<PAGE>

                          FIFTH AMENDMENT AND CONSENT
                          ---------------------------

          FIFTH AMENDMENT AND CONSENT (this "Amendment"), dated as of June 3,
1999, among CAF HOLDINGS, INC. ("Holdings"), COLLINS & AIKMAN FLOORCOVERINGS,
INC. (the "Borrower"), the financial institutions party to the Credit Agreement
referred to below (each, a "Bank" and, collectively, the "Banks"),  BANKERS
TRUST COMPANY, as Agent for the Banks (in such capacity, the "Agent") and
BANKERS TRUST COMPANY, as Pledgee and Collateral Agent (the "Pledgee") under the
Pledge referred to below. All capitalized terms used herein and not otherwise
defined herein shall have the respective meanings provided such terms in the
Credit Agreement referred to below.

                             W I T N E S S E T H:
                             - - - - - - - - - -

          WHEREAS, Holdings, the Borrower, the Banks and the Agent are parties
to a Credit Agreement, dated as of February 6, 1997 (as amended, modified or
supplemented to but not including the date hereof, the "Credit Agreement");

          WHEREAS, Holdings, the Borrower, various Subsidiaries of the Borrower
and the Collateral Agent are parties to a Security Agreement, dated as of
February 6, 1997 (as in effect on the date hereof, the  "Security Agreement");

          WHEREAS, Holdings, the Borrower, various Subsidiaries of the Borrower
and the Collateral Agent are parties to a Pledge Agreement, dated as of February
6, 1997 (as in effect on the date hereof, the  "Pledge Agreement");

          WHEREAS, the Borrower desires to acquire all of the capital stock of a
corporation previously identified to the Agent and the Banks (the "First
Identified Target"), by way of a one-step merger of a newly-formed Wholly-Owned
Subsidiary of the Borrower ("MergeCo") with and into the First Identified
Target, pursuant to, and in accordance with the terms of, an Agreement and Plan
of Merger (as amended, modified or supplemented to the date hereof, the "First
Identified Merger Agreement"), dated as of June 4, 1999, among the Borrower, the
First Identified Target and MergeCo, with the First Identified Target to be the
surviving corporation of such merger (the "First Identified Acquisition"), which
acquisition, after giving effect to this Amendment, will constitute a Permitted
Acquisition effected in accordance with the requirements of the Credit Agreement
as amended by this Amendment;

          WHEREAS, the Borrower desires to acquire, indirectly through a newly-
formed Wholly-Owned Subsidiary of the Borrower which may, but need not be, a
Foreign Subsidiary ("Second Identified Acquisition Corp."), all of the capital
stock of a corporation previously identified to the Agent and the Banks (the
"Second Identified Target"), pursuant to, and in accordance with the terms of, a
definitive Stock Purchase Agreement in the form furnished to the Agent prior to
the date hereof (with such amendments, modifications and waivers thereto as may
<PAGE>

be consented to by the Required Banks, the "Identified Stock Purchase
Agreement"), to be entered into among Second Identified Acquisition Corp., the
Borrower, as guarantor, the Second Identified Target and the selling
shareholders specified therein (the "Second Identified Acquisition"), which
acquisition, after giving effect to this Amendment, will constitute a Permitted
Acquisition effected in accordance with the requirements of the Credit Agreement
as amended by this Amendment;

          WHEREAS, the Borrower has requested certain amendments and consents to
the Credit Agreement, the Security Agreement and the Pledge Agreement in
connection with the First Identified Acquisition, the Second Identified
Acquisition and the financing thereof as described below; and

          WHEREAS, subject to the terms and conditions of this Amendment, the
Banks wish to grant certain consents to the Credit Agreement and the parties
hereto wish to amend the Credit Agreement, the Security Agreement and the Pledge
Agreement, in each case as herein provided;

          NOW, THEREFORE, it is agreed:

I.   Amendments and Consents to Credit Agreement.
     -------------------------------------------

          1.     Notwithstanding anything to the contrary contained in the
Credit Agreement, the Banks hereby acknowledge and agree that the First
Identified Acquisition may be effected as a Permitted Acquisition under the
Credit Agreement (and thereupon constitute a "Permitted Acquisition" for all
purposes of the Credit Agreement), so long as:

          (i)    immediately after giving effect to the First Identified
     Acquisition, the Permitted Acquisition Cost thereof (exclusive of
     transaction fees and expenses) shall not exceed $50,000,000 plus the amount
                                                                 ----
     of any purchase price adjustment as determined pursuant to the First
     Identified Merger Agreement;

          (ii)   except for (x) the deviation from the requirements of a
     Permitted Acquisition contained in the Credit Agreement as set forth in
     clause (i) above and (y) the consummation of the First Identified
     Acquisition by MergeCo (rather than the Borrower as otherwise contemplated
     by Section 8.02(p) under the Credit Agreement), the First Identified
     Acquisition shall otherwise be effected as a "Permitted Acquisition" in
     accordance with all applicable terms of (and meet all applicable
     requirements for a Permitted Acquisition under) the Credit Agreement,
     including, without limitation, Sections 7.11, 8.02(p) and 8.15(a) thereof;

          (iii)  on or prior to the First Identified Acquisition Date, there
     shall have been delivered to the Agent true and correct copies of the First
     Identified Merger Agreement and all documents entered into in connection
     with the First Identified Acquisition (the "First Identified Acquisition
     Documents"), certified as such by an officer of the Borrower;

                                      -2-
<PAGE>

          (iv)   on the First Identified Acquisition Date, (w) all First
     Identified Acquisition Documents shall have been duly executed and
     delivered by the parties thereto and shall be in full force and effect, (x)
     the representations and warranties set forth in the First Identified
     Acquisition Documents shall be true and correct in all material respects,
     (y) each of the material conditions precedent to the Borrower's and its
     Subsidiaries' obligations to consummate the First Identified Acquisition as
     set forth in the First Identified Acquisition Documents shall have been
     satisfied to the reasonable satisfaction of the Agent or waived with the
     consent of the Agent, and (z) the First Identified Acquisition shall have
     been consummated in accordance with all applicable law and the First
     Identified Acquisition Documents (without giving effect to any amendment or
     modification thereof or waiver with respect thereto unless consented to by
     the Agent);

          (v)    on or prior to the First Identified Acquisition Date, the Agent
     shall have received from McGuire, Woods Battle & Boothe LLP, special
     counsel to the Credit Parties, an opinion addressed to the Agent, the
     Collateral Agent and each of the Banks and dated the First Identified
     Acquisition Date, which opinion shall be in form and substance reasonably
     satisfactory to the Agent and shall cover the perfection of security
     interests in the assets of the First Identified Target and its Subsidiaries
     granted pursuant to the Security Documents and such other matters incident
     to the transactions contemplated herein as the Agent may reasonably
     request;

          (vi)   on the First Identified Acquisition Date, all necessary and
     material governmental (domestic and foreign) and third party approvals in
     connection with the First Identified Acquisition and the transactions
     contemplated by the First Identified Acquisition Documents and this
     Amendment and otherwise referred to therein or herein, shall have been
     obtained and remain in effect, and all applicable waiting periods shall
     have expired without any action being taken by any competent authority
     which restrains, prevents or imposes, in the judgment of the Agent,
     materially adverse conditions upon the consummation of the First Identified
     Acquisition and the transactions contemplated by this Amendment;

          (vii)  on the First Identified Acquisition Date, there shall not exist
     any judgment, order, injunction or other restraint issued or filed or a
     hearing seeking injunctive relief or other restraint pending or notified
     prohibiting or imposing materially adverse conditions upon the consummation
     of the First Identified Acquisition or the transactions contemplated by
     this Amendment;

          (viii) on the First Identified Acquisition Date, after giving effect
     to the First Identified Acquisition, nothing shall have occurred since July
     31, 1998 (and neither the Banks nor the Agent shall have become aware of
     any facts or conditions not previously known) which the Agent or the
     Required Banks shall determine has, or could reasonably be expected to have
     (x) a material adverse effect on the rights or remedies of the Agents or
     the Banks, or on the ability of the Credit Parties to perform their
     respective obligations to the Agent and the Banks under the Credit
     Documents, (y) a Material Adverse Effect or (z) a material adverse effect
     on the business, properties, assets, liabilities, condition

                                      -3-
<PAGE>

     (financial or otherwise) or prospects of the First Identified Target and
     its Subsidiaries taken as a whole;

          (ix)   on the First Identified Acquisition Date, no actions, suits or
     proceedings by any entity (private or governmental) shall be pending or
     threatened (a) with respect to the First Identified Acquisition, the Credit
     Agreement or any documentation executed in connection therewith or (b)
     which the Agent or the Required Banks shall determine could reasonably be
     expected to (x) have a Material Adverse Effect or (y) have a materially
     adverse effect on (I) the First Identified Acquisition, (II) the rights or
     remedies of the Banks or the Agent under the Credit Agreement or under any
     other Credit Document or on the ability of any Credit Party to perform its
     respective obligations to the Banks or the Agent under the Credit Agreement
     or under any other Credit Document or (III) the business, properties,
     assets, liabilities, condition (financial or otherwise) or prospects of
     the First Identified Target and its Subsidiaries taken as a whole;

          (x)    on the First Identified Acquisition Date, the Agent shall have
     received a solvency certificate from the chief financial officer of the
     Borrower, dated the First Identified Acquisition Date, in form and
     substance satisfactory to the Agent;

          (xi)   on the First Identified Acquisition Date, the Agent shall have
     received a certificate from the chief financial officer of the Borrower,
     dated the First Identified Acquisition Date, in form and substance
     satisfactory to the Agent, containing (I) a representation and warranty
     that (x) the incurrence of A-2 Term Loans on such date does not violate the
     terms of the Senior Subordinated Notes Indenture (including Section 4.12
     thereof) and (y) the Indebtedness evidenced by the A-2 Term Loans
     constitutes "Senior Debt" and "Designated Senior Debt" under the Senior
     Subordinated Notes Indenture and (II) financial calculations (in form and
     substance reasonably satisfactory to the Agent) establishing compliance
     with a Consolidated Fixed Charge Coverage Ratio (as defined in the Senior
     Subordinated Notes Indenture) of greater than 2.00:1.0 (after giving effect
     to the incurrence of A-2 Term Loans) as required by the proviso to Section
     4.12 of the Senior Subordinated Notes Indenture; and

          (xii)  on the First Identified Acquisition Date, the Agent shall have
     received a certificate, dated the First Identified Acquisition Date and
     signed on behalf of the Borrower by an appropriate officer of the Borrower,
     stating all of the conditions in clauses (i), (ii), (iii), (iv), (vi),
     (vii), (viii) and (ix) of above and Section 5.02 of the Credit Agreement
     have been satisfied on such date.

          2.   Notwithstanding anything to the contrary contained in the Credit
Agreement or Section 1 of Part I of this Amendment, the parties hereto hereby
acknowledge and agree that the First Identified Acquisition shall not constitute
a "Permitted Acquisition" for purposes of determining compliance with clause
(vi) of the proviso to Section 8.02(p) in connection with any new Permitted
Acquisition to be effected after the Fifth Amendment Effective Date.

                                      -4-
<PAGE>

          3.     The Banks hereby acknowledge and agree that the Second
Identified Acquisition may be effected as a Permitted Acquisition in accordance
with all applicable requirements of the Credit Agreement, including, without
limitation, Section 8.02 thereof; provided that, notwithstanding anything to the
                                  --------
contrary contained in the Credit Agreement, the following deviations from the
requirements of a Permitted Acquisition under Section 8.02(p) of the Credit
Agreement shall be permitted (and only such deviations shall be permitted) in
connection with the Second Identified Acquisition so long as the same otherwise
meets all applicable requirements for a Permitted Acquisition pursuant to the
Credit Agreement:

          (i)    the Second Identified Acquisition may be (but shall not be
     required to be) consummated by Second Identified Acquisition Corp. rather
     than the Borrower (notwithstanding any contrary requirement contained in
     Section 8.02(p) of the Credit Agreement);

          (ii)   upon the consummation of the Second Identified Acquisition, the
     Second Identified Target may become a Wholly-Owned Foreign Subsidiary of
     the Borrower (notwithstanding any contrary requirement contained in clause
     (ii) to the proviso to Section 8.02(p) of the Credit Agreement); and

          (iii)  the consideration paid (and Indebtedness assumed) in connection
     with the Second Identified Acquisition may include Indebtedness expressly
     permitted by Sections 8.04(p) and (q) of the Credit Agreement.

          4.     Section 1.01(a) of the Credit Agreement is hereby amended by
deleting each reference to the word "Term" appearing in said Section and
inserting the text "A-1 Term" in lieu thereof.

          5.     Section 1.01 of the Credit Agreement is hereby further amended
by inserting the following text at the end of said Section:

          "(e)   Subject to and upon the terms and conditions set forth herein,
     each Bank with an A-2 Term Loan Commitment severally agrees to make a term
     loan or term loans (each, an "A-2 Term Loan" and, collectively, the "A-2
     Term Loans") to the Borrower, which A-2 Term Loans (i) shall be incurred by
     the Borrower pursuant to a single drawing on the First Identified
     Acquisition Date, (ii) shall be denominated in U.S. Dollars, (iii) except
     as hereafter provided, shall, at the option of the Borrower, be incurred
     and maintained as, and/or converted into, Base Rate Loans or Eurodollar
     Loans, provided, that (x) all A-2 Term Loans made as part of the same
            --------
     Borrowing shall, unless otherwise specifically provided herein, consist of
     A-2 Term Loans of the same Type and (y) unless the Agent has determined
     that the A-2 Term Loan Syndication Date has occurred (at which time this
     clause (y) shall no longer be applicable), no more than three Borrowings of
     A-2 Term Loans to be maintained as Eurodollar Loans may be incurred prior
     to the 90th day after the First Identified Acquisition Date (each of which
     Borrowings of Eurodollar Loans may only have an Interest Period of one
     month, and the first of which Borrowings may only be made on or within five
     Business Days following the First Identified Acquisition Date, the second
     of which Borrowings may only be made on the

                                      -5-
<PAGE>

     last day of the Interest Period of the first such Borrowing and the third
     of which Borrowings may only be made on the last day of the Interest Period
     of the second such Borrowing) and (iv) shall not exceed for any Bank at the
     time of incurrence thereof on the First Identified Acquisition Date that
     aggregate principal amount as is equal to the A-2 Term Loan Commitment of
     such Bank as in effect on the First Identified Acquisition Date (after
     giving effect to any reductions thereto pursuant to Section 3.03(d)(ii) but
     before giving effect to any reductions thereto on such date pursuant to
     Section 3.03(d)(i)). Once repaid, A-2 Term Loans incurred hereunder may not
     be reborrowed.".

          6.    Section 1.03(a) of the Credit Agreement is hereby amended by
deleting the text "Term Loans" appearing in said Section and inserting the text
"A-1 Term Loans, A-2 Term Loans" in lieu thereof.

          7.    Section 1.05(a) of the Credit Agreement is hereby amended by (x)
deleting the text "Term" in each place it appears in clause (i) of said Section
and inserting the text "A-1 Term" in lieu thereof, (y) deleting the word "and"
appearing at the end of clause (ii) of said Section and inserting a comma in
lieu thereof and (z) inserting the following new clause (iv) at the end of said
Section:

     "and (iv) if A-2 Term Loans, by a promissory note substantially in the form
     of Exhibit B-4 with blanks appropriately completed in conformity herewith
     (each, an "A-2 Term Note" and, collectively, the "A-2 Term Notes")".

          8.    Section 1.05(b) of the Credit Agreement is hereby amended by
deleting each reference to the word "Term" appearing in said Section and
inserting the text "A-1 Term" in lieu thereof.

          9.    Section 1.05 of the Credit Agreement is hereby further amended
by (i) redesignating clause (e) thereof as clause (f) and (ii) inserting the
following new clause (e) immediately following clause (d) of said Section:

          "(e)  The A-2 Term Note issued to each Bank shall (i) be executed by
     the Borrower, (ii) be payable to the order of such Bank or its registered
     assigns and be dated the Fifth Amendment Effective Date, (iii) be in a
     stated principal amount equal to the A-2 Term Loan Commitment of such Bank
     on the Fifth Amendment Effective Date (or, if issued after the termination
     of the Total A-2 Term Loan Commitment, the A-2 Term Loans made by such
     Bank) and be payable in the principal amount of A-2 Term Loans evidenced
     thereby, (iv) mature on the A-2 Term Loan Maturity Date, (v) bear interest
     as provided in the appropriate clause of Section 1.08 in respect of the
     Base Rate Loans and Eurodollar Loans, as the case may be, evidenced
     thereby, (vi) be subject to voluntary repayment as provided in Section 4.01
     and mandatory repayment as provided in Section 4.02 and (vii) be entitled
     to the benefits of this Agreement and the other Credit Documents.".

