AMENDMENT 1 TO PSA



Exhibit 10.39


 


 


 


 


 


 


AMENDMENT NO. 4


to the


 


CREDIT AND SECURITY
AGREEMENT


 


 


Dated as of December 31, 2002


 


 


 


 











                THIS AMENDMENT NO. 4 (this "Amendment")
to the Credit and Security Agreement, dated as of October 25, 2000 (as amended
and supplemented, the "Credit and Security Agreement"), is dated as of
December 31, 2002, and is by and among MOHAWK FACTORING, INC., a Delaware
corporation ("Mohawk Factoring" or "Borrower"), BLUE RIDGE ASSET
FUNDING CORPORATION, a Delaware Corporation ("Blue Ridge"), WACHOVIA BANK,
NATIONAL ASSOCIATION (the "Agent") and MOHAWK CARPET DISTRIBUTION, L.P.,
a Delaware limited partnership ("Mohawk Distribution").  Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to them in the Credit and
Security Agreement.




WHEREAS, Mohawk Carpet Corporation ("Mohawk Carpet"), Mohawk
Commercial, Inc. ("Mohawk Commercial"), Durkan Patterned Carpets, Inc.
("Durkan") and Mohawk Factoring were parties to the Receivables Purchase
and Sale Agreement, dated as of October 25, 2000 ("Purchase and Sale
Agreement"), whereby Mohawk Carpet, Mohawk Commercial and Durkan would sell
and Mohawk Factoring, as Buyer, would purchase, from time to time, Receivables
originated by each of Mohawk Carpet, Mohawk Commercial and Durkan (the "Initial
Originators");




WHEREAS, pursuant to Amendment No. 1 to the Purchase and Sale Agreement,
Mohawk Carpet of Texas, L.P. ("Carpet LP") was added as an Originator
under the Purchase and Sale Agreement, and pursuant to Amendment No. 1 of the
Credit and Security Agreement, the definition of, and all references to the
term, "Originator" under the Credit and Security Agreement were amended to
include Carpet LP;  




WHEREAS, Durkan was merged into Mohawk Carpet, effective 2001, and, in
accordance with Section 7.9 of the Purchase and Sale Agreement, Durkan's
rights, obligations and interests thereunder were assigned by operation of law
to the surviving Originator, Mohawk Carpet;




WHEREAS, Mohawk Commercial will be merged into Mohawk Carpet, effective
December 31, 2002, and, in accordance with Section 7.9 of the Purchase and Sale
Agreement, Mohawk Commercial's rights, obligations and interests thereunder
will be assigned by operation of law to the surviving Originator, Mohawk
Carpet;




WHEREAS, Mohawk Carpet and Carpet LP are each contributing all of their
respective finished goods inventories to Mohawk Distribution and, upon and
following the effective date of this Amendment, will act only as sales agents
for Mohawk Distribution, and Mohawk Distribution will sell inventory in the
manner formerly sold by Mohawk Carpet and Carpet LP, thereby originating the
Receivables arising from such sales;




WHEREAS, pursuant to an Amendment and Joinder to the Purchase and Sale
Agreement, references to Mohawk Carpet and Carpet LP as Originators under the
Purchase and Sale Agreement were changed and removed, and Mohawk Distribution
was joined as a new Originator under such Purchase and Sale Agreement;




WHEREAS, this Amendment is being entered into by the parties hereto
(collectively, the "Parties") to change, among other things, any and all
references to Mohawk Carpet and Carpet LP as Originators under the Credit and
Security Agreement to Mohawk Distribution as a new Originator under the
Purchase and Sale Agreement;




WHEREAS, the Parties have
taken each and all of the actions required to properly amend the Credit and
Security Agreement in accordance with its terms; and




                NOW,
THEREFORE, in consideration of the mutual promises contained herein and in the
Credit and Security Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties,
intending to be legally bound hereby, hereto agree as follows:  




Section 1.              
 Amendments
to the Credit and Security Agreement




                1.1           All
references to Mohawk Carpet and Carpet LP, as Originators, shall be amended to
refer to Mohawk Distribution, as Originator.




                1.2           The definition of "Originator" under
Exhibit 1 of the Credit and Security Agreement is amended in its entirety to
read as follows:




                ""Originator"
means Mohawk Distribution LP, a Delaware limited partnership, in its capacity
as a seller under the Receivables Sale Agreement."




Section 2.              
 Representations
and Warranties


                Each
of the Parties hereby represents and warrants severally and not jointly that,
with respect to each Party:




                                (i)            Its execution, delivery and
performance of this Amendment are within its corporate powers, have been duly
authorized by all necessary corporate action and do not require any consent or
approval which has not been obtained.




(ii)           This
Amendment is the legal, valid and binding obligation of it, enforceable in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by general equitable principles.




Section 3.              
 Conditions
Precedent


                This
Amendment shall become effective as of its date, provided that all of the following conditions are first met:




	Mohawk Distribution shall have furnished the Agent and
Blue Ridge with an Opinion of Counsel regarding enforceability, perfection and
priority; and 
	The Agent and Blue Ridge shall
receive officer's certificates from each of Mohawk Factoring, Mohawk
Distribution, Mohawk Carpet and Carpet LP.





Section 4.              
 Miscellaneous




                (a)           Applicability of the Credit and
Security Agreement.




                In all respects not
inconsistent with the terms and provisions of this Amendment, the provisions of
the Credit and Security Agreement are hereby ratified, approved and confirmed.




(b)                

Opinions to be Furnished.




Borrower will furnish true
sale and substantive nonconsolidation opinions of counsel as to Blue Ridge and
the Agent as soon as practical, but no later than January 31, 2003.  The failure to provide such opinions by
January 31, 2003 shall be an Amortization Event under Section 9.1 of the Credit
and Security Agreement.




                (c)          
 Headings


                The captions in this
Amendment are for convenience of reference only and shall not define or limit
the provisions hereof.




                (d)          
 Counterparts


                This Amendment may
be executed in counterparts by facsimile or otherwise, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one and the same instrument.




                (e)          
 Governing Law


                THIS
AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF GEORGIA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.




[Signatures on Next Page]




                 IN WITNESS WHEREOF, the Parties
have caused this Amendment to be duly executed and delivered by their
respective officers thereunto duly authorized as of December 31, 2002.




MOHAWK
FACTORING, INC.


  as Borrower






By: _____________________________


                                                                                                          Name:


                                                                                                          Title:




BLUE
RIDGE ASSET FUNDING CORPORATION






By:
_____________________________


                                                                                                          Name:


                                                                                                          Title:




WACHOVIA
BANK, NATIONAL ASSOCIATION


  as Agent






By:
_____________________________


                                                                                                          Name:


                                                                                                          Title:




MOHAWK
CARPET DISTRIBUTION, L.P.


  as Originator






By:
_____________________________


                                                                                                          Name:


                                                                                                          Title: