Exhibit 10.2

FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of
November 2, 2012, is entered into by and among THE DIXIE GROUP, INC., a
Tennessee corporation (“Dixie”), CANDLEWICK YARNS, LLC, an Alabama limited
liability company (“Candlewick”), FABRICA INTERNATIONAL, INC., a California
corporation (“Fabrica”), MASLAND CARPETS, LLC, a Georgia limited liability
company (“Masland”; together with Dixie, Candlewick and Fabrica, are referred to
hereinafter each individually as a “Borrower”, and individually and
collectively, jointly and severally, as the “Borrowers”), THE PERSONS IDENTIFIED
AS THE LENDERS ON THE SIGNATURE PAGES HERETO (the “Lenders”), and WELLS FARGO
CAPITAL FINANCE, LLC, a Delaware limited liability company, as administrative
agent for the Lenders (in such capacity, together with its successors and
assigns in such capacity, “Agent”).
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, dated as of September 13, 2011 (as
amended, restated, supplemented, or otherwise modified prior to the date hereof,
the “Existing Credit Agreement”) among Borrowers, the Lenders, the Agent, and
Wells Fargo Capital Finance, LLC, a Delaware limited liability company, as
arranger and book runner, the Lenders have extended commitments to make certain
credit facilities available to the Borrowers; and
WHEREAS, the Borrowers have requested that the Lenders and the Agent enter into
this Amendment to make certain changes to the Existing Credit Agreement
effective on (and subject to the occurrence of) the First Amendment Effective
Date; and
WHEREAS, the Agent and the Lenders are willing to amend the Existing Credit
Agreement as set forth below.
NOW, THEREFORE, in consideration of the agreements herein contained and other
good and valuable consideration, the parties hereby agree as follows:
PART I
DEFINITIONS
SUBPART 1.1.    Certain Definitions. Unless otherwise defined herein or the
context otherwise requires, the following terms used in this Amendment,
including its preamble and recitals, have the following meanings:
“Amended Credit Agreement” means the Existing Credit Agreement as amended
hereby.
“First Amendment Effective Date” shall have the meaning set forth in Subpart
3.1.
SUBPART 1.2.    Other Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Amendment, including its preamble
and recitals, have the meanings provided in the Amended Credit Agreement.
PART II
AMENDMENTS
SUBPART 2.1.    Amendment to Section 8.7 (Events of Default). Effective on (and
subject to the occurrence of) the First Amendment Effective Date, Section 8.7 of
the Existing Credit Agreement is amended by deleting Section 8.7 in its entirety
and substituting the following in lieu thereof:
8.7    If there is a default in one or more agreements to which a Loan Party or
any of its Subsidiaries is a party with one or more third Persons relative to
either (a) the ColorMaster Indebtedness or (b) a Loan

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Party's or any of its Subsidiaries' Indebtedness involving an aggregate amount
of $3,000,000 or more, and, in each case, such default (i) occurs at the final
maturity of the obligations thereunder, or (ii) results in a right by such third
Person, irrespective of whether exercised, to accelerate the maturity of such
Loan Party's or its Subsidiary's obligations thereunder;
SUBPART 2.2.    Amendment to Schedule 1.1 (Definitions). Effective on (and
subject to the occurrence of) the First Amendment Effective Date, Schedule 1.1
of the Existing Credit Agreement is amended by amending and restating the
defined terms “EBITDA”, “Net Income”, and “Permitted Purchase Money
Indebtedness” as follows:
“EBITDA” means, with respect to any fiscal period, the Net Income of Borrowers
and their Subsidiaries plus Interest Expense, income taxes, and depreciation and
amortization for such period, in each case as Net Income and such other items
are determined on a consolidated basis in accordance with GAAP; provided, that,
(a) in the case of the calculation of EBITDA for any fiscal period that includes
one or more fiscal months ended prior to the date of the Agreement, EBITDA for
such fiscal month(s) ended prior to the date of the Agreement shall be as listed
on Schedule E-1, (b) for the purposes of calculating EBITDA for any period of 12
consecutive fiscal months (each, a “Reference Period”), if at any time during
such Reference Period (and after the Closing Date), Borrowers shall have made a
Permitted Acquisition, EBITDA for such Reference Period shall be calculated
after giving pro forma effect thereto (including pro forma adjustments arising
out of events which are directly attributable to such Permitted Acquisition, are
factually supportable, and are expected to have a continuing impact, in each
case to be mutually and reasonably agreed upon by Borrowers and Agent) or in
such other manner acceptable to Agent as if any such Permitted Acquisition or
adjustment occurred on the first day of such Reference Period, and (c) in the
case of the calculation of EBITDA for any Reference Period that includes one or
more of the first eighteen fiscal months ended immediately after the First
Amendment Effective Date, EBITDA for such Reference Period shall be increased by
up to $2,000,000 of Permitted Restructuring and Startup Costs actually incurred
related to the ColorMaster Purchase during such Reference Period. For purposes
of this paragraph, “Permitted Restructuring and Startup Costs” means expenses
involving the termination of associates as a result of the effects of the
ColorMaster Purchase at any of Borrowers' facilities, the excess cost as
measured by the Borrowers' departmental variance analysis for all of Borrowers'
dyeing and finishing operations, including the acquired ColorMaster dye house,
outside processing costs required as a result of the integration of the
ColorMaster dye house into Borrowers' facilities, excess freight costs or
savings thereof, costs associated with termination of utilities or energy
supplies at any of Borrowers' facilities as a result such integration of the
ColorMaster dye house, and any other of such expenses so approved by the Lenders
in their sole discretion.
“Net Income” means, with respect to any fiscal period, the net earnings (or
loss) for such fiscal period of Borrowers and their Subsidiaries, as adjusted to
reflect the add-back of the change in the LIFO reserve over the prior period,
but excluding: (a) facility consolidation charges for periods prior to the
Closing Date; (b) other non-cash charges (including, in the case of any fiscal
period that includes one or more fiscal months ended prior to the First
Amendment Effective Date, up to $2,000,000 of non-cash impairment charges for
the Atmore facility for such period); (c) any pre-tax gain or loss arising from
the sale or write-down of capital assets; (d) any pre-tax gain or loss arising
from any write-up or write-down of assets or any write-down of goodwill during
such period; (e) pre-tax earnings of any Subsidiary accrued prior to the date it
became a Subsidiary; (f) non-cash pre-tax earnings or losses of any Person,
substantially all the assets of which have been acquired in any manner by any
Borrower, realized by such Person prior to the date of such acquisition; (g) net
pre-tax earnings of any entity (other than a Subsidiary of a Borrower) in which
any Borrower has an ownership interest unless such net pre-tax earnings have
actually been received by a Borrower in the form of cash distributions; (h) any
portion of the net pre-tax earnings of any Subsidiary which for any reason is
unavailable for payment of distributions to a Borrower; (i) the pre-tax earnings
of any Person to which any assets of a Borrower shall have been sold,
transferred or disposed of, or into which a Borrower shall have merged, or been
a party to any consolidation or other form of reorganization, prior to the date
of such transaction; (j) any pre-tax gain arising from the acquisition of any
Stock of any Borrower; and (k) any pre-tax gain or loss arising from
extraordinary or non-recurring items or as otherwise agreed to by Agent as
non-recurring, in each case as net earnings (or loss), the change in the LIFO
reserve, and all such exclusions are determined on a consolidated basis in
accordance with GAAP.

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“Permitted Purchase Money Indebtedness” means, as of any date of determination,
(a) the ColorMaster Indebtedness, and (b) Purchase Money Indebtedness incurred
after the Closing Date in an aggregate principal amount outstanding at any one
time not in excess of $20,000,000.
SUBPART 2.3.    Amendment to Schedule 1.1 (Definitions). Effective on (and
subject to the occurrence of) the First Amendment Effective Date, Schedule 1.1
of the Existing Credit Agreement is amended by deleting clause (c) of the
definition of “Eligible M&E” and substituting the following in lieu thereof:
(c)    it is (i) located at the ColorMaster dye house in Calhoun, Georgia (it
being understood that this clause (i) shall no longer apply after the payment
and satisfaction of the ColorMaster Indebtedness and the release of all Liens
granted to Lineage PCR, Inc. with respect to the ColorMaster dye house), or (ii)
not located at one of the locations in the continental United States set forth
on Schedule 4.30;
SUBPART 2.4.    Amendment to Schedule 1.1 (Definitions). Effective on (and
subject to the occurrence of) the First Amendment Effective Date, Schedule 1.1
of the Existing Credit Agreement is amended by inserting the defined terms
“ColorMaster Indebtedness,” “ColorMaster Purchase”, and “First Amendment
Effective Date” in proper alphabetical order as follows:
“ColorMaster Indebtedness” means Indebtedness incurred by one or more Borrowers
that is owing to Lineage PCR, Inc. in connection with the ColorMaster Purchase;
provided, that, the principal amount of such Indebtedness shall be in an amount
equal to the lesser of (a) the actual purchase price paid by one or more
Borrowers to Lineage PCR, Inc. with respect to the ColorMaster Purchase, or (b)
$5,500,000.
“ColorMaster Purchase” means the purchase by one or more Borrowers of the
ColorMaster dye house located in Calhoun, Georgia, to be purchased on or about
the First Amendment Effective Date.
“First Amendment Effective Date” means November 2, 2012.
SUBPART 2.5.    ColorMaster Dye House; Seller Intercreditor Agreement. In
connection with one or more Borrowers purchase of the ColorMaster dye house
located in Calhoun, Georgia and related Equipment from Lineage PCR, Inc. (the
“Seller”) on or about the First Amendment Effective Date (the “ColorMaster Dye
House Assets”), (a) Lenders acknowledge that Agent is entering into an
intercreditor agreement with the Seller in substantially the form presented by
Agent to Lenders prior to the date hereof (the “Seller Intercreditor
Agreement”), (b) Lenders consent to the terms of the Seller Intercreditor
Agreement, including, without limitation, Agent's agreement contained therein
that it shall not have or take a Lien on any of the ColorMaster Dye House Assets
until the payment and satisfaction of the ColorMaster Indebtedness, (c) Agent
and Lenders agree that, notwithstanding any contrary terms set forth in the
Amended Credit Agreement or any other Loan Document, the ColorMaster Dye House
Assets shall not be subject to Agent's Liens until the payment and satisfaction
of the ColorMaster Indebtedness, (d) Borrowers agree that they shall notify
Agent in writing of the payment and satisfaction of the ColorMaster Indebtedness
within 5 Business Days after the payment and satisfaction thereof, (e) Borrowers
agree that all of the ColorMaster Dye House Assets shall automatically become
subject to Agent's Liens upon the payment and satisfaction of the ColorMaster
Indebtedness, regardless of whether Borrowers have provided Agent notice of such
payment and satisfaction, and (f) Borrowers agree that, following the payment
and satisfaction of the ColorMaster Indebtedness, they shall comply with all of
the provisions of Section 5.12 of the Amended Credit Agreement with respect to
the ColorMaster Dye House Assets within 10 days after Agent's request therefor.
PART III
CONDITIONS TO EFFECTIVENESS OF PART II
SUBPART 3.1.    First Amendment Effective Date. Part II of this Amendment shall
be and become effective as of the date hereof (the “First Amendment Effective
Date”), subject to the conditions set forth in this Part III having been
satisfied (it being understood and agreed that this Amendment may be executed
and delivered in escrow pending release upon satisfaction of such conditions).

