Document:

<PAGE>

                                                                   EXHIBIT 10.18

                                                                        ORIGINAL

                                LEASE AGREEMENT

          THIS LEASE AGREEMENT (the "Lease") is entered into this 10/th/ day of
          Dec, 1999, between Seattle Box Company, a Washington corporation doing
          business as Seattle-Tacoma Box Company ("Landlord"), and Aladdin
          Manufacturing Corp., a Delaware corporation ("Tenant"). Landlord and
          Tenant agree as follows:

          1. LEASE SUMMARY.

               a.   The Premises. The Premises (the "Premises") consist of that
               certain parcel of real property legally described on Exhibit A
               attached hereto (the "Real Property"), together with that certain
               portion hereinafter described of a building ("the Building") to
               be constructed by Landlord on the Real Property. The Building
               will have a footprint of approximately 120,950 square feet, of
               which the following shall be included in the Premises: (i)
               approximately 105,134 square feet of first floor warehouse space;
               (ii) approximately 4716 square feet of first floor office space
               (divided into two office areas of 4200 square feet and 516 square
               feet, respectively); and (iii) approximately 2500 square feet of
               mezzanine office space. The Building will be constructed with
               access to a railroad spur, which shall be used by Tenant and
               Landlord jointly. Tenant shall have exclusive use of one rail
               door in the Building. The Real Property and the Building,
               including the delineation of the Premises, and the delineation of
               the Reserved Space (hereinafter defined) are depicted on the site
               plan attached hereto as Exhibit B.

               b.   The Reserved Space. The Premises do not include, and
               Landlord reserves, approximately 11,100 square feet of the
               Building located in the southeast corner thereof. Landlord's use
               of the railroad spur will include use in connection with certain
               other real property owned by Landlord and located adjacent and to
               the south of the Real Property. Landlord also reserves the right
               to vehicular and pedestrian access to the Reserved Space
               (hereinafter defined) across that portion of the Real Property
               adjacent and to the south of the portion of the Building reserved
               by Landlord. The approximately 11,100 square feet of the Building
               reserved by the Landlord, the use jointly with Tenant of the rail
               spur adjacent thereto, and the right to vehicular and pedestrian
               access across that portion of the Real Property adjacent and to
               the south of the portion of the Building reserved by Landlord are
               hereinafter collectively referred to as the "Reserved Space".
               Landlord may use the Reserved Space for its own purposes in any
               manner that does not unreasonably interfere with Tenant's carpet
               warehouse and distribution business on the Premises, or may lease
               the Reserved Space to any third party; provided however that
               Tenant shall have the right of first refusal to lease the
               Reserved Space as further provided in Section 1(g) below.

               c.   Lease Commencement Date. The Lease shall commence on the
               date provided for in Section 3(d) below. After delivery of
               occupancy of the Premises to Tenant, Tenant and Landlord shall
               confirm the Commencement Date in writing.

               d.   Lease Termination Date. The Lease shall terminate at
               midnight on the last day of the 122/nd/ month of the lease
               calculated as set forth in this paragraph (the "Termination
               Date"). If the Commencement Date occurs on the first day of a
               month, that month shall be the first month of the lease term. If
               the Commencement Date occurs on any other day, the first month of
               the lease term shall be the following calendar month.

               e.   Extension Options. Tenant shall have two options to extend
               the term of this Lease for five years per option. Herein the
               initial one hundred and twenty-two month term of this Lease shall
               be referred to as the "Initial Term", the first five year
               extension shall be referred to as the "First Extended Term", and
               the second five year extension shall be referred to as the
               "Second Extended Term." If Tenant wishes to exercise either of
               its options to extend the term, Tenant shall notify Landlord in
               writing of such exercise no earlier than 365 days and no later
               than 180 days prior to the last day of the preceding term hereof
               (the "Extension Notice Period"); provided however that Tenant
               shall not be entitled to exercise its extension option if Tenant
               is in default

                                      -1-
<PAGE>

               under this Lease at any time during the Extension Notice Period.
               During either of the Extended Terms, all terms and conditions of
               this Lease will remain in full force and effect, except that
               Tenant shall not be entitled to any tenant improvement or similar
               allowances for either such Extended Terms.

               f.   Base Rent.

                    (i)  Initial Term Base Rent. The monthly base rent during
                    the Initial Term shall be as follows:

                    Months  1 through 2:      $.00
                    Months  3 through 36:     $41,136 per month
                    Months 37 through 60:     $42,951 per month
                    Months 61 through 96:     $45,562 per month
                    Months 97 through 122:    $50,984 per month

                    (ii) First Extended Term Base Rent. If Tenant exercises
                    it's first renewal option, monthly base rent during the
                    First Extended Term shall be as follows:

                    Months 123 through 146:   "Market Rent" (defined below) as
                                              of the beginning of month 123, but
                                              in no event less than the base
                                              rent for the preceding period.

                    Months 147 through 170:   "Market Rent" as of the beginning
                                              of month 147, but in no event less
                                              than the base rent for the
                                              preceding period.

                    Months 171 through 182:   "Market Rent" as of the beginning
                                              of month 171, but in no event less
                                              than the base rent for the
                                              preceding period.

                    (iii) Second Extended Term Base Rent. If Tenant exercises
                    it's second renewal option, monthly base rent during the
                    Second Extended Term shall be as follows:

                    Months 183 through 206:   "Market Rent" as of the beginning
                                              of month 183, but in no event less
                                              than the base rent for the
                                              preceding period.

                    Months 207 through 230:   "Market Rent" as of the beginning
                                              of month 207, but in no event less
                                              than the base rent for the
                                              preceding period.

                    Months 232 through 242:   "Market Rent" as of the beginning
                                              of month 231, but in no event less
                                              than the base rent for the
                                              preceding period.

                    (iv) Definition of "Market Rent". The term "Market Rent" as
                    used in this Lease shall mean the fair market rent for
                    premises of comparable size, location and type as the
                    Premises, with rail spur access, in the Kent, Washington
                    area. In determining the "Market Rent" as of any date during
                    the First Extended Term the fact that Tenant has an
                    additional five year renewal option under this Lease shall
                    also be taken into consideration.

                    (v)  Method of Determining Base Rental Adjustment Amount.
                    The first day of months 123,147,171,183,207 and 231 of the
                    term of this Lease are hereinafter referred to as the "Base
                    Rental Adjustment Dates." If Landlord and Tenant have not
                    agreed at least 150 days in advance of any Base Rental
                    Adjustment Date as to amount of the upcoming base rental
                    adjustment, then the base rental adjustment shall be
                    determined as follows:

                                      -2-
<PAGE>

                                    (1) Either Landlord or Tenant may appoint an
                                    appraiser to provide a written opinion (with
                                    supporting information) as to the Market
                                    Rent for the Premises as of the upcoming
                                    Base Rental Adjustment Date. The party
                                    appointing the appraiser shall notify the
                                    other party of such appointment within three
                                    business days of such appointment. The other
                                    party may then appoint a second appraiser to
                                    provide a written opinion (with supporting
                                    information) as to the Market Rent for the
                                    Premises as of the upcoming Base Rental
                                    Adjustment Date. Each appraiser appointed
                                    shall be a professional real estate
                                    appraiser active during the ten-year period
                                    immediately prior to his or her appointment
                                    in the appraisal of industrial and warehouse
                                    properties in the greater Seattle area.

                                    (2) The two appraisers so appointed shall
                                    within 30 days of the date of the
                                    appointment of the last appointed appraiser
                                    agree upon and appoint a third appraiser who
                                    shall be qualified under the same criteria
                                    set forth hereinabove to qualify the initial
                                    two appraisers.

                                    (3) The three appraisers shall within sixty
                                    days of the appointment of the third
                                    appraiser give a written opinion (with
                                    supporting information) as to the Market
                                    Rent for the Premises, using the criteria
                                    set forth above, and notify Landlord and
                                    Tenant thereof.

                                    (4) If any two of the three appraisers agree
                                    as to the Market Rent for the Premises, then
                                    their opinion shall be binding upon Landlord
                                    and Tenant. If no two of the three
                                    appraisers agree as to the Market Rent for
                                    the Premises, then the base rent shall be
                                    adjusted to an amount which is the average
                                    of the opinions of the three appraisers,
                                    ignoring for the purpose of such averaging
                                    any portion of the high and low opinions
                                    which is more than 10 percent in excess of
                                    or less than the middle opinion. If either
                                    Landlord or Tenant fails to appoint an
                                    appraiser within the time period set forth
                                    above, the appraiser appointed by the other
                                    shall give his or her opinion of the Market
                                    Rent for the Premises, shall notify Landlord
                                    and Tenant thereof, and such appraiser's
                                    opinion shall be binding upon Landlord and
                                    Tenant. If the two appraisers appointed by
                                    Landlord and Tenant fail to agree upon and
                                    appoint a third appraiser, both appraisers
                                    shall be dismissed and the matter shall be
                                    forthwith submitted to binding arbitration
                                    with the American Arbitration Association
                                    pursuant to such rules and procedures as
                                    have then been promulgated by the American
                                    Arbitration Association.

                                    (5) If it using these procedures the Market
                                    Rent for the Premises has not been
                                    determined by the next upcoming Base Rental
                                    Adjustment Date, then Tenant shall continue
                                    to pay the base rent to Landlord at the
                                    previous rate, and after the Market Rent is
                                    determined Tenant shall pay to Landlord
                                    within 15 days the difference between the
                                    base rent actually paid from the Base Rental
                                    Adjustment Date to the date that the Market
                                    Rent is determined, together with interest
                                    thereon at the rate of 12 percent per annum.

                                    (6) Each party shall pay the cost of the
                                    appraiser appointed by its, and the cost of
                                    the third appraiser and of the arbitration
                                    if any shall be paid by Landlord and Tenant
                                    equally.

                           g.   Right to Lease Reserved Space. If Landlord
                           elects to lease or rent the Reserved Space to any
                           third party which is not an affiliate of Landlord,
                           Landlord shall first offer in writing to add the
                           Reserved Space to this Lease. Tenant shall then have
                           fifteen (15) days to notify Landlord in writing
                           whether Tenant wishes to accept the offer to add the
                           Reserved Space to this Lease. If Tenant accepts
                           Landlord's offer to add the Reserved Space to this
                           Lease, then within fifteen (15) days following
                           Tenant's written notice to Landlord accepting
                           Landlord's offer, Landlord and Tenant shall execute
                           an amendment to this Lease adding the Reserved Space
                           to the Premises, increasing the base rent by ten
                           percent (10%), and , increasing Tenant's share of
                           Operating Costs of

                                      -3-
<PAGE>

                            the Building and Taxes to one hundred percent
                            (100%). The amendment to this Lease shall be
                            effective from and after the later of the date that
                            Landlord vacates the Reserved Space or the date that
                            the parties sign the Lease amendment. All other
                            provisions of this Lease shall remain in full force
                            and effect after the Reserved Space is added to this
                            Lease. In the event that Tenant does not accept
                            Landlord's offer to add the Reserved Space to this
                            Lease within fifteen days (15) of Landlord's offer
                            to Tenant, then Landlord shall be free to lease or
                            rent the Reserved Space at any time to any party
                            without first offering the Reserved Space to Tenant.

                            h.  Notice and Payment Addresses: Rent and any the
                            sums payable by Tenant to Landlord pursuant to this
                            Lease shall be payable at Landlord's address shown
                            below, or such other place designated in writing by
                            Landlord. All notices to be provided to Landlord or
                            Tenant pursuant to the terms of this Lease shall be
                            provided to the following addresses or to such other
                            addresses of which Landlord or Tenant notifies the
                            other in writing. Notices hereunder shall be in
                            writing and may be hand delivered, mailed, delivered
                            by overnight courier service or, if facsimile
                            numbers are provided below, transmitted by
                            facsimile. If mailed, such notices shall be sent by
                            certified mail, postage prepaid, return receipt
                            requested. The date which is two days after the date
                            of mailing shall be deemed to be the date on which
                            the notice was given. The postmark affixed to such
                            notice by the U.S. Post Office shall be conclusively
                            presumed to be the date of mailing for purposes of
                            this section. In the case of notices given by hand
                            delivery or overnight courier, such notices shall be
                            deemed given on the date of the actual receipt. If
                            transmitted by facsimile, such notices shall be
                            deemed given on the date of the actual receipt of a
                            complete, legible facsimile transmission, except
                            that if a facsimile transmission is received after
                            business hours or on a weekend or holiday, then the
                            notice shall be deemed given on the next business
                            day following the receipt of the facsimile
                            transmission.

                                Landlord:  SEATTLE TACOMA BOX COMPANY
                                           Attn: Ferdinand J. Nist, President
                                           23400 - 71ST Place South
                                           Kent, WA 98032

                                Tenant:    Mohawk Carpet Corporation
                                           Attn: S.J. Perillo, Esq.
                                           160 South Industrial Blvd.
                                           Calhoun, GA 30701

                        2.  PREMISES. Landlord leases to Tenant, and Tenant
                            leases from Landlord the Premises upon the terms
                            specified in this Lease.

                        3.  CONSTRUCTION AND COMMENCEMENT.

                            a.  Construction of Building. Within ten (10) days
                            after mutual execution hereof, Landlord will provide
                            Tenant with a preliminary construction schedule and
                            a preliminary delivery date for the Premises.
                            Landlord shall construct the Building at Landlord's
                            expense, pursuant to a construction contract with a
                            general contractor of Landlord's choosing. The
                            completed Building shall be constructed
                            substantially in accordance with those certain plans
                            prepared by Rupert Engineering Inc. which are more
                            specifically described on the attached Exhibit F,
                            and those certain specifications prepared by Rupert
                            Engineering Inc. and dated November, 1999, which
                            plans and specifications have been delivered to
                            Tenant and reviewed and approved by Tenant. The
                            completed Building shall comply with the
                            specifications set forth on Exhibit C hereto
                            ("Tenant's Required Specifications"). The office
                            portion of the completed Building shall be
                            constructed substantially in accordance with those
                            certain plans and specifications attached as Exhibit
                            E hereto. Landlord shall be entitled to make or
                            approve revisions in the plans and specifications
                            which are not inconsistent with Tenant's Required
                            Specifications and do not materially affect the size
                            of the Premises or Tenant's ability to use the
                            Premises in accordance with Tenant's intended use.
                            The completed Building shall include installation by
                            Landlord of an overhead ESFR fire sprinkler system
                            ("Landlord's Sprinkler System"). After Tenant takes
                            occupancy of the Premises, Tenant may elect at
                            Tenant's expense to make additions or alterations

                                      -4-
<PAGE>

                            to Landlord's Sprinkler System to comply with
                            Tenant's insurance and fire safety requirements,
                            which additions and alterations may include
                            converting Landlord's Sprinkler System into an in-
                            rack sprinkler system ("Tenant's Sprinkler System").
                            In the event that Tenant believes that the Premises
                            or Building do not comply with the terms of this
                            Lease, Tenant shall notify Landlord, in writing,
                            within 120 days of the issuance of the Certificate
                            of Occupancy for the Building. This notice shall
                            specify all claimed deficiencies of the Premises or
                            Building. If no such notice is given, Tenant shall
                            be conclusively deemed to have accepted the Premises
                            and Building and shall waive any claim that the
                            Premises or Building were not constructed to the
                            plans and specifications required by this Lease.

                            b.  Tenant Improvement Allowances. The following
                            allowances shall be paid for by Landlord for
                            Tenant's desired improvements:

                                (i)  Up to $1200 of the cost of preparation of
                                the preliminary space plan for Tenant's office
                                space, which is attached as Exhibit D hereto,
                                and which has been approved by both Landlord and
                                Tenant.

                                (ii) As part of the construction cost of the
                                Building Landlord shall pay to Tenant $21,600.00
                                for carpet materials to be installed in the
                                Premises. The carpet materials provided by
                                Tenant in return for the said payment by
                                Landlord to Tenant shall be installed by
                                Landlord as part of the tenant improvements and
                                shall be 28 ounce level loop Mohawk carpet or
                                approved equal or better.

                                (iii) An allowance of up to $5000 for the cost
                                of distribution of power to Tenant's cutting
                                machine and forklift station. Any additional
                                cost for such power distribution shall be paid
                                by Tenant to Landlord within 15 days of demand.

                            Any other tenant improvements desired by Tenant and
                            not specifically provided for herein shall be
                            undertaken by Tenant at Tenant sole cost and expense
                            after Tenant has obtained the written consent of
                            Landlord to all plans and specifications for such
                            tenant improvements.

                            c.  Occupancy. Landlord shall provide Tenant with a
                            written notice (the "Occupancy Notice"), at least
                            fifteen days in advance, of the date that the
                            Building is expected to be secured (lockable doors),
                            illuminated with lighting sufficient for
                            construction activities, and ready for commencement
                            of the installation of Tenant's Sprinkler System
                            (e.g. Landlord's sprinkler system installed) and
                            Tenant's trade fixtures and other tenant
                            improvements which Tenant may wish to install in
                            addition to the office tenant improvements
                            undertaken by Landlord. Said Building status is
                            referred to herein as "Tenant Improveable". The
                            occupancy date under this paragraph may be prior to
                            substantial completion of the Premises or the
                            Building by Landlord. Tenant may thereupon enter the
                            Premises at its own risk, to install trade fixtures
                            and equipment and to make such improvements as
                            Tenant shall have the right to make. Tenant shall at
                            all times remain fully responsible for obtaining all
                            necessary permits for any such tenant improvements.
                            Tenant agrees that it will not in any way interfere
                            with the progress of Landlord's work on the Premises
                            and the Building by such entry. During the period
                            after which Tenant has entered the Premises and
                            prior to Landlord's completion of the Building and
                            the Premises, all terms and conditions of this Lease
                            shall apply. During this time period, Tenant has
                            Landlord's consent to bringing supplies and
                            inventory into the Premises to the extent that
                            Tenant has received any necessary permits to do so
                            and to the extent that such activity otherwise
                            complies with the limitations of this paragraph.
                            However, the ability to bring in such supplies and
                            inventory shall not be an attribute of "Tenant
                            Improveable" as that term is used herein.

                            d.  Commencement Date. Tenant shall be deemed to
                            have taken occupancy of the Premises on the date
                            specified in Landlord's Occupancy Notice, which
                            shall be the Commencement Date of this Lease;
                            provided however, that no base rent shall be charged
                            during the first two months following the
                            Commencement Date. If the Commencement Date does not
                            fall on the first day of any calendar month, then
                            base rent for the third month shall be prorated
                            based on a thirty day month, so that Tenant shall
                            receive exactly two months of free base rent, and
                            thereafter all rent payments

                                      -5-
<PAGE>

                           shall become due on the first day of each month. If
                           Landlord acts diligently to make the Premises
                           available to Tenant on or before June 1, 2000, or on
                           such other date stated in the Occupancy Notice,
                           neither Landlord nor any agent or employee of
                           Landlord shall be liable for any damage or loss due
                           to Landlord's inability or failure to deliver
                           possession of the Premises to Tenant as provided in
                           this Lease, except for the liquidated damages
                           provided below.

                           e.   Liquidated Damages For Late Delivery: In the
                           event that, due to no fault of Tenant, the Building
                           is not Tenant Improveable on or before August 1,
                           2000, Landlord agrees to give Tenant two days of free
                           rent in the Premises for each day from August 2,
                           2000, until the Premises are Tenant Improveable. In
                           the event that, due to no fault of Tenant,
                           construction of the Building is not substantially
                           complete on or before the later of October 1, 2000,
                           or sixty (60) days after the Premises are Tenant
                           Improveable, Landlord agrees to give Tenant two days
                           of free rent in the Premises for each day thereafter
                           until construction of the Building is substantially
                           complete.

                       4.  RENT. Upon mutual execution of this Lease, Tenant
                           shall deliver to Landlord the sum of $41,136 as
                           prepaid base rent, to be applied to the base rent due
                           for the third month of this Lease. All sums payable
                           to Landlord by Tenant pursuant to the provisions of
                           this Lease are rent to Landlord. Tenant shall pay
                           Landlord without notice, demand, deduction, offset,
                           or counterclaim, in lawful money of the United
                           States, the monthly base rental stated in Section
                           1(f) in advance on or before the first day of each
                           month, and any other additional payments due to
                           Landlord, including Operating Costs (hereinafter
                           defined) when required under this Lease (all of which
                           are collectively referred to herein as the "Rent").
                           If any sums payable by Tenant to Landlord under this
                           Lease are not received within five days following the
                           date due, Tenant shall pay Landlord in addition to
                           the amount due, for the cost of collecting and
                           handling such late payment, an amount equal to the
                           greater of $100 or five percent (5%) of the
                           delinquent amount. In addition, all delinquent sums
                           payable by Tenant to Landlord and not paid within
                           five days of the due date shall, at Landlord's
                           option, bear interest at the rate of twelve percent
                           (12%) per annum, or the highest rate of interest
                           allowable by law, whichever is less. Interest on all
                           delinquent amounts shall be calculated from the
                           original due date to the date of payment. Landlord's
                           acceptance of less than the full amount of any
                           payment due from Tenant shall not be deemed an accord
                           and satisfaction or compromise of such payment unless
                           Landlord specifically consents in writing to payment
                           of such lesser sum as an accord and satisfaction or
                           compromise of the amount which Landlord claims.

                       5.  USES. The Premises shall be used only as a floor
                           covering and ancillary products warehouse storage and
                           distribution facility and related office (the
                           "Permitted Use"), and for no other business or
                           purpose whatsoever without the prior written consent
                           of Landlord, no to be unreasonably withheld or
                           delayed. In granting or witholding such consent,
                           Landlord may consider the impact of any proposed use
                           on the use and value of the Reserved Space. Landlord
                           is not aware that any zoning regulations or other
                           applicable laws would prohibit use of the Premises
                           for Tenant's intended use. Tenant shall have access
                           to the Premises twenty-four hours per day, 7 days per
                           week. No act shall be done on or around the Premises
                           that is unlawful or that will increase the existing
                           rate of insurance on the Premises or the Building, or
                           cause the cancellation of any insurance on the
                           Premises or the Building. Tenant shall not commit or
                           allow to be committed any waste upon the Premises, or
                           any public or private nuisance. Tenant shall not do
                           or permit anything to be done in the Premises which
                           will obstruct or interfere with the rights of other
                           tenants or occupants of the Property, or Landlord, or
                           their customers, clients and visitors, or injure or
                           annoy such persons.

                       6.  COMPLIANCE WITH LAWS. Tenant shall not cause or
                           permit the Premises to be used in any way which
                           violates any law, ordinance, or governmental
                           regulation or order. Landlord shall deliver the
                           Premises to Tenant in a condition which complies with
                           all laws, rules, regulations, or orders, including
                           without limitation the Americans With Disabilities
                           Act, as applicable to the Premises on the
                           Commencement Date, except that Tenant shall be
                           responsible for bringing the Premises into compliance
                           with any laws which are applicable to the Premises as
                           a result of Tenant's particular use of the Premises,
                           such as modifications required by the Americans With
                           Disabilities Act as a

                                      -6-
<PAGE>

                           result of Tenant opening the Premises to the public
                           as a place of public accommodation. If the enactment,
                           amendment or enforcement of any law, ordinance,
                           regulation or code during the Lease term requires any
                           changes to the Premises during the Lease term, the
                           Tenant shall perform all such changes at its expense
                           if the changes are required due to the nature of
                           Tenant's activities at the Premises, or due to
                           alterations that Tenant seeks to make to the
                           Premises; otherwise, Landlord shall perform all such
                           changes at its expense. Tenant shall be responsible
                           for obtaining all required permits of any nature
                           necessary for the operation of Tenant's business on
                           the Premises, or for any construction or installation
                           work to be undertaken by Tenant.

                       7.  OPERATING COSTS\UTILITIES\TAXES.

                           a.  Net Rent. Except as specifically set forth
                           herein, it is the intention of Landlord and Tenant
                           that the rental received by Landlord be net of any
                           taxes or expenses of any sort, except expenses for
                           Landlord's use of utilities and services in the
                           Reserved Space and Landlord's share of insurance and
                           other expenses related to the entire Building, based
                           on the percentage of the square footage of the
                           Building which is included in the Reserved Space,
                           which percentage is agreed by Landlord and Tenant to
                           be nine percent (9%).

                           b.  Operating Costs of the Building. Tenant shall pay
                           to Landlord as additional rent ninety one percent
                           (91%) of all "Operating Costs of the Building" which
                           shall include without limitation all costs not
                           required to be paid directly by Tenant hereunder, of
                           operating, maintaining and repairing the Building
                           (except for exterior walls, foundation and roof as
                           provided below). Operating Costs of the Building
                           shall include without limitation the following:
                           insurance premiums paid by Landlord and (to the
                           extent used) deductibles; and amortization (in
                           accordance with generally accepted accounting
                           principles) of capital improvements that Landlord may
                           make in the future (except for exterior walls,
                           foundation and roof as provided below). Operating
                           Costs of the Building shall not include the cost of
                           maintaining and repairing, or making capital
                           improvements to, the Building's exterior walls,
                           foundation and roof, except as required to fix damage
                           to the Building caused by Tenant, its agents,
                           employees, contractors customers or invitees. In
                           addition, Operating Costs of the Building shall not
                           include: Landlord's income tax or general corporate
                           overhead, depreciation on the Building or equipment
                           therein; loan payments; real estate brokers
                           commissions; or any costs regarding the operation,
                           maintenance and repair of the Premises, the Building,
                           or the Property paid directly by Tenant or other
                           tenants in the Building. Tenant shall also pay to
                           Landlord as additional Rent a reasonable maintenance
                           and management fee in the amount of three percent
                           (3%) of then applicable base rent.

                           c.  Utilities and Services. Tenant shall obtain, at
                           Tenant's sole expense, all utilities which Tenant may
                           need or desire, including, without limitation all
                           electrical, natural gas, water, sewer, telephone,
                           telecommunications services; janitorial services;
                           refuse removal; recycling; pest control; snow and ice
                           removal; fire detection and security services; and
                           other services which Tenant needs or desires with
                           respect to the Premises. Gas and electrical power
                           shall be separately metered. Water charges need not
                           be separately metered. Any utility charges which are
                           not separately metered and paid directly by Tenant
                           shall be included in the Operating Costs of the
                           Building in accordance with the preceding Section
                           7(b) of this Lease; provided however that if Landlord
                           can show with reasonable certainty that Tenant's use
                           of any utilities or services so divided exceeds
                           ninety-one percent (91%) of the total of such
                           utilities or services provided to the Building, then
                           Tenant shall pay a proportionally higher share of
                           such utilities or services so that Tenant bears the
                           full cost of all utilities and services used by
                           Tenant.

                           d.  Repairs and Maintenance of Real Property.
                           Landlord shall provide the following repairs and
                           maintenance of the Real Property (not including the
                           Building): landscape maintenance, upkeep and
                           replacement; parking lot, road, sidewalk and driveway
                           patching, resurfacing and maintenance (but not
                           including snow and ice removal); and maintenance of
                           the biofilter swale and detention pond located on the
                           Real Property, all of which shall be collectively
                           referred to herein as the "Operating Costs for the
                           Real Property". Tenant shall pay to Landlord as
                           additional rent one hundred percent (100%) of the
                           Operating Costs for the Real Property.

                                      -7-
<PAGE>

                           e.  Taxes. Landlord shall pay all taxes and
                           assessments on the non Building portion of the Real
                           Property and on the improvements to the Real Property
                           (including, but not limited to, real and personal
                           property taxes and assessments, local improvement
                           district assessments and other special purpose
                           assessments, and taxes on rent or gross receipts)
                           (the "Taxes") including any Taxes resulting from a
                           reassessment of the Building due to a change of
                           ownership or otherwise. Tenant shall pay to Landlord
                           as additional rent ninety one percent (91%) of all
                           taxes and assessments on the improvements to the Real
                           Property (including, but not limited to, real and
                           personal property taxes and assessments, local
                           improvement district assessments and other special
                           purpose assessments, and taxes on rent or gross
                           receipts); and ninety six percent (96%) of all taxes
                           and assessments on the non Building portions of the
                           Real Property itself (including, but not limited to,
                           real property taxes and assessments, local
                           improvement district assessments and other special
                           purpose assessments).

                           f.  Payment and Accounting. Landlord shall provide to
                           Tenant, at or before the Commencement Date, a good
                           faith estimate of annual Operating Costs of the
                           Building, Operating Costs for the Real Property and
                           Taxes (collectively the "Operating Costs") for the
                           remainder of the calendar year in which the
                           Commencement Date occurs. Landlord shall also provide
                           to Tenant, as soon as possible following the first
                           day of each succeeding calendar year, a good faith
                           estimate of the annual Operating Costs for the then-
                           current year. Based on such estimates, Tenant's
                           annual payment obligation to Landlord for the
                           Operating Costs shall be divided into twelve (12)
                           equal monthly installments. Tenant shall pay to
                           Landlord such monthly installments with each monthly
                           payment of base rent. In the event the estimated
                           amount of Tenant's payment obligation to Landlord for
                           the Operating Costs has not yet been determined at
                           the beginning of any calendar year, Tenant shall pay
                           the monthly installment in the estimated amount
                           determined for the preceding calendar year until the
                           estimate for the current calendar year has been
                           provided to Tenant. At such time as the estimate for
                           the current calendar year is received, Tenant shall
                           then pay any shortfall or receive a credit for any
                           surplus for the preceding months of the current
                           calendar year and shall, thereafter, make the monthly
                           installment payment in accordance with the current
                           estimate. As soon as reasonably possible following
                           the end of each calendar year of the Lease term,
                           Landlord shall determine and provide to Tenant a
                           statement (the "Annual Cost Statement") setting forth
                           the amount of Operating Costs actually incurred and
                           the amounts thereof paid by Tenant with respect to
                           such calendar year. In the event the amount payable
                           by Tenant for Operating Costs exceeds the sum of the
                           monthly installments actually paid by Tenant for such
                           calendar year, Tenant shall pay to Landlord the
                           difference within thirty (30) days following receipt
                           of the Annual Cost Statement. In the event the sum of
                           such installments paid exceeds the amount payable by
                           Tenant for Operating Costs, the difference shall be
                           applied as a credit to Tenant's obligation to pay
                           future Operating Costs.

                       8.  TENANT'S TAXES. Tenant shall pay all taxes,
                           assessments, liens and license fees levied, assessed
                           or imposed by any authority having the direct or
                           indirect power to tax or assess any such liens, by
                           reason of Tenant's use of the Premises, and all taxes
                           on Tenant's personal property located on the
                           Premises.

                       9.  ALTERATIONS. Tenant may make alterations, additions
                           or improvements to the Premises, ("Alterations"),
                           only with the prior written consent of Landlord which
                           will not be unreasonably withheld or delayed. Tenant
                           shall complete all Alterations at Tenant's expense in
                           compliance with all applicable laws and in accordance
                           with plans and specifications approved by Landlord,
                           using contractors approved by Landlord, and in a
                           manner so as to not unreasonably interfere with
                           Landlord or other tenants of the Building. Landlord
                           shall be deemed the owner of all Alterations except
                           for Tenant's trade fixtures, and those which Landlord
                           requires to be removed at the end of the Lease term.
                           Tenant shall remove all Alterations at the end of the
                           Lease term unless Landlord conditioned its consent
                           upon Tenant leaving a specified Alteration at the
                           Premises, in which case Tenant shall not remove such
                           Alteration. Tenant shall immediately repair any
                           damage to the Premises caused by removal of
                           Alterations and trade fixtures.

                                      -8-
<PAGE>

               10.  REPAIRS AND MAINTENANCE. Tenant shall, at its sole expense,
                    maintain the Premises in good condition and promptly make
                    all repairs and replacements, whether structural or non-
                    structural, necessary to keep the Premises (including the
                    Real Property) safe and in good condition, including removal
                    of snow and ice from the roadways, parking areas, sidewalks,
                    and loading dock areas of the Premises, refurbishing and
                    repainting, carpet replacement, repair and maintenance of
                    air conditioning, heating, ventilation, plumbing, electrical
                    and lighting systems and all utilities and other systems
                    serving the Premises; provided however that Landlord shall
                    maintain and repair the Building foundation, exterior walls
                    (but not including exterior lighting which may be attached
                    to the exterior walls of the Building) Tenant shall not
                    damage any demising wall or disturb the structural integrity
                    of the Building and shall promptly repair any damage or
                    injury done to any such demising walls or structural
                    elements caused by Tenant or its employees, agents,
                    contractors, or invitees. If Tenant fails to maintain or
                    repair the Premises, Landlord may enter the Premises and
                    perform such repair or maintenance on behalf of Tenant. In
                    such case, Tenant shall be obligated to pay to Landlord
                    immediately upon receipt of demand for payment, as
                    additional Rent, all costs incurred by Landlord.
                    Notwithstanding anything in this Section to the contrary,
                    Tenant shall not be responsible for any repairs to the
                    Premises made necessary by the acts of Landlord or its
                    agents, employees, contractors or invitees therein.

               11.  SURRENDER. Upon expiration or early or termination of this
                    Lease, whether by lapse of time or otherwise, Tenant shall
                    promptly and peacefully surrender the Premises to Landlord
                    in as good condition as when received by Tenant from
                    Landlord or as thereafter improved, reasonable wear and tear
                    and insured casualty excepted. Tenant shall be entitled to
                    remove its trade fixtures and equipment from the Premises
                    upon surrender of the Premises if Tenant is not then in
                    default under this Lease; provided that Tenant must repair
                    all damage to the Premises caused by such removal. Unless
                    Landlord notifies Tenant otherwise in writing, Tenant shall
                    be required to remove Tenant's Sprinkler System at the time
                    of surrender of the Premises and return Landlord's Sprinkler
                    System to its original condition. Unless Landlord notifies
                    Tenant otherwise in writing, Tenant shall be required to
                    remove from the Premises all shelves, bins, machinery and
                    personal property of Tenant's, and to repair any damage
                    caused to the Premises by such removal.

               12.  ACCESS. After reasonable notice from Landlord (except in
                    cases of emergency, where no notice is required), Tenant
                    shall permit Landlord and its agents and employees to enter
                    the Premises at all reasonable times for the purposes of
                    repair or inspection. Landlord shall also be entitled to
                    enter the Premises as reasonably necessary for Landlord to
                    make alterations to the Reserved Space; provided however
                    that Landlord shall not unreasonably interfere with Tenant's
                    operations in the Premises. This Section shall not impose
                    any repair or other obligation upon Landlord not expressly
                    stated elsewhere in this Lease. After reasonable notice to
                    Tenant, Landlord shall have the right to enter the Premises
                    for the purpose of showing the Premises to prospective
                    purchasers or lenders at any time, and to prospective
                    tenants within 180 days prior to the expiration or sooner
                    termination of the Lease term.

               13.  SIGNAGE. Tenant shall obtain Landlord's written consent
                    before installing any signs upon the Premises which consent
                    shall not be unreasonably withheld or delayed. Tenant shall
                    install any approved signage at Tenant's sole expense and in
                    compliance with all applicable laws. Tenant shall not damage
                    or deface the Premises in installing or removing signage and
                    shall repair any injury or damage to the Premises caused by
                    such installation or removal.

               14.  DESTRUCTION OR CONDEMNATION.

                    a.  Damage and Repair. If the Premises are partially damaged
                    but not rendered untenantable, by fire or other insured
                    casualty, then Landlord shall diligently restore the
                    Premises and the portion of the Property necessary for
                    Tenant's occupancy and this Lease shall not terminate;
                    provided, however, Tenant may terminate the Lease if
                    Landlord is unable to restore the Premises within six (6)
                    months of the casualty event. The Premises shall not be
                    deemed untenantable if less than twenty-five percent (25%)
                    of each of those areas are damaged. Notwithstanding the
                    foregoing, Landlord shall

                                      -9-
<PAGE>

                    have no obligation to restore the Premises if insurance
                    proceeds are not available to pay the entire cost of such
                    restoration. If insurance proceeds are available to Landlord
                    but are not sufficient to pay the entire cost of
                    restoration, then Landlord may elect to terminate this Lease
                    and keep the insurance proceeds, by notifying Tenant within
                    sixty (60) days of the date of such casualty.

                    If the Premises are entirely destroyed, or partially damaged
                    and rendered untenantable, by fire or other casualty,
                    Landlord may, at its option: (a) terminate this Lease as
                    provided herein, or (b) restore the Premises to their
                    previous condition; provided, however, if such casualty
                    event occurs during the last 6 months of the Lease term then
                    either Tenant or Landlord may elect to terminate the Lease.
                    If, within 60 days after receipt by Landlord from Tenant of
                    written notice that Tenant deems the Premises or the portion
                    of the Property necessary for Tenant's occupancy
                    untenantable, Landlord fails to notify Tenant of its
                    election to restore those areas, or if Landlord is unable to
                    restore those areas within six (6) months of the date of the
                    casualty event, then Tenant may- elect to terminate the
                    Lease.

                    If Landlord restores the Premises under this Section
                    Landlord shall proceed with reasonable diligence to complete
                    the work, and the base rent shall be abated in the same
                    proportion as the untenantable portion of the Premises bears
                    to the whole Premises, provided that there shall be a rent
                    abatement only if the damage or destruction of the Premises
                    or the Property did not result from, or was not contributed
                    to directly or indirectly by the act, fault or neglect of
                    Tenant, or Tenant's officers, contractors, licensees,
                    agents, servants, employees, guests, invitees or visitors.
                    Provided, Landlord complies with its obligations under this
                    Section, no damages, compensation or claim shall be payable
                    by Landlord for inconvenience, loss of business or annoyance
                    directly, incidentally or consequentially arising from any
                    repair or restoration of any portion of the Premises or the
                    Property. Landlord will not carry insurance of any kind for
                    the protection of Tenant or any improvements paid for by
                    Tenant or on Tenant's furniture or on any fixtures,
                    equipment, improvements or appurtenances of Tenant under
                    this Lease, and Landlord shall not be obligated to repair
                    any damage thereto or replace the same unless the damage is
                    caused by Landlord's negligence.

                    b. Condemnation. If the Premises are made untenantable by
                    eminent domain, or conveyed under a threat of condemnation,
                    this Lease shall terminate at the option of either Landlord
                    or Tenant as of the earlier of the date title vests in the
                    condemning authority or the condemning authority first has
                    possession of the Premises or the portion of the Property
                    and all Rents and other payments shall be paid to that date.
                    In case of taking of a part of the Premises that does not
                    render those areas not taken untenantable, then this Lease
                    shall continue in full force and effect and the base rent
                    shall be equitably reduced based on the proportion by which
                    the floor area of any structures is reduced, such reduction
                    in base rent to be effective as of the earlier of the date
                    the condemning authority first has possession of such
                    portion or title vests in the condemning authority. The
                    Premises shall not be deemed untenantable if less than
                    twenty-five percent (25%) of the Premises is condemned.
                    Landlord shall be entitled to the entire award from the
                    condemning authority attributable to the value of the
                    Premises or the Real Property and Tenant shall make no claim
                    for the value of its leasehold. Tenant shall be permitted to
                    make a separate claim against the condemning authority for
                    moving expenses or damages resulting from interruption in
                    its business, provided that in no event shall Tenant's claim
                    reduce Landlord's award.

               15.  INSURANCE.

                    a. Liability Insurance. During the Lease term, Tenant shall
                    pay for and maintain commercial general liability insurance
                    with broad form property damage and contractual liability
                    endorsements. This policy shall name Landlord as an
                    additional insured, and shall insure Tenant's activities and
                    those of Tenant's employees, officers, contractors,
                    licensees, agents, servants, employees, guests, invitees or
                    visitors with respect to the Premises against loss, damage
                    or liability for personal injury or death or loss or damage
                    to property with a combined single limit of not less than
                    $5,000,000, and a deductible of not more than $5,000. The
                    insurance will be noncontributory with any liability
                    insurance carried by Landlord.

                                      -10-
<PAGE>

                    b. Tenant's Insurance. During the Lease term, Tenant shall
                    pay for and maintain replacement cost fire and extended
                    coverage insurance, with vandalism and malicious mischief,
                    sprinkler leakage and earthquake endorsements, in an amount
                    sufficient to cover not less than 100% of the full
                    replacement cost, as the same may exist from time to time,
                    of all of Tenant's personal property, fixtures, equipment
                    and tenant improvements.

                    c. Miscellaneous. Insurance required under this Section
                    shall be with companies rated A-XV or better in Best's
                    Insurance Guide, and which are authorized to transact
                    business in the State of Washington. No insurance policy
                    shall be canceled or reduced in coverage and each such
                    policy shall provide that it is not subject to cancellation
                    or a reduction in coverage except after thirty (30) days'
                    prior written notice to Landlord. Tenant shall deliver to
                    Landlord upon commencement of the Lease and from time to
                    time thereafter, copies or certificates of the insurance
                    policies required by this Section. In no event shall the
                    limit of such policies be considered as limiting the
                    liability of Tenant under this Lease.

                    d. Landlord Insurance. Landlord shall carry standard form
                    extended coverage fire insurance of the Building shell and
                    core in the amount of their full replacement value, and such
                    other insurance of such types and amounts as Landlord, in
                    its discretion, shall deem reasonably appropriate, which may
                    include without limitation coverage for loss of Rents from
                    the Premises. The cost of any such insurance be included in
                    the Operating Costs of the Building. Landlord's insurance
                    may be included in a "blanket policy" insuring other parties
                    and/or locations in addition to the Building, in which case
                    the portion of the premiums therefor allocable to the
                    Building shall be included in the Operating Costs of the
                    Building. In addition to the foregoing, in the event Tenant
                    fails to provide or keep in force any of the insurance as
                    required above, Landlord, in its discretion, may provide
                    such insurance, in which event, the cost thereof shall be
                    payable by Tenant to Landlord as additional rent on the
                    first day of the calendar month immediately following demand
                    therefor from Landlord. Landlord shall make all reasonable
                    attempts to secure insurance that does not charge a higher
                    premium due to Tenant's particular use of the Premises as a
                    floor covering and ancillary products warehouse and
                    distribution center.

                    e. Waiver of Subrogation. Landlord and Tenant hereby release
                    each other and any other tenant, their agents or employees,
                    from responsibility for, and waive their entire claim of
                    recovery for any loss or damage arising from any cause
                    covered by insurance required to be carried by each of them.
                    Each party shall provide notice to the insurance carrier or
                    carriers of this mutual waiver of subrogation, and shall
                    cause its respective insurance carriers to waive all rights
                    of subrogation against the other, This waiver shall not
                    apply to the extent of the deductible amounts to any such
                    policies or to the extent of liabilities exceeding the
                    limits of such policies.

               16.  INDEMNIFICATION. Tenant shall defend, indemnity, and hold
                    Landlord harmless against all liabilities, damages, costs,
                    and expenses, including attorneys' fees, arising from any
                    negligent or wrongful act or omission of Tenant or Tenant's
                    officers, contractors, licensees, agents, servants,
                    employees, guests, invitees, or visitors on or around the
                    Premises or arising from any breach of this Lease by Tenant.
                    Tenant shall use legal counsel acceptable to Landlord in
                    defense of any action within Tenant's defense obligation.
                    Landlord shall defend, indemnity and hold Tenant harmless
                    against all liabilities, damages, costs, and expenses,
                    including attorneys' fees, arising from any negligent or
                    wrongful act or omission of Landlord or Landlord's officers,
                    contractors, licensees, agents, servants, employees, guests,
                    invitees, or visitors on or around the Premises or arising
                    from any breach of this Lease by Landlord. Landlord shall
                    use legal counsel acceptable to Tenant in defense of any
                    action within Landlord's defense obligation.

               17.  ASSIGNMENT AND SUBLETTING. Except for assignments or
                    subleases to entities which are wholly owned by Tenant or
                    which are wholly owned by Tenant's parent company,
                    ("Affiliate") Tenant shall not assign, sublet, mortgage,
                    encumber or otherwise transfer any interest in this Lease
                    (collectively referred to as a "Transfer") or any part of
                    the Premises, without first obtaining Landlord's written
                    consent, which will not be unreasonably withheld or delayed.
                    No Transfer shall relieve Tenant of any liability

                                      -11-
<PAGE>

                    under this Lease notwithstanding Landlord's consent to such
                    transfer, nor shall any Transfer with or without Landlord's
                    consent relieve any guarantor of this Lease from liability
                    on such guarantee. Consent to any Transfer shall not operate
                    as a waiver of the necessity for Landlord's consent to any
                    subsequent Transfer. As a condition to Landlord's approval,
                    if given, any potential assignee or subtenant otherwise
                    approved by Landlord shall assume all obligations of Tenant
                    under this Lease and shall be jointly and severally liable
                    with Tenant and any guarantor, if required, for the payment
                    of Rent and performance of all terms of this Lease. In
                    connection with any Transfer, Tenant shall provide Landlord
                    with copies of all assignments, subleases and assumption
                    instruments. In addition, in the event of a sublease or
                    assignment of all or a portion of the Premises to an entity
                    that is not an Affiliate, in which the subtenant or assignee
                    gives total consideration greater in value than the rent due
                    to Landlord hereunder for said portion ("Bonus Rent"),
                    Tenant shall pay to Landlord fifty percent (50%) of the
                    Bonus Rent as it is received by Tenant. In calculating Bonus
                    Rent subtenant's or assignee's total consideration given
                    shall be converted as closely as possible to a dollar per
                    square foot per month value which shall be compared to the
                    same value determined under this Lease.