          10.   Section 1.06 of the Credit Agreement is hereby amended by (x)
redesignating clause (iv) of the proviso to the first sentence of said Section
as clause (v) and (y)

                                      -6-
<PAGE>

inserting the following new clause (iv) immediately following clause (iii) of
the proviso to the first sentence of said Section:

     ", (iv) unless the Agent has determined that the A-2 Term Loan
     Syndication Date has occurred (at which time this clause (iv) shall
     no longer be applicable), prior to the 90th day after the First
     Identified Acquisition Date, A-2 Term Loans maintained as Base Rate
     Loans may not be converted into Eurodollar Loans unless any such
     conversion is effective on the first, second or third Interest
     Period referred to in clause (y) of Section 1.01(e)(iii) and so
     long as such conversion does not result in a greater number of
     Borrowings of Eurodollar Loans prior to the 90th day after the
     First Identified Acquisition Date as are permitted under such
     Section".

          11.    Section 1.07 of the Credit Agreement is hereby amended by
deleting the first sentence of said Section in its entirety and inserting the
following sentence in lieu thereof:

     "All Borrowings of A-1 Term Loans, A-2 Term Loans and Revolving
     Loans under this Agreement shall be incurred by the Borrower from
     the Banks pro rata on the basis of their A-1 Term Loan Commitments,
               --- ----
     A-2 Term Loan Commitments or Revolving Loan Commitments, as the
     case may be; provided that all Borrowings of Revolving Loans made
                  --------
     pursuant to a Mandatory Borrowing shall be incurred from the Banks
     pro rata on the basis on their Percentages.".
     --- ----

          12.    Section 1.09 of the Credit Agreement is hereby amended by (i)
deleting clause (v) appearing in said Section in its entirety and inserting the
following new clause (v) in lieu thereof:

          "(v)   no Interest Period for any Borrowing under a Facility shall be
     elected which would extend beyond the respective Maturity Date for such
     Facility;"

and (ii) deleting clause (vii) appearing in said Section in its entirety and
inserting the following new clause (vii) in lieu thereof:

          "(vii) no Interest Period in respect of any Borrowing of Term Loans
     shall be elected which extends beyond any date upon which a mandatory
     repayment of such Term Loans is required to be made under Section
     4.02(A)(b)(i) or (ii), as the case may be, if, after giving effect to the
     election of such Interest Period, the aggregate principal amount of such
     Term Loans which have Interest Periods which will expire after such date of
     mandatory repayment will be in excess of the aggregate principal amount of
     such Term Loans permitted to be outstanding after such mandatory
     repayment.".

          13.    Section 1.13 of the Credit Agreement is hereby amended by (i)
deleting the text "and/or (b) Term Loans, the outstanding Term Loans)" appearing
in said Section and inserting the text "and/or (b) the outstanding Term Loans
and Term Loan Commitment of any Facility, the outstanding Term Loans and Term
Loan Commitment of the respective Facility or Facilities)" in lieu thereof, (ii)
deleting the text "(except for the replacement of only the outstanding Term
Loans of the respective Bank)" appearing in said Section and inserting the text

                                      -7-
<PAGE>

"(except for the replacement of only the outstanding Term Loans and Term Loan
Commitment of any or all Facilities of Term Loans of the respective Bank)" in
lieu thereof, (iii) inserting the text "and/or the Term Loan Commitment"
immediately following the text "or (II) the Term Loans" appearing in said
Section, (iv) inserting the text "and/or the Term Loan Commitment" immediately
after the text "Term Loans" appearing in clause (x)(B) of said Section, (v)
inserting the text "and Term Loan Commitment of any or all Facilities of Term
Loans" immediately after the text "outstanding Term Loans" appearing in clause
(y) of said Section and (vi) inserting the text ", a Term Loan Commitment"
immediately following the text "Term Loans" appearing in the last sentence of
said Section.

          14.  Section 3.02(a) of the Credit Agreement is hereby amended by
deleting said Section in its entirety and inserting the following new Section
3.02(a) in lieu thereof:

     "(a) Upon at least three Business Days' prior written notice (or telephone
     notice promptly confirmed in writing) to the Agent at its Notice Office
     (which notice the Agent shall promptly transmit to each of the Banks), the
     Borrower shall have the right, without premium or penalty, to terminate or
     partially reduce the Total A-2 Term Loan Commitment or the Total Unutilized
     Revolving Loan Commitment, provided that (w) any such termination or
                                --------
     partial reduction shall apply to proportionately and permanently reduce the
     Total A-2 Term Loan Commitment or the Revolving Loan Commitment, as the
     case may be, of each Bank with such a Commitment, (x) any partial reduction
     pursuant to this Section 3.02(a) shall be in integral multiples of
     $1,000,000, (y) the reduction to the Total Unutilized Revolving Loan
     Commitment shall be in no case be in an amount which would cause the
     Revolving Loan Commitment of any RL Bank to be reduced (as required by the
     preceding clause (w)) by an amount which exceeds the remainder of (A) the
     Unutilized Revolving Loan Commitment of such RL Bank as in effect
     immediately before giving effect to such reduction minus (B) such RL Bank's
     Percentage of the aggregate principal amount of Swingline Loans then
     outstanding and (z) any partial reduction to the Total A-2 Term Loan
     Commitment pursuant to this Section 3.02(a) shall apply to reduce the then
     remaining Scheduled A-2 Repayments on a pro rata basis (based upon the then
                                             --- ----
     remaining Scheduled A-2 Repayments after giving effect to all prior
     reductions thereto).".

          15.  Section 3.02(b) of the Credit Agreement is hereby amended by
deleting said Section in its entirety and inserting the following new Section
3.02(b) in lieu thereof:

          "(b) In the event of certain refusals by a Bank to consent to certain
     proposed changes, waivers, discharges or terminations with respect to this
     Agreement which have been approved by the Required Banks as provided in
     Section 12.12(b), the Borrower shall have the right, subject to obtaining
     the consents required by Section 12.12(b), upon five Business Days' prior
     written notice to the Agent at its Notice Office (which notice the Agent
     shall promptly transmit to each of the Banks), to terminate the entire
     Revolving Loan

                                      -8-
<PAGE>

     Commitment and/or, if prior to the termination of the Total A-2 Term Loan
     Commitment, the A-2 Term Loan Commitment of such Bank, so long as all
     Loans, together with accrued and unpaid interest, Fees and all other
     amounts, owing to such Bank (including all amounts, if any, owing pursuant
     to Section 1.11 but excluding amounts owing in respect of any Loans
     maintained by such Bank, if such Loans are not being repaid pursuant to
     Section 12.12(b)) are repaid concurrently with the effectiveness of such
     termination (at which time Annex I shall be deemed modified to reflect such
     changed amounts) and at such time, unless the respective Bank continues to
     have outstanding Loans or Commitments of any Facility hereunder, such Bank
     shall no longer constitute a "Bank" for purposes of this Agreement, except
     with respect to indemnifications under this Agreement (including, without
     limitation, Sections 1.10, 1.11, 2.05, 4.04, 12.01 and 12.06), which shall
     survive as to such repaid Bank. Unless otherwise specifically agreed in
     writing by the Required Banks, any reduction to the Total A-2 Term Loan
     Commitment pursuant to this Section 3.02(b) shall apply to reduce the
     remaining Scheduled A-2 Repayments on a pro rata basis (based upon the then
                                             --- ----
     remaining amount of each such Scheduled A-2 Repayment, after giving effect
     to all prior reductions thereto).".

