July 20, 2001
The Dixie Group, Inc.
185 South Industrial Blvd.
Calhoun, GA 30701
Attention: Gary Harmon
Re: Request for Waiver
Ladies and Gentlemen:
We refer to that certain Credit Agreement, dated as of March 31, 1998, as amended by that certain First Amendment to Credit Agreement, effective December 26, 1998, as further amended by that certain Second Amendment to Credit Agreement, effective October 5, 2000, and as further amended by that certain Third Amendment to Credit Agreement, effective as of November 2, 2000 ("Credit Agreement") by and among The Dixie Group, Inc., a Tennessee corporation (the "Borrower"), SunTrust Bank, formerly known as SunTrust Bank, Atlanta, a Georgia banking corporation ("SunTrust"), the other banks and lending institutions from time to time party thereto, and any assignees of SunTrust or such other banks and lending institutions, (SunTrust, and such other banks, lending institutions, and assignees referred to collectively as "Lenders"), SunTrust Bank, as administrative agent for the Lenders (in such capacity, the "Administrative Agent") and Bank of America, N.A., formerly known as NationsBank, N.A., as documentation agent (the "Documentation Agent"). Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.
You have informed us that you anticipate that as of June 30, 2001, (i) the Total Funded Debt to EBITDA Ratio will not be less than 5.0:1.0 as required by Section 8.11(a) of the Credit Agreement, and (ii) the Senior Funded Debt to EBITDA Ratio will not be less than 3.3:1.0 as required by Section 8.11(b) of the Credit Agreement. As you have requested, we hereby waive any Events of Default that have arisen as a result of your failure to comply with Section 8.11(a), and Section 8.11(b) for the fiscal quarters ending on March 31, 2001 and June 30, 2001, until 5:00 p.m. on October 15, 2001.
You have also informed us that you anticipate that as of June 30, 2001 and July 31, 2001, the Interest Coverage Ratio will not be greater than 2.5:1.0 as required by Section 8.11(c) of the Credit Agreement. We therefore agree to waive any Event of Default that will result from your anticipated failure to comply with Section 8.11(c) of the Credit Agreement for the fiscal months ending on April 30, 2001, May 31, 2001, June 30, 2001 and July 31, 2001 so long as the Interest Coverage Ratio for such month is not less than 2.00:1.0.
The waiver set forth above is limited solely to the matters stated above and shall not be deemed to be a waiver or amendment of any other provision of the Credit Agreement. As modified hereby, the Credit Agreement shall remain in full force and effect. This waiver letter shall be governed by, and construed in accordance with the internal laws (and not the laws of conflicts), of the State of Georgia and all applicable laws of the United States of America.
Very truly yours,
SUNTRUST BANK, formerly known as SunTrust Bank, Atlanta, individually and as Administrative Agent
By_____________________________
Name: Kristina L. Anderson
Title: Director
BANK OF AMERICA, N.A., formerly known as Nationsbank, N.A., individually and as Documentation Agent
By: _____________________________
Name: John F. Register
Title: Principal
SOUTHTRUST BANK, formerly known as Southtrust Bank, National Association
By:_____________________________
Name: Bradford Vieira
Title:
FIRST UNION NATIONAL BANK
By:_____________________________
Name: Harvey Horowitz
Title: Director
THE CHASE MANHATTAN BANK
By:_____________________________
Name: Jane E. Orndahl
Title: Vice President
Acknowledged:
THE DIXIE GROUP, INC.
By:_______________________________
Name: Gary A. Harmon
Title: Vice President and Chief Financial Officer
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