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                                                                 Exhibit 4(e)(4)

                 PUTNAM FLEXIBLE 401(K) AND PROFIT SHARING PLAN

                              PLAN AGREEMENT #001

This is the Plan Agreement for a Putnam nonstandardized prototype 401(k) plan
with optional profit sharing plan provisions. Please consult a tax or legal
advisor and review the entire form before you sign it. If you fail to fill out
this Putnam Plan Agreement properly, the Plan may be disqualified. By executing
this Plan Agreement, the Employer establishes a 401(k) and profit sharing plan
and trust upon the terms and conditions of Putnam Basic Plan Document #07, as
supplemented and modified by the provisions elected by the Employer in this
Plan Agreement. THIS PLAN AGREEMENT MUST BE ACCEPTED BY PUTNAM IN ORDER FOR THE
EMPLOYER TO RECEIVE FUTURE AMENDMENTS TO THE PUTNAM FLEXIBLE 401(K) AND PROFIT
SHARING PLAN.

                                 *  *  *  *  *

1.  Employer Information. The Employer adopting this Plan is:

    A.  Employer Name:  Books-A-Million, Inc.

    B.  Employer Identification Number:  63-0798460

    C.  Employer Address:  402 Industrial Lane

                           Birmingham, AL 35211




    D.  SIC Code:          3521

    E.  Employer Contact:  Name:  Christine Sanders

                           Title:  Director of Human Resource

                           Phone #:  205-942-3737

    F.  Fiscal Year:       February 1 through January 31
                           (month/day)        (month/day)

    G.  Type of Entity (check one):

        [X] Corporation  [ ] Partnership   [ ] Subchapter S Corporation

        [ ] Sole proprietorship   [ ] Other

    H.  Plan Name: Books-A-Million, Inc. 401(k) Profit Sharing Plan

    I.  Plan Number: 001 (complete)


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2.  Plan Information.

    A.  Plan Year.  Check one:

        [ ]  (1)  The Calendar Year

        [x]  (2)  The Plan Year will be the same as the Fiscal Year of the
                  Employer shown in 1.F. above. If the Fiscal Year of the
                  Employer changes, the Plan Year will change accordingly.

        [ ]  (3)  The Plan Year will be the period of 12 months beginning on the
                  first day of __ (month) and ending on the last day of __
                  (month).

        [ ]  (4)  A short Plan Year commencing on ________ (month/day/year) and
                  ending on ________ (month/day/year) and immediately thereafter
                  the 12-consecutive month period commencing on _____
                  (month/day).

        The Plan Year will also be your Plan's Limitation Year for purposes of
        the contribution limitation rules in Article 6 of the Plan.

    B.  Effective Date of Adoption of Plan.

        (1)  Are you adopting this Plan to replace an existing plan?

             [x]  (a)  Yes     [ ]  (b)  No

        (2)  If you answered Yes in 2.B(1) above, the Effective Date of your
                     adoption of this Replacement Plan will be the first day of
                     the current Plan Year unless you elect a later date in
                     (2)(b) below. Please complete the following:

                                          (a)  December 31, 1972
                          Original Effective Date of the Plan you are Replacing

                                          (b)  February 1, 1996
                          Effective Date of this Replacement Plan

        (3)  If you answered No in 2B(1) above, the Effective Date of your
                     adoption of this Plan will be the day you select below
                     (not before the first day of the current Plan Year, and
                     not before the day your Business began):

                          (a)  The Effective Date is:
                                          month/day/year


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    C.  Identifying Highly Compensated Employees. Check either (1) or (2).

        [ ]  (1)  The Plan will use the regular method under Plan Section
                  2.58(a) for identifying Highly Compensated Employees.

                  If you selected this option and your Plan Year is the
                  calendar year, do you wish to make the regular method's
                  "calendar year election" for identifying your Highly
                  Compensated Employees?

                  [ ]   (a) Yes           [ ]   (b) No

        [X]  (2)  The Plan will use the simplified method under Plan Section
                  2.58(b) for identifying Highly Compensated Employees.

3.  Eligibility For Plan Participation (Plan Section 3.1). Employees will be
    eligible to participate in the Plan when they complete the requirements you
    select in A, B, C and D below.

    A.  Classes of Eligible Employees. The Plan will cover all employees who
        have met the age and service requirements with the following exclusions:

        [X]  (1)  No exclusions. All job classifications will be eligible.

        [ ]  (2)  The Plan will exclude employees in a unit of Employees covered
                  by a collective bargaining agreement with respect to which
                  retirement benefits were the subject of good faith
                  bargaining, with the exception of the following collective
                  bargaining units, which will be included: ___.

        [ ]  (3)  The Plan will exclude employees who are non-resident aliens
                  without U.S. source income.

        [ ]  (4)  Employees of the following Affiliated Employers (specify):

        [ ]  (5)  Leased Employees

        [ ]  (6)  Employees in the following other classes (specify):


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    B.  Age Requirement (check and complete (1) or (2)):

        [ ]  (1)  No minimum age required for participation

        [X]  (2)  Employees must reach age 21 (not over 21) to participate

    C.  Service Requirements.

             (1)  Elective Deferrals. To become eligible, an employee must
                  complete (choose one):

                  [ ]  (a)  No minimum service required.

                  [ ]  (b)  One 6-month Eligibility Period

                  [ ]  (c)  One __-month Eligibility Period (must be less
                            than 12)

                  [X]  (d)  One 12-month Eligibility Period

             (2)  Employer Matching Contributions. To become eligible, an
                  employee must complete (choose one):

                  [ ]  (a)  No minimum service required.

                  [ ]  (b)  One 6-month Eligibility Period

                  [ ]  (c)  One __-month Eligibility Period (must be less
                            than 12)

                  [X]  (d)  One 12-month Eligibility Period

                  [ ]  (e)  Two 12-month Eligibility Periods (may only be chosen
                            if you adopt the vesting schedule under item
                            9.A(3)(a) to provide 100% full and immediate vesting
                            of Employer Matching Contributions).

                  [ ]  (f)  Not applicable. The Employer will not make Employer
                            Matching Contributions.

             (3)  Profit Sharing Contributions. To become eligible, an employee
                  must complete (choose one):

                  [ ]  (a)  No minimum service required.

                  [ ]  (b)  One 6-month Eligibility Period


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             [ ]  (c)  One __-month Eligibility Period (must be less than 12)

             [X]  (d)  One 12-month Eligibility Period

             [ ]  (e)  Two 12-month Eligibility Periods (may only be chosen if
                       you adopt the vesting schedule under item 9.A(3)(a) to
                       provide for 100% full and immediate vesting of Profit
                       Sharing Contributions)

             [ ]  (f)  Not applicable. The Employer will not make Profit Sharing
                       Contributions.

        (4)  If the Employer acquired a business on or before the Effective Date
             of this Plan and the Eligibility Periods selected in (1), (2) and
             (3) for former employees of that acquired business will include the
             former employees' periods of employment with that business, list
             the business below. Any acquired business which had a plan which
             the Employer now maintains must be listed below.



        (5)  If the Employer acquires a business after the Effective Date, the
             Eligibility Periods for an employee of the acquired business will
             be the periods selected in (1), (2) and (3) beginning on (check (a)
             or (b)):

             [X]  (a)  the date the employee began work with the acquired
                       business.

             [ ]  (b)  the date of the acquisition (i.e., the date the employee
                       begins work for the Employer).

        (6)  Hours of Service for Eligibility Periods.

             (a)  6-Month Eligibility Period. To receive credit for a 6-month
                  Eligibility Period, an employee must complete 6 months of
                  service, during which he completes at least:

                       [ ]  (i)  500 Hours of Service

                       [ ]  (ii) ___ Hours of Service (under 500)

             (b)  12-Month Eligibility Period. To receive credit for a 12-month
                  Eligibility Period, an employee must complete 12 months of
                  service, during which he completes at least:


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                  [X]  (i)   1,000 Hours of Service

                  [ ]  (ii)  _____ Hours of Service
                              (under 1,000)

             (c)  Other Eligibility Period. To receive credit for the
                  Eligibility Period selected in 3.C(1)(c), 3.C(2)(c) and/or
                  3.C(3)(c) above, an employee must complete during it at least:

                  [ ]  (i)   _____ Hours of Service
                              (under 1,000)

        (7)  Method of Crediting Hours of Service For Eligibility and Vesting.
             Hours of Service will be credited to an employee by the following
             method (check one):

             [X]  (a)  Actual hours for which an employee is paid

             [ ]  (b)  Any employee who has one actual paid hour in the
                       following period will be credited with the number of
                       Hours of Service indicated (check one):

                       [ ]  (i)    Day (10 Hours of Service)

                       [ ]  (ii)   Week (45 Hours of Service)

                       [ ]  (iii)  Semi-monthly payroll period (95 Hours
                                   of Service)

                       [ ]  (iv)   Month (190 Hours of Service)

        (8)  Entry Dates. Each employee in an eligible class who completes the
             age and service requirements specified above will begin to
             participate in the Plan on (check one):

             [ ]  (a)  The first day of the month in which he fulfills the
                       requirements.

             [X]  (b)  The first of the following dates occurring after he
                       fulfills the requirements (check one):

                       [ ]  (i)    The first day of the month following the date
                                   he fulfills the requirements (monthly).

                       [ ]  (ii)   The first day of the first, fourth,


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                                   seventh and tenth months in a Plan Year
                                   (quarterly).

                      [X]  (iii)   The first day of the first month and the
                                   seventh month in a Plan Year (semiannually).

            [ ]  (c)  Other: __ (May be no later than (i) the first day of the
                      Plan Year after which he fulfills the requirements, and
                      (ii) the date six months after the date on which he
                      fulfills the requirements, which ever occurs first.)

    D.  (FOR NEW PLANS ONLY) Will all eligible Employees as of the Effective
        Date be required to meet the age and service requirements for
        participation specified in B and C above?

        [ ]  (a)  Yes

        [ ]  (b)  No. Eligible Employees will be eligible to become Participants
                  as of the Effective Date even if they have not satisfied
                  (check one or both):

                  [ ]  (i)    the age requirement.

                  [ ]  (ii)   the service requirement.

4.  CONTRIBUTIONS.

    A.  ELECTIVE DEFERRALS (PLAN SECTION 5.2). Your Plan will allow employees
        to elect pre-tax contributions under Section 401(k) of the Code. You
        must complete this part A.

        (1)  A Participant may make Elective Deferrals for each year in an
             amount not to exceed (check one):

             [X]  (a)  15% of his Earnings

             [ ]  (b)  ___% of his Earnings not to exceed $___ (specify a
                       dollar amount)

             [ ]  (c)  $___ (specify a dollar amount)

        (2)  Will a Participant be required to make a minimum Elective Deferral
             in order to make Elective Deferrals under the Plan? (check one and
             complete as applicable)

             [X]  (a)  No.


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             [ ]  (b)  Yes. The minimum Elective Deferral will be __% of the
                       Participant's Earnings.

        (3)  A Participant may begin to make Elective Deferrals, or change the
             amount of his Elective Deferrals, as of the following dates
             (check one):

             [ ]  (a)  First business day of each month (monthly).

             [ ]  (b)  First business day of the first, fourth, seventh and
                       tenth months of the Plan Year (quarterly).

             [X]  (c)  First business day of the first and seventh months of the
                       Plan Year (semiannually).

             [ ]  (d)  First business day of the Plan Year only (annually).

             [ ]  (e)  Other: ____

        (4)  Will Participants be permitted to make separate Elective Deferrals
             of bonuses, even if bonuses have otherwise been excluded from
             Compensation for the purpose of Elective Deferrals under 7.A(1)?

             [X]  (a)  Yes          [ ]  (b)  No

    B.  Employer Matching Contributions. (Plan Section 5.8). Complete this part
        B only if you will make Employer Matching Contributions under the Plan.

        (1)  The Employer will contribute and will allocate to each Qualified
             Participant's Employee Matching Account an Employer Matching
             Contribution on the basis set forth below:

             [X]  (a)  Discretionary matching contributions. (The Employer may
                       select this option in addition to option (b) if the
                       Employer wishes to have the option to make discretionary
                       matching contributions in addition to fixed matching
                       contributions.)

             [ ]  (b)  Fixed matching contributions.

                       [ ]  (i)   based on Elective Deferrals:

                            [ ]   (A)  % of Elective Deferrals

                            [ ]   (B)  % of Elective Deferrals up to  % of
                                       Earnings.



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                            [ ]   (C)  __% of Elective Deferrals up to __% of
                                       Earnings and __% of Elective Deferrals
                                       over that percentage of Earnings and up
                                       to __% of Earnings. (The third percentage
                                       number must be less than the first
                                       percentage number.)

                            [ ]   (D)   __% of Elective Deferrals up to $____ of
                                       Elective Deferrals.

                            [ ]   (E)  __% of Elective Deferrals up to $____ of
                                       Elective Deferrals and __% of Elective
                                       Deferrals over that dollar amount and up
                                       to $____ of Elective Deferrals. (The last
                                       percentage must be less than the first
                                       percentage).

                       [ ]  (ii)  Based on after-tax Participant Contributions:

                            [ ]   (A)  __% of Participant Contributions

                            [ ]   (B)  __% of Participant Contributions up to
                                       __% of Earnings.

                            [ ]   (C)  __% of Participant Contributions up to
                                       __% of Earnings and __% of Participant
                                       Contributions over that percentage of
                                       Earnings and up to __% of Participant
                                       Contributions. (The third percentage must
                                       be less than the first percentage)

                            [ ]   (D)  __% of Participant Contributions up to
                                       $____ of Participant Contributions.

                            [ ]   (E)  __% of Participant Contributions up to
                                       $____ of Participant Contributions and
                                       __% of Participant Contributions


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<PAGE>   10
                                            over that dollar amount and up
                                            to $___ of Participant
                                            Contributions. (The last
                                            percentage must be less than
                                            the first percentage).

        (2)  Qualified Participant. In order to receive an allocation of
             Employer Matching Contributions for a Plan Year, an Employee must
             be a Qualified Participant for that purpose. Select below either
             (a) alone, or any combination of (b), (c) and (d).

             [ ]  (a)  To be a Qualified Participant eligible to receive
                       Employer Matching Contributions for a Plan Year, an
                       Employee must (check (i) or (ii)):

                       [ ]  (i)   Either be employed on the last day of
                                  the Plan Year, complete more than 500
                                  Hours of Service in the Plan Year, or
                                  retire, die or become disabled in the
                                  Plan Year.

                       [ ]  (ii)  Either be employed on the last day of
                                  the Plan Year or complete more than
                                  500 Hours of Service in the Plan Year.

             Stop here if you checked (a). If you did not check (a), check (b),
             (c) or (d), or any combination of (b), (c) and (d).

             To be a Qualified Participant eligible to receive Employer Matching
             Contributions for a Plan Year, an Employee must:

             [X]  (b)  Be credited with 1000 (choose 1, 501 or 1,000) Hours
                       of Service in the Plan Year.

             [X]  (c)  Be an Employee on the last day of the Plan Year.

             [X]  (d)  Retire, die or become disabled during the Plan Year.

        (3)  Will the Employer have the option of making all or any portion of
             its Employer Matching Contributions in Employer Stock?

             [X]  (a)  Yes    [ ]  (b)  No

     C.  Profit Sharing Contributions. (Plan Sections 4.1 and 4.2)

        (1)  Profit Limitation. Will Profit Sharing Contributions to the Plan
             be limited to the current and accumulated profits of your Business?
             Check one:


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<PAGE>   11

            [ ]  (a)  Yes  [X]  (b)  No

       (2)  Amount.  The Employer will contribute to the Plan for each Plan
            Year (check one):

            [X]  (a)  An amount chosen by the Employer from year to year

            [ ]  (b)  __% of the Earnings of all Qualified Participants for
                      the Plan      Year

            [ ]  (c)  $__ for each Qualified Participant per __ (enter time
                      period, e.g. payroll period, plan year)

       (3)  Allocations to Participants

            (a)  Allocation to Participants. Profit Sharing Contributions will
                 be allocated:

                 [X]   (i)    Pro rata (percentage based on compensation)

                 [ ]   (ii)   Uniform Dollar amount

                 [ ]   (iii)  Integrated With Social Security (complete (b) and
                              (c) below)

            (b)  Integration with Social Security. (Complete only if you have
                 elected in 4.C(3)(a) to integrate your Plan with Social
                 Security.) Profit Sharing Contributions will be allocated to
                 Qualified Participants as you check below:

                 [ ]  (i)    Profit Sharing Contributions will be allocated
                             according to the Top-Heavy Integration
                             Formula in Plan Section 4.2(c)(1) in every Plan
                             Year, whether or not the Plan is top-heavy.

                 [ ]  (ii)   Profit Sharing Contributions will be allocated
                             according to the Top-Heavy Integration
                             Formula in Plan Section 4.2(c)(1) only in Plan
                             Years in which the Plan is top-heavy. In all
                             other Plan Years, contributions will be
                             allocated according to the Non-Top-Heavy
                             Integration Formula in Plan Section 4.2(c)(2).

            (c)  Integration Level. (Complete only if you have elected in
                 4.C(3)(a) to integrate your Plan with Social Security.) The
                 Integration Level will be (check one):

                 [ ]  (i)    The Social Security Wage Base in effect at the
                             beginning of the Plan Year.

                 [ ]  (ii)   __% (not more than 100%) of the Social


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                             Security Wage Base in effect at the beginning
                             of the Plan Year.

                 [ ]  (iii)  $__ (not more than the Social Security Wage
                             Base).

                             Note: The Social Security Wage Base is
                             indexed annually to reflect increases in the cost
                             of living.

       (4)  Qualified Participants. In order to receive an allocation of Profit
            Sharing Contributions for a Plan Year, an Employee must be a
            Qualified Participant for this purpose. Select below either (a)
            alone, or any combination of (b), (c) and (d).

            [ ]  (a)  To be a Qualified Participant eligible to receive an
                      allocation of Profit Sharing Contributions for a Plan
                      Year, an Employee must (check (i) or (ii)):

                      [ ]  (i)    Either be employed on the last day of
                                  the Plan Year, complete more than 500
                                  Hours of Service in the Plan Year, or
                                  retire, die or become disabled in the
                                  Plan Year.

                      [ ]  (ii)   Either be employed on the last day of
                                  the Plan Year or complete more than
                                  500 Hours of Service in the Plan Year.

            Stop here if you checked (a). If you did not check (a), check (b),
            (c) or (d), or any combination of (b), (c) and (d).


            To be a Qualified Participant eligible to receive an allocation of
            Profit Sharing Contributions for a Plan Year, an Employee must:

            [X]  (b)  Be credited with 1,000 (choose 1, 501 or 1,000) Hours
                      of Service in the Plan Year.

            [X]  (c)  Be an Employee of the last day of the Plan Year.

            [X]  (d)  Retire, die or become disabled during the Plan Year.


   D.  Participant Contributions (Plan Section 4.6). Will your Plan allow
       Participants to make after-tax contributions?

            [ ]  (1)  Yes    [X]  (2)  No


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    E.  Qualified Matching Contributions (Plan Section 2.61). Skip this part E
        if you will not make Qualified Matching Contributions.

        (1)  Qualified Matching Contributions will be made with respect to
             (check one):

             [ ]  (a)  Elective Deferrals made by all Qualified Participants (as
                       defined in 4.B(2))

             [ ]  (b)  Elective Deferrals made only by Qualified Participants
                       (as defined in 4.B(2)) who are not Highly Compensated
                       Participants

        (2)  The amount of Qualified Matching Contributions made with respect to
             a Participant will be:

             [ ]  (a)  discretionary

             [ ]  (b)  fixed (check and complete (i), (ii) or (iii))

                       [ ]  (i)    __% of Elective Deferrals

                       [ ]  (ii)   __% if Elective Deferrals that do not exceed
                                   __% of Earnings

                       [ ]  (iii)  __% of Elective Deferrals that do not exceed
                                   $____

    F.  Qualified Nonelective Contributions (Plan Section 2.62): Skip this part
        F if you will not make Qualified Nonelective Contributions.

        (1)  Qualified Nonelective Contributions will be made on behalf of
             (check either (a) or (b) and either (c) or (d)):

             [ ]  (a)  All Participants

             [ ]  (b)  Only Participants who are not Highly Compensated
                       Employees who also, for the Plan Year for which the
                       Qualified Nonelective Contributions are made:

             [ ]  (c)  Are Qualified Participants (as defined in 4.C(4))

             [ ]  (d)  Made Elective Deferrals


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        (2)  The amount of Qualified Nonelective Contributions for a Plan Year
             will be (check one):

             [ ]  (a)  ___% (not over 15%) of the Earnings of Participants on
                       whose behalf Qualified Nonelective Contributions are made

             [ ]  (b)  An amount determined by the Employer from year to year,
                       to be shared in proportion to their Earnings by
                       Participants on whose behalf Qualified Nonelective
                       Contributions are made

    G. Forfeitures

        (1)  Employer Matching Contributions. Forfeitures of Employer Matching
             Contributions will be used as follows (check and complete (a) or
             (b)):

             [X]  (a)  Applied to reduce the following contributions required of
                       the Employer (check (i) and/or (ii)):

                       [X]  (i)    Employer Matching Contributions

                       [ ]  (ii)   Profit Sharing Contributions

             [ ]  (b)  Reallocated as follows (check (i) or (ii)):

                       [ ]  (i)    As additional Employer Matching Contributions

                       [ ]  (ii)   As additional Profit Sharing Contributions

        (2)  Profit Sharing Contributions.  Forfeitures of Profit Sharing
             Contributions will be used as follows (check (a) or (b)):

             [X]  (a)   Applied to reduce the following contributions required
                        of the Employer (check (i) and/or (ii)):

                        [X]  (i)    Profit Sharing Contributions

                        [ ]  (ii)   Employer Matching Contributions

             [ ]  (b)   Reallocated as additional Profit Sharing Contributions



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5.  Top-Heavy Minimum Contributions (Plan Section 14.3). Skip paragraphs A and B
    below if you do not maintain any other qualified plan in addition to this
    Plan. N/A

    A.  For any Plan Year in which the Plan is Top-Heavy, the Top-Heavy minimum
        contribution (or benefit) for Non-Key employees participating both in
        this Plan and another qualified plan maintained by the Employer will be
        provided in (check one):

        [ ]  (1)  This Plan    [ ]  (2)  The other qualified plan

    B.  If you maintain a defined benefit plan in addition to this Plan, and the
        Top-Heavy Ratio (as defined in Plan Section 14.2(c)) for the combined
        plans is between 60% and 90%, you may elect to provide an increased
        minimum allocation or benefit pursuant to Plan Section 14.4. Specify
        your election by completing the statement below:

        The Employer will provide an increased (specify contribution or benefit)
        ____ in its (specify defined contribution or defined benefit) ___ plan
        as permitted under Plan Section 14.4.

6.  Other Plans. You must complete this section if you maintain or ever
    maintained another qualified plan in which any Participant in this Plan is
    (or was) a participant or could become a participant. N/A

    The Plan and your other plan(s) combined will meet the contribution
    limitation rules in Article 6 of the Plan as you specify below:

    A.  If a Participant in the Plan is covered under another qualified defined
        contribution plan maintained by your Business, other than a master or
        prototype plan (check one):

        [ ]  (1)  The provisions of Section 6.2 of the Plan will apply as if the
                  other plan were a master or prototype plan.

        [ ]  (2)  The plans will limit total annual additions to the maximum
                  permissible amount, and will properly reduce any excess
                  amounts, in the manner you describe below.

    B.  If a Participant in the Plan is or has ever been a participant in a
        defined benefit plan maintained by your Business, the plans will meet
        the limits of Article 6 in the manner you describe below:

        If your Business has ever maintained a defined benefit plan, state below
        the


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<PAGE>   16
        interest rate and mortality table to be used in establishing the present
        value of any benefit under the defined benefit plan for purposes of
        computing the top-heavy ratio:

                              Interest rate:     %

                              Mortality Table:

7.  Compensation (Plan Section 2.8).

     A.  Amount.

         (1)  Elective Deferrals and Employer Matching Contributions.
              Compensation for the purposes of determining the amount and
              allocation of Elective Deferrals and Employer Matching
              Contributions will be determined as follows (choose either (a)
              or (b), and (c) and/or (d) as applicable).

             [x]  (a)  Compensation will include Form W-2 earnings as defined
                       in Section 2.8 of the Plan.

             [ ]  (b)  Compensation will include all compensation included in
                       the definition of Code Section 415 Compensation in Plan
                       Section 6.5(b) of the Plan.

             [ ]  (c)  In addition to the amount provided in either (a) or (b)
                       above, Compensation will also include any amounts
                       withheld from the employee under a 401(k) plan, cafeteria
                       plan, SARSEP, tax sheltered 403(b) arrangement, or Code
                       Section 457 deferred compensation plan, and contributions
                       described in Code Section 414(h)(2) that are picked up by
                       a governmental employer.

             [ ]  (d)  Compensation will also exclude the following amount
                       (choose each that applies):

                       [ ]  (i)    overtime pay.

                       [ ]  (ii)   bonuses.

                       [ ]  (iii)  commissions.

                       [ ]  (iv)   other pay (describe): ____

                       [ ]  (v)    compensation in excess of $___


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<PAGE>   17
        (2)  Profit Sharing Contributions. Compensation for the purposes of
             determining the amount and allocation of Profit Sharing
             Contributions shall be determined as follows (choose either (a) or
             (b), and (c) and/or (d), as applicable).

             [X]  (a)  Compensation will include Form W-2 earnings as defined
                       in Section 2.8 of the Plan.

             [ ]  (b)  Compensation will include all compensation included in
                       the definition of Code Section 415 Compensation in
                       Section 6.5(b) of the Plan.

             [ ]  (c)  In addition to the amount provided in either (a) or (b)
                       above, compensation will also include any amounts
                       withheld from the employee under a 401(k) plan,
                       cafeteria plan, SARSEP, tax sheltered 403(b)
                       arrangement, or Code Section 457 deferred compensation
                       plan, and contributions described in Code Section
                       414(h)(2) that are picked up by a governmental employer.

             [ ]  (d)  Compensation will also exclude the following amounts
                       (choose each that applies):

                       [ ]  (i)    overtime pay

                       [ ]  (ii)   bonuses

                       [ ]  (iii)  commissions

                       [ ]  (iv)   other pay describe: _____

                       [ ]  (v)    compensation in excess of $____

                 Note: No exclusion under (d) may be selected if Profit Sharing
                 Contributions will be integrated with Social Security under
                 4.C(3)(a)(iii). In addition, no exclusion under (d) will apply
                 for purposes of determining the top-heavy minimum contribution
                 if the Plan is top-heavy.

    B.  Measuring Period. Compensation will be based on the Plan Year. However,
        for an Employee's initial year of participation in the Plan,
        Compensation will be recognized as of:

        [X]  (1)  the first day of the Plan Year.

        [ ]  (2)  the date the Participant enters the Plan.


                                      -17-
<PAGE>   18
8.  Distributions and Withdrawals.

    A.  Retirement Distributions.

        (1)  Normal Retirement Age (Plan Section 7.1). Normal retirement age
             will be the later of 65 (not over age 65) or __ (not more than 5)
             years of participation in the Plan.

        (2)  Early Retirement (Plan Section 7.1). Select One:

             [X]  (a)  No early retirement will be permitted.

             [ ]  (b)  Early retirement will be permitted at age __.

             [ ]  (c)  Early retirement will be permitted at age __ with at
                       least __ Years of Service.

        (3)  Annuities (Plan Section 9.3). Will your Plan permit distributions
             in the form of a life annuity? You must check Yes if this Plan
             replaces or serves as a transferee plan for an existing Plan that
             permits distributions in a life annuity form.

             [ ]  (a)  Yes    [X]  (b)  No

    B.  Hardship Distributions (Plan Section 12.2). Will your Plan permit
        hardship distributions?

        [X]  (1)  No

        [ ]  (2)  Yes. Indicate below from which Accounts hardship withdrawals
                  will be permitted (check all that apply);

             [ ]  (a)  Elective Deferral Account

             [ ]  (b)  Rollover Account

             [ ]  (c)  Employer Matching Account

             [ ]  (d)  Employer Contribution Account (i.e., Profit Sharing
                       Contributions)


    C.  Withdrawals after Age 59 1/2 (Plan Section 12.3). Will your Plan permit
        employees over age 59 1/2 to withdraw amounts upon request? You must
        check Yes if this Plan replaces an existing Plan that permits
        withdrawals after age 59 1/2.

        [ ]  (1)  Yes    [X]  (2)  No


                                      -18-
<PAGE>   19
    D.  Withdrawals following Five Years of Participation or Two Years after
        Contribution (Plan Section 12.4). Will your Plan permit employees to
        withdraw amounts from the vested portion of their Employer Matching
        Contribution Accounts and Employer Contribution Accounts (i.e., Profit
        Sharing Contributions) if either (i) the Participant has been a
        Participant for at least five years, or (ii) the amount withdrawn from
        each of these Accounts is limited to the amounts that were credited to
        that Account prior to the date two years before the withdrawal? You
        must check yes if this Plan replaces a Plan which permits withdrawals
        in these circumstances.

        [ ]  (1)  Yes    [x]  (2)  No

    E.  Loans (Plan Section 12.5). Will your Plan permit loans to employees
        from the vested portion of their Accounts?

        [ ]  (1)  No

        [x]  (2)  Yes. Indicate below whether loans will be permitted for any
                  reason or only on account of hardship:

             [x]  (a)  Any reason.

             [ ]  (b)  Hardship only.

    F.  Automatic Distribution of Small Accounts (Plan Section 9.1). Will your
        Plan automatically distribute vested account balances not exceeding
        $3,500, within 60 days after the end of the Plan Year in which a
        Participant separates from employment?

        [x]  (1)  Yes    [ ]  (2)  No

9.  Vesting (Plan Article 8)

    A.  Time of Vesting (select (1) or (2) below and complete vesting schedule).

        [x]  (1)  Single Vesting Schedule:

             The vesting schedule selected below will apply to both Employer
             Matching Contributions and Profit Sharing Contributions.

        [ ]  (2)  Dual Vesting Schedules:

             The vesting schedule marked with an "MC" below will apply to
             Employer Matching Contributions and the vesting schedule marked
             with a "PS" below will apply to Profit Sharing Contributions.


                                      -19-
<PAGE>   20
             (3)  Vesting Schedules:

             [ ]  (a)  100% vesting immediately upon participation in the Plan.

             [ ]  (b)  Five-Year Graded Schedule:

                       Vested Percentage    20%    40%    60%    80%    100%

                       Years of Service     1      2      3      4      5

             [X]  (c)  Seven-Year Graded Schedule:

                       Vested Percentage    20%    40%    60%    80%    100%

                       Years of Service     3      4      5      6      7

             [ ]  (d)  Six-Year Graded Schedule:

                       Vested Percentage    20%    40%    60%    80%    100%

                       Years of Service     2      3      4      5      6

             [ ]  (e)  Three-Year Cliff Schedule:

                       Vested Percentage    0%    100%

                       Years of Service     0-2   3

             [ ]  (f)  Five-Year Cliff Schedule:

                       Vested Percentage    0%    100%

                       Years of Service     0-4   5

             [ ]  (g)  Other Schedule (must be at least as favorable as
                       Seven-Year Graded Schedule or Five-Year Cliff Schedule):

                       (i)  Vested Percentage    __%    __%    __%    __%   ___%

                       (ii)  Years of Service    __     __     __     __    ___

             (4)  Top Heavy Schedule:

                  (a)  If you selected above an "Other Schedule," specify in the
                       space below the schedule that will apply in Plan Years
                       that the Plan is top-heavy. The schedule you specify must
                       be at least as favorable to employees, at all years of
                       service, as either the Six-Year Graded Schedule or the
                       Three-Year Cliff Schedule. The top-heavy vesting schedule
                       will be:

                       [ ]  (i)    the same "Other Schedule" selected above


                                      -20-
<PAGE>   21

                      [ ]  (ii)   the following schedule:

                      Vested Percentage   %   %   %      %   %

                      Years of Service

                      [X]  (iii)  Six-Year Graded Schedule

                      [ ]  (iv)   Three-Year Cliff Schedule

            (b)  If the Plan becomes top-heavy in a Plan Year, will the top-
                 heavy vesting schedule apply for all subsequent Plan Years?

                 [ ]  (i)    Yes    [X]  (ii)  No

   B.  Service for Vesting (select (1) or (2), and complete (3)).

       [X]  (1)  All of an employee's service will be used to determine his
                 Years of Service for purposes of vesting

       [ ]  (2)  An employee's Years of Service for vesting will include all
                 years except (check all that apply):

            [ ]  (a)  (New plan) service before the effective date of the plan

            [ ]  (b)  (Existing plan) service before the effective date of the
                      existing plan

            [ ]  (c)  Service before the Plan Year in which an employee
                      reached age 18

       (3)  Will an employee's service for a business acquired by the Employer
            that was performed before the acquisition be included in
            determining an employee's Years of Service for vesting?

            [ ]  (i)    Yes    [X]  (ii)  No

            List below any business acquired on or before the Effective Date for
            which an employee's service will be included in determining an
            employee's Years of Service for vesting.  Service of an employee
            for a predecessor employer (which includes an acquired business)
            whose plan the Employer maintains must be included as service for
            the Employer under this Plan. Therefore, also list below any
            predecessor employer whose plan the Employer maintains:


                                     -21-





<PAGE>   22
    C.  Hours of Service for Vesting. The number of Hours of Service required
        for crediting a Year of Service for vesting will be (check one):

        [x]  (1)  1,000 Hours of Service

        [ ]  (2)  ____ Hours of Service
                       (under 1,000)

        Hours of Service for vesting will be credited according to the method
        selected under 3.C(6).

    D.  Year of Service Measuring Period for Vesting (Plan Section 2.52). The
        periods of 12 months used for measuring Years of Service will be
        (check one):

        [x]  (1)  Plan Years

        [ ]  (2)  12-month Eligibility Periods

    Note: If you are adopting this Plan to replace an existing plan, employees
    will be credited under this Plan with all service credited to them under the
    plan you are replacing.

10. Investments (Plan Sections 13.2 and 13.3).

    A.  Available Investment Products (Plan Section 13.2).  The investment
        options available under the Plan are identified in the Service Agreement
        or such other written instructions between the Employer and Putnam, as
        the case may be. All Investment Products must be sponsored,
        underwritten, managed or expressly agreed to in writing by Putnam. If
        there is any amount in the Trust Fund for which no instructions or
        unclear instructions are delivered, it will be invested in the default
        option selected by the Employer in its Service Agreement with Putnam, or
        such other written instructions as the case may be, until instructions
        are received in good order, and the Employer will be deemed to have
        selected the option indicated in its Service Agreement, or such other
        written instructions as the case may be, as an available Investment
        Product for that purpose.


                                      -22-
<PAGE>   23
    B.  Instructions (Plan Section 13.3). Investment instructions for amounts
        held under the Plan generally will be given by each Participant for his
        own Accounts and delivered to Putnam as indicated in the Service
        Agreement between Putnam and the Employer. Check below only if the
        Employer will make investment decisions under the Plan with respect to
        the following contributions made to the Plan. (Check all applicable
        options.) N/A

        [ ]  (1)  The Employer will make all investment decisions with respect
                  to all employee contributions, including Elective Deferrals,
                  Participant Contributions, Deductible Employee Contributions
                  and Rollover Contributions.

        [ ]  (2)  The Employer will make all investment decisions with respect
                  to all Employer contributions, including Profit Sharing
                  Contributions, Employer Matching Contributions, Qualified
                  Matching Contributions and Qualified Nonelective
                  Contributions.

        [ ]  (3)  The Employer will make investment decisions with respect to
                  Employer Matching Contributions and Qualified Matching
                  Contributions.

        [ ]  (4)  The Employer will make investment decisions with respect to
                  Qualified Nonelective Contributions.

        [ ]  (5)  The Employer will make investment decisions with respect to
                  Profit Sharing Contributions.

        [ ]  (6)  Other (Describe. An Employer may elect to make investment
                  decisions with respect to a specified portion of a specific
                  type of contribution to the Plan.): ____

    C.  Changes. Investment instructions may be changed (check one):

        [ ]  (1)  on any Valuation Date (daily)

        [ ]  (2)  on the first day of any month (monthly)

        [X]  (3)  on the first day of the first, fourth, seventh and tenth
                  months in a Plan Year (quarterly)

    D.  Employer Stock. (Skip this paragraph if you did not designate Employer
        Stock as an investment under the Service Agreement.)



                                      -23-
<PAGE>   24
        (1)  Voting.  Employer Stock will be voted as follows:

             [ ]  (a)  In accordance with the Employer's instructions.

             [X]  (b)  In accordance with the Participant's instructions.
                       Participants are hereby appointed named fiduciaries for
                       the purpose of the voting of Employer Stock in accordance
                       with Plan Section 13.8.

        (2)  Tendering. Employer stock will be tendered as follows:

             [ ]  (a)  In accordance with the Employer's instructions.

             [X]  (b)  In accordance with the Participant's instructions.
                       Participants are hereby appointed named fiduciaries for
                       the purpose of the tendering of Employer Stock in
                       accordance with Plan Section 13.8.

11. Administration.

    A.  Plan Administrator (Plan Section 15.1). You may appoint a person or a
        committee to serve as Plan Administrator. If you do not appoint a Plan
        Administrator, the Plan provides that the Employer will be the Plan
        Administrator.

        The initial Plan Administrator will be (check one):

        [ ]  This person: ___

        [ ]  A committee composed of these people:



    B.  Recordkeeper (Plan Section 15.4). Unless Putnam expressly permits
        otherwise, you must appoint Putnam as Recordkeeper to perform certain
        routine services determined upon execution of a written Service
        Agreement between Putnam and the Employer.
        The initial Record keeper will be:

        Putnam Fiduciary Trust Company
        Putnam Retail 401(k)B-2-B
        859 Willard St.
        Quincy, MA 02269-9110



                                      -24-

<PAGE>   25
12. Determination Letter Required.  You may not rely on an opinion letter
    issued to Putnam by the National Office of the Internal Revenue Service as
    evidence that the Plan is qualified under Section 401 of the Internal
    Revenue Code. In order to obtain reliance with respect to qualification of
    the Plan, you must receive a determination letter from the appropriate Key
    District Office of Internal Revenue. Putnam will prepare an application for
    such a letter upon your request at a fee agreed upon by the parties.

    Putnam will inform you of all amendments it makes to the prototype plan. If
    Putnam ever discontinues or abandons the prototype plan, Putnam will inform
    you. This Plan Agreement #001 may be used only in conjunction with Putnam's
    Basic Plan Document #07.

                                   * * * * *

    If you have any questions regarding this Plan Agreement, contact Putnam at:

                          Putnam Defined Contribution Plans
                                  One Putnam Place B2B
                                   859 Willard Street
                                    Quincy, MA 02269
                                 Phone: 1-800-752-5766


                                      -25-
<PAGE>   26
                                   * * * * *

                         EMPLOYER'S ADOPTION OF PUTNAM
                    FLEXIBLE 401(k) AND PROFIT SHARING PLAN




The Employer named below hereby adopts a PUTNAM FLEXIBLE 401(k) AND PROFIT
SHARING PLAN, and appoints Putnam Fiduciary Trust Company to serve as Trustee
of the Plan. The Employer acknowledges that it has received copies of the
current prospectus for each Investment Product available under the Plan, and
represents that it will deliver copies of the then current prospectus for each
such Investment Product to each Participant before each occasion on which the
Participant makes an investment instruction as to his Account. The Employer
further acknowledges that the Plan will be acknowledged by Putnam as a Putnam
Flexible 401(k) and Profit Sharing Plan only upon Putnam's acceptance of this
Plan Agreement.

Investment Options

The Employer hereby elects the following as the investment options available
under the Plan:

PUTNAM MONEY MARKET FUND                   PUTNAM FEDERAL INCOME TRUST

PUTNAM FUND FOR GROWTH AND INCOME          PUTNAM OTC EMERGING GROWTH FUND

PUTNAM VOYAGER FUND                        BOOKS-A-MILLION-STOCK



The following investment option shall be the default option: Putnam Money
Market Fund (select the default option from among the investment options listed
above).



Employer signature(s) to adopt Plan:             Date of signature:


BOOKS-A-MILLION, INC.



/s/ SANDRA B. COCHRAN                            10/26/98
------------------------------------             -------------------------------




------------------------------------             -------------------------------

Please print name(s) of authorized person(s) signing above:



Sandra B. Cochran
------------------------------------



------------------------------------


                                      -26-
<PAGE>   27

AMERICAN WHOLESALE BOOK COMPANY, INC.

/s/ SANDRA B. COCHRAN                10/26/98
---------------------------------    --------------


---------------------------------    --------------

Please print name(s) of authorized person(s) signing above:

Sandra B. Cochran
---------------------------------


---------------------------------

A new Plan must be signed by the last day of the Plan Year in which the Plan is
to be effective.


                                      -27-
<PAGE>   28

                                   * * * * *


            ACCEPTANCE OF PUTNAM FIDUCIARY TRUST COMPANY AS TRUSTEE




The Trustee accepts appointment in accordance with the terms and conditions of
the Plan, effective as of the date of execution by the Employer set forth above.

Putnam Fiduciary Trust Company, Trustee

By: /s/ TIMA A. CAMPBELL, V.P.
--------------------------------------------------------------
Tima A. Campbell


                                      -28-
<PAGE>   29


                                  * * * * *

                             ACCEPTANCE BY PUTNAM


Putnam hereby accepts this Employer's Plan as a prototype established under
Putnam Basic Plan Document #07.

Putnam Mutual Funds Corp.

By:  /s/ BONNIE MALLIN
     -------------------------



                                     -29-