          16.   Section 3.03 of the Credit Agreement is hereby amended by (i)
deleting the text "The Total Commitment (and the" appearing in clause (a) of
said Section and inserting the text "Each of the Total A-1 Term Loan Commitment
and the Total Revolving Loan Commitment (and the A-1" in lieu thereof, (ii)
inserting the text "A-1" immediately prior to each appearance of the word "Term"
appearing in clause (b) of said Section, (iii) redesignating clauses (d) and (e)
of said Section as clauses (e) and (f), respectively, (iv) inserting the
following new clause (d) immediately following clause (c) of said Section:

          "(d)  In addition to any other mandatory commitment reductions
     pursuant to this Section 3.03, the Total A-2 Term Loan Commitment shall (i)
     terminate in its entirety (to the extent not theretofore terminated) on the
     earlier to occur of (x) the First Identified Acquisition Date (after giving
     effect to the incurrence of A-2 Term Loans on such date) and (y) August 31,
     1999 and (ii) prior to the termination of the Total A-2 Term Loan
     Commitment as provided in clause (i) above, be permanently reduced on each
     date upon which a mandatory repayment of Term Loans pursuant to Section
     4.02(A)(c), (d), (e), (f), (g) and (h) is required (and exceeds in amount
     the aggregate principal amount of Term Loans then outstanding) or would be
     required if Term Loans were then outstanding, by the amount, if any, by
     which the amount required to be applied pursuant to said Sections
     (determined as if an unlimited amount of Term Loans were actually
     outstanding) exceeds the aggregate principal amount of Term Loans then
     outstanding.";

(v) inserting the text "occurring on and after the termination of the Total A-2
Term Loan Commitment pursuant to this Section 3.03" immediately after the text
"this Section 3.03 on each date" appearing in clause (e) of said Section (as
redesignated pursuant to clause (iii) above) and

                                      -9-
<PAGE>

(vi) deleting clause (f) of said Section (as redesignated pursuant to clause
(iii) above) in its entirety and inserting the following new clause (f) in lieu
thereof:

          "(f)   Each reduction to the Total A-1 Term Loan Commitment, the Total
     A-2 Term Loan Commitment or Total Revolving Loan Commitment pursuant to
     this Section 3.03 shall be applied proportionately to reduce the A-1 Term
     Loan Commitment, A-2 Term Loan Commitment or the Revolving Loan Commitment,
     as the case may be, of each Bank with such a Commitment.".

          17.    Section 4.01(a) of the Credit Agreement is hereby amended by
(i) deleting the text "and/or Term Loans" appearing in said Section and
inserting the text ", A-1 Term Loans and/or A-2 Term Loans" in lieu thereof,
(ii) deleting the text "Term Loans" appearing in clause (i) of said Section and
inserting the text "A-1 Term Loans, A-2 Term Loans" in lieu thereof, (iii)
deleting the word "and" appearing at the end of clause (iv) of said Section,
(iv) deleting clause (v) of said Section in its entirety and inserting the
following new clauses (v), (vi) and (vii) in lieu thereof:

          "(v)   each prepayment of Term Loans pursuant to this Section 4.01
     must consist of a prepayment of A-1 Term Loans (in an amount equal to the
     A-1 TL Percentage of such prepayment) and A-2 Term Loans (in an amount
     equal to the A-2 TL Percentage of such prepayment);

          (vi)   each prepayment of A-1 Term Loans pursuant to this Section 4.01
     shall reduce the then remaining Scheduled A-1 Repayments in direct order of
     maturity (based upon the then remaining principal amount of each such
     Scheduled A-1 Repayment); and

          (vii)  each prepayment of A-2 Term Loans pursuant to this Section 4.01
     shall reduce the then remaining Scheduled A-2 Repayments in direct order of
     maturity (based upon the then remaining principal amount of each such
     Scheduled A-2 Repayment).".

          18.    Section 4.01(b) of the Credit Agreement is hereby amended by
(i) redesignating clause (B) of said Section as clause (C) thereof and (ii)
inserting the following new clause (B) immediately following clause (A) of said
Section:

     ", (B) in the case of the repayment of A-2 Term Loans of any Bank pursuant
     to this clause (b), the A-2 Term Loan Commitment of such Bank (to the
     extent not theretofore terminated) is terminated concurrently with such
     repayment (at which time Annex I shall be deemed modified to reflect the
     changed A-2 Term Loan Commitments)".

          19.    Section 4.02(A)(b) of the Credit Agreement is hereby amended by
(i) inserting the text "(i)" immediately prior to the text "In addition"
appearing in said Section, (ii) deleting the word "Term" appearing in said
Section and inserting the text "A-1 Term" in lieu thereof, (iii) deleting the
text "Scheduled Repayment" appearing in said Section and inserting the

                                      -10-
<PAGE>

text "Scheduled A-1 Repayment" in lieu thereof and (iv) inserting the following
clause (ii) at the end of said Section:

          "(ii)  In addition to any other mandatory repayments pursuant to this
     Section 4.02, on each date set forth below, the Borrower shall be required
     to repay that principal amount of A-2 Term Loans as is set forth opposite
     such date (each such repayment, as the same may be reduced as provided in
     Sections 4.01 and 4.02(B), a "Scheduled A-2 Repayment"):

       Scheduled A-2 Repayment Date                          Amount
       ----------------------------                          ------
       September 30, 2002                                    $6,000,000
       December 31, 2002                                     $6,000,000
       March 31, 2003                                        $7,000,000
       June 30, 2003                                         $7,000,000
       September 30, 2003                                    $7,000,000
       A-2 Term Loan Maturity Date                           $7,000,000

     In the event that less than $40,000,000 in aggregate principal amount of A-
     2 Term Loans has been incurred on the earlier to occur of (x) the First
     Identified Acquisition Date and (y) August 31, 1999, an amount equal to the
     remainder of $40,000,000 less the aggregate principal amount of the A-2
                              ----
     Term Loans incurred on the First Identified Acquisition Date (if any) shall
     be applied to reduce the then remaining Scheduled A-2 Repayments on a pro
                                                                           ---
     rata basis (based upon the then remaining principal amount of such
     ----
     Scheduled A-2 Repayments after giving effect to all prior reductions
     thereto).".

          20.    Each of Sections 4.02(A)(c), (d), (e), (f), (g) and (h) of the
Credit Agreement is hereby amended by inserting the text "(with the A-1 TL
Percentage of such amount to be applied as a repayment of the A-1 Term Loans and
the A-2 TL Percentage of such amount to be applied as a repayment of the A-2
Term Loans)" immediately after the first appearance of the text "shall be
applied as a mandatory repayment of principal of Term Loans" in each such
Section.

          21.    Section 4.02(A)(i) of the Credit Agreement is hereby amended by
deleting clause (ii) of said Section in its entirety and inserting the text
"(ii) all other then outstanding Loans of the respective Facility shall be
repaid in full on the respective Maturity Date for such Facility" in lieu
thereof.

          22.    Sections 4.02(B)(a) of the Credit Agreement is hereby amended
by deleting said Section in its entirety and inserting the following new Section
4.02(B)(a) in lieu thereof:

          "(a)   All repayments of Term Loans shall be applied in the following
     manner:

                                      -11-
<PAGE>

          (i)    any amount required to be applied to A-1 Term Loans or A-2 Term
     Loans, as the case may be, shall apply to the repayment of the outstanding
     principal amount of A-1 Term Loans and A-2 Term Loans, respectively, of the
     respective Facility;

          (ii)   if required pursuant to Section 4.02(A)(c), (d), (e), (g) or
     (h), such repayments of A-1 Term Loans and A-2 Term Loans shall be applied
     to reduce the then remaining Scheduled Repayments of the respective
     Facility on a pro rata basis (based upon the then remaining amount of each
                   --- ----
     such Scheduled Repayment of the respective Facility after giving effect to
     all prior reductions thereto); and

          (iii)  if required pursuant to Section 4.02(A)(f), such repayments of
     A-1 Term Loans and A-2 Term Loans shall be applied (x) first to reduce the
                                                            -----
     next two then remaining Scheduled Repayments of the respective Facility in
     direct order of maturity and (y) second, thereafter (or to the extent in
     excess thereof), to reduce the then remaining Scheduled Repayments of the
     respective Facility on a pro rata basis (based upon the then remaining
                              --- ----
     amount of each such Scheduled Repayment of the respective Facility after
     giving effect to all prior reductions thereto, including reductions
     pursuant to clause (x) above).".

          23.    Section 6.05 of the Credit Agreement is hereby amended by (i)
deleting the word "Term" appearing in clause (a) of said Section and inserting
the text "A-1 Term" in lieu thereof, (ii) inserting the text "(x)" immediately
after the text "provided that" appearing in clause (b) of said Section, (iii)
                --------
inserting the text "and (y) proceeds of Revolving Loans incurred on the First
Identified Acquisition Date in an amount not to exceed $13,500,000 may be used
to finance the First Identified Acquisition and to pay fees and expenses
incurred in connection therewith" at the end of the proviso appearing in clause
(b) of said Section and (iv) inserting the following new clause (d) at the end
of said Section:

          "(d) The proceeds of all A-2 Term Loans shall be utilized (i) to
     finance the First Identified Acquisition and (ii) to pay fees and expenses
     incurred in connection therewith, so long as such fees and expenses do not
     exceed $1,000,000.".

          24.    Section 6.10 of the Credit Agreement is hereby amended by (x)
inserting the text "(i)" immediately after the text "(b)" appearing in clause
(b) of said Section, (y) inserting the following new clause (ii) at the end of
clause (b) of said Section:

          "(ii)  The audited consolidated balance sheets of the First Identified
     Target for the fiscal years ended July 31, 1995, July 31, 1996, July 31,
     1997 and July 31, 1998, and the unaudited consolidated balance sheet of the
     First Identified Target at April 30, 1999, and the related consolidated
     statements of operations and cash flows of the First Identified Target for
     the fiscal years or nine-month period, as the case may be, ended as of said
     dates, which annual financial statements have been examined by (x) BDO
     Seidman LLP, in the case the financial statements for the fiscal years
     ended July 31, 1995, July 31, 1996 and July 31, 1997 and (y)

                                      -12-
<PAGE>

     Arthur Andersen LLP, in the case of the financial statements for the fiscal
     year ended July 31, 1998, each certified public accountants, who delivered
     an unqualified opinion with respect thereto and copies of which have
     heretofore been delivered to each Bank, present fairly in all material
     respects the financial position of the First Identified Target and its
     Subsidiaries on a consolidated basis at the date of said statements and the
     results for the periods covered thereby. All such financial statements have
     been prepared in accordance with GAAP consistently applied except to the
     extent provided in the notes to said financial statements and subject, in
     the case of the April 30, 1999 financial statements, to normal year-end
     audit adjustments and the absence of footnotes.";

and (z) inserting the following new clause (f) at the end of said Section:

          "(f)   The Updated Projections are based on good faith estimates and
     assumptions made by the management of the Borrower.  On the Fifth Amendment
     Effective Date such management believed that the Updated Projections were
     reasonable and attainable, it being recognized by the Banks, however, that
     projections as to future events are not to be viewed as facts and that the
     actual results during the period or periods covered by the Updated
     Projections may differ from the projected results and that the differences
     may be material.".

          25.    Section 7.10 of the Credit Agreement is hereby amended by (i)
inserting the text "(or, at the option of the Borrower at any time prior to the
first anniversary of the Fifth Amendment Effective Date (x) in the case of the
First Identified Target and each of its Subsidiaries, July 31 and (y) in the
case of Second Identified Target and each of its Subsidiaries, December 31)"
immediately after the text "January of each year" appearing in said Section and
(ii) inserting the text "(or, at the option of the Borrower at any time prior to
the first anniversary of the Fifth Amendment Effective Date (x) in the case of
the First Identified Target and each of its Subsidiaries, October 31, January
31, and April 30 and (y) in the case of Second Identified Target and each of its
Subsidiaries, March 31, June 30 and September 30)" immediately after the text
"such fiscal year ends" appearing in said Section.

          26.    Section 7 of the Credit Agreement is hereby amended by
inserting the following new Section 7.19: "Within 60 days following the Fifth
Amendment Effective Date, the Borrower shall have delivered to the Collateral
Agent, or caused to be delivered to the Collateral Agent, (x) fully executed
counterparts of amendments (the "Mortgage Amendments"), in form and substance
satisfactory to the Agent, to each of the Mortgages, together with evidence that
counterparts of each of the Mortgage Amendments have been delivered to the title
company insuring the Lien on the Mortgages for recording in all places to the
extent necessary or desirable, in the judgment of the Collateral Agent,
effectively to maintain a valid and enforceable first priority mortgage lien on
the Mortgaged Properties in favor of the Collateral Agent for the benefit of the
Secured Creditors and (y) either endorsements to the existing Mortgage Policies
or new Mortgage Policies assuring the Collateral Agent that each Mortgage is a
valid and enforceable first priority mortgage lien on the respective Mortgaged
Properties, free and clear of all defects and encumbrances except Permitted
Encumbrances."

                                      -13-
<PAGE>

          27.    Section 8.02 of the Credit Agreement is hereby amended by (i)
inserting the text "(x)" immediately prior to the text "the Borrower" appearing
in clause (g) said Section, (ii) inserting the text "and (y) the First
Identified Target may sell and repurchase accounts receivable pursuant to, and
in accordance with the terms of, the Permitted Factoring Agreement, so long as
the Indebtedness of the First Identified Target arising in connection therewith
is permitted by Section 8.04(o)" at the end of clause (g) of said Section, (iii)
deleting the word "and" at the end of clause (q) of said Section, (iv)
redesignating clause (r) of said Section as clause (s) and (v) inserting the
following new clause (r) after clause (q) appearing in said Section:

          "(q) the First Identified Target may purchase certain equity interests
     to the extent permitted by Section 8.05(v); and".

          28.    Section 8.03 of the Credit Agreement is hereby amended by (i)
redesignating clause (o) of said Section as clause (s), (ii) deleting the word
"and" at the end of clause (n) of said Section and (iii) inserting the following
new clauses (o), (p), (q) and (r) immediately following clause (n) of said
Section:

          "(o) Liens created under the Permitted Factoring Agreement
     securing Indebtedness permitted by Section 8.04(o) and the other
     obligations of the First Identified Target under the Permitted
     Factoring Agreement;

          (p)  Liens created by or pursuant to the Second Identified
     Target Credit Agreement and the Second Identified Target Bonds;

          (q)  Liens on the capital stock of Second Identified Target
     securing the Second Identified Target Secured Note;

          (r)  Liens securing Permitted Refinancing Indebtedness to the extent
     permitted by Section 8.04(r); and".

          29.    Section 8.04 of the Credit Agreement is hereby amended by (i)
redesignating clause (o) of said Section as clause (s), (ii) deleting the word
"and" at the end of clause (n) of said Section and (iii) inserting the following
new clauses (o), (p), (q) and (r) immediately following clause (n) of said
Section:

          "(o) Indebtedness consisting of recourse obligations of the
     First Identified Target under the Permitted Factoring Agreement, so
     long as the aggregate amount of all such Indebtedness shall not
     exceed $4,000,000 at any time;

          (p)  Indebtedness of (x) Second Identified Acquisition Corp.
     incurred pursuant to the Second Identified Target Secured Note in an
     aggregate outstanding principal amount not to exceed CDN$4,000,000
     (as reduced by any principal payments thereof) and (y) the Borrower
     consisting of an unsecured guaranty of the Indebtedness permitted
     pursuant to immediately preceding clause (x);

                                      -14-
<PAGE>

          (q)  Indebtedness of Second Identified Target incurred under
     (x) the Second Identified Target Credit Agreement in an aggregate
     principal amount not to exceed CDN$11,000,000 less the aggregate
                                                   ----
     amount of permanent commitment reductions thereunder, (y) the Second
     Identified Target Bonds in an aggregate principal amount not to
     exceed CDN$14,439,000 (as reduced by any repayments of principal
     thereof and any forgiveness of principal prepayments thereunder by
     the holders thereof) and (z) the Second Identified Target Loan
     Agreement in the form of term loans in an aggregate principal amount
     not to exceed CDN$1,830,000 less the aggregate amount of principal
                                 ----
     repayments thereof;

          (r)  Permitted Refinancing Indebtedness, so long as no Default
     or Event of Default is in existence at the time of the respective
     incurrence thereof and immediately after giving effect thereto;
     and".

          30.    Section 8.05 of the Credit Agreement is hereby amended by (i)
inserting the text "(including receivables in respect of obligations owing from
a financial institution to the First Identified Target under the Permitted
Factoring Agreement)" immediately following the text "owing to it" appearing in
clause (b) of said Section, (ii) deleting the amount "$500,000" appearing in
clause (o) of said Section and inserting the amount "$5,000,000" in lieu
thereof, "(iii) deleting the word "and" appearing at the end of clause (r) of
said Section, (iv) redesignating clause (s) of said Section as clause (w) and
(v) inserting the following new clauses (s), (t), (u) and (v) immediately
following clause (r) of said Section:

          "(s) the Borrower may make cash capital contributions to each of
     Second Identified Acquisition Corp. and MergeCo, in each case in such
     amounts as may be required to finance the Second Identified Acquisition or
     the First Identified Acquisition, as the case may be, on the respective
     closing date of the Second Identified Acquisition or the First Identified
     Acquisition, as the case may be;

          (t)  (I) the Borrower may make cash capital contributions and/or make
     intercompany loans or advances to Second Identified Acquisition Corp., and
     (II) Second Identified Acquisition Corp. may in turn use the proceeds of
     any such contributions and/or intercompany loans to make cash capital
     contributions and/or intercompany loans to Second Identified Target, so
     long as (i) no Default or Event of Default is then in existence or would
     result therefrom, (ii) the aggregate amount of all cash contributions plus
                                                                           ----
     the aggregate outstanding principal amount of all intercompany loans and
     advances, in each case made pursuant to sub-clause (I) this clause (t),
     does not exceed CDN$5,000,000 (determined without regard to any write-downs
     or write-offs thereof), (iii) each such intercompany loan (if any) is
     evidenced by an Intercompany Note pledged to the Collateral Agent pursuant
     to (and to the extent required by) the Pledge Agreement and (iv) Second
     Identified Target uses the proceeds of any such contribution or
     intercompany loan for its working capital purposes;

          (u)  the Borrower  may make cash capital contributions and/or make
     intercompany loans or advances to Second Identified Acquisition Corp. to
     enable Second Identified

                                      -15-
<PAGE>

     Acquisition Corp. to make payments on the Second Identified Target Secured
     Note when and as due, so long as (i) no Default or Event of Default is then
     in existence or would result therefrom, (ii) each such intercompany loan
     (if any) is evidenced by an Intercompany Note pledged to the Collateral
     Agent pursuant to the Pledge Agreement and (iii) the proceeds of any such
     contribution or intercompany loan, as the case may be, are promptly used by
     Second Identified Acquisition Corp. to make payments then due and owing on
     the Second Identified Target Secured Note;

          (v)  the First Identified Target may purchase with cash equity
     interests in an entity in which the First Identified Target has existing
     investments at the time of the consummation of the First Identified
     Acquisition, so long as the aggregate amount of consideration paid therefor
     does not exceed $3,000,000; and"

          31.    Section 8.08(a) of the Credit Agreement is hereby amended by
(i) deleting the text "during any fiscal year set forth below" appearing in said
Section and inserting the text "during any fiscal year of the Borrower" in lieu
thereof and (ii) deleting the text "in any fiscal year set forth below the
amount set forth opposite such fiscal year below" and the table, in each case
appearing in said Section, and inserting the text "$10,000,000 in any fiscal
year of the Borrower." in lieu thereof.

          32.    Section 8.09 of the Credit Agreement is hereby amended by
inserting the following text at the end of the table appearing in said Section:

          "July 31, 2002                $36,000,000
          October 31, 2002              $36,000,000
          January 31, 2003              $36,000,000
          April 30, 2003                $36,000,000
          July 31, 2003                 $36,000,000
          October 31, 2003              $36,000,000."

          33.    Section 8.10 of the Credit Agreement is hereby amended by
inserting the following text at the end of the table appearing in said Section:

          "July 31, 2002                     2.75:1.0
           October 31, 2002                  2.75:1.0
           January 31, 2003                  2.75:1.0
           April 30, 2003                    2.75:1.0
           July 31, 2003                     2.75:1.0
           October 31, 2003                  2.75:1.0".

          34.    Section 8.11 of the Credit Agreement is hereby amended by
inserting the following text at the end of the table appearing in said Section:

          "July 31, 2002                     3.20:1.0
           October 31, 2002                  3.20:1.0
           January 31, 2003                  3.20:1.0

                                      -16-
<PAGE>

          April 30, 2003                     3.20:1.0
          July 31, 2003                      3.20:1.0
          October 31, 2003                   3.20:1.0".

          35.    Section 8.13 of the Credit Agreement is hereby amended by (i)
inserting the text "the Permitted Factoring Agreement, any Second Identified
Target Bond Document, the Second Identified Target Secured Note, the First
Identified Merger Agreement, the Second Identified Target Loan Agreements,"
immediately after the text "any Merger Document," appearing in clause (iii) of
said Section and (ii) inserting the text ", any Second Identified Target Bond"
immediately following the text "Indebtedness to Remain Outstanding" appearing in
clause (i) of said Section.

          36.    Section 8.14 of the Credit Agreement is hereby amended by (i)
deleting the word "and" appearing immediately before clause (vi) of said Section
and inserting a comma in lieu thereof and (ii) inserting the text ", (vii) the
Second Identified Target Credit Agreement and (viii) the Second Identified
Target Bond Documents" immediately after clause (vi) appearing in said Section.

          37.    The definition of "Applicable Base Rate Margin" appearing in
Section 10 of the Credit Agreement is hereby amended by (x) inserting the text
"(i)" immediately following the text "Notwithstanding anything to the contrary
contained above in this definition," and (y) inserting the following text at the
end of said definition:

     "and (ii) the Applicable Base Rate Margin shall be no less than
     1.00% at any time on and after the Fifth Amendment Effective Date
     and prior to the delivery of the financial statements required
     pursuant to Section 7.01(b) for the fiscal quarter ended on the last
     Saturday of July, 1999".

          38.    The definition of "Applicable Commitment Fee Percentage"
appearing in Section 10 of the Credit Agreement is hereby amended by (x)
inserting the text "(i)" immediately following the text "Notwithstanding
anything to the contrary contained above in this definition," and (y) inserting
the following text at the end of said definition:

     "and (ii) the Applicable Commitment Fee Percentage shall be no less
     than .450% at any time on and after the Fifth Amendment Effective
     Date and prior to the delivery of the financial statements required
     pursuant to Section 7.01(b) for the fiscal quarter ended on the last
     Saturday of July, 1999".

          39.    The definition of "Applicable Eurodollar Margin" appearing in
Section 10 of the Credit Agreement is hereby amended by (x) inserting the text
"(i)" immediately following the text "Notwithstanding anything to the contrary
contained above in this definition," and (y) inserting the following text at the
end of said definition:

     "and (ii) the Applicable Eurodollar Margin shall be no less than
     2.00% at any time on and after the Fifth Amendment Effective Date
     and prior to the delivery of the

                                      -17-
<PAGE>

     financial statements required pursuant to Section 7.01(b) for the
     fiscal quarter ended on the last Saturday of July, 1999".

          40.  The definition of "Bank Default" appearing in Section 10 of the
Credit Agreement is hereby amended by deleting the text "1.01(a), (b) or (d)"
appearing in said definition and inserting the text "1.01(a), (b), (d) or (e)"
in lieu thereof.

          41.  The definition of "Facility" appearing in Section 10 of the
Credit Agreement is hereby amended by inserting the text "A-1 Term Loan
Facility, the A-2" immediately prior to the text "Term Loan Facility" appearing
in said definition.

          42.  The definition of "Loan" appearing in Section 10 of the Credit
Agreement is hereby amended by inserting the text "A-1 Term Loan, A-2"
immediately prior to the text "Term Loan" appearing in said definition.

          43.  The definition of "Note" appearing in Section 10 of the Credit
Agreement is hereby amended by inserting the text "A-1 Term Note, A-2"
immediately prior to the text "Term Note" appearing in said definition.

          44.  The definition of "Syndication Date" appearing in Section 10 of
the Credit Agreement is hereby amended by inserting the text "of the A-1 Term
Loans and the Revolving Loans" immediately prior to the text "has been
completed" appearing in said Section.

          45.  The definition of "Total Commitment" appearing in Section 10 of
the Credit Agreement is hereby amended by inserting the text "A-1 Term Loan
Commitment, the Total A-2" immediately prior to the text "Term Loan Commitment"
appearing in said definition.

          46.  Section 10 of the Credit Agreement is hereby further amended by
(i) deleting the definitions of "Aggregate Unutilized Commitment", "Commitment",
"Required Banks", "Scheduled Repayment", "Term Loan", "Term Loan Commitment",
"Term Loan Facility", "Term Note" and "Total Term Loan Commitment" appearing
therein in their entirety and (ii) inserting in the appropriate alphabetical
order the following new definitions:

          "Aggregate Unutilized Commitment" with respect to any Bank at any time
     shall mean the sum of (i) such Bank's A-1 Term Loan Commitment at such
     time, if any, (ii) such Bank's A-2 Term Loan Commitment at such time, if
     any and (iii) such Bank's Revolving Loan Commitment at such time less the
                                                                      ----
     sum of (x) the aggregate outstanding principal amount of all Revolving
     Loans made by such Bank, (y) such Bank's Percentage of the Letter of Credit
     Outstandings at such time and (z) in the case of any determination with
     respect to BTCo in its individual capacity as a Bank hereunder (and only in
     such case), the aggregate outstanding principal amount of all Swingline
     Loans made by BTCo at such time.

          "A-1 Term Loan" shall have the meaning provided in Section 1.01(a).

