issuance of certain bonds by The Development
Authority of Catoosa County, Georgia, pursuant to the terms and conditions set
forth in that certain Indenture of Trust dated as of November 1, 1991.

 

“CERCLA” means the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. § 9601 et. seq. and its implementing regulations and
amendments.

 

“CERCLIS” means the Comprehensive Environmental Response Compensation and
Liability Inventory System established pursuant to CERCLA.

 

“Change of Law” shall have the meaning set forth in Section 8.02.

 

“Closing Date” means October 28, 2005.

 

“Code” means the Internal Revenue Code of 1986, as amended, or any successor
Federal tax code.

 

“Compliance Certificate” has the meaning set forth in Section 5.01(c).

 

“Consolidated Debt” means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.

 

“Consolidated Net Income” means, for any period, the Net Income of the Borrower
and its Consolidated Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, but excluding from the determination
thereof (without duplication) (a) any non-cash extraordinary or non-recurring
gains or losses, (b) non-cash losses or gains from the proposed or actual
disposition of material assets not exceeding $20,000,000 in any fiscal year
(c) non-cash goodwill and intangible asset write-downs and restructuring charges
(but deducting from the determination of Consolidated Net Income for any period,
cash payments made during such period in respect of any goodwill and intangible
asset write-downs or restructuring charges recorded after the Closing Date),
(d) non-cash charges resulting from the vesting or exercise of

 

5

--------------------------------------------------------------------------------

stock options or stock appreciation rights granted to management of the
Borrower, (e) non-cash gains or losses under the Statement of Financial
Accounting Standards number 133 and its amendments and (f) any equity interests
of the Borrower or any Subsidiary in the unremitted earnings of any Person that
is not a Subsidiary. For each of the four Fiscal Quarters following the Closing
Date, Consolidated Net Income shall be calculated on a pro forma basis as if the
Unilin Acquisition had occurred on the first day of such period.

 

“Consolidated Net Worth” means at any time Stockholders’ Equity but excluding
from the determination thereof (without duplication) the effect of (a) any
foreign currency translation adjustments, (b) any extraordinary or
non-recurring, non-cash losses or gains, (c) non-cash losses or gains under the
Statement of Financial Accounting Standards number 133 and its amendments,
(d) non-cash intangible and material write-downs of assets (but deducting from
the determination of Consolidated Net Worth for any period, cash payments made
during such period in respect of any write-downs recorded after the Closing
Date) not exceeding $20,000,000 in any Fiscal Year and (e) non-cash charges
resulting from the vesting or exercise of stock options or stock appreciation
rights granted to management of the Borrower.

 

“Consolidated Subsidiary” means at any date any Subsidiary or other entity the
accounts of which, in accordance with GAAP, would be consolidated with those of
the Borrower in its consolidated financial statements as of such date.

 

“Consolidated Tangible Assets” means, at any time, without duplication,
Consolidated Total Assets, excluding therefrom all items that are treated as
goodwill and other intangible assets under GAAP.

 

“Consolidated Total Assets” means, at any time, without duplication, (a) the
total assets of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis, as set forth or reflected on the most recent consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries, prepared in
accordance with GAAP, plus (b) the accounts receivable balance reported as of
the last day of the Fiscal Quarter most recently ended by the Borrower or a
Subsidiary with respect to an Asset Securitization. Consolidated Total Assets
shall be calculated on a pro forma basis to include the Unilin Acquisition.

 

“Consolidated Total Capital” means, at any time, the sum of the following as of
such time (a) Consolidated Net Worth, and (b) Consolidated Debt.

 

“Controlled Group” means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single employer under
Section 414 of the Code.

 

“Debt” of any Person means at any date, without duplication, all of the
following as of such date (a) all obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (c) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (d) all obligations of such Person
as lessee under capital leases, (e) all obligations of such Person to reimburse
any bank or other Person in respect of amounts payable under a banker’s
acceptance, (f) all Redeemable Preferred Stock of

 

6

--------------------------------------------------------------------------------

such Person (in the event such Person is a corporation), (g) all obligations of
such Person to reimburse any bank or other Person in respect of amounts paid
under a letter of credit or similar instrument (provided, however, solely with
respect to commercial letters of credit, such amounts shall be included
hereunder only to the extent that they exceed $5,000,000 in the aggregate),
(h) all Debt of others secured by a Lien on any asset of such Person, whether or
not such Debt is assumed by such Person, (i) all obligations of such Person with
respect to Hedging Agreements (valued as the termination value thereof computed
in accordance with a method approved by the International Swap Dealers
Association and agreed to by such Person in the applicable Hedging Agreement, if
any) (provided, however, solely with respect to Hedging Agreements entered into
in the ordinary course of business for natural gas or any other fuels used for
the same purposes, such obligations shall be included hereunder only to the
extent that they exceed $100,000,000 in the aggregate), (j) all Debt of others
Guaranteed by such Person, and (k) the outstanding attributed principal amount
under any Asset Securitization. For all purposes of this Agreement, the amount
of a Person’s Debt under a loan or lease agreement between such Person and a
governmental agency that has issued industrial development bonds or similar
instruments, the repayment of which is secured by the payment obligations of
such Person under such loan or lease agreement, shall be equal to the aggregate
principal amount of such bonds or instruments outstanding at the time of
determination less the amount of proceeds of such bonds or instruments which at
such time are on deposit with a trustee or other fiduciary in a “construction”
fund, or other similar fund which would be available to such trustee or other
fiduciary to repay the bonds or other instruments if then due and payable.

 

“Debt to Capitalization Ratio” means the ratio of Consolidated Debt to
Consolidated Total Capital.

 

“Debt Rating” has the meaning set forth in the definition of Applicable Margin.

 

“Default” means any condition or event which constitutes an Event of Default or
which with the giving of notice or lapse of time or both would, unless cured or
waived, become an Event of Default.

 

“Default Rate” means, with respect to any Loan, on any day, the sum of 2% plus
the then highest interest rate (including the Applicable Margin) which may be
applicable to any Loans hereunder, including, without limitation, under
Section 8.07 (irrespective of whether any such class of Loans are actually
outstanding hereunder).

 

“Dividends” means for any period the sum of all dividends paid or declared
during such period in respect of any Capital Stock and Redeemable Preferred
Stock (other than dividends paid or payable in the form of additional Capital
Stock).

 

“Dollar Amount” shall mean, at any time, (a) with respect to any amount
denominated in Dollars, such amount and (b) with respect to any amount
denominated in any Alternative Currency, the equivalent amount thereof in
Dollars at the most favorable spot exchange rate for the purchase of Dollars
with such Alternative Currency, as determined by the Administrative Agent or
applicable Issuer, as applicable, at approximately 11:00 A.M. (the time of the
Administrative Agent’s Correspondent) 2 Business Days prior to the date on which
the foreign exchange computation is made.

 

7

--------------------------------------------------------------------------------

“Dollar Term Loan” means the term loan to be made to the Borrower by the Term
Loan Banks pursuant to Section 2.01(d).

 

“Dollar Term Loan Amount” means (a) with respect to each Term Loan Bank, the
amount set forth opposite the name of such Bank under the heading “Dollar Term
Loan Amount” on Schedule 1.01(a) attached hereto, or in the Assignment and
Acceptance by which such Bank became a party hereto, in each case, as such
amount may be reduced or otherwise modified at any time or from time to time
pursuant to the terms hereof and (b) as to all Term Loan Banks, the aggregate
outstanding principal amount of the Dollar Term Loan held by all the Term Loan
Banks. The Dollar Term Loan Amount of all the Term Loan Banks on the Closing
Date shall be $389,220,000.

 

“Dollar Term Loan Funding Date” has the meaning set forth in Section 2.01(d).

 

“Dollar Term Notes” means the promissory notes of the Borrower, substantially in
the form of Exhibit A-2, evidencing the obligation of the Borrower to repay the
Dollar Term Loan, together with all amendments, consolidations, modifications,
renewals, and supplements thereto.

 

“Dollars” or “$” means dollars in lawful currency of the United States of
America.

 

“EMU” shall mean economic and monetary union as contemplated in the Treaty on
European Union.

 

“EMU Legislation” shall mean legislative measures of the Council of European
Union for the introduction of, change over to or operation of the Euro.

 

“Environmental Authority” means any foreign, federal, state, local or regional
government that exercises any form of jurisdiction or authority under any
Environmental Requirement.

 

“Environmental Judgments and Orders” means all judgments, decrees or orders
arising from or in any way associated with any Environmental Requirements,
whether or not entered upon consent or written agreements with an Environmental
Authority or other entity arising from or in any way associated with any
Environmental Requirement, whether or not incorporated in a judgment, decree or
order.

 

“Environmental Liabilities” means any liabilities, whether pending or, to the
knowledge of the Borrower or any Subsidiary threatened, arising from and in any
way associated with any Environmental Requirements and which would have or
create a reasonable possibility of causing a Material Adverse Effect.

 

“Environmental Notices” means notice from any Environmental Authority or by any
other person or entity, of possible or alleged noncompliance with or liability
under any Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental Authority or
from any other person or entity for correction of any, violation of any
Environmental Requirement or any investigations concerning any violation of any
Environmental Requirement.

 

8

--------------------------------------------------------------------------------

“Environmental Proceedings” means any judicial or administrative proceedings
arising from or in any way associated with any Environmental Requirement.

 

“Environmental Releases” means releases as defined in CERCLA or under any
applicable state or local environmental law or regulation.

 

“Environmental Requirements” means any legal requirement relating to health,
safety or the environment and applicable to any of the Borrower, any Subsidiary,
or the Properties, including but not limited to any such requirement under
CERCLA or similar state legislation and all federal, state and local laws,
ordinances, regulations, orders, writs, decrees and common law.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, or any successor law. Any reference to any provision of ERISA
shall also be deemed to be a reference to any successor provision or provisions
thereof.

 

“Euro” or “€” shall mean the single currency to which the Participating Member
States of the EMU have converted.

 

“Euro Term Loan” means the term loan to be made to the Borrower by the Term Loan
Banks pursuant to Section 2.01(c).

 

“Euro Term Loan Amount” means (a) with respect to each Term Loan Bank, the
amount set forth opposite the name of such Bank under the heading “Euro Term
Loan Amount” on Schedule 1.01(a) attached hereto, or in the Assignment and
Acceptance by which such Bank became a party hereto, in each case, as such
amount may be reduced or otherwise modified at any time or from time to time
pursuant to the terms hereof and (b) as to all Term Loan Banks, the aggregate
outstanding principal amount of the Euro Term Loan held by all the Term Loan
Banks. The Euro Term Loan Amount of all the Term Loan Banks on the Closing Date
shall be €300,000,000.

 

“Euro Term Notes” means the promissory notes of the Borrower, substantially in
the form of Exhibit A-3, evidencing the obligation of the Borrower to repay the
Euro Term Loan, together with all amendments, consolidations, modifications,
renewals, and supplements thereto.

 

“Eurocurrency Loan” means a Loan to be made as a Eurocurrency Loan pursuant to
the applicable Notice of Borrowing, Section 2.01(c) or Section 2.01(d), as
applicable.

 

“Euro-Dollar Reserve Percentage” means, with respect to a given Bank and with
respect to any Eurocurrency Loan denominated in Dollars, for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor), for determining the actual reserve requirement for such Bank in
respect of “Eurocurrency liabilities” (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurocurrency Loans denominated in Dollars is determined or any category of
extensions of credit or other assets which includes loans by a non-United States
office of any Bank to United States residents). The Adjusted London Interbank
Offered Rate shall be adjusted automatically on and as of the effective date of
any change in the Euro-Dollar Reserve Percentage.

 

9

--------------------------------------------------------------------------------

“Event of Default” has the meaning set forth in Section 6.01.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Bank, any
Issuer or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) taxes imposed on or measured by its
overall net income (however denominated), and franchise taxes imposed on it (in
lieu of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Bank, in which its applicable
Lending Office is located, (b) any branch profits taxes imposed by the United
States or any similar tax imposed by any other jurisdiction in which such
recipient is located and (c) in the case of a Foreign Bank (other than an
assignee pursuant to a request by the Borrower under Section 8.07), any
withholding tax that is imposed on amounts payable to such Foreign Bank at the
time such Foreign Bank becomes a party hereto (or designates a new Lending
Office) or is attributable to such Foreign Bank’s failure or inability (other
than as a result of a Change in Law) to comply with Section 8.06(e), except to
the extent that such Foreign Bank (or its assignor, if any) was entitled, at the
time of designation of a new Lending Office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 8.06(a).

 

“Existing Credit Agreement” means the Five Year Credit Agreement, dated as of
September 30, 2003, by and among the Borrower, the lenders party thereto and
Wachovia, as administrative agent (as amended by the First Amendment to Five
Year Credit Agreement and Termination of 364-Day Credit Agreement dated as of
September 29, 2004).

 

“Existing Letter of Credit Issuer” means Wachovia.

 

“Existing Letters of Credit” means the letters of credit set forth on Schedule
1.01(b).

 

“Federal Funds Rate” means, for any day, the rate per annum (rounded upward, if
necessary, to the next higher 1/100th of 1%) equal to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (a) if the day for which such rate is to be determined is not
a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if such rate is not so published for any day,
the Federal Funds Rate for such day shall be the average rate charged to the
Administrative Agent on such day on such transactions, as determined by the
Administrative Agent.

 

“Fiscal Quarter” means any fiscal quarter of the Borrower.

 

“Fiscal Year” means any fiscal year of the Borrower.

 

“Foreign Bank” means any Bank that is organized under the laws of a jurisdiction
other than that in which the Borrower is resident for tax purposes. For purposes
of this definition, the United States, each State thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction.

 

10

--------------------------------------------------------------------------------

“GAAP” means generally accepted accounting principles applied on a basis
consistent with those which, in accordance with Section 1.02, are to be used in
making the calculations for purposes of determining compliance with the terms of
this Agreement.

 

“Galaxy” means Galaxy Carpet Mills, Inc., a Delaware corporation, which
corporation was liquidated into the Borrower as successor thereto.

 

“Guarantee” by any Person means any obligation, contingent or otherwise, of such
Person directly or indirectly guaranteeing any Debt or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
secure, purchase or pay (or advance or supply funds for the purchase or payment
of) such Debt or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to provide collateral security, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (b) entered into for the purpose
of assuring in any other manner the obligee of such Debt or other obligation of
the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part); provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term “Guarantee” used as a verb has a corresponding meaning.

 

“Hazardous Materials” means (a) hazardous waste, as defined in the Resource
Conservation and Recovery Act of 1980, 42 U.S.C. § 6901 et seq. and its
implementing regulations and amendments, or in any applicable state or local law
or regulation, (b) “hazardous substance”, “pollutant”, or “contaminant” as
defined in CERCLA, or in any applicable state or local law or regulation,
(c) gasoline, or any other petroleum product or by-product, including, crude oil
or any fraction thereof, (d) toxic substances, as defined in the Toxic
Substances Control Act of 1976, or in any applicable state or local law or
regulation or (e) insecticides, fungicides, or rodenticides, as defined in the
Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or in any
applicable state or local law or regulation, as each such Act, statute or
regulation may be amended from time to time.

 

“Hedging Agreement” means any interest rate protection agreement, foreign
currency exchange agreement or other agreement or arrangement designed to alter
the risks of any Person arising from fluctuations in interest rates, currency
values or commodity prices.

 

“Indemnified Taxes” means Taxes and Other Taxes other than Excluded Taxes.

 

“Interest Period” means

 

(a) with respect to each Eurocurrency Borrowing, the period commencing on the
date of such Borrowing and ending on the numerically corresponding day in the
first, second, third, sixth, or, if each Bank consents thereto, twelfth month
thereafter, as the Borrower may elect in the applicable Notice of Borrowing;
provided that:

 

(i) any Interest Period (other than an Interest Period determined pursuant to
paragraph (iii) below) which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day;

 

11

--------------------------------------------------------------------------------

(ii) any Interest Period which begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall, subject to paragraph (iii) below,
end on the last Business Day of the appropriate subsequent calendar month; and

 

(iii) any Interest Period which begins before the Termination Date and would
otherwise end after the Termination Date shall end on the Termination Date; and

 

(b) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending 30 days thereafter; provided that:

 

(i) any Interest Period (other than an Interest Period determined pursuant to
paragraph (ii) below) which would otherwise end on a day which is not a Business
Day shall be extended to the next succeeding Business Day; and

 

(ii) any Interest Period which begins before the Termination Date and would
otherwise end after the Termination Date shall end on the Termination Date.

 

“Investment” means any investment in any Person, whether by means of purchase or
acquisition of obligations or securities of such Person, capital contribution to
such Person, loan or advance to such Person, making of a time deposit with such
Person, Guarantee or assumption of any obligation of such Person or otherwise.

 

“Investment Guidelines” means the guidelines for investment of funds of the
Borrower and the Subsidiaries as approved by the Board of Directors of the
Borrower or an authorized executive committee thereof and in effect on the
Closing Date, as modified or supplemented from time to time with the approval of
the Board of Directors of the Borrower or an authorized executive committee.

 

“Issuer” means the Existing Letter of Credit Issuer solely with respect to
Existing Letters of Credit or the Administrative Agent or any Additional Issuer
with respect to New Letters of Credit.

 

“Lending Office” means, as to each Bank, its office located at its address set
forth on Schedule 1.01(a) attached hereto or such other office as such Bank may
hereafter designate as its Lending Office by notice to the Borrower.

 

“Letter of Credit” means any Existing Letter of Credit or any New Letter of
Credit.

 

“Letter of Credit Application” means an application, in the form specified by
the applicable Issuer from time to time, requesting such Issuer to issue a New
Letter of Credit.

 

12

--------------------------------------------------------------------------------

“Letter of Credit Fee” means a letter of credit fee in an amount equal to the
Applicable Margin for Eurocurrency Loans that are Revolving Credit Loans
multiplied by the average daily amount of the Letter of Credit Obligations,
computed for the actual number of days elapsed on the basis of a 360 day year.

 

“Letter of Credit Obligations” shall mean, at any time, the sum of (a) the
aggregate unfunded amount of the outstanding Letters of Credit plus (b) the
aggregate amount of unpaid Reimbursement Obligations.

 

“Lien” means, with respect to any asset, any mortgage, deed to secure debt, deed
of trust, lien, pledge, charge, security interest, security title, preferential
arrangement, which has the practical effect of constituting a security interest
or encumbrance, or encumbrance or servitude of any kind in respect of such asset
to secure or assure payment of a Debt or a Guarantee, whether by consensual
agreement or by operation of statute or other law. For the purposes of this
Agreement, the Borrower or any Subsidiary shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.

 

“Loan” means a Revolving Credit Loan, the Dollar Term Loan, the Euro Term Loan
or a Swing Loan and “Loans” means the Revolving Credit Loans, the Dollar Term
Loan, the Euro Term Loan or the Swing Loans, or any or each of them, as the
context shall require.

 

“Loan Documents” means this Agreement, the Notes, and any other document
evidencing, relating to or securing the Loans, and any other document or
instrument delivered in connection with this Agreement, the Notes or the Loans,
as such documents and instruments may be amended or modified from time to time.

 

“London Interbank Offered Rate” means, with respect to any Eurocurrency Loan,
for the Interest Period of such Eurocurrency Loan, the rate per annum determined
on the basis of the offered rate for deposits in the Permitted Currency in which
such Eurocurrency Loan is to be made, of amounts equal or comparable to the
principal amount of such Eurocurrency Loan offered for a term comparable to such
Interest Period, which rates appear on Telerate Page 3750 (or the applicable
Reuters Screen Page, as determined by the Administrative Agent) effective as of
11:00 A.M., London time, 2 Business Days prior to the first day of such Interest
Period, provided that (i) if more than one such offered rate appears on Telerate
Page 3750 or such applicable Reuters Screen Page, the “London Interbank Offered
Rate” will be the arithmetic average (rounded upward, if necessary, to the next
higher  1/100th of 1%) of such offered rates; (ii) if no such offered rates
appear on such page, the “London Interbank Offered Rate” for such Interest
Period will be the arithmetic average (rounded upward, if necessary, to the next
higher  1/100th of 1%) of rates quoted by not less than two major banks in New
York City, selected by the Administrative Agent, at approximately 10:00 A.M.,
New York City time, 2 Business Days prior to the first day of such Interest
Period, for deposits in the Permitted Currency in which such Eurocurrency Loan
is to be made, offered to leading European banks for a period comparable to such
Interest Period in an amount comparable to the principal amount of such
Eurocurrency Loan.

 

13

--------------------------------------------------------------------------------

“Mandatory Cost” shall mean the percentage rate per annum calculated by the
Administrative Agent in accordance with Schedule 1.01(c).

 

“Margin Stock” means “margin stock” as defined in Regulations T, U or X.

 

“Material Adverse Effect” means, with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (a) the financial
condition, operations, business, properties or prospects of the Borrower and its
Consolidated Subsidiaries taken as a whole, (b) the rights and remedies of the
Banks under the Loan Documents, or the ability of the Borrower to perform its
obligations under the Loan Documents to which it is a party, as applicable, or
(c) the legality, validity or enforceability of any Loan Document.

 

“Material Subsidiary” means, as of the date of any determination thereof, any
Subsidiary that either: (a) owns assets having a book value equal to or greater
than 5.0% of Consolidated Total Assets, or (b) had Consolidated Net Income for
any prior period of four consecutive Fiscal Quarters equal to or greater than
5.0% of Consolidated Net Income for the same four Fiscal Quarter period.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

 

“Multiemployer Plan” shall have the meaning set forth in Section 4001(a)(3) of
ERISA.

 

“Net Income” means, as applied to any Person for any period, the aggregate
amount of net income of such Person, after taxes, for such period, as determined
in accordance with GAAP.

 

“New Letter(s) of Credit” means each standby or commercial letter of credit
(other than the Existing Letters of Credit) issued by the Administrative Agent
or an Additional Issuer for the account of the Borrower pursuant to
Section 2.14(a); provided, however, in the event that any Additional Issuer
fails to provide the notice to the Administrative Agent required by the first
proviso contained in Section 2.14(a), any letter of credit issued by such
Additional Issuer without the giving of such notice shall not constitute a New
Letter of Credit under this Agreement.

 

“Notes” means the collective reference to the Revolving Credit Notes, the Dollar
Term Notes, the Euro Term Notes and the Swing Loan Note.

 

“Notice of Borrowing” has the meaning set forth in Section 2.02.

 

“Notice of Continuation or Conversion” has the meaning set forth in
Section 2.03.

 

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets
Control.

 

“Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.

 

14

--------------------------------------------------------------------------------

“Participant” has the meaning set forth in Section 9.08(b).

 

“Participating Member State” shall mean each state so described in any EMU
Legislation.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

 

“Performance Pricing Determination Date” has the meaning set forth in the
definition of Applicable Margin.

 

“Permitted Acquisition” means a non-hostile acquisition, however structured, of
all or substantially all of the assets of, or a majority of all the issued and
outstanding capital stock of, a Person; provided that the Borrower will be in
compliance with Section 5.07 after giving effect to such acquisition. The Unilin
Acquisition is a Permitted Acquisition.

 

“Permitted Currency” shall mean Dollars or any Alternative Currency, or each
such currency, as the context requires.