               18.  LIENS. Tenant shall have no authority, express or implied,
                    to create or place any lien or encumbrance of any kind or
                    nature whatsoever upon, or in any manner to bind, the
                    interest of Landlord in the Premises or to charge the
                    rentals payable hereunder for any claim in favor of any
                    person dealing with Tenant, including those who may furnish
                    materials are perform labor for any construction or repairs,
                    and each such claim shall affect and each such lien shall
                    attach to, if at all, only the leasehold interest granted to
                    Tenant by this Lease. Tenant covenants and agrees that it
                    will pay or cause to be paid all sums legally due and
                    payable by it on account of any labor performed or materials
                    furnished in connection with any work performed on the
                    Premises on which any lien is or can be validly and legally
                    asserted against Tenant's interest in the Premises or the
                    improvements thereon, and that it will save and hold
                    Landlord harmless from any and all loss, cost or expense
                    based on or arising out of asserted claims or liens against
                    the leasehold estate or against the right, title and
                    interest of Landlord in the Premises. If a lien is filed
                    against the Premises by any person claiming by, through or
                    under Tenant, Tenant shall, upon request of Landlord, at
                    Tenant's expense, immediately furnish to Landlord a bond in
                    form and amount and issued by a surety satisfactory to
                    Landlord, indemnifying Landlord and the Premises against all
                    liabilities, costs and expenses, including attorneys' fees,
                    which Landlord could reasonably incur as a result of such
                    lien(s).

               19.  DEFAULT. The following occurrences shall each be deemed an
                    Event of Default by Tenant:

                    a. Failure To Pay. Tenant fails to pay any sum, including
                    Rent, due under this Lease following five (5) days written
                    notice from Landlord of the failure to pay.

                    b. Insolvency. Tenant becomes insolvent, voluntarily or
                    involuntarily bankrupt, or a receiver, assignee or other
                    liquidating officer is appointed for Tenant's business,
                    provided that in the event of any involuntary bankruptcy or
                    other insolvency proceeding, the existence of such
                    proceeding shall constitute an Event of Default only if such
                    proceeding is not dismissed or vacated within 60 days after
                    its institution or commencement.

                    c. Levy or Execution. Tenant's interest in this Lease or the
                    Premises, or any part thereof, is taken by execution or
                    other process of law directed against Tenant, or is taken
                    upon or subjected to any attachment by any creditor of
                    Tenant, it such attachment is not discharged within 15 days
                    after being levied.

                    d. Other Non-Monetary Defaults. Tenant breaches any
                    agreement, term or covenant of this Lease other than one
                    requiring the payment of money and not otherwise enumerated
                    in this Section, and the breach continues for a period of 30
                    days after notice by Landlord to Tenant of the breach.

                                      -12-
<PAGE>

               20.  REMEDIES. Landlord shall have the following remedies upon an
                    Event of Default. Landlord's rights and remedies under this
                    Lease shall be cumulative, and none shall exclude any other
                    right or remedy allowed by law.

                    a. Termination of Lease. Landlord may terminate Tenant's
                    interest under the Lease, but no act by Landlord other than
                    written notice from Landlord to Tenant of termination shall
                    terminate this Lease. The Lease shall terminate on the date
                    specified in the notice of termination. Upon termination of
                    this Lease, Tenant will remain liable to Landlord for
                    damages in an amount equal to the Rent and other sums that
                    would have been owing by Tenant under this Lease for the
                    balance of the Lease term, less the net proceeds, if any, of
                    any reletting of the Premises by Landlord subsequent to the
                    termination, after deducting all Landlord's Reletting
                    Expenses (as defined below). Landlord shall be entitled to
                    either collect damages from Tenant monthly on the days on
                    which Rent or other amounts would have been payable under
                    the Lease, or alternatively, Landlord may accelerate Tenants
                    obligations under the Lease and recover from Tenant: (i)
                    unpaid Rent which had been earned at the time of
                    termination; (ii) the amount by which the unpaid Rent which
                    would have been earned after termination until the time of
                    award exceeds the amount of Rent loss that Tenant proves
                    could reasonably have been avoided; (iii) the amount by
                    which the unpaid Rent for the balance of the term of the
                    Lease after the time of award exceeds the amount of Rent
                    loss that Tenant proves could reasonably be avoided
                    (discounting such amount by the discount rate of the Federal
                    Reserve Bank of San Francisco at the time of the award, plus
                    1%); and (iv) any other amount necessary to compensate
                    Landlord for all the detriment proximately caused by
                    Tenant's failure to perform its obligations under the Lease,
                    or which in the ordinary course would be likely to result
                    from the Event of Default, including without limitation
                    Reletting Expenses described in Section 21(b).

                    b. Re-Entry and Reletting. Landlord may continue this Lease
                    in full force and effect, and without demand or notice, re-
                    enter and take possession of the Premises or any part
                    thereof, expel the Tenant from the Premises and anyone
                    claiming through or under the Tenant, and remove the
                    personal property of either. Landlord may relet the
                    Premises, or any part of them, in Landlord's or Tenant's
                    name for the account of Tenant, for such period of time and
                    at such other terms and conditions, as Landlord, in its
                    discretion, may determine. Landlord may collect and receive
                    the Rents for the Premises. Re-entry or taking possession of
                    the Premises by Landlord under this Section shall not be
                    construed as an election on Landlord's part to terminate
                    this Lease, unless a written notice of termination is given
                    to Tenant. Landlord reserves the right following any re-
                    entry or reletting, or both, under this Section to exercise
                    its right to terminate the Lease. During the Event of
                    Default, Tenant will pay Landlord the Rent and other sums
                    which would be payable under this Lease if repossession had
                    not occurred, plus the net proceeds, if any, after reletting
                    the Premises, after deducting Landlord's Reletting Expenses.
                    "Reletting Expenses" is defined to include all expenses
                    incurred by Landlord in connection with reletting the
                    Premises, including without limitation, all repossession
                    costs, brokerage commissions, attorneys' fees, remodeling
                    and repair costs, costs for removing and storing Tenant's
                    property and equipment, and rent concessions granted by
                    Landlord to any new Tenant, prorated over the life of the
                    new lease.

                    c. Waiver of Redemption Rights. Tenant, for itself, and on
                    behalf of any and all persons claiming through or under
                    Tenant, including creditors of all kinds, hereby waives and
                    surrenders all rights and privileges which they may have
                    under any present or future law, to redeem the Premises or
                    to have a continuance of this Lease for the Lease term, as
                    it may have been extended.

                    d. Nonpayment of Additional Rent All costs which Tenant
                    agrees to pay to Landlord pursuant to this Lease shall in
                    the event of nonpayment be treated as if they were payments
                    of Rent, and Landlord shall have all the rights herein
                    provided for in case of nonpayment of Rent.

                    e. Failure to Remove Property. If Tenant fails to remove
                    any of its property from the Premises at Landlord's request
                    following an uncured Event of Default, Landlord may, at its
                    option, remove and store the property at Tenant's expense
                    and risk. If Tenant does not pay the storage cost within
                    five (5) days of Landlord's request,

                                      -13-
<PAGE>

                    Landlord may, at its option, have any or all of such
                    property sold at public or private sale (and Landlord may
                    become a purchaser at such sale), in such manner as Landlord
                    deems proper, without notice to Tenant. Landlord shall apply
                    the proceeds of such sale: (i) to the expense of such sale,
                    including reasonable attorneys' fees actually incurred; (ii)
                    to the payment of the costs or charges for storing such
                    property; (iii) to the payment of any other sums of money
                    which may then be or thereafter become due Landlord from
                    Tenant under any of the terms hereof; and (iv) the balance,
                    if any, to Tenant. Nothing in this Section shall limit
                    Landlord's right to sell Tenant's personal property as
                    permitted by law to foreclose Landlord's lien for unpaid
                    rent.

               21.  RESTRICTIONS. This Lease is subject to the effect of (a) any
                    covenants, conditions, restrictions, easements, or rights of
                    way of record, and any other matters or documents of record;
                    (b) any zoning laws of the city, county and state where the
                    Real Property is situated; and (c) general and special taxes
                    not delinquent. Tenant agrees that as to its leasehold
                    estate, Tenant and all persons in possession or holding
                    under Tenant will conform to and will not violate the terms
                    of any covenants, conditions or restrictions of record which
                    may now or hereafter encumber the property (hereinafter the
                    "Restrictions"). This Lease is subordinate to the
                    Restrictions and any amendments or modifications thereto.

               22.  MORTGAGE SUBORDINATION/NON-DISTURBANCE. Tenant accepts this
                    Lease subject and subordinate to any mortgages and/or deeds
                    of trust now or any time hereinafter constituting a lien or
                    charge upon the Premises or the improvements situated
                    thereon, provided, however, that if the mortgagee, trustee,
                    or holder of any such mortgage or deed of trust elects to
                    have Tenant's interest in this Lease superior to any such
                    instrument, then by notice to Tenant from such mortgagee,
                    trustee or holder, this Lease shall be deemed to superior to
                    such lien, whether this Lease was executed before after said
                    mortgage or deed of trust.. Tenant shall at any time
                    hereinafter on demand execute any instruments, releases or
                    other documents which may be required by any mortgagee for
                    the purpose of subjecting and subordinating this Lease to
                    the lien of any such mortgage; provided however that such
                    instruments must provide that in the event the mortgagee or
                    the beneficiary of the deed of trust becomes the owner of
                    the Premises pursuant to any foreclosure or trustee's sale,
                    the mortgagee or beneficiary will not disturb Tenant in it
                    possession and enjoyment of the Premises so long as Tenant
                    abides by the terms and conditions of this Lease.

               23.  NON-WAIVER. Landlord's waiver of any breach of any term
                    contained in this Lease shall not be deemed to be a waiver
                    of the same term for subsequent acts of Tenant. The
                    acceptance by Landlord of Rent or other amounts due by
                    Tenant hereunder shall not be deemed to be a waiver of any
                    breach by Tenant preceding such acceptance.

               24.  HOLDOVER. If Tenant shall, without the written consent of
                    Landlord, hold over after the expiration or termination of
                    the Term, such tenancy shall be deemed to be on a month-to-
                    month basis and may be terminated according to Washington
                    law. During such tenancy, Tenant agrees to pay to Landlord
                    125% the rate of Rent last payable under this Lease, unless
                    a different rate is agreed upon by Landlord. All other terms
                    of the Lease shall remain in effect.

               25.  COSTS AND ATTORNEYS' FEES. If Tenant or Landlord engage the
                    services of an attorney to collect monies due or to bring
                    any action for any relief against the other, declaratory or
                    otherwise, arising out of this Lease, including any suit by
                    Landlord for the recovery of Rent or other payments, or
                    possession of the Premises, the losing party shall pay the
                    prevailing party a reasonable sum for attorneys' fees and
                    expert witness fees in such suit, at trial and on appeal.

               26.  ESTOPPEL CERTIFICATES. Tenant shall, from time to time, upon
                    written request of Landlord, execute, acknowledge and
                    deliver to Landlord or its designee a written statement
                    specifying the following, subject to any modifications
                    necessary to make such statements true and complete: (i) the
                    date the Lease term commenced and the date it expires; (ii)
                    the amount of monthly base rent and the date to which such
                    base rent has been paid; (iii) that this Lease is in full
                    force and effect and has not been assigned, modified,
                    supplemented or amended in any way; (iv) that this Lease

                                      -14-
<PAGE>

                    represents the entire agreement between the parties; (v)
                    that all conditions under this Lease to be performed by
                    Landlord have been satisfied; (vi) that there are no
                    existing claims, defenses or offsets which the Tenant has
                    against the enforcement of this Lease by Landlord; (vii)
                    that no Rent has been paid more than one month in advance;
                    (viii) that no security has been deposited with Landlord
                    (or, if so, the amount thereof) and (ix) any such other
                    matters pertaining to this Lease may be requested by
                    Landlord. Any such statement delivered pursuant to this
                    Section may be relied upon by a prospective purchaser of
                    Landlord's interest or assignee of any mortgage or new
                    mortgagee of Landlord's interest in the Premises. It Tenant
                    shall fail to respond within ten (10) days of receipt by
                    Tenant of a written request by Landlord as herein provided,
                    Tenant shall be deemed to have given such certificate as
                    above provided without modification and shall be deemed to
                    have admitted the accuracy of any information supplied by
                    Landlord to a prospective purchaser or mortgagee.

               27.  TRANSFER OF LANDLORD'S INTEREST. This Lease shall be
                    assignable by Landlord without the consent of Tenant. Any
                    such assignment shall not alter the terms of this lease. In
                    the event of any transfer or transfers of Landlord's
                    interest in the Premises, other than a transfer for security
                    purposes only, upon the assumption of this Lease by the
                    transferee, Landlord shall be automatically relieved of
                    obligations and liabilities accruing from and after the date
                    of such transfer, except for any retained security deposit
                    or prepaid rent, and Tenant shall attorn to the transferee.

               28.  LIABILITY OF LANDLORD. Landlord shall not be liable to
                    Tenant or Tenant's employees, agents, servants, guests,
                    invitees or visitors, or to any other person whomsoever, for
                    any injury to person or damage to property on or about the
                    Premises, resulting from and/or caused in part or whole by
                    the negligence or misconduct of Tenant, its employees,
                    agents, servants, guests, invitees or visitors, or any other
                    person entering upon the Premises, or caused by the Building
                    or the Premises becoming out of repair, or caused by leakage
                    of gas, oil, water, steam or by electricity emanating from
                    the Premises, or due to any cause whatsoever, and Tenant
                    hereby covenants and agrees that it will at all times
                    indemnify, defend and hold safe and harmless the Real
                    Property, the Premises, Landlord, Landlord's employees,
                    agents, servants, guests, invitees, and visitors from any
                    loss, liability, claims, suits, costs, expenses, including
                    without limitation attorneys' fees and damages, both real
                    and alleged, arising out of any such damage or injury;
                    except injury to persons or damage to property the sole
                    cause of which is the negligence of Landlord. Tenant agrees
                    that no trustee, officer, employee, or agent of Landlord,
                    shall be personally liable for any obligation of Landlord
                    hereunder, and that Tenant must look solely to the interests
                    of Landlord in the Real Property for the enforcement of any
                    claims against Landlord arising here under.

               29.  RIGHT TO PERFORM. If Tenant shall fail to timely pay any sum
                    or perform any other act on its part to be performed
                    hereunder, Landlord may make any such payment or perform any
                    such other act on Tenant's part to be made or performed as
                    provided in this Lease. Tenant shall, on demand, reimburse
                    Landlord for its expenses incurred in making such payment or
                    performance. Landlord shall (in addition to any other right
                    or remedy of Landlord provided by law) have the same rights
                    and remedies in the event of the nonpayment of sums due
                    under this Section as in the case of default by Tenant in
                    the payment of Rent.

               30.  HAZARDOUS MATERIALS. Tenant agrees that neither Tenant nor
                    Tenant's employees, officers, agents, invitees, customers,
                    agents or representatives will use, generate, release,
                    treat, store or dispose of Hazardous Materials on the
                    Premises except in accordance with any law, ordinance, rule
                    or regulation of any governmental authority having
                    jurisdiction of the Premises. If Tenant breaches the
                    obligations stated in the preceding sentence, or if the
                    presence of Hazardous Materials on the Premises caused or
                    permitted by Tenant result in contamination of the Premises,
                    then Tenant shall indemnify, defend and hold Landlord
                    harmless from any and all claims, judgments, damages,
                    penalties, fines, costs, liabilities, or losses (including
                    without limitation diminution in value of the Premises,
                    damages for the loss or restriction on the use of space or
                    of any adverse impact on marketing of space in the Premises,
                    and sums paid in settlement of claims, attorneys' fees,
                    consultant fees and expert fees) which arise during or after
                    the Lease term as a result of such contamination. This

                                      -15-
<PAGE>

                    indemnification of Landlord by Tenant includes, without
                    limitation, costs incurred in connection with any
                    investigation of site conditions or any cleanup,
                    remediation, removal or restoration work required by any
                    federal, state or local governmental agency, political
                    subdivision, lender or buyer because of Hazardous Materials
                    present in the soil or groundwater on or under the Premises,
                    diminution in value of the Premises, damages for the loss or
                    restriction on use of space in the Building or on the Real
                    Property, damages arising from any adverse impact on
                    marketing of the Real Property or of the Building, and sums
                    paid in settlement of claims, attorneys' fees, consultant
                    fees, laboratory fees and expert fees. Without limiting the
                    foregoing, if the presence of any Hazardous Materials on the
                    Premises or Real Property caused or permitted by Tenant
                    results in any contamination of the Premises or the Real
                    Property, Tenant shall promptly take all actions at its sole
                    expense as are necessary to return the Real Property and the
                    Premises to the condition existing prior to the
                    contamination by any such Hazardous Materials; provided,
                    however, the Landlord's approval of such action shall first
                    be obtained, which approval shall not be unreasonably
                    withheld.

                    Tenant will deliver to Landlord copies of any documents
                    received from, or sent by. Tenant to, the United States
                    Environmental Protection Agency and/or any state, county or
                    municipal, environmental ill or health agency concerning
                    Tenant's operations on the Premises.

                    As used herein, the term "Hazardous Materials" means any
                    substance which is (i) designating, defined, classified or
                    regulated as a hazardous substance, hazardous material,
                    hazardous waste, pollutant or contaminant under any
                    Environmental Law, as currently in effect or as hereinafter
                    amended or enacted, (ii) a petroleum hydrocarbon, including
                    crude oil or any fraction thereof and all petroleum
                    products, (iii) PCBs, (iv) lead, (v) asbestos, (vi)
                    flammable explosives, (vii) infectious materials, or (viii)
                    radioactive materials. "Environmental Law(s)" means the
                    Comprehensive Environmental Response, Compensation, and
                    Liability Act of 1980, 42 U. S. C. (S) 9601 et seq., the
                    Resource Conservation and Recovery Act of 1976, 42 U. S. C.
                    (S) 6901 et seq., the Toxic Substances Control Act, 15 U. S.
                    C. (S) 2601 et seq., the Hazardous Materials Transportation
                    Act, 49 U. S. C. (S) 1801 et seq., the Clean Water Act, 33
                    U. S. C. (S) 1251 et seq., and the Washington Model Toxics
                    Control Act, Chapter 70.105D, Revised Code of Washington, as
                    said laws have been supplemented or amended to date, the
                    regulations promulgated pursuant to said laws and any other
                    federal, state or local law, statute, rule, regulation or
                    ordinance which regulates or proscribes the use, storage,
                    disposal, presence, cleanup, transportation or release or
                    threatened release into the environment of Hazardous
                    Materials.

               31.  QUIET ENJOYMENT. So long as Tenant pays the Rent and
                    performs all of its obligations in this Lease, Tenant's
                    possession of the Premises will not be disturbed by Landlord
                    or anyone claiming by, through or under Landlord.

               32.  GENERAL.

                    a. Heirs and Assigns. This Lease shall apply to and be
                    binding upon Landlord and Tenant and their respective heirs,
                    executors, administrators, successors and assigns.

                    b. Brokers' Fees. Tenant represents and warrants to Landlord
                    that it has not engaged any broker, finder or other person
                    who would be entitled to any commission or fees for the
                    negotiation, execution, or delivery of this Lease other than
                    the Andover Company, and Scott Rice, Kidder Matthews and
                    Segner Inc. and Richard T. Davidson and Alliance Partners
                    Inc., a Georgia Corporation, which brokers shall be paid a
                    commission by Landlord pursuant to a separate agreement.
                    Tenant shall indemnify and hold Landlord harmless against
                    any loss, cost, liability or expense incurred by Landlord as
                    a result of any claim asserted by any other broker, finder
                    or other person on the basis of any arrangements or
                    agreements made or alleged to have been made by or on behalf
                    of Tenant.

                    c. Entire Agreement. This Lease contains all of the
                    covenants and agreements between Landlord and Tenant
                    relating to the Premises. No prior or contemporaneous

                                      -16-
<PAGE>

                    agreements or understanding pertaining to the Lease shall be
                    valid or of any force or effect and the covenants and
                    agreements of this Lease shall not be altered, modified or
                    added to except in writing signed by Landlord and Tenant.

                    d. Severability. Any provision of this Lease which shall
                    prove to be invalid, void or illegal shall in no way affect,
                    impair or invalidate any other provision of this Lease.

                    e. Force Majeure. Time periods for either party's
                    performance under any provisions of this Lease (excluding
                    payment of Rent) shall be extended for periods of time
                    during which the party's performance is prevented due to
                    circumstances beyond such party's control, including without
                    limitation, fires, floods, earthquakes, lockouts, strikes,
                    embargoes, governmental regulations, acts of God, public
                    enemy, war or other strife.

                    f. Governing Law/Venue. This Lease shall be governed by and
                    construed in accordance with the laws of the State of
                    Washington. Venue and jurisdiction for any dispute between
                    Landlord and Tenant in any way concerning or connected to
                    this Lease shall be in the Superior Court of Washington in
                    King County.

                    g. Memorandum of Lease. This Lease shall not be recorded.
                    However, Landlord and Tenant shall, at the other's request,
                    execute and record a memorandum of Lease in recordable form
                    that identifies Landlord and Tenant, the commencement and
                    expiration dates of the Lease, and the legal description of
                    the Premises.

                    h. Submission of Lease Form Not An Offer. One party's
                    submission of this Lease to the other for review shall not
                    constitute an offer to lease the Premises. This Lease shall
                    not become effective and binding upon Landlord and Tenant
                    until it has been fully signed by both Landlord and Tenant.

                    i. No Light, Air or View Easement. Tenant has not been
                    granted an easement or other right for light, air or view to
                    or from the Premises. Any diminution or shutting off of
                    light, air or view by any structure which may be erected on
                    or adjacent to the Building shall in no way effect this
                    Lease or the obligations of Tenant hereunder or impose any
                    liability on Landlord.

                    j. Authority of Parties. Any individual signing this Lease
                    on behalf of an entity represents and warrants to the other
                    that such individual has authority to do so and, upon such
                    individual's execution, which this Lease shall be binding
                    upon and enforceable against the party on behalf of whom
                    such individual is signing. Tenant and Landlord shall each
                    provide the other with a resolution of its Board of
                    Directors authorizing the execution of this Lease on behalf
                    of the corporation by the individual whose signature appears
                    below.

               33.  Exhibits and Riders. The following exhibits and riders are
                    made a part of this Lease:

               EXHIBIT A:  Legal description of Real Property, less strip of
                           land running south of Building
               EXHIBIT B:  Site plan identifying Premises and Reserved Space
               EXHIBIT C:  Tenant's Required Specifications
               EXHIBIT D:  Tenant's Office Space Plan
               EXHIBIT E:  Specifications for Tenant Improvements to Office
                           Spaces to be Constructed by Landlord
               EXHIBIT F:  Schedule of Building Plans

                    IN WITNESS WHEREOF Landlord and Tenant had executed this
               lease agreement on the day and date first mentioned above.