                                      -18-
<PAGE>

          "A-1 Term Loan Commitment" shall mean, with respect to each Bank, the
     amount set forth opposite such Bank's name in Annex I directly below the
     column entitled "A-1 Term Loan Commitment," as the same may be reduced or
     terminated pursuant to Sections 3.02, 3.03 and/or 9.

          "A-1 Term Loan Facility" shall mean the Facility evidenced by the
     Total A-1 Term Loan Commitment.

          "A-1 Term Note" shall have the meaning provided in Section 1.05(a).

          "A-1 TL Percentage" shall mean, at any time, a fraction (expressed as
     a percentage) the numerator of which is equal to the aggregate principal
     amount of all A-1 Term Loans outstanding at such time and the denominator
     of which is equal to the aggregate principal amount of all Term Loans
     outstanding at such time.

          "A-2 Term Loan" shall have the meaning provided in Section 1.01(e).

          "A-2 Term Loan Commitment" shall mean, with respect to each Bank, the
     amount set forth opposite such Bank's name in Annex I directly below the
     column entitled "A-2 Term Loan Commitment," as the same may be reduced or
     terminated pursuant to Sections 3.02, 3.03 and/or 9.

          "A-2 Term Loan Facility" shall mean the Facility evidenced by the
     Total A-2 Term Loan Commitment.

          "A-2 Term Loan Maturity Date" shall mean December 31, 2003.

          "A-2 Term Loan Syndication Date" shall mean that date upon which the
     Agent determines (and notifies the Borrower and the Banks) that the primary
     syndication (and resultant addition of Persons as Banks pursuant to Section
     12.04(b)) of the A-2 Term Loan Commitments and/or the A-2 Term Loans has
     been completed.

          "A-2 Term Note" shall have the meaning provided in Section 1.05(a).

          "A-2 TL Percentage" shall mean, at any time, a fraction (expressed as
     a percentage) the numerator of which is equal to the aggregate principal
     amount of all A-2 Term Loans outstanding at such time and the denominator
     of which is equal to the aggregate principal amount of all Term Loans
     outstanding at such time.

          "CDN$" shall mean shall mean freely transferable lawful money of
     Canada.

                                      -19-
<PAGE>

          "Commitment" shall mean, with respect to each Bank, such Bank's A-1
     Term Loan Commitment, A-2 Term Loan Commitment and Revolving Loan
     Commitment.

          "Fifth Amendment" shall mean the Fifth Amendment and Consent to this
     Agreement, dated as of June 3, 1999.

          "Fifth Amendment Effective Date" shall have the meaning provided in
     the Fifth Amendment.

          "First Identified Acquisition" shall have the meaning provided in the
     Fifth Amendment.

          "First Identified Acquisition Date" shall mean the date of the
     consummation of the First Identified Acquisition in accordance with the
     requirements of Section 1 of the Fifth Amendment.

          "First Identified Target" shall mean the U.S. corporation identified
     in the Updated Projections as an acquisition target of the Borrower.

          "Maturity Date" shall mean (x) with respect to the Revolving Loan
     Facility and the A-1 Term Loan Facility, the Final Maturity Date and (y)
     with respect to the A-2 Term Loan Facility, the A-2 Term Loan Maturity
     Date.

          "MergeCo" shall have the meaning provided in the Fifth Amendment.

          "Permitted Factoring Agreement" shall mean the Factoring Agreement,
     dated as of January 26, 1995, among the First Identified Target and Trust
     Company Bank, as the same may be amended, modified or supplemented from
     time to time in accordance with the terms hereof and thereof.

          "Permitted Refinancing Indebtedness" shall mean any Indebtedness of
     the Second Identified Target issued or given in exchange for, or the
     proceeds of which are used to, extend, refinance, renew, replace,
     substitute or refund Indebtedness under the Second Identified Target Credit
     Agreement or any Indebtedness issued to so extend, refinance, renew,
     replace, substitute or refund any such Indebtedness, so long as (a) such
     Indebtedness has a weighted average life to maturity greater than or equal
     to the weighted average life to maturity of the Indebtedness being
     refinanced, (b) such refinancing or renewal does not (i) increase the
     maximum amount of such Indebtedness permitted to be outstanding immediately
     prior to such refinancing or renewal by more than CDN$2,000,000 or (ii) add
     guarantors, obligors or security from that which applied to such
     Indebtedness being refinanced or renewed, and (c) all other terms of such
     refinancing or renewal (including, without limitation, with respect to the
     amortization schedules, redemption provisions, maturities, covenants,
     defaults and remedies), are not, taken as a whole, materially less
     favorable to the Second

                                      -20-
<PAGE>

     Identified Target than those previously existing with respect to the
     Indebtedness being refinancing or renewed.

          "Required Banks" shall mean Non-Defaulting Banks the sum of whose
     outstanding Term Loans (and, if prior to the termination of the Total A-2
     Term Loan Commitment, A-2 Term Loan Commitments) and Revolving Loan
     Commitments (or, if after the Total Revolving Loan Commitment has been
     terminated, outstanding Revolving Loans and Percentages of outstanding
     Swingline Loans and Letter of Credit Outstandings) constitute greater than
     50% of the sum of (i) the total outstanding Term Loans of Non-Defaulting
     Banks (and, if prior to the termination of the Total A-2 Term Loan
     Commitment, the Total A-2 Term Loan Commitment less the aggregate A-2 Term
     Loan Commitments of Defaulting Banks) and (ii) the Total Revolving Loan
     Commitment less the aggregate Revolving Loan Commitments of Defaulting
     Banks (or, if after the Total Revolving Loan Commitment has been
     terminated, the total outstanding Revolving Loans of Non-Defaulting Banks
     and the aggregate Percentages of all Non-Defaulting Banks of the total
     outstanding Swingline Loans and Letter of Credit Outstandings at such
     time).

          "Scheduled A-1 Repayment" shall have the meaning provided in Section
     4.02(A)(b)(i).

          "Scheduled A-2 Repayment" shall have the meaning provided in Section
     4.02(A)(b)(ii).

          "Scheduled Repayment" shall mean any Scheduled A-1 Repayment and
     Scheduled A-2 Repayment.

          "Second Identified Acquisition Corp." shall mean a Wholly-Owned
     Subsidiary of the Borrower previously identified to the Agent and the
     Banks.

          "Second Identified Target" shall mean the foreign corporation
     identified in the Updated Projections as an acquisition target of the
     Borrower.

          "Second Identified Acquisition" shall have the meaning provided in the
     Fifth Amendment.

          "Second Identified Target Bond Indenture" shall mean the Deed of Trust
     and Mortgage, dated as of November 1, 1968, among the Second Identified
     Target and Canada Permanent Trust Company, and the related security
     documentation, in each case, as in effect on the Fifth Amendment Effective
     Date and as the same may be amended, modified or supplemented from time to
     time in accordance with the terms of hereof and thereof.

          "Second Identified Target Bond Documents" shall mean the Second
     Identified Target Bonds, the Second Identified Target Bond Indenture and
     the

                                      -21-
<PAGE>

     other documents and instruments entered into connection with the issuance
     of the Second Identified Target Bonds, as the same may be amended, modified
     or supplemented from time to time in accordance with the terms hereof and
     thereof.

          "Second Identified Target Bonds" shall mean the Series M, N and O
     Income Bonds issued by the Second Identified Target pursuant to the Second
     Identified Target Bond Indenture, as the same may be amended, modified or
     supplemented from time to time in accordance with the terms hereof and
     thereof.

          "Second Identified Target Credit Agreement" shall mean the Credit
     Agreement, dated as of July 15, 1998, among the Second Identified Target
     and Canadian Imperial Bank of Commerce,  and the related security
     documentation, in each case, as in effect on the Fifth Amendment Effective
     Date and as the same may be amended, modified or supplemented from time to
     time.

          "Second Identified Target Loan Agreements" shall mean the Letter
     Agreements, dated as of February 27, 1997, August 1, 1997 and December 12,
     1997, between the Second Identified Target and a business development
     corporation identified to the Agent, as in effect on the Fifth Amendment
     Effective Date and as the same may be amended, modified or supplemented
     from time to time in accordance with the terms hereof and thereof.

          "Second Identified Target Secured Note" shall mean the promissory note
     to be issued by Second Identified Acquisition Corp. as consideration
     pursuant to the Second Identified Acquisition, which promissory note shall
     (i) be unguaranteed by any Person (other than the Borrower), (ii) bear no
     interest, (iii) be unsecured (except by the capital stock of Second
     Identified Target) and (iv) otherwise be in form and substance satisfactory
     to the Agent, as the same may be amended , modified or supplemented from
     time to time in accordance with the terms hereof and thereof

          "Term Loan" shall mean each A-1 Term Loan and each A-2 Term Loan.

