Document:

AMENDMENT #3 TO CREDIT AND SECURITY AGREEMENT

Exhibit No. 10.38

AMENDMENT
#3 TO CREDIT AND SECURITY AGREEMENT

THIS AMENDMENT #3   (this "Amendment")
is entered into by the undersigned parties as of October 23, 2002 with respect
to the Credit and Security Agreement dated as of October 25, 2000 (as amended,
the "Credit and Security Agreement")
by and among Mohawk Factoring, Inc., a Delaware corporation ("Borrower"), Mohawk Servicing, Inc., a
Delaware corporation, as initial Servicer, Blue Ridge Asset Funding
Corporation, a Delaware corporation, and Wachovia Bank, National Association,
individually and as Agent.   Unless defined elsewhere herein, capitalized
terms used in this Amendment shall have the meanings assigned to such terms in
the Credit and Security Agreement.

PRELIMINARY
STATEMENT

On
the terms and subject to the conditions hereof, each of the parties wishes to
amend the Credit and Security Agreement as hereinafter set forth.

NOW, THEREFORE, in consideration of the
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:

1.             Amendments.

1.1.          Section 10.2 of the Credit and
Security Agreement is hereby amended to delete the lead-in thereto (up to but
not including the colon in the eighth line thereof) and to substitute in lieu
thereof "If any Regulatory Change shall occur".

1.2.          The definition of "Regulatory Change" in the Credit and Security Agreement is hereby
amended and restated in its entirety to read as follows:

"Regulatory Change" means any change after
October 26, 2000 in United States (federal, state or municipal) or foreign
laws, regulations (including Regulation D) or accounting principles or the
adoption or making after such date of any interpretations, directives or
requests applying to a class of banks (including the Liquidity Banks) of or
under any United States (federal, state or municipal) or foreign laws,
regulations (whether or not having the force of law) or accounting principles
by any court, governmental or monetary authority, or accounting board or
authority (whether or not part of government) 
charged with the establishment, interpretation or administration
thereof.  For the avoidance of doubt,
any interpretation of Accounting Research Bulletin No. 51 by the Financial
Accounting Standards Board shall constitute a Regulatory Change.

2.             Conditions Precedent to
Effectiveness.  The effectiveness of
this Amendment is subject to the conditions precedent that the Agent shall have
received counterparts hereof duly executed by each of the parties to the Credit
and Security Agreement.

3.             Scope of Amendment. Except as
expressly amended hereby, the Credit and Security Agreement remains in full
force and effect in accordance with its terms and this Amendment to the Credit
and Security Agreement shall not by implication or otherwise alter, modify,
amend or in any way affect any of the terms, conditions, obligations, covenants
or agreements contained in the Credit and Security Agreement, all of which are
ratified and affirmed in all respects and shall continue in full force and
effect.   

4.             Governing Law. This Amendment and
the Credit and Security Agreement as amended hereby shall be governed by and
construed in accordance with the laws of the State of Georgia.

5.             Counterparts.  This Amendment may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
an original, and all such counterparts shall together constitute but one and
the same instrument.

6.             No Rating Agency Condition.  By signing below, the Agent confirms that
this Amendment will not require satisfaction of the Rating Agency Condition.

<signature pages
follow>

IN WITNESS WHEREOF, the parties hereto have
caused this Amendment #3 to Credit and Security Agreement to be executed and
delivered by their duly authorized officers as of the date hereof.

MOHAWK
FACTORING, INC.

By:                                                                                         
 

Name:  ______________________________

Title:  _______________________________

MOHAWK
SERVICING, INC.

By:                                                                                         
 

Name:                                                                                     
 

Title:AMENDMENT 1 TO PSA

Exhibit 10.39

 

 

 

 

 

 

AMENDMENT NO. 4

to the

 

CREDIT AND SECURITY
AGREEMENT

 

 

Dated as of December 31, 2002

 

 

 

 

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

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

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

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

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

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

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

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

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

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

Section 1.              
 Amendments
to the Credit and Security Agreement

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

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

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

Section 2.              
 Representations
and Warranties

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

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

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

Section 3.              
 Conditions
Precedent

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

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

Section 4.              
 Miscellaneous

                (a)           Applicability of the Credit and
Security Agreement.

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

(b)                

Opinions to be Furnished.

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

                (c)          
 Headings

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

                (d)          
 Counterparts

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

                (e)          
 Governing Law

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

[Signatures on Next Page]

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

MOHAWK
FACTORING, INC.

  as Borrower

By: _____________________________

                                                                                                          Name:

                                                                                                          Title:

BLUE
RIDGE ASSET FUNDING CORPORATION

By:
_____________________________

                                                                                                          Name:

                                                                                                          Title:

WACHOVIA
BANK, NATIONAL ASSOCIATION

  as Agent

By:
_____________________________

                                                                                                          Name:

                                                                                                          Title:

MOHAWK
CARPET DISTRIBUTION, L.P.

  as Originator

By:
_____________________________

                                                                                                          Name:

                                                                                                          Title:

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