 

“Permitted Line of Business” means businesses in substantially the same fields
as the businesses conducted by the Borrower and its Subsidiaries on the Closing
Date and after giving effect to the Unilin Acquisition (including, without
limitation, the manufacturing, marketing and/or distribution of commercial or
home furnishings and floor coverings and other reasonably related products and
any “vertical integration” with respect thereto) and in lines of business
reasonably related thereto.

 

“Person” means an individual, a corporation, a partnership, an unincorporated
association, joint venture, limited liability company, a trust or any other
entity or organization, including, but not limited to, a government or political
subdivision or an agency or instrumentality thereof.

 

“Plan” means at any time an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code and is either (a) maintained by a member of the Controlled Group for
employees of any member of the Controlled Group or (b) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which a member of the Controlled Group
is then making or accruing an obligation to make contributions or has within the
preceding five plan years made contributions.

 

“Properties” means all real property owned, leased or otherwise used or occupied
by the Borrower or any Subsidiary, wherever located.

 

“Redeemable Preferred Stock” of any Person means any preferred stock issued by
such Person which is at any time prior to the Termination Date either
(a) mandatorily redeemable (by sinking fund or similar payments or otherwise) or
(b) redeemable at the option of the holder thereof.

 

“Register” has the meaning assigned thereto in Section 9.08(d).

 

15

--------------------------------------------------------------------------------

“Regulation T” means Regulation T of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.

 

“Regulation U” means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.

 

“Regulation X” means Regulation X of the Board of Governors of the Federal
Reserve System, as in effect from time to time, together with all official
rulings and interpretations issued thereunder.

 

“Reimbursement Obligations” means the reimbursement or repayment obligations of
the Borrower to the Issuers pursuant to Section 2.14 with respect to Letters of
Credit and the applicable Letter of Credit Application.

 

“Replacement Bank” has the meaning set forth in Section 8.07.

 

“Required Banks” means at any time Banks having more than 50% of the sum of
(a) the aggregate amount of the Revolving Credit Commitments plus (b) the
aggregate outstanding principal amount of the Term Loans, or if the Revolving
Credit Commitments are no longer in effect, holding more than 50% of the
aggregate outstanding principal amount of the Loans.

 

“Required Revolving Credit Banks” means at any time Revolving Credit Banks
having more than 50% of the aggregate amount of the Revolving Credit
Commitments, or if the Revolving Credit Commitments are no longer in effect,
holding more than 50% of the aggregate outstanding principal amount of the
Revolving Credit Loans, Swing Loans and Letter of Credit Obligations.

 

“Responsible Officer” means the chief executive officer, president, vice
president and general counsel, chief financial officer, controller or treasurer
of the Borrower. Any document delivered hereunder that is signed by a
Responsible Officer of the Borrower shall be conclusively presumed to have been
authorized by all necessary corporate action on the part of the Borrower and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of the Borrower.

 

“Restricted Payment” means (a) any dividend or other distribution on any shares
of the Borrower’s capital stock (except dividends payable solely in shares of
its capital stock) or (b) any payment on account of the purchase, redemption,
retirement or acquisition of (i) any shares of the Borrower’s capital stock
(except shares acquired upon the conversion thereof into other shares of its
capital stock) or (ii) any option, warrant or other right to acquire shares of
the Borrower’s capital stock.

 

“Revaluation Date” shall mean (a) with respect to any Alternative Currency Loan,
each of the following: (i) the date of a borrowing of such Alternative Currency
Loan, (ii) each date of a continuation of such Alternative Currency Loan, and
(iii) such additional dates as the Administrative Agent shall reasonably
determine or the Required Banks shall reasonably require; and (b) with respect
to any Alternative Currency Letter of Credit, each of the following: (i) the

 

16

--------------------------------------------------------------------------------

date of issuance of such Alternative Currency Letter of Credit, (ii) each date
of an amendment of such Alternative Currency Letter of Credit having the effect
of increasing the amount thereof (solely with respect to the increased amount),
(iii) each date of any payment by the Issuer of any drawing under such
Alternative Currency Letter of Credit, and (iv) such additional dates as the
Administrative Agent or the applicable Issuer shall reasonably determine or the
Required Banks shall reasonably require.

 

“Revolving Credit Banks” means Banks with a Revolving Credit Commitment.

 

“Revolving Credit Borrowing” means any Base Rate Loans or Eurocurrency Loans
made to the Borrower pursuant to the terms and conditions set forth in
Section 2.01(a).

 

“Revolving Credit Commitment” means (a) with respect to each Revolving Credit
Bank, the amount set forth opposite the name of such Bank under the heading
“Revolving Credit Commitment” on Schedule 1.01(a) attached hereto, or in the
Assignment and Acceptance by which such Bank became a party hereto, as such
amount may be reduced from time to time pursuant to Sections 2.08 and 2.09 and
(b) as to all Revolving Credit Banks, the aggregate commitment of all Revolving
Credit Banks to make Revolving Credit Loans, as such amount may be reduced at
any time or from time to time pursuant to Sections 2.08 and 2.09. The Revolving
Credit Commitment of all Revolving Credit Banks on the Closing Date shall be
$750,000,000.

 

“Revolving Credit Commitment Percentage” means, with respect to a Revolving
Credit Bank, the ratio, expressed as a percentage, of (a) the amount of such
Bank’s Revolving Credit Commitment to (b) the aggregate amount of the Revolving
Credit Commitments of all Revolving Credit Banks hereunder; provided, however,
that if at the time of determination the Revolving Credit Commitments have
terminated or been reduced to zero, the “Revolving Credit Commitment Percentage”
of each Revolving Credit Bank shall be the Revolving Credit Commitment
Percentage of such Bank in effect immediately prior to such termination or
reduction.

 

“Revolving Credit Loans” means Base Rate Loans or Eurocurrency Loans made
pursuant to the terms and conditions set forth in Section 2.01(a).

 

“Revolving Credit Notes” means the promissory notes of the Borrower,
substantially in the form of Exhibit A-1, evidencing the obligation of the
Borrower to repay the Revolving Credit Loans, together with all amendments,
consolidations, modifications, renewals, and supplements thereto.

 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.

 

“Sterling” shall mean, at any time of determination, the then official currency
of the United Kingdom of Great Britain and Northern Ireland.

 

“Stockholders’ Equity” means, at any time, the stockholders’ equity of the
Borrower and its Consolidated Subsidiaries, as set forth or reflected on the
most recent consolidated balance

 

17

--------------------------------------------------------------------------------

sheet of the Borrower and its Consolidated Subsidiaries prepared in accordance
with GAAP and delivered to the Administrative Agent pursuant to Section 5.01,
but excluding any Redeemable Preferred Stock of the Borrower or any of its
Consolidated Subsidiaries. Shareholders’ equity generally would include, but not
be limited to, (a) the par or stated value of all outstanding Capital Stock,
(b) capital surplus, (c) retained earnings, and (d) various deductions such as
purchases of treasury stock, valuation allowances, receivables due from an
employee stock ownership plan, employee stock ownership plan debt guarantees,
and foreign currency translation adjustments. Stockholders’ Equity shall be
calculated on a pro forma basis to include the Unilin Acquisition.

 

“Subsidiary” means any corporation or other entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the time
directly or indirectly owned by the Borrower.

 

“Summerville City IRB” means that issuance of certain bonds by The Development
Authority of the City of Summerville, Georgia, pursuant to the terms and
conditions set forth in that certain Trust Indenture dated as of September 1,
1997.

 

“SunTrust” means SunTrust Bank, a Georgia state banking corporation, and its
successors and, as the context requires, its permitted assigns.

 

“Sweep Agreement” means any agreement relating to the Sweep Plus Service Program
of the Administrative Agent or any other cash management arrangement which the
Borrower and the Administrative Agent have executed for the purposes of
effecting the borrowing and repayment of Swing Loans.

 

“Swing Loan” means a Loan made by the Administrative Agent pursuant to
Section 2.01(b).

 

“Swing Loan Commitment” means $100,000,000.

 

“Swing Loan Note” means the promissory note of the Borrower, substantially in
the form of Exhibit A-4, evidencing the obligation of the Borrower to repay the
Swing Loans, together with all amendments, consolidations, modifications,
renewals, and supplements thereto.

 

“Swing Loan Reserve” means (a) on and after the date the Borrower elects to
terminate the Sweep Agreement pursuant to Section 2.01(b)(ii), the aggregate
amount of Swing Loans outstanding on any date of determination and (b) at all
other times, the Swing Loan Commitment.

 

“TARGET Day” shall mean any day on which the Trans-European Automated Real-time
Gross Settlement Express Transfer (TARGET) payment system (or, if such payment
system ceases to be operative, such other payment system (if any) determined by
the Administrative Agent to be a suitable replacement) is open for the
settlement of payments in Euro.

 

18

--------------------------------------------------------------------------------

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Authority,
including any interest, additions to tax or penalties applicable thereto.

 

“Term Loan Banks” means Banks which hold a portion of the Dollar Term Loan
and/or the Euro Term Loan.

 

“Term Loans” means the collective reference to the Euro Term Loan and the Dollar
Term Loan, or any or each of them, as the context shall require.

 

“Termination Date” means whichever is applicable of (a) the date that is five
(5) years following the Closing Date or (b) the date of termination pursuant to
Section 6.01 following the occurrence of an Event of Default.

 

“Third Parties” means all lessees, sublessees, licensees and other users of the
Properties, excluding those users of the Properties in the ordinary course of
the Borrower’s business and on a temporary basis.

 

“Transferee” has the meaning set forth in Section 9.08(e).

 

“Treaty on European Union” shall mean the Treaty of Rome of March 25, 1957, as
amended by the Single European Act of 1986 and the Maastricht Treaty (signed
February 7, 1992), as amended from time to time.

 

“Unilin Acquisition” means the acquisition by the Borrower directly, or through
one or more Subsidiaries, of the outstanding shares of Unilin Holding NV
pursuant to the terms of the Unilin Purchase Agreement.

 

“Unilin Purchase Agreement” means the Share Purchase Agreement dated as of
July 2, 2005 between Cigales SAK, as seller, and the Borrower, as purchaser, as
amended from time to time.

 

“Unused Commitments” means at any date an amount equal to (a) the aggregate
Revolving Credit Commitments less (b) the aggregate outstanding principal amount
of the Revolving Credit Loans less (c) the Swing Loan Reserve less (d) the
Letter of Credit Obligations.

 

“Wachovia” means Wachovia Bank, National Association, a national banking
association, and its successors and, as the context requires, its permitted
assigns.

 

“Wholly Owned Subsidiary” means any Subsidiary all of the shares of capital
stock or other ownership interests of which (except directors’ qualifying
shares) are at the time directly or indirectly owned by the Borrower or a
Consolidated Subsidiary.

 

SECTION 1.02. Accounting Terms and Determinations. Unless otherwise specified
herein, all terms of an accounting character used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in accordance
with GAAP, applied on a basis consistent (except for

 

19

--------------------------------------------------------------------------------

changes concurred in by the Borrower’s independent public accountants or
otherwise required by a change in GAAP) with the most recent audited
consolidated financial statements of the Borrower delivered to the Banks unless
with respect to any such change concurred in by the Borrower’s independent
public accountants or required by GAAP, in determining compliance with any of
the provisions of any of the Loan Documents: (a) the Borrower shall have
objected to determining such compliance on such basis at the time of delivery of
such financial statements, or (b) the Required Banks shall so object in writing
within 30 days after the delivery of such financial statements, in either of
which events, the Banks and the Borrower shall negotiate in good faith to
resolve any existing disagreements regarding such calculations, provided, that
if such disagreements are not resolved within 30 days after receipt of a notice
of objection, such calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as to which such
objection shall not have been made (which, if objection is made in respect of
the first financial statements delivered under Section 5.01 hereof, shall mean
the financial statements referred to in Section 4.04).

 

SECTION 1.03. References. Unless otherwise indicated, references in this
Agreement to “Articles”, “Exhibits”, “Schedules”, “Sections” and other
Subdivisions are references to articles, exhibits, schedules, sections and other
subdivisions hereof.

 

SECTION 1.04. Use of Defined Terms. All terms defined in this Agreement shall
have the same defined meanings when used in any of the other Loan Documents,
unless otherwise defined therein or unless the context shall require otherwise.

 

SECTION 1.05. Terminology. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and the plural shall include the
singular. Titles of Articles and Sections in this Agreement are for convenience
only, and neither limit nor amplify the provisions of this Agreement.

 

SECTION 1.06. Determination of Amounts. Unless otherwise specified, for purposes
of this Agreement, any determination of the amount of any outstanding Revolving
Credit Loans, Swing Loans, Letter of Credit Obligations or other obligations
payable under this Agreement shall be based upon the Dollar Amount of such
outstanding Revolving Credit Loans, Swing Loans, Letter of Credit Obligations or
other obligations payable under this Agreement.

 

ARTICLE II

 

THE CREDITS

 

SECTION 2.01. Commitments to Lend.

 

(a) Revolving Credit Loans. Each Revolving Credit Bank severally agrees, on the
terms and conditions set forth herein, to make Revolving Credit Loans in a
Permitted Currency to the Borrower from time to time before the Termination
Date; provided that,

 

(i) immediately after each such Revolving Credit Loan is made, the aggregate
outstanding principal amount of Revolving Credit Loans by such Revolving Credit
Bank plus such Revolving Credit Bank’s Revolving Credit Commitment Percentage of
the Swing Loan Reserve and of all outstanding Letter of Credit Obligations shall
not exceed the amount of its Revolving Credit Commitment, and

 

20

--------------------------------------------------------------------------------

(ii) the sum of (x) the aggregate outstanding principal amount of all Revolving
Credit Loans plus (y) the Letter of Credit Obligations plus (z) the Swing Loan
Reserve shall not exceed the aggregate amount of the Revolving Credit
Commitments.

 

Each Revolving Credit Borrowing under this Section shall be in an aggregate
principal amount of $2,000,000 or any larger integral multiple of $500,000 (or,
in each case, the Alternative Currency Amount thereof), except that any such
Revolving Credit Borrowing may be in the aggregate amount of the Unused
Commitments, and shall be made from the several Revolving Credit Banks in
proportion to their respective Revolving Credit Commitment Percentages. Within
the foregoing limits, the Borrower may borrow under this Section, repay or,
subject to the provisions of Section 2.10, prepay Revolving Credit Loans and
reborrow under this Section at any time before the Termination Date.

 

(b) Swing Loans.

 

(i) At any time during which the Sweep Agreement is in effect, Swing Loans shall
be advanced to fund borrowing needs pursuant to the terms of the Sweep
Agreement; provided that the aggregate principal amount of all outstanding Swing
Loans (after giving effect to any amount requested), shall not exceed the lesser
of (A) the aggregate Revolving Credit Commitments less the sum of all
outstanding Revolving Credit Loans and the Letter of Credit Obligations and
(B) the Swing Loan Commitment. Principal and interest on Swing Loans deemed
requested pursuant to this Section shall be paid pursuant to the terms and
conditions of the Sweep Agreement without any deduction, setoff or counterclaim
whatsoever. Unless sooner paid pursuant to the provisions hereof or the
provisions of the Sweep Agreement, the principal amount of the Swing Loans shall
be paid in full, together with accrued interest thereon, on the Termination
Date.

 

(ii) The Borrower may elect to terminate the Sweep Agreement upon giving the
Administrative Agent irrevocable written notice at least 30 days prior to such
termination date. Following such termination date, (A) Swing Loans will no
longer be advanced pursuant to the terms of subsection (i) above and (B) the
Administrative Agent shall from time to time, upon the request of the Borrower,
if the applicable conditions precedent in Article III have been satisfied or
waived in accordance with Section 9.06, make Swing Loans to the Borrower in
Dollars in an aggregate principal amount at any time outstanding not exceeding
the Swing Loan Commitment; provided that, immediately after such Swing Loan is
made, the conditions set forth in clauses (i) and (ii) of Section 2.01(a) shall
have been satisfied. Each Swing Loan Borrowing under this clause (ii) shall be
in an aggregate principal amount of $100,000 or any larger multiple of $25,000.
Within the foregoing limits, the Borrower may borrow under this clause (ii),
prepay and reborrow under this clause (ii) at any time before the Termination
Date. All Swing Loans made pursuant to this clause (ii) shall bear interest at
the per annum rate or rates agreed to by the Borrower and the Administrative
Agent from time to time, or, if no agreement is reached, at the Base Rate for
Revolving Credit Loans plus the Applicable Margin.

 

21

--------------------------------------------------------------------------------

(iii) At any time, upon the request of the Administrative Agent, each Revolving
Credit Bank other than the Administrative Agent shall, on the 3rd Business Day
after such request is made, purchase a participating interest in Swing Loans in
an amount equal to such Revolving Credit Bank’s Revolving Credit Commitment
Percentage of such Swing Loans. On such 3rd Business Day, each Revolving Credit
Bank will immediately transfer to the Administrative Agent, in immediately
available funds, the amount of its participation. Whenever, at any time after
the Administrative Agent has received from any such Revolving Credit Bank its
participating interest in a Swing Loan, the Administrative Agent receives any
payment on account thereof, the Administrative Agent will distribute to such
Revolving Credit Bank its participating interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Revolving Credit Bank’s participating interest was outstanding and
funded); provided, however, that in the event that such payment received by the
Administrative Agent is required to be returned, such Revolving Credit Bank will
return to the Administrative Agent any portion thereof previously distributed by
the Administrative Agent to it. Each Revolving Credit Bank’s obligation to
purchase such participating interests shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation:
(A) any set-off, counterclaim, recoupment, defense or other right which such
Revolving Credit Bank or any other Person may have against the Administrative
Agent requesting such purchase or any other Person for any reason whatsoever;
(B) the occurrence or continuance of a Default or an Event of Default or the
termination of the Revolving Credit Commitments; (C) any adverse change in the
condition (financial or otherwise) of the Borrower or any other Person; (D) any
breach of this Agreement by the Borrower or any other Revolving Credit Bank;
(E) non-satisfaction of the conditions set forth in Section 3.02 or (F) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing.

 

(c) Euro Term Loan.

 

(i) Subject to the terms and conditions of this Agreement, each Term Loan Bank
severally agrees, on the terms and conditions set forth herein, to make its Euro
Term Loan Amount of the Euro Term Loan in Euros to the Borrower on the Closing
Date.

 

(ii) Not later than 11:00 A.M. (Charlotte, North Carolina time) and at least
3 Business Days prior to the Closing Date, the Borrower shall have delivered to
the Administrative Agent an irrevocable Notice of Borrowing requesting that the
Term Loan Lenders make the Euro Term Loan in Euros on the Closing Date, together
with a written agreement in form and substance satisfactory to the
Administrative Agent agreeing to indemnify the Term Loan Banks for any funding
losses resulting from the failure by the Borrower to borrow the Euro Term Loan
on the Closing Date to the Administrative Agent.

 

22

--------------------------------------------------------------------------------

(iii) Not later than 11:00 A.M. (the time of the Administrative Agent’s
Correspondent) on the Closing Date, each Term Loan Bank shall make available its
respective Euro Term Loan Amount of the Euro Term Loan in Euros in immediately
available funds at the office of the Administrative Agent’s Correspondent.
Unless the Administrative Agent determines that any applicable condition
specified in Article III has not been satisfied or waived in accordance with
Section 9.06, the Administrative Agent will make the funds so received from the
Term Loan Banks available to the Borrower in the manner provided for in the
applicable Notice of Borrowing no later than 2:00 P.M. (the time of the
Administrative Agent’s Correspondent).

 

(d) Dollar Term Loan.

 

(i) Subject to the terms and conditions of this Agreement, each Term Loan Bank
severally agrees, on the terms and conditions set forth herein, to make its
Dollar Term Loan Amount of the Dollar Term Loan in Dollars to the Borrower in a
single Borrowing during the period from the Closing Date to and including
October 31, 2005 (such funding date to be hereinafter referred to as the “Dollar
Term Loan Funding Date”), as requested by the Borrower pursuant to the terms
hereof.

 

(ii) Not later than (A) 11:00 A.M. (Charlotte, North Carolina time) on the
Dollar Term Loan Funding Date for a Base Rate Borrowing and (B) 11:00 A.M.
(Charlotte, North Carolina time) and at least 3 Business Days prior to the
Dollar Term Loan Funding Date for a Eurocurrency Borrowing, the Borrower shall
have delivered to the Administrative Agent an irrevocable Notice of Borrowing
requesting that the Term Loan Lenders make the Dollar Term Loan in Dollars on
the Dollar Term Loan Funding Date, together with a written agreement in form and
substance satisfactory to the Administrative Agent agreeing to indemnify the
Term Loan Banks for any funding losses resulting from the failure by the
Borrower to borrow the Dollar Term Loan on the Dollar Term Loan Funding Date to
the Administrative Agent.

 

(iii) Not later than 1:00 P.M. (Charlotte, North Carolina time) on the Dollar
Term Loan Funding Date, each Term Loan Bank shall make available its respective
Dollar Term Loan Amount of the Dollar Term Loan in Dollars in immediately
available funds to the Administrative Agent at its address determined pursuant
to Section 9.01. Unless the Administrative Agent determines that any applicable
condition specified in Article III has not been satisfied or waived in
accordance with Section 9.06, the Administrative Agent will make the funds so
received from the Term Loan Banks available to the Borrower in the manner
provided for in the applicable Notice of Borrowing no later than 2:00 P.M.
(Charlotte, North Carolina time).

 

SECTION 2.02. Method of Borrowing Loans.

 

(a) The Borrower shall give the Administrative Agent notice (a “Notice of
Borrowing”), which shall be substantially in the form of Exhibit D-1, prior to
(i) 11:00 A.M. (Charlotte, North Carolina time) on the same Business Day of each
Base Rate Borrowing or a Swing Loan Borrowing (except as provided under the
Sweep Agreement), (ii) 11:00 A.M. (Charlotte, North Carolina time) and at least
3 Business Days before each Eurocurrency

 

23

--------------------------------------------------------------------------------

Borrowing denominated in Dollars, and (iii) 11:00 A.M. (Charlotte, North
Carolina time) and at least 4 Business Days before each Eurocurrency Borrowing
denominated in an Alternative Currency, specifying:

 

(i) the date of such Borrowing, which shall be a Business Day,

 

(ii) the aggregate amount of such Borrowing,

 

(iii) whether the Revolving Credit Loans comprising such Borrowing are to be
Base Rate Loans or Eurocurrency Loans, or stating that such Borrowing is to be a
Swing Loan Borrowing,

 

(iv) in the case of a Eurocurrency Borrowing, the duration of the Interest
Period applicable thereto, subject to the provisions of the definition of
Interest Period,

 

(v) in the case of a Eurocurrency Borrowing, the Permitted Currency in which
such Eurocurrency Borrowing is to be denominated, and

 

(vi) how the proceeds of such Borrowing are to be made available to the
Borrower.

 

(b) Upon receipt of a Notice of Borrowing, the Administrative Agent shall
promptly notify each Bank of the contents thereof and unless such Borrowing is a
Swing Loan Borrowing of such Bank’s Revolving Credit Commitment Percentage of
such Revolving Credit Borrowing and, such Notice of Borrowing, once received by
the Administrative Agent, shall not thereafter be revocable by the Borrower
(except as otherwise provided in Section 8.01).

