SECOND AMENDED AND RESTATED CREDIT AGREEMENT

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SECOND AMENDED AND RESTATED CREDIT AGREEMENT

This Second Amended and Restated Credit Agreement, dated as of November

22, 2002, is among DMI FURNITURE, INC., a Delaware corporation, the Lenders from

time to time party hereto, and BANK ONE, NA, a national banking association

having its principal office in Chicago, Illinois, as Agent.

The Borrower and Bank One are parties to a certain Amended and Restated

Credit Agreement, dated as of October 23, 2001, as amended by a First Amendment

to Amended and Restated Credit Agreement, dated as of January 3, 2002, and a

Second Amendment to Amended and Restated Credit Agreement, dated as of March 29,

2002, and by the Loan Modification Agreement (the "Modification Agreement"), of

even date, among the Borrower, Bank One, and Fifth Third Bank, Kentucky, Inc.

(the "Original Agreement").

The parties hereto agree as follows:

ARTICLE I

DEFINITIONS

As used in this Agreement:

"Acquisition" means any transaction, or any series of related

transactions, consummated on or after the date of this Agreement, by which the

Borrower or any of its Subsidiaries (i) acquires any going business or all or

substantially all of the assets of any firm, corporation or limited liability

company, or division thereof, whether through purchase of assets, merger or

otherwise or (ii) directly or indirectly acquires (in one transaction or as the

most recent transaction in a series of transactions) at least a majority (in

number of votes) of the securities of a corporation which have ordinary voting

power for the election of directors (other than securities having such power

only by reason of the happening of a contingency) or a majority (by percentage

or voting power) of the outstanding ownership interests of a partnership or

limited liability company.

"Advance" means a borrowing of the Revolving Loan or Term Loan

hereunder, (i) made by the Lenders on the same Borrowing Date, or (ii) converted

or continued by the Lenders on the same date of conversion or continuation,

consisting, in either case, of the aggregate amount of the several Loans of the

same Type and, in the case of Eurodollar Loans, for the same Interest Period.

"Affiliate" of any Person means any other Person directly or indirectly

controlling, controlled by or under common control with such Person. A Person

shall be deemed to control another Person if the controlling Person owns 10% or

more of any class of voting securities (or other ownership interests) of the

controlled Person or possesses, directly or indirectly, the power to direct or

cause the direction of the management or policies of the controlled Person,

whether through ownership of stock, by contract or otherwise.

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"Agent" means Bank One in its capacity as contractual representative of

the Lenders pursuant to Article X, and not in its individual capacity as a

Lender, and any successor Agent appointed pursuant to Article X.

"Aggregate Commitment" means the aggregate of the Commitments of all

the Lenders, as reduced from time to time pursuant to the terms hereof.

"Aggregate Outstanding Credit Exposure" means, at any time, the

aggregate of the Outstanding Credit Exposure of all the Lenders.

"Aggregate Term Loan Commitment" means, at any time, the aggregate of

the Term Loan Commitments of all the Lenders.

"Agreement" means this credit agreement, as it may be amended or

modified and in effect from time to time.

"Agreement Accounting Principles" means generally accepted accounting

principles as in effect from time to time, applied in a manner consistent with

that used in preparing the financial statements referred to in Section 5.4.

"Alternate Base Rate" means, for any day, a rate of interest per annum

equal to the higher of (i) the Prime Rate for such day and (ii) the sum of the

Federal Funds Effective Rate for such day plus 1/2% per annum.

"Applicable Fee Rate" means, at any time, the percentage rate per annum

at which commitment fees are accruing on the Unused Revolving Loan Aggregate

Commitment at such time as set forth in the Pricing Schedule.

"Applicable LC Fee" means at any time, with respect to the 1993

Direct-Pay Letter of Credit, the 1994 Refunding Direct-Pay Letter of Credit, and

a Facility LC that is a standby letter of credit, the percentage rate per annum

which is applicable at such time as set forth in the Pricing Schedule.

"Applicable Margin" means, with respect to Advances of any Type at any

time, the percentage rate per annum which is applicable at such time with

respect to Advances of such Type as set forth in the Pricing Schedule.

"Approved Fund" means any Fund that is administered or managed by (a) a

Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an

entity that administers or manages a Lender.

"Arranger" means Banc One Capital Markets, Inc., a Delaware

corporation, and its successors, in its capacity as Lead Arranger and Sole Book

Runner.

"Article" means an article of this Agreement unless another document is

specifically referenced.

"Authorized Officer" means any of the President or the Chief Financial

Officer of the Borrower, acting singly.

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"Bank One" means Bank One, NA, a national banking association having

its principal office in Chicago, Illinois, in its individual capacity (successor

by merger with Bank One, Indiana, N.A.), and its successors.

"Bond Document" means any of the 1993 Bond Documents or any of the 1994

Refunding Bond Documents as the context requires, and when used in the plural

form, refers to all or any combination of the Bond Documents as the context

requires.

"Borrower" means DMI Furniture, Inc., a Delaware corporation, and its

successors and assigns.

"Borrowing Base" means, at any date a determination thereof is to be

made, an amount equal to the sum of: (i) Eighty Percent (80%) of (a) the net

book value (as determined in accordance with Agreement Accounting Principles) of

Eligible Accounts minus (b) an amount equal to the net book value of all

Eligible Accounts owed by account debtors for goods supplied by Borrower for use

in showroom or displays for which extended payment terms (i.e., payment terms

which are longer than customarily extended for purchases of inventory from

Borrower on account) were given to the account debtor by the Borrower,

determined as of the last day of the fiscal quarter of Borrower preceding the

date of determination; (ii) Fifty Percent (50%) of the Eligible Finished Goods

Inventory Value and the Eligible Wood Stock Inventory Value; (iii) Twenty-Five

Percent (25%) of the Eligible Miscellaneous Inventory Value; and (iv) during the

period beginning on the first day of the fourth Fiscal Month of each fiscal year

of the Borrower and ending on the last day of the sixth Fiscal Month of the same

fiscal year of the Borrower, and during the period beginning on the first day of

the eighth Fiscal Month of each fiscal year of the Borrower and ending on the

last day of the tenth Fiscal Month of the same fiscal year of the Borrower, the

sum of $1,000,000.00 (all of the foregoing as determined on the basis of the

information contained in the most recent Borrowing Base Certificate provided to

the Agent or as determined by the Agent upon an inspection of the Borrower's

books and records and inventory by the Agent or any other representative of the

Lenders); provided, however, the Borrowing Base shall be $0 commencing five (5)

calendar days after the Borrower's failure to furnish to the Agent a monthly

Borrowing Base Certificate within the period of time required under Section 6.1

and continuing until the Agent shall have received a properly completed and

certified Borrowing Base Certificate.

"Borrowing Base Certificate" means a certificate signed by an

Authorized Officer of the Borrower certifying the amount of the Borrowing Base

and the Maximum Availability as of a stated date and in such form and showing

such detail as the Agent reasonably may require from time to time.

"Borrowing Date" means a date on which an Advance is made hereunder.

"Borrowing Notice" is defined in Section 2.8.

"Business Day" means (i) with respect to any borrowing, payment or rate

selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on

which banks generally are open in Chicago and New York City for the conduct of

substantially all of their commercial lending activities, interbank wire

transfers can be made on the Fedwire system and dealings in United States

dollars are carried on in the London interbank market and (ii) for all other

purposes, a day (other than a Saturday or Sunday) on which banks generally are

open in Indianapolis for the conduct of substantially all of their commercial

lending activities and interbank wire transfers can be made on the Fedwire

system.

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"Capital Expenditures" means, without duplication, any expenditures for

any purchase or other acquisition of any asset which would be classified as a

fixed or capital asset on a consolidated balance sheet of the Borrower and its

Subsidiaries prepared in accordance with Agreement Accounting Principles,

including the amount capitalized under all Capital Leases.

"Capitalized Lease" of a Person means any lease of Property by such

Person as lessee which would be capitalized on a balance sheet of such Person

prepared in accordance with Agreement Accounting Principles.

"Capitalized Lease Obligations" of a Person means the amount of the

obligations of such Person under Capitalized Leases which would be shown as a

liability on a balance sheet of such Person prepared in accordance with

Agreement Accounting Principles.

"Cash Capital Expenditures" means Capital Expenditures that are not

financed through the incurring of new Indebtedness.

"Cash Equivalent Investments" means (i) short-term obligations of, or

fully guaranteed by, the United States of America, (ii) commercial paper rated

A-1 or better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts

maintained in the ordinary course of business, and (iv) certificates of deposit

issued by and time deposits with commercial banks (whether domestic or foreign)

having capital and surplus in excess of $100,000,000; provided in each case that

the same provides for payment of both principal and interest (and not principal

alone or interest alone) and is not subject to any contingency regarding the

payment of principal or interest.

"Change in Control" means the occurrence of any of the following:

(i) Any "person", as such term is used in Sections 13(d)

and 14(d)(2) of the Securities Exchange Act of 1934,

as amended (the "Exchange Act") (other than the

Borrower, any trustee or other fiduciary holding

securities under an employee benefit plan of the

Borrower, or any corporation owned, directly or

indirectly, by the shareholders of the Borrower in

substantially the same proportions as their ownership

of stock of the Borrower, or any of the existing

Series C Preferred shareholders), is or becomes the

"beneficial owner" (as defined in Rule 13d-3 under

the Exchange Act), directly or indirectly, of

securities of the Borrower representing 40% or more

of the combined voting power of the Borrower's then

outstanding securities.

(ii) During any period of one year, individuals who at the

beginning of such period constitute the Board of

Directors of the Borrower cease to constitute at

least a majority thereof. If the election or

nomination for election by the Borrower's

shareholders of a new director (other than a director

designated by a person who has entered into an

agreement with the Borrower to effect a transaction

described in clause (a), (c) or (d) of this

definition) was approved by a vote of at least

two-thirds of the directors then still in office who

either were directors at the beginning of the period

or whose election or nomination for election was

previously so approved, that director shall not be

counted for purposes of the preceding sentence.

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(iii) The shareholders of the Borrower approve a merger or

consolidation of the Borrower with any other

corporation, other than (A) a merger or consolidation

which would result in the voting securities of the

Borrower outstanding immediately prior thereto

continuing to represent (either by remaining

outstanding or by being converted into voting

securities of the surviving entity) more than 80% of

the combined voting power of the voting securities of

the Borrower or such surviving entity outstanding

immediately after such merger or consolidation, or

(B) a merger or consolidation effected to implement a

recapitalization of the Borrower (or similar

transaction) in which no "person" (as hereinabove

defined) acquires more than 50% of the combined

voting power of the Borrower's then outstanding

securities.

(d) The shareholders of the Borrower approve a plan of

complete liquidation of the Borrower or an agreement

for the sale of disposition by the Borrower of all or

substantially all of the Borrower's asset.

(e) Any other transaction which is of a nature that would

be require to be reported in response to Item 6(e) of

Schedule 14A of Regulation 14A promulgated under the

Exchange Act occurs.

"Change in Management" means neither (i) Donald D. Dreher nor (ii)

Joseph G. Hill is a senior executive of the Borrower.

"City" means the City of Huntingburg, Indiana.

"Closing Date" means November 22, 2002.

"Code" means the Internal Revenue Code of 1986, as amended, reformed or

otherwise modified from time to time.

"Collateral Documents" means, collectively, the Security Agreement, the

Mortgages, the Mortgage Assignment and the Guaranty.

"Collateral Shortfall Amount" is defined in Section 8.1.