               LANDLORD:                          TENANT:

               Seattle-Tacoma Box Co.             Aladdin Manufacturing Corp.
               a Washington corporation           a Delaware corporation

                                      -17-
<PAGE>

<TABLE>
               <S>                                <C>
               By: Fred J. Nist                   By: Salvatore J. Perillo
                   --------------------------         ---------------------------------
               Its: President                     Its: Asst/Secretary/General Counsel
                   --------------------------         ---------------------------------
</TABLE>
               STATE OF WASHINGTON      )
                                        ) ss.
               COUNTY OF KING           )

                    On this 10/th/ day of December, 1999, before me personally
               appeared Fred J. Nist, to me known (or proven on the basis of
               satisfactory evidence) to be the President of SEATTLE-TACOMA BOX
               CO., the corporation that executed the within and foregoing
               instrument, and acknowledged said instrument to be the free and
               voluntary act and deed of said corporation for the uses and
               purposes therein mentioned, and on oath stated that he was
               authorized to execute said instrument and that the seal affixed,
               if any, is the corporate seal of said corporation.

                    IN WITNESS WHEREOF I have hereunto set my hand and affixed
               my official seal the day and year first above written.

                                                Trudy L. Burch
                                   ---------------------------------------
                                   NOTARY PUBLIC in and for the State of
                                   Washington, residing at Corington
                                                           ---------------
                                    My commission expires 5-12-2000
                                                          ----------------
                                    Print Name: Trudy L. Burch
                                                --------------------------

               STATE OF GEORGIA         )
                        ------------
                                        ) ss.
               COUNTY OF Gordon         )
                         -----------

                    On this 1/st/ day of December, 1999, before me personally
               appeared Salvatore J. Perillo to me known (or proven on the basis
                        --------------------
               of satisfactory evidence) to be the Asst Secretary/General
               Counsel of ALADDIN MANUFACTURING CORP., the corporation that
               executed the within and foregoing instrument, and acknowledged
               said instrument to be the free and voluntary act and deed of said
               corporation for the uses and purposes therein mentioned, and on
               oath stated that he was authorized to execute said instrument and
               that the seal affixed, if any, is the corporate seal of said
               corporation.

                    IN WITNESS WHEREOF I have hereunto set my hand and affixed
               my official seal the day and year first above written.

                                                     Elaine Busbee
                                   --------------------------------------------
                                   NOTARY PUBLIC in and for the State of
                                   Georgia, residing at Acworth, Paulding Co. GA
                                                        ------------------------
                                   My commission expires Notary Public Paulding
                                   County, Georgia
                                   My commission expires Nov. 3, 2001
                                   Print Name:     Elaine Busbee
                                              ----------------------------------
                                              My commission expires Nov. 3, 2001

                                      -18-
<PAGE>

                                   EXHIBIT A
                      Legal Description of Real Property

          LOT 2, CITY OF KENT SHORT PLAT NO. 74-1, RECORDED UNDER RECORDING NO.
          7808170845, BEING A PORTION OF THE NORTH HALF OF THE SOUTHWEST QUARTER
          OF SECTION 13, TOWNSHIP 22 NORTH, RANGE 4 EAST, WILLAMETTE MERIDIAN,
          IN KING COUNTY, WASHINGTON.

                                      -19-
<PAGE>

                                   EXHIBIT B
               Site Plan Identifying Premises and Reserved Space

                                  [SITE PLAN]

<PAGE>

                                  EXHIBIT C
                       Tenant's Required Specifications

          1.   30 ft. minimum clear height.
          2.   3 ft. 10 inch permanent metal canopy running the length of the
               dock area.
          3.   Sealed warehouse floor, using Burke Cure and Seal sealant.
          4.   Lighting at 30 ft. candles at 3 ft. in the aisles.
          5.   6 X 30,000 lb. Capacity FX-6 x 8-30 fully automatic Kelly Air Bag
               Levelors.
          6.   Ten mechanical edge of dock 30,000 lb. capacity 72" wide by 29"
               long.
          7.   Two grade level doors 12'x14' to be located adjacent to office
               area on west end of Building

                                      -21-
<PAGE>

                                   EXHIBIT D
                          Tenant's Office Space Plan

<PAGE>

                             [OFFICE 516 SF PLAN]

<PAGE>

                                   EXHIBIT E

               Specifications for Tenant Improvements to Office Spaces, to be
               Constructed by Landlord

          1.   Framing and drywall:
               -------------------

                    a.   Metal stud framing with 5/8 type drywall on both sides,
                         ready to receive paint.

          2.   Insulation:
               ----------

                    a.   Sound batt insulation at restrooms
                    b.   Humidor insulation in ceiling and insulation to meet
                         Washington State Energy Code

          3.   Wood Doors:
               ----------

                    a.   3'-0" x 7'-0" solid core stain grade oak doors with hem
                         fir jambs
                    b.   Doors to be 1-3/4" thick

          4.   Finish Hardware:
               ---------------

                    a.   Provide all finish hardware in suitable fashion to
                         complete work in accordance with the drawings
                    b.   Lock sets and latch sets shall be Schlege "D" series
                         lever hardware or Yale lever hardware or approved
                         equal - cylindrical style
                    c.   Strike plates and hinges to match
                    d.   Closures will be provided on restroom doors and doors
                         leading from conditioned space to unheated space

          5.   Glass and Glazing:
               -----------------

                    a.   Provide glass and glazing as indicated on drawings
                    b.   All perimeter glass to meet Washington State Energy
                         Code and shall be 1" insulated units
                    c.   Interior relites shall be clear 1/4" glass and shall be
                         tempered glass in locations required by the Uniform
                         Building Code
                    d.   Six (6) 3'x6' interior relites shall be provided at
                         locations selected by the tenant

          6.   Acoustical Ceilings:
               -------------------

                    a.   24" x 48" grid system
                    b.   Ceiling boards shall be second look tegular tile
                    c.   Ceiling system shall meet seismic requirements

          7.   Floor Covering:
               --------------
                    a.   Carpeting in office areas shall be a $15.00/SY
                         allowance

                         i.   28 ounce level loop Mohawk carpet or approved
                              equal

                         ii.  carpet material allowance of $21,000.00
                    b.   Coved base sheet vinyl at the restroom floors
                    c.   4" rubber base at all areas receiving carpeting
                    d.   Plastic laminate wainscoting at wet walls in restrooms
                    e.   Warehouse concrete floors to be sealed with Burke Cure
                         & Seal or approved equal
                    f.   Vinyl floor covering and laminate countertops at
                         lunchroom

                                      -1-
<PAGE>

          8.   Painting:
               --------

                    a.   Interiors doors and millwork to receive one coat of
                         stain, one coat of sealer and two coats of lacquer or
                         varnish
                    b.   Gypsum wallboard to be painted shall receive one coat
                         of primer and one finish coat

          9.   Toilet Room Accessories:
               -----------------------

                    a.   Trash dispensers shall be one per water closet
                    b.   Napkin dispensers shall be one per water closet at
                         women's restrooms
                    c.   Paper towel dispenser shall be one per restroom
                    d.   Soap dispenser shall be one per lavatory
                    e.   Waste receptacles shall be one per restroom
                    f.   Mirrors shall be above vanities
                    g.   Grab bars per Uniform Building Code and to meet ADA
                         requirements
                    h.   Toilet partitions per plans and/or as required

          10.  HVAC:
               ----

                    a.   Provide a complete design/build heating, ventilating
                         and air conditioning system in accordance with
                         Washington State Energy Codes
                    b.   Units to be gas fired rooftop package units
                    c.   Separate HVAC units will be provided for the first and
                         second floor office spaces.
                    d.   Separate HVAC units will be provided for the 516 square
                         foot office space.

          11.  Fire Protection:
               ---------------

                    a.   Provide a fire sprinkler system to meet all local
                         applicable codes
                    b.   Heads to be semi-recessed chrome plated

          12.  Plumbing:
               --------

                    a.   Plumbing fixtures shall be as shown on architectural
                         plans and detail
                    b.   Color shall be white unless otherwise noted
                    c.   Trim shall be brass with all exposed metal parts chrome
                         plated
                    d.   Water closets shall be floor mount with pressure assist
                         valves
                    e.   Urinals shall be wall hung flush valve
                    f.   Lavs shall be China white with single lever faucets
                         with pop-up drains
                    g.   Gas fired hot water tank to provide hot water for
                         fixtures shown
                    h.   Water drinking fountain per building code and UBC

          13.  Electrical:
               ----------

                    a.   Design/build electrical system in accordance with the
                         architectural drawings
                    b.   Design and construction shall conform to state, local
                         and all utility requirements
                    c.   Lighting fixtures shall be designed to provide state
                         energy code lighting levels in accordance with the
                         architectural plans
                    d.   Light fixtures shall be 2x4 fluorescent parabolic
                         lights on the first floor office area and 2x4 standard
                         prismatic fluorescent fixtures at the second floor
                    e.   Duplex receptacles shall be a minimum of two per office
                         and one per 15' in the open office areas. Standards to
                         be 110 volt, 15 amp grounded circuits with the maximum
                         number of outlets per circuits to be 8 unless otherwise
                         approved
                    f.   Telephones and data pull boxes shall be provided at one
                         per office and one per 15 feet in the open areas
                    g.   A plywood backboard shall be provided for telephone
                         equipment
                    h.   Electrical service and panels shall be designed to meet
                         all of the office and warehouse loads and be in
                         accordance with NEC, state and local code requirements
                    i.   Lighting shall be 208/277 volt; light switches shall be
                         provided at all offices and dual switching at areas
                         with natural lighting per the energy code. Restrooms
                         shall have surface mount fluorescent for fixtures.

                                      -2-
<PAGE>

                    j.   Minimum of ten (10) duplex outlets in shipping office.
                    k.   Minimum of six (6) duplex outlets in office support
                         area
                    l.   Minimum of ten (10) duplex outlets in open staff area

                                      -3-
<PAGE>

                                   EXHIBIT F

                           SCHEDULE OF BUILDING PLANS
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
PLAN NO.       DESCRIPTION                                                             DATE
---------------------------------------------------------------------------------------------------
<S>            <C>                                                                     <C>
C1             Cover Sheet and Notes                                                   11/19/99
---------------------------------------------------------------------------------------------------
C2             Site Plan                                                               11/8/99
---------------------------------------------------------------------------------------------------
03             TESC Plan                                                               11/8/99
---------------------------------------------------------------------------------------------------
C4             Storm Drainage and Grading Plan                                         11/8/99
---------------------------------------------------------------------------------------------------
C5             Sanitary Sewer and Water Line Plan                                      11/8/99
---------------------------------------------------------------------------------------------------
C6             Street Improvements Plan                                                11/8/99
---------------------------------------------------------------------------------------------------
C7             Ditch TESC Plan                                                         11/8/99
---------------------------------------------------------------------------------------------------
08             Ditch Relocation and Grading Plans                                      11/9/99
---------------------------------------------------------------------------------------------------
C9             Notes                                                                   11/9/99
---------------------------------------------------------------------------------------------------
ClO            Section and Details                                                     11/19/99
---------------------------------------------------------------------------------------------------
C11            Sections and Details                                                    11/19/99
---------------------------------------------------------------------------------------------------
C12            Water Line and Storm Drain Profiles                                     11/19/99
---------------------------------------------------------------------------------------------------
C13            Keystone Details and Notes                                              11/19/99

---------------------------------------------------------------------------------------------------
1 of 1         Boundary and Topographic Survey                                         7/22/99

---------------------------------------------------------------------------------------------------
VMD1           Vehicle Maneuvering Diagram                                             11/9/99

---------------------------------------------------------------------------------------------------
L1             Landscape Plan                                                          Undated
---------------------------------------------------------------------------------------------------
L2             Irrigation Plan                                                         Undated

---------------------------------------------------------------------------------------------------
L3             Landscape Plan                                                          Undated
---------------------------------------------------------------------------------------------------
R1             Track Plan and Profile (Railroad)                                       7/6/99
---------------------------------------------------------------------------------------------------
R2             Sections and Details (Railroad)                                         7/6/99

---------------------------------------------------------------------------------------------------
Al             Floor Plan - West                                                       11/19/99
---------------------------------------------------------------------------------------------------
A2             Floor Plan - East                                                       11/15/99
---------------------------------------------------------------------------------------------------
A3             Exterior Building & Interior Building Elevations                        11/19/99
---------------------------------------------------------------------------------------------------
A4             Entrance Plans & Elevations & Details                                   11/19/99
---------------------------------------------------------------------------------------------------
A5             Wall Sections                                                           11/19/99
---------------------------------------------------------------------------------------------------
A6             Floor & Reflected Ceiling Plans                                         11/19/99
---------------------------------------------------------------------------------------------------
A7             Ladder & Roof Hatch Details                                             11/19/99
---------------------------------------------------------------------------------------------------
A8             General Notes                                                           11/16/99
---------------------------------------------------------------------------------------------------
A9             General Notes & Accessibility Notes                                     11/16/99

---------------------------------------------------------------------------------------------------
A10            Accessibility Notes                                                     11/19/99

---------------------------------------------------------------------------------------------------
S1             Foundation Plan - West                                                  11/19/99
---------------------------------------------------------------------------------------------------
S2             Foundation Plan - East                                                  11/19/99
---------------------------------------------------------------------------------------------------
S3             Roof Framing Plan - West                                                11/19/99
---------------------------------------------------------------------------------------------------
S4             Roof Framing Plan - East                                                11/19/99
---------------------------------------------------------------------------------------------------
S5             Foundation Details                                                      11/19/99
---------------------------------------------------------------------------------------------------
S6             Precast Tilt-Up Panel Elevations                                        11/19/99
---------------------------------------------------------------------------------------------------
S7             Precast Tilt-Up Panel Elevations                                        11/19/99
---------------------------------------------------------------------------------------------------
S8             Precast Tilt-Up Panel Elevations                                        11/19/99
---------------------------------------------------------------------------------------------------
S9             Structural Details                                                      11/16/99
---------------------------------------------------------------------------------------------------
S10            Structural Details                                                      11/16/99
---------------------------------------------------------------------------------------------------
S11            Structural Notes                                                        11/16/99
---------------------------------------------------------------------------------------------------
S12            Structural Details                                                      11/16/99
---------------------------------------------------------------------------------------------------
S13            Office Foundation Plan, West                                            11/19/99
---------------------------------------------------------------------------------------------------
S14            Structural Details                                                      11/16/99
---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                      FIRST AMENDMENT TO LEASE AGREEMENT

     This First Amendment to Lease Agreement is made this ____ day of August,
2000 between SEATTLE BOX COMPANY, a Washington corporation doing business as
SEATTLE-TACOMA BOX COMPANY ("Landlord") and ALADDIN MANUFACTURING CORPORATION, a
Delaware corporation ("Tenant") and is an amendment to that Lease between the
parties dated December 10, 1999 ("Lease") affecting the Premises located on Lot
2, City of Kent. Short Plat No. 74-1, recorded under Recording Number
7808170845, located in King County Washington.

     WHEREAS the Tenant has requested that certain changes be made in the
construction of the Building; and

     WHEREAS these changes will change the cost of the Building and the time for
completion of the Building;

     The parties hereby agree to amend the Lease as follows:

     1.   Column Change. The Building Plans listed in Exhibit F to the Lease
          -------------
will be changed to reflect that the columns supporting the roof of the Building
shall be located as shown on those plans and drawings dated January 28, 2000.
showing relocation of the columns. The change in the column locations is
referred to as the "Column Change". The parties acknowledge that the columns
have been constructed in the location desired by the Tenant and as reflected in
the Column Change;

     2.   Sprinkler System Change. The original Lease provides that the building
          -----------------------
shall include installation by Landlord of an overhead ESFR fire sprinkler system
("Landlord's Sprinkler System") and that the Tenant may thereafter convert
Landlord's Sprinkler System into an in-rack sprinkler system ("Tenant's
Sprinkler System"). The Lease further provides that upon surrender of the
Premises at the end of the lease term, the Tenant will restore the Landlord's
Sprinkler System. The parties have agreed to change this arrangement. Paragraphs
3A and 11 of the Lease shall be amended in part to provide that, as part of
construction of the Building, the Landlord will alter the Building and construct
an in-rack sprinkler system as requested by Tenant. These alterations and the
new sprinkler system are represented in plans and specifications original
submitted to the City of Kent on February 11, 2000 and then resubmitted to
include a smoke curtain on March 20, 2000 and are referred to herein as the
"Revised Sprinkler System". Regarding surrender of the Premises, unless Landlord
notifies Tenant otherwise in writing, prior to the time of Tenant's surrender of
the Premises, Tenant shell construct on the Premises a fully operational ESFR
system. Upon surrender of the premises this ESFR system shall be fully
operational. In the event that at the time of surrender ESFR sprinkler systems
are no longer being constructed, tenant shall construct and surrender with the
Premises the then in use system most similar in performance and quality to the
ESFR systems currently in use.

     3.   Electrical System Change and Distribution System. The original plans
          ------------------------------------------------
for the building provided for a 200 amp distribution panel on the Premises and
provided a $5,000 credit for the cost of distribution of the power throughout
the Premises. The original lease made no provision for the electrical costs
associated with the relocation of Tenant's equipment to the Premises and the
modifications that would be necessary to that equipment. The parties have agreed
that the main distribution panel will be increased by Landlord to 600 amps, that
Landlord will provide the electrical distribution system to Tenant's equipment,
that Landlord will provide extra electrical outlets as requested by Tenant and
that Landlord will complete certain equipment modifications which have been
negotiated between Tenant and Landlord's contractor. All such additional
electrical work shall be referred to herein as the Electrical Change.

                                      -1-
<PAGE>

     4.   Commencement Date. The Commencement Date of the Lease described in
          -----------------
Sections 1(c) and 3(d) of the Lease shall be June 15, 2000.

     5.   Liquidated Damages For Late Delivery. Paragraph 3(e) of the Lease is
          ------------------------------------
hereby deleted in its entirety.

     6.   Reimbursements for Changes. Tenant agrees to reimburse Landlord for
          --------------------------
the Column Change and Sprinkler System Changes as follows. The additional cost
to the Tenant of the Column Change is $17,859.56, which shall be paid to
Landlord within fifteen (15) business days of Tenant receiving a bill for the
Column Change, which bill shall be issued by Landlord as Landlord is billed for
the changes by the contractor. At Landlord's election, its administrative fee
may be billed on a pro rata basis in installments or as part of the final
billing. The additional cost to the Tenant of the Sprinkler System Change is
$174,035.50 which shall be paid to Landlord within fifteen (15) business days of
Tenant receiving a bill for the Sprinkler System Change, which bill shall be
issued by Landlord as Landlord is billed for the items included in the Sprinkler
System Change by the contractor. At Landlord's election, its administrative fee
may be billed on a pro rata basis in installments or as part of the final
billing. The Landlord and Tenant have agreed to share the cost of the Electrical
Change. The total cost of the Electrical Change is $55,636.97. The Landlord will
pay $2,419.55 of this amount. After credit for the $5,000 allowance in the
Lease, the additional cost to the Tenant of the Electrical Change is $48,148.00
which shall be paid to Landlord within fifteen (15) business days of Tenant
receiving a bill for the items included in the Electrical Change, which bill
shall be issued by Landlord as Landlord is billed for the changes by the
contractor, At Landlord's election, its administrative fee may be billed on a
pro rata basis in installments or as part of the final billing.

     7.   Except as expressly modified herein, the terms and conditions of the
Lease shall remain in full force and effect.
LANDLORD:

SEATTLE BOX COMPANY
dba SEATTLE-TACOMA BOX COMPANY,
a Washington corporation

By: ____________________________
      Its: _____________________

TENANT:

ALADDIN MANUFACTURING CORPORATION,
a Delaware are corporation
                                         SALVATORE J. PERILLO
By: /s/ Salvatore J. Perillo             ASSISTANT SECRETARY/
   -----------------------------         GENERAL COUNSEL
      Its: _____________________

STATE OF WASHINGTON         )
                            )ss.
COUNTY OF _________         )

     On this ______ day of _________________, 2000, before me personally
appeared _____________________________________, to me known (or proven on the
basis of satisfactory evidence) to be the ______________________ of SEATTLE BOX
CO. dba SEATTLE-TACOMA BOX CO., the corporation that executed the within and
foregoing instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation for the uses and purposes therein
mentioned, and on oath stated that _____ was authorized to

                                      -2-
<PAGE>

execute said instrument and that the seal affixed, if any, is the corporate seal
of said corporation.

     IN WITNESS WHEREOF I have hereunto set my hand and affixed my official seal
the day and year first above written.

                                       _________________________________________
                                       NOTARY PUBLIC in and for the State of
                                       Washington, residing at__________________
                                       My commission expires ___________________
                                       Print Name:______________________________

STATE OF Georgia         )
                         )ss.
COUNTY OF Gordon         )

     On this 7/th/ day of August 2000 before me personally appeared Salvatore J.
Perrillo, to me known (or proven on the basis of satisfactory evidence) to be
the General Counsel of ALADDIN MANUFACTURING CORPORATION, the corporation that
executed the within and foregoing instrument, and acknowledged said instrument
to be the free and voluntary act and deed of said corporation for the uses and
purposes therein mentioned, and on oath stated that He was authorized to execute
said instrument and that the seal affixed, if any. is the corporate seal of said
corporation.

     IN WITNESS WHEREOF I have hereunto set my hand and affixed my official seal
the day and year first above written.