 

(c) Not later than 1:00 P.M. (Charlotte, North Carolina time) on the date of
each Revolving Credit Borrowing denominated in Dollars, each Revolving Credit
Bank shall make available its respective Revolving Credit Commitment Percentage
of such Revolving Credit Borrowing, in Dollars in immediately available funds to
the Administrative Agent at its address determined pursuant to Section 9.01.
Unless the Administrative Agent determines that any applicable condition
specified in Article III has not been satisfied or waived in accordance with
Section 9.06, the Administrative Agent will make the funds so received from the
Revolving Credit Banks available to the Borrower in the manner provided for in
the applicable Notice of Borrowing no later than 2:00 P.M. (Charlotte, North
Carolina time).

 

(d) Not later than 11:00 A.M. (the time of the Administrative Agent’s
Correspondent) on the date of each Revolving Credit Borrowing denominated in an
Alternative Currency, each Revolving Credit Bank shall make available its
respective Revolving Credit Commitment Percentage of such Revolving Credit
Borrowing, in the requested Alternative Currency in immediately available funds
at the office of the Administrative Agent’s Correspondent. Unless the
Administrative Agent determines that any applicable condition specified in
Article III has not been satisfied or waived in accordance with Section 9.06,
the Administrative Agent will make the funds so received from the Revolving
Credit Banks available to the Borrower in the manner provided for in the
applicable Notice of Borrowing no later than 2:00 P.M. (the time of the
Administrative Agent’s Correspondent).

 

24

--------------------------------------------------------------------------------

(e) Unless the Administrative Agent receives notice from a Bank, at the address
of the Administrative Agent or the Administrative Agent’s Correspondent, as
applicable, no later than 4:00 P.M. (local time at such address) on the Business
Day before the date of a Borrowing with respect to a Eurocurrency Loan, or no
later than 1:00 P.M. (local time at such address) on the date of a Borrowing
with respect to a Base Rate Loan, stating that such Bank will not make a Loan in
connection with such Borrowing, the Administrative Agent shall be entitled to
assume that such Bank will make a Loan in connection with such Borrowing and, in
reliance on such assumption, the Administrative Agent may (but shall not be
obligated to) make available such Bank’s (i) Revolving Credit Commitment
Percentage of such Revolving Credit Borrowing, (ii) Dollar Term Loan Amount or
(iii) Euro Term Loan Amount, as applicable, to the Borrower for the account of
such Bank. If the Administrative Agent makes such Bank’s (i) Revolving Credit
Commitment Percentage of such Revolving Credit Borrowing, (ii) Dollar Term Loan
Amount or (iii) Euro Term Loan Amount, as applicable, available to the Borrower
and such Bank does not in fact make its (i) Revolving Credit Commitment
Percentage of such Revolving Credit Borrowing, (ii) Dollar Term Loan Amount or
(iii) Euro Term Loan Amount, as applicable, of such Borrowing available on such
date, the Administrative Agent shall be entitled to recover such Bank’s
(i) Revolving Credit Commitment Percentage of such Revolving Credit Borrowing,
(ii) Dollar Term Loan Amount or (iii) Euro Term Loan Amount, as applicable, from
such Bank or the Borrower (and for such purpose shall be entitled to charge such
amount to any account of the Borrower maintained with the Administrative Agent),
together with interest thereon for each day during the period from the date of
such Borrowing until such sum shall be paid in full at the Federal Funds Rate;
provided that (i) any such payment by the Borrower of such Bank’s (A) Revolving
Credit Commitment Percentage of such Revolving Credit Borrowing, (B) Dollar Term
Loan Amount or (C) Euro Term Loan Amount, as applicable, and interest thereon
shall be without prejudice to any rights that the Borrower may have against such
Bank and (ii) until such Bank has paid its (A) Revolving Credit Commitment
Percentage, (B) Dollar Term Loan Amount or (C) Euro Term Loan Amount, as
applicable, of such Borrowing, together with interest pursuant to the foregoing,
it will have no interest in or rights with respect to such Borrowing for any
purpose hereunder. If the Administrative Agent does not exercise its option to
advance funds for the account of such Bank, it shall forthwith notify the
Borrower of such decision.

 

(f) Unless the Administrative Agent determines that any applicable condition
specified in Article III has not been satisfied or waived in accordance with
Section 9.06, the Administrative Agent will make available to the Borrower at
the Administrative Agent’s Lending Office (or as otherwise agreed by the
Administrative Agent) the amount of any Swing Loan Borrowing no later than 2:00
P.M (Charlotte, North Carolina time). Notwithstanding the terms of this
Section 2.02 to the contrary, at any time during which the Sweep Agreement is in
effect, Swing Loans shall be advanced to fund borrowing needs pursuant to the
terms of the Sweep Agreement.

 

(g) The Term Loans shall be requested and advanced pursuant to Section 2.01(c)
and (d).

 

(h) Notwithstanding anything to the contrary contained in this Agreement, no
Eurocurrency Borrowing may be made if there shall have occurred a Default or an
Event of Default, which Default or Event of Default shall not have been cured or
waived.

 

25

--------------------------------------------------------------------------------

(i) In the event that a Notice of Borrowing fails to specify whether the
Revolving Credit Loans comprising such Revolving Credit Borrowing are to be Base
Rate Loans or Eurocurrency Loans, such Revolving Credit Loans shall be made as
Base Rate Loans. In the event that the Notice of Borrowing fails to specify the
Permitted Currency of such Revolving Credit Loans, such Revolving Credit Loans
shall be denominated in Dollars. If the Borrower is otherwise entitled under
this Agreement to repay any Revolving Credit Loans maturing at the end of an
Interest Period applicable thereto with the proceeds of a new Borrowing, and the
Borrower fails to repay such Revolving Credit Loans using its own moneys and
fails to give a Notice of Borrowing in connection with such new Revolving Credit
Borrowing, a new Revolving Credit Borrowing shall be deemed to be made on the
date such Revolving Credit Loans mature in an amount equal to the principal
amount of the Revolving Credit Loans so maturing, and the Revolving Credit Loans
comprising such new Revolving Credit Borrowing shall be Base Rate Loans.

 

(j) Notwithstanding anything to the contrary contained herein, there shall not
be more than ten (10) Interest Periods outstanding at any given time.

 

(k) Notwithstanding anything to the contrary contained herein, the Revolving
Credit Banks agree to make Revolving Credit Loans as Eurocurrency Loans
denominated in Euros or Dollars on the Closing Date if, prior to 11:00 A.M.
(Charlotte, North Carolina time) at least 3 Business Days before the Closing
Date, the Borrower has delivered an irrevocable Notice of Borrowing for such
Eurocurrency Borrowing and a written agreement in form and substance
satisfactory to the Administrative Agent agreeing to indemnify the Revolving
Credit Banks for any funding losses resulting from the failure by the Borrower
to borrow such Eurocurrency Loan on the Closing Date.

 

SECTION 2.03. Continuation and Conversion Elections. By delivering a notice (a
“Notice of Continuation or Conversion”), which shall be substantially in the
form of Exhibit D-2 to the Administrative Agent on or before 11:00 A.M.
(Charlotte, North Carolina time), on a Business Day, the Borrower may from time
to time irrevocably elect, by notice (a) on the same Business Day, in the case
of Base Rate Loans, (b) 3 Business Days, in the case of Eurocurrency Loans
denominated in Dollars or (c) 4 Business Days, in the case of Eurocurrency Loans
denominated in an Alternative Currency, that all, or any portion in an aggregate
principal amount of $2,000,000 or any larger integral multiple of $500,000 (or,
in each case, the Alternative Currency Amount thereof) be, (i) in the case of
Base Rate Loans, converted into Eurocurrency Loans or (ii) in the case of
Eurocurrency Loans, converted into Base Rate Loans or continued as Eurocurrency
Loans, which such notice shall specify the Permitted Currency in which such
Eurocurrency Loan is denominated (in the absence of delivery of a Notice of
Continuation or Conversion with respect to any Eurocurrency Loan at least 3
Business Days before the last day of the then current Interest Period with
respect thereto, such Eurocurrency Loan shall, on such last day, automatically
convert to a Base Rate Loan denominated in Dollars); provided, however, that
(x) each such conversion or continuation shall be pro rated among the Banks that
have made such Loans, and (y) no portion of the outstanding principal amount of
any Loans may be continued as, or be converted into, any Eurocurrency Loan when
any Event of Default has occurred and is continuing.

 

26

--------------------------------------------------------------------------------

SECTION 2.04. Notes

 

(a) The Revolving Credit Loans of each Revolving Credit Bank shall be evidenced
by a single Revolving Credit Note made by the Borrower payable to the order of
such Bank for the account of its Lending Office in an amount equal to the
original principal amount of such Bank’s Revolving Credit Commitment. The Dollar
Term Loan of each Term Loan Bank shall be evidenced by a single Dollar Term Note
made by the Borrower payable to the order of such Bank for the account of its
Lending Office in an amount equal to the original principal amount of such
Bank’s Dollar Term Loan Amount. The Euro Term Loan of each Term Loan Bank shall
be evidenced by a single Euro Term Note made by the Borrower payable to the
order of such Bank for the account of its Lending Office in an amount equal to
the original principal amount of such Bank’s Euro Term Loan Amount. The Swing
Loans shall be evidenced by a single Swing Loan Note payable to the order of the
Administrative Agent in the original principal amount of the Swing Loan
Commitment.

 

(b) Upon receipt of each Bank’s Notes pursuant to Section 3.01, the
Administrative Agent shall deliver such Notes to such Bank. Each Bank shall
record, and prior to any transfer of its Note shall endorse on the schedule
forming a part thereof appropriate notations to evidence the date, amount and
maturity of each Loan made by it, the date and amount of each payment of
principal made by the Borrower with respect thereto and whether such Loan is a
Base Rate Loan or Eurocurrency Loan, and such schedule shall constitute
rebuttable presumptive evidence of the principal amount owing and unpaid on such
Bank’s Note; provided that the failure of any Bank to make any such recordation
or endorsement shall not affect the obligation of the Borrower hereunder or
under the Notes. Each Bank is hereby irrevocably authorized by the Borrower so
to endorse its Note and to attach to and make a part of its Note a continuation
of any such schedule as and when required.

 

SECTION 2.05. Maturity of Loans.

 

(a) Each Eurocurrency Loan included in any Borrowing shall mature, and the
principal amount thereof shall be due and payable, on the last day of the
Interest Period applicable to such Borrowing.

 

(b) Notwithstanding the foregoing, the outstanding principal amount of the
Loans, if any, together with all accrued but unpaid interest thereon, if any,
shall be due and payable on the Termination Date.

 

SECTION 2.06. Interest Rates.

 

(a) Each Base Rate Loan shall bear interest on the outstanding principal amount
thereof, for each day from the date such Loan is made until it becomes due, at a
rate per annum equal to the Base Rate for such day plus the Applicable Margin.
Such interest shall be payable for each Interest Period on the last day thereof.
Any overdue principal of and, to the extent permitted by applicable law, overdue
interest on any Base Rate Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the Default Rate.

 

(b) Each Eurocurrency Loan shall bear interest on the outstanding principal
amount thereof, for the Interest Period applicable thereto, at a rate per annum
equal to the sum of the Applicable Margin plus the applicable Adjusted London
Interbank Offered Rate for such

 

27

--------------------------------------------------------------------------------

Interest Period plus, if applicable, the Mandatory Cost; provided that if any
Eurocurrency Loan shall, as a result of paragraph (a)(iii) of the definition of
Interest Period, have an Interest Period of less than one month, such
Eurocurrency Loan shall bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such interest shall be payable
for each Interest Period on the last day thereof and, if such Interest Period is
longer than 3 months, at intervals of 3 months after the first day thereof. Any
overdue principal of and, to the extent permitted by law, overdue interest on
any Eurocurrency Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the Default Rate.

 

(c) The Administrative Agent shall determine the interest rates applicable to
the Loans hereunder (other than Swing Loans, which shall be determined in
accordance with Section 2.01(b)). The Administrative Agent shall give prompt
notice to the Borrower and the other Banks (by telephone, facsimile or other
electronic transmission) of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.

 

(d) Maximum Rate. In no contingency or event whatsoever shall the aggregate of
all amounts deemed interest under this Agreement charged or collected pursuant
to the terms of this Agreement exceed the highest rate permissible under any
applicable law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event that such a court determines
that the Banks have charged or received interest hereunder in excess of the
highest applicable rate, the rate in effect hereunder shall automatically be
reduced to the maximum rate permitted by applicable law and the Banks shall, at
the Borrower’s option, (i) promptly refund to the Borrower any interest received
by the Banks in excess of the maximum lawful rate or (ii) apply such excess to
the principal balance of the Loans on a pro rata basis. It is the intent hereof
that the Borrower not pay or contract to pay, and that neither the
Administrative Agent nor any Bank receive or contract to receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may be
paid by the Borrower under applicable law.

 

SECTION 2.07. Fees.

 

(a) Facility Fee. The Borrower shall pay to the Administrative Agent, for the
ratable account of each Revolving Credit Bank, a facility fee on the aggregate
amount of such Bank’s Revolving Credit Commitment (without taking into account
the amount of the outstanding Revolving Credit Loans made by such Bank), at a
rate per annum equal to (i) for the period commencing on the Closing Date to and
including the first Performance Pricing Determination Date, 0.150%; and
(ii) from and after the first Performance Pricing Determination Date, the
percentage determined on each Performance Pricing Determination Date by
reference to the table set forth below based on the criteria and provisions used
in determining the Applicable Margin.

 

Level

--------------------------------------------------------------------------------

 

Debt Rating

(S&P/Moody’s)

--------------------------------------------------------------------------------

  Facility Fee

--------------------------------------------------------------------------------

    Utilization Fee

--------------------------------------------------------------------------------

  I   > A/A2   0.060 %   0.050 % II   A-/A3   0.080 %   0.050 % III   BBB+/Baa1
  0.100 %   0.050 % IV   BBB/Baa2   0.125 %   0.100 % V   BBB-/Baa3   0.150 %  
0.100 % VI   BBB-/Ba1 or BB+/Baa3   0.200 %   0.125 % VII   < BB+/Ba1   0.250 %
  0.125 %

 

28

--------------------------------------------------------------------------------

Such facility fees shall accrue from and including the Closing Date to (but
excluding) the Termination Date and shall be payable quarterly in arrears on
each December 31, March 31, June 30, September 30 and on the Termination Date.

 

(b) Utilization Fee. The Borrower shall pay to the Administrative Agent, for the
account of the Revolving Credit Banks, a non-refundable utilization fee at a
rate per annum equal to (i) for the period commencing on the Closing Date to and
including the first Performance Pricing Determination Date, 0.100%; and
(ii) from and after the first Performance Pricing Determination Date, the
percentage determined on each Performance Pricing Determination Date by
reference to the table set forth in clause (a) above based on the Borrower’s
Debt Rating, on the aggregate principal amount of outstanding Revolving Credit
Loans when the Average Utilization exceeds fifty percent (50%) of the aggregate
Revolving Credit Commitments. Such utilization fee shall accrue from and
including the Closing Date to (but excluding) the Termination Date and shall be
payable quarterly in arrears on each
December 31, March 31, June 30, September 30 and on the Termination Date. Such
utilization fee shall be distributed by the Administrative Agent to the
Revolving Credit Banks pro rata in accordance with the Revolving Credit Banks’
respective Revolving Credit Commitments.

 

(c) Other Fees. The Borrower shall pay to the Administrative Agent, for the
account and sole benefit of the Administrative Agent, such fees and other
amounts at such times as mutually agreed in writing as of the Closing Date.

 

SECTION 2.08. Optional Termination or Reduction of Revolving Credit Commitments.
The Borrower may, upon at least 3 Business Days’ notice to the Administrative
Agent, terminate at any time, or proportionately reduce the Unused Commitments
from time to time by an aggregate amount of at least $10,000,000 or any larger
multiple of $1,000,000. Upon a reduction of the Unused Commitments, each
Revolving Credit Bank’s Revolving Credit Commitment shall be permanently and
ratably reduced.

 

SECTION 2.09. Mandatory Reduction and Termination of Revolving Credit
Commitments. The Revolving Credit Commitments shall terminate on the Termination
Date and any Revolving Credit Loans then outstanding (together with accrued
interest thereon) shall be due and payable by the Borrower on such date.

 

SECTION 2.10. Optional Prepayments.

 

(a) The Borrower may, upon notice to the Administrative Agent on the same
Business Day, prepay any Base Rate Borrowing in whole at any time, or from time
to time in part in amounts aggregating at least $500,000 or any larger multiple
of $100,000, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment.

 

29

--------------------------------------------------------------------------------

(b) Subject to Section 8.05, the Borrower may, upon at least 3 Business Days’
notice to the Administrative Agent, prepay any Eurocurrency Loan denominated in
Dollars in whole at any time, or from time to time in part, prior to the
maturity thereof, in amounts aggregating at least $2,000,000 or any larger
multiple of $100,000, by paying the principal amount to be prepaid together with
accrued interest thereon to the date of the prepayment.

 

(c) Subject to Section 8.05, the Borrower may, upon at least 4 Business Days’
notice to the Administrative Agent, prepay any Eurocurrency Loan denominated in
an Alternative Currency in whole at any time, or from time to time in part,
prior to the maturity thereof, in amounts aggregating at least $2,000,000 or any
larger multiple of $100,000 (based on the Alternative Currency Amount thereof),
by paying the principal amount to be prepaid together with accrued interest
thereon to the date of the prepayment.

 

(d) Any such notice under this Section shall specify:

 

(i) the date of such prepayment, which shall be a Business Day,

 

(ii) the aggregate amount of such prepayment,

 

(iii) whether the prepayment is of Revolving Credit Loans, the Dollar Term Loan,
the Euro Term Loan or Swing Loans, and

 

(iv) in the case of a prepayment of Eurocurrency Loans, the Permitted Currency
in which such Eurocurrency Loans are denominated.

 

(e) Upon any Administrative Agent’s receipt of a notice of prepayment pursuant
to this Section, such notice shall not thereafter be revocable by the Borrower.
No repayment or prepayment pursuant to this Section shall affect any of the
Borrower’s obligations under any Hedging Agreement.

 

SECTION 2.11. Mandatory Prepayments.

 

(a) On each date on which the Revolving Credit Commitments are reduced pursuant
to Section 2.08 or Section 2.09, the Borrower shall repay or prepay such
principal amount of the outstanding Revolving Credit Loans and/or Swing Loans,
if any (together with interest accrued thereon), as may be necessary so that
after such payment the aggregate unpaid principal amount of the Revolving Credit
Loans, Swing Loans and Letter of Credit Obligations does not exceed the
aggregate amount of the Revolving Credit Commitments as then reduced.

 

(b) If, as of the most recent Revaluation Date, (i) solely as a result of
currency fluctuations, the outstanding principal amount of all Revolving Credit
Loans plus the sum of all outstanding Letter of Credit Obligations plus the
Swing Loan Reserve exceeds 105% of the aggregate Revolving Credit Commitments,
or (ii) for any other reason, the outstanding principal amount of all Revolving
Credit Loans plus the sum of all outstanding Letter of Credit Obligations plus
the Swing Loan Reserve exceeds the aggregate Revolving Credit Commitments,

 

30

--------------------------------------------------------------------------------

then, in each case, the Borrower shall repay immediately upon notice from the
Administrative Agent, by payment to the Administrative Agent for the account of
the Revolving Credit Banks, an amount equal to such excess with each such
repayment applied first to the principal amount of outstanding Swing Loans,
second to the principal amount of outstanding Revolving Credit Loans (applied
first to Base Rate Loans and second to Eurocurrency Loans) and third, with
respect to any Letter of Credit Obligations, a payment of cash collateral into a
cash collateral account opened by the Administrative Agent, for the benefit of
the Revolving Credit Banks in an amount equal to such excess (such cash
collateral to be applied in accordance with Section 6.01). Each such repayment
pursuant to this Section 2.11 shall be accompanied by any amount required to be
paid pursuant to Section 8.05. No repayment or prepayment pursuant to this
Section shall affect any of the Borrower’s obligations under any Hedging
Agreement.

 

SECTION 2.12. General Provisions as to Payments.

 

(a) The Borrower shall make each payment of principal, interest and fees
hereunder without defense, setoff or counterclaim to the Administrative Agent
(or the applicable Issuer, as applicable) (i) not later than 11:00 A.M.
(Charlotte, North Carolina time) on the date when due with respect to any Loans
or Letters of Credit denominated in Dollars (including any fee, commission or
other amount with respect thereto) in Dollars in immediately available funds at
its Lending Office and (ii) not later than 11:00 A.M. (the time of the
Administrative Agent’s Correspondent) on the date when due with respect to any
Alternative Currency Loans or Alternative Currency Letters of Credit (including
any fee, commission or other amount with respect thereto) in such Alternative
Currency in immediately available funds at its Lending Office.

 

(b) Whenever any payment of principal of, or interest on, the Base Rate Loans or
of fees shall be due on a day which is not a Business Day, the date for payment
thereof shall be extended to the next succeeding Business Day. Whenever any
payment of principal of or interest on, the Eurocurrency Loans shall be due on a
day which is not a Business Day, the date for payment thereof shall be extended
to the next succeeding Business Day unless such Business Day falls in another
calendar month, in which case the date for payment thereof shall be the next
preceding Business Day.

 

SECTION 2.13. Computation of Interest and Fees. Interest on Base Rate Loans and
Alternative Currency Loans denominated in Sterling or Canadian Dollars shall be
computed on the basis of a year of 365/366 days and paid for the actual number
of days elapsed (including the first day but excluding the last day). Interest
on Eurocurrency Loans shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed, calculated as to each Interest
Period from and including the first day thereof to but excluding the last day
thereof. Any fees payable hereunder shall be computed on the basis of a year of
360 days and paid for the actual number of days elapsed (including the first day
but excluding the last day).

 

SECTION 2.14. Letters of Credit.

 

(a) New Letters of Credit. Subject to the terms and conditions of this
Agreement, and in reliance upon the representations and warranties of the
Borrower herein set forth, the Administrative Agent and each Additional Issuer
agree to issue for the account of the Borrower,

 

31

--------------------------------------------------------------------------------

one or more New Letters of Credit denominated in a Permitted Currency in a
minimum original face amount of $100,000 (or the Alternative Currency Amount
thereof, as applicable), in accordance with this Section 2.14(a), from time to
time during the period commencing on the Closing Date and ending on the Business
Day prior to the Termination Date; provided, however, an Additional Issuer may
only issue New Letters of Credit under this Section 2.14(a) following compliance
with Section 2.14(h) with respect to such Additional Issuer.

