FIRST AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Exhibit 4.1

FIRST AMENDMENT TO SECOND AMENDED

AND RESTATED LOAN AND SECURITY AGREEMENT

THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Amendment") is dated as of January 1, 2009, by and among THE DIXIE GROUP, INC. , a Tennessee corporation ("Borrower"), FABRICA INTERNATIONAL, INC. , a California corporation ("Fabrica"), BRETLIN, INC. , a Georgia corporation ("Bretlin"), CANDLEWICK YARNS, INC. , a Tennessee corporation ("Candlewick"), MASLAND CARPETS, LLC , a Georgia limited liability company ("Masland"; Fabrica, Bretlin Candlewick and Masland are collectively referred to herein as "Guarantors"), and BANK OF AMERICA, N.A. , a national banking association  in its capacity as collateral and administrative agent ("Agent") for the financial institutions party from time to time ("Lenders") to the Loan Agreement (as defined below).

Recitals :

Borrower, Guarantors, Agent and Lenders are parties to a certain Second Amended and Restated Loan and Security Agreement dated October 24, 2008 (as at any time amended, modified, restated or supplemented, the "Loan Agreement"), pursuant to which Agent and Lenders have made certain revolving credit and term loans to Borrower.

Subject to the terms and conditions set forth herein, the parties desire to amend the Loan Agreement.

NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and valuable consideration, the receipt and sufficiency of which are hereby severally acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

1.

Definitions .  All capitalized terms used in this Amendment, unless otherwise defined herein, shall have the meaning ascribed to such terms in the Loan Agreement.

2.

Amendments to Loan Agreement .  The Loan Agreement is hereby amended as follows:

(a)

By deleting the first paragraph and the pricing grid contained in the definition of "Applicable Margin" in Appendix A to the Loan Agreement, and by substituting in lieu thereof the following new first paragraph and pricing grid:

Applicable Margin - a percentage equal to 2.00% with respect to Revolver Loans that are Base Rate Loans, 2.25% with respect to Revolver Loans that are LIBOR Loans, 2.50% with respect to each Term Loan Advance made or outstanding as a Base Rate Loan, 2.75% with respect to each Term Loan Advance made or outstanding as a LIBOR Loan, and 0.375% with respect to unused line fees payable to Lenders pursuant to Section 2.2 ; provided that , commencing January 1, 2009, the Applicable Margin shall be increased or (if no Default or Event of Default exists) decreased, based upon the Leverage Ratio, as follows:

(b)

By deleting the definitions of "Base Rate", "Federal Funds Rate" and "Prime Rate" in Appendix A to the Loan Agreement in their entirety, and by substituting in lieu thereof the following new definitions:

Base Rate - for any day, a per annum rate equal to the greater of (a) the Prime Rate for such day; (b) the Federal Funds Rate for such day, plus 0.50%; or (c) the LIBOR Rate for a 30-day interest period as determined on such day, plus 1.0%.

Federal Funds Rate - (a) the weighted average of interest rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on the applicable Business Day (or on the preceding Business Day, if the applicable day is not a Business Day), as published by the Federal Reserve Bank of New York on the next Business Day; or (b) if no such rate is published on the next Business Day, the average rate (rounded up, if necessary, to the nearest 1/8 of 1%) charged to BofA on the applicable day on such transactions, as determined by Agent.

Prime Rate - the rate of interest announced by BofA from time to time as its prime rate.  Such rate is set by BofA on the basis of various factors, including its costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such rate.  Any change in such rate announced by BofA shall take effect at the opening of business on the day specified in the public announcement of such change.

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3.

Ratification and Reaffirmation .  Borrower hereby ratifies and reaffirms the Obligations, each of the Loan Documents and all of Borrower's covenants, duties, indebtedness and liabilities under the Loan Documents.

4.

Acknowledgments and Stipulations.  Borrower acknowledges and stipulates that the Loan Agreement and the other Loan Documents executed by Borrower are legal, valid and binding obligations of Borrower that are enforceable against Borrower in accordance with the terms thereof; all of the Obligations are owing and payable without defense, offset or counterclaim (and to the extent there exists any such defense, offset or counterclaim on the date hereof, the same is hereby waived by Borrower