                                       /s/ Misty Young
                                       ----------------------------------
                                       NOTARY PUBLIC in and for the State of
                                       Georgia, residing at 175 Nichols Lane
                                       My commission expires My Commission
                                       Expires Jan 14, 2004
                                       Print Name: Misty Young

                                      -3-<PAGE>

--------------------------------------------------------------------------------
                                                                   EXHIBIT 10.28

                    RECEIVABLES PURCHASE AND SALE AGREEMENT

                         Dated as of October 25, 2000

                                     among

            MOHAWK CARPET CORPORATION, MOHAWK COMMERCIAL, INC. AND
                        DURKAN PATTERNED CARPETS, INC.,
                                as Originators,

                                      and

                            MOHAWK FACTORING, INC.,
                                 as the Buyer

--------------------------------------------------------------------------------
<PAGE>

                               TABLE OF CONTENTS
                               -----------------
<TABLE>
<CAPTION>
                                                                                                                               PAGE
                                                                                                                               ----
<S>                                                                                                                            <C>
ARTICLE I AMOUNTS AND TERMS OF THE PURCHASE..................................................................................    2

Section 1.1         Purchase of Receivables..................................................................................    2
                    -----------------------

Section 1.2         Payment for the Purchases................................................................................    3
                    -------------------------

Section 1.3         Purchase Price Credit Adjustments........................................................................    3
                    ---------------------------------

Section 1.4         Payments and Computations, Etc...........................................................................    4
                    ------------------------------

Section 1.5         Transfer of Collection Records; License of Software; Access to Contracts.................................    4
                    ------------------------------------------------------------------------

Section 1.6         Characterization.........................................................................................    5
                    ----------------

ARTICLE II REPRESENTATIONS AND WARRANTIES....................................................................................    5

Section 2.1 Representations and Warranties of Originators....................................................................    5
            ---------------------------------------------
     (a)       Existence and Power...........................................................................................    5
               -------------------
     (b)       Power and Authority; Due Authorization, Execution and Delivery................................................    6
               --------------------------------------------------------------
     (c)       No Conflict...................................................................................................    6
               -----------
     (d)       Governmental Authorization....................................................................................    6
               --------------------------
     (e)       Actions, Suits................................................................................................    6
               --------------
     (f)       Binding Effect................................................................................................    6
               --------------
     (g)       Accuracy of Information.......................................................................................    6
               -----------------------
     (h)       Use of Proceeds...............................................................................................    7
               ---------------
     (i)       Good Title....................................................................................................    7
               ----------
     (j)       Perfection....................................................................................................    7
               ----------
     (k)       Places of Business and Locations of Collection Records........................................................    7
               ------------------------------------------------------
     (1)       Collections...................................................................................................    7
               -----------
     (m)       Material Adverse Effect.......................................................................................    7
               -----------------------
     (n)       Names.........................................................................................................    7
               -----
     (o)       Not a Holding Company or an Investment Company................................................................    7
               ----------------------------------------------
     (p)       Compliance with Law...........................................................................................    8
               -------------------
     (q)       Compliance with Credit and Collection Policy..................................................................    8
               --------------------------------------------
     (r)       Payments to such Originator...................................................................................    8
               ---------------------------
     (s)       Enforceability of Receivables.................................................................................    8
               -----------------------------
     (t)       Eligible Receivables..........................................................................................    8
               --------------------
     (u)       Accounting....................................................................................................    8
               ----------

ARTICLE III CONDITIONS OF PURCHASE...........................................................................................    8

Section 3.1         Conditions Precedent to Purchase.........................................................................    8
                    --------------------------------

Section 3.2         Conditions Precedent to Subsequent Payments..............................................................    8
                    -------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                                            <C>
ARTICLE IV COVENANTS........................................................................................................    9

Section 4.1            Affirmative Covenants of Originators.................................................................    9
                       ------------------------------------
     (a)       Financial Reporting..........................................................................................    9
               -------------------
          (i)       Annual Reporting........................................................................................    9
                    ----------------
          (ii)      Quarterly Reporting.....................................................................................    9
                    -------------------
          (iii)     Compliance Certificate..................................................................................   10
                    ----------------------
          (iv)      Shareholders' Statements and Reports....................................................................   10
                    ------------------------------------
          (v)       SEC Filings.............................................................................................   10
                    -----------
          (vi)      Change in Credit and Collection Policy..................................................................   10
                    --------------------------------------
          (vii)     Other Information.......................................................................................   10
                    -----------------
     (b)       Notices......................................................................................................   10
               -------
          (i)       Termination Events or Unmatured Termination Events......................................................   10
                    --------------------------------------------------
          (ii)      Material Adverse Effect.................................................................................   10
                    -----------------------
          (iii)     ERISA Events............................................................................................   10
                    ------------
     (c)       Compliance with Laws and Preservation of Existence...........................................................   11
               --------------------------------------------------
     (d)       Audits.......................................................................................................   11
               ------
     (e)       Keeping and Marking of Records and Books.....................................................................   11
               ----------------------------------------
     (f)       Compliance with Contracts and Credit and Collection Policy...................................................   12
               ----------------------------------------------------------
     (g)       Ownership....................................................................................................   12
               ---------
     (h)       Lenders' Reliance............................................................................................   12
               -----------------
     (i)       Taxes........................................................................................................   12
               -----

Section 4.2            Negative Covenants of Originators....................................................................   12
                       ---------------------------------
     (a)       Name Change, Offices and Collection Records..................................................................   12
               -------------------------------------------
     (b)       Change in Payment Instructions to Obligors...................................................................   13
               ------------------------------------------
     (c)       Modifications to Credit and Collection Policy................................................................   13
               ---------------------------------------------
     (d)       Sales, Liens.................................................................................................   13
               ------------
     (e)       Accounting for Purchases.....................................................................................   13
               ------------------------

ARTICLE V TERMINATION EVENTS................................................................................................   13

Section 5.1            Termination Events...................................................................................   13
                       ------------------

Section 5.2            Remedies.............................................................................................   14
                       --------

ARTICLE VI INDEMNIFICATION..................................................................................................   15

Section 6.1            Indemnities by Originators...........................................................................   15
                       --------------------------

Section 6.2            Other Costs and Expenses.............................................................................   17
                       ------------------------

ARTICLE VII MISCELLANEOUS...................................................................................................   17

Section 7.1            Waivers and Amendments...............................................................................   17
                       ----------------------

Section 7.2            Notices..............................................................................................   18
                       -------

Section 7.3            Protection of Ownership Interests of the Buyer.......................................................   18
                       ----------------------------------------------

Section 7.4            Confidentiality......................................................................................   19
                       ---------------
</TABLE>
                                      ii
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                                             <C>
section 7.5          Bankruptcy Petition......................................................................................   20
                     -------------------

Section 7.6          CHOICE OF LAW............................................................................................   20
                     -------------

Section 7.7          CONSENT TO JURISDICTION..................................................................................   20
                     -----------------------

Section 7.8          WAIVER OF JURY TRIAL.....................................................................................   20
                     --------------------

Section 7.9          Integration; Binding Effect; Survival of Terms...........................................................   21
                     ----------------------------------------------

Section 7.10         Counterparts; Severability; Section References...........................................................   21
                     ----------------------------------------------
</TABLE>

                            Exhibits and Schedules
                            ----------------------

Exhibit I      Definitions

Exhibit II     Principal Place of Business; Location(s) of Collection Records;
               Federal Employer Identification Number; Other Names

Exhibit III    Lock-Boxes and Collection Accounts

Exhibit IV     Form of Compliance Certificate

Exhibit V      Copy of Credit and Collection Policy

Exhibit VI     Form of Purchase Report

Schedule A     List of Documents to Be Delivered to the Buyer Prior to the
               Purchases

                                      iii
<PAGE>

                    RECEIVABLES PURCHASE AND SALE AGREEMENT

          THIS RECEIVABLES PURCHASE AND SALE AGREEMENT, dated as of October 25,
2000, is by and among Mohawk Carpet Corporation, a Delaware corporation ("Mohawk
Carpet"), Mohawk Commercial, Inc., a Delaware corporation ("Mohawk Commercial"),
Durkan Patterned Carpets, Inc., a Georgia corporation ("Durkan;" each of Mohawk
Carpet, Mohawk Commercial and Durkan being hereinafter referred to as an
"Originator" and collectively, as the "Originators"), and Mohawk Factoring,
Inc., a Delaware corporation ("Buyer"), and replaces and supersedes the
following agreements (each, an "Existing Agreement") in their entirety:

          (i)   that certain Receivables Purchase and Sale Agreement dated
     December 31, 1997 by and between the Buyer and Mohawk Carpet;

          (ii)  that certain Receivables Purchase and Sale Agreement dated May
     13, 1999 by and between the Buyer and Durkan;

          (iii) that certain Receivables Purchase and Sale Agreement dated
     December 31, 1997 by and between the Buyer and Mohawk Commercial.

Unless defined elsewhere herein, capitalized terms used in this Agreement shall
have the meanings assigned to such terms in Exhibit I hereto.
                                            ---------

                            PRELIMINARY STATEMENTS

          Each of the Originators has from time to time sold Receivables to the
     Buyer pursuant to the Existing Agreement to which such Originator is a
     party and wishes to terminate and replace such Existing Agreement in its
     entirety with this Agreement.

          Each of the Originators and the Buyer intended that the past transfers
     of Receivables under the Existing Agreements, and that all transfers of
     Receivables hereunder, be true sales to the Buyer by such Originator of the
     Receivables originated by it, providing the Buyer with the full benefits of
     ownership of such Receivables, and none of the Originators nor the Buyer
     intends these transactions to be, or for any purpose to be characterized as
     loans from the Buyer to such Originator.

          Each of the Originators acknowledges that from and after October 26,
     2000, the Buyer intends to finance purchases of Receivables from the
     Originators, in part, from the proceeds of loans made pursuant to a Credit
     and Security Agreement of even date herewith (as the same may from time to
     time hereafter be amended, supplemented, restated or otherwise modified,
     the "Credit and Security Agreement") among the Buyer, as the borrower,
     Mohawk Servicing, Inc., a Delaware corporation, as the initial Servicer,
     Blue Ride Asset Funding Corporation ("Blue Ridge") and certain other
     lenders from time to time party

                                       1
<PAGE>

     thereto, and Wachovia Bank, N.A., as agent for Blue Ridge and the other
     Lenders (in such capacity, together with its successors, the "Agent").

          NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements herein contained and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:

                                   ARTICLE I
                       AMOUNTS AND TERMS OF THE PURCHASE

     Section 1.1  Purchase of Receivables.
                  -----------------------

          (a) Effective on October 26, 2000, in consideration for the Purchase
Price paid to each Originator and upon the terms and subject to the conditions
set forth herein, each Originator does hereby sell, assign, transfer, set-over
and otherwise convey to the Buyer, without recourse (except to the extent
expressly provided herein), and the Buyer does hereby purchase from such
Originator, all of such Originator's right, title and interest in and to all
Receivables originated by such Originator and existing as of the close of
business on the Initial Cutoff Date and all Receivables thereafter originated by
such Originator through and including the Termination Date, together, in each
case, with all Related Security relating thereto. In accordance with the
preceding sentence, on October 26, 2000 the Buyer shall acquire all of each
Originator's right, title and interest in and to all Receivables existing as of
the Initial Cutoff Date and thereafter arising through and including the
Termination Date, together with all of such Originator's rights in and to all
Related Security relating thereto. The Buyer shall be obligated to pay the
Purchase Price for the Receivables purchased hereunder from each Originator in
accordance with Section 1.2. From and after the Termination Date, the Buyer
                -----------
shall not be obligated to purchase Receivables from any Originator.

          (b) On each Monthly Reporting Date, each Originator shall (or shall
require the Servicer to) deliver to the Buyer a report in substantially the form
of Exhibit VI hereto (each such report being herein called a "Purchase Report")
with respect to the Receivables sold by such Originator to the Buyer during the
fiscal month then most recently ended. In addition to, and not in limitation of,
the foregoing, in connection with the payment of the Purchase Price for any
Receivables purchased hereunder, the Buyer may request that the applicable
Originator deliver, and such Originator shall deliver, such approvals, opinions,
information or documents as the Buyer may reasonably request.

          (c) It is the intention of the parties hereto that each Purchase of
Receivables from an Originator made hereunder shall constitute a sale, which
sale is absolute and irrevocable and provides the Buyer with the full benefits
of ownership of the Receivables originated by such Originator. Except for the
Purchase Price Credits owed to such Originator pursuant to Section 1.3, the sale
                                                           -----------
of Receivables hereunder by each Originator is made without recourse to such
Originator; provided, however, that (i) such Originator shall be liable to the
Buyer for all representations, warranties, covenants and indemnities made by
such Originator pursuant to the terms of the Transaction Documents to which such
Originator is a party, and (ii) such sale does

                                       2
<PAGE>

not constitute and is not intended to result in an assumption by the Buyer or
any assignee thereof of any obligation of such Originator or any Person arising
in connection with the Receivables, the related Contracts and /or other Related
Security or any other obligations of such Originator. In view of the intention
of the parties hereto that each Purchase of Receivables ma hereunder shall
constitute a sale of such Receivables rather than loans secured thereby, each
Originator agrees that it will, on or prior to the date hereof and in accordance
with Section 4.1 (e)(ii), mark its master data processing records relating to
     -------------------
the Receivables originated by it with a legend properly evidencing that the
Buyer has purchased such Receivables as provided ii this Agreement and to note
in its financial statements that its Receivables have been sold to the Buyer.
Upon the request of the Buyer or the Agent (as the Buyer's assignee), each
Originator will execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate perfect and maintain the perfection
of the Buyer's ownership interest in the Receivables originated by such
Originator and the Related Security with respect thereto, or as the Buyer may
reasonably request.

     Section 1.2  Payment for the Purchases.
                  -------------------------

          (a)     The Purchase Price for the Purchase from each Originator of
its Receivables in existence as of the close of business on the Initial Cutoff
Date and not previously (assigned or transferred to the Buyer, if any, shall be
payable in full by the Buyer to such Originator on October 26, 2000 in
immediately available funds.

          (b)     The Purchase Price for each Receivable coming into existence
after the Cutoff Date shall be due and owing in full by the Buyer to the
applicable Originator or its designee immediately available funds on the date
each such Receivable came into existence except that Buyer may, with respect to
any such Purchase Price:

          (i)  offset against such Purchase Price any amounts owed by such
     Originator to the Buyer hereunder and which unpaid); and/or

          (ii) elect to defer payment of all or any portion of the Purchase
     Price for Receivables originated by such Originator during the same
     Calculation Period (based on the information contained in the Purchase
     Report delivered by such Originator for the Calculation Period then most
     recently ended) until the next succeeding Settlement Date.

     Section 1.3  Purchase Price Credit Adjustments. If on any day:
                  ---------------------------------

          (a)     the Outstanding Balance of a Receivable purchased from any
     Originator is:

                  (i)   reduced as a result of any defective or rejected or
          returned goods or services, any discount or any adjustment or
          otherwise by such

                                       3
<PAGE>

          Originator (other than as a result of such Receivable becoming a
          Charged-Off Receivables or to reflect cash Collections on account of
          such Receivable),

                  (ii)  reduced or canceled as a result of a setoff in respect
          of any claim by any Person (whether such claim arises out of the same
          or a related transaction or an unrelated transaction), or

          (b)     any of the representations and warranties set forth in Section
                                                                         -------
     2.1(i), (l), (p), (q), (r),(s) or (t) hereof is not true when made or
     ------------------------------    ---
     deemed made with respect to any Receivable,

then, in such event, the Buyer shall be entitled to a credit (each, a "Purchase
Price Credit") against the Purchase Price otherwise payable to the applicable
Originator hereunder equal to the Outstanding Balance of such Receivable
(calculated before giving effect to the applicable reduction or cancellation).
If such Purchase Price Credit exceeds the Original Balance of the Receivables
originated by the applicable Originator on any day, such Originator shall pay
the remaining amount of such Purchase Price Credit in cash immediately.

     Section 1.4  Payments and Computations. Etc. All amounts to be paid or
                  -------------------------------
deposit the Buyer hereunder shall be paid or deposited in accordance with the
terms hereof on the day when due in immediately available funds to the account
of the applicable Originator designated from time to time by such Originator or
as otherwise directed by such Originator. In the event that any payment owed by
any Person hereunder becomes due on a day that is not a Business Day, then such
payment shall be made on the next succeeding Business Day. If any Person to pay
any amount hereunder when due, such Person agrees to pay, on demand, the Default
in respect thereof until paid in full; provided, however, that such Default Fee
shall not at any time exceed the maximum rate permitted by applicable law. All
computations of interest payable hereunder shall be made on the basis of a year
of 360 days for the actual number of days elapsed.

     Section 1.5  Transfer of Collection Records; License of Software; Access
                  -----------------------------------------------------------
to Contracts. In connection with, and in consideration of, the Purchase from
------------
each Originator of Receivables originated by it, each Originator will deliver to
the Buyer or to the Servicer, on behalf of the Buyer, originals or copies (in
written, photostatic, electronic or other mutually acceptable form) of such
Originator's Collection Records relating to all Receivables sold by it
hereunder. Each Originator shall permit the Servicer and the Buyer during such
Originator's normal business hours and without undue disruption to the
Originator's operations, at the expense of the Buyer or the Servicer, as
applicable (but in no event at the expense of the Agent), to inspect and copy
all such collection Records and other books and records regarding the
Receivables and the Contracts solely for purposes of administering and
collecting the Receivables hereunder and under the Collection Services
Agreement. In order to facilitate such administration, collection and servicing
of such Receivables, each Originator hereby grants to each of the Buyer,
Servicer, and, for so long as the Credit and Security Agreement remains in
effect, the Agent, an irrevocable, non-exclusive license to use, without royalty
or payment of any kind, all software used by such Originator to account for such
Receivables, to the extent necessary to administer such Receivables, whether
such software is owned

                                       4
<PAGE>

by such Originator or is owned by others and used by such Originator under
license agreements with respect thereto, provided that should the consent of any
licensor of such software be required for the grant of the license described
herein, to be effective, such Originator hereby agrees that upon the request of
the Servicer or the Buyer, such Originator will use its reasonable efforts to
obtain the consent of such third-party licensor. The license granted hereby
shall be irrevocable until the later to occur of (i) the indefeasible payment in
full of the Aggregate Unpaids under the Credit and Security Agreement, and (ii)
the date on which this Agreement terminates in accordance with its terms.

     Section 1.6  Characterization. If, notwithstanding the intention of the
                  ----------------
parties expressed in Section 1.1(c), any sale by an Originator to the Buyer of
                     --------------
Receivables hereunder shall be characterized as a secured loan and not a sale or
such sale shall for any reason be ineffective or unenforceable, then this
Agreement shall be deemed to constitute a security agreement under the UCC and
other applicable law. For this purpose and without being in derogation of the
parties' intention that the sale of Receivables by each Originator hereunder
shall constitute a true sale thereof, such Originator hereby grants to the Buyer
a duly perfected security interest in all of such Originator's right, title and
interest in and to all Receivables of such Originator which exist on the Initial
Cutoff Date or arise thereafter through and including the Termination Date,
together with all Related Security with respect thereto, all other rights and
payments relating to such Receivables and all proceeds of the foregoing, to
secure the prompt and complete payment of a loan deemed to have been made in an
amount equal to the Purchase Price of the Receivables purchased from such
Originator together with any Purchase Interest applicable thereto and all other
obligations of such Originator hereunder, which security interest shall be prior
to all other Adverse Claims thereto. Upon the occurrence of a Termination Event,
the Buyer shall have, in addition to the rights and remedies which it may have
under this Agreement, all other rights and remedies provided to a secured
creditor upon default under the UCC and other applicable law, which rights and
remedies shall be cumulative.

                                  ARTICLE II
                        REPRESENTATIONS AND WARRANTIES

     Section 2.1  Representations and Warranties of Originators. Each Originator
                  --------------------------------------------
hereby represents and warrants to the Buyer on the date of the Purchase from
such Originator hereunder and, except for representations and warranties that
are limited to a certain date, on each date that any Receivable is originated by
such Originator on or after the date of such Purchase through and including the
Termination Date, that:

             (a)  Existence and Power. Such Originator is a corporation, duly
                  -------------------
organized,validly existing and in good standing under the laws of the state set
forth after its name in the preamble to this Agreement, and is duly qualified to
do business and is in good standing as a foreign entity, and has and holds all
organizational power, and all governmental licenses, authorizations, consents
and approvals required to carry on its business in each jurisdiction in which
its business is conducted except where the failure to so qualify or so hold is
not reasonably likely to have a Material Adverse Effect.

                                       5
<PAGE>

          (b)  Power and Authority; Due Authorization, Execution and Delivery.
               --------------------------------------------------------------
The execution and delivery by such Originator of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder, and such Originator's use of the proceeds
of the Purchase made from it hereunder, are within its corporate powers and
authority and have been duly authorized by all necessary corporate action on its
part. This Agreement and each other Transaction Document to which such
Originator is a party has been duly executed and delivered by such Originator.

          (c)  No Conflict. The execution and delivery by such Originator of
               -----------
this Agreement and each other Transaction Document to which it is a party, and
the performance of its obligations hereunder and thereunder do not contravene or
violate (i) its Organizational Documents, (ii) any law, rule or regulation
applicable to it, (iii) any restrictions under any agreement, contract or
instrument to which it is a party or by which it or any of its property is
bound, or (iv) any order, writ, judgment, award, injunction or decree applicable
to it, and do not result in the creation or imposition of any Adverse Claim on
assets of such Originator or its Subsidiaries (except as created hereunder)
except, in any case, where such contravention or violation is not reasonably
likely to have a Material Adverse Effect; and no transaction contemplated hereby
requires compliance with any bulk sales act or similar law.

          (d)  Governmental Authorization. Other than the filing of the
               --------------------------
financing statements required hereunder, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by such
Originator of this Agreement and each other Transaction Document to which it is
a party and the performance of its obligations hereunder and thereunder.

          (e)  Actions, Suits. There are no actions, suits or proceedings
               --------------
pending, or to the best of such Originator's knowledge, threatened, before any
court, arbitrator or other body, that could reasonably be expected to have a
Material Adverse Effect, except as previously disclosed or for which reserves in
reasonable amounts have been established. Such Originator is not in default with
respect to any order of any court, arbitrator or governmental body.

          (f)  Binding Effect. This Agreement and each other Transaction
               --------------
Document to which such Originator is a party constitute the legal, valid and
binding obligations of such Originator enforceable against such Originator in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).

          (g)  Accuracy of Information. All written information heretofore
               -----------------------
furnished by such Originator or any of its Affiliates to the Buyer for purposes
of or in connection with this Agreement, any of the other Transaction Documents
or any transaction contemplated hereby or thereby is, and all such information
hereafter furnished by such Originator or any of its Affiliates to the Buyer, as
of the date thereof, does not and will not contain any material misstatement of
fact or omit to state a material fact necessary to make the statements contained
therein, in light the circumstances under which they were made, not misleading.

                                       6
<PAGE>

          (h)  Use of Proceeds. No payment made to any Originator hereunder will
               ---------------
be used for a purpose that violates Regulation T, U or X of the Board of
Governors of the Federal Reserve System.

          (i)  Good Title. Each Receivable which is sold to the Buyer hereunder
               ----------
shall be owned by the respective Originator, free and clear of any Adverse
Claim, except as provided herein or except as may be granted by the Buyer.
Whenever the Buyer makes a purchase hereunder, it shall have acquired and shall
continue to have maintained a valid ownership interest (free and clear of any
Adverse Claim) in the respective Originator's entire right, title and interest
in and to each Receivable and the Related Security with respect thereto. There
have been duly filed all financing statements or other similar instruments or
documents necessary under the UCC of all appropriate jurisdictions to perfect
the Buyer's ownership interest in such Receivables and the Related Security to
the extent such interest can be perfected by filing a financing statement under
the UCC.

          (j)  [Reserved].
               ---------

          (k)  Places of Business and Locations of Collection Records. The
               ------------------------------------------------------
principal places of business and chief executive office of such Originator and
the offices where it keeps its Collection Records are located at the address(es)
listed on Exhibit II or such other locations of which the Buyer has been
          ----------
notified in accordance with Section 4.2(a) in jurisdictions where all action
                            -------------
required by Section 4.2(a) has been taken and completed. Such Originator's
            -------------
Federal Employer Identification Number is correctly set forth on Exhibit II.
                                                                 ----------

          (l)  Collections. Such Originator has directed all Obligors on the
               -----------
Receivables originated by it existing on or after the Initial Cutoff Date to
make payments thereon directly to a Collection Account or Lock-Box of the Buyer
which is listed on Exhibit III hereto as the same may be amended from time to
                   -----------
time by the Buyer upon not less than 30 days' prior written notice to the
Originators.

          (m)  Material Adverse Effect. Since June 30, 2000, no event has
               -----------------------
occurred that would have a Material Adverse Effect.