 

(i) An Issuer shall have no obligation to issue any New Letter of Credit at any
time: (A) if the Administrative Agent has determined that the aggregate maximum
amount then available for drawing under all Letters of Credit, after giving
effect to the issuance of the requested New Letter of Credit, would exceed any
limit imposed by law or regulation upon the Issuer; (B) if the Administrative
Agent has determined that, after giving effect to the issuance of the requested
New Letter of Credit, (1) the aggregate Letter of Credit Obligations would
exceed $200,000,000, or (2) the conditions set forth in Article III as to the
advancing of Revolving Credit Loans or issuance of New Letters of Credit which
have not been waived in accordance with Section 9.06 would not be satisfied; and
(C) such New Letter of Credit has an expiration date (1) more than 364 days
after the date of issuance (subject to automatic extension for additional 364
day periods pursuant to the terms of the Letter of Credit Application or other
documentation acceptable to the applicable Issuer, so long as any such extension
does not extend beyond the Termination Date) or (2) after the Termination Date;
provided, however, such New Letter of Credit may have an expiration date after
the Termination Date if (A) each of the Administrative Agent and the applicable
Issuer consent in writing prior to the issuance thereof, (B) all Letter of
Credit Obligations associated with any such New Letter of Credit are cash
collateralized or otherwise supported in a manner satisfactory to the
Administrative Agent and the applicable Issuer on or prior to the Termination
Date and (C) except with respect to drawings made under such New Letter of
Credit on or prior to the Termination Date, each Revolving Credit Bank, other
than the applicable Issuer, shall be released from its obligation to participate
in such New Letter of Credit on the Termination Date. The obligation of an
Issuer to issue any New Letter of Credit is subject to the satisfaction in full
of the following conditions: (A) the Borrower shall have delivered to the
applicable Issuer at such times and in such manner as the applicable Issuer may
prescribe, a Letter of Credit Application as to New Letters of Credit and such
other documents and materials as may be required pursuant to the terms thereof
all satisfactory in form and substance to the applicable Issuer and the terms of
the proposed New Letter of Credit shall be satisfactory in form and substance to
such applicable Issuer; (B) as of the date of issuance, no order, judgment or
decree of any court, arbitrator or Authority shall purport by its terms to
enjoin or restrain the applicable Issuer from issuing the New Letter of Credit
and no law, rule or regulation applicable to the applicable Issuer and no
request or directive (whether or not having the force of law) from any Authority
with jurisdiction over the applicable Issuer shall prohibit or request that the
applicable Issuer refrain from the issuance of letters of credit generally or
the issuance of that New Letter of Credit; and (C) after the issuance of the
requested New Letter of Credit, the conditions set forth in this Section shall
be satisfied.

 

(ii) At least 2 Business Days (or 4 Business Days with respect to each
Alternative Currency Letter of Credit) before the effective date for any New
Letter of Credit, the Borrower shall give the applicable Issuer and the
Administrative Agent notice by telecopier containing the signature of an
authorized officer or employee of the Borrower. Such notice shall be irrevocable
and shall specify the original face amount of the New Letter of Credit
requested,

 

32

--------------------------------------------------------------------------------

the Permitted Currency in which such New Letter of Credit shall be denominated
(which shall be Dollars if such notice does not specify a Permitted Currency),
the effective date (which day shall be a Business Day) of issuance of such
requested New Letter of Credit, the date on which such requested New Letter of
Credit is to expire, the amount of then outstanding aggregate Letter of Credit
Obligations, the purpose for which such New Letter of Credit is to be issued,
whether such New Letter of Credit may be drawn in single or partial draws, the
person for whose benefit the requested New Letter of Credit is to be issued and
the identity of the proposed Issuer.

 

(iii) If the conditions set forth in subsections (i) and (ii) above are
satisfied, the applicable Issuer shall issue the requested New Letter of Credit.
The Administrative Agent shall give each Revolving Credit Bank written or
electronic notice, or telephonic notice confirmed promptly thereafter in
writing, of the issuance of a New Letter of Credit and upon request by any
Revolving Credit Bank, shall deliver to such Bank in connection with such notice
a copy of the New Letter of Credit issued by the applicable Issuer, provided
that the Administrative Agent shall be obligated to deliver the foregoing with
respect to a New Letter of Credit issued by an Additional Issuer only after
receipt by the Administrative Agent of all notices required to be delivered to
the Administrative Agent with respect thereto.

 

(iv) The Borrower shall pay to the applicable Issuer, for its own account, an
issuance fee with respect to each Letter of Credit issued by such Issuer in an
amount equal to the face amount of such Letter of Credit multiplied by 0.10% per
annum. Such issuance fee shall be payable quarterly in arrears on the last
Business Day of each calendar quarter commencing with the first such date to
occur after the issuance of such Letter of Credit, on the Termination Date and
thereafter on demand of such Issuer.

 

(v) In addition to the issuance fee provided in subsection (iv) above, the
Borrower shall pay to the applicable Issuer, for its own account, the standard
charges and fees assessed by the applicable Issuer in connection with the
issuance, administration, amendment and payment or cancellation of New Letters
of Credit issued hereunder, which charges and fees shall be those typically
charged by the applicable Issuer to its customers generally having credit and
other characteristics similar to the Borrower, as determined in good faith by
the applicable Issuer.

 

(b) Letter of Credit Payments; Duties of the Administrative Agent.

 

(i) Subject to the terms and conditions contained in this Agreement, with
respect to the Letters of Credit, the Borrower shall pay to the order of the
Administrative Agent the amount of the Letter of Credit Fee payable with respect
to each Letter of Credit (and the Administrative Agent shall pay to each other
Revolving Credit Bank such Revolving Credit Bank’s respective Revolving Credit
Commitment Percentage thereof) (A) in arrears on the last day of each Fiscal
Quarter, (B) on the Termination Date and (C) if there are any Letter of Credit
Obligations on the Termination Date, in arrears on the last day of each Fiscal
Quarter and on the date on which there are no Letter of Credit Obligations, in
each case for the previous period.

 

(ii) Upon receipt by an Issuer from the beneficiary of a Letter of Credit of any
demand for payment under such Letter of Credit, such Issuer shall promptly
notify the Borrower and the Administrative Agent of the amount to be paid by
such Issuer as a result of such demand

 

33

--------------------------------------------------------------------------------

and the date on which payment is to be made by such Issuer to such beneficiary
in respect of such demand. The Borrower shall reimburse the Issuer in the
applicable Permitted Currency for drawings under a Letter of Credit issued by it
no later than the earlier of (A) the time specified in the Letter of Credit
Application, or (B) 1 Business Day after the payment by the Issuer. Upon its
receipt of a notice referred to in the first sentence of this subsection (ii),
the Borrower shall advise the Administrative Agent whether or not the Borrower
intends to borrow hereunder to finance its obligation to reimburse the
applicable Issuer for the amount of the related demand for payment and, if it
does, the Borrower shall submit a timely request for such borrowing as provided
in the applicable provisions of this Agreement. If the Borrower fails to so
advise the Administrative Agent, or if the Borrower fails to reimburse an Issuer
for a demand for payment under a Letter of Credit by the date required to do so,
then (i) if the applicable conditions contained in Article III would permit the
making of Revolving Credit Loans, the Borrower shall be deemed to have requested
a borrowing of Revolving Credit Loans (which shall be Base Rate Loans) in a
Dollar Amount equal to the unpaid Reimbursement Obligation and the
Administrative Agent shall give each Revolving Credit Bank notice of the amount
of the Revolving Credit Loan to be made available in accordance with
Section 2.02(c), and (ii) if such conditions would not permit the making of
Revolving Credit Loans, the provisions of subsection (d) of this Section shall
apply. The minimum borrowing limitations set forth in Section 2.01(a) shall not
apply to any borrowing of Base Rate Loans under this subsection.

 

(iii) Any Reimbursement Obligation with respect to any Letter of Credit shall
bear interest from the date of the relevant drawing under the pertinent Letter
of Credit until the date of payment in full thereof at a rate per annum equal to
(A) prior to the date that is 3 Business Days after the date of the related
payment by the Issuer, the Base Rate and (B) thereafter, the Default Rate.

 

(iv) Any action taken or omitted to be taken by an Issuer in connection with any
Letter of Credit issued by it, if taken or omitted in the absence of willful
misconduct or gross negligence, shall not put such Issuer under any resulting
liability to any Revolving Credit Bank, or assuming that such Issuer has
complied with the procedures specified in subsection (ii), relieve that
Revolving Credit Bank of its obligations hereunder to such Issuer. In
determining whether to pay under any Letter of Credit, the Issuer thereof shall
have no obligation relative to the Revolving Credit Banks other than to confirm
that any documents required to have been delivered under such Letter of Credit
appear to comply on their face with the requirements of such Letter of Credit.

 

(v) After the occurrence and during the continuation of an Event of Default, or
upon the termination of this Agreement, to the extent of any Letter of Credit
Obligations, the Administrative Agent, on behalf of the Issuers, may, as
separate collateral security to be held by the Administrative Agent, on behalf
of the Issuers and Revolving Credit Banks, for reimbursement of amounts of the
Letter of Credit Obligations which are subsequently funded by an Issuer (and for
which the other Revolving Credit Banks have purchased a participation therein as
set forth below), either (x) immediately advance the principal amount thereof as
Revolving Credit Loans, and set aside the amounts so advanced as such collateral
security, or (y) demand from the Borrower cash collateral in an amount equal to
100% of such Letter of Credit Obligations with respect to each Letter of Credit
(which such cash collateral shall be deposited in the applicable Permitted
Currency in which each Letter of Credit is denominated) as such

 

34

--------------------------------------------------------------------------------

collateral security (such cash collateral to be applied in accordance with
Section 6.01). The Borrower hereby agrees that the Administrative Agent, for the
benefit of itself and the other Revolving Credit Banks, shall have a right of
setoff against any security interest in such collateral reserve. After a Letter
of Credit has been canceled and all Letter of Credit Obligations with respect to
such Letter of Credit have been satisfied, and the applicable Issuer (or
participant) has been reimbursed all amounts funded by such Issuer (or
participant) with respect thereto, any balance remaining in said collateral
reserve with respect to such Letter of Credit may be applied to other unpaid
obligations of the Borrower hereunder, and, if none, shall be remitted to the
Borrower.

 

(c) Purchase of Participations. Each Revolving Credit Bank hereby irrevocably
and unconditionally purchases and receives from each Issuer, without recourse or
warranty, an undivided interest and participation, equal to the amount of such
Revolving Credit Bank’s Revolving Credit Commitment Percentage, in each Letter
of Credit issued by such Issuer.

 

(d) Sharing of Letters of Credit Payments. In the event that an Issuer makes any
payment under a Letter of Credit issued by it for which the Borrower shall not
have repaid such amount to such Issuer pursuant to this Section, such Issuer
shall promptly notify the other Revolving Credit Banks of such failure, and each
other Revolving Credit Bank shall promptly and unconditionally pay to such
Issuer its Revolving Credit Commitment Percentage of the amount of such payment
in the applicable Permitted Currency and in same day funds. If an Issuer so
notifies the other Revolving Credit Banks prior to 10:00 A.M. (Charlotte, North
Carolina time) on any Business Day, such other Revolving Credit Banks shall make
available to such Issuer their respective Revolving Credit Commitment
Percentages of the amount of such payment on such Business Day in same day
funds. If and to the extent any of such other Revolving Credit Banks shall not
have so made its Revolving Credit Commitment Percentage of the amount of such
payment available to such Issuer, each such other Revolving Credit Bank agrees
to pay to such Issuer forthwith on demand such amount together with interest
thereon, for each day from the date such payment was first due until the date
such amount is paid to such Issuer at the Federal Funds Rate.

 

(e) Sharing of Reimbursement Obligation Payments. Whenever an Issuer receives a
payment from the Borrower or any guarantor on account of Letter of Credit
Obligations owing in respect of a Letter of Credit issued by such Issuer
including any interest thereon, as to which such Issuer has received any
payments from the other Revolving Credit Banks pursuant to this Section, such
Issuer shall promptly pay to each other Revolving Credit Bank, in the Permitted
Currency and in the kind of funds so received, an amount equal to such other
Revolving Credit Bank’s Revolving Credit Commitment Percentage thereof; provided
that in the event that any such payment received by an Issuer shall be required
to be returned by such Issuer, each such other Revolving Credit Bank shall
return to such Issuer the portion thereof previously distributed by such Issuer
to it. Each such payment shall be made by such Issuer on the Business Day on
which the funds are paid to such Person, if received prior to 10:00 a.m.
(Charlotte, North Carolina time) on such Business Day, and otherwise on the next
succeeding Business Day. Each Revolving Credit Bank agrees that letter of credit
fees (other than the Letter of Credit Fee) payable under an Issuer’s Letter of
Credit Application are solely for the account of such Issuer, notwithstanding
any provision contained herein to the contrary.

 

35

--------------------------------------------------------------------------------

(f) Obligations Irrevocable. The obligations of the Borrower to reimburse an
Issuer for drawings under a Letter of Credit and the obligations of each
Revolving Credit Bank to make payments to an Issuer with respect to a Letter of
Credit, shall be irrevocable, not subject to any qualification or exception
whatsoever and shall be made under all circumstances, including, without
limitation, any of the following circumstances, to the extent such circumstances
do not result from such Issuer’s gross negligence or willful misconduct:

 

(i) any lack of validity or enforceability of this Agreement or any of the other
Loan Documents;

 

(ii) the existence of any claim, set-off, defense or other right which the
Borrower may have at any time against a beneficiary named in the Letters of
Credit or any transferee of the Letters of Credit (or any Person for whom any
such transferee may be acting), an Issuer, any Bank or any other Person, whether
in connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions;

 

(iii) any draft, certificate or any other document presented under a Letter of
Credit proves to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein is untrue or inaccurate in any respect;

 

(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents;

 

(v) payment by an Issuer under a Letter of Credit proves to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein is
untrue or inaccurate in any respect;

 

(vi) payment by an Issuer under a Letter of Credit against presentation of any
draft or certificate that does not comply with the terms of such Letter of
Credit, except payment resulting from the gross negligence or willful misconduct
of such Issuer; or

 

(vii) any other circumstances or happenings whatsoever, whether or not similar
to any of the foregoing.

 

(g) Amendments to Letters of Credit. No Issuer shall agree to an amendment or
modification to any Letter of Credit issued by it unless the Required Revolving
Credit Banks have granted their prior written consent thereto, which consent
shall not be unreasonably withheld or delayed; provided, however, an Issuer of a
Letter of Credit may amend or otherwise modify such Letter of Credit without the
need to obtain consent of the Required Revolving Credit Banks if the respective
Letter of Credit affected thereby could have been issued under this Agreement in
such amended or modified form, but if the undrawn available amount under such
Letter of Credit is increased thereby, only so long as a notice is sent by the
Borrower under Section 3.02(a) and, if applicable, any Additional Issuer under
Section 2.14(h). In the case of any conflict between provisions of any Letter of
Credit Application or this Agreement, the provisions of this Agreement shall
govern, but only for so long as this Agreement is in effect.

 

(h) Appointment and Duties of Additional Issuers. The Borrower may appoint
Additional Issuers by delivering written notice to the Administrative Agent at
least 2 Business

 

36

--------------------------------------------------------------------------------

Days before the issuance of any New Letters of Credit by such Additional Issuer.
Any Revolving Credit Bank designated as an Additional Issuer shall remain as
such until the Borrower gives written notice to the Administrative Agent that
such Revolving Credit Bank is no longer an Additional Issuer; provided that no
Letter of Credit Obligations remain outstanding with respect to such Additional
Issuer. Each Additional Issuer shall notify the Administrative Agent at least 2
Business Days before (i) the issuance of any New Letter of Credit by such
Additional Issuer and (ii) any amendment or modification to any Letter of Credit
issued by such Additional Issuer.

 

ARTICLE III

 

CONDITIONS TO BORROWINGS AND ISSUANCE OF NEW LETTERS OF CREDIT

 

SECTION 3.01. Conditions to Closing. The obligations of each Bank under this
Agreement are subject to the satisfaction of the conditions set forth in
Section 3.02 and each of the following conditions:

 

(a) Executed Loan Documents. Receipt by the Administrative Agent of the
following (in sufficient number of counterparts (except as to the Notes) for
delivery of a counterpart to each Bank and retention of one counterpart by the
Administrative Agent):

 

(i) a written letter agreement evidencing the payment in full and termination of
the Existing Credit Agreement;

 

(ii) from each of the parties hereto a duly executed counterpart of this
Agreement;

 

(iii) a duly executed Revolving Credit Note by the Borrower for the account of
each Revolving Credit Bank, a duly executed Dollar Term Note by the Borrower for
the account of each Term Loan Bank, a duly executed Euro Term Note by the
Borrower for the account of each Term Loan Bank and a duly executed Swing Loan
Note by the Borrower for the account of the Administrative Agent, in each case,
complying with the provisions of Section 2.04;

 

(iv) an opinion of Alston & Bird LLP, counsel for the Borrower, dated as of the
Closing Date, substantially in the form of Exhibit B;

 

(v) the Borrower’s most recent audited consolidated financial statements,
including, without limitation, a balance sheet and income statement and its most
recent 10-K filed with the Securities and Exchange Commission;

 

(vi) a certificate, dated as of the Closing Date, signed by a Responsible
Officer of the Borrower, certifying (i) that no Default has occurred and is
continuing on the Closing Date and (ii) that the representations and warranties
of the Borrower contained in Article IV are true in all material respects on and
as of the Closing Date;

 

(vii) all documents which the Administrative Agent or any Bank may reasonably
request relating to the existence of the Borrower, the corporate authority for
and the validity of the Loan Documents to which the Borrower is a party, and any
other matters relevant thereto, all in form and substance satisfactory to the
Administrative Agent, including, without

 

37

--------------------------------------------------------------------------------

limitation, a certificate of incumbency of the Borrower, signed by the Secretary
or an Assistant Secretary of the Borrower, certifying as to the names, true
signatures and incumbency of the officer or officers of the Borrower, authorized
to execute and deliver the Loan Documents, and certified copies of the following
items as to the Borrower: (i) its Certificate of Incorporation, (ii) its Bylaws,
(iii) a certificate of the Secretary of State of the State of Delaware as to the
good standing of the Borrower as a Delaware corporation, and (iv) the action
taken by its Board of Directors (or a duly authorized committee thereof)
authorizing its execution, delivery and performance of the Loan Documents to
which it is a party; and

 

(viii) Notice(s) of Borrowing, if necessary.

 

(b) No Injunction, Etc. No action, suit, investigation or proceeding shall be
pending or threatened in writing before any court, arbitrator or governmental
authority that could reasonably be expected to materially and adversely affect
any transaction contemplated hereby (including, without limitation, the Unilin
Acquisition);

 

(c) Unilin Acquisition.

 

(i) All regulatory and third-party approvals necessary for the consummation of
the Unilin Acquisition shall have been obtained and remain in effect; and

 

(ii) The Borrower shall have provided to the Administrative Agent copies of such
additional documents and information relating to the Unilin Acquisition and the
Unilin Purchase Agreement as the Administrative Agent shall reasonably request.

 

(d) Closing of 364-Day Credit Facility. The 364-Day Credit Facility shall be
closed contemporaneously with this Agreement on the terms and conditions set
forth therein.

 

SECTION 3.02. Conditions to All Borrowings and Issuance of New Letters of
Credit. The obligation of each Bank to make a Loan on the occasion of each
Borrowing or an Issuer to issue a New Letter of Credit is subject to the
satisfaction of the following conditions:

 

(a) in the case of a Loan, receipt by the Administrative Agent of a Notice of
Borrowing, or in the case of a New Letter of Credit (or increase to the undrawn
amount available under a Letter of Credit), receipt by the Administrative Agent
and the applicable Issuer of a request for such Letter of Credit (or request as
to such increase);

 

(b) no Default or Event of Default shall have occurred and be continuing
immediately after giving effect to such Borrowing or issuance of such Letter of
Credit;

 

(c) all representations and warranties contained in Article IV of this Agreement
(other than those contained in Sections 4.04(b) and 4.05), shall be true on and
as of the date of such Borrowing or issuance of such Letter of Credit except for
changes permitted by this Agreement and except to the extent they relate solely
to an earlier date; provided, that with respect to those contained in
Sections 4.01, 4.06, 4.11, 4.12 and 4.13, the determination of whether any
Material Adverse Effect has occurred as set forth therein shall be made solely
by the Borrower, in its reasonable, good faith judgment ; and

 

38

--------------------------------------------------------------------------------

(d) immediately after such Revolving Credit Borrowing or issuance of such Letter
of Credit, the sum of (x) the aggregate outstanding principal amount of the
Revolving Credit Loans plus the Letter of Credit Obligations of the Banks plus
the Swing Loan Reserve will not exceed (y) the amount of the aggregate Revolving
Credit Commitments.

 

Each Borrowing and issuance of a New Letter of Credit hereunder shall be deemed
to be a representation and warranty by the Borrower on the date thereof as to
the facts specified in paragraphs (b), (c) and (d) of this Section.

 

SECTION 3.03. Condition Subsequent. Within two (2) Business Days following the
Closing Date, the Unilin Acquisition shall have been consummated.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants that:

 

SECTION 4.01. Corporate Existence and Power. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified to transact business in
every jurisdiction where, by the nature of its business, such qualification is
necessary and where failure to be so qualified could have or create a reasonable
possibility of causing a Material Adverse Effect, and has all corporate powers
and all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.

 

SECTION 4.02. Corporate and Governmental Authorization; No Contravention. The
execution, delivery and performance by the Borrower of this Agreement, the Notes
and the other Loan Documents to which it is a party (i) are within its corporate
powers, (ii) have been duly authorized by all necessary corporate action,
(iii) require no action by or in respect of or filing with, any governmental
body, agency or official (other than routine filings with the Securities and
Exchange Commission), (iv) do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of incorporation
or by-laws of the Borrower or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower or any of its Subsidiaries,
and (v) do not result in the creation or imposition of any Lien on any asset of
the Borrower or any of its Subsidiaries.

 

SECTION 4.03. Binding Effect. This Agreement constitutes a valid and binding
agreement of the Borrower enforceable in accordance with its terms, and the
Notes and the other Loan Documents, when executed and delivered in accordance
with this Agreement, will constitute valid and binding obligations of the
Borrower (provided that the Borrower is a party to any such Loan Document)
enforceable in accordance with their respective terms, provided that the
enforceability hereof and thereof is subject in each case to general principles
of equity and to bankruptcy, insolvency and similar laws affecting the
enforcement of creditors’ rights generally.

 

39

--------------------------------------------------------------------------------

SECTION 4.04. Financial Information

 

(a) The consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of December 31, 2004, and the related consolidated statements of
income, shareholders’ equity and cash flows for the Fiscal Year then ended,
reported on by KPMG LLP, copies of which have been delivered to each of the
Banks, and the unaudited consolidated financial statements of the Borrower for
the interim period ended July 2, 2005, copies of which have been delivered to
each of the Banks, fairly present in all material respects, in conformity with
GAAP, the consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such dates and their consolidated results of operations and
cash flows for such periods stated.

 

(b) Since December 31, 2004, there has been no event, act, condition or
occurrence having, or which could reasonably be expected to have a Material
Adverse Effect.

 

SECTION 4.05. No Litigation. Except as set forth on Schedule 4.05, as of the
date hereof, there is no action, suit, proceeding or investigation pending, or
to the knowledge of the Borrower threatened in writing, against or affecting the
Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official which could reasonably be expected to have
a Material Adverse Effect.

 

SECTION 4.06. Compliance with ERISA.

 

(a) The Borrower and each member of the Controlled Group have fulfilled their
obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan and are in compliance with the presently applicable
provisions of ERISA and the Code (except where such noncompliance could not
reasonably be expected to have a Material Adverse Effect), and have not incurred
any liability to the PBGC under Title IV of ERISA.

 

(b) Neither the Borrower nor any member of the Controlled Group is or ever has
been obligated to contribute to any Multiemployer Plan.

 

SECTION 4.07. Taxes. There have been filed on behalf of the Borrower and its
Subsidiaries all Federal, state and local income, excise, property and other tax
returns which are required to be filed by them and all taxes due pursuant to
such returns or pursuant to any assessment received by or on behalf of the
Borrower or any Subsidiary have been paid or valid and effective extensions
therefor have been obtained. The charges, accruals and reserves on the books of
the Borrower and its Subsidiaries in respect of taxes or other governmental
charges are, in the opinion of the Borrower, adequate. United States income tax
returns of the Borrower and its Subsidiaries’ have been examined and closed
through the Fiscal Year ended 1994.

 

SECTION 4.08. Subsidiaries. Each of the Borrower’s Subsidiaries is duly
organized or formed, validly existing and in good standing under the laws of the
jurisdiction of its creation and organization, and has all powers (by virtue of
its creation and organization) and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted. As of the date hereof, the Borrower has no Subsidiaries except for
those Subsidiaries listed on Schedule 4.08 (assuming the Unilin Acquisition has
been consummated), which accurately sets forth each such Subsidiary’s complete
name and jurisdiction of creation and organization.

 

40

--------------------------------------------------------------------------------

SECTION 4.09. Not an Investment Company. The Borrower is not an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.

 

SECTION 4.10. Ownership of Property; Liens. Each of the Borrower and its
Consolidated Subsidiaries has title to its properties sufficient for the conduct
of its business, and none of such property is subject to any Lien except as
permitted in Section 5.06.

 

SECTION 4.11. No Default. Neither the Borrower nor any of its Consolidated
Subsidiaries is in default under or with respect to any agreement, instrument or
undertaking to which it is a party or by which it or any of its property is
bound which could reasonably be expected to have or cause a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.

 

SECTION 4.12. Full Disclosure. All information heretofore furnished by the
Borrower to any Bank for purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all such information hereafter furnished
by the Borrower to any Bank will be, true, accurate and complete in every
material respect or based on reasonable estimates on the date as of which such
information is stated or certified. The Borrower has disclosed to the Banks in
writing any and all facts which would have or create a reasonable possibility of
causing a Material Adverse Effect.

 

SECTION 4.13. Environmental Matters.

 

(a) To the best knowledge of the Borrower, after due inquiry (which does not
necessarily mean the performance of a phase I environmental audit), (i) neither
the Borrower nor any Subsidiary is subject to any Environmental Liability and
(ii) neither the Borrower nor any Subsidiary has been designated as a
potentially responsible party under CERCLA or under any state statute similar to
CERCLA in respect of any matters that could reasonably be expected to have a
Material Adverse Effect. To the best knowledge of the Borrower, after due
inquiry (which does not necessarily mean the performance of a phase I
environmental audit), none of the Properties has been identified on any current
or proposed (i) National Priorities List under 40 C.F.R. Section 300,
(ii) CERCLIS list or (iii) any list arising from a state statute similar to
CERCLA, in each case, in respect of any matters that could reasonably be
expected to have a Material Adverse Effect.

 

(b) To the best knowledge of the Borrower, after due inquiry (which does not
necessarily mean the performance of a phase I environmental audit), no Hazardous
Materials have been or are being used, produced, manufactured, processed,
treated, recycled, generated, stored, disposed of, managed or otherwise handled
at, or shipped or transported to or from the Properties or are otherwise present
at, on, in or under the Properties, or, to the best of the knowledge of the
Borrower, at or from any adjacent site or facility, except for (i) Hazardous
Materials, such as cleaning solvents, combustion enhancers, pesticides and other
materials used, produced, manufactured, processed, treated, recycled, generated,
stored, disposed of, managed, or otherwise handled in the ordinary course of
business in compliance with all applicable Environmental Requirements, and
(ii) Hazardous Materials with respect to which the presence thereof, any
required remediation with respect thereto, or the expenses, fines, penalties and
other costs relating thereto could not reasonably be expected to have a Material
Adverse Effect.

 

41

--------------------------------------------------------------------------------

(c) Except for non-compliance which could not reasonably be expected to have a
Material Adverse Effect, the Borrower, and each of its Subsidiaries is in
compliance with all Environmental Requirements in connection with the operation
of the Properties and each of the Borrower’s and its Subsidiary’s respective
businesses.

 

SECTION 4.14. Capital Stock. All Capital Stock, debentures, bonds, notes and all
other securities of the Borrower and its Subsidiaries presently issued and
outstanding are validly and properly issued in accordance with all applicable
laws, including but not limited to, the “Blue Sky” laws of all applicable states
and the federal securities laws. At least a majority of the issued shares of
capital stock of each of the Borrower’s Subsidiaries (other than Wholly Owned
Subsidiaries) is owned by the Borrower free and clear of any Lien (other than
those Liens permitted by Section 5.07) or adverse claim.

 

SECTION 4.15. Margin Stock. Neither the Borrower nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
purchasing or carrying any Margin Stock, and no part of the proceeds of any Loan
will be used, except as permitted by Section 5.10, (a) to purchase or carry any
Margin Stock or (b) to extend credit to others for the purpose of purchasing or
carrying any Margin Stock.

 

SECTION 4.16. Insolvency. After giving effect to the execution and delivery of
the Loan Documents and the making of the Loans under this Agreement, the
Borrower will not be “insolvent,” within the meaning of such term as used in
O.C.G.A. § 18-2-22 or as defined in § 101 of Title 11 of the United States Code,
as amended from time to time, or be unable to pay its debts generally as such
debts become due, or have an unreasonably small capital to engage in any
business or transaction, whether current or contemplated.

 

SECTION 4.17. OFAC. None of the Borrower, any Subsidiary of the Borrower or, to
the best of the Borrower’s knowledge, any Affiliate of the Borrower: (a) is
(i) an agency of the government of, (ii) an organization directly or indirectly
controlled by, or (iii) a person resident in a country that is subject to a
sanctions program identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/enforcement/ofac/sanctions/index.html, or as
otherwise published from time to time, as such program may be applicable to such
agency, organization or person (each, a “Sanctioned Entity”), (b) has more than
10% of its assets in Sanctioned Entities, or (c) derives more than 10% of its
operating income from investments in, or transactions with a person named on the
list of Specially Designated Nationals or Blocked Persons maintained by OFAC
available at http://www.treas.gov/offices/enforcement/ofac/sdn/index.html, or as
otherwise published from time to time (each, a “Sanctioned Person”) or
Sanctioned Entities. The proceeds of any Loan will not be used and have not been
used to fund any operations in, finance any investments or activities in, or
make any payments to, a Sanctioned Person or a Sanctioned Entity.

 

42

--------------------------------------------------------------------------------

ARTICLE V

 

COVENANTS

 

The Borrower agrees that, so long as any Revolving Credit Commitment shall
remain in effect, any Loans or Letter of Credit Obligations are outstanding or
any amount payable hereunder or under any Note remains unpaid:

 

SECTION 5.01. Information. The Borrower will deliver to the Administrative Agent
for distribution to each of the Banks:

 

(a) as soon as available and in any event within 90 days after the end of each
Fiscal Year, a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Year and the related consolidated
statements of earnings, stockholders’ equity and cash flows for such Fiscal
Year, setting forth in each case in comparative form the figures for the
previous Fiscal Year, including the related unqualified audit opinion issued by
KPMG LLP or other independent public accountants of nationally recognized
standing, with such certification to be free of exceptions and qualifications
not acceptable to the Required Banks; provided that, to the extent that the
Borrower’s annual report to the SEC on Form 10-K (or any successor form)
contains all of the information required by this Section 5.01(a), the Borrower
may satisfy the requirements of this Section 5.01(a) by delivering to the
Administrative Agent an electronic copy of such Form 10-K (or any successor
form) with respect to any Fiscal Year, within the period specified above;

 

(b) as soon as available and in any event within 45 days after the end of each
Fiscal Quarter (other than the fourth Fiscal Quarter), a consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as of the end of such
Fiscal Quarter and the related consolidated statements of earnings and
statements of cash flows for such quarter and for the portion of the Fiscal Year
ended at the end of such quarter, setting forth in each case in comparative form
the figures for the corresponding quarter and the corresponding portion of the
previous Fiscal Year, all certified (subject to normal year-end adjustments) as
to fairness of presentation, GAAP (except for the failure to provide footnotes
thereto) and consistency by a Responsible Officer of the Borrower; provided
that, to the extent that the Borrower’s quarterly report to the SEC on Form 10-Q
(or any successor form) contains all of the information required by this
Section 5.01(b), the Borrower may satisfy the requirements of this
Section 5.01(b) by delivering to the Administrative Agent an electronic copy of
such Form 10-Q (or any successor form) with respect to any Fiscal Quarter,
within the period specified above;

 

(c) simultaneously with the delivery of each set of financial statements
referred to in paragraphs (a) and (b) above, a certificate, substantially in the
form of Exhibit E (a “Compliance Certificate”), of the chief financial officer,
treasurer or the corporate controller of the Borrower (i) setting forth in
reasonable detail the calculations required to establish whether the Borrower
was in compliance with the requirements of Sections 5.03, 5.05, and 5.06, on the
date of such financial statements and (ii) stating whether any Default exists on
the date of such certificate and, if any Default then exists, setting forth the
details thereof and the action which the Borrower is taking or proposes to take
with respect thereto;

 

(d) simultaneously with the delivery of each set of annual financial statements
referred to in paragraph (a) above, operations and cash flow projections
(indicating projected earnings and significant cash sources and uses) prepared
by the Borrower for the Fiscal Year following the Fiscal Year reported on in
such statements referred to in paragraph (a), in such form and detail as is
reasonably acceptable to the Administrative Agent;

 

(e) within 1 Business Day after the Borrower becomes aware of any change in the
Debt Rating, whether such change is made by (i) Moody’s, (ii) S&P or (iii) both
Moody’s and S&P, evidence in form reasonably satisfactory to the Administrative
Agent of such changed Debt Rating;

 

43

--------------------------------------------------------------------------------

(f) within 1 Business Day after the Borrower becomes aware of the occurrence of
any Default, telephonic notice to each of the Banks of the occurrence of a
Default (which telephonic notice shall set forth the details thereof), followed,
within 10 Business Days after the date of such telephonic notice, with a
certificate of the chief financial officer or the treasurer of the Borrower
setting forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;

 

(g) promptly upon the mailing thereof to the shareholders of the Borrower
generally, copies of all financial statements, reports and proxy statements so
mailed;

 

(h) promptly upon the filing thereof, copies of all registration statements
(other than the exhibits thereto and any registration statements on Form S-8 or
its equivalent) and annual, quarterly or monthly reports which the Borrower
shall have filed with the Securities and Exchange Commission;

 

(i) if and when any member of the Controlled Group (i) gives or is required to
give notice to the PBGC of any “reportable event” (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA, a copy of such notice; or (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate or appoint a trustee to
administer any Plan, a copy of such notice; and

 

(j) from time to time such additional information regarding the financial
position or business of the Borrower and its Subsidiaries as any Bank may
reasonably request, including, without limitation, consolidating balance sheets
and statements of earnings of the Borrower and the Borrower’s Subsidiaries, in
existence at such time, as at the end of any fiscal period.

 

SECTION 5.02. Inspection of Property, Books and Records. The Borrower will
(a) keep, and cause each Subsidiary to keep, proper books of record and account
in which full, true and correct entries in conformity with GAAP shall be made of
all dealings and transactions in relation to its business and activities; and
(b) permit, and cause each Subsidiary to permit, representatives of any Bank at
such Bank’s expense prior to the occurrence of a Default and at the Borrower’s
expense after the occurrence of a Default to visit and inspect any of their
respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers and independent public accountants.
The Borrower agrees to cooperate and assist in such visits and inspections, in
each case upon reasonable notice, at such reasonable times and as often as may
reasonably be desired.

 

SECTION 5.03. Debt to Capitalization Ratio. The Debt to Capitalization Ratio
shall be less than or equal to 0.65 to 1.00 at the end of each Fiscal Quarter;
provided, that for any Fiscal

 

44

--------------------------------------------------------------------------------

Quarter ending on or after the date that is 1 year following the closing date of
the Unilin Acquisition, the Debt to Capitalization Ratio shall be less than or
equal to 0.60 to 1.00 at the end of each Fiscal Quarter.

 

SECTION 5.04. Restricted Payments. The Borrower shall not declare or make any
Restricted Payment unless, after giving effect thereto, no Default or Event of
Default shall exist.

 

SECTION 5.05. Investments. The Borrower will not, and will not permit any of its
Subsidiaries to, make or maintain any Investments except (a) Investments in the
Borrower or any Subsidiary, including without limitation, advances or loans
between or among the Borrower or any Subsidiary and loans and advances to
officers and employees of the Borrower or any Subsidiary in the ordinary course
of business; (b) Investments in Persons (whether or not such Person is, or after
giving effect to any such Investment becomes, a Subsidiary); provided that the
Borrower will be in compliance with Section 5.07 after giving effect to such
Investment; (c) Investments in Persons in connection with Permitted
Acquisitions; and (d) Investments in Approved Investments; provided, however,
during the existence of an Event of Default, neither the Borrower nor any of its
Subsidiaries may make any new Investments without the prior written consent of
the Required Banks.

 

SECTION 5.06. Negative Pledge. Neither the Borrower nor any of its Subsidiaries
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:

 

(a) Liens existing on the date of this Agreement securing Debt outstanding on
the date of this Agreement in an aggregate principal amount not exceeding
$5,000,000;

 

(b) Liens existing on the date of this Agreement (assuming the Unilin
Acquisition has been consummated) and described on Schedule 5.06;

 

(c) any Lien existing on (i) any asset of any Person at the time such Person
becomes a Consolidated Subsidiary or is merged or consolidated with or into the
Borrower or a Consolidated Subsidiary (including in connection with the Unilin
Acquisition) and (ii) any asset prior to the acquisition thereof by the Borrower
or a Consolidated Subsidiary, in each case, not created in contemplation of such
event;

 

(d) any Lien on any asset securing Debt incurred or assumed for the purpose of
financing all or any part of the cost of acquiring or constructing such asset,
provided that such Lien attaches to such asset concurrently with or within 18
months after the acquisition or completion of construction thereof;

 

(e) Liens securing Debt owing by any Subsidiary to the Borrower;

 

(f) any Lien arising out of the refinancing, extension, renewal or refunding of
any Debt secured by any Lien permitted by any of the foregoing paragraphs of
this Section, provided that (i) such Debt is not secured by any additional
assets, and (ii) the amount of such Debt secured by any such Lien is not
increased;

 

45

--------------------------------------------------------------------------------

(g) Liens incidental to the conduct of its business or the ownership of its
assets which (i) do not secure Debt and (ii) do not, in the aggregate,
materially detract from the value of its assets or materially impair the use
thereof in the operation of its business;

 

(h) any Lien on Margin Stock;

 

(i) Liens in connection with an Asset Securitization permitted under
Section 5.09;

 

(j) Liens involuntarily imposed and being contested in good faith, subject to
the Borrower or such Subsidiary having established reasonable reserves therefor
to the extent required under GAAP;

 

(k) Liens against the assets of Aladdin (formerly owned by Galaxy) under the
Catoosa Co. IRB solely to the extent existing as of the date hereof;

 

(l) Liens against the assets of Aladdin (formerly owned by Image Industries,
Inc.) under the Summerville City IRB solely to the extent existing as of the
date of the acquisition by Aladdin of certain assets of Image Industries, Inc.
as contemplated by that certain Asset Purchase Agreement dated as of
November 12, 1998, by and among Aladdin, Image Industries, Inc. and The Maxim
Group, Inc., as amended and restated on January 29, 1999; and

 

(m) Liens granted to the Administrative Agent for the benefit of the
Administrative Agent and the Banks under the Loan Documents;

 

provided that Liens permitted by the foregoing paragraphs (a) through (h) shall
at no time secure Debt, when aggregated with outstanding Debt of the
Subsidiaries permitted pursuant to Section 5.18(e), in an aggregate amount
exceeding 15% of Consolidated Net Worth.

 

SECTION 5.07. Maintenance of Existence; Lines of Business. Other than as
permitted by Section 5.08 or 5.09, the Borrower shall, and shall cause each
Subsidiary to, maintain its corporate existence. The Borrower shall, and shall
cause each Subsidiary to, carry on its business in Permitted Lines of Business,
determined with respect to the Borrower and its Subsidiaries taken as a whole.

 

SECTION 5.08. Dissolution. Neither the Borrower nor any of its Subsidiaries
shall suffer or permit dissolution or liquidation either in whole or in part or
redeem or retire any shares of its own stock or that of any Subsidiary, except
through corporate reorganization to the extent permitted by Section 5.09 or in
connection with a Restricted Payment which is not prohibited pursuant to
Section 5.04.

 

SECTION 5.09. Consolidations, Mergers and Sales of Assets. The Borrower will
not, nor will the Borrower permit any Subsidiary to, consolidate or merge with
or into, or sell, lease or otherwise transfer all or any substantial part of its
assets to, any other Person, provided that (a) the Borrower may merge with
another Person if (i) such Person was organized under the laws of the United
States of America or one of its states, (ii) the Borrower is the corporation
surviving such merger and (iii) immediately after giving effect to such merger,
no Default shall have occurred and be continuing; (b) Subsidiaries of the
Borrower may merge with and into the Borrower, any other Subsidiary, or any
other Person if after giving effect thereto such other

 

46

--------------------------------------------------------------------------------

Person would be a Subsidiary; (c) assets may be transferred from a Subsidiary to
the Borrower or another Subsidiary; (d) any Wholly-Owned Subsidiary may dissolve
or liquidate so long as the assets of such Subsidiary at the time of such
dissolution or liquidation are transferred to such Subsidiary’s shareholder and
such shareholder assumes all of the liabilities of such Subsidiary at the time
of such dissolution or liquidation; (e) the Borrower and its Subsidiaries may
factor receivables; (f) the Borrower and its Subsidiaries may effect Asset
Securitizations; (g) the Borrower and its Subsidiaries may sell, transfer or
otherwise dispose of assets (regardless of whether such disposition takes the
form of a merger or liquidation of a Subsidiary) if the proceeds thereof are
reinvested within 180 days thereafter in a Permitted Line of Business owned by
the Borrower or such Subsidiary; and (h) the Borrower and its Subsidiaries may
sell, transfer or otherwise dispose of additional assets (regardless of whether
such disposition takes the form of a merger or liquidation of a Subsidiary) not
otherwise permitted pursuant to this Section; provided that the aggregate book
value of such assets to be sold, transferred or otherwise disposed of, when
combined with all other assets sold, transferred or otherwise disposed of during
the applicable Fiscal Quarter and the immediately preceding three Fiscal
Quarters (excluding those asset sales otherwise permitted pursuant to this
Section), do not constitute more than 20% of Consolidated Tangible Assets at the
end of the fourth Fiscal Quarter immediately preceding such Fiscal Quarter.

 

SECTION 5.10. Use of Proceeds. The proceeds of the Loans shall be used by the
Borrower to (a) refinance indebtedness of the Borrower under the Existing Credit
Agreement, and other indebtedness of the Borrower and its Subsidiaries, (b) to
finance a portion of the purchase price to be paid in connection with the Unilin
Acquisition, (c) to finance capital expenditures and Investments permitted under
Section 5.05 and (d) for general corporate purposes of the Borrower and its
Subsidiaries, including commercial paper backup, working capital and the payment
of fees and expenses incurred in connection with the transactions contemplated
hereby, including the Unilin Acquisition. In no event shall any portion of the
proceeds of the Loans be used by the Borrower (i) except for Permitted
Acquisitions, in connection with any tender offer for, or other acquisition of,
stock of any corporation with a view towards obtaining control of such other
corporation, (ii) directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any Margin Stock other than
the common stock or other capital stock of the Borrower, or (iii) for any
purpose in violation of any applicable law or regulation.

 

SECTION 5.11. Compliance with Laws; Payment of Taxes. The Borrower will, and
will cause each of its Subsidiaries to, comply in all material respects with
applicable laws (including but not limited to ERISA), regulations and similar
requirements of governmental authorities (including but not limited to PBGC),
except where the necessity of such compliance is being contested in good faith
through appropriate proceedings or where noncompliance would not have or create
a reasonable possibility of causing a Material Adverse Effect. The Borrower
will, and will cause each of its Subsidiaries to, pay promptly when due, giving
regard for any extensions obtained, all taxes, assessments, governmental
charges, claims for labor, supplies, rent and other obligations which, if
unpaid, might become a lien against the property of either the Borrower or any
Subsidiary, except (a) liabilities being contested in good faith and against
which, if requested by the Banks, either the Borrower or such Subsidiary will
set up reserves in accordance with GAAP and (b) to the extent any failure to
comply with any of the foregoing could not reasonably be expected to have a
Material Adverse Effect.

 

47

--------------------------------------------------------------------------------

SECTION 5.12. Insurance. The Borrower will maintain, and will cause each of its
Subsidiaries to maintain (either in the name of the Borrower or in such
Subsidiary’s own name), with financially sound and reputable insurance
companies, insurance on all its property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies of established repute engaged in the same or similar business, subject
to the Borrower’s right to self-insure with respect to loss or damage to
property in an amount customarily self-insured against by such similarly
situated companies.

 

SECTION 5.13. Change in Fiscal Year. The Borrower shall give the Banks at least
30 day’s prior written notice of any change in the determination of its Fiscal
Year.

 

SECTION 5.14. Maintenance of Property. Subject to the rights of the Borrower or
any Subsidiary under Section 5.08 or 5.09, the Borrower shall, and shall cause
each Subsidiary to, maintain all of its properties and assets in good working
order, ordinary wear and tear and obsolescence excepted (excluding losses due to
fully insured, subject to commercially reasonable deductibles, casualties).

 

SECTION 5.15. Environmental Notices. The Borrower shall furnish to the Banks
prompt written notice of all Environmental Liabilities, pending, threatened or
anticipated Environmental Proceedings, Environmental Notices, Environmental
Judgments and Orders, and Environmental Releases at, on, in, under or in any way
affecting the Properties or any adjacent property which would have a Material
Adverse Effect, and all relevant facts, events, or conditions relating thereto.

 

SECTION 5.16. Environmental Matters. The Borrower will not, nor will it permit
any Third Party to, use, produce, manufacture, process, treat, recycle,
generate, store, dispose of, manage at, or otherwise handle, or ship or
transport to or from the Properties any Hazardous Materials except for
(a) Hazardous Materials such as cleaning solvents, combustion enhancers,
pesticides and other materials used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed, managed, or otherwise handled in the
ordinary course of business in compliance with all applicable Environmental
Requirements and (b) Hazardous Materials with respect to which the presence
thereof, any required remediation with respect thereto, or the expenses, fines,
penalties and other costs relating thereto could not reasonably be expected to
have a Material Adverse Effect.

 

SECTION 5.17. Environmental Release. The Borrower agrees that upon the
occurrence of an Environmental Release which would have a Material Adverse
Effect and which violates any Environmental Requirement it will promptly
investigate the extent of, and take appropriate action to remediate such
Environmental Release, whether or not ordered or otherwise directed to do so by
any Environmental Authority.

 

SECTION 5.18. Debt of Subsidiaries. The Borrower shall not permit any Subsidiary
to incur any Debt except for (a) Debt owed by a Subsidiary to the Borrower or
another Subsidiary, (b) Debt deemed incurred in connection with an Asset
Securitization permitted under Section 5.09; (c) (i) Debt of Subsidiaries
arising in connection with the Summerville City IRB and the Catoosa Co. IRB and
incurrence of Reimbursement Obligations with respect to the Letters of Credit
and (ii) other Debt of Subsidiaries arising in connection with the issuance of
bonds by

 

48

--------------------------------------------------------------------------------

governmental authorities so long as such Debt is supported by a letter of credit
issued by a financial institution for the benefit of the Borrower and the
Borrower is obligated to such financial institution under a reimbursement
agreement for the reimbursement of amounts drawn under such letter of credit;
(d) Debt of Mohawk International Holdings S.á r.l. and its Subsidiaries in
aggregate outstanding amount not exceeding $150,000,000; and (e) in addition to
Debt incurred under clauses (a) through (d) of this Section, other Debt of the
Subsidiaries, when aggregated with Debt of the Borrower and its Subsidiaries
secured by Liens permitted pursuant to paragraphs (a) through (h) of
Section 5.02, in an aggregate amount not exceeding 15% of Consolidated Net
Worth.

 

ARTICLE VI

 

DEFAULTS

 

SECTION 6.01. Events of Default. If one or more of the following events (“Events
of Default”) shall have occurred and be continuing:

 

(a) the Borrower shall fail to pay when due any principal or any interest on any
Loan or any fee or other amount payable hereunder within 5 Business Days after
such principal, interest, fee or other amount shall become due (except at
maturity on the applicable Termination Date); or

 

(b) the Borrower shall fail to observe or perform any covenant or condition
contained in Sections 3.03, 5.02(b), 5.03 through 5.10, inclusive, or 5.18; or

 

(c) the Borrower shall fail to observe or perform any covenant or agreement
contained or incorporated by reference in this Agreement (other than those
covered by paragraph (a) or (b) above) and such failure shall not have been
cured within 30 days after the earlier to occur of (i) written notice thereof
has been given to the Borrower by the Administrative Agent at the request of any
Bank or (ii) a Responsible Officer of the Borrower otherwise becomes aware of
any such failure; or

 

(d) any representation, warranty, certification or statement made by the
Borrower in Article IV of this Agreement or in any certificate, financial
statement or other document delivered pursuant to this Agreement or any of the
other Loan Documents shall prove to have been incorrect or misleading in any
material respect when made (or deemed made); or

 

(e) the Borrower or any Subsidiary shall fail to make any payment in respect of
Debt in excess of $25,000,000 in the aggregate outstanding (other than the Notes
or pursuant to any of the other Loan Documents) when due, and such failure shall
continue following any applicable grace period; or

 

(f) any event or condition shall occur which results in the acceleration of the
maturity of Debt in excess of $25,000,000 in the aggregate outstanding of the
Borrower or any Subsidiary (including, without limitation, any “put” of such
Debt to the Borrower or any Subsidiary) or enables or, with the giving of notice
or lapse of time or both, would enable, the holders of such Debt or any Person
acting on such holders’ behalf to accelerate the maturity thereof (including,
without limitation, any “put” of such Debt to the Borrower or any Subsidiary);
or

 

49

--------------------------------------------------------------------------------

(g) the Borrower or any Material Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or

 

(h) an involuntary case or other proceeding shall be commenced against the
Borrower or any Material Subsidiary seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Borrower or any Material Subsidiary under
the federal bankruptcy laws as now or hereafter in effect; or

 

(i) the Borrower or any member of the Controlled Group shall fail to pay when
due any material amount which it shall have become liable to pay to the PBGC or
to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or
Plans (other than pursuant to a standard termination) shall be filed under Title
IV of ERISA by the Borrower, any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to be
appointed to administer any such Plan or Plans or a proceeding shall be
instituted by a fiduciary of any such Plan or Plans to enforce Section 515 or
4219(c)(5) of ERISA and such proceeding shall not have been dismissed within 30
days thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any such Plan or Plans must be
terminated; or

 

(j) one or more judgments or orders for the payment of money in an aggregate
amount in excess of $25,000,000 (exclusive of insurance coverage if any insurer
shall have acknowledged such coverage in writing) shall be rendered against the
Borrower or any Material Subsidiary and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days; or

 

(k) one or more federal tax liens securing an aggregate amount in excess of
$5,000,000 shall be filed against the Borrower or any Material Subsidiary under
Section 6321 of the Code or a lien of the PBGC shall be filed against the
Borrower or any Material Subsidiary under Section 4068 of ERISA and in either
case such lien shall remain undischarged for a period of 25 days after the date
of filing; or

 

(l) (i) any Person or two or more Persons acting in concert shall have acquired,
after the Closing Date, beneficial ownership (within the meaning of Rule 13d-3
of the Securities and Exchange Commission under the Securities Exchange Act of
1934) of 30% or more of the outstanding shares of the voting stock of the
Borrower; or (ii) as of any date following the

 

50

--------------------------------------------------------------------------------

Closing Date a majority of the Board of Directors of the Borrower consists of
individuals who were not either (A) directors of the Borrower as of the
corresponding date of the previous year, (B) selected or nominated to become
directors by the Board of Directors of the Borrower of which a majority
consisted of individuals described in clause (A), or (C) selected or nominated
to become directors by the Board of Directors of the Borrower of which a
majority consisted of individuals described in clause (A) and individuals
described in clause (B); or

 

(m) an “Event of Default” shall occur under any of the other Loan Documents; or

 

(n) (i) any of the Loan Documents shall cease to be enforceable, or (ii) the
Borrower shall assert that any Loan Document shall cease to be enforceable;

 

then, and in every such event, (A) the Administrative Agent shall, if requested
by the Required Revolving Credit Banks by notice to the Borrower, terminate the
Revolving Credit Commitments and they shall thereupon terminate, and (B) the
Administrative Agent shall, if requested by the Required Banks by notice to the
Borrower, declare the Loans (together with accrued interest thereon) and all
other obligations of the Borrower owing hereunder to be, and the Loans and all
other obligations of the Borrower owing hereunder shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower together with
interest at the Default Rate accruing on the principal amount thereof from and
after the date of such Event of Default; provided that if any Event of Default
specified in paragraph (g) or (h) above occurs with respect to the Borrower,
without any notice to the Borrower or any other act by the Administrative Agent
or the Banks, the Revolving Credit Commitments shall thereupon terminate and the
Loans (together with accrued interest thereon) and all other obligations of the
Borrower owing hereunder shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower together with interest thereon at the Default Rate
accruing on the principal amount thereof from and after the date of such Event
of Default. Notwithstanding the foregoing, each of the Banks shall have
available to it all other remedies at law or equity.

 

Amounts held in any cash collateral account opened by the Administrative Agent
pursuant to Section 2.14(b)(v) shall be applied by the Administrative Agent to
the payment of drafts drawn under such Letters of Credit, and the unused portion
thereof after all such Letters of Credit shall have expired or been fully drawn
upon, if any, shall be applied to repay the other obligations under this
Agreement on a pro rata basis. After all such Letters of Credit shall have
expired or been fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other obligations under this Agreement and the other Loan
Documents shall have been paid in full, the balance, if any, in such cash
collateral account shall be returned to Borrower.

 

Notwithstanding any of the foregoing to the contrary, upon the occurrence of an
Event of Default, and at any time thereafter if any Event of Default shall then
be continuing, the Administrative Agent may, with the consent of the Required
Banks, and upon the written (including telecopied) request of the Required
Banks, shall, by written notice to Borrower, require that any or all of the then
outstanding Alternative Currency Loans be prepaid or converted into a Base Rate
Loan in Dollars in the Dollar Amount thereof, on the last day of the then
current Interest Period with respect thereto.

 

51

--------------------------------------------------------------------------------

SECTION 6.02. Notice of Default. The Administrative Agent shall give notice to
the Borrower of any Default under Section 6.01(c) promptly upon being requested
to do so by any Bank and shall thereupon notify all Banks thereof.

 

SECTION 6.03. Crediting of Payments and Proceeds. In the event that the Borrower
shall fail to pay any of the Loans when due and the Loans have been accelerated
pursuant to Section 6.01, all payments received by the Banks upon the Loans and
all net proceeds from the enforcement of the Loans shall be applied:

 

First, to payment of fees (including attorney fees), indemnities and other
expenses payable to the Administrative Agent in its capacity as such and each
Issuer in its capacity as such (ratably among the Administrative Agent and the
Issuers in proportion to the respective amounts described in this clause First
payable to them);

 

Second, to payment of fees, indemnities and other amounts (other than principal
and interest) payable to the Banks, including attorney fees (ratably among the
Banks in proportion to the respective amounts described in this clause Second
payable to them);

 

Third, to payment of accrued and unpaid interest on the Loans and Reimbursement
Obligations (ratably among the Banks in proportion to the respective amounts
described in this clause Third payable to them);

 

Fourth, to payment of unpaid principal of the Loans and Reimbursement
Obligations and any obligations then due and owing by the Borrower under any
Hedging Agreements with any Person that is a Bank or an affiliate of a Bank at
the time such Hedging Agreement was entered into (including any termination
payments and any accrued and unpaid interest thereon) (ratably among the Banks
in proportion to the respective amounts described in this clause Fourth held by
them);

 

Fifth, to the Administrative Agent for the account of the Issuers, to cash
collateralize any Letter of Credit Obligations then outstanding; and

 

Last, the balance, if any, after all of the Loans, Reimbursement Obligations,
Letter of Credit Obligations and other obligations of the Borrower hereunder
have been indefeasibly paid in full, to the Borrower or as otherwise required by
law.

 

ARTICLE VII

 

THE AGENT

 

SECTION 7.01. Appointment; Powers and Immunities. Each Bank hereby irrevocably
appoints and authorizes the Administrative Agent to act as its agent hereunder
and under the other Loan Documents with such powers as are specifically
delegated to the Administrative Agent by the terms hereof and thereof, together
with such other powers as are reasonably incidental thereto. The Administrative
Agent: (a) shall have no duties or responsibilities except as expressly set
forth in this Agreement and the other Loan Documents, and shall not by reason of
this Agreement or any other Loan Document be a trustee for any Bank; (b) shall
not be responsible to the Banks for any recitals, statements, representations or
warranties contained in

 

52

--------------------------------------------------------------------------------

this Agreement or any other Loan Document, or in any certificate or other
document referred to or provided for in, or received by any Bank under, this
Agreement or any other Loan Document, or for the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or any other document referred to or provided for herein or therein or
for any failure by the Borrower to perform any of its obligations hereunder or
thereunder or for the satisfaction of any condition set forth in Article III or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent; (c) shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby or by the other
Loan Documents that the Administrative Agent is required to exercise as directed
in writing by the Required Banks (or such other number or percentage of the
Banks as shall be expressly provided for herein or in the other Loan Documents),
provided that the Administrative Agent shall not be required to take any action
that, in its opinion or the opinion of its counsel, may expose the
Administrative Agent to liability or that is contrary to any Loan Document or
applicable law, and (d) shall not be responsible for any action taken or omitted
to be taken by it hereunder or under any other Loan Document or any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or willful
misconduct. The Administrative Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The exculpatory
provisions of this Article shall apply to any such agent and any such
attorneys-in-fact, and shall apply to their respective activities in connection
with the syndication of the credit facilities provided for herein as well as
activities as Administrative Agent. The provisions of this Article VII are
solely for the benefit of the Administrative Agent and the Banks, and the
Borrower shall not have any rights as a third party beneficiary of any of the
provisions hereof (other than Section 7.10). In performing its functions and
duties under this Agreement and under the other Loan Documents, the
Administrative Agent shall act solely as agent of the Banks and does not assume
and shall not be deemed to have assumed any obligation towards or relationship
of agency or trust with or for the Borrower. The duties of the Administrative
Agent shall be ministerial and administrative in nature, and the Administrative
Agent shall not have by reason of this Agreement or any other Loan Document a
fiduciary relationship or any implied duties, regardless of whether a Default
has occurred and is continuing, in respect of any Bank.

 

SECTION 7.02. Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telecopier, telegram or cable) believed by
it to be genuine and correct and to have been signed or sent by or on behalf of
the proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants or other experts selected by the Administrative Agent.
In determining compliance with any condition hereunder to the making of a Loan,
or the issuance of a Letter of Credit, that by its terms must be fulfilled to
the satisfaction of a Bank or an Issuer, the Administrative Agent may presume
that such condition is satisfactory to such Bank or such Issuer unless the
Administrative Agent shall have received notice to the contrary from such Bank
or such Issuer prior to the making of such Loan or the issuance of such Letter
of Credit. The Administrative Agent may consult with legal counsel (who may be
counsel for the Borrower), independent accountants and other experts selected by
it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts. As to
any matters not expressly provided for by this

 

53

--------------------------------------------------------------------------------

Agreement or any other Loan Document, the Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
thereunder in accordance with instructions signed by the Required Banks, and
such instructions of the Required Banks in any action taken or failure to act
pursuant thereto shall be binding on all of the Banks.

 

SECTION 7.03. Defaults. The Administrative Agent shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default (other than the
nonpayment of principal of or interest on the Loans) unless the Administrative
Agent has received notice from a Bank or the Borrower specifying such Default or
Event of Default and stating that such notice is a “Notice of Default”. In the
event that the Administrative Agent receives such a notice of the occurrence of
a Default or an Event of Default, the Administrative Agent shall give prompt
notice thereof to the Banks. The Administrative Agent shall (subject to
Section 9.06) take such action hereunder with respect to such Default or Event
of Default as shall be directed by the Required Banks, provided that, unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Banks.

 

SECTION 7.04. Rights of Administrative Agent and its Affiliates as a Bank. With
respect to the Loans made by the Administrative Agent and any affiliate of the
Administrative Agent, Wachovia in its capacity as a Bank hereunder and any
affiliate of the Administrative Agent or such affiliate in its capacity as a
Bank hereunder shall have the same rights and powers hereunder as any other Bank
and may exercise the same as though Wachovia were not acting as the
Administrative Agent, and the term “Bank” or “Banks” shall, unless the context
otherwise indicates, include Wachovia in its individual capacity and any
affiliate of the Administrative Agent in its individual capacity. The
Administrative Agent and any affiliate of the Administrative Agent may (without
having to account therefor to any Bank) accept deposits from, lend money to and
generally engage in any kind of banking, trust or other business with the
Borrower (and any of the Borrower’s Affiliates) as if Wachovia were not acting
as the Administrative Agent, and the Administrative Agent and any affiliate of
the Administrative Agent may accept fees and other consideration from the
Borrower (and any of the Borrower’s Affiliates) (in addition to any agency fees
and arrangement fees heretofore agreed to between the Borrower and the
Administrative Agent) for services in connection with this Agreement or any
other Loan Document or otherwise without having to account for the same to the
Banks.

 

SECTION 7.05. Indemnification. Each Bank severally agrees to indemnify the
Administrative Agent, to the extent the Administrative Agent shall not have been
reimbursed by the Borrower, in accordance with such Bank’s pro rata amount, for
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including, without limitation, counsel fees
and disbursements) or disbursements of any kind and nature whatsoever which may
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of this Agreement or any other Loan Document or
any other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (excluding, unless an Event of
Default has occurred and is continuing, the normal administrative costs and
expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or any such other documents;
provided that no Bank shall be liable for any of the foregoing to the extent
they arise from the

 

54

--------------------------------------------------------------------------------

gross negligence or willful misconduct of the Administrative Agent. If any
indemnity furnished to the Administrative Agent for any purpose shall, in the
opinion of the Administrative Agent, be insufficient or become impaired, the
Administrative Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.

 

SECTION 7.06. Intentionally Omitted.

 

SECTION 7.07. Payee of Note Treated as Owner. The Administrative Agent may deem
and treat each Person in whose name a Loan is registered as the owner thereof
for all purposes hereof unless and until a written notice of the assignment or
transfer thereof shall have been filed with the Administrative Agent and the
provisions of Section 9.08(c) have been satisfied. Any requests, authority or
consent of any Person who at the time of making such request or giving such
authority or consent is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee or assignee of that Note or of any Note or
Notes issued in exchange therefor or replacement thereof.

 

SECTION 7.08. Nonreliance on Administrative Agent and Other Banks. Each Bank
agrees that it has, independently and without reliance on the Administrative
Agent or any other Bank, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Borrower and decision to
enter into this Agreement and that it will, independently and without reliance
upon the Administrative Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any of the other Loan Documents. The Administrative Agent shall not be required
to keep itself (or any Bank) informed as to the performance or observance by the
Borrower of this Agreement or any of the other Loan Documents or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Borrower or any other Person. Except for notices,
reports and other documents and information expressly required to be furnished
to the Banks by the Administrative Agent hereunder or under the other Loan
Documents, the Administrative Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of the Borrower or any other Person (or any of
their affiliates) which may come into the possession of the Administrative
Agent.

 

SECTION 7.09. Failure to Act. Except for action expressly required of the
Administrative Agent hereunder or under the other Loan Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction by the Banks of their indemnification obligations
under Section 7.05 against any and all liability and expense which may be
incurred by the Administrative Agent by reason of taking, continuing to take, or
failing to take any such action.

 

SECTION 7.10. Resignation of Administrative Agent.

 

(a) The Administrative Agent may at any time give notice of its resignation to
the Banks, the Issuers and the Borrower. Upon receipt of any such notice of
resignation, the

 

55

--------------------------------------------------------------------------------

Required Banks shall have the right, with the prior written consent of the
Borrower (provided that no Default or Event of Default exists), to appoint a
successor, which shall be a bank with an office in the United States, or an
affiliate of any such bank with an office in the United States. If no such
successor shall have been so appointed by the Required Banks and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may on
behalf of the Banks and the Issuers, appoint a successor Administrative Agent
meeting the qualifications set forth above provided that if the Administrative
Agent shall notify the Borrower and the Banks that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (1) the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents (except that in the case of any collateral security
held by the Administrative Agent on behalf of the Banks or the Issuers under any
of the Loan Documents, the retiring Administrative Agent shall continue to hold
such collateral security until such time as a successor Administrative Agent is
appointed) and (2) all payments, communications and determinations provided to
be made by, to or through the Administrative Agent shall instead be made by or
to each Bank and each Issuer, as applicable, directly, until such time as the
Required Banks appoint a successor Administrative Agent as provided for above in
this paragraph. Upon the acceptance of a successor’s appointment as
Administrative Agent hereunder, such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring (or
retired) Administrative Agent, and the retiring Administrative Agent shall be
discharged from all of its duties and obligations hereunder or under the other
Loan Documents (if not already discharged therefrom as provided above in this
paragraph). The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the retiring Administrative
Agent’s resignation hereunder and under the other Loan Documents, the provisions
of this Article and Section 9.04 shall continue in effect for the benefit of
such retiring Administrative Agent, its sub-agents and their respective
affiliates in respect of any actions taken or omitted to be taken by any of them
while the retiring Administrative Agent was acting as Administrative Agent.

 

(b) Any resignation by Wachovia as Administrative Agent pursuant to this Section
shall also constitute its resignation as an Issuer and lender of Swing Loans.
Upon the acceptance of a successor’s appointment as Administrative Agent
hereunder, (a) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring Issuer and lender of Swing
Loans, (b) the retiring Issuer and lender of Swing Loans shall be discharged
from all of its respective duties and obligations hereunder or under the other
Loan Documents, and (c) the successor Issuer shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or make other arrangement satisfactory to the retiring Issuer to
effectively assume the obligations of the retiring Issuer with respect to such
Letters of Credit.

 

ARTICLE VIII

 

CHANGE IN CIRCUMSTANCES; TAXES; COMPENSATION

 

SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair. If on or
prior to the first day of any Interest Period:

 

(a) the Administrative Agent determines that deposits in the applicable
Permitted Currency (in the applicable amounts) are not being offered in the
relevant market for such Interest Period,

 

56

--------------------------------------------------------------------------------

(b) the Administrative Agent or any Bank determines that a fundamental change
has occurred in the foreign exchange or interbank markets with respect to any
Alternative Currency (including, without limitation, changes in national or
international financial, political or economic conditions or currency exchange
rates or exchange controls) that increases the costs of the Administrative Agent
or such Bank to make such Alternative Currency Loans or it has become otherwise
materially impractical for the Administrative Agent or such Bank to make such
Alternative Currency Loans, or

 

(c) the Required Banks advise the Administrative Agent that the London Interbank
Offered Rate as determined by the Administrative Agent will not adequately and
fairly reflect the cost to such Banks of funding the relevant Eurocurrency Loans
for such Interest Period,

 

then the Administrative Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Administrative Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer exist
(which the Administrative Agent agrees to do promptly upon such circumstances
ceasing to exist), the obligations of the Banks to make any Eurocurrency Loan
(or the obligation of such Bank to make and maintain Alternative Currency
Loans), specified in such notice shall be suspended. Unless the Borrower
notifies the Administrative Agent at least 2 Business Days before the date of
any Borrowing of such Eurocurrency Loan (or such Alternative Currency Loan), for
which a Notice of Borrowing has previously been given that it elects not to
borrow on such date, such Borrowing shall instead be made as a Base Rate
Borrowing in Dollars.

 

SECTION 8.02. Illegality. If, after the date hereof, the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof (any such agency being referred to as an “Authority” and any such event
being referred to as a “Change of Law”), or compliance by any Bank (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any Authority shall make it unlawful or impossible for any Bank (or
its Lending Office) to make, maintain or fund its Eurocurrency Loans or any
Alternative Currency Loan, and such Bank shall so notify the Administrative
Agent, the Administrative Agent shall forthwith give notice thereof to the other
Banks and the Borrower, whereupon until such Bank notifies the Borrower and the
Administrative Agent that the circumstances giving rise to such suspension no
longer exist (which the Administrative Agent agrees to do promptly upon such
circumstances ceasing to exist), the obligation of such Bank to make
Eurocurrency Loans (or such Alternative Currency Loans), shall be suspended.
Before giving any notice to the Administrative Agent pursuant to this Section,
such Bank shall designate a different Lending Office if such designation will
avoid the need for giving such notice and will not, in the judgment of such
Bank, be otherwise materially disadvantageous to such Bank. If such Bank shall
determine that it may not lawfully continue to maintain and fund any of its
outstanding Eurocurrency Loans or Alternative Currency Loans to maturity and
shall so specify in such notice, the Borrower shall immediately prepay in full
the then outstanding principal amount of each Eurocurrency Loan (or such

 

57

--------------------------------------------------------------------------------

Alternative Currency Loans) of such Bank, together with accrued interest thereon
and any amount due pursuant to Section 8.05(a). Concurrently with prepaying each
such Eurocurrency Loan (or such Alternative Currency Loans), the Borrower shall
borrow a Base Rate Loan in an equal principal amount from such Bank (on which
interest and principal shall be payable contemporaneously with the related
Eurocurrency Loans or Alternative Currency Loans, as applicable, of the other
Banks) and such Bank shall make such Base Rate Loan.

 

SECTION 8.03. Increased Cost and Reduced Return.

 

(a) If after the date hereof, a Change of Law or compliance by any Bank (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any Authority:

 

(i) shall subject any Bank (or its Lending Office) to any tax, duty or other
charge with respect to its Eurocurrency Loans or Alternative Currency Loans, its
Note or its obligation to make Eurocurrency Loans or Alternative Currency Loans
or shall change the basis of taxation of payments to any Bank (or its Lending
Office) of the principal of or interest on its Eurocurrency Loans or Alternative
Currency Loans or any other amounts due under this Agreement in respect of its
Eurocurrency Loans or Alternative Currency Loans or its obligation to make
Eurocurrency Loans or Alternative Currency Loans (except for changes in the rate
of tax on the overall net income of such Bank or its Lending Office imposed by
the jurisdiction in which such Bank’s principal executive office or Lending
Office is located); or

 

(ii) shall impose, modify or deem applicable any reserve, special deposit or
similar requirement (including, without limitation, any such requirement imposed
by the Board of Governors of the Federal Reserve System, but excluding with
respect to any Eurocurrency Loan any such requirement included in an applicable
Euro-Dollar Reserve Percentage) against assets of, deposits with or for the
account of, or credit extended by, any Bank (or its Lending Office); or

 

(iii) shall impose on any Bank (or its Lending Office) or on the United States
market for certificates of deposit or the London interbank market any other
condition affecting its Eurocurrency Loans or Alternative Currency Loans or its
Note or its obligation to make Eurocurrency Loans or Alternative Currency Loans;

 

and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Eurocurrency Rate Loan or
Alternative Currency Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Lending Office) under this Agreement or under
its Notes with respect thereto, by an amount deemed by such Bank to be material,
then, within 15 days after demand by such Bank (with a copy to the
Administrative Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such increased cost or
reduction.