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SUBPART 3.2.    Execution of Revolver Amendment. The Agent shall have received
fully executed counterparts of this Amendment.
SUBPART 3.3.    Execution of Term Loan Amendment. The Agent shall have received
fully executed counterparts of an amendment to the credit agreement governing
the Susan Street Term Loan, in the form attached hereto as Exhibit A.
SUBPART 3.4.    ColorMaster Purchase. Borrowers shall consummate the ColorMaster
Purchase simultaneous with the effectiveness of this Amendment.
SUBPART 3.5.    Seller Intercreditor Agreement. The Agent shall have received
fully executed counterparts of the Seller Intercreditor Agreement.
SUBPART 3.6.    Amendment Fee. The Agent shall have received an amendment fee in
the amount of $25,000 to be apportioned on a pro-rata basis among the Lenders
according to each Lender's Commitment, which Borrowers hereby authorize Agent to
charge to the Loan Account.
PART IV
MISCELLANEOUS
SUBPART 4.1.    No Additional Obligations. The Borrowers acknowledge and agree
that the execution, delivery and performance of this Amendment shall not create
(nor shall the Borrowers rely upon the existence of or claim or assert that
there exists) any obligation of any of the Agent or Lenders to consider or agree
to any other amendment of or waiver or consent with respect to the Amended
Credit Agreement or any other instrument or agreement to which the Agent or any
Lender is a party (collectively, an “Additional Amendment” or “Consent”), and in
the event that the Agent and the Lenders subsequently agree to consider any
requested Additional Amendment or Consent, neither the existence of this
Amendment nor any other conduct of the Agent or the Lenders related hereto,
shall be of any force or effect on the Lenders' consideration or decision with
respect to any such requested Additional Amendment or Consent, and the Lenders
shall not have any obligation whatsoever to consider or agree to any such
Additional Amendment or Consent.
SUBPART 4.2.    Acknowledgments and Stipulations. In order to induce Agent and
Lenders to enter into this Amendment, each Borrower acknowledges, stipulates and
agrees that (a) the Loan Documents executed by each Borrower are legal, valid
and binding obligations of such Borrower enforceable against such Borrower in
accordance with their respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors' rights generally; (b) the
Liens granted by each Borrower to Agent in the Collateral are valid and duly
perfected, first priority Liens, subject only to Permitted Liens; (c) each of
the recitals contained at the beginning of this Amendment is true and correct;
and (d) prior to executing this Amendment, each Borrower consulted with and had
the benefit of advice of legal counsel of their own selection and has relied
upon the advice of such counsel, and in no part upon the representation of
Agent, any Lender or any counsel to Agent or any Lender concerning the legal
effects of this Amendment or any provision hereof.
SUBPART 4.3.    Cross-References. References in this Amendment to any Part or
Subpart are, unless otherwise specified, to such Part or Subpart of this
Amendment.
SUBPART 4.4.     References in Other Credit Documents. At such time as this
Amendment shall become effective pursuant to the terms of Subpart 3.1, all
references in the Existing Credit Agreement (including without limitation the
Schedules thereto) to the “Agreement”, and all references in the other Loan
Documents to the “Credit Agreement”, shall be deemed to refer to the Amended
Credit Agreement.
SUBPART 4.5.    Representations and Warranties of the Borrowers. Each Borrower
hereby represents and warrants that on the First Amendment Effective Date and
after giving effect to the amendments and waivers contained herein: (a) the
representations and warranties contained in Section 4 of the Amended Credit
Agreement shall be correct

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in all material respects on and as of such date as though made on and as of such
date, (b) no Default or Event of Default exists under the Amended Credit
Agreement on and as of such date, and (c) the ColorMaster Purchase is not an
“Investment” as defined in the Amended Credit Agreement. Without limitation of
the preceding sentence, each Borrower hereby expressly re-affirms the validity,
effectiveness and enforceability of each Loan Document to which it is a party
(in each case, as the same may be modified by the terms of this Amendment).
Based on the representation in clause (c) of this Subpart 4.5, the Agent
acknowledges that the ColorMaster Purchase is not subject to the restrictions
set forth in Section 6.11 of the Amended Credit Agreement concerning Permitted
Investments.
SUBPART 4.6.    Counterparts. This Amendment may be executed in any number of
counterparts each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
THIS AMENDMENT SUPPLEMENTS, AND FORMS A PART OF, THE EXISTING CREDIT AGREEMENT,
BUT (FOR THE AVOIDANCE OF DOUBT) THE PARTIES HERETO IN ANY EVENT SPECIFICALLY
AGREE (WITHOUT LIMITATION OF THE FIRST PART OF THIS SENTENCE) THAT THE
PROVISIONS OF SECTION 12 OF THE EXISTING CREDIT AGREEMENT APPLY TO THIS
AMENDMENT, MUTATIS MUTANDIS.
SUBPART 4.7. Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.

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[Signatures on Next Page]

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Each of the parties hereto has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.
BORROWERS:
THE DIXIE GROUP, INC.,
a Tennessee corporation
 
 
 
By: /s/ Jon A. Faulkner
 
Name: Jon A. Faulkner
 
Title: VP & CFO
 
 
 
CANDLEWICK YARNS, LLC.
an Alabama limited liability company
 
 
 
By: /s/ Jon A. Faulkner
 
Name: Jon A. Faulkner
 
Title: President
 
 
 
FABRICA INTERNATIONAL, INC.,
a California corporation
 
 
 
By: /s/ Jon A. Faulkner
 
Name: Jon A. Faulkner
 
Title: President
 
 
 
MASLAND CARPETS, LLC,
a Georgia limited liability company
 
 
 
By: /s/ Jon A. Faulkner
 
Name: Jon A. Faulkner
 
Title: President
 
 

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AGENT AND LENDERS:
WELLS FARGO CAPITAL FINANCE, LLC,
a Delaware limited liability company, as Agent and as a Lender
 
 
 
By: /s/ Gary Forlenza
 
Name: Gary Forlenza
 
Title: VP
 
 
 
BANK OF AMERICA, N.A.,
a national banking association, as a Lender
 
 
 
By: /s/ Robert B. H. Moore
 
Name: Robert B. H. Moore
 
Title: Senior Vice President

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GUARANTOR'S ACKNOWLEDGEMENT
The undersigned, a guarantor of the “Obligations” of THE DIXIE GROUP, INC., a
Tennessee corporation (“Dixie”), CANDLEWICK YARNS, LLC, an Alabama limited
liability company (“Candlewick”), FABRICA INTERNATIONAL, INC., a California
corporation (“Fabrica”), MASLAND CARPETS, LLC, a Georgia limited liability
company (“Masland”; together with Dixie, Candlewick and Fabrica, are referred to
hereinafter each individually as a “Borrower”, and individually and
collectively, jointly and severally, as the “Borrowers”), under and as defined
in that certain Credit Agreement dated as of September 13, 2011 (as amended,
restated, supplemented, or otherwise modified prior to the date hereof, the
“Credit Agreement”) among the Borrowers, the lenders party thereto (the
“Lenders”), WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability
company, as administrative agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, the “Agent”), and WELLS FARGO
CAPITAL FINANCE, LLC, a Delaware limited liability company, as arranger and book
runner, hereby (a) acknowledges receipt of the foregoing First Amendment Credit
Agreement (the “Amendment”); (b) consents to the terms and execution thereof;
(c) reaffirms its obligations pursuant to the terms of that certain Guaranty
Agreement dated as of September 13, 2011 executed by the undersigned in favor of
the Agent and Lenders (the “Guaranty”); and (d) acknowledges that the Agent and
the Lenders may amend, restate, extend, renew or otherwise modify the Credit
Agreement and any indebtedness or agreement of the Borrowers, or enter into any
agreement or extend additional or other credit accommodations to the Borrowers,
without notifying or obtaining the consent of the undersigned and without
impairing the liability of the undersigned under the Guaranty for the Borrowers'
present and future Obligations. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Credit Agreement.
 
C-KNIT APPAREL, INC.,
 
a Tennessee corporation
 
 
 
By: /s/ Jon A. Faulkner
 
Name: Jon A. Faulkner
 
Title: President