          (n)  Names. In the 5 years ending on the date of this Agreement, such
               -----
Originator has not used any corporate name in which a financing statement naming
such Originator (or any entity which has merged with and into such Originator)
as a debtor may be properly recorded and effective to grant a security interest
under the UCC as in effect in any applicable jurisdiction other than (i) the
name in which it has executed this Agreement, and (ii) as listed on Exhibit II.
                                                                    ----------

          (o)  Not a Holding Company or an Investment Company. Such Originator
               ----------------------------------------------
is not a "holding company" or a "subsidiary holding company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or any successor statute. Such Originator is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or any successor statute.

                                       7
<PAGE>

          (p)  Compliance with Law. Each Receivable reflected in any Purchase
               -------------------
Report as an Eligible Receivable, together with the Invoice related thereto,
does not violate any laws, rules or regulations applicable thereto (including,
without limitation, laws, rules and regulations relating to truth in lending,
fair credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy), except where such violation is not reasonably
likely to have a Material Adverse Effect.

          (q)  Compliance with Credit and Collection Policy. Such Originator has
               --------------------------------------------
complied in all material respects with the Credit and Collection Policy with
regard to each Receivable originated by it and the related Contract, and has not
made any change since the Initial Cut-Off Date to such Credit and Collection
Policy, except such material change as to which the Buyer has been notified and
has consented, as required, in accordance with Section 4.1 (a)(vi).
                                               -------------------

          (r)  Payments to such Originator. With respect to each Receivable
               ---------------------------
originated by such Originator and sold to the Buyer hereunder, the Purchase
Price (and, if applicable, Purchase Interest) received by such Originator
constitutes fair and reasonably equivalent value in consideration therefor.

          (s)  Enforceability of Receivables. Each Receivable sold by such
               -----------------------------
Originator to the Buyer hereunder is a legal, valid and binding obligation of
the related Obligor to pay the Outstanding Balance of the Receivable created
thereunder and accrued Finance Charges (if any) thereon, enforceable against the
Obligor in accordance with its terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or limiting creditors' rights generally and by general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).

          (t)  Eligible Receivables. Each Receivable reflected in any Purchase
               --------------------
Report as an Eligible Receivable was an Eligible Receivable on the date of its
acquisition by the Buyer hereunder.

          (u)  Accounting. The manner in which such Originator accounts for the
               ----------
transactions contemplated by this Agreement does not jeopardize the
characterization of the transactions contemplated herein as being true sales.

                                  ARTICLE III
                            CONDITIONS OF PURCHASE

     Section 3.1    Conditions Precedent to Purchase. The Purchase from each
                    --------------------------------
Originator under this Agreement is subject to the conditions precedent that the
Buyer shall have received on or before the date thereof the documents listed on
Schedule A.
----------

     Section 3.2    Conditions Precedent to Subsequent Payments. the Buyer's
                    -------------------------------------------
obligation to pay for Receivables coming into existence after the Initial Cutoff
Date shall be subject to the further conditions precedent that: (a) the Facility
Termination Date shall not have occurred under

                                       8
<PAGE>

the Credit and Security Agreement; (b) the Buyer (or, at any time the Credit
and Security Agreement remains in effect, the Agent as the Buyer's assignee)
shall have received such other approvals, opinions or documents as it may
reasonably request; and (c) on the date such Receivable came into existence, the
following statements shall be true (and acceptance of the proceeds of any
payment for such Receivable shall be deemed a representation and warranty by
such Originator that such statements are then true):

               (i)  the representations and warranties set forth in Article II
                                                                    ----------
          are true and correct on and as of the date such Receivable came into
          existence as though made on and as of such date; and

               (ii) no event has occurred and is continuing that will constitute
          a Termination Event.

Notwithstanding the foregoing conditions precedent, and subject to the
applicable Originator's receipt of payment of the Purchase Price for any
Receivable, all of such Originator's right, title and interest in and under such
Receivable and the Related Security with respect thereto shall vest in the
Buyer, whether or not the conditions precedent to the Buyer's obligation to pay
for such Receivable were in fact satisfied. The failure of such Originator to
satisfy any of the foregoing conditions precedent may, however, give rise to a
claim for indemnity under Article VI of this Agreement.
                          ----------

                                  ARTICLE IV
                                   COVENANTS

     Section 4.1    Affirmative Covenants of Originators. Until the date on
                    ------------------------------------
which this Agreement terminates in accordance with its terms, each Originator
hereby covenants as set forth below:

          (a)  Financial Reporting. Such Originator will maintain, for itself
               -------------------
and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish to the Buyer (or, at any time
the Credit and Security Agreement remains in effect, the Agent as the Buyer's
assignee):

               (i)  Annual Reporting. Promptly upon the filing thereof, and
                    ----------------
within 90 days after the close of each of Parent's fiscal years, audited,
unqualified consolidated financial statements (which shall include balance
sheets, statements of earnings and stockholders' equity and cash flows) for
Parent and its consolidated Subsidiaries (which include such Originator) for
such fiscal year, accompanied by an opinion of independent public accountants of
recognized national standing.

               (ii) Quarterly Reporting. Promptly upon the filing thereof, and
                    -------------------
within 45 days after the close of the first three (3) quarterly periods of each
of Parent's fiscal years, consolidated balance sheets of Parent and its
consolidated Subsidiaries (including such Originator) as at the close of each
such period and consolidated statements of earnings and

                                       9
<PAGE>

stockholders' equity and cash flows for Parent and its consolidated Subsidiaries
for the period from the beginning of such fiscal year to the end of such
quarter, all certified by a Responsible Financial Officer of Parent.

               (iii) Compliance Certificate. Together with the financial
                     ----------------------
statements required hereunder, a compliance certificate in substantially the
form of Exhibit IV signed by an Authorized Officer of Parent and dated the date
        ----------
of such annual financial statement or such quarterly financial statement, as the
case may be.

               (iv)  Shareholders' Statements and Reports. Promptly upon the
                     ------------------------------------
furnishing thereof generally to the shareholders of Parent, copies of all
financial statements, reports and proxy statements so furnished.

               (v)   S.E.C. Filings. Promptly upon the filing thereof, copies of
                     --------------
all registration statements (other than registration statements on Forms S-8 or
S-3 covering benefit or compensation plans, stock purchase or dividend
repurchase plans, or for purposes of resales of securities by holders) and
annual, quarterly or other periodic reports which Parent or any of its
Subsidiaries files with the Securities and Exchange Commission.

               (vi)  Change in Credit and Collection Policy. At least thirty
                     --------------------------------------
(30) days prior to the effectiveness of any material change in or material
amendment to the Credit and Collection Policy, a copy of the Credit and
Collection Policy then in effect and a notice indicating such proposed change or
amendment and, if such proposed change is reasonably likely to adversely affect
the collectibility of the Receivables generally or materially decrease the
credit quality of newly created Receivables generally, requesting the Buyer's
consent thereto.

               (vii) Other Information. Promptly, from time to time, such other
                     -----------------
information, documents, records or reports relating to the Receivables
originated by such Originator or the condition or operations, financial or
otherwise, of such Originator as the Buyer may from time to time reasonably
request in order to protect the interests of the Buyer under or as contemplated
by this Agreement; provided, however, that the Buyer shall keep all such
information which is not otherwise in the public domain confidential and require
a confidentiality agreement from any third party that may properly request such
information.

          (b)  Notices. Such Originator will notify the Buyer in writing of any
               -------
of the following promptly upon learning of the occurrence thereof, describing
the same and, if applicable, the steps being taken with respect thereto:

               (i)   Termination Events or Unmatured Termination Events. The
                     --------------------------------------------------
     occurrence of each Termination Event and each Unmatured Termination Event,
     by a statement of an Authorized Officer of such Originator.

               (ii)  Material Adverse Effect. The occurrence of any event or
                     -----------------------
     condition that has had, or is reasonably likely to have, a Material Adverse
     Effect.

               (iii) ERISA Events. The occurrence of any ERISA Event.
                     ------------

                                      10
<PAGE>

          (c)  Compliance with Laws and Preservation of Existence. Such
               --------------------------------------------------
Originator will comply in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject, except where the failure to so comply is not reasonably
likely to have a Material Adverse Effect. Such Originator will preserve and
maintain its legal existence, rights, franchises and privileges in the
jurisdiction of its organization, and qualify and remain qualified in good
standing as a foreign entity in each jurisdiction where its business is
conducted, except where the failure to so qualify or remain in good standing is
not reasonably likely to have a Material Adverse Effect.

          (d)  Audits. Such Originator will furnish to the Buyer from time to
               ------
time such information with respect to it and the Receivables sold by it as the
Buyer may reasonably request. Such Originator will, from time to time during
regular business hours as requested by the Buyer (or, at any time the Credit and
Security Agreement remains in effect, the Agent as the Buyer's assignee), upon
not less than two (2) Business Days' prior written notice unless a Termination
Event has occurred, permit the Buyer or their respective agents or
representatives: (i) to examine and make copies of and abstracts from all Other
Records in the possession or under the control of such Originator relating to
the Receivables and the Related Security, including, without limitation, the
related Contracts to the extent permitted by Section 1.5, and (ii) to visit the
offices and properties of such Originator for the purpose of examining such
materials described in clause (i) above, and to discuss, on a confidential
basis, matters relating to such Originator's financial condition or the
Receivables and the Related Security or such Originator's performance under any
of the Transaction Documents or such Originator's performance under the
Contracts and, in each case, with any of the officers or employees of such
Originator having knowledge of such matters.

          (e)  Keeping and Marking of Records and Books.
               ----------------------------------------

               (i)  Such Originator will maintain or will cause the Servicer to
          maintain administrative and operating procedures (including, without
          limitation, an ability to recreate records evidencing Receivables in
          the event of the destruction of the originals thereof), and keep and
          maintain all documents, books, records and other information
          reasonably necessary or advisable for the collection of all
          Receivables (including, without limitation, records adequate to permit
          the immediate identification of each new Receivable and all
          Collections of and adjustments to each existing Receivable). Such
          Originator will give, or will direct the Servicer to give, the Buyer
          notice of any material change in the administrative and operating
          procedures referred to in the previous sentence.

               (ii) Such Originator will (A) on or prior to the date hereof,
          mark its master data processing records and other books and records
          relating to the Receivables with a legend or code describing the
          Buyer's ownership interests in the Receivables and (B) upon the
          request of the Buyer following the occurrence of a Termination Event,
          mark each Invoice

                                      11
<PAGE>

             applicable to any Receivable sold by such Originator to the Buyer
             hereunder with a legend or code describing the Buyer's ownership
             thereof.

             (f)  Compliance with Contracts and Credit and Collection Policy.
                  ----------------------------------------------------------
Such Originator will timely (i) perform and comply in all material respects with
all provisions, covenants and other promises required to be observed by it under
the Contracts related to the Receivables originated by it, and (ii) comply in
all material respects with the Credit and Collection Policy in regard to each
such Receivable and the related Contract.

             (g)  Ownership. Such Originator will take all necessary action to
                  ---------
establish and maintain, irrevocably, the Buyer's right, title and interest in
and to the Receivables originated or acquired by such Originator and sold to the
Buyer hereunder, and to keep the Receivables and associated Related Security, in
each case, free and clear of any Adverse Claims other than Adverse Claims in
favor of the Buyer (including, without limitation, the filing of all financing
statements, continuation statements and/or financing statement amendments
necessary under the UCC of all appropriate jurisdictions to perfect the Buyer's
interest in such Receivables and Related Security to the extent such interest
can be perfected by filing any of the foregoing under the UCC and such other
action to perfect, protect or more fully evidence the interest of the Buyer as
the Buyer may reasonably request).

             (h)  Lenders' Reliance. Such Originator acknowledges that creditors
                  -----------------
of the Buyer are relying upon the Buyer's identity as a legal entity that is
separate from such Originator and its other Affiliates and agrees to take all
reasonable steps to maintain the Buyer's identity as a separate legal entity and
to make it manifest to third parties that the Buyer is an entity with assets and
liabilities distinct from those of such Originator and its other Affiliates and
not just a division thereof Without limiting the generality of the foregoing and
in addition to the other covenants set forth herein, such Originator (i) will
not hold itself out to third parties as liable for the debts of the Buyer nor
purport to own any of the Receivables or Related Security sold to the Buyer
hereunder, and (ii) will conduct all business with the Buyer on terms reasonably
believed by such Originator and the Buyer to be reasonably comparable to those
applicable in transactions with an unaffiliated Person in similar circumstances.

             (i)  Taxes. To the extent not handled by Parent, such Originator
                  -----
will file all tax returns and reports required by law to be filed by it and
promptly pay all taxes and governmental charges at any time owing, except any
such taxes which are not yet delinquent or are being diligently contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books. Such Originator
will pay when due any taxes payable in connection with the Receivables
originated by it, exclusive of taxes on or measured by income or gross receipts
of the Buyer and its assigns.

     Section 4.2  Negative Covenants of Originators. Until the date on which
                  ---------------------------------
this Agreement terminates in accordance with its terms, each Originator hereby
covenants that:

             (a)  Name Change, Offices and Collection Records. Such Originator
                  -------------------------------------------
will not (i) change its state of organization, (ii) change its legal name, or
(iii) change its identity or

                                      12
<PAGE>

corporate structure (within the meaning of Section 9-402(7) of any applicable
enactment of the UCC), (iv) relocate its chief executive office (so long as its
chief executive office determines the place of perfection of the Buyer's
ownership interest in such Originator's Receivables), or (v) relocate any office
where Collection Records are kept by or on behalf of such Originator unless, in
each of the foregoing cases, it shall have: (A) given the Buyer at least 30
days' prior written notice thereof and (B) delivered to the Buyer all financing
statements, instruments and other documents requested by the Buyer in connection
with such change or relocation.

          (b)     Change in Payment Instructions to Obligors. Such Originator
                  ------------------------------------------
will not direct any Obligor on the Receivables sold by it to the Buyer hereunder
to make payments to any location other than to one of the Buyer's Lock-Boxes or
Collection Accounts listed on Exhibit III hereto as the same may be amended
                              -----------
from time to time by the Buyer upon not less than 30 days' prior written notice
to the Originators.

          (c)     Modifications to Credit and Collection Policy. Such
                  ---------------------------------------------
Originator will not, and will not cause or authorize the Servicer to, make any
material change to the Credit and Collection Policy that would materially
decrease the collectibility of its Receivables generally.

          (d)     Sales, Liens. Such Originator will not sell, assign (by
                  ------------
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, or create or suffer to exist any Adverse Claim upon (including,
without limitation, the filing of any financing statement) or with respect to,
any Receivable or the Related Security, or upon or with respect to any Contract
under which any Receivable arises, or assign any right to receive income with
respect thereto (other than, in each case, the creation of the interests therein
in favor of the Buyer provided for herein), and such Originator will defend the
right, title and interest of the Buyer in, to and under any of the foregoing
property, against all claims of third parties claiming through or under such
Originator.

          (e)     Accounting for Purchases. Such Originator will not account
                  ------------------------
for the transactions contemplated hereby in any manner other than the sale for
financial accounting purposes by such Originator to the Buyer of the Receivables
sold and transferred by such Originator on or after the Initial Cutoff Date
through and including the Termination Date, together with the associated Related
Security, except to the extent that such transactions are not recognized on
account of consolidated financial reporting in accordance with generally
accepted accounting principles.

                                   ARTICLE V
                              TERMINATION EVENTS

     Section 5.1  Termination Events. The occurrence of any one or more of the
                  ------------------
following events shall constitute a Termination Event:

          (a)     Such Originator shall fail to make any payment or deposit
required hereunder when due, or to perform or observe any term, covenant or
agreement hereunder or

                                       13
<PAGE>

under any other Transaction Document to which it is a party and such failure
shall continue for 30 days after written notice of such failure is given.

          (b)     Any representation, warranty, certification or statement made
by such Originator in this Agreement, any other Transaction Document to which it
is a party, or in any other document delivered pursuant hereto or thereto shall
prove to have been incorrect in any material respect when made or deemed made;
provided that the materiality threshold in the preceding clause shall not be
applicable with respect to any representation or warranty which itself contains
a materiality threshold.

          (c)     Failure of any Originator to pay any Indebtedness when due in
excess of $25,000,000 ("Material Debt"); or the default by any Originator in the
performance of any term, provision or condition contained in any agreement under
which any Material Debt was created or is governed, the effect of which is to
cause, or to permit the holder or holders of such Material Debt to cause, such
Indebtedness to become due prior to its stated maturity; or any Material Debt of
any Originator shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the date of maturity
thereof.

          (d)     (i)    Any Originator or any of its Material Subsidiaries
shall generally not pay its debts as such debts become due or shall admit in
writing its inability to pay its debts generally or shall make a general
assignment for the benefit of creditors; or (ii) any proceeding shall be
instituted by or against such Originator or any of its Material Subsidiaries
seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee or other similar official for it or
any substantial part of its property or (iii) any Originator or any of its
Material Subsidiaries shall take any corporate action to authorize any of the
actions set forth in the foregoing clauses (i) or (ii) of this subsection (d).

          (e)     A Change of Control shall occur.

          (f)     One or more final judgments for the payment of money in an
amount in excess of $25,000,000, individually or in the aggregate, shall be
entered against any Originator on claims not covered by insurance or as to which
the insurance carrier has denied its responsibility, and such judgment shall
continue unsatisfied and in effect for thirty (30) consecutive days without a
stay of execution.

          (g)     The PBGC or Internal Revenue Service shall file any notice of
lien on any of the Receivables or the Related Security.

     Section 5.2  Remedies. Upon the occurrence and during the continuation of a
                  --------
Termination Event, the Buyer may take any of the following actions: (i) declare
the Termination Date to have occurred, whereupon the Termination Date shall
forthwith occur, without demand, protest or further notice of any kind, all of
which are hereby expressly waived by each Originator;

                                       14
<PAGE>

provided, however, that upon the occurrence of a Termination Event described in
Section 5.1(d), or of an actual or deemed entry of an order for relief with
--------------
respect to such Originator under the Federal Bankruptcy Code, the Termination
Date shall automatically occur, without demand, protest or any notice of any
kind, all of which are hereby expressly waived by each Originator and (ii) to
the fullest extent permitted by applicable law, declare that the Default Fee
shall accrue with respect to any amounts then due and owing by such Originator
to the Buyer. The aforementioned rights and remedies shall be without limitation
and shall be in addition to all other rights and remedies of the Buyer and, so
long as the Credit and Security Agreement remains in effect, the Agent as the
Buyer's assignee otherwise available under any other provision of this
Agreement, by operation of law, at equity or otherwise, all of which are hereby
expressly preserved, including, without limitation, all rights and remedies
provided under the UCC, all of which rights shall be cumulative.

                                  ARTICLE VI
                                INDEMNIFICATION

     Section 6.1  Indemnities, by Originators. Without limiting any other rights
                  ---------------------------
that the Buyer may have hereunder or under applicable law, each Originator
hereby agrees to indemnify (and pay upon demand to) the Buyer and its assigns,
officers, directors, agents and employees (each an "Indemnified Party") from and
against any and all damages, losses, claims, taxes, liabilities, costs, expenses
and for all other amounts payable, including reasonable attorneys' fees and
disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against and actually paid or actually incurred by
any of them arising out of or as a result of this Agreement or the acquisition,
either directly or indirectly, by the Buyer of any interest in the Receivables
originated by such Originator, excluding, however:

          (a)     Indemnified Amounts to the extent a final judgment of a court
     of competent jurisdiction holds that such Indemnified Amounts resulted from
     gross negligence or willful misconduct on the part of the Indemnified Party
     seeking indemnification;

          (b)     Indemnified Amounts to the extent the same includes losses in
     respect of Receivables originated by such Originator that are uncollectible
     on account of the insolvency, bankruptcy or lack of creditworthiness of the
     related Obligor; or

          (c)     taxes imposed by the jurisdiction in which such Indemnified
     Party's principal executive office is located, on or measured by the
     overall net income or gross receipts of such Indemnified Party;

provided, however, that nothing contained in this sentence shall limit the
liability of such Originator or limit the recourse of the Buyer to such
Originator for amounts otherwise specifically provided to be paid by such
Originator under the terms of this Agreement. Without limiting the generality of
the foregoing indemnification, but subject in each case to clauses (a),

                                       15
<PAGE>

(b) and (c) above, each Originator shall indemnify the Buyer for Indemnified
Amounts relating to or resulting from:

               (i)     any representation or warranty made by such Originator
     (or any officers of such Originator) under or in connection with any
     Purchase Report, this Agreement, any other Transaction Document or any
     other information or report delivered by such Originator pursuant hereto or
     thereto for which the Buyer has not received a Purchase Price Credit that
     shall have been false or incorrect when made or deemed made;

               (ii)    the failure by such Originator, to comply with any
     applicable law, rule or regulation with respect to any Receivable or
     Contract related thereto, or the nonconformity of any Receivable or
     Contract included therein with any such applicable law, rule or regulation
     or any failure of such Originator to keep or perform any of its
     obligations, express or implied, with respect to any Contract;

               (iii)   any failure of such Originator to perform its duties,
     covenants or other obligations in accordance with the provisions of this
     Agreement or any other Transaction Document;

               (iv)    any products liability, personal injury or damage, suit
     or other similar claim arising out of or in connection with goods or
     services that are the subject of any Contract or any Receivable;

               (v)     any dispute, claim, offset or defense (other than
     discharge in bankruptcy of the Obligor) of the Obligor to the payment of
     any Receivable (including, without limitation, a defense based on such
     Receivable or the related Contract not being a legal, valid and binding
     obligation of such Obligor enforceable against it in accordance with its
     terms), or any other claim resulting from the sale of the goods or service
     related to such Receivable or the furnishing or failure to furnish such
     goods or services;

               (vi)    any Collections received, directly or indirectly by an
     Originator (or its agent) which are not promptly remitted to Buyer;

               (vii)   any investigation, litigation or proceeding related to or
     arising from this Agreement or any other Transaction Document, the
     transactions contemplated hereby, such Originator's use of the proceeds of
     the Purchase from it hereunder, the ownership of the Receivables originated
     by such Originator or any other investigation, litigation or proceeding
     relating to such Originator in which any Indemnified Party becomes involved
     as a result of any of the transactions contemplated hereby;

               (viii)  any inability to litigate any claim against any Obligor
     in respect of any Receivable reflected in any Purchase Report as being an
     Eligible Receivable as a result of such Obligor being immune from civil and
     commercial law and suit on the grounds of sovereignty or otherwise from any
     legal action, suit or proceeding;

               (ix)    any Termination Event described in Section 5.1(d);
                                                          --------------

                                      16

<PAGE>

                  (xi)    any failure to vest and maintain vested in the Buyer,
     or to transfer to the Buyer, ownership of the Receivables originated by
     such Originator and purported to be conveyed to the Buyer hereunder,
     together with the associated Related Security, in each case, free and clear
     of any Adverse Claim;

                  (xii)   the failure to have filed, or any delay in filing,
     financing statements or other similar instruments or documents under the
     UCC of any applicable jurisdiction or the applicable laws of Canada with
     respect to any Receivable originated by such Originator and the Related
     Security with respect thereto, and the proceeds of any thereof, whether at
     the time of the Purchase from such Originator hereunder or at any
     subsequent time;

                  (xiii)  any action or omission by such Originator which
     impairs the rights of the Buyer with respect to any Receivable or reduces
     the value of any such Receivable (for any reason other than the application
     of Collections thereto or charge-off of any Receivable as uncollectible)
     unless the Buyer has received a Purchase Price Credit therefor; and

                  (xiv)   the failure of any Receivable reflected as an Eligible
     Receivable on any Purchase Report prepared by such Originator to be an
     Eligible Receivable at the time acquired by the Buyer.

     Section 6.2  Other Costs and Expenses. Each Originator shall pay to the
                  ------------------------
Buyer on demand all reasonable costs and out-of-pocket expenses actually
incurred in connection with the preparation, execution and delivery of this
Agreement, the transactions contemplated hereby and the other documents to be
delivered hereunder. In addition to the foregoing, each Originator shall pay, on
demand, any and all reasonable costs and expenses, including reasonable counsel
fees and expenses, actually incurred by the Buyer (or, at any time the Credit
and Security Agreement remains in effect, the Agent as the Buyer's assignee) in
connection with (i) any amendment to or waiver of this Agreement, and/or (ii)
the enforcement of this Agreement and the other documents delivered hereunder
following a Termination Event.

                                  ARTICLE VII
                                 MISCELLANEOUS

     Section 7.1  Waivers and Amendments.
                  ----------------------

          (a)     No failure or delay on the part of the Buyer (or, at any time
     the Credit and Security Agreement remains in effect, the Agent as the
     Buyer's assignee) in exercising any power, right or remedy under this
     Agreement shall operate as a waiver thereof, nor shall any single or
     partial exercise of any such power, right or remedy preclude any other
     further exercise thereof or the exercise of any other power, right or
     remedy. The rights and remedies herein provided shall be cumulative and
     nonexclusive of any rights or remedies provided by law.

                                       17
<PAGE>

     Any waiver of this Agreement shall be effective only in the specific
     instance and for the specific purpose for which given.

          (b)     No provision of this Agreement may be amended, supplemented,
     modified or waived except in writing signed by each Originator and the
     Buyer and, to the extent required under the Credit and Security Agreement,
     the Agent and the Liquidity Banks or the Required Liquidity Banks. At any
     time while the Credit and Security Agreement remains in effect, any
     material amendment, supplement, modification or waiver will require
     satisfaction of the Rating Agency Condition.

     Section 7.2  Notices. All communications and notices provided for hereunder
                  -------
shall be in writing (including bank wire, telecopy or electronic facsimile
transmission or similar writing) and shall be given to the other parties hereto
at their respective addresses or telecopy numbers set forth on the signature
pages hereof or at such other address or telecopy number as such Person may
hereafter specify for the purpose of notice to each of the other parties hereto.
Each such notice or other communication shall be effective (a) if given by
telecopy, upon the receipt thereof, (b) if given by mail, three (3) Business
Days after the time such communication is deposited in the mail with first class
postage prepaid or (c) if given by any other means, when received at the address
specified in this Section 7.2.
                  -----------

     Section 7.3  Protection of Ownership Interests of the Buyer.
                  ----------------------------------------------

          (a)     Each Originator agrees that from time to time, at its expense,
it will promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that the Buyer (or, at any time
the Credit and Security Agreement remains in effect, the Agent as the Buyer's
assignee) may request, to perfect, protect or more fully evidence the interest
of the Buyer (or, at any time the Credit and Security Agreement remains in
effect, the Agent as the Buyer's assignee) hereunder, or to enable the Buyer
(or, at any time the Credit and Security Agreement remains in effect, the Agent
as the Buyer's assignee) to exercise and enforce their rights and remedies
hereunder. At any time following a Termination Event, the Buyer (or, at any time
the Credit and Security Agreement remains in effect, the Agent as the Buyer's
assignee) may, at such Originator's sole cost and expense, direct such
Originator to notify the Obligors of Receivables of the ownership interests of
the Buyer under this Agreement and may also direct that payments of all amounts
due or that become due under any or all Receivables be made directly to the
Buyer (or, at any time the Credit and Security Agreement remains in effect, the
Agent as the Buyer's assignee) or the Buyer's (or such assigns') designee.

          (b)     If any Originator fails to perform any of its obligations
hereunder, the Buyer (or, at any time the Credit and Security Agreement remains
in effect, the Agent as the Buyer's assignee) may (but shall not be required to)
perform, or cause performance of, such obligations, and the Buyer's (or such
assigns') costs and expenses incurred in connection therewith shall be payable
by such Originator as provided in Section 6.2. Each Originator irrevocably
                                  ------------
authorizes the Buyer (and, at any time the Credit and Security Agreement remains
in

                                       18
<PAGE>

effect, the Agent as the Buyer's assignee) at any time and from time to time in
the sole discretion of the Buyer (or, at any time the Credit and Security
Agreement remains in effect, the Agent as Buyer's assignee), and appoints the
Buyer (and, at any time the Credit and Security Agreement remains in effect, the
Agent as the Buyer's assignee) as its attorney(ies)-in-fact, to act on behalf of
such Originator (i) to execute on behalf of such Originator as debtor, in the
event such Originator fails to timely execute, and to file financing statements
necessary in the Buyer's my time while the Credit and Security Agreement remains
in effect, the Agent's) reasonable opinion to perfect and to maintain the
perfection and priority of the interest of the in the Receivables originated by
such Originator and (ii) in the event such Originator fails to deliver any
financing statement requested pursuant to the preceding clause (i), to file a
carbon photographic or other reproduction of this Agreement or any financing
statement with respect to receivables as a financing statement in such offices
as the Buyer (or, at any time the Credit Security Agreement remains in effect,
the Agent as the Buyer's assignee) in their sole discretion deem necessary or
desirable to perfect and to maintain the perfection and priority of the Buyer's
interest in such Receivables. This appointment is coupled with an interest and
is able.

     Section 7.4  Confidentiality.
                  ---------------

          (a)     Each Originator shall maintain and shall cause each of its
employees and officers to maintain the confidentiality of the Fee Letter (under
and as defined in the Credit and Security Agreement) and the electronic models
and files (including electronic files containing model accounting entries for
securitization transactions) provided by the Agent or Blue Ridge in connection
with the Credit and Security Agreement, provided, however, such information may
be disclosed to third parties to the extent such disclosure is (i) required to
comply with any applicable law (including federal and state securities laws) or
order of any judicial or administrative proceeding, or (ii) required in response
to any summons or subpoena or in connection with any litigation, provided,
further, that such Originator inform such person that such information is
sensitive, proprietary and confidential. Notwithstanding the foregoing, each
Originator shall have no obligation of confidentiality in respect of any
information which may be generally available to the public or becomes available
to the public through no fault of such Originator or its Affiliates.

          (b)     The Buyer (and, accordingly, each of its assigns) shall
maintain, shall cause each of its employees, officers and agents to maintain,
and shall require the Lenders to maintain and to cause each of their respective
employees, officers and agents to maintain, the confidentiality of any
information obtained by it in respect of the Receivables (including, without
limitation, credit losses and delinquency levels) and any other proprietary or
confidential information with respect to Parent, the Obligors, the Receivables,
the Originators and the Servicer in communications with third parties; provided,
however, such information may be disclosed to third parties to the extent such
disclosure is (i) required to comply with any applicable law (including federal
and state securities laws) or order of any judicial or administrative
proceeding, or (ii) required in response to any summons or subpoena or in
connection with any litigation, or (iii) to any Person specified in Section 14.5
of the Credit and Security Agreement on the terms set forth therein.

                                       19
<PAGE>

     Section 7.5  Bankruptcy Petition.
                  -------------------

          (a)     Each Originator and the Buyer covenant and agree that, prior
to the date that is one year and one day after the payment in full of all
outstanding senior indebtedness of Blue Ridge, it will not institute against, or
join any other Person in instituting against, Blue Ridge any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.

          (b)     Each Originator covenants and agrees that, prior to the date
that is one year and one day after the payment in full of all outstanding
obligations of the Buyer under the Credit and Security Agreement, it will not
institute against, or join any other Person in instituting against, the Buyer
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.

     Section 7.6  CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
                  -------------
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
OF GEORGIA.

     Section 7.7  CONSENT TO JURISDICTION. ORIGINATOR HEREBY IRREVOCABLY SUBMITS
                  -----------------------
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR GEORGIA STATE
COURT SITTING IN FULTON COUNTY, GEORGIA IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ORIGINATOR PURSUANT
TO THIS AGREEMENT AND ORIGINATOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
BUYER (OR ITS ASSIGNS) TO BRING PROCEEDINGS AGAINST ORIGINATOR IN THE COURTS OF
ANY OTHER JURISDICTION.

     Section 7.8  WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
                  --------------------
APPLICABLE LAW, EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ORIGINATOR PURSUANT TO THIS
AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.

                                       20
<PAGE>

     Section 7.9  Integration; Binding Effect; Survival of Terms.
                  ----------------------------------------------

          (a)     The Transaction Documents contain the final and complete
integration of all prior expressions by the parties hereto with respect to the
sale and collection of the Receivables and Related Security and shall constitute
the entire agreement among the parties hereto with respect to such subject
matter, superseding all prior oral or written understandings with respect to the
sale and collection of the Receivables and Related Security.

          (b)     Nothing contained herein or in any other Transaction Document
shall be deemed to prohibit or limit any merger or consolidation of an
Originator with another Originator so long as any necessary financing statements
are filed, promptly after the effectiveness of such merger or consolidation,
under the UCC in all jurisdictions necessary to make the representations and
warranties contained in this Agreement true and correct after giving effect to
such merger or consolidation. This Agreement shall be binding upon and inure to
the benefit of the Originators, the Buyer and their respective successors and
permitted assigns (including any trustee in bankruptcy). No Originator may
assign any of its rights and obligations hereunder or any interest herein
without the prior written consent of the Buyer; provided, however, that no
consent of the Buyer shall be required in connection with an assignment by
operation of law to the surviving Originator in a merger or consolidation
described in the first sentence of this Section 7.9(b). The Buyer may pledge or
assign at any time its rights and obligations hereunder and interests herein to
any other Person without the consent of any Originator. Without limiting the
foregoing, each Originator acknowledges that the Buyer, pursuant to the Credit
and Security Agreement, may grant to the Agent for the benefit of the Secured
Parties (under and as defined in the Credit and Security Agreement), a security
interest in the Buyer's rights, remedies, powers and privileges hereunder. This
Agreement shall create and constitute the continuing obligations of the parties
hereto in accordance with its terms and shall remain in full force and effect
until terminated in accordance with its terms; provided, however, that the
rights and remedies with respect to (i) any breach of any representation and
warranty made by any Originator pursuant to Article II; (ii) the indemnification
                                            ----------
and payment provisions of Article VI; and (iii) Section 7.4 shall be continuing
                          ----------            -----------
and shall survive any assignment or termination of this Agreement.

     Section 7.10 Counterparts; Severability; Section References. This Agreement
                  ----------------------------------------------
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise expressly indicated, all references herein
to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and
sections of, and schedules and exhibits to, this Agreement.

                           (Signature pages follows)

                                      21

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date
hereof in Wilmington, Delaware.

                                      MOHAWK CARPET CORPORATION

                                      By: __________________________
                                      Name:     Sidney J. Frost
                                      Title:    Vice President and Treasurer

                                      Address:  160 S. Industrial Blvd.
                                                Calhoun, GA 30703
                                                Attn: Sidney J. Frost
                                                Phone: (706) 624-2239
                                                Fax:   (706) 625-3851

                                      MOHAWK COMMERCIAL, INC.

                                      By: __________________________
                                      Name:     Sidney J. Frost
                                      Title:    Vice President and Treasurer

                                      Address:  160 S. Industrial Blvd.
                                                Calhoun, GA 30703
                                                Attn: Sidney J. Frost
                                                Phone: (706) 624-2239
                                                Fax:   (706) 625-3851

                                      DURKAN PATTERNED CARPETS, INC.

                                      By: __________________________
                                      Name:     Sidney J. Frost
                                      Title:    Vice President, Treasurer and
                                                Secretary

                                      Address:  160 S. Industrial Blvd.
                                                Calhoun, GA 30703
                                                Attn: Sidney J. Frost
                                                Phone: (706) 624-2239
                                                Fax:   (706) 625-3851

                                      22
<PAGE>

                               MOHAWK FACTORING, INC.

                               By: __________________________
                               Name:     Linda Bubacz
                               Title:    Assistant Treasurer and Secretary

                                         Address:  300 Delaware Ave.
                                                   Suite 1273 C
                                                   Wilmington, Delaware 19801
                                                   Attn: Linda Bubacz
                                                   Phone: (302) 552-3100
                                                   Fax:   (302) 552-3128

                                      23
<PAGE>

                                   Exhibit I

                                  Definitions
                                  -----------

     This is Exhibit I to the Agreement (as hereinafter defined). As used in the
Agreement and the Exhibits and Schedules thereto, capitalized terms have the
meanings set forth in this Exhibit I (such meanings to be equally applicable to
the singular and plural forms thereof).

     "Adverse Claim" means a lien, security interest, charge or encumbrance, or
other right or claim in, of or on any Person's assets or properties in favor of
any other Person.

     "Agent" has the meaning set forth in the Preliminary Statements to the
Agreement.

     "Agreement" means the Receivables Purchase and Sale Agreement, dated as of
October 25, 2000, among Originators and the Buyer, as the same may be amended,
restated or otherwise modified.

     "Blue Ridge" has the meaning set forth in the Preliminary Statements to the
Agreement.

     "Business Day" means any day on which banks are not authorized or required
to close in New York, New York or Atlanta, Georgia, and The Depository Trust
Company of New York is open for business, and, if the applicable Business Day
relates to any computation or payment to be made with respect to the LIBO Rate,
any day on which dealings in dollar deposits are carried on in the London
interbank offering market.

     "Buyer" has the meaning set forth in the preamble to the Agreement.

     "Calculation Period" means each fiscal month of the Buyer or portion
thereof which elapses during the term of the Agreement. The first Calculation
Period shall commence on the date of the Purchases hereunder and the final
Calculation Period shall terminate on the Termination Date. For purposes of the
use of this term in other definitions in Exhibit I to this Agreement,
Calculation Periods occurring prior to the date of the Purchases hereunder shall
mean a fiscal month of the Buyer.

     "Canadian Receivable" means a Receivable owing from an Obligor domiciled
in, or organized under the laws of, Canada or one of its political subdivisions.

     "Change of Control" means the acquisition by any Person, or two or more
Persons acting in concert, of 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 voting stock of Parent,
or Parent ceases to own, directly or indirectly, all of the outstanding shares
of voting stock of each Originator.

                                      24
<PAGE>

     "Collection Accounts" means those accounts shown on Exhibit III, as the
                                                         -----------
same may be amended from time to time by the Buyer in accordance with the terms
hereof.

     "Collection Records" means, with respect to any Receivable, all Invoices
and all other documents, books, records and other information (including,
without limitation, computer programs, tapes, disks, punch cards, data
processing software and related property and rights) relating to amounts paid on
or owing in respect of such Receivable.

     "Collections" means, with respect to any Receivable, all cash collections
and other cash proceeds in respect of such Receivable, including, without
limitation, all Finance Charges or other related amounts accruing in respect
thereof and all cash proceeds of Related Security with respect to such
Receivable.

     "Collection Services Agreement" means that certain Servicing Agreement
dated as of October 25, 2000 by and between the Buyer and Mohawk Servicing,
Inc., as Servicer, providing for the collection and servicing of all Receivables
held by the Buyer.

     "Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a letter of credit.

     "Contract" means, with respect to any Receivable, any and all instruments
and agreements, if any, pursuant to which such Receivable arises but excluding
any Invoice.

     "Credit and Collection Policy" means each Originator's credit and
collection policies and practices relating to Contracts and Receivables existing
on and as administered historically prior to the date hereof and summarized in
Exhibit V, as modified from time to time in accordance with the Agreement.

     "Credit and Security Agreement" has the meaning set forth in the
Preliminary Statements to the Agreement.

     "Default Fee" means a per annum rate of interest equal to the sum of (i)
the Prime Rate, plus (ii) 2% per annum.

     "Defaulted Receivable" means a Receivable: (i) as to which the Obligor
thereof has suffered an Event of Bankruptcy; (ii) which, consistent with the
Credit and Collection Policy, would be written off Originator's books as
uncollectible; or (iii) as to which any payment, or part thereof, remains unpaid
for 61 days or more from the original due date for such payment.

     "Delinquent Receivable" means a Receivable as to which any payment, or part
thereof, remains unpaid for 31-60 days from the original due date for such
payment.

                                      25
<PAGE>

     "Discount Factor" means a percentage calculated to provide the Buyer with a
reasonable return on its investment in the Receivables originated by each
Originator after taking account of (i) the time value of money based upon the
anticipated dates of collection of such Receivables and the cost to the Buyer of
financing its investment in such Receivables during such period and (ii) the
risk of nonpayment by the Obligors. Each Originator and the Buyer may agree from
time to time to change the Discount Factor based on changes in one or more of
the items affecting the calculation thereof, provided that any change to the
Discount Factor shall take effect as of the commencement of a Calculation
Period, shall apply only prospectively and shall not affect the Purchase Price
payment made prior to such Calculation Period during which such Originator and
the Buyer agree to make such change.

     "Durkan" has the meaning set forth in the preamble to the Agreement.

     "Eligible Receivable" means, at any time, a Receivable:

          (i)     the Obligor of which (a) if a natural person, is a resident of
     the United States or Canada or, if a corporation or other business
     organization, is organized under the laws of the United States, Canada or
     any political subdivision of the United States or Canada and has its chief
     executive office in the United States or Canada; (b) is not an Affiliate of
     any of the parties hereto; and (c) is not a government or a governmental
     subdivision or agency; provided, however, that in no event may the sum of
     100% of all Canadian Receivables denominated in United States Dollars that
     are included as Eligible Receivables plus 85% of all Canadian Receivables
     denominated in Canadian Dollars that are included as Eligible Receivables
     exceed 3% of total Receivables at any time,

          (ii)    which is not a Defaulted Receivable,

          (iii)   which was not a Delinquent Receivable on (A) the date of
     Purchase (if such Receivable was in existence on the Initial Cutoff Date),
     or (B) the date on which such Receivable came into existence (in all other
     cases),

          (iv)    which (A) by its terms is due and payable within 91 days of
     the original billing date therefor, (B) has not had its payment terms
     extended more than once, and (C) will not, when added to all other Eligible
     Receivables, cause the weighted average of the payment terms for all
     Eligible Receivables to exceed 50 days,

          (v)     which is an "account," a "general intangible" or "chattel
     paper" within the meaning of Article 9 of the UCC in the applicable
     jurisdiction, and is not evidenced by an "instrument" within the meaning of
     Article 9 of the UCC,

                                      26

<PAGE>

          (vi)    which is denominated and payable only in United States Dollars
     or Canadian Dollars in the United States or Canada,

          (vii)   which is in full force and effect and constitutes the legal,
     valid and binding obligation of the related Obligor enforceable against
     such Obligor in accordance with its terms,

          (viii)  which (A) does not require the Obligor's consent to the
     transfer, sale, pledge or assignment of the rights of the applicable
     Originator under the applicable Contract or Invoice and (B) does not
     contain a confidentiality provision that purports to restrict the ability
     of the Buyer (or, at any time the Credit and Security Agreement remains in
     effect, the Agent as the Buyer's assignee) to exercise its rights under
     this Agreement, including, without limitation, its right to review the
     Contract or Invoice applicable thereto,

          (ix)    which represents an obligation to pay a specified sum of
     money, contingent only upon (A) the sale of goods or the provision of
     services by the applicable Originator (which sale has been consummated or
     services have been performed), and (B) satisfaction by such Originator of
     any applicable warranty claims which have not yet been made or asserted,

          (x)     which does not contravene any law, rule or regulation
     applicable thereto (including, without limitation, any law, rule and
     regulation relating to truth in lending, fair credit billing, fair credit
     reporting, equal credit opportunity, fair debt collection practices and
     privacy),

          (xi)    which satisfies all applicable requirements of the applicable
     Credit and Collection Policy,

          (xii)   which was generated in the ordinary course of the applicable
     Originator's business,

          (xiii)  which arises solely from the sale (and not the lease) of goods
     or the provision of services to the related Obligor by the applicable
     Originator or a predecessor to such Originator, and not by any other Person
     (in whole or in part),

          (xiv)   which is not the subject of, to the Originator's knowledge,
     any dispute, counterclaim, right of rescission, set-off, counterclaim or
     any other defense (including defenses arising out of violations of usury
     laws) of the applicable Obligor against the applicable Originator or any
     other Adverse Claim, and the Obligor thereon holds no right as against such

                                      27
<PAGE>

     Originator to cause such Originator to repurchase the goods or merchandise
     the sale of which shall have given rise to such Receivable (except with
     respect to sale discounts effected pursuant to the Contract, or defective
     goods returned in accordance with the terms of the Contract); provided,
     however, that if such dispute, offset, counterclaim or defense affects only
     a portion of the Outstanding Balance of such Receivable, then such
     Receivable may be deemed an Eligible Receivable to the extent of the
     portion of such Outstanding Balance which is not so affected, and provided,
     further, that Receivables of any Obligor which has any accounts payable by
     the applicable Originator or by a wholly-owned Subsidiary of such
     Originator (thus giving rise to a potential offset against such
     Receivables) may be treated as Eligible Receivables to the extent that the
     Obligor of such Receivables has agreed pursuant to a written agreement in
     form and substance satisfactory to the Buyer (and, at any time the Credit
     and Security Agreement remains in effect, the Agent as the Buyer's
     assignee), that such Receivables shall not be subject to such offset,

          (xv)    as to which the applicable Originator has satisfied and fully
     performed all obligations on its part with respect to such Receivable
     required to be fulfilled by it, and no further action is required to be
     performed by any Person with respect thereto other than payment thereon by
     the applicable Obligor, and

          (xvi)   as to which each of the representations and warranties
     contained in Sections 2.1(i), (1) and (s) is true and correct.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with any Originator within the meaning of Section 4 14(b)
or (c) of the Code (and Sections 4 14(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

     "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by any Originator or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001 (a) (2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by any Originator or any
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 404 IA
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer

                                      28
<PAGE>

Plan; or (f) the imposition of any liability under Tide IV of ERISA, other than
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any
Originator or any ERISA Affiliate.

     "Factored Receivable" means, with respect to any Originator, any right to
payment for goods sold or services performed by such Originator existing on or
after the Initial Cutoff Date which is sold or pledged to any factor and
designated on such Originator's accounting system with code "C", "D", "S", "I"
or any other code identified as such in writing by the Originator to the Buyer
(and, as long as the Credit and Security Agreement remains in effect, the Agent
as the Buyer's assignee), or which directs that payment be made to a factor
other than the Buyer.

     "Finance Charges" means, with respect to any Contract, any finance,
interest, late payment charges or similar charges owing by an Obligor pursuant
to such Contract.

     "Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, secured by liens or payable out of the proceeds or
production from property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, acceptances, or other instruments, (v)
capitalized lease obligations, (vi) net liabilities under interest rate swap,
exchange or cap agreements, (vii) Contingent Obligations and (viii) liabilities
in respect of unfunded vested benefits under plans covered by Title IV of ERISA.

     "Initial Cutoff Date" means the close of business on the Business Day
immediately prior to the date hereof.

     "Invoice" means any paper or electronic invoice evidencing any Receivable.

     "Lock-Boxes" means those lock-boxes shown on Exhibit III, as the same may
                                                  -----------
be amended from time to time by the Buyer in accordance with the terms hereof.

     "Material Adverse Effect" means a material adverse effect on (i) the
financial condition or results of operations of Parent and its Subsidiaries,
considered as a whole, (ii) the ability of any Originator to perform its
obligations under this Agreement or any other Transaction Document to which such
Originator is a party, (iii) the legality, validity or enforceability of this
Agreement or any other Transaction Document to which such Originator is a party,
(iv) any Originator's, the Buyer's, the Agent's or any Lender's interest in the
Receivables generally or in any significant portion of the Receivables or the
Related Security with respect thereto, or (v) the collectibility of the
Receivables generally or of any material portion of the Receivables.

     "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% of the consolidated total assets shown on the consolidated
balance sheet of Parent and its consolidated

                                      29
<PAGE>

subsidiaries, or (b) had net income for any prior period of four consecutive
fiscal quarters equal to or greater than 5% of the Parent's and its consolidated
subsidiaries consolidated net income shown on the statements of earnings for the
same four fiscal quarter period.

     "Mohawk Carpet" has the meaning set forth in the preamble to the Agreement.

     "Mohawk Commercial" has the meaning set forth in the preamble to the
Agreement.

     "Monthly Reporting Date" means the 18th day of each calendar month
hereafter (or if any such day is not a Business Day, the next succeeding
Business Day thereafter).

     "Multiemployer Plan" means a "multiemployer plan," within the meaning of
Section 4001(a)(3) of ERISA, to which any Originator or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the preceding
three calendar years, has made, or been obligated to make, contributions.

     "Obligor" means a Person obligated to make payments on a Receivable.

     "Organizational Documents" means, for any Person, the documents for its
formation and organization, which, for example, (a) for a corporation are its
corporate charter and bylaws, (b) for a partnership are its certificate of
partnership (if applicable) and partnership agreement, (c) for a limited
liability company are its certificate of formation or organization and its
operating agreement, regulations or the like and (d) for a trust is the trust
agreement, declaration of trust, indenture or bylaws under which it is created.

     "Original Balance" means, with respect to any Receivable coming into
existence after the Initial Cutoff Date, the Outstanding Balance of such
Receivable on the date it was created.

     "Originator" has the meaning set forth in the preamble to the Agreement.

     "Other Records" means, with respect to any Receivable: (a) all Contracts
and (b) all other documents, books, records and other information (including,
without limitation, computer programs, tapes, disks, punch cards, data
processing software and related property and rights) relating to the
creditworthiness of any Obligor in respect thereof.

     "Outstanding Balance" of any Receivable at any time means then outstanding
principal balance thereof.

     "Parent" means Mohawk Industries, Inc., a Delaware corporation, and its
successors.

     "PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.

                                      30
<PAGE>

     "Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which any Originator sponsors or maintains, or to
which it makes, is making, or is obligated to make contributions, or in the case
of a multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five plan years.

     "Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.

     "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which any Originator or any of its ERISA Affiliates sponsors or maintains or to
which any Originator or any of its ERISA Affiliates makes, is making, or is
obligated to make contributions and includes any Pension Plan, other than a Plan
maintained outside the United States primarily for the benefit of Persons who
are not U.S. residents.

     "Purchase" means the purchase by the Buyer from an Originator pursuant to
Section 1.1(a) of the Agreement of the Receivables originated by such Originator
--------------
and the Related Security related thereto, together with all related rights in
connection therewith.

     "Purchase Price" means, with respect to the Purchase from each Originator,
the aggregate price to be paid by the Buyer to such Originator for such Purchase
in accordance with Section 1.2 of the Agreement for the Receivables originated
                   -----------
by such Originator and the associated Related Security being sold to the Buyer,
which price shall equal on any date (i) the product of (x) the Outstanding
Balance of such Receivables on such date, multiplied by (y) one minus the
Discount Factor in effect on such date, minus (ii) any Purchase Price Credits to
be credited against the Purchase Price otherwise payable in accordance with
Section 1.3 of the Agreement.
-----------

     "Purchase Price Credit" has the meaning set forth in Section 1.3 of the
                                                          -----------
Agreement.

     "Purchase Report" has the meaning set forth in Section 1.1(b) of the
                                                    --------------
Agreement.

     "Rating Agency Condition" means, at any time the Credit and Security
Agreement remains in effect, the Rating Agency Condition as defined therein.

     "Receivable" means all indebtedness and other obligations owed to an
Originator, at the times it arises and before giving effect to any transfer or
conveyance under the Agreement, arising in connection with the sale of goods or
the rendering of services by such Originator or a predecessor (including,
without limitation, any indebtedness, obligation or interest constituting an
account, chattel paper or general intangible) together with the obligation, if
any, to pay any Finance Charges with respect thereto and all proceeds thereof;
provided, however, in no event shall the term "Receivable" include any Factored
Receivable or any Receivable coming into existence after the Termination Date.
All Receivables are identified with the legend paid to

                                      31
<PAGE>

Buyer or similar language. For purposes of this Agreement, indebtedness and
other rights and obligations arising from any one transaction, including,
without limitation, indebtedness and other rights and obligations represented by
an individual invoice, shall constitute a Receivable separate from a Receivable
consisting of the indebtedness and other rights and obligations arising from any
other transaction; provided, further, that any indebtedness, rights or
obligations referred to in the immediately preceding sentence shall be a
Receivable regardless or whether the account debtor or such Originator treats
such indebtedness, rights or obligations as a separate payment obligation.

          "Related Security" means, with respect to any Receivable:

               (i)     all of the applicable Originator's interest, if any, in
     the goods (including returned or repossessed goods), the sale of which by
     such Originator gave rise to such Receivable,

               (ii)    all other security interests or liens and property
     subject thereto from time to time, if any, purporting to secure payment of
     such Receivable, together with all financing statements and security
     agreements describing any collateral securing such Receivable,

               (iii)   all guaranties, letters of credit, credit insurance and
     other agreements or arrangements of whatever character from time to time
     supporting payment of such Receivable,

               (iv)    all service contracts and agreements, if any, associated
     with such Receivable,

               (v)     all Collections, and

               (vi)    all other proceeds and insurance proceeds of any of the
     foregoing or of any Receivable.

          "Reportable Event" means any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.

          "Responsible Financial Officer" of Parent means any of its chief
financial officer, vice president & corporate controller or vice president &
treasurer, acting singly.

          "Servicer" means Mohawk Servicing, Inc. and its permitted successors
and assigns.

          "Settlement Date" means the second Business Day after each Monthly
Reporting Date.

                                      32
<PAGE>

     "Termination Date" means the earliest to occur of (i) the date on which the
Buyer is unable to pay the Purchase Price for any Receivable in accordance with
Section 1.2, (ii) the Business Day immediately prior to the occurrence of a
-----------
Termination Event set forth in Section 5.1(d), (iii) the Business Day specified
                               --------------
in a written notice from the Buyer (or, at any time the Credit and Security
Agreement remains in effect, the Agent as the Buyer's assignee) to the
Originators following the occurrence of any other Termination Event, (iv) the
date which is 5 Business Days after the Buyer's receipt of written notice from
any Originator that it wishes to terminate sales under this Agreement, and (v)
the date which is 5 Business Days after each Originator receives written notice
that the Buyer wishes to terminate purchases under this Agreement.

     "Termination Event" has the meaning set forth in Section 5.1 of the
                                                      -----------
Agreement.

     "Transaction Documents" means, collectively, this Agreement, the Collection
Services Agreement, and all Purchase Reports.

     "Unmatured Termination Event" means an event which, with the passage of
time or the giving of notice, or both, would constitute a Termination Event.

     All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of
Georgia, and not specifically defined herein, are used herein as defined in such
Article 9.

                                      33
<PAGE>

                                  Exhibit II
                                  ----------

             Places of Business; Locations of Collection Records;
             ----------------------------------------------------
            Federal Employer Identification Number(s); Other Names
            ------------------------------------------------------

Places of Business:

Mohawk Carpet Corporation                    Durkan Patterned Carpets, Inc.
FEI# 58-2185429                              FEI# 58-1729913
Address:                                     Address:
160 S. Industrial Blvd.                      160 S. IndustriBlvd.
Calhoun, GA 30703                            Calhoun, GA 30703

Mohawk Commercial, Inc.
FEI# 58-2357716
Address:
160 S. Industrial Blvd.
Calhoun, GA 30703

Location of Collection Records:

Mohawk Servicing, Inc                        Mohawk Servicing, Inc.
235 Industrial Blvd.                         160 S. Industrial Blvd.
Chatsworth, GA 30705                         Calhoun, GA 30703

Federal Employer Identificati on Number:

Mohawk Carpet Corporation                    Durkan Patterned Carpets, Inc.
FEI # 58-2185429                             FEI# 58-1729913

Mohawk Commercial, Inc.
FEI# 58-2357716

                                      34
<PAGE>

Legal, Trade and Assumed Names:

Alladin Mills                              Insignia

World Contract                             Sunrise

Mohawk Commercial                          Hamilton

IMAGE                                      Cyboney

Galaxy                                     Mohawk Rug & Textile

Merit Hospitality                          Ultra Weave

Custom Weave                               Durkan Commercial

Wunda Wave                                 American Weavers

Mohawk International

Karastan

Alliance Pad

Mohawk Non-Woven

Mohawk Carpet

World

Diamond

Durkan Patterned Carpet

Rug & Textile Group

Aladdin Rug

Townhouse

New Mark & James

J MAR

American Rug Craftsman

Horizon

Alexander Smith

Bigelow

Harbinger

Helios

Delaware Valley Wool ________

Greenville Yarn

Burton Rug

                                      35
<PAGE>

                                  EXHIBIT III

                      Lock-Boxes and Collection Accounts

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
                       BUYER'S                        RELATED COLLECTION ACCOUNT
                       -------                        --------------------------
                      LOCK-BOX                               OF BUYER
                      --------                               --------
<S>                                                   <C>
----------------------------------------------------------------------------------------
P.O. Box 91157                                        Account No. 8188602028 at
Chicago, IL 60693-1157                                Bank of America in Chicago, Illinois
                                                      ABA No. 071000039
-----------------------------------------------------------------------------------------
P.O. Box 99312                                        Account No. 8188602028 at
Chicago, IL 60693-9312                                Bank of America in Chicago, Illinois
                                                      ABA No. 071000039
-----------------------------------------------------------------------------------------
P.0. Box 98808                                        Account No. 8188602028 at
Chicago, IL 60693-8808                                Bank of America in Chicago, Illinois
                                                      ABA No. 071000039
-----------------------------------------------------------------------------------------
P.O. Box 101450                                       Account No. 12420855 at
Atlanta, GA 30392-1450                                Wachovia in Atlanta, GA
                                                      ABA No. 061000010
-----------------------------------------------------------------------------------------
P.O. Box 751487                                       Account No. 12420855 at
Charlotte, NC 28275-1487                              Wachovia in Charlotte, NC
                                                      ABA No. 061000010
-----------------------------------------------------------------------------------------
P.O. Box 951495                                       Account No. 12420855 at
Dallas, TX 75395-1495                                 Wachovia in Dallas, TX
                                                      ABA No. 061000010
-----------------------------------------------------------------------------------------
P.O. Box 101804                                       Account No. 13244224 at
Atlanta, GA 30392-1804                                Wachovia in Atlanta, GA
                                                      ABA No. 061000010
-----------------------------------------------------------------------------------------
P.O. Box 751075                                       Account No. 13244224 at
Charlotte, NC 28275-1487                              Wachovia in Charlotte, NC
                                                      ABA No. 061000010
-----------------------------------------------------------------------------------------
</TABLE>

                                      36
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
<S>                                                         <C>
P.O. Box 951495                                             Account No. 13244224 at
Dallas, TX 75395-1495                                       Wachovia in Dallas, TX
                                                            ABA No. 061000010
---------------------------------------------------------------------------------------------------------
Unit 80033 (for Canadian funds)                             Bank of Montreal Account No. 3144-
P.O. Box 5600, Station Main                                 1014450 at Bank of Montreal in
Burlington, Ontario, Canada L7R4X3                          Burlington, Ontario
---------------------------------------------------------------------------------------------------------
Unit 00067 (for Canadian funds)                             Bank of Montreal Account No. 3144-
P.O. Box 2488, Station M                                    1014450 at Bank of Montreal in Calgary,
Calgary, Alberta, Canada T2P4W2                             Alberta
---------------------------------------------------------------------------------------------------------
Unit 980033 (for US Dollars)                                Bank of Montreal Account No. 3144-
P.O. Box 5600, Station Main                                 4503209 at Bank of Montreal in
Burlington, Ontario, Canada L7R4X3                          Burlington, Ontario
---------------------------------------------------------------------------------------------------------
Unit 800067 (for US Dollars)                                Bank of Montreal Account No. 3144-
P.O. Box 2488, Station M                                    4503209 at Bank of Montreal in Calgary,
Calgary, Alberta, Canada T2P4W2                             Alberta
---------------------------------------------------------------------------------------------------------
</TABLE>

The foregoing may be changed by the Buyer at any time upon 30 days prior written
notice to each Originator.

                                      37
<PAGE>

                                  Exhibit IV
                                  ----------

                        Form of Compliance Certificate
                        ------------------------------

          This Compliance Certificate is furnished pursuant to that certain
Receivables Purchase and Sale Agreement dated as of October 25, 2000, among
Mohawk Carpet Corporation, Mohawk Commercial, Inc., Durban Patterned Carpets,
Inc., and Mohawk Factoring, Inc. (as amended, restate or otherwise modified from
time to time in accordance with the Transaction Documents, the "Agreement").
Capitalized terms used and not otherwise defined herein are used with the
meanings attributed thereto in the Agreement.

                   THE UNDERSIGNED HEREBY CERTIFIES TIM T:

          1.   I am the duly elected _______________ and, accordingly, a
Responsible Financial Officer, of Mohawk Industries, Inc., a Delaware
corporation (the "Parent").

          2.   I have reviewed the terms of the Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of Parent and its Subsidiaries during the accounting
period covered by the attached financial statements.

          3.   The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
a Termination Event or an Unmatured Termination Event, as each such term is
defined under the Agreement, during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate[, except as set forth below].

          [4.  Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which Parent and its Subsidiaries have
taken, is taking, or proposes to take with respect to each such condition or
event: ___________________].

          The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this ____ day of ________,
200_.

                                                    ___________________________
                                                    [Name]

                                       38
<PAGE>

                                   Exhibit V
                                   ---------

                         Credit and Collection Policy
                         ----------------------------

                                 [attach copy]

                                      39
<PAGE>

                                  Exhibit VI
                                  ----------

                           [Form of] Purchase Report
                           ------------------------

         For the Calculation Period beginning [date] and ending [date]

                                    ------

TO:  THE BUYER
CC:  (WHILE THE CREDIT AND SECURITY AGREEMENT REMAINS IN EFFECT)
THE AGENT
FROM:  [INSERT ORIGINATOR NAME]

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                                   <C>                    <C>
Aggregate Outstanding Balance of all
Receivables sold during the period:                           $ _____________                                               A
------------------------------------------------------------------------------------------------------------------------------------
Less:   Aggregate Outstanding Balance of all
Receivables sold during such period which
were not Eligible Receivables on the date
when sold:                                                    ($ ___________)                                              (B)
------------------------------------------------------------------------------------------------------------------------------------
Equals: Aggregate Outstanding Balance of all
Eligible Receivables sold during the
period (A-B):                                                                                       $ __________           =C
------------------------------------------------------------------------------------------------------------------------------------
Less:   Purchase Price discount during the
Period:                                                       ($ ___________)                                              (D)
------------------------------------------------------------------------------------------------------------------------------------
Equals: Gross Purchase Price Payable
during the period (C -- D)                                                                          $ __________           =E
------------------------------------------------------------------------------------------------------------------------------------
Less:   Total Purchase Price Credits arising                                                                               (F)
during the Period:                                            ($ ___________)
------------------------------------------------------------------------------------------------------------------------------------
Equals: Net Purchase Price payable during
the Period (E -- F):                                                                                $ __________           =G
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
Cash Purchase Price Paid to Originator                                                                                      H
during the period:                                            ($ ___________)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      40
<PAGE>

The undersigned hereby represents and warrants that the information set forth
above is accurate and complete as of the last day of the Calculation Period set
forth above.

                    [ORIGINATOR NAME]

                    By:  _______________________________________________
                            Name:
                            Title:

                                      41
<PAGE>

                                  Schedule A
                                  ----------

                      DOCUMENTS TO BE DELIVERED TO BUYER
              ON OR PRIOR TO THE INITIAL PURCHASE OF RECEIVABLES

1.   Executed copies of the Receivables Purchase and Sale Agreement, duly
     executed by the parties thereto.

2.   Copy of each Credit and Collection Policy to attach to the Receivables
     Purchase and Sale Agreement as an Exhibit.

3.   A certificate of each Originator's [Assistant] Secretary certifying:

            (a)  A copy of the Resolutions of the Board of Directors of such
        Originator, authorizing Originator's execution, delivery and performance
        of the Receivables Purchase and Sale Agreement and the other documents
        to be delivered by it thereunder;

            (b)  A copy of the Organizational Documents of such Originator (also
        certified, to the extent that such documents are filed with any
        governmental authority, by the Secretary of State of the jurisdiction of
        organization of such Originator on or within thirty (30) days prior to
        closing);

            (c)  Good Standing Certificates for such Originator issued by the
        Secretaries of State of its state of incorporation and the State of
        Georgia; and

            (d)  The names and signatures of the officers authorized on its
        behalf to execute the Receivables Purchase and Sale Agreement and any
        other documents to be delivered by it thereunder.

4.   Pre-filing state and federal tax lien, judgment lien and UCC lien searches
     against each Originator from the following jurisdictions:

            a.   State of Delaware

            b.   Superior Court Clerk's Cooperative Authority (State of Georgia)

            c.   Superior Court Clerk's Office in the following Georgia
                 Counties:

                 (i)    Gordon

                 (ii)   Murray

                 (iii)  Whitfield

                                      42
<PAGE>

5.   Duly executed UCC financing statements, in form appropriate for filing in
     all jurisdictions as may be necessary or, in the opinion of the Buyer (or,
     at any time the Credit and Security Agreement remains in effect, the Agent
     as the Buyer's assignee), desirable, under the UCC of all appropriate
     jurisdictions or any comparable law in order to perfect the transfer of the
     ownership interests contemplated by the Receivables Purchase and Sale
     Agreement.

6.   Duly executed UCC termination statements, in form suitable for filing, if
     any, necessary to release all security interests and other rights of any
     Person in the Receivables, Contracts Related Security previously granted by
     each Originator.

7.   A favorable opinion of legal counsel for each Originator licensed to give
     opinions under Georgia law reasonably acceptable to the Buyer (and the
     Agent, as the Buyer's assignee) as to the following:

          (a)   Such Originator is a corporation duly organized, validly
existing, and it good standing under the laws of the State of Delaware.

          (b)   Such Originator has all requisite authority to conduct its
business in the jurisdiction where it maintains its chief executive office.

          (c)   The execution and delivery by such Originator of the Receivables
Purchase and Sale Agreement and each other Transaction Document to which it is a
party and its performance of its obligations thereunder have been duly
authorized by all necessary organizational action and proceedings on the part of
such Originator and will not:

          (i)   require any action by or in respect of, or filing with, any
       governmental body, agency or official (other than the filing of UCC
       financing statements);

          (ii)  contravene, or constitute a default under, any provision of
       applicable law or regulation or of its articles or certificate of
       incorporation or bylaws or of any agreement, judgment, injunction, order,
       decree or other instrument binding upon such Originator; or

          (iii) result in the creation or imposition of any Adverse Claim on
       assets of such Originator or any of its Subsidiaries (except as
       contemplated by the Receivables Purchase and Sale Agreement).

          (d)   The Receivables Purchase and Sale Agreement and each other
Transaction Document to which it is a party has been duly executed and delivered
by such Originator and constitutes the legally valid, and binding obligation of
such Originator enforceable in accordance with its terms, except to the extent
the enforcement thereof may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and subject also to the
availability of equitable remedies if equitable remedies are sought.

                                      43
<PAGE>

          (e)  In the event that the Receivables Purchase and Sale Agreement is
held to create a transfer for security purposes rather than a true sale or other
outright assignment, the provisions of the Receivables Purchase and Sale
Agreement are effective to create valid security interests in favor of the Buyer
in all of such Originator's right, title and interest in and to the Receivables
described therein which constitute "accounts," "chattel paper" or "general
intangibles" (each as defined in the UCC) (collectively, the "Opinion
Collateral").

          (f)  Upon filing of such UCC-1 Financing Statements in such filing
offices and payment of the required filing fees, the security interest in favor
of the Buyer in the Opinion Collateral will be perfected and assigned of record
to the Agent.

          (g)  Based solely on our review of the UCC Search Reports and assuming
(i) the filing of the Financing Statements and payment of the required filing
fees in accordance with paragraph (f) and (ii) the absence of any intervening
filings between the date and time of the Search Reports and the date and time of
the filing of the Financing Statements and other customary exhibits, the
security interest of the Buyer in the Opinion Collateral is prior to any
security interest granted in the Opinion Collateral by such Originator, the
priority of which is determined solely by the filing of a financing statement in
the [describe filing offices].

          (h)  To the best of the opinion giver's knowledge, there is no action,
suit or other proceeding against such Originator which would materially
adversely affect the ability of such Originator to perform its obligations under
the Receivables Purchase and Sale Agreement.

          (i)  Such Originator is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.

8.   A "true sale" opinion and "substantive consolidation" opinion of counsel
     for Originator with respect to the transactions contemplated by the
     Receivables Purchase and Sale Agreement.

9.   A Certificate of a Responsible Financial Officer of each Originator
     certifying that, as of the closing date, no Termination Event or Unmatured
     Termination Event exists and is continuing.

10.  Executed copies of (i) all consents from and authorizations by any Persons
     and (ii) all waivers and amendments to existing credit facilities, that are
     necessary in connection with the Receivables Purchase and Sale
     Agreement./1/

11.  A copy of the Servicing Agreement duly executed by the parties thereto.

________________
/1/ Per Alston & Bird, no consents / waivers are needed.

                                      44

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}]]