 

(b) If any Bank shall have determined that after the date hereof the adoption of
any applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof, or
compliance by any Bank (or its Lending Office) with any request or directive
regarding capital adequacy (whether or not having the force

 

58

--------------------------------------------------------------------------------

of law) of any Authority, has or would have the effect of reducing the rate of
return on such Bank’s capital as a consequence of its obligations hereunder to a
level below that which such Bank could have achieved but for such adoption,
change or compliance (taking into consideration such Bank’s policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, within 15 days after demand by such Bank, the Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank for such reduction.

 

(c) Each Bank will promptly notify the Borrower and the Administrative Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of such Bank, be
otherwise materially disadvantageous to such Bank. In determining such amount,
such Bank may use any reasonable averaging and attribution methods.

 

(d) The provisions of this Section 8.03 shall be applicable with respect to any
Participant, Assignee or other Transferee (unless the date of any such
assignment or transfer, a condition listed under Section 8.02 or 8.03 existed
with respect to any such Participant, Assignee or other Transferee), and any
calculations required by such provisions shall be made based upon the
circumstances of such Participant, Assignee or other Transferee. Amounts paid
pursuant to this Section 8.03 shall be without duplication of Mandatory Costs
and amounts required to be paid pursuant to Section 8.08.

 

SECTION 8.04. Base Rate Loans Substituted for Eurocurrency Loans. If (a) the
obligation of a Bank to make or maintain Eurocurrency Loans or Alternative
Currency Loans has been suspended pursuant to Section 8.02 or (b) any Bank has
demanded compensation under Section 8.03, and the Borrower shall, by at least 5
Business Days’ prior notice to the Banks through the Administrative Agent, have
elected that the provisions of this Section shall apply, then, unless and until
the circumstances giving rise to such suspension or demand for compensation no
longer apply:

 

(i) Loans which would otherwise be made by such Bank as Eurocurrency Loans or
Alternative Currency Loans, as the case may be, shall be made instead as Base
Rate Loans in Dollars, and

 

(ii) after each such Eurocurrency Loan or Alternative Currency Loan has been
repaid, all payments of principal which would otherwise be applied to repay such
Eurocurrency Loans or Alternative Currency Loans shall be applied to repay such
Base Rate Loans instead.

 

SECTION 8.05. Compensation. Upon the request of any Bank, delivered to the
Borrower and the Administrative Agent, the Borrower shall pay to such Bank such
amount or amounts as shall compensate such Bank for any loss, cost or expense
actually incurred by such Bank (including, without limitation, any foreign
exchange costs) and not compensated pursuant to Section 8.03 as a result of:

 

(a) any payment or prepayment (pursuant to Section 2.10(b), Section 8.02 or
otherwise) of a Eurocurrency Loan on a date other than the last day of an
Interest Period for such Eurocurrency Loan; or

 

59

--------------------------------------------------------------------------------

(b) any failure by the Borrower to prepay a Eurocurrency Loan on the date for
such prepayment specified in the relevant notice of prepayment hereunder; or

 

(c) any failure by the Borrower to borrow a Eurocurrency Loan on the date for
the Eurocurrency Borrowing of which such Eurocurrency Loan is a part specified
in the applicable Notice of Borrowing delivered pursuant to Section 2.02; or

 

(d) any failure by the Borrower to continue or convert a Eurocurrency Loan on
the date specified in the applicable Notice of Continuation or Conversion
delivered pursuant to Section 2.03;

 

such compensation to include, without limitation, an amount equal to the excess,
if any, of (x) the amount of interest which would have accrued on the amount so
paid or prepaid or not prepaid, borrowed, continued or converted for the period
from the date of such payment, prepayment or failure to prepay, borrow, continue
or convert to the last day of the then current Interest Period for such
Eurocurrency Loan (or, in the case of a failure to prepay, borrow, continue or
convert, the Interest Period for such Eurocurrency Loan which would have
commenced on the date of such failure to prepay, borrow, continue or convert) at
the applicable rate of interest for such Eurocurrency Loan provided for herein
over (y) the amount of interest (as reasonably determined by such Bank) such
Bank would have paid on deposits in the applicable Permitted Currency of
comparable amounts having terms comparable to such period placed with it by
leading banks in the London interbank market. A certificate of any Bank claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error.

 

SECTION 8.06. Taxes.

 

(a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without reduction or withholding for any Indemnified
Taxes or Other Taxes; provided that if the Borrower shall be required by
applicable law to deduct any Indemnified Taxes (including any Other Taxes) from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent, Bank or
Issuer, as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall timely pay the full amount deducted to
the relevant Authority in accordance with applicable law.

 

(b) Payment of Other Taxes by the Borrower. Without limiting the provisions of
paragraph (a) above, the Borrower shall timely pay any Other Taxes to the
relevant Authority in accordance with applicable law.

 

60

--------------------------------------------------------------------------------

(c) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent, each Bank and each Issuer, within 30 days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Administrative
Agent, such Bank or such Issuer, as the case may be, and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Bank or an Issuer (with a
copy to the Administrative Agent), or by the Administrative Agent on its own
behalf or on behalf of a Bank or an Issuer, shall be conclusive absent manifest
error.

 

(d) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

 

(e) Status of Banks. Any Foreign Bank that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is resident for tax purposes, or any treaty to which such jurisdiction
is a party, with respect to payments hereunder or under any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law or reasonably requested by the
Borrower or the Administrative Agent, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate of withholding. In addition, any
Bank, if requested by the Borrower or the Administrative Agent, shall deliver
such other documentation prescribed by applicable law or reasonably requested by
the Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Bank is subject to backup
withholding or information reporting requirements. Without limiting the
generality of the foregoing, any Foreign Bank shall deliver to the Borrower and
the Administrative Agent (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Bank becomes a Bank
under this Agreement (and from time to time thereafter upon the request of the
Borrower or the Administrative Agent, but only if such Foreign Bank is legally
entitled to do so), whichever of the following is applicable:

 

(i) duly completed copies of Internal Revenue Service Form W-8BEN (or successor
form) claiming eligibility for benefits of an income tax treaty to which the
United States is a party,

 

(ii) duly completed copies of Internal Revenue Service Form W-8ECI (or successor
form),

 

(iii) in the case of a Foreign Bank claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the
effect that such Foreign Bank is not (A) a “bank” within the meaning of section
881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within
the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign
corporation” described in section 881(c)(3)(C) of the Code and (y) duly
completed copies of Internal Revenue Service Form W-8BEN (or successor form), or

 

61

--------------------------------------------------------------------------------

(iv) any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable law to permit the Borrower to determine the withholding or deduction
required to be made.

 

(f) Treatment of Certain Refunds. If the Administrative Agent, a Bank or an
Issuer determines, in its reasonable discretion, that it has received a refund
or a foreign tax credit of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section, it shall pay to the Borrower an
amount equal to such refund or credit (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this Section
with respect to the Taxes or Other Taxes giving rise to such refund or credit),
net of all out-of-pocket expenses of the Administrative Agent, such Bank or such
Issuer, as the case may be, and without interest (other than any interest paid
by the relevant Authority with respect to such refund or credit); provided that
the Borrower, upon the request of the Administrative Agent, such Bank or such
Issuer, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Authority) to the
Administrative Agent, such Bank or such Issuer in the event the Administrative
Agent, such Bank or such Issuer is required to repay such refund or credit to
such Authority. This paragraph shall not be construed to require the
Administrative Agent, any Bank or any Issuer to make available its tax returns
(or any other information relating to its taxes which it deems confidential) to
the Borrower or any other Person.

 

(g) Survival. Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section shall survive the payment in full of the obligations of the
Borrower hereunder and the termination of the Revolving Credit Commitments.

 

SECTION 8.07. Replacement of Banks. If any Bank or the Administrative Agent, as
applicable (an “Affected Bank”) makes demand for amounts owed under Section 8.03
(other than due to any change in the Euro-Dollar Reserve Percentage) or
Section 8.06, or gives notice under Section 8.01 or 8.02 that it can no longer
participate in Eurocurrency Loans or Alternative Currency Loans, as applicable,
then in each case the Borrower shall have the right, if no Default or Event of
Default exists, and subject to the terms and conditions set forth in
Section 9.08(c) with respect to assignments of Loans, to designate an Assignee
(a “Replacement Bank”) to purchase the Affected Bank’s share of outstanding
Loans and all other obligations hereunder and to assume the Affected Bank’s
obligations to the Borrower under this Agreement; provided, that, any
Replacement Bank may not be an Affiliate of the Borrower. Subject to the
foregoing, the Affected Bank agrees to assign without recourse to the
Replacement Bank its share of outstanding Loans and its Revolving Credit
Commitment, as applicable, and to delegate to the Replacement Bank its
obligations to the Borrower under this Agreement. Upon such sale and delegation
by the Affected Bank and the purchase and assumption by the Replacement Bank,
and compliance with the provisions of Section 9.08(c), the Affected Bank shall
cease to be a “Bank” hereunder and the Replacement Bank shall become a “Bank”
under this Agreement; provided, however, that any Affected Bank shall continue
to be entitled to the indemnification provisions contained elsewhere herein.

 

62

--------------------------------------------------------------------------------

SECTION 8.08. Alternative Currency Matters.

 

(a) Effectiveness of Euro Provisions. With respect to any state (or the currency
of such state) that is not a Participating Member State on the date of this
Agreement, the provisions of this Section 8.08 shall become effective in
relation to such state (and the currency of such state) at and from the date on
which such state becomes a Participating Member State.

 

(b) Basis of Accrual. Subject to clause (a) above, with respect to the currency
of any state that becomes a Participating Member State, the accrual of interest
or fees expressed in this Agreement with respect to such currency shall be based
upon the applicable convention or practice in the London Interbank Market for
the basis of accrual of interest or fees in respect of the Euro, which such
convention or practice shall replace such expressed basis effective as of and
from the date on which such state becomes a Participating Member State; provided
that if any Loan in the currency of such state is outstanding immediately prior
to such date, such replacement shall take effect, with respect to such Loan, at
the end of the then current Interest Period.

 

(c) Redenomination of Alternative Currency Loans.

 

(i) Conversion to the Alternate Base Rate. If any Alternative Currency Loan is
required to bear interest based on the Base Rate rather than the Adjusted London
Interbank Offered Rate pursuant to Section 8.01, Section 8.02 or any other
applicable provision hereof, such Loan shall be funded in Dollars in an amount
equal to the Dollar Amount of such Loan, all subject to the provisions of
Section 2.11. The Borrower shall reimburse the Banks upon any such conversion
for any amounts required to be paid under Section 8.05.

 

(ii) Redenomination of Alternative Currency Loans. Subject to clause (a) above,
any Alternative Currency Loan to be denominated in the currency of the
applicable Participating Member State shall be made in the Euro.

 

(iii) Redenomination of Obligations. Subject to clause (a) above, any obligation
of any party under this Agreement or any other Loan Document which has been
denominated in the currency of a Participating Member State shall be
redenominated into the Euro.

 

(iv) Further Assurances. The terms and provisions of this Agreement will be
subject to such reasonable changes of construction as determined by the
Administrative Agent to reflect the implementation of the EMU in any
Participating Member State or any market conventions relating to the fixing
and/or calculation of interest being changed or replaced and to reflect market
practice at that time, and subject thereto, to put the Administrative Agent, the
Banks and the Borrower in the same position, so far as possible, that they would
have been if such implementation had not occurred. In connection therewith, the
Borrower agrees, at the request of the Administrative Agent, at the time of or
at any time following the implementation of the EMU in any Participating Member
State or any market conventions relating to the fixing and/or calculation of
interest being changed or replaced, to enter into an agreement amending this
Agreement in such manner as the Administrative Agent shall reasonably request.

 

63

--------------------------------------------------------------------------------

(d) Regulatory Limitation. In the event, as a result of increases in the value
of Alternative Currencies against the Dollar or for any other reason, the
obligation of any of the Banks to make or continue Loans or issue or extend
Letters of Credit (taking into account the Dollar Amount of the obligations
hereunder and all other indebtedness required to be aggregated under 12 U.S.C.A.
§84, as amended, the regulations promulgated thereunder and any other applicable
law or regulation) is determined by such Bank to exceed its then applicable
legal lending limit under 12 U.S.C.A. §84, as amended, and the regulations
promulgated thereunder, or any other applicable law or regulation, the amount of
additional Loans or Letters of Credit such Bank shall be obligated to make or
issue or participate in hereunder shall immediately be reduced to the maximum
amount which such Bank may legally advance (as determined by such Bank), the
obligation of each of the remaining Banks hereunder shall be proportionately
reduced, based on their applicable pro rata share of the Revolving Credit
Commitment, if any, and, to the extent necessary under such laws and regulations
(as determined by each of the Banks, with respect to the applicability of such
laws and regulations to itself), and the Borrower shall reduce, or cause to be
reduced, complying to the extent practicable with the remaining provisions
hereof, the Loans and Letters of Credit outstanding hereunder by an amount
sufficient to comply with such maximum amounts.

 

(e) Exchange Indemnification and Increased Costs. The Borrower shall, upon
demand from the Administrative Agent, pay to the Administrative Agent, any
Issuer or any Bank, the amount of (i) any loss or cost or increased cost
incurred by the Administrative Agent, any Issuer or any Bank, (ii) any reduction
in any amount payable to or in the effective return on the capital to the
Administrative Agent, any Issuer or any Bank, (iii) any interest or any other
return, including principal, foregone by the Administrative Agent, any Issuer or
any Bank as a result of the introduction of, change over to or operation of the
Euro, or (iv) any currency exchange loss that the Administrative Agent, any
Issuer or any Bank sustains as a result of any payment being made by the
Borrower in a currency other than that originally extended to the Borrower or as
a result of any other currency exchange loss incurred by the Administrative
Agent, any Issuer or any Bank under this Agreement. A certificate of the
Administrative Agent, such Issuer or such Bank setting forth the basis for
determining such additional amount or amounts necessary to compensate the
Administrative Agent, such Issuer or such Bank shall be conclusive absent
manifest error.

 

(f) Exchange Rates. For purposes of determining the Borrower’s compliance with
Section 2.11 or the borrowing limits set forth in Section 2.01 and Section 2.14,
the Dollar Amount of any Alternative Currency Loan or Alternative Currency
Letter of Credit to be made, continued, converted or issued shall be determined
in accordance with the terms of this Agreement by the Administrative Agent (in
respect of the most recent Revaluation Date). Such Dollar Amount shall become
effective as of such Revaluation Date for such Alternative Currency Loan or
Alternative Currency Letter of Credit and shall be the Dollar Amount employed in
converting any amounts between the applicable currencies until the next
Revaluation Date to occur for such Alternative Currency Loan or Alternative
Currency Letter of Credit.

 

64

--------------------------------------------------------------------------------

(g) Rounding and Other Consequential Changes. Subject to clause (a) above,
without prejudice and in addition to any method of conversion or rounding
prescribed by any EMU Legislation and without prejudice to the respective
obligations of the Borrower to the Administrative Agent and the Banks and the
Administrative Agent and the Banks to the Borrower under or pursuant to this
Agreement, except as expressly provided in this Agreement, each provision of
this Agreement, including, without limitation, the right to combine currencies
to effect a set-off, shall be subject to such reasonable changes of
interpretation as the Administrative Agent may from time to time specify to be
necessary or appropriate to reflect the introduction of or change over to the
Euro in Participating Member States.

 

(h) Continuity of Contract. The parties hereto agree that the occurrence or
non-occurrence of EMU, any event or events associated with EMU and/or the
introduction of the Euro in all or any part of the European Union (a) will not
result in the discharge, cancellation, rescission or termination in whole or in
part of this Agreement or any other Loan Document, (b) will not give any party
the right to cancel, rescind, terminate or vary this Agreement or any other Loan
Document and (c) will not give rise to an Event of Default, in each case other
than as specifically provided in this Agreement.

 

ARTICLE IX

 

MISCELLANEOUS

 

SECTION 9.01. Notices.

 

(a) Method of Communication. Except as otherwise provided in this Agreement, all
notices and communications hereunder shall be in writing or by telephone
subsequently confirmed in writing; provided that notices and communications
hereunder between the Administrative Agent and the Banks (including the Issuers)
may be made in electronic format such as electronic mail and internet web pages.
Any notice shall be effective if delivered by hand delivery, telecopy,
recognized overnight courier service or certified mail, return receipt requested
(or sent via electronic mail or posting on an internet web page, as applicable),
and shall be presumed to be received by a party hereto (i) on the date of
delivery if delivered by hand or telecopy (or sent by electronic mail or posting
on an internet web page, as applicable), (ii) on the next Business Day if sent
by recognized overnight courier service and (iii) on the 3rd Business Day
following the date sent by certified mail, return receipt requested. A
telephonic notice to the Administrative Agent as understood by the
Administrative Agent will be deemed to be the controlling and proper notice in
the event of a discrepancy with or failure to receive a confirming written
notice.

 

(b) Addresses for Notices. Notices to any party shall be sent to it at the
following addresses, or any other address as to which all the other parties are
notified in writing.

 

If to the Borrower:    Mohawk Industries, Inc.      160 South Industrial
Boulevard      Calhoun, Georgia 30703-7002      Attention: Chief Financial
Officer or Treasurer      Telephone No.: (706) 624-2103      Telecopier number:
(706) 624-2052

 

65

--------------------------------------------------------------------------------

With copies to:    Mohawk Industries, Inc.      160 South Industrial Boulevard  
   Calhoun, Georgia 30703-7002      Attention: Salvatore J. Perillo, Jr.     
Telephone No.: (706) 629-7721      Telecopy No.: (706) 624-2483
If to Wachovia as    Wachovia Bank, National Association Administrative Agent:
   Charlotte Plaza, CP-8      201 South College Street      Charlotte, North
Carolina 28288-0680      Attention: Syndication Agency Services      Telephone
No.: (704) 374-2698      Telecopy No.: (704) 383-0288 With copies to:   
Wachovia Securities      NC0760      One Wachovia Center      301 South College
Street      Charlotte, North Carolina 28288      Attention: Louis K. Beasley III
     Telephone No.: (704) 374-3070      Telecopy No.: (704) 383-6647

If to the Administrative

Agent’s Correspondent:

   To the address set forth on Schedule 1.01(a). If to any Bank:    To the
address set forth on Schedule 1.01(a).

 

(c) Administrative Agent’s Office. The Administrative Agent hereby designates
its office located at the address set forth above, or any subsequent office
which shall have been specified for such purpose by written notice to the
Borrower and the Banks to which payments due are to be made and at which Loans
will be disbursed and Letters of Credit requested. The Administrative Agent
shall provide the Borrower with reasonable notice of any redesignation of its
Administrative Agent’s Correspondent from Wachovia Bank, National Association,
London Branch.

 

SECTION 9.02. No Waivers. No failure or delay by the Administrative Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note or
other Loan Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

66

--------------------------------------------------------------------------------

SECTION 9.03. Expenses. The Borrower shall pay (i) all out-of-pocket expenses of
the Administrative Agent, including reasonable fees and disbursements actually
incurred of special counsel for the Administrative Agent, in connection with the
preparation of this Agreement and the other Loan Documents, any waiver or
consent hereunder or thereunder or any amendment hereof or thereof and (ii) if a
Default or an Event of Default occurs, all out-of-pocket expenses incurred by
the Administrative Agent and the Banks, including reasonable fees and
disbursements of counsel, actually incurred in connection with such Default and
collection and other enforcement proceedings resulting therefrom, including
out-of-pocket expenses incurred in enforcing this Agreement and the other Loan
Documents.

 

SECTION 9.04. Indemnification; Waiver of Consequential Damages.

 

(a) The Borrower shall indemnify the Administrative Agent, the Banks and each
affiliate thereof and their respective directors, officers, employees and agents
(each, an “Indemnified Party”) from, and hold each of them harmless against, any
and all losses, liabilities, claims or damages to which any of them may become
subject, insofar as such losses, liabilities, claims (including, without
limitation, any civil penalties or fines assessed by OFAC) or damages arise out
of or result from any actual or proposed use by the Borrower of the proceeds of
any extension of credit by any Bank hereunder or breach by the Borrower of this
Agreement or any other Loan Document or from any investigation, litigation
(including, without limitation, any actions taken by the Administrative Agent or
any of the Banks to enforce this Agreement or any of the other Loan Documents)
or other proceeding (including, without limitation, any threatened investigation
or proceeding) relating to the foregoing, and the Borrower shall reimburse the
Administrative Agent and each Bank, and each affiliate thereof and their
respective directors, officers, employees and agents, upon demand for any
expenses (including, without limitation, legal fees) incurred in connection with
any such investigation or proceeding; but excluding any such losses,
liabilities, claims, damages or expenses (i) incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified or (ii) to the
extent arising directly out of or resulting directly from claims of one or more
Indemnified Parties against another Indemnified Party.

 

(b) Consequential Damages. THE ADMINISTRATIVE AGENT, THE BANKS AND THE BORROWER
(ON BEHALF OF ITSELF AND ITS SUBSIDIARIES) SHALL NOT BE RESPONSIBLE OR LIABLE TO
ANY SUCH PERSON OR ANY OTHER PERSON OR ENTITY FOR ANY PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

The agreements and obligations of the Borrower contained in this Section shall
survive the termination of the Revolving Credit Commitments and the payment in
full of the Loans and the other obligations hereunder.

 

SECTION 9.05. Sharing of Setoffs.

 

(a) (i) If an Event of Default shall have occurred and be continuing, each Bank,
each Issuer and each of their respective affiliates is hereby authorized at any
time and from time

 

67

--------------------------------------------------------------------------------

to time, to the fullest extent permitted by applicable law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final,
in whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by such Bank, such Issuer or such affiliate to or
for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement or
any other Loan Document to such Bank or such Issuer, irrespective of whether or
not such Bank or such Issuer shall have made any demand under this Agreement or
any other Loan Document and although such obligations of the Borrower may be
contingent or unmatured or are owed to a branch or office of such Bank or such
Issuer different from the branch or office holding such deposit or obligated on
such indebtedness. The rights of each Bank, each Issuer and each of their
respective affiliates under this clause (i) are in addition to other rights and
remedies (including other rights of setoff) that such Bank, such Issuer or such
affiliate may have. Each Bank and each Issuer agrees to notify the Borrower and
the Administrative Agent promptly after any such setoff and application;
provided that the failure to give such notice shall not affect the validity of
such setoff and application.

 

(ii) Any amount to be set-off pursuant to clause (i) above shall be denominated
in Dollars and any amount denominated in an Alternative Currency shall be in an
amount equal to the Dollar Amount of such amount at the most favorable spot
exchange rate determined by the Administrative Agent to be available to it;
provided that if at the time of any such determination no such spot exchange
rate can reasonably be determined, the Administrative Agent may use any
reasonable method as it deems applicable to determine such rate, any such
determination to be conclusive absent manifest error.

 

(iii) Each Bank and any assignee or participant of such Bank in accordance with
Section 9.08 are hereby authorized by the Borrower to combine currencies, as
deemed necessary by such Person, in order to effect any set-off pursuant to
clause (i) above.

 

(b) Each Bank agrees that if it shall, by exercising any right of setoff or
counterclaim or otherwise (including through any affiliate of such Bank),
receive payment of a proportion of the aggregate amount of principal and
interest owing with respect to the Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate amount of all
principal and interest owing with respect to the Note held by such other Bank,
the Bank receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks owing to such other Banks,
and such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Note held by the Bank
owing to such other Banks shall be shared by the Banks pro rata; provided that
(i) nothing in this Section shall impair the right of any Bank or any affiliate
thereof to exercise any right of setoff or counterclaim it may have and to apply
the amount subject to such exercise to the payment of indebtedness of the
Borrower other than its indebtedness under the Notes and (ii) if all or any
portion of such payment received by the purchasing Bank is thereafter recovered
from such purchasing Bank, such purchase from such other Banks shall be
rescinded and such other Bank shall repay to the purchasing Bank the purchase
price of such participation to the extent of such recovery together with an
amount equal to such other Banks’ ratable share (according to the proportion of
(A) the amount of such other Banks’ required repayment to (B) the total amount
so recovered from the purchasing Bank) of any interest or other amount paid or

 

68

--------------------------------------------------------------------------------

payable by the purchasing Bank in respect of the total amount so recovered. The
Borrower agrees, to the fullest extent it may effectively do so under applicable
law, that any holder of a participation in a Note, whether or not acquired
pursuant to the foregoing arrangements, may exercise rights of setoff or
counterclaim and other rights with respect to such participation as fully as if
such holder of a participation were a direct creditor of the Borrower in the
amount of such participation.

 

SECTION 9.06. Amendments and Waivers.

 

(a) Any provision of this Agreement, the Notes or any other Loan Documents may
be amended or waived if, but only if, such amendment or waiver is in writing and
is consented to by the Borrower and the Required Banks (or by the Administrative
Agent with the consent of the Required Banks) and, if the rights or duties of
the Administrative Agent are affected thereby, by the Administrative Agent;
provided that, (i) no such amendment or waiver shall, unless consented to by all
Banks directly affected thereby (or by the Administrative Agent with the consent
of such Banks), (A) change the Revolving Credit Commitment of any Revolving
Credit Bank or the amount of Loans of any Bank or subject any Bank to any
additional obligation, (B) change the principal of or decrease the rate of
interest on any Loan or decrease any fees (other than fees payable to the
Administrative Agent) hereunder, (C) extend the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder, (D) change the
amount of principal, interest or fees due on any date fixed for the payment
thereof, (E) amend or otherwise modify this Section 9.06 or change the
percentage of the Revolving Credit Commitments or of the aggregate unpaid
principal amount of the Loans, or the number of Banks, which shall be required
for the Banks or any of them to take any action under this Section or any other
provision of this Agreement, (F) change the manner of application of any
payments made under this Agreement or the Notes, (G) release or substitute all
or any substantial part of the collateral (if any) held as security for the
Loans, (H) release any Guarantee (if any) given to support payment of the Loans
or (I) modify the definitions of “Alternative Currency” or “Interest Period” and
(ii) no such amendment or waiver shall, unless consented to by the Required
Revolving Credit Banks (or by the Administrative Agent with the consent of the
Required Revolving Credit Banks), amend Section 6.01 or waive any of the
conditions, or waive any Default or Event of Default for purposes of waiving any
of the conditions, set forth in Section 3.02.

 

(b) The Borrower will not solicit, request or negotiate for or with respect to
any proposed waiver or amendment of any of the provisions of this Agreement
unless each Bank shall be informed thereof by the Borrower (through the
Administrative Agent) and shall be afforded an opportunity of considering the
same and shall be supplied by the Borrower (through the Administrative Agent)
with sufficient information to enable it to make an informed decision with
respect thereto. Executed or true and correct copies of any waiver or consent
effected pursuant to the provisions of this Agreement shall be delivered by the
Administrative Agent to each Bank promptly following the date on which the same
shall have been executed and delivered by the requisite percentage of Banks. The
Borrower will not, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any Bank (in its capacity as such) as consideration for or as an
inducement to the entering into by such Bank of any waiver or amendment of any
of the terms and provisions of this Agreement unless such remuneration is
concurrently paid, on the same terms, ratably to each of the Banks consenting to
or entering into any such waiver or amendment.

 

69

--------------------------------------------------------------------------------

SECTION 9.07. No Margin Stock Collateral. Each of the Banks represents to the
Administrative Agent and each of the other Banks that it in good faith is not,
directly or indirectly (by negative pledge or otherwise), relying upon any
Margin Stock as collateral in the extension or maintenance of the credit
provided for in this Agreement.

 

SECTION 9.08. Successors and Assigns.

 

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereunder; provided that the Borrower may not assign or otherwise
transfer any of its rights under this Agreement.

 

(b) Any Bank may at any time sell to one or more Persons (each a “Participant”)
participating interests in any Loan owing to such Bank, its Note, its Revolving
Credit Commitment hereunder or any other interest of such Bank hereunder. In the
event of any such sale by a Bank of a participating interest to a Participant,
such Bank’s obligations under this Agreement shall remain unchanged, such Bank
shall remain solely responsible for the performance thereof, such Bank shall
remain the holder of any such Note for all purposes under this Agreement, and
the Borrower and the Administrative Agent shall continue to deal solely and
directly with such Bank in connection with such Bank’s rights and obligations
under this Agreement. In no event shall a Bank that sells a participation be
obligated to the Participant to take or refrain from taking any action hereunder
except that such Bank may agree that it will not (except as provided below),
without the consent of the Participant, agree to (i) extend any date fixed for
the payment of principal of or interest on the related loan or loans, (ii) the
change of the amount of any principal, interest or fees due on any date fixed
for the payment thereof with respect to the related loan or loans, (iii) the
change of the principal of the related loan or loans, (iv) any decrease in the
rate at which either interest is payable thereon or (if the Participant is
entitled to any part thereof) commitment fee is payable hereunder from the rate
at which the Participant is entitled to receive interest or commitment fee (as
the case may be) in respect of such participation, (v) the release or
substitution of all or any substantial part of the collateral (if any) held as
security for the Loans, or (vi) the release of any Guarantee (if any) given to
support payment of the Loans. The Borrower agrees that each Participant shall be
entitled to the benefits of Article VIII with respect to its participation in
Loans outstanding from time to time; provided that (x) a Participant shall not
be entitled to receive any greater payment under Section 8.06 than the
applicable Bank would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent and (y) a
Participant that would be a Foreign Bank if it were a Bank shall not be entitled
to the benefits of Section 8.06 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower and the Administrative Agent, to comply with
Section 8.06(e) and (f) as though it were a Bank. Each Bank agrees that, upon
the request of the Borrower, such Bank shall disclose to the Borrower any
participating interests sold by such Bank since the Closing Date.

 

(c) Any Bank may at any time assign to one or more banks or financial
institutions (each an “Assignee”) all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume all such rights and obligations, pursuant to an Assignment and
Acceptance in the form attached hereto as Exhibit C, executed by such Assignee
and such transferor Bank and, if applicable, the Administrative Agent; provided

 

70

--------------------------------------------------------------------------------

that (i) no interest may be sold by a Bank pursuant to this paragraph (c) unless
the Assignee shall agree to assume ratably equivalent portions of the transferor
Bank’s Revolving Credit Commitment, Dollar Term Loan Amount or Euro Term Loan
Amount, as applicable, (ii) except in the case of an assignment of the entire
remaining amount of the assigning Bank’s Revolving Credit Commitment, if
applicable, and the Loans at the time owing to it or in the case of an
assignment to a Bank or an affiliate of a Bank, the amount of the Revolving
Credit Commitment, Dollar Term Loan Amount or Euro Term Loan Amount, as
applicable, of the assigning Bank subject to such assignment (determined as of
the effective date of the assignment) shall be equal to $10,000,000 (or any
larger multiple of $1,000,000), and (iii) no interest may be sold by a Bank
pursuant to this paragraph (c) to any Assignee that is not then a Bank or an
affiliate of a Bank without the consent of the (A) Administrative Agent and (B)
so long as no Default or Event of Default has occurred and is continuing, the
Borrower, such consents shall not be unreasonably withheld or delayed. Each Bank
agrees to notify the Administrative Agent who will notify the other Banks of any
assignment hereunder. Upon (A) execution of the Assignment and Acceptance by
such transferor Bank, such Assignee, the Administrative Agent (if applicable)
and the Borrower (if applicable), (B) delivery of an executed copy of the
Assignment and Acceptance to the Borrower and the Administrative Agent, (C)
payment and delivery by the transferor Bank or the Assignee to the
Administrative Agent of a $2,500 processing and recordation fee for each such
Assignment to an Assignee and (D) payment by such Assignee to such transferor
Bank of an amount equal to the purchase price agreed between such transferor
Bank and such Assignee, such Assignee shall for all purposes be a Bank party to
this Agreement and shall have all the rights and obligations of a Bank under
this Agreement to the same extent as if it were an original party hereto with a
Revolving Credit Commitment, Dollar Term Loan Amount or Euro Term Loan Amount,
as applicable, as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by the Borrower, the Banks or the
Administrative Agent shall be required. Upon the consummation of any transfer to
an Assignee pursuant to this paragraph (c), the transferor Bank, the
Administrative Agent and the Borrower shall make appropriate arrangements so
that, if required, a new Note is issued to each of such Assignee and such
transferor Bank. Any assignment or transfer by a Bank of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated
for purposes of this Agreement as a sale by such Bank of a participation in such
rights and obligations in accordance with paragraph (b) of this Section.

 

(d) The Administrative Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at one of its offices in Charlotte, North Carolina, a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Banks, and the Revolving Credit
Commitments, Dollar Term Loan Amounts and/or Euro Term Loan Amounts, as
applicable, of, and principal amounts of the Loans owing to, each Bank pursuant
to the terms hereof from time to time (the “Register”). The entries in the
Register shall be conclusive, and the Borrower, the Administrative Agent and the
Banks may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Bank hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Bank, at any reasonable time and from time to
time upon reasonable prior notice. The parties intend that the keeping of the
Register is, among other things, to cause the Notes to be in “registered form”
within the meaning of Section 163(f) of the Code.

 

71

--------------------------------------------------------------------------------

(e) Subject to the provisions of Section 9.09, the Borrower authorizes each Bank
to disclose to any Participant, Assignee or other transferee (each a
“Transferee”) and any prospective Transferee any and all financial information
in such Bank’s possession concerning the Borrower which has been delivered to
such Bank by the Borrower pursuant to this Agreement or which has been delivered
to such Bank by the Borrower in connection with such Bank’s credit evaluation
prior to entering into this Agreement.

 

(f) No Transferee shall be entitled to receive any greater payment under
Section 8.03 than the transferor Bank would have been entitled to receive with
respect to the rights transferred, unless such transfer is made with the
Borrower’s prior written consent or by reason of the provisions of Section 8.02
or 8.03 requiring such Bank to designate a different Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.

 

(g) Any Bank may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Bank,
including without limitation any pledge or assignment to secure obligations to a
Federal Reserve Bank; provided that no such pledge or assignment shall release
such Bank from any of its obligations hereunder or substitute any such pledgee
or assignee for such Bank as a party hereto.

 

SECTION 9.09. Confidentiality. Each of the Administrative Agent and the Banks
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent required to
be disclosed to, any rating agency, or regulatory or similar authority
(including any self-regulatory authority, such as the National Association of
Insurance Commissioners), (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
hereto, (e) in connection with the exercise of any remedies under this Agreement
or under any other Loan Document (or any hedging agreement with a Bank or the
Administrative Agent) or any legal or regulatory action or proceeding relating
to this Agreement or any other Loan Document (or any hedging agreement with a
Bank or the Administrative Agent) or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any purchasing Bank, proposed purchasing
Bank, Participant or proposed Participant, or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Borrower and its obligations, (g) with the consent of the Borrower, (h) to
Gold Sheets and other similar bank trade publications, such information to
consist solely of deal terms and other information customarily found in such
publications, (i) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section or (y) becomes available to
the Administrative Agent or any Bank on a nonconfidential basis from a source
other than the Borrower or (j) to governmental regulatory authorities in
connection with any regulatory examination of the Administrative Agent or any
Bank or in accordance with the Administrative Agent’s or any Bank’s regulatory
compliance policy if the Administrative Agent or such Bank deems necessary for
the mitigation of claims by those authorities against the Administrative Agent
or such Bank or any of its subsidiaries or affiliates. For purposes of this
Section, “Information” means all information

 

72

--------------------------------------------------------------------------------

received from or at the direction of the Borrower or any of its Subsidiaries
relating to the Borrower or any of its Subsidiaries or any of their respective
businesses, other than any such information that is available to the
Administrative Agent or any Bank on a nonconfidential basis prior to disclosure
by the Borrower or any of its Subsidiaries. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

 

SECTION 9.10. Representation by Banks. Each Bank hereby represents that it is a
commercial lender or financial institution which makes loans in the ordinary
course of its business and that it will make its Loans hereunder for its own
account in the ordinary course of such business; provided, however that, subject
to Section 9.08, the disposition of the Note or Notes held by that Bank shall at
all times be within its exclusive control.

 

SECTION 9.11. Obligations Several. The obligations of each Bank hereunder are
several, and no Bank shall be responsible for the obligations or commitment of
any other Bank hereunder. Nothing contained in this Agreement and no action
taken by Banks pursuant hereto shall be deemed to constitute the Banks to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Bank shall be a separate and
independent debt, and each Bank shall be entitled to protect and enforce its
rights arising out of this Agreement or any other Loan Document, subject to any
restrictions requiring actions to be taken upon the consent of the Required
Banks, and it shall not be necessary for any other Bank to be joined as an
additional party in any proceeding for such purpose.

 

SECTION 9.12. Georgia Law. This Agreement and each Note shall be construed in
accordance with and governed by the law of the State of Georgia.

 

SECTION 9.13. Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.

 

SECTION 9.14. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION. TO THE FULLEST
EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO (A) IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF THIS
AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, (B) SUBMITS TO THE NONEXCLUSIVE PERSONAL
JURISDICTION IN THE STATE OF GEORGIA, THE COURTS THEREOF AND THE UNITED STATES
DISTRICT COURTS SITTING THEREIN, FOR THE ENFORCEMENT OF THIS AGREEMENT, THE
NOTES AND THE OTHER LOAN DOCUMENTS, (C) WAIVES ANY AND ALL PERSONAL RIGHTS UNDER
THE LAW OF ANY JURISDICTION TO OBJECT ON ANY BASIS (INCLUDING, WITHOUT
LIMITATION, INCONVENIENCE OF FORUM) TO JURISDICTION OR VENUE WITHIN THE STATE OF
GEORGIA FOR THE PURPOSE OF LITIGATION TO ENFORCE THIS AGREEMENT, THE NOTES OR
THE OTHER LOAN DOCUMENTS, AND (D) AGREES THAT SERVICE OF PROCESS MAY BE MADE
UPON

 

73

--------------------------------------------------------------------------------

IT IN THE MANNER PRESCRIBED IN SECTION 9.01 FOR THE GIVING OF NOTICE TO THE
BORROWER. NOTHING HEREIN CONTAINED, HOWEVER, SHALL PREVENT THE BANKS FROM
BRINGING ANY ACTION OR EXERCISING ANY RIGHTS AGAINST ANY SECURITY AND AGAINST
THE BORROWER PERSONALLY, AND AGAINST ANY ASSETS OF THE BORROWER WITHIN ANY OTHER
STATE OR JURISDICTION.

 

SECTION 9.15. Judgment Currency. The obligation of the Borrower to pay the
obligations under this Agreement and the other Loan Documents and the obligation
of the Borrower to make payments of any other amounts payable hereunder or
pursuant to any other Loan Document in the currency specified for such payment
shall not be discharged or satisfied by any tender, or any recovery pursuant to
any judgment, which is expressed in or converted into any other currency, except
to the extent that such tender or recovery shall result in the actual receipt by
each of the Administrative Agent, the Issuers and the Banks of the full amount
of the particular Permitted Currency expressed to be payable pursuant to the
applicable Loan Document. The Administrative Agent shall, using all amounts
obtained or received from the Borrower pursuant to any such tender or recovery
in payment of principal of and interest on the obligations under this Agreement
and the other Loan Documents, promptly purchase the applicable currency at the
most favorable spot exchange rate determined by the Administrative Agent to be
available to it. The obligation of the Borrower to make payments in the
applicable currency shall be enforceable as an alternative or additional cause
of action solely for the purpose of recovering in the applicable currency the
amount, if any, by which such actual receipt shall fall short of the full amount
of the currency expressed to be payable pursuant to the applicable Loan
Document.

 

SECTION 9.16. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

 

SECTION 9.17. Reversal of Payments. To the extent the Borrower makes a payment
or payments to the Administrative Agent for the ratable benefit of the Banks or
the Administrative Agent receives any payment or proceeds of the collateral
which payments or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds repaid, the Loans or part thereof or other obligation
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or proceeds had not been received by the Administrative
Agent.

 

SECTION 9.18. Survival of Indemnities. Notwithstanding any termination of this
Agreement, the indemnities to which the Administrative Agent and the Banks are
entitled under the provisions of this Article IX and any other provision of this
Agreement and the other Loan Documents shall continue in full force and effect
and shall protect the Administrative Agent and the Banks against events arising
after such termination as well as before.

 

SECTION 9.19. Integration. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and

 

74

--------------------------------------------------------------------------------

thereof and supersedes all prior agreements, written or oral, on such subject
matter. In the event of any conflict between the provisions of this Agreement
and those of any other Loan Document, the provisions of this Agreement shall
control; provided that the inclusion of supplemental rights or remedies in favor
of the Administrative Agent or the Banks in any other Loan Document shall not be
deemed a conflict with this Agreement. Each Loan Document was drafted with the
joint participation of the respective parties thereto and shall be construed
neither against nor in favor of any party, but rather in accordance with the
fair meaning thereof.

 

SECTION 9.20. USA Patriot Act. The Administrative Agent and each Bank hereby
notifies the Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it
is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and
other information that will allow such Bank to identify the Borrower in
accordance with the Act.

 

[Signature Pages Follow]

 

75

--------------------------------------------------------------------------------

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

 

MOHAWK INDUSTRIES, INC., as Borrower By:  

/s/ Scott R. Veldman

--------------------------------------------------------------------------------

Name:   Scott R. Veldman Title:   Vice President and Treasurer

 

[Signature Pages Continue]

 

[Five Year Credit Agreement – Mohawk Industries, Inc.]

--------------------------------------------------------------------------------

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent, an Issuer and a Bank

By:  

/s/ Louis K. Beasley, III

--------------------------------------------------------------------------------

Name:   Louis K. Beasley, III Title:   Director

 

[Signature Pages Continue]

 

[Five Year Credit Agreement – Mohawk Industries, Inc.]

--------------------------------------------------------------------------------

SUNTRUST BANK, as Syndication Agent and a Bank By:  

/s/ Charles J. Johnson

--------------------------------------------------------------------------------

Name:   Charles J. Johnson Title:   Managing Director

 

[Signature Pages Continue]

 

[Five Year Credit Agreement – Mohawk Industries, Inc.]

--------------------------------------------------------------------------------

JPMORGAN CHASE BANK, N.A., as

Documentation Agent and a Bank

By:  

/s/ B.B. Wuthrich

--------------------------------------------------------------------------------

Name:   B.B. Wuthrich Title:   Vice President

 

[Signature Pages Continue]

 

[Five Year Credit Agreement – Mohawk Industries, Inc.]

--------------------------------------------------------------------------------

LEHMAN COMMERCIAL PAPER INC., as

Documentation Agent and a Bank

By:  

/s/ Janine M. Shugan

--------------------------------------------------------------------------------

Name:   Janine M. Shugan Title:   Authorized Signatory

 

[Signature Pages Continue]

 

[Five Year Credit Agreement – Mohawk Industries, Inc.]

--------------------------------------------------------------------------------

BANK OF AMERICA, N.A., as Documentation

Agent and a Bank

By:  

/s/ David McCauley

--------------------------------------------------------------------------------

Name:   David McCauley Title:   Vice President

 

[Signature Pages Continue]

 

[Five Year Credit Agreement – Mohawk Industries, Inc.]

--------------------------------------------------------------------------------

CITIBANK, N.A., as a Bank By:  

/s/ James M. Buchanan

--------------------------------------------------------------------------------

Name:   James M. Buchanan Title:   Director

 

[Signature Pages Continue]

 

[Five Year Credit Agreement – Mohawk Industries, Inc.]

--------------------------------------------------------------------------------

WELLS FARGO BANK, N.A., as a Bank By:  

/s/ Sharon L. Prince

--------------------------------------------------------------------------------

Name:   Sharon L. Prince Title:   Vice President By:  

/s/ Horace S. Jennings

--------------------------------------------------------------------------------

Name:   Horace S. Jennings Title:   Vice President

 

[Signature Pages Continue]

 

[Five Year Credit Agreement – Mohawk Industries, Inc.]

--------------------------------------------------------------------------------

ING CAPITAL, LLC By:  

/s/ John Kippax

--------------------------------------------------------------------------------

Name:   John Kippax Title:   Managing Director

 

[Signature Pages Continue]

 

[Five Year Credit Agreement – Mohawk Industries, Inc.]

--------------------------------------------------------------------------------

KBC BANK N.V., as a Bank

By:

 

/s/ Eric Raskin

--------------------------------------------------------------------------------

Name:

 

Eric Raskin

Title:

 

Vice President

By:

 

/s/ Robert Snauffer

--------------------------------------------------------------------------------

Name:

 

Robert Snauffer

Title:

 

First Vice President

 

[Signature Pages Continue]

 

[Five Year Credit Agreement – Mohawk Industries, Inc.]

--------------------------------------------------------------------------------

BANK OF TOKYO-MITSUBISHI TRUST

COMPANY, as a Bank

By:  

/s/ K. Ossolinski

--------------------------------------------------------------------------------

Name:   K. Ossolinski Title:   Vice President

 

[Signature Pages Continue]

 

[Five Year Credit Agreement – Mohawk Industries, Inc.]

--------------------------------------------------------------------------------

THE GOVERNOR AND COMPANY OF THE

BANK OF IRELAND, as a Bank

By:  

/s/ David Hickey

--------------------------------------------------------------------------------

Name:   David Hickey Title:   Authorised Signatory By:  

/s/ Lain Donovan

--------------------------------------------------------------------------------

Name:   Lain Donovan Title:   Authorised Signatory

 

[Signature Pages Continue]

 

[Five Year Credit Agreement – Mohawk Industries, Inc.]

--------------------------------------------------------------------------------

COMERICA BANK, as a Bank By:  

/s/ Erica M. Krzeminiski

--------------------------------------------------------------------------------

Name:   Erica M. Krzeminski Title:   Account Officer

 

[Five Year Credit Agreement – Mohawk Industries, Inc.]