          "Term Loan Commitment" shall mean either or both of the A-1 Term Loan
     Commitment or the A-2 Term Loan Commitment, as the context may require.

          "Total A-1 Term Loan Commitment" shall mean the sum of the A-1 Term
     Loan Commitments of each of the Banks.

          "Total A-2 Term Loan Commitment" shall mean the sum of the A-2 Term
     Loan Commitments of each of the Banks.

          "Updated Projections" shall have the meaning provided in the Fifth
     Amendment.

                                      -22-
<PAGE>

          47.  Section 12.04(b) of the Credit Agreement is hereby amended by (i)
inserting the text "(or, if prior to the termination of the Total A-2 Term Loan
Commitment, A-2 Term Loan Commitments)" immediately following the text "and/or
its outstanding Term Loans" and (ii) inserting the text "(or, if prior to the
termination of the Total A-2 Term Loan Commitment, A-2 Term Loan Commitments)"
immediately following the text "and/or outstanding principal amount of Term
Loans".

          48.  Annex I to the Credit Agreement is hereby amended by deleting
same in its entirety and inserting in lieu thereof the new Annex I as it appears
as attached hereto.

          49.  Exhibit A-1 to the Credit Agreement is hereby amended by deleting
the text "[Term Loans]" appearing in said Exhibit and inserting the text "[A-1
Term Loans][A-2 Term Loans]" in lieu thereof.

          50.  Exhibit B-1 and Exhibit J to the Credit Agreement are hereby
amended by deleting same in their entirety and inserting in lieu thereof a new
Exhibit B-1 or Exhibit J, as the case may be, in the form of Exhibit B-1 or
Exhibit J, as the case may be, attached hereto.

          51.  The Credit Agreement is hereby further amended by adding Exhibit
B-4 thereto in the form of Exhibit B-4 attached hereto.

II.  Amendments to Security Agreement.
     --------------------------------

          1.   Section 1.1 of the Security Agreement is hereby amended by
inserting the following sentence at the end of said Section:

          "Notwithstanding the foregoing, the term "Collateral" shall not
     include any Excluded Receivables."

          2.   The definition of "Receivables" appearing in Article IX of the
Security Agreement is hereby amended by inserting the following text immediately
prior to the period at the end of said definition:

     "; provided that the term Receivable shall not include any Excluded
        --------
     Receivable."

          3.   Article IX of the Security Agreement is hereby amended by
inserting the following new definition in the appropriate alphabetical order in
said Article:

          "Excluded Receivable" shall mean any Receivable (as defined herein
     without giving effect to the proviso to the definition thereof) owned or
     held by the First Identified Target.

III. Amendments to Pledge Agreement.
     -------------------------------

               1.  Section 2 of the Pledge Agreement is hereby amended by (x)
inserting the text "(I)" immediately after the text "provided that," appearing
in clause (i) of said Section

                                      -23-
<PAGE>

and (y) inserting the following text immediately after the proviso appearing in
clause (i) of said Section:

               "and (II) the term "Stock" shall not include any capital stock of
     the Second Identified Target (to the extent owned by any Pledgor) at any
     time (and only at such times) prior to the repayment in full of the Second
     Identified Target Secured Note".

IV.  Miscellaneous Provisions.
     ------------------------

          1.   In order to induce the Banks to enter into this Amendment, each
of Holdings and the Borrower hereby represents and warrants that:

          (a)  no Default or Event of Default exists as of the Fifth Amendment
     Effective Date, both before and after giving effect to this Amendment; and

          (b)  all of the representations and warranties contained in the Credit
     Agreement or the other Credit Documents are true and correct in all
     material respects on the Fifth Amendment Effective Date both before and
     after giving effect to this Amendment, with the same effect as though such
     representations and warranties had been made on and as of the Fifth
     Amendment Effective Date (it being understood that any representation or
     warranty made as of a specific date shall be true and correct in all
     material respects as of such specific date).

          2.   This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.

          3.   This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.  A complete set of
counterparts shall be lodged with the Borrower and the Agent.

          4.   THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.

          5.   This Amendment shall become effective on the date (the "Fifth
Amendment Effective Date") when each of the following conditions shall have been
satisfied:

          (i)  the Agent shall have received for the account of each relevant
     Bank the appropriate A-1 Term Note and A-2 Term Note for such Bank, in the
     amount, maturity and as otherwise provided in Section 1.05 of the Credit
     Agreement;

          (ii) the Agent shall have received from each Credit Party certified
     copies of resolutions of the Board of Directors of such Credit Party with
     respect to the matters set forth in this Amendment and such resolutions
     shall be satisfactory to the Agent;

                                      -24-
<PAGE>

          (iii) the Agent shall have received from McGuire, Woods Battle &
     Boothe LLP, special counsel to the Credit Parties, an opinion addressed to
     the Agent, the Collateral Agent and each of the Banks and dated the Fifth
     Amendment Effective Date in form and substance satisfactory to the Agent,
     and covering such matters incident to this Amendment and the transactions
     contemplated herein as the Agent may reasonably request (including an
     opinion as to no conflict with the Senior Subordinated Note Indenture);

          (iv)  the Banks shall have received a copy of the detailed
     consolidated financial projections for Holdings and its Subsidiaries, and
     after giving effect to the Transaction, the First Identified Acquisition,
     the Second Identified Acquisition, the related financings therefor and the
     transactions and financings contemplated by this Amendment (including the
     A-2 Term Loans and the Senior Subordinated Notes), for the five fiscal
     years ended after the Fifth Amendment Effective Date (the "Updated
     Projections"), which Updated Projections shall be satisfactory in form and
     substance to the Agent and the Required Banks;

          (v)   the Borrower shall have paid to the Agent and the Banks all
     fees, costs and expenses (including, without limitation, legal fees and
     expenses) payable to the Agent and the Banks to the extent then due; and

          (vi)  each of Holdings, the Borrower, the Pledgee, the Collateral
     Agent, each Subsidiary Guarantor, the Required Banks and each Bank with an
     A-2 Term Loan Commitment shall have signed a counterpart hereof (whether
     the same or different counterparts) and shall have delivered (including by
     way of facsimile transmission) the same to the Agent at its Notice Office.

          6.    By executing and delivering a copy hereof, each Credit Party
hereby agrees that all Loans (including, without limitation, the A-2 Term Loans)
shall be fully guaranteed pursuant to the various Guaranties in accordance with
the terms and provisions thereof and shall be fully secured pursuant to the
Security Documents.

          7.    From and after the Fifth Amendment Effective Date, all
references in the Credit Agreement and each of the other Credit Documents to the
Credit Agreement, the Security Agreement and the Pledge Agreement shall be
deemed to be references to the Credit Agreement, the Security Agreement or the
Pledge Agreement, as the case may be, as modified hereby.

                            *          *          *

                                      -25-
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Amendment as of the date first
above written.

                              CAF HOLDINGS, INC.

                              By____________________________________
                                Title:

                               COLLINS & AIKMAN FLOORCOVERINGS, INC.

                              By____________________________________
                                Title:
<PAGE>

                              BANKERS TRUST COMPANY,
                                Individually and as Agent

                              By________________________________
                                Title:
<PAGE>

                              FIRST SOURCE FINANCIAL LLP
                                By: First Source Financial Inc., as its
                                agent/manager

                              By___________________________________
                                Title:
<PAGE>

                              HELLER FINANCIAL, INC.

                              By___________________________________
                                Title:
<PAGE>

                                        LASALLE NATIONAL BANK

                                        By______________________________
                                          Title:
<PAGE>

                                        BANKBOSTON, N.A.

                                        By______________________________
                                          Title:
<PAGE>

                                        FIRST UNION NATIONAL BANK

                                        By______________________________
                                          Title:
<PAGE>

                                   FLEET BUSINESS CREDIT CORPORATION

                                   By_______________________________
                                     Title:
<PAGE>

                              SENIOR DEBT PORTFOLIO
                                   By:  Boston Management and Research
                                   as Investment Advisor

                              By________________________________________
                                Title:
<PAGE>

                                        WACHOVIA BANK, N.A.

                                        By_________________________
                                          Title:
<PAGE>

                                        CAF HOLDINGS, INC.,
                                        as a Guarantor

                                        By_____________________________
                                          Title: