Document:

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                                  EXHIBIT 10.5

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                                                                    EXHIBIT 10.5

                              BOOKS-A-MILLION, INC.
                            1999 AMENDED AND RESTATED

                          EMPLOYEE STOCK PURCHASE PLAN

                                    SECTION 1
                                     PURPOSE

         The primary purpose of this Plan is to encourage Stock ownership by
each Eligible Employee of Books-A-Million and each Subsidiary in the belief that
such ownership will increase his or her interest in the success of
Books-A-Million and will provide an additional incentive for him or her to
remain in the employ of Books-A-Million or such subsidiary. Books-A-Million
intends that this Plan constitutes an "employee stock purchase plan" within the
meaning of Section 423 of the Code and, further, intends that any ambiguity in
this Plan or any related offering be resolved to effect such intent.

                                    SECTION 2
                                   DEFINITIONS

         2.1.     The term Account shall mean the separate bookkeeping account
which shall be established and maintained by the Plan Administrator for each
Participant for each Purchase Period to record the payroll deductions made on
his or her behalf to purchase Stock under this Plan.

         2.2.     The term Authorization shall mean the participation election
and payroll deduction authorization form which an Eligible Employee shall be
required to properly complete in writing and timely file with the Plan
Administrator before the end of an Offering Period in order to participate in
this Plan for the related Purchase Period.

         2.3.     The term Beneficiary shall mean the person described in
Section 14.

         2.4.     The term Books-A-Million shall mean Books-A-Million, Inc., a
corporation incorporated under the laws of the State of Delaware, and any
successor to Books-A-Million.

         2.5.     The term Board shall mean the board of directors of
Books-A-Million.

         2.6.     The term Code shall mean the Internal Revenue Code of 1986, as
amended.

         2.7.     The term Disability shall mean a condition which the Plan
Administrator in his or her discretion determines would be treated as a total
and permanent disability under Section 22(e)(3) of the Code.

         2.8.     The term Eligible Employee shall mean each employee of
Books-A-Million or a Subsidiary except:

         (a)      an employee who has completed less than one full and
continuous year of employment as an employee of Books-A-Million or such
Subsidiary,

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         (b)      an employee who customarily is employed 20 hours or less per
week by Books-A-Million or such Subsidiary,

         (c)      an employee who (after completing at least one full and
continuous year of employment as an employee of Books-A-Million or such
Subsidiary) customarily is employed for not more than 5 months in any calendar
year by Books-A-Million or such Subsidiary, and

         (d)      an employee who would own (immediately after the grant of an
option under this Plan) stock possessing 5% or more of the total combined voting
power or value of all classes of stock of Books-A-Million based on the rules set
forth in Section 423(b)(3) and Section 424 of the Code.

         An employee's continuous employment by Books-A-Million or by a
Subsidiary shall not be treated as interrupted by a transfer directly between
Books-A-Million and any Subsidiary or between one Subsidiary and another
Subsidiary.

         2.9.     The term Exercise Date shall mean for each Purchase Period the
last day of such Purchase Period.

         2.10.    The term Offering Period shall mean a period which (a) shall
be set by Books-A-Million, (b) shall come before the related Purchase Period and
(c) shall continue for no more than 30 days.

         2.11.    The term Option Price shall mean for each Purchase Period the
lesser of 85% of the closing price for a share of Stock on the first day of such
Purchase Period or 85% or the closing price for a share of Stock on the last day
of such Purchase Period, as such closing price is accurately reported in The
Wall Street Journal or in any successor to The Wall Street Journal or, if there
is no such successor, any similar trade publication selected by the Plan
Administrator; For purposes of this Section 2.11 "closing price" for a share of
Stock as of a given date shall mean (a) the closing price per share of Stock on
the principal exchange on which shares of Stock are then trading (or if shares
of Stock are not traded on such date, then on the next preceding date on which a
trade occurred), or (b) if the Stock is not traded on an exchange but is quoted
on NASDAQ or a successor quotation system, the mean between the closing
representative bid and asked prices for the stock, or (c) if Stock is not
publicly traded on an exchange and not quoted on NASDAQ or a successor quotation
system, the fair market value per share of the Stock as established by the Plan
Administrator acting in good faith.

         2.12.    The term Participant shall mean for each Purchase Period an
Eligible Employee who has satisfied the requirements set forth in Section 7 of
the Plan for such Purchase Period.

         2.13.    The term Participating Employer shall for each Participant, as
of any date, mean Books-A-Million or a Subsidiary, whichever employs such
Participant as of such date.

         2.14.    The term Plan shall mean this Books-A-Million, Inc. 1999
Amended and Restated Employee Stock Purchase Plan (which prior to April 19, 1999
was known as the Books-A-Million, Inc. Employee Stock Purchase Plan) as
effective as of the date set forth in Section 3 and as thereafter amended from
time to time.

         2.15.    The term Plan Administrator shall mean the person or persons
appointed by the Board to administer this Plan.

         2.16.    The term Purchase Period shall mean a 12 consecutive month
period which shall begin on a date (within the 15 day period which immediately
follows the end of the related Offering Period) set by Books-A-Million.

         2.17.    The term Retirement shall mean a termination of employment
after reaching at least age 55 and completing at least 10 years of continuous
employment with Books-A-Million or

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a Subsidiary (where such continuous employment shall be determined using the
same rules used to determine whether an employee is an Eligible Employee).

         2.18.    The term Stock shall mean the $ .01 par value common stock of
Books-A-Million.

         2.19.    The term Subsidiary shall mean each corporation (a) which is
in an unbroken chain of corporations beginning with Books-A-Million in which
each corporation in such chain (except for the last corporation in such chain)
owns stock possessing 80% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain and (b) which
the Plan Administrator has designated as eligible to participate in this Plan.

                                    SECTION 3
                                 EFFECTIVE DATE

         This Plan was originally known as the Books-A-Million, Inc. Employee
Stock Purchase Plan and was first effective as of September 17, 1992. Effective
as of April 19, 1999, the Plan is amended and restated in its entirety and the
Plan is renamed the Books-A-Million, Inc. 1999 Amended and Restated Employee
Stock Purchase Plan. The Books-A-Million, Inc. 1999 Amended and Restated
Employee Stock Purchase Plan will be submitted for the approval of the
Books-A-Million Shareholders within 12 months after the Board's initial adoption
of the Plan. Options to purchase shares of Stock in excess of the 100,000 shares
of Stock available for purchase under the Plan prior to this amendment and
restatement of the Plan may be granted prior to such shareholder approval;
provided, however, that such options shall not be exercisable prior to the time
the Books-A-Million, Inc. 1999 Amended and Restated Employee Stock Purchase Plan
is approved by the shareholders; provided, further, that if such shareholder
approval has not been obtained by the end of said 12-month period, all options
to purchase shares of Stock in excess of the 100,000 shares of Stock available
for purchase under the Plan prior to this amendment and restatement of the Plan
shall thereupon be canceled and become null and void.

                                    SECTION 4
                                    OFFERINGS

         Options to purchase shares of Stock shall be offered to Participants in
accordance with this Plan from time to time at the discretion of the Board;
provided, however, that there shall be no more than one Offering Period in
effect at any time and that there shall be no more than one Purchase Period in
effect at any time.

                                    SECTION 5
                           STOCK AVAILABLE FOR OPTIONS

         There shall be an aggregate of 200,000 shares of Stock available for
purchase from Books-A-Million upon the exercise of options granted under Section
9 of this Plan (including the 100,000 shares of Stock available for purchase
under the Plan prior to this amendment and restatement of the Plan). Any shares
of Stock which are subject to options granted as of the first day of a Purchase
Period but which are not purchased on the related Exercise Date shall again
become available under this Plan.

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                                    SECTION 6
                                 ADMINISTRATION

         The Plan Administrator shall be responsible for the administration of
this Plan and shall have the power in connection with such administration to
interpret this Plan and to take such other action in connection with such
administration as the Plan Administrator deems necessary or equitable under the
circumstances. The Plan Administrator also shall have the power to delegate the
duty to perform such administrative functions as the Plan Administrator deems
appropriate under the circumstances. Any person to whom the duty to perform an
administrative function is delegated shall act on behalf of and shall be
responsible to the Plan Administrator for such function. Any action or inaction
by or on behalf of the Plan Administrator under this Plan shall be final and
binding on each Eligible Employee, each Participant and on each other person who
makes a claim under this Plan based on the rights, if any, of any such Eligible
Employee or Participant under this Plan.

                                    SECTION 7
                                  PARTICIPATION

         Each person who is an Eligible Employee on the first day of an Offering
Period shall satisfy the requirements to be a Participant in this Plan for the
related Purchase Period if:

         (a)      he or she properly completes in writing and files an
authorization with the Plan Administrator on or before the last day of such
Offering Period to purchase shares of Stock pursuant to the option granted under
Section 9, and

         (b)      he or she remains an Eligible Employee throughout the period
which begins on the first day of such Offering Period and ends on the first day
of the related Purchase Period. An Authorization shall require an Eligible
Employee to provide such information and to take such action as the Plan
Administrator in his or her discretion deems necessary or helpful to the orderly
administration of this Plan, including specifying (in accordance with Section 9)
his or her payroll deductions to purchase shares of Stock pursuant to the option
granted under Section 9 and designating a Beneficiary. A Participant's status as
such shall terminate for a Purchase Period (for which he or she has an effective
Authorization) at such time as his or her Account has been withdrawn under
Section 12 or Section 13 or the purchases and distributions contemplated under
Section 10 or Section 13 with respect to his or her Account have been completed,
whichever comes first.

                                    SECTION 8
                               PAYROLL DEDUCTIONS

         (a)      Initial Authorization. Each Participant's Authorization made
under Section 7 shall specify the specific dollar amount which he or she
authorizes his or her Participating Employer to deduct from his or her
compensation each pay day during the Purchase Period for which such
Authorization is in effect to purchase shares of Stock pursuant to the option
granted under Section 9, provided:

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                  (1)      the total of such dollar amount shall (based on the
         assumption that there shall be 26 pay days in such Purchase Period) not
         be less than $100.00, and

                  (2)      the total of such dollar amount shall (based on the
         assumption that there shall be 26 pay days in such Purchase Period) not
         be more than $5,000.00.

         (b)      Subsequent Authorization. A Participant shall have the right
to make one amendment to an Authorization after the end of an Offering Period to
reduce or to stop the payroll deductions which he or she previously had
authorized for the related Purchase Period, and such reduction shall be
effective as soon as practicable after the Plan Administrator actually receives
such amended Authorization.

         (c)      Account Credits, General Assets and Taxes. All payroll
deductions made for a Participant shall be credited to his or her Account as of
the pay day as of which the deduction is made. All payroll deductions shall be
held by Books-A-Million, by Books-A-Million's agent or by one, or more than one,
Subsidiary (as determined by the Plan Administrator) as part of the general
assets of Books-A-Million or any such Subsidiary, and each Participant's right
to the payroll deductions credited to his or her Account shall be those of a
general and unsecured creditor. Books-A-Million, Books-A-Million's agent or such
Subsidiary shall have the right to withhold on payroll deductions to the extent
such person deems necessary or appropriate to satisfy applicable tax laws.

         (d)      No Cash Payments. A Participant may not make any contribution
to his or her Account except through payroll deductions made in accordance with
this Section 8.

                                    SECTION 9
                               GRANTING OF OPTION

         (a)      General Rule. Subject to Section 9(b) and Section 9(c), each
person who is a Participant for a Purchase Period automatically shall be granted
by operation of this Plan an option as of the first day of such Purchase Period
to purchase the number of shares of Stock determined by the Plan Administrator
by dividing the total payroll deductions which he or she has elected to make for
such Purchase Period under Section 7 (based on the assumption that there will be
26 pay days in such Purchase Period) by the Option Price for a share of Stock as
determined as of the first day of such Purchase Period, and rounding down to the
nearest whole number. Each such option shall be exercisable only in accordance
with the terms of this Plan.

         (b)      Statutory Limitation. No option granted by operation of this
Plan to any Eligible Employee under Section 9(a) shall permit his or her rights
to purchase shares of Stock under this Plan or under any other employee stock
purchase plan (within the meaning of Section 423 of the Code) or any other
shares of Stock under any other employee stock purchase plans (within the
meaning of Section 423 of the Code) of Books-A-Million and any of its
subsidiaries (within the meaning of Section 424(f) of the Code) to accrue
(within the meaning of Section 423(b)(8) of the Code) at a rate which exceeds
$25,000 of the fair market value of such Stock for any calendar year. Such fair
market value shall be determined as of the first day of the Purchase Period for
which the option is granted.

         (c)      Available Shares of Stock. If the number of shares of Stock
available for purchase for any Purchase Period is insufficient to cover the
shares which Participants have elected to purchase through effective
Authorizations, then each Participant's option to purchase shares of Stock for
such Purchase Period shall be reduced to equal the number of shares of Stock

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(rounded down to nearest whole number ) which the Plan Administrator shall
determine by multiplying the number of shares of Stock available for options for
such Purchase Period by a fraction, the numerator of which shall be the number
of shares of Stock for which such Participant would have been granted an option
under Section 9(a) if sufficient shares were available and the denominator of
which shall be the total number of shares of Stock for which options would have
been granted to all Participants under Section 9(a) if sufficient shares were
available.

                                   SECTION 10
                               EXERCISE OF OPTION

         (a)      General Rule. Unless a Participant files an amended
Authorization under Section 10(b) or Section 12 on or before the Exercise Date
for a Purchase Period for which he or she has an effective Authorization, his or
her option shall be exercised automatically on such Exercise Date for the
purchase of as many whole shares of Stock subject to such option as the balance
credited to his or her Account as of that date will purchase at the Option Price
for such shares of Stock if he or she also is an Eligible Employee on such
Exercise Date.

         (b)      Partial Exercise. A Participant may file an amended
Authorization under this Section 10 with the Plan Administrator on or before an
Exercise Date to elect, effective as of such Exercise Date, to exercise his or
her option for a specific number of whole shares of stock (which shall be less
than the whole number which the entire balance credited to his or her Account
would purchase) and to withdraw in cash the remaining balance credited to his or
her Account (without interest) as of such date after giving effect to such
partial exercise, and any such amended Authorization shall be effective only if
such Participant is an Eligible Employee on such Exercise Date.

         (c)      Automatic Refund; Balance Carry Forward. If a Participant's
Account has a remaining cash balance after his or her option has been exercised
as of an Exercise Date under Section 10 (a), such balance automatically shall be
refunded to the Participant in cash (without interest) as soon as practicable
following such Exercise Date; provided, however, that the Plan Administer may in
its discretion provide that such balance shall be carried forward to the next
Purchase Period unless the Participant has elected to withdraw from the Plan
pursuant to Section 12 hereof.

                                   SECTION 11
                                    DELIVERY

         A stock certificate representing any shares of Stock purchased upon the
exercise of an option under this Plan shall be delivered to the Participant
registered in (a) his or her name or, if the Participant so directs on his or
her Authorization filed with the Plan Administrator on or before the Exercise
Date for such option and if permissible under applicable law, (b) the names of
the Participant and one such other person as may be designated by the
Participant, as joint tenants with rights of survivorship. No Participant (or
any person who makes a claim through a Participant) shall have any interest in
any shares of Stock subject to an option until such option has been exercised
and the related shares of Stock actually have been delivered to such person.

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                                   SECTION 12
                          VOLUNTARY ACCOUNT WITHDRAWAL

         A Participant may elect to withdraw the entire balance credited to his
or her Account for a Purchase Period by completing in writing and filing an
amended Authorization with the Plan Administrator on or before the Exercise Date
for such period. If a Participant makes such a withdrawal election, such balance
shall be paid to him or her in cash (without interest) as soon as practicable
after such amended Authorization is filed, and no further payroll deductions
shall be made on his or her behalf for the remainder of such Purchase Period.

                                   SECTION 13
                            TERMINATION OF EMPLOYMENT

         (a)      Death, Disability or Retirement. If a Participant's employment
by a Participating Employer terminates as a result of his or her Death,
Disability or Retirement on of before the Exercise Date for a Purchase Period
and if such Participant or, in the event he or she dies, his or her Beneficiary
timely makes an irrevocable election in writing under this Section 13(a), such
person shall have the right:

                  (1)      to withdraw the Participant's entire Account in cash
         (without interest), or

                  (2)      to apply the Participant's entire Account to purchase
         whole shares of Stock at the

         Option Price for such Purchase Period as of the related Exercise Date.
Any election made under this Section 13(a) shall be irrevocable and shall be
timely only if actually delivered to the Plan Administrator on or before the
earlier of (i) the Exercise Date for such Purchase Period or (ii) the last day
of the 3 consecutive months period which begins on the last day the Participant
was an Eligible Employee. If no timely election is made under this Section
13(a), a Participant shall be deemed to have elected the cash alternative set
forth in Section 13(a)(1). If the purchase alternative set forth in Section
13(a)(2) is elected, the certificate representing the shares of Stock purchased
shall be delivered as soon as administratively practicable to the Participant
or, in the event he or she dies, to his or her Beneficiary. Finally, if a
Participant's Account has a remaining balance after his or her option has been
exercised under this Section 13(a), such balance automatically shall be refunded
to the Participant or, in the event he or she dies, to his or her Beneficiary in
cash (without interest) as soon as practicable after such exercise.

         (b)      Other Terminations. If a Participant's employment as an
Eligible Employee terminates on or before the Exercise Date for a Purchase
Period for any reason whatsoever other than his or her Death, Disability or
Retirement, his or her Account automatically shall be distributed as if he or
she has elected to withdraw his or her Account in cash under Section 12
immediately before the date his or her employment had so terminated.

         (c)      Transfers. If a Participant is transferred directly between
Books-A-Million and a Subsidiary or between one Subsidiary and another
Subsidiary while he or she has an Authorization in effect, such Authorization
shall (subject to all the terms and conditions of this Plan) remain in effect.

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                                   SECTION 14
                           DESIGNATION OF BENEFICIARY

         A Participant shall designate on his or her Authorization a Beneficiary
(a) who shall act on his or her behalf if the Participant dies before the end of
a Purchase Period and (b) who shall receive the Stock, if any, and cash, if any,
to the Participant's credit under this Plan if the Participant dies after the
end of a Purchase Period but before the delivery of the certificate representing
such shares of Stock, if any, and the cash, if any, to his or her credit in such
Account. Such designation may be revised in writing at any time by the
Participant by filing an amended Authorization, and his or her revised
designation shall be effective at such time as the Plan Administrator receives
such amended Authorization. If a deceased Participant fails to designate a
Beneficiary or, if no person so designated survives the Participant or, if after
checking his or her last known mailing address, the whereabouts of the person so
designated are unknown, then the Participant's Beneficiary shall be determined
by the Plan Administrator in accordance with the Participant's will or the
applicable laws of descent and distribution.

                                   SECTION 15
                                 TRANSFERABILITY

         Neither the balance credited to a Participant's Account nor any rights
to the exercise of an option or to receive shares of Stock under this Plan may
be assigned, encumbered, alienated, transferred, pledged, or otherwise disposed
of in any way by a Participant during his or her lifetime or by his or her
Beneficiary or by any other person during his or her lifetime, and any attempt
to do so shall be without effect; provided, however, that the Plan Administrator
in its absolute discretion may treat any such action as an election by a
Participant to withdraw the balance credited to his or her Account in accordance
with Section 12. A Participant's right, if any, to transfer any interest in this
Plan at his or her death shall be determined exclusively under Section 13 and
Section 14.

                                   SECTION 16
                                   ADJUSTMENT

         The number of shares of Stock covered by outstanding options granted
pursuant to this Plan and the related Option Price and the number of shares of
Stock available under this Plan shall be adjusted by the Board in an equitable
manner to reflect any change in the capitalization of Books-A-Million,
including, but not limited to such changes as dividends paid in the form of
Stock or Stock splits. Furthermore, the Board shall adjust (in a manner which
satisfies the requirements of Section 424(a) of the Code) the number of shares
of Stock available under this Plan and the number of shares of Stock covered by
options granted under this Plan and the related Option Prices in the event of
any corporate transaction described in Section 424(a) of the Code. If any
adjustment under this Section 16 would create a fractional share of Stock or a
right to acquire a fractional share, such fractional share shall be disregarded
and the number of shares of Stock subject to options granted pursuant to this
Plan shall be the next lower number of whole shares of Stock, rounding all
fractions downward. An adjustment made under this Section 16 by the Board shall
be conclusive and binding on all affected persons.

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                                   SECTION 17
                             SECURITIES REGISTRATION

         If Books-A-Million shall deem it necessary to register under the
Securities Act of 1933, as amended, or any other applicable statutes, any shares
of Stock with respect to which an option shall have been exercised under this
Plan or to qualify any such shares of Stock for an exemption from any such
statutes, Books-A-Million shall take such action at its own expense before
delivery of the certificate representing such shares of Stock. If shares of
Stock are listed on any national stock exchange at the time an option to
purchase shares of Stock is exercised under this Plan, Books-A-Million whenever
required shall register shares of Stock for which such option is exercised under
the Securities Act of 1933, as amended, and shall make prompt application for
the listing on such national stock exchange of such shares, all at the expense
of Books-A-Million.

                                   SECTION 18
                            AMENDMENT OR TERMINATION

         This Plan may be amended by the Board from time to time to the extent
that the Board deems necessary or appropriate in light of, and consistent with,
Section 423 of the Code and the laws of the State of Delaware. The Board also
may terminate this Plan or any offering made under this Plan at any time;
provided, however, the Board shall not have the right to modify, cancel, or
amend any option outstanding after the beginning of a Purchase Period unless (a)
each Participant consents in writing to such modification, amendment or
cancellation, (b) such modification only accelerates the Exercise Date for the
related Purchase Period or (c) the Board acting in good faith deems that such
action is required under applicable law.

                                   SECTION 19
                                     NOTICES

         All Authorizations and other communications from a Participant to the
Plan Administrator under, or in connection with, this Plan shall be deemed to
have been filed with the Plan Administrator when actually received in the form
specified by the Plan Administrator at the location, or by the person,
designated by the Plan Administrator for the receipt of such Authorizations and
communications.

                                   SECTION 20
                                   EMPLOYMENT

         No offer under this Plan shall constitute an offer of employment, and
no acceptance of an offer under this Plan shall constitute an employment
agreement. Any such offer or acceptance shall have no bearing whatsoever on the
employment relationship between any Eligible Employee and Books-A-Million or any
subsidiary of Books-A-Million, including a Subsidiary. Finally, no Eligible
Employee shall be induced to participate in this Plan by the expectation of
employment or continued employment.

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                                   SECTION 21
                      HEADINGS, REFERENCES AND CONSTRUCTION

         The headings to sections in this Plan have been included for
convenience of reference only. Except as otherwise expressly indicated, all
references to sections in this Plan shall be to sections in this plan. This Plan
shall be interpreted and construed in accordance with the laws of the State of
Delaware.

                                      -10-<PAGE>   1

                                  EXHIBIT 10.16

<PAGE>   2

                                                                   EXHIBIT 10.16

                       THIRD AMENDMENT TO CREDIT AGREEMENT

         THIS THIRD AMENDMENT TO CREDIT AGREEMENT dated as of June 18, 1999
("this Amendment") is entered into by BOOKS-A-MILLION, INC., a Delaware
corporation ("BAM"), AMERICAN WHOLESALE BOOK COMPANY, INC., an Alabama
corporation ("AWBC"; BAM and AWBC are sometimes together referred to as the
"Borrowers"), AMSOUTH BANK, an Alabama banking corporation formerly known as
AmSouth Bank of Alabama ("AmSouth"), SUNTRUST BANK, ATLANTA, a Georgia banking
corporation, NATIONSBANK, N.A., a national banking association, successor by
merger to NationsBank, N.A. (South), a national banking association formerly
known as NationsBank of Georgia, N.A., and SOUTHTRUST BANK, NATIONAL
ASSOCIATION, a national banking association (collectively, the "Lenders"), and
AMSOUTH BANK, an Alabama banking corporation formerly known as AmSouth Bank of
Alabama, as agent for the Lenders (the "Agent").

                                    RECITALS

         A.       The Borrowers, the Agent and the Lenders are parties to that
certain Credit Agreement dated October 27, 1995 as amended by a First Amendment
thereto dated June 4, 1997 and a Second Amendment thereto dated June 19, 1998
(collectively, the "Agreement") pursuant to which the Lenders have made
available to the Borrowers a revolving credit facility in an aggregate principal
amount outstanding not to exceed $90,000,000, the proceeds of which are to be
used by the Borrowers for general corporate purposes.

         B.       The Borrowers have applied to the Lenders for a modification
to the definition of "Net Income Available for Debt Service" and the financial
covenant set forth in Section 7.8(1) of the Agreement.

         C.       The Lenders are willing to make such modification as requested
only if, among other things, the Borrowers enter into this Amendment.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing Recitals, the
Borrowers, the Lenders and the Agent hereby agree as follows:

         Capitalized terms used in this Amendment and not otherwise defined
herein have the respective meanings attributed thereto in the Agreement.

         The definition of "Net Income Available for Debt Service" set forth in
Section 1.1 of the Agreement is hereby amended to read, in its entirety, as
follows:

                  Net Income Available for Debt Service for any period shall
         mean Consolidated Net Income (or the net deficit, if expenses and
         charges exceed revenues and other proper income credits) for such
         period, plus amounts that have been deducted for (i) Interest Expense,
         (ii) Operating Lease Payments, (iii) depreciation, (iv) amortization
         and (v) income and profit taxes in determining Consolidated Net Income
         for such period.

         Section 7.8(1) of the Agreement is hereby amended to read, in its
         entirety, as follows:

                  (1)      Coverage Ratio. The ratio of Net Income Available for
         Debt Service for the preceding four quarters to Interest Expense and
         Operating Lease Payments of BAM and the Consolidated Entities on a
         consolidated basis for such period shall not be less than 1.50 to 1.0
         at any time.

         As consideration for the Lenders' agreement to make the modification
set forth in this Amendment, the Borrowers shall pay a fee in the amount of
$45,000 to the Agent for the account of each of the Lenders. This fee shall be
due and payable upon the execution of this Amendment and shall be fully earned
and non-refundable.

<PAGE>   3

         Notwithstanding the execution of this Amendment, all of the
indebtedness evidenced by each of the Notes shall remain in full force and
effect, as modified hereby, and nothing contained in this Amendment shall be
construed to constitute a novation of the indebtedness evidenced by any of the
Notes or to release, satisfy, discharge, terminate or otherwise affect or impair
in any manner whatsoever (a) the validity or enforceability of the indebtedness
evidenced by any of the Notes; (b) the liens, security interests, assignments
and conveyances effected by the Agreement or the Loan Documents, or the priority
thereof; (c) the liability of any maker, endorser, surety, guarantor or other
person that may now or hereafter be liable under or on account of any of the
Notes or the Agreement or the Loan Documents; or (d) any other security or
instrument now or hereafter held by the Agent or the Lenders as security for or
as evidence of any of the above-described indebtedness.

         All references in the Loan Documents to "Credit Agreement" shall refer
to the Agreement as amended by this Amendment, and as the Agreement may be
further amended from time to time.

         The Borrowers hereby certify that the organizational documents of the
Borrowers have not been amended since October 27, 1995.

         The Borrowers hereby represent and warrant to the Agent and the Lenders
that all representations and warranties contained in the Agreement are true and
correct as of the date hereof; and the Borrowers hereby certify that no Event of
Default nor any event that, upon notice or lapse of time or both, would
constitute an Event of Default, has occurred and is continuing.

         Except as hereby amended, the Agreement shall remain in full force and
effect as written. This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which when taken together
shall constitute one and the same instrument. The covenants and agreements
contained in this Amendment shall apply to and inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns.

         Nothing contained herein shall be construed as a waiver, acknowledgment
or consent to any breach of or Event of Default under the Agreement and the Loan
Documents not specifically mentioned herein.

         This Amendment shall be governed by the laws of the State of Alabama.

                  [Remainder of this page intentionally blank]

                                       2
<PAGE>   4

         IN WITNESS WHEREOF, each of the Borrowers, the Lenders and the Agent
has caused this Amendment to be executed and delivered by its duly authorized
corporate officer as of the day and year first above written.

                      BOOKS-A-MILLION, INC.

                      By: /s/ Sandra B. Cochran
                          ---------------------
                          Its Executive Vice President & Chief Financial Officer

                      AMERICAN WHOLESALE BOOK COMPANY, INC.

                      By: /s/ Sandra B. Cochran
                          ---------------------
                          Its Executive Vice President & Chief Financial Officer

<PAGE>   5

                       AMSOUTH BANK

                       By: /s/ David A. Simmons
                           --------------------
                           Its Senior Vice President

<PAGE>   6

                                SUNTRUST BANK, ATLANTA

                                By: /s/ David J. Edge
                                    -----------------
                                    Its Vice President

                                By: /s/ Carolyn S. McMeekin
                                    -----------------------
                                    Its Corporate Banking Officer

<PAGE>   7

                                     NATIONSBANK, N.A.

                                     By: /s/ David Jackson
                                         ------------------
                                         Its Senior Vice President

<PAGE>   8

                                     SOUTHTRUST BANK, NATIONAL ASSOCIATION

                                     By: /s/ Chris Peck
                                        ---------------
                                        Its Commercial Loan Officer

<PAGE>   9

                                     AMSOUTH BANK, as Agent

                                     By: /s/ David A. Simmons
                                         Its Senior Vice President

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