"Commission Due Date" means the first Business Day of each November,

February, May and August of each year.

"Commitment" means, for each Lender, the sum of its LC Commitment and

its Revolving Commitment.

"Consolidated EBITDA" means with respect to any period, Consolidated

Net Income plus, to the extent deducted from revenues in determining

Consolidated Net Income, (i) Consolidated Interest Expense, (ii) expense for

taxes paid or accrued, (iii) depreciation, (iv) amortization and (v)

extraordinary losses incurred other than in the ordinary course of business,

minus, to the extent included in Consolidated Net Income, extraordinary gains

realized other than in the ordinary course of business, all calculated for the

Borrower and its Subsidiaries on a consolidated basis.

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"Consolidated Fixed Charges" means with respect to any period, the sum

of interest which was due and payable by the Borrower and its Subsidiaries in

cash during such period, plus Cash Capital Expenditures made by the Borrower and

its Subsidiaries during such period, plus scheduled principal payments of

Indebtedness of the Borrower and each of its Subsidiaries which were due and

payable in cash during such period (excluding payments to the Designated Account

that are required under Section 2.21.1 or 2.22.1 to the extent that such

payments are funded with Advances of the Term Loans, plus taxes of the Borrower

and its Subsidiaries which were due and payable during such period, plus

dividends that were paid to the shareholders of the Borrower in cash during such

period.

"Consolidated Funded Indebtedness" means at any time the aggregate

dollar amount of the Indebtedness of the Borrower and its Subsidiaries

calculated on a consolidated basis which has actually been funded and is

outstanding at such time, whether or not such amount is due or payable at such

time.

"Consolidated Interest Expense" means, with reference to any period,

the interest expense of the Borrower and its Subsidiaries calculated on a

consolidated basis for such period.

"Consolidated Net Income" means, with reference to any period, the net

income (or loss) of the Borrower and its Subsidiaries calculated on a

consolidated basis for such period.

"Consolidated Tangible Net Worth" means the consolidated shareholders'

equity of the Borrower and its Subsidiaries, less any allowance for goodwill,

patents, trademarks, trade secrets, and any other assets which would be

classified as intangible assets under Agreement Accounting Principles, and less

the deferred tax asset arising from the recognition of net operating loss carry

forward, and less the portion of "other comprehensive income" (determined in

accordance with Agreement Accounting Principles and being either a positive or

negative amount) which relates to interest rate swaps and minimum pension

liabilities and which directly affects the equity section of the balance sheet

without being reflected in the income statement, all determined on a

consolidated basis for the Borrower and its Subsidiaries.

"Contingent Obligation" of a Person means any agreement, undertaking or

arrangement by which such Person assumes, guarantees, endorses, contingently

agrees to purchase or provide funds for the payment of, or otherwise becomes or

is contingently liable upon, the obligation or liability of any other Person, or

agrees to maintain the net worth or working capital or other financial condition

of any other Person, or otherwise assures any creditor of such other Person

against loss, including, without limitation, any comfort letter, operating

agreement, take-or-pay contract or the obligations of any such Person as general

partner of a partnership with respect to the liabilities of the partnership.

"Conversion/Continuation Notice" is defined in Section 2.9.

"Controlled Group" means all members of a controlled group of

corporations or other business entities and all trades or businesses (whether or

not incorporated) under common control which, together with the Borrower or any

of its Subsidiaries, are treated as a single employer under Section 414 of the

Code.

"Credit Enhancement Business Day" means a "Business Day," as defined in

each of the Credit Enhancement Letters of Credit, as the context requires.

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"Credit Enhancement Letter of Credit" means the 1993 Direct-Pay Letter

of Credit or the 1994 Refunding Direct-Pay Letter of Credit as the context

requires, and when used in the plural form, refers to both of them.

"Credit Extension" means the making of an Advance or the issuance of a

Facility LC hereunder.

"Credit Extension Date" means the Borrowing Date for an Advance or the

issuance date for a Facility LC.

"Default" means an event described in Article VII.

"Designated Account" is defined in Section 2.21.1.

"Drawing" means an Interest Drawing, a Principal Drawing or a

Remarketing Drawing, as the context requires, and when used in the plural form,

means all or any combination of them as the context requires.

"Eligible Accounts" means, at any date a determination thereof is to be

made, all outstanding accounts receivable of the Borrower for which the Borrower

shall have furnished to the Agent information adequate for purposes of

identification at times and in form and substance as may be reasonably requested

by the Agent; provided, however, that an account receivable shall not constitute

an Eligible Account if it: (i) remains unpaid sixty (60) days after the original

due date for its payment stated on the applicable invoice or one hundred fifty

(150) days after the invoice date; (ii) is an account receivable with respect to

which the account receivable debtor is the subject of a bankruptcy or similar

insolvency proceeding or has made an assignment for the benefit of creditors or

whose assets have been conveyed to a receiver or trustee or who is no longer

conducting its customary business, except and to the extent the Agent otherwise

agrees in writing; (iii) is an account receivable which is not invoiced (and

dated as of the date of such invoice) and sent to the account receivable debtor

within the ordinary course of the business of the Borrower and in accordance

with customary billing practices after delivery of the underlying goods to, or

performance of the underlying services for, the accounts receivable debtor; (iv)

is an account receivable arising with respect to goods which have not been

shipped or arising with respect to services which have not been fully performed;

(v) is an account receivable with respect to which the account receivable

debtor's obligation to pay the account receivable is conditional upon the

account receivable debtor's approval or is otherwise subject to any repurchase

obligation or return right, as with sales made on a bill-and-hold, guaranteed

sale, sale-and-return, sale on approval or consignment basis; (vi) is an account

receivable in which the Bank does not have a first priority, perfected security

interest; (vii) is an account receivable due from any Subsidiary, Affiliate,

employee or sales agent of the Borrower or which is due solely from an accounts

receivable debtor which is a United States federal governmental entity or

agency, except and to the extent the Bank otherwise agrees in writing; or (viii)

is an account receivable evidenced by an instrument (as defined in Article 9.1

of the Indiana Uniform Commercial Code). At any time more than Twenty-Five

Percent (25%) of the aggregate amount of accounts receivable due from an

accounts receivable debtor remain unpaid more than sixty (60) days after the

date(s) due as stated on the original invoice(s) evidencing such accounts

receivable, then no accounts receivable due the Borrower from that accounts

receivable debtor shall constitute an Eligible Account; provided that accounts

receivable from Sam's Club shall not be excluded from Eligible Accounts unless

more than Fifty Percent (50%) of the aggregate amount of accounts receivable due

from Sam's Club remain unpaid more than sixty (60) days after the date(s) due

stated on the original invoice(s). Further, to the extent that an Eligible

Account is subject to any set-off, offset, credit or other

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reduction right held by the account receivable debtor, then for purposes of

determining the Borrowing Base the amount of such Eligible Account shall be

reduced by the sum of all such offsets, credits and reductions.

"Eligible Finished Goods Inventory Value" means, at any date a

determination thereof is to be made, an amount equal to the sum of (i) the

aggregate book value of the Borrower's finished goods inventory (all as

determined and classified in accordance with Agreement Accounting Principles)

but excluding all such inventory: (a) held by a third party on consignment or

subject to any repurchase option or arrangement or return right, as with sales

made on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval or

consignment basis; (b) located outside the United States of America, except such

inventory with respect to which the Borrower has provided to the Agent evidence

satisfactory to the Agent that the Agent holds a perfected, first priority

security in such inventory, or (c) which does not comply with any of the

following requirements:

(1) It is in good and merchantable condition for sale to

an end user and is readily marketable by the Borrower

in the ordinary course of the Borrower's business;

(2) It conforms in all material respects to all

applicable specifications, standards and

requirements; and

(3) It complies with or exceeds all standards, mandates

and requirements of Governmental Authority with which

it must be in compliance for it to be lawfully sold

to an end user in the United States of America;

and (ii) the aggregate amount available to be drawn under all Facility LCs

issued by the LC Issuer against which a vendor may draw to obtain payment of the

purchase price of finished goods inventory, minus the book value of any such

inventory included in the calculation of the Eligible Finished Goods Inventory

Value pursuant to clause (i) above as to which the vendors who are the

beneficiaries of such Facility LCs have not yet presented or the LC Issuer has

not yet honored a draft or demand for payment.

"Eligible Miscellaneous Inventory Value" means, at any date a

determination thereof is to be made, an amount equal to the aggregate book value

(as determined and classified in accordance with Agreement Accounting

Principles) of the Borrower's raw material inventory, including furniture

hardware which is not yet part of work in process or finished goods, but

excluding all lumber (cut or uncut), board stock, timber, logs and other wood.

"Eligible Wood Stock Inventory Value" means, at any date a

determination thereof is to be made, an amount equal to the aggregate book value

of the Borrower's inventory of timber, logs, rough cut lumber and full-board

stock (all as determined and classified in accordance with Agreement Accounting

Principles) and that is readily marketable in established wood markets in its

existing condition, but excluding all such lumber and board stock which is not

in standard market dimensions.

"Enhancement Issuer" means Bank One, as issuer of the Credit

Enhancement Letters of Credit.

"Environmental Laws" means any and all federal, state, local and

foreign statutes, laws, judicial decisions, regulations, ordinances, rules,

judgments, orders, decrees, plans, injunctions, permits, concessions, grants,

franchises, licenses, agreements and other governmental restrictions relating to

(i) the protection of the environment, (ii) the effect of the environment on

human health, (iii) emissions,

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discharges or releases of pollutants, contaminants, hazardous substances or

wastes into surface water, ground water or land, or (iv) the manufacture,

processing, distribution, use, treatment, storage, disposal, transport or

handling of pollutants, contaminants, hazardous substances or wastes or the

clean-up or other remediation thereof.

"ERISA" means the Employee Retirement Income Security Act of 1974, as

amended from time to time, and any rule or regulation issued thereunder.

"Eurodollar Advance" means an Advance which, except as otherwise

provided in Section 2.11, bears interest at the applicable Eurodollar Rate.

"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for

the relevant Interest Period, the applicable British Bankers' Association LIBOR

rate for deposits in U.S. dollars as reported by any generally recognized

financial information service as of 11:00 a.m. (London time) two Business Days

prior to the first day of such Interest Period, and having a maturity equal to

such Interest Period, provided that, if no such British Bankers' Association

LIBOR rate is available to the Agent, the applicable Eurodollar Base Rate for

the relevant Interest Period shall instead be the rate determined by the Agent

to be the rate at which Bank One or one of its Affiliate banks offers to place

deposits in U.S. dollars with first-class banks in the London interbank market

at approximately 11:00 a.m. (London time) two Business Days prior to the first

day of such Interest Period, in the approximate amount of Bank One's relevant

Eurodollar Loan and having a maturity equal to such Interest Period.

"Eurodollar Loan" means a Loan which, except as otherwise provided in

Section 2.11, bears interest at the applicable Eurodollar Rate.

"Eurodollar Rate" means, with respect to a Eurodollar Advance for the

relevant Interest Period, the sum of (i) the quotient of (a) the Eurodollar Base

Rate applicable to such Interest Period, divided by (b) one minus the Reserve

Requirement (expressed as a decimal) applicable to such Interest Period, plus

(ii) the Applicable Margin.

"Excluded Taxes" means, in the case of each Lender or applicable

Lending Installation and the Agent, taxes imposed on its overall net income, and

franchise taxes imposed on it, by (i) the jurisdiction under the laws of which

such Lender or the Agent is incorporated or organized or (ii) the jurisdiction

in which the Agent's or such Lender's principal executive office or such

Lender's applicable Lending Installation is located.

"Exhibit" refers to an exhibit to this Agreement, unless another

document is specifically referenced.

"Extension Request" is defined in Section 2.20.

"Facility LC" is defined in Section 2.19.1.

"Facility LC Application" is defined in Section 2.19.3.

"Facility LC Collateral Account" is defined in Section 2.19.11.

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"Facility Termination Date" means December 31, 2004 or any later date

as may be specified as the Facility Termination Date in accordance with Section

2.20, or any earlier date on which the Aggregate Commitment is reduced to zero

or otherwise terminated pursuant to the terms hereof.

"Federal Funds Effective Rate" means, for any day, an interest rate per

annum equal to the weighted average of the rates on overnight Federal funds

transactions with members of the Federal Reserve System arranged by Federal

funds brokers on such day, as published for such day (or, if such day is not a

Business Day, for the immediately preceding Business Day) by the Federal Reserve

Bank of New York, or, if such rate is not so published for any day which is a

Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago

time) on such day on such transactions received by the Agent from three Federal

funds brokers of recognized standing selected by the Agent in its sole

discretion.

"Fiscal Month" means a 4-week or 5-week period comprising a fiscal

month of the Borrower.

"Fixed Charge Coverage Ratio" means, with respect to the Borrower and

its Subsidiaries for any fiscal period, the ratio of Consolidated EBITDA for

such period to Consolidated Fixed Charges for such period.

"Floating Rate" means, for any day, a rate per annum equal to (i) the

Alternate Base Rate for such day plus (ii) the Applicable Margin, in each case

changing when and as the Alternate Base Rate changes.

"Floating Rate Advance" means an Advance which, except as otherwise

provided in Section 2.11, bears interest at the Floating Rate.

"Floating Rate Loan" means a Loan which, except as otherwise provided

in Section 2.11, bears interest at the Floating Rate.

"Fund" means any Person (other than a natural person) that is (or will

be) engaged in making, purchasing, holding or otherwise investing in commercial

loans and similar extensions of credit in the ordinary course of its business.

"Guarantor" means DMI Management, Inc., a Kentucky corporation, and its

successors and assigns.

"Guaranty" means that certain Second Amended and Restated Guaranty

dated as of the Closing Date, executed by the Guarantor in favor of the Agent

for the benefit of the Lenders, as it may be amended or modified and in effect

from time to time.

"Hazardous Substance" means any hazardous or toxic substance regulated

by any Environmental Laws, including but not limited to the Comprehensive

Environmental Response, Compensation and Liability Act, the Resource

Conservation and Recovery Act and the Toxic Substance Control Act, or by any

federal or state governmental agencies having jurisdiction over the control of

any such substance including but not limited to the United States Environmental

Protection Agency.

"Indebtedness" of a Person means such Person's (i) obligations for

borrowed money, (ii) obligations representing the deferred purchase price of

Property or services (other than accounts payable

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arising in the ordinary course of such Person's business payable on terms

customary in the trade), (iii) obligations, whether or not assumed, secured by

Liens or payable out of the proceeds or production from Property now or

hereafter owned or acquired by such Person, (iv) obligations which are evidenced

by notes, acceptances, or other negotiable instruments, (v) obligations of such

Person to purchase securities or other Property arising out of or in connection

with the sale of the same or substantially similar securities or Property, (vi)

Capitalized Lease Obligations, (vii) any other obligation for borrowed money or

other financial accommodation which in accordance with Agreement Accounting

Principles would be shown as a liability on the consolidated balance sheet of

such Person, and (viii) Contingent Obligations.

"Interest Drawing" is used as defined in each of the Credit Enhancement

Letters of Credit, as the context requires.

"Interest Payment Date" is used as defined in the 1993 Trust Indenture

or the 1994 Refunding Trust Indenture, as the context requires.

"Interest Period" means, with respect to a Eurodollar Advance, a period

of one, two, three or six months commencing on a Business Day selected by the

Borrower pursuant to this Agreement. Such Interest Period shall end on the day

which corresponds numerically to such date one, two, three or six months

thereafter, provided, however, that if there is no such numerically

corresponding day in such next, second, third or sixth succeeding month, such

Interest Period shall end on the last Business Day of such next, second, third

or sixth succeeding month. If an Interest Period would otherwise end on a day

which is not a Business Day, such Interest Period shall end on the next

succeeding Business Day, provided, however, that if said next succeeding

Business Day falls in a new calendar month, such Interest Period shall end on

the immediately preceding Business Day.

"Investment" of a Person means any loan, advance (other than

commission, travel and similar advances to officers and employees made in the

ordinary course of business), extension of credit (other than accounts

receivable arising in the ordinary course of business on terms customary in the

trade) or contribution of capital by such Person; stocks, bonds, mutual funds,

partnership interests, notes, debentures or other securities owned by such

Person; any deposit accounts and certificate of deposit owned by such Person;

and structured notes, derivative financial instruments and other similar

instruments or contracts owned by such Person.

"LC Commitment" means, for each Lender, the obligation of such Lender

to participate in Facility LCs, in an aggregate amount not exceeding the amount

set forth opposite its signature below, as it may be modified as a result of any

assignment that has become effective pursuant to Section 12.3.2 or as otherwise

modified from time to time pursuant to the terms hereof.

"LC Fee" is defined in Section 2.19.4.

"LC Issuer" means Bank One (or any subsidiary or affiliate of Bank One

designated by Bank One) in its capacity as issuer of Facility LCs hereunder.

"LC Obligations" means, at any time, the sum, without duplication, of

(i) the aggregate undrawn stated amount under all Facility LCs and Credit

Enhancement Letters of Credit outstanding at such time, plus (ii) the aggregate

unpaid amount at such time of all Reimbursement Obligations.

"LC Payment Date" is defined in Section 2.19.5.

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"Lenders" means the lending institutions listed on the signature pages

of this Agreement (including any Lender in the capacity of LC Issuer or

Enhancement Issuer) and their respective successors and assigns.

"Lending Installation" means, with respect to a Lender or the Agent,

the office, branch, subsidiary or affiliate of such Lender or the Agent listed

on the signature pages hereof or on a Schedule or otherwise selected by such

Lender or the Agent pursuant to Section 2.17.

"Leverage Ratio" means, as of any date of calculation, the ratio of (i)

Consolidated Funded Indebtedness outstanding on such date to (ii) Consolidated

EBITDA for the period of twelve consecutive Fiscal Months ending on the last day

of the most-recently ended fiscal quarter.

"Lien" means any lien (statutory or other), mortgage, pledge,

hypothecation, assignment, deposit arrangement, encumbrance or preference,

priority or other security agreement or preferential arrangement of any kind or

nature whatsoever (including, without limitation, the interest of a vendor or

lessor under any conditional sale, Capitalized Lease or other title retention

agreement).

"Loan" means, with respect to a Lender, such Lender's loan made

pursuant to Article II (or any conversion or continuation thereof).

"Loan Documents" means the Modification Agreement, this Agreement, the

Notes, the Facility LC Applications, the Collateral Documents and the Guaranty.

"Material Adverse Effect" means a material adverse effect on (i) the

business, Property, condition (financial or otherwise), results of operations,

or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the

ability of the Borrower to perform its obligations under the Loan Documents or

the Bond Documents, or (iii) the validity or enforceability of any of the Loan

Documents or the Bond Documents or the Bond Documents, or the rights or remedies

of the Agent, the LC Issuer, the Enhancement Issuer or the Lenders thereunder.

"Material Indebtedness" means Indebtedness in an outstanding principal

amount of $100,000.00 or more in the aggregate (or the equivalent thereof in any

currency other than U.S. dollars).

"Material Indebtedness Agreement" means any agreement under which any

Material Indebtedness was created or is governed or which provides for the

incurrence of Indebtedness in an amount which would constitute Material

Indebtedness (whether or not an amount of Indebtedness constituting Material

Indebtedness is outstanding thereunder).

"Maximum Availability" means, as of any date of determination, the

lesser of: (i) (a) during the period beginning July 31 of each year until

January 30 of the following year, $20,000,000.00, and (b) during the period

beginning on January 31 of each year until July 30 of that year, $19,000,000.00;

and (ii) the Borrowing Base, minus the LC Obligations in respect of Facility

LCs.

"Maximum Available Credit" means the sum of (i) the 1993 Maximum

Available Credit, plus (ii) the 1994 Refunding Maximum Available Credit.

"Modification Agreement" is defined in the preamble of this Agreement.

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"Modify" and "Modification" are defined in Section 2.19.1.

"Moody's" means Moody's Investors Service, Inc.

"Mortgages" means amendments and restatements of the 1992 Huntingburg

Mortgage, the 1993 Huntingburg Mortgage-Warehouse, the 1993 Huntingburg

Mortgage-Mfg., and the 1997 Project Mortgage, in form and substance acceptable

to the Agent and the Lenders, providing for Liens granted to the Agent, for the

benefit of the Lenders, to secure all of the Secured Obligations.

"Mortgage Assignments" means assignments of the 1992 Huntingburg

Mortgage, the 1993 Huntingburg Mortgage-Warehouse, the 1993 Huntingburg

Mortgage-Mfg., and the 1997 Project Mortgage, in form and substance acceptable

to the Agent and the Lenders, whereby the liens and rights of Bank One

thereunder are assigned to the Agent for the benefit of the Lenders, the LC

Issuer and the Enhancement Issuer, to secure all of the Secured Obligations.

"Multiemployer Plan" means a Plan maintained pursuant to a collective

bargaining agreement or any other arrangement to which the Borrower or any

member of the Controlled Group is a party to which more than one employer is

obligated to make contributions.

"Non-U.S. Lender" is defined in Section 3.5(iv).

"Note" means any of the Revolving Note, the Term Notes, the Remarketing

Reimbursement Notes-1993 Bonds, or the Remarketing Reimbursement Notes-1994

Refunding Bonds.

"Obligations" means all unpaid principal of and accrued and unpaid

interest on the Loans, all Reimbursement Obligations, all accrued and unpaid

fees and all expenses, reimbursements, indemnities and other obligations of the

Borrower to the Lenders or to any Lender, the Agent, the LC Issuer, the

Enhancement Issuer, or any indemnified party arising under the Loan Documents.

"Operating Lease" of a Person means any lease of Property (other than a

Capitalized Lease) by such Person as lessee which has an original term

(including any required renewals and any renewals effective at the option of the

lessor) of one year or more.

"Original Agreement" is defined in the preamble to this Agreement.

"Other Taxes" is defined in Section 3.5(ii).

"Outstanding Credit Exposure" means, as to any Lender at any time, the

sum of (i) the aggregate principal amount of its Advances of the Revolving Loan

outstanding at such time, plus (ii) an amount equal to its Pro Rata Share of the

LC Obligations in respect of Facility LCs at such time.

"Participants" is defined in Section 12.2.1.

"Participation" means, for each Lender, the obligation of such Lender

to participate in the Credit Enhancement Letters of Credit, the Remarketing

Reimbursement Loans-1993 Bonds, and the Remarketing Reimbursement Loans-1994

Refunding Bonds in proportion to its Pro Rata Share, as it may

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be modified as a result of any assignment that has become effective pursuant to

Section 12.3.2 or as otherwise modified from time to time pursuant to the terms

hereof.

"Payment Date" means the last Business Day of each calendar month.

"PBGC" means the Pension Benefit Guaranty Corporation, or any successor

thereto.

"Permitted Liens" means Liens described in Section 6.15(i) through

(vii).

"Person" means any natural person, corporation, firm, joint venture,

partnership, limited liability company, association, enterprise, trust or other

entity or organization, or any government or political subdivision or any

agency, department or instrumentality thereof.

"Plan" means an employee pension benefit plan which is covered by Title

IV of ERISA or subject to the minimum funding standards under Section 412 of the

Code as to which the Borrower or any member of the Controlled Group may have any

liability.

"Pricing Schedule" means the Schedule attached hereto identified as

such.

"Prime Rate" means a rate per annum equal to the prime rate of interest

announced from time to time by Bank One or its parent (which is not necessarily

the lowest rate charged to any customer), changing when and as said prime rate

changes.

"Principal Drawing" is used as defined in each of the Credit

Enhancement Letters of Credit, as the context requires.

"Pro Rata Share" means, with respect to a Lender, a portion equal to a

fraction the numerator of which is the sum of such Lender's Commitment and Term

Loan Commitment and the denominator of which is the sum of the Aggregate

Commitment and the Aggregate Term Loan Commitment. The Pro Rata Share of each

Lender as of the Closing Date, stated as a percentage, is set forth opposite its

signature below.

"Property" of a Person means any and all property, whether real,

personal, tangible, intangible, or mixed, of such Person, or other assets owned,

leased or operated by such Person.

"Purchasers" is defined in Section 12.3.1.

"Rate Management Obligations" of a Person means any and all obligations

of such Person, whether absolute or contingent and howsoever and whensoever

created, arising, evidenced or acquired (including all renewals, extensions and

modifications thereof and substitutions therefor), under (i) any and all Rate

Management Transactions, and (ii) any and all cancellations, buy backs,

reversals, terminations or assignments of any Rate Management Transactions.

"Rate Management Transaction" means any transaction (including an

agreement with respect thereto) now existing or hereafter entered by the

Borrower which is a rate swap, basis swap, forward rate transaction, commodity

swap, commodity option, equity or equity index swap, equity or equity index

option, bond option, interest rate option, foreign exchange transaction, cap

transaction, floor transaction, collar transaction, forward transaction,

currency swap transaction, cross-currency rate swap transaction,

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currency option or any other similar transaction (including any option with

respect to any of these transactions) or any combination thereof, whether linked

to one or more interest rates, foreign currencies, commodity prices, equity

prices or other financial measures.

"Regulation D" means Regulation D of the Board of Governors of the

Federal Reserve System as from time to time in effect and any successor thereto

or other regulation or official interpretation of said Board of Governors

relating to reserve requirements applicable to member banks of the Federal

Reserve System.

"Regulation U" means Regulation U of the Board of Governors of the

Federal Reserve System as from time to time in effect and any successor or other

regulation or official interpretation of said Board of Governors relating to the

extension of credit by banks for the purpose of purchasing or carrying margin

stocks applicable to member banks of the Federal Reserve System.

"Reimbursement Obligations" means, at any time, the aggregate of (i)

all obligations of the Borrower then outstanding under Section 2.19 to reimburse

the LC Issuer for amounts paid by the LC Issuer in respect of any one or more

drawings under Facility LCs, (ii) all obligations of the Borrower then

outstanding under Sections 2.21 and 2.22 to reimburse the Enhancement Issuer for

amounts paid by the Enhancement Issuer in respect of Drawings under the Credit

Enhancement Letters of Credit, and (iii) the indebtedness evidenced by all

Remarketing Reimbursement Notes-1993 Bonds and all Remarketing Reimbursement

Notes-1994 Refunding Bonds.

"Remarketing Drawing" is used as defined in each of the Credit

Enhancement Letters of Credit, as the context requires.

"Remarketing Reimbursement Loan - 1993 Bonds" is defined in Section

2.21.3.

"Remarketing Reimbursement Note - 1993 Bonds" is defined in Section

2.21.3.

"Remarketing Reimbursement Loan - 1994 Refunding Bonds" is defined in

Section 2.22.3.

"Remarketing Reimbursement Note - 1994 Refunding Bonds" is defined in

Section 2.22.3.

"Rentals" of a Person means the aggregate fixed amounts payable by such

Person under any Operating Lease.

"Reportable Event" means a reportable event as defined in Section 4043

of ERISA and the regulations issued under such section, with respect to a Plan,

excluding, however, such events as to which the PBGC has by regulation waived

the requirement of Section 4043(a) of ERISA that it be notified within 30 days

of the occurrence of such event, provided, however, that a failure to meet the

minimum funding standard of Section 412 of the Code and of Section 302 of ERISA

shall be a Reportable Event regardless of the issuance of any such waiver of the

notice requirement in accordance with either Section 4043(a) of ERISA or Section

412(d) of the Code.

"Reports" is defined in Section 9.6.

"Required Lenders" means Lenders in the aggregate holding at least

sixty-seven percent (67%) of the Aggregate Commitment, Aggregate Term Loan

Commitment, and the aggregate LC Obligations in

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respect of Credit Enhancement Letters of Credit, or if the Aggregate Commitment

has been terminated, Lenders in the aggregate holding at least sixty-seven

percent (67%) of the Aggregate Outstanding Credit Exposure, Aggregate Term Loan

Commitment and the aggregate LC Obligations in respect of Credit Enhancement

Letters of Credit.

"Reserve Requirement" means, with respect to an Interest Period, the

maximum aggregate reserve requirement (including all basic, supplemental,

marginal and other reserves) which is imposed under Regulation D on Eurocurrency

liabilities.

"Revolving Commitment" means, as to each Lender, the obligation of such

Lender to make Advances to the Borrower under the Revolving Loan, in an

aggregate amount not exceeding the amount set forth opposite its signature

below, as it may be modified as a result of any assignment that has become

effective pursuant to Section 12.3.2 or as otherwise modified from time to time

pursuant to the terms hereof.

"Revolving Loan" is defined in Section 2.2.

"Revolving Loan Maturity Date" means the earlier of (i) the Facility

Termination Date, and (ii) that date upon which the Required Lenders accelerate

payment of the Revolving Loan in accordance with Section 8.1 of this Agreement.

"Revolving Notes" is defined in Section 2.13.

"S&P" means Standard and Poor's Ratings Services, a division of The

McGraw Hill Companies, Inc.

"Schedule" refers to a specific schedule to this Agreement, unless

another document is specifically referenced.

"Section" means a numbered section of this Agreement, unless another

document is specifically referenced.

"Secured Obligations" means, collectively, (i) the Obligations and (ii)

all Rate Management Obligations owing to one or more Lenders.

"Security Agreement" means that certain Second Amended and Restated

Security Agreement, dated as of the Closing Date, executed by Borrower in favor

of the Agent, for the benefit of the Lenders, as it may be amended or modified

and in effect from time to time.

"Single Employer Plan" means a Plan maintained by the Borrower or any

member of the Controlled Group for employees of the Borrower or any member of

the Controlled Group.

"Subsidiary" of a Person means (i) any corporation more than 50% of the

outstanding securities having ordinary voting power of which shall at the time

be owned or controlled, directly or indirectly, by such Person or by one or more

of its Subsidiaries or by such Person and one or more of its Subsidiaries, or

(ii) any partnership, limited liability company, association, joint venture or

similar business organization more than 50% of the ownership interests having

ordinary voting power of which shall at

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the time be so owned or controlled. Unless otherwise expressly provided, all

references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower.

"Substantial Portion" means, with respect to the Property of the

Borrower and its Subsidiaries, Property which represents more than 10% of the

consolidated assets of the Borrower and its Subsidiaries or property which is

responsible for more than 10% of the consolidated net sales or of the

consolidated net income of the Borrower and its Subsidiaries, in each case, as

would be shown in the consolidated financial statements of the Borrower and its

Subsidiaries as at the beginning of the twelve-month period ending with the

month in which such determination is made (or if financial statements have not

been delivered hereunder for that month which begins the twelve-month period,

then the financial statements delivered hereunder for the quarter ending

immediately prior to that month).

"Taxes" means any and all present or future taxes, duties, levies,

imposts, deductions, charges or withholdings, and any and all liabilities with

respect to the foregoing, but excluding Excluded Taxes and Other Taxes.

"Term Loan" is defined in Section 2.2.

"Term Loan Commitment" means, for each Lender, the obligation of such

Lender to make Advances of the Term Loan, in an aggregate amount not exceeding

the amount set forth opposite its signature below, as it may be modified as a

result of any assignment that has become effective pursuant to Section 12.3.2 or

as otherwise modified from time to time pursuant to the terms hereof.

"Term Loan Maturity Date" means the earlier of (i) September 30, 2006,

and (ii) that date upon which the Required Lenders accelerate payment of the

Term Loan in accordance with Section 8.1 of this Agreement.

"Term Notes" is defined in Section 2.13.

"Total Credit Exposure" means, as to any Lender at any time, the sum of

(i) its Outstanding Credit Exposure, (ii) the aggregate outstanding principal

amount of its Advances of the Term Loan at such time, and (iii) an amount equal

to its Pro Rata Share of LC Obligations in respect of Credit Enhancement Letters

of Credit at such time.

"Transferee" is defined in Section 12.4.

"Type" means, with respect to any Advance, its nature as a Floating

Rate Advance or a Eurodollar Advance and with respect to any Loan, its nature as

a Floating Rate Loan or a Eurodollar Loan.

"Unfunded Liabilities" means the amount (if any) by which the present

value of all vested and unvested accrued benefits under all Single Employer

Plans exceeds the fair market value of all such Plan assets allocable to such

benefits, all determined as of the then most recent valuation date for such

Plans using PBGC actuarial assumptions for single employer plan terminations.

"Unmatured Default" means an event which but for the lapse of time or

the giving of notice, or both, would constitute a Default.

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"Unused Revolving Loan Commitment" means, on any day, the positive

difference, if any, which results from subtracting from the Maximum Availability

on such day the outstanding principal balance on such day of Advances of the

Revolving Loan.

"1992 Huntingburg Mortgage" means a Mortgage, Security Agreement,

Assignment of Rents and Fixture Filing dated December 4, 1992, and recorded on

December 7, 1992, as Document No. 168207 in Mortgage Book 281, Page 97, as

amended by a First Amendment to Mortgage, Security Agreement, Assignment of

Rents and Fixture Filing effective as of November 12, 1993, and recorded on

November 12, 1993, as Document No. 174844, in Mortgage Book 304, Page 390, by a

Second Amendment to Mortgage, Security Agreement, Assignment of Rents and

Fixture Filling dated June 9, 1994, and recorded on June 13, 1994, as Document

No. 178773 in Mortgage book 318, Page 25, by a Third Amendment to Mortgage,

Security Agreement, Assignment of Rents and Fixture Filing, dated as of October

11, 1994, recorded on October 28, 1994, as Document No. 181216, in Mortgage Book

325, Page 158, by a Fourth Amendment to Mortgage, Security Agreement, Assignment

of Rents and Fixture Filing, dated as October 2, 1997, recorded on October 29,

1997, as Instrument No. 202983, in Mortgage Record 400, Page 150, by a Fifth

Amendment to Mortgage, Security Agreement, Assignment of Rents and Fixture

Filing, dated as of August 27, 1998, recorded on April 19, 1999, as Instrument

No. 217033, in Mortgage Record 459, Page 224, and by a Sixth Amendment to

Mortgage, Security Agreement, Assignment of Rents and Fixture Filing, dated as

of October 23, 2001, recorded on November 8, 2001, as Document No. 239916, with

all recording occurring in the Office of the Recorder of Dubois County, Indiana,

as the same has been or hereafter may be amended, modified, supplemented and/or

restated from time to time and at any time.

"1993 Bond Documents" means the 1993 Bonds, the 1993 Trust Indenture,

the 1993 Loan Agreement and any other documents or agreement executed by the

Borrower as an incident to the issuance of the 1993 Bonds (other than the Loan

Documents), as the same have been and hereafter may be amended, modified,

supplemented and/or restated from time to time and at any time.

"1993 Bonds" means the $3,420,000 in original principal amount of City

of Huntingburg, Indiana, Adjustable Rate Economic Development Revenue Bonds,

(DMI Furniture, Inc. Project) Series 1993 issued by the City pursuant to the

1993 Trust Indenture, as the same have been and hereafter may be amended,

modified, supplemented and/or restated from time to time and at any time.

"1993 Direct-Pay Letter of Credit" is defined in Section 2.21.

"1993 Huntingburg Mortgage-Warehouse" means a Mortgage, Security

Agreement, Assignment of Rents and Fixture Filing dated November 10, 1993, and

recorded on November 12, 1993, as Document No. 17845, in Mortgage book 304, Page

393, as amended by a First Amendment to Mortgage, Security Agreement, Assignment

of Rents and Fixture Filing dated June 9, 1994, and recorded on June 14, 1994,

as Document No. 178806, in Mortgage Book 318, Page 108, by a Second Amendment to

Mortgage, Security Agreement, Assignment of Rents and Fixture Filing, dated as

of October 10, 1994, recorded on October 28, 1994, as Document No. 181214 in

Mortgage Book 325, Page 152, by a Third Amendment to Mortgage, Security

Agreement, Assignment of Rents and Fixture Filing, dated as of October 2, 1997,

recorded on October 28, 1997, as Instrument No. 202981, in Mortgage Record 400,

Page 142, by a Fourth Amendment to Mortgage, Security Agreement, Assignment of

Rents and Fixture Filing, dated as of August 27, 1998, recorded on April 19,

1999, as Instrument No. 217035, in Mortgage Record 459, Page 232, and by a Fifth

Amendment to Mortgage, Security Agreement, Assignment of Rents and Fixture

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Filing, dated as of October 23, 2001, recorded on October 30, 2001, as Document

No. RD239558, with all recording occurring in the Office of the Recorder of

Dubois County, Indiana, as the same has been and hereafter may be amended,

modified, supplemented and/or restated from time to time and at any time.

"1993 Huntingburg Mortgage-Mfg." means a Mortgage, Security Agreement,

Assignment of Rents and Fixture Filing dated December 15, 1993, and recorded on

December 16, 1993, as Document No. 175583 in Mortgage Book 307, Page 154, as

amended by a First Amendment to Mortgage, Security Agreement, Assignment of

Rents and Fixture Filing dated June 9, 1994, and recorded on June 14, 1994, as

Document No. 178807, in Mortgage book 318, Page 111, by a Second Amendment to

Mortgage, Security Agreement, Assignment of Rents and Fixture Filing, dated as

of October 11, 1994, recorded on October 28, 1994, as Document No. 181215, in

Mortgage Book 325, Page 155, by a Third Amendment to Mortgage, Security

Agreement, Assignment of Rents and Fixture Filing, dated as of October 3, 1997,

recorded on October 28, 1997, as Instrument No. 202982, in Mortgage Record 400,

Page 146, by a Fourth Amendment to Mortgage, Security Agreement, Assignment of

Rents and Fixture Filing, dated as of August 27, 1998, recorded on April 19,

1999, as Instrument No. 217034, in Mortgage Record 459, Page 228, and by a Fifth

Amendment to Mortgage, Security Agreement, Assignment of Rents and Fixture

Filing, dated as of October 23, 2001, recorded October 30, 2001, as Document No.

RD239557, with all recording occurring in the Office of the Recorder of Dubois

County, Indiana, as the same has been and hereafter may be amended, modified,

supplemented and/or restated from time to time and at any time.

"1993 Loan Agreement" means the Loan Agreement dated as of October 1,

1993, between the Borrower and the City as an incident to the issuance of the

1993 Bonds, as the same has been and hereafter may be amended, modified,

supplemented and/or restated from time to time and at any time.

"1993 Maturity Date" means October 1, 2003.

"1993 Maximum Available Credit" meant initially the sum of

$3,462,750.00, and thereafter shall mean the maximum amount available to be

drawn by the 1993 Trustee under the 1993 Direct-Pay Letter of Credit for payment

of principal and interest due on the 1993 Bonds, whether such payments become

due as scheduled, upon mandatory or optional redemption of the 1993 Bonds, or on

account of acceleration of the 1993 Bonds following the occurrence of an "Event

of Default" as defined in the 1993 Trust Indenture.

"1993 Trust Indenture" means the Trust Indenture entered into by the

City and the 1993 Trustee dated as of October 1, 1993 pursuant to which the City

issued the 1993 Bonds, as the same has been and hereafter may be amended,

modified, supplemented and/or restated from time to time and at any time.

"1993 Trustee" means PNC Bank, Indiana, Inc., in its capacity as

Trustee under the 1993 Trust Indenture, or any successor Trustee under the 1993

Trust Indenture.

"1994 Maturity Date" means June 1, 2004.

"1994 Refunding Bond Documents" means the 1994 Refunding Bonds, the

1994 Refunding Trust Indenture, the 1994 Refunding Loan Agreement and any other

document or agreement executed by the Borrower as an incident to the issuance of

the 1994 Refunding Bonds (other than the Loan Documents), as the same have been

and hereafter may be amended, modified, supplemented and/or restated from time

to time and at any time.

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"1994 Refunding Bonds" means the $2,940,000 in original principal

amount of City of Huntingburg, Indiana, Adjustable Rate Economic Development

Revenue Refunding Bonds, (DMI Furniture, Inc. Project) Series 1994, issued by

the City pursuant to the 1994 Refunding Trust Indenture, as the same have been

and hereafter may be amended, modified, supplemented and/or restated from time

to time and at any time.

"1994 Refunding Direct-Pay Letter of Credit" is defined in Section

2.22.

"1994 Refunding Loan Agreement" means the Loan Agreement dated as of

June 1, 1994, between the Borrower and the City as an incident to the issuance

of the 1994 Refunding Bonds, as the same has been and hereafter may be amended,

modified, supplemented and/or restated from time to time and at any time.

"1994 Refunding Maximum Available Credit" means initially the sum of

$2,976,750, and thereafter shall mean the maximum amount available to be drawn

by the 1994 Refunding Trustee under the 1994 Refunding Direct-Pay Letter of

Credit for principal and interest due on account of the 1994 Refunding Bonds

upon (i) mandatory or optional redemption of the 1994 Refunding Bonds, or (ii)

on account of acceleration of the 1994 Refunding Bonds following the occurrence

of an "Event of Default" as defined in the 1994 Refunding Trust Indenture.

"1994 Refunding Trust Indenture" means the Trust Indenture entered into

between the City and the 1994 Refunding Trustee dated as of June 1, 1994,

pursuant to which the City is issuing the 1994 Refunding Bonds, as the same has

been and hereafter may be amended, modified, supplemented and/or restated from

time to time and at any time.

"1994 Refunding Trustee" means PNC Bank, Indiana, Inc., in its capacity

as Trustee under the 1994 Refunding Trust Indenture, or any successor Trustee

under the 1994 Refunding Trust Indenture.

"1997 Project Mortgage" means the Mortgage, Security Agreement and

Assignment of Leases and Rents dated as of October 23, 2001, recorded on October

30, 2001 as Document No. RD239559, in the Office of the Recorder of Dubois

County, Indiana, as the same may be amended, modified, supplemented and/or

restated from time to time and at any time.

The foregoing definitions shall be equally applicable to both the

singular and plural forms of the defined terms.

ARTICLE II

THE CREDITS

2.1. Commitments, Term Loan Commitments, and Participations. From

and including the date of this Agreement, each Lender severally agrees, on the

terms and conditions set forth in this Agreement, to (i) make Loans to the

Borrower, (ii) participate in Facility LCs issued upon the request of the

Borrower and (iii) participate in the Credit Enhancement Letters of Credit,

provided that, (x) after giving effect to the making of each such Advance of the

Revolving Loan and the issuance of each such

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Facility LC, such Lender's Outstanding Credit Exposure shall not exceed its

Commitment, and (y) after giving effect to the making of each Advance of the

Term Loan, the aggregate principal amount of its Advances of the Term Loan

outstanding shall not exceed its Term Loan Commitment. The Lender will make

Loans on the terms and conditions set forth in Sections 2.2. The LC Issuer will

issue Facility LCs and the Lenders will participate in Facility LCs on the terms

and conditions set forth in Section 2.19. The Enhancement Issuer will maintain

the Credit Enhancement Letters of Credit previously issued by the Enhancement

Issuer for the account of the Borrower and the Lenders will participate in the

Credit Enhancement Letters of Credit on the terms and conditions set forth in

Sections 2.21, 2.22 and 2.23.

2.2. Revolving Loan Facility and Term Loan Facility.

(i) The Revolving Loan. The Lenders agree to make Advances to the

Borrower on a revolving basis (collectively, the "Revolving Loan") from time to

time from and after the Closing Date until the Revolving Loan Maturity Date, in

an amount not exceeding in the aggregate at any time outstanding the Maximum

Availability, provided that all of the conditions of lending stated in Sections

4.1 and 4.2 applicable to the Revolving Loan have been fulfilled at the time of

each such Advance. Proceeds of the Revolving Loan from and after the Closing

Date may be used by the Borrower only to fund working capital requirements. So

long as no Default or Unmatured Default shall have occurred and be continuing

and until the Revolving Loan Maturity Date, the Borrower may borrow, repay

(subject to the requirements of Section 2.7(iii) of this Agreement) under the

Revolving Loan on any Business Day, provided that the Borrower shall not be

entitled to receive and the Lenders shall not be obligated to make any Advance

under the Revolving Loan: (i) if the making of such Advance would cause or

result in a Default or an Unmatured Default; or (ii) if after making such

Advance the principal balance of the Revolving Loan would exceed the Maximum

Availability.

The Revolving Loan under this Agreement is a continuation, on amended

terms, of the "Revolving Loan" extended to the Borrower by Bank One under the

Original Agreement and the Borrower affirms, acknowledges and agrees that (a)

the principal balance thereof as of the Closing Date is $16,207,762.00, and

that, accordingly, the initial unpaid principal balance of the Revolving Loan on

the Closing Date is also such amount, (b) all outstanding advances thereof shall

constitute Advances of the Revolving Loan under this Agreement, and (c) all

interest which is accrued and unpaid thereon shall be due and payable on the

Closing Date.

(ii) The Term Loan. Each Lender agrees, subject to the terms and

conditions of this Agreement, to make a term loan to the Borrower to be advanced

and re-advanced as hereinafter provided, in principal amounts not exceeding in

the aggregate at any time for all Lenders the sum of Four Million Twenty

Thousand Dollars ($4,020,000.00) for the term period beginning on the Closing

Date and ending on the Term Loan Maturity Date (collectively, the "Term Loan").

On the Closing Date, initial Advances of the Term Loan will be made for the

purpose of paying off the unpaid balance of the "Term Loan" extended to the

Borrower by Bank One under the Original Agreement, and the Borrower affirms,

acknowledges and agrees that the unpaid principal balance of such term loan, as

of the Closing Date, is $1,239,833.40, which shall be the aggregate amount of

the initial Advances of the Term Loan.

In addition to the initial Advances of the Term Loan on the Closing

Date, each Lender agrees, subject to the terms and conditions of this Agreement,

to make not more than two (2) Advances to the Borrower under the Term Loan, in a

principal amount not to exceed in the aggregate for all Lenders the sum of

$4,250,000.00 to be used in their entirety by the Borrower as follows: (A) to

pay an amount not to exceed $2,230,000.00 to fund the portion of the Borrower's

deposit to the Designated Account required

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under Section 2.21.1 which is equal to the outstanding principal amount of the

1993 Bonds due on the 1993 Maturity Date; and (B) to pay an amount not to exceed

$2,020,000.00 to fund the portion of the Borrower's deposit to the Designated

Account required under Section 2.22.1 which is equal to the outstanding

principal amount of the 1994 Refunding Bonds due on the 1994 Maturity Date. So

long as no Default or Unmatured Default shall have occurred and be continuing,

the Borrower may request such additional Advances of the Term Loan not earlier

than three (3) Business Days prior to the date the deposit to the relevant

Designated Account related to the 1993 Maturity Date or the 1994 Maturity Date,

as applicable, is required to be made, provided that the Borrower shall not be

entitled to receive and the Lenders shall not be obligated to make any such

additional Advance of the Term Loan: (1) if the making of such Advance would

cause or result in a Default or an Unmatured Default; or (2) if after making

such Advance the principal balance of the Term Loan would exceed $4,020,000.00.

2.3. Ratable Loans. Each Advance hereunder shall consist of Loans

made by the several Lenders ratably according to their Pro Rata Shares.

2.4. Types of Advances. The Advances may be Floating Rate Advances

or Eurodollar Advances, or a combination thereof, selected by the Borrower in

accordance with Sections 2.8 and 2.9.

2.5. Commitment Fee; Reductions in Aggregate Commitment. The

Borrower agrees to pay to the Agent, for the account of each Lender according to

its Pro Rata Share, a commitment fee at a per annum rate equal to the Applicable

Fee Rate on the average daily Unused Revolving Loan Commitment from the date

hereof to and including the Facility Termination Date, payable quarterly and on

the Facility Termination Date. The commitment fees for each fiscal quarter shall

be due and payable within ten (10) days following the Agent's submission,

following the close of such quarter, of a statement of the amount due. The

Borrower may permanently reduce the Aggregate Commitment in whole, or in part

ratably among the Lenders in integral multiples of $1,000,000.00, upon at least

five Business Days' written notice to the Agent, which notice shall specify the

amount of any such reduction, provided, however, that the amount of the

Aggregate Commitment may not be reduced below the Aggregate Outstanding Credit

Exposure. All accrued commitment fees shall be payable on the effective date of

any termination of the Commitments of all Lenders.

2.6. Minimum Amount of Each Advance. Each Eurodollar Advance shall

be in the minimum amount of $1,000,000.00, and each Floating Rate Advance shall

be in the minimum amount of $50,000.00, provided, however, that any Floating

Rate Advance may be in the amount of the Unused Revolving Loan Commitment.

2.7. Principal Payments.

(i) The principal of the Revolving Loan shall be due and payable

in full on the Revolving Loan Termination Date.

(ii) If at any time a determination thereof is to be made, the

principal balance of the Revolving Loan outstanding at such time exceeds the

Maximum Availability, the Borrower shall immediately repay the Revolving Notes

in an aggregate principal amount equal to such excess. If at any time a

determination thereof is to be made, the principal balance of the Term Loan

outstanding at such time exceeds $4,020,000, the Borrower shall immediately

repay the Term Notes in an aggregate principal amount equal to such excess.

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(iii) The principal of the Term Loan shall be payable in equal

monthly installments, each in the amount of $77,500, due and payable on the last

Business Day of November, 2002, and on the last Business Day of each successive

calendar month thereafter until (unless the Term Loan shall have been earlier

paid in full) the Term Loan Maturity Date, at which time the entire principal

balance of the Term Loan and all unpaid, accrued interest thereon, shall be due

and payable in full without demand. Subject to Section 2.7(iv) and Section 3.4,

the principal of the Term Loan may be prepaid at any time in whole or in part,

provided that all partial prepayments shall be applied to the latest maturing

installments of principal payable under the Term Loan in inverse order of

maturity.

(iv) The Borrower may from time to time pay, without penalty or

premium, all outstanding Floating Rate Advances, or, in a minimum aggregate

amount of $100,000.00 or any integral multiple of $25,000.00 in excess thereof,

any portion of the outstanding Floating Rate Advances upon two Business Days'

prior notice to the Agent. The Borrower may from time to time pay, subject to

the payment of any funding indemnification amounts required by Section 3.4 but

without penalty or premium, all outstanding Eurodollar Advances, or, in a

minimum aggregate amount of $1,000,000.00 or any integral multiple of

$100,000.00 in excess thereof, any portion of the outstanding Eurodollar

Advances upon three Business Days' prior notice to the Agent.

2.8. Method of Selecting Types and Interest Periods for New

Advances. The Borrower shall select the Type of Advance and, in the case of each

Eurodollar Advance, the Interest Period applicable thereto from time to time.

The Borrower shall give the Agent irrevocable notice (a "Borrowing Notice") not

later than 12:00 noon (Indianapolis time) on the Borrowing Date of each Floating

Rate Advance and three Business Days before the Borrowing Date for each

Eurodollar Advance, specifying:

(i) the Borrowing Date, which shall be a Business Day, of such

Advance,

(ii) the aggregate amount of such Advance,

(iii) the Type of Advance selected, and

(iv) in the case of each Eurodollar Advance, the Interest Period

applicable thereto.

Not later than 2:00 p.m. (Indianapolis time) on each Borrowing Date, each Lender

shall make available its Loan or Loans in funds immediately available in

Indianapolis to the Agent at its address specified pursuant to Article XIII. The

Agent will make the funds so received from the Lenders available to the Borrower

at the Agent's aforesaid address.

2.9. Conversion and Continuation of Outstanding Advances. Floating

Rate Advances shall continue as Floating Rate Advances unless and until such

Floating Rate Advances are converted into Eurodollar Advances pursuant to this

Section 2.9 or are repaid in accordance with Section 2.7. Each Eurodollar

Advance shall continue as a Eurodollar Advance until the end of the then

applicable Interest Period therefor, at which time such Eurodollar Advance shall

be automatically converted into a Floating Rate Advance unless (x) such

Eurodollar Advance is or was repaid in accordance with Section 2.7 or (y) the

Borrower shall have given the Agent a Conversion/Continuation Notice (as defined

below) requesting that, at the end of such Interest Period, such Eurodollar

Advance continue as a Eurodollar Advance for the same or another Interest

Period. Subject to the terms of Section 2.6, the Borrower may elect from time to

time to convert all or any part of a Floating Rate Advance into a Eurodollar

Advance. The Borrower shall give the Agent irrevocable notice (a

"Conversion/Continuation Notice") of each

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conversion of a Floating Rate Advance into a Eurodollar Advance or continuation

of a Eurodollar Advance not later than 10:00 a.m. (Chicago time) at least three

Business Days prior to the date of the requested conversion or continuation,

specifying:

(i) the requested date, which shall be a Business Day, of such

conversion or continuation,

(ii) the aggregate amount and Type of the Advance which is to be

converted or continued, and

(iii) the amount of such Advance which is to be converted into or

continued as a Eurodollar Advance and the duration of the

Interest Period applicable thereto.

2.10. Changes in Interest Rate, etc. Each Floating Rate Advance

shall bear interest on the outstanding principal amount thereof, for each day

from and including the date such Advance is made or is automatically converted

from a Eurodollar Advance into a Floating Rate Advance pursuant to Section 2.9,

to but excluding the date it is paid or is converted into a Eurodollar Advance

pursuant to Section 2.9 hereof, at a rate per annum equal to the Floating Rate

for such day. Changes in the rate of interest on that portion of any Advance

maintained as a Floating Rate Advance will take effect simultaneously with each

change in the Alternate Base Rate. Each Eurodollar Advance shall bear interest

on the outstanding principal amount thereof from and including the first day of

the Interest Period applicable thereto to (but not including) the last day of

such Interest Period at the interest rate determined by the Agent as applicable

to such Eurodollar Advance based upon the Borrower's selections under Sections

2.8 and 2.9 and otherwise in accordance with the terms hereof. No Interest

Period selected with respect to an Advance of the Revolving Loan may end after

the Facility Termination Date, and no Interest Period selected with respect to

an Advance of the Term Loan may end after September 30, 2006.

2.11. Rates Applicable After Default. Notwithstanding anything to

the contrary contained in Section 2.8, 2.9 or 2.10, during the continuance of a

Default or Unmatured Default the Required Lenders may, at their option, by

notice to the Borrower (which notice may be revoked at the option of the

Required Lenders notwithstanding any provision of Section 8.2 requiring

unanimous consent of the Lenders to changes in interest rates), declare that no

Advance may be made as, converted into or continued as a Eurodollar Advance.

During the continuance of a Default the Required Lenders may, at their option,

by notice to the Borrower (which notice may be revoked at the option of the

Required Lenders notwithstanding any provision of Section 8.2 requiring

unanimous consent of the Lenders to changes in interest rates), declare that (i)

each Eurodollar Advance shall bear interest for the remainder of the applicable

Interest Period at the rate otherwise applicable to such Interest Period plus 2%

per annum, (ii) each Floating Rate Advance shall bear interest at a rate per

annum equal to the Floating Rate in effect from time to time plus 2% per annum

and (iii) the LC Fee shall be increased by 2% per annum, provided that, during

the continuance of a Default under Section 7.6 or 7.7, the interest rates set

forth in clauses (i) and (ii) above and the increase in the LC Fee set forth in

clause (iii) above shall be applicable to all Credit Extensions without any

election or action on the part of the Agent or any Lender.

2.12. Method of Payment. All payments of the Obligations hereunder

shall be made, without setoff, deduction, or counterclaim, in immediately

available funds to the Agent at the Agent's address specified pursuant to

Article XIII, or at any other Lending Installation of the Agent specified in

writing by the Agent to the Borrower, by noon (local time) on the date when due

and shall (except in the case of Reimbursement Obligations for which the LC

Issuer or the Enhancement Issuer, as applicable, has not been fully indemnified

by the Lenders, or as otherwise specifically required hereunder) be applied

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ratably by the Agent among the Lenders. Each payment delivered to the Agent for

the account of any Lender shall be delivered promptly by the Agent to such

Lender in the same type of funds that the Agent received at its address

specified pursuant to Article XIII or at any Lending Installation specified in a

notice received by the Agent from such Lender. The Agent is hereby authorized to

charge the account of the Borrower maintained with Bank One for each payment of

principal, interest, Reimbursement Obligations and fees as it becomes due

hereunder. Each reference to the Agent in this Section 2.12 shall also be deemed

to refer, and shall apply equally, (i) to the LC Issuer, in the case of payments

required to be made by the Borrower to the LC Issuer pursuant to Section 2.19.6

and (ii) to the Enhancement Issuer, in the case of payments required to be made

by the Borrower to the Enhancement Issuer pursuant to Section 2.21 and Section

2.22.

2.13. Evidence of Indebtedness. (i) Each Lender shall maintain in

accordance with its usual practice an account or accounts evidencing the

indebtedness of the Borrower to such Lender resulting from each Loan made by

such Lender from time to time, including the amounts of principal and interest

payable and paid to such Lender from time to time hereunder.

(ii) The Agent shall also maintain accounts in which it will record

(a) the amount of each Advance made hereunder, the Type thereof and the Interest

Period with respect thereto, (b) the amount of any principal or interest due and

payable or to become due and payable from the Borrower to each Lender hereunder,

(c) the original stated amount of each Facility LC and the amount of LC

Obligations outstanding at any time, and (d) the amount of any sum received by

the Agent hereunder from the Borrower and each Lender's share thereof.

(iii) The entries maintained in the accounts maintained pursuant to

paragraphs (i) and (ii) above shall be prima facie evidence of the existence and

amounts of the Obligations therein recorded; provided, however, that the failure

of the Agent or any Lender to maintain such accounts or any error therein shall

not in any manner affect the obligation of the Borrower to repay the Obligations

in accordance with their terms.

(iv) The obligation of the Borrower to repay the Revolving Loan

shall be evidenced by promissory notes executed by Borrower to each of the

Lenders in substantially the form and substance of Exhibit E attached hereto (as

the same may be amended, modified, supplemented, and/or restated from time to

time and at any time, the "Revolving Notes").

(v) The obligation of the Borrower to repay the Term Loan shall be

evidenced by promissory notes executed by the Borrower to each of the Lenders in

the form of Exhibit F attached hereto (as the same may be amended, modified,

extended, renewed, supplemented, replaced and/or restated from time to time and

at any time, the "Term Notes").

2.14. Telephonic Notices. The Borrower hereby authorizes the Lenders

and the Agent to extend, convert or continue Advances, effect selections of

Types of Advances and to transfer funds based on telephonic notices made by any

person or persons the Agent or any Lender in good faith believes to be acting on

behalf of the Borrower, it being understood that the foregoing authorization is

specifically intended to allow Borrowing Notices and Conversion/Continuation

Notices to be given telephonically. The Borrower agrees to deliver promptly to

the Agent a written confirmation, if such confirmation is requested by the Agent

or any Lender, of each telephonic notice signed by an Authorized Officer. If the

written confirmation differs in any material respect from the action taken by

the Agent and the Lenders, the records of the Agent and the Lenders shall govern

absent manifest error.

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2.15. Interest Payment Dates; Interest and Fee Basis. Interest

accrued on each Floating Rate Advance shall be payable on each Payment Date,

commencing with the first such date to occur after the date hereof and at

maturity. Interest accrued on each Eurodollar Advance shall be payable on the

last day of its applicable Interest Period, on any date on which the Eurodollar

Advance is prepaid, whether by acceleration or otherwise, and at maturity.

Interest accrued on each Eurodollar Advance having an Interest Period longer

than three months shall also be payable on the last day of each three-month

interval during such Interest Period. Interest, commitment fees, LC Fees and

commissions payable to the Enhancement Issuer under Section 2.21 and 2.22 shall

be calculated for actual days elapsed on the basis of a 360-day year. Interest

shall be payable for the day an Advance is made but not for the day of any

payment on the amount paid if payment is received prior to noon (local time) at

the place of payment. If any payment of principal of or interest on an Advance

or under any of the Notes shall become due on a day which is not a Business Day,

such payment shall be made on the next succeeding Business Day and, in the case

of a principal payment, such extension of time shall be included in computing

interest in connection with such payment.

2.16. Notification of Advances, Interest Rates, Prepayments and

Commitment Reductions. Promptly after receipt thereof, the Agent will notify

each Lender of the contents of each Aggregate Commitment reduction notice,

Borrowing Notice, Conversion/Continuation Notice, and repayment notice received

by it hereunder. Promptly after notice from the LC Issuer, the Agent will notify

each Lender of the contents of each request for issuance of a Facility LC

hereunder. The Agent will notify each Lender of the interest rate applicable to

each Eurodollar Advance promptly upon determination of such interest rate and

will give each Lender prompt notice of each change in the Alternate Base Rate.

2.17. Lending Installations. Each Lender may book its Loans and its

participation in any LC Obligations, the LC Issuer may book the Facility LCs,

and the Enhancement Issuer may book the Credit Enhancement Letters of Credit at

any Lending Installation selected by such Lender or the LC Issuer or Enhancement

Issuer, as the case may be, and may change its Lending Installation from time to

time. All terms of this Agreement shall apply to any such Lending Installation

and the Loans, Facility LCs, Credit Enhancement Letters of Credit,

participations in LC Obligations and any Notes issued hereunder shall be deemed

held by each Lender, the LC Issuer, or Enhancement Issuer as the case may be,

for the benefit of any such Lending Installation. Each Lender, the LC Issuer,

and the Enhancement Issuer may, by written notice to the Agent and the Borrower

in accordance with Article XIII, designate replacement or additional Lending

Installations through which Loans will be made by it or Facility LCs will be

issued by it or by which its participation in LC Obligations will be held, and

for whose account Loan payments or payments with respect to Reimbursement

Obligations are to be made.

2.18. Non-Receipt of Funds by the Agent. Unless the Borrower or a

Lender, as the case may be, notifies the Agent prior to the date on which it is

scheduled to make payment to the Agent of (i) in the case of a Lender, the

proceeds of a Loan or funding of its participation in Facility LCs or its

Participation or (ii) in the case of the Borrower, a payment of principal,

interest or fees to the Agent for the account of the Lenders, that it does not

intend to make such payment, the Agent may assume that such payment has been

made. The Agent may, but shall not be obligated to, make the amount of such

payment available to the intended recipient in reliance upon such assumption. If

such Lender or the Borrower, as the case may be, has not in fact made such

payment to the Agent, the recipient of such payment shall, on demand by the

Agent, repay to the Agent the amount so made available together with interest

thereon in respect of each day during the period commencing on the date such

amount was so made available by the Agent until the date the Agent recovers such

amount at a rate per annum equal to (x) in the case of payment by a

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Lender, the Federal Funds Effective Rate for such day for the first three days

and, thereafter, the interest rate applicable to the relevant Loan or (y) in the

case of payment by the Borrower, the interest rate applicable to the relevant

Loan.

2.19. Facility LCs.

2.19.1. Issuance. The LC Issuer hereby agrees, on the terms

and conditions set forth in this Agreement, to issue standby and

commercial letters of credit (each, a "Facility LC") and to renew,

extend, increase, decrease or otherwise modify each Facility LC

("Modify," and each such action a "Modification"), from time to time

from and including the date of this Agreement and prior to the Facility

Termination Date upon the request of the Borrower; provided that

immediately after each such Facility LC is issued or Modified, (i) the

aggregate amount of the outstanding LC Obligations shall not exceed the

lesser of (a) $3,000,000.00 and (b) the Borrowing Base, minus the

aggregate principal amount of all outstanding Advances of the Revolving

Loan; and (ii) the Aggregate Outstanding Credit Exposure shall not

exceed the Aggregate Commitment. No Facility LC shall have an expiry

date later than the earlier of (x) the fifth Business Day prior to the

Facility Termination Date and (y) one year after its issuance or

Modification.

2.19.2. Participations. Upon the issuance or Modification by

the LC Issuer of a Facility LC in accordance with this Section 2.19,

the LC Issuer shall be deemed, without further action by any party

hereto, to have unconditionally and irrevocably sold to each Lender,

and each Lender shall be deemed, without further action by any party

hereto, to have unconditionally and irrevocably purchased from the LC

Issuer, a participation in such Facility LC (and each Modification

thereof) and the related LC Obligations in proportion to its Pro Rata

Share.

2.19.3. Notice. Subject to Section 2.19.1, the Borrower shall

give the LC Issuer notice prior to 10:00 a.m. (Indianapolis time) at

least five Business Days prior to the proposed date of issuance or

Modification of each Facility LC, specifying the beneficiary, the

proposed date of issuance (or Modification) and the expiry date of such

Facility LC, and describing the proposed terms of such Facility LC and

the nature of the transactions proposed to be supported thereby. Upon

receipt of such notice, the LC Issuer shall promptly notify the Agent,

and the Agent shall promptly notify each Lender, of the contents

thereof and of the amount of such Lender's participation in such

proposed Facility LC. The issuance or Modification by the LC Issuer of

any Facility LC shall, in addition to the conditions precedent set

forth in Article IV (the satisfaction of which the LC Issuer shall have

no duty to ascertain), be subject to the conditions precedent that such

Facility LC shall be satisfactory to the LC Issuer and that the

Borrower shall have executed and delivered such application agreement

and/or such other instruments and agreements relating to such Facility

LC as the LC Issuer shall have reasonably requested (each, a "Facility

LC Application"). In the event of any conflict between the terms of

this Agreement and the terms of any Facility LC Application, the terms

of this Agreement shall control.

2.19.4. LC Fees. The Borrower shall pay to the Agent, for the

account of the Lenders ratably in accordance with their respective Pro

Rata Shares, (i) with respect to each standby Facility LC, a letter of

credit fee at a per annum rate equal to the Applicable LC Fee on the

average daily undrawn stated amount under such standby Facility LC,

such fee to be payable in arrears on each Payment Date, and (ii) with

respect to each commercial Facility LC, a one-time letter of credit fee

in an amount equal to 1.0% per annum of the initial stated amount (or,

with

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respect to a Modification of any such commercial Facility LC which

increases the stated amount thereof, such increase in the stated

amount) for the period from the date of issuance until its expiration

date (or in the case of an extension of the expiration date, from the

existing expiration date to the new expiration date), such fee to be

payable on the date of such issuance, increase or extension (each such

fee described in this sentence an "LC Fee"). The Borrower shall also

pay to the LC Issuer for its own account (x) at the time of issuance of

each Facility LC, a fronting fee in an amount equal to .125% of the

stated amount of such Facility LC, and (y) documentary and processing

charges in connection with the issuance or Modification of and draws

under Facility LCs in accordance with the LC Issuer's standard schedule

for such charges as in effect from time to time.

2.19.5. Administration; Reimbursement by Lenders. Upon

receipt from the beneficiary of any Facility LC of any demand for

payment under such Facility LC, the LC Issuer shall notify the Agent

and the Agent shall promptly notify the Borrower and each other Lender

as to the amount to be paid by the LC Issuer as a result of such demand

and the proposed payment date (the "LC Payment Date"). The

responsibility of the LC Issuer to the Borrower and each Lender shall

be only to determine that the documents (including each demand for

payment) delivered under each Facility LC in connection with such

presentment shall be in conformity in all material respects with such

Facility LC. The LC Issuer shall endeavor to exercise the same care in

the issuance and administration of the Facility LCs as it does with

respect to letters of credit in which no participations are granted, it

being understood that in the absence of any gross negligence or willful

misconduct by the LC Issuer, each Lender shall be unconditionally and

irrevocably liable without regard to the occurrence of any Default or

any condition precedent whatsoever, to reimburse the LC Issuer on

demand for (i) such Lender's Pro Rata Share of the amount of each

payment made by the LC Issuer under each Facility LC to the extent such

amount is not reimbursed by the Borrower pursuant to Section 2.19.6

below, plus (ii) interest on the foregoing amount to be reimbursed by

such Lender, for each day from the date of the LC Issuer's demand for

such reimbursement (or, if such demand is made after 11:00 a.m.

(Indianapolis time) on such date, from the next succeeding Business

Day) to the date on which such Lender pays the amount to be reimbursed

by it, at a rate of interest per annum equal to the Federal Funds

Effective Rate for the first three days and, thereafter, at a rate of

interest equal to the rate applicable to Floating Rate Advances.

2.19.6. Reimbursement by Borrower. The Borrower shall be

irrevocably and unconditionally obligated to reimburse the LC Issuer on

or before the applicable LC Payment Date for any amounts to be paid by

the LC Issuer upon any drawing under any Facility LC, without

presentment, demand, protest or other formalities of any kind; provided

that neither the Borrower nor any Lender shall hereby be precluded from

asserting any claim for direct (but not consequential) damages suffered

by the Borrower or such Lender to the extent, but only to the extent,

caused by (i) the willful misconduct or gross negligence of the LC

Issuer in determining whether a request presented under any Facility LC

issued by it complied with the terms of such Facility LC or (ii) the LC

Issuer's failure to pay under any Facility LC issued by it after the

presentation to it of a request strictly complying with the terms and

conditions of such Facility LC. All such amounts paid by the LC Issuer

and remaining unpaid by the Borrower shall bear interest, payable on

demand, for each day until paid at a rate per annum equal to (x) the

rate applicable to Floating Rate Advances for such day if such day

falls on or before the applicable LC Payment Date and (y) the sum of 2%

plus the rate applicable to Floating Rate Advances for such day if such

day falls after such LC Payment Date. The LC Issuer will pay to each

Lender

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ratably in accordance with its Pro Rata Share all amounts received by

it from the Borrower for application in payment, in whole or in part,

of the Reimbursement Obligations in respect of any Facility LC issued

by the LC Issuer, but only to the extent such Lender has made payment

to the LC Issuer in respect of such Facility LC pursuant to Section

2.19.5. Subject to the terms and conditions of this Agreement

(including without limitation the submission of a Borrowing Notice in

compliance with Section 2.8 and the satisfaction of the applicable

conditions precedent set forth in Article IV), the Borrower may request

an Advance hereunder for the purpose of satisfying any Reimbursement

Obligation.

2.19.7. Obligations Absolute. The Borrower's obligations

under this Section 2.19 shall be absolute and unconditional under any

and all circumstances and irrespective of any setoff, counterclaim or

defense to payment which the Borrower may have or have had against the

LC Issuer, any Lender or any beneficiary of a Facility LC. The Borrower

further agrees with the LC Issuer and the Lenders that the LC Issuer

and the Lenders shall not be responsible for, and the Borrower's

Reimbursement Obligation in respect of any Facility LC shall not be

affected by, among other things, the validity or genuineness of

documents or of any endorsements thereon, even if such documents should

in fact prove to be in any or all respects invalid, fraudulent or

forged, or any dispute between or among the Borrower, any of its

Affiliates, the beneficiary of any Facility LC or any financing

institution or other party to whom any Facility LC may be transferred

or any claims or defenses whatsoever of the Borrower or of any of its

Affiliates against the beneficiary of any Facility LC or any such

transferee. The LC Issuer shall not be liable for any error, omission,

interruption or delay in transmission, dispatch or delivery of any

message or advice, however transmitted, in connection with any Facility

LC. The Borrower agrees that any action taken or omitted by the LC

Issuer or any Lender under or in connection with each Facility LC and

the related drafts and documents, if done without gross negligence or

willful misconduct, shall be binding upon the Borrower and shall not

put the LC Issuer or any Lender under any liability to the Borrower.

Nothing in this Section 2.19.7 is intended to limit the right of the

Borrower to make a claim against the LC Issuer for damages as

contemplated by the proviso to the first sentence of Section 2.19.6.

2.19.8. Actions of LC Issuer. The LC Issuer shall be entitled

to rely, and shall be fully protected in relying, upon any Facility LC,

draft, writing, resolution, notice, consent, certificate, affidavit,

letter, cablegram, telegram, telecopy, telex or teletype message,

statement, order or other document believed by it to be genuine and

correct and to have been signed, sent or made by the proper Person or

Persons, and upon advice and statements of legal counsel, independent

accountants and other experts selected by the LC Issuer. The LC Issuer

shall be fully justified in failing or refusing to take any action

under this Agreement unless it shall first have received such advice or

concurrence of the Required Lenders as it reasonably deems appropriate

or it shall first be indemnified to its reasonable satisfaction by the

Lenders against any and all liability and expense which may be incurred

by it by reason of taking or continuing to take any such action.

Notwithstanding any other provision of this Section 2.19, the LC Issuer

shall in all cases be fully protected in acting, or in refraining from

acting, under this Agreement in accordance with a request of the

Required Lenders, and such request and any action taken or failure to

act pursuant thereto shall be binding upon the Lenders and any future

holders of a participation in any Facility LC.

2.19.9. Indemnification. The Borrower hereby agrees to

indemnify and hold harmless each Lender, the LC Issuer and the Agent,

and their respective directors, officers, agents and

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employees from and against any and all claims and damages, losses,

liabilities, costs or expenses which such Lender, the LC Issuer or the

Agent may incur (or which may be claimed against such Lender, the LC

Issuer or the Agent by any Person whatsoever) by reason of or in

connection with the issuance, execution and delivery or transfer of or

payment or failure to pay under any Facility LC or any actual or

proposed use of any Facility LC, including, without limitation, any

claims, damages, losses, liabilities, costs or expenses which the LC

Issuer may incur by reason of or in connection with (i) the failure of

any other Lender to fulfill or comply with its obligations to the LC

Issuer hereunder (but nothing herein contained shall affect any rights

the Borrower may have against any defaulting Lender) or (ii) by reason

of or on account of the LC Issuer issuing any Facility LC which

specifies that the term "beneficiary" included therein includes any

successor by operation of law of the named beneficiary, but which

Facility LC does not require that any drawing by any such successor

beneficiary be accompanied by a copy of a legal document, satisfactory

to the LC Issuer, evidencing the appointment of such successor

beneficiary; provided that the Borrower shall not be required to

indemnify any Lender, the LC Issuer or the Agent for any claims,

damages, losses, liabilities, costs or expenses to the extent, but only

to the extent, caused by (x) the willful misconduct or gross negligence

of the LC Issuer in determining whether a request presented under any

Facility LC complied with the terms of such Facility LC or (y) the LC

Issuer's failure to pay under any Facility LC after the presentation to

it of a request strictly complying with the terms and conditions of

such Facility LC. Nothing in this Section 2.19.9 is intended to limit

the obligations of the Borrower under any other provision of this

Agreement.

2.19.10. Lenders' Indemnification Each Lender shall, ratably

in accordance with its Pro Rata Share, indemnify the LC Issuer, its

affiliates and their respective directors, officers, agents and

employees (to the extent not reimbursed by the Borrower) against any

cost, expense (including reasonable counsel fees and disbursements),

claim, demand, action, loss or liability (except such as result from

such indemnitees' gross negligence or willful misconduct or the LC

Issuer's failure to pay under any Facility LC after the presentation to

it of a request strictly complying with the terms and conditions of the

Facility LC) that such indemnitees may suffer or incur in connection

with this Section 2.19 or any action taken or omitted by such

indemnitees hereunder.

2.19.11. Facility LC Collateral Account. The Borrower agrees

that it will, upon the request of the Agent or the Required Lenders and

until the final expiration date of any Facility LC and thereafter as

long as any amount is payable to the LC Issuer or the Lenders in

respect of any Facility LC, maintain a special collateral account

pursuant to arrangements satisfactory to the Agent (the "Facility LC

Collateral Account") at the Agent's office at the address specified

pursuant to Article XIII, in the name of such Borrower but under the

sole dominion and control of the Agent, for the benefit of the Lenders

and in which such Borrower shall have no interest other than as set

forth in Section 8.1. The Borrower hereby pledges, assigns and grants

to the Agent, on behalf of and for the ratable benefit of the Lenders

and the LC Issuer, a security interest in all of the Borrower's right,

title and interest in and to all funds which may from time to time be

on deposit in the Facility LC Collateral Account to secure the prompt

and complete payment and performance of the Obligations. The Agent will

invest any funds on deposit from time to time in the Facility LC

Collateral Account in certificates of deposit of Bank One having a

maturity not exceeding 30 days. Nothing in this Section 2.19.11 shall

either obligate the Agent to require the Borrower to deposit any funds

in the Facility LC Collateral Account or limit the right of the Agent

to release any funds held in the Facility LC Collateral Account in each

case other than as required by Section 8.1.

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2.19.12. Rights as a Lender. In its capacity as a Lender, the

LC Issuer shall have the same rights and obligations as any other

Lender.

2.20. Extension of Facility Termination Date. The Borrower may

request a one-year extension of the Facility Termination Date by submitting a

request for an extension to the Agent (an "Extension Request") no more than 90

and no less than 30 days prior to the second anniversary of the closing of this

Agreement. Promptly upon receipt of an Extension Request, the Agent shall notify

each Lender thereof and shall request each Lender to approve the Extension

Request. Each Lender approving the Extension Request shall deliver its written

consent no later than 15 days prior to such second anniversary of the closing of

this Agreement. If the consent of each of the Lenders is received by the Agent,

the Facility Termination Date shall be extended by one year and the Agent shall

promptly notify the Borrower and each Lender of the new Facility Termination

Date.

2.21. The 1993 Direct-Pay Letter of Credit. The Enhancement Issuer

previously has issued its Letter of Credit No. ST04689 (as the same has been or

hereafter may be amended, modified, extended, supplemented and/or restated from

time to time and at any time, the "1993 Direct-Pay Letter of Credit") in the

original principal amount of $3,462,750.00 in favor of the 1993 Trustee. On the

Closing Date, the Enhancement Issuer shall issue an amendment to the 1993

Direct-Pay Letter of Credit extending the expiration date thereof to December

31, 2003. The 1993 Direct-Pay Letter of Credit secures payment of the 1993 Bonds

and is subject to the terms stated therein. The 1993 Direct-Pay Letter of Credit

is subject to the following terms and conditions and all other terms and

conditions of this Agreement concerning the Borrower's obligations with respect

to the 1993 Direct-Pay Letter of Credit:

2.21.1 Reimbursement. So long as the 1993 Direct-Pay Letter

of Credit is outstanding, the Borrower will maintain a demand deposit

account with the Agent (the "Designated Account") which the Borrower

shall designate as the account through which the transactions described

in this Section 2.21 will regularly be accomplished. On the Credit

Enhancement Business Day of each calendar month which is two (2) Credit

Enhancement Business Days prior to an Interest Payment Date for the

1993 Bonds, the Borrower will deposit into the Designated Account such

amount as may be necessary to cause the balance of the Designated

Account to be not less than the sum of (i) the anticipated amount of

interest that will be due on account of the 1993 Bonds at the next

Interest Payment Date for the 1993 Bonds, plus (ii) the amount of the

transaction fee provided for in Section 2.21.2 which will be due upon

the Enhancement Issuer's payment of the related Drawing or Drawings

under the 1993 Direct-Pay Letter of Credit, plus (iii) any balance

required under other provisions of this Agreement. On the Credit

Enhancement Business Day which is two (2) Credit Enhancement Business

Days prior to the 1993 Maturity Date, the Borrower will deposit into

the Designated Account such amount as may be necessary to cause the

balance of the Designated Account to be not less than the sum of : (i)

any amount required by this Section 2.21.2 to be deposited in

connection with the payment of interest on the 1993 Bonds, plus (ii)

the amount of outstanding principal of the 1993 Bonds that will be due

on the 1993 Maturity Date, plus (iii) the amount of the transaction fee

provided for in Section 2.21.2 which will be due upon the Enhancement

Issuer's payment of the related Drawing or Drawings under the 1993

Direct-Pay Letter of Credit, plus (iv) any balance required under other

provisions of this Agreement. Only after honoring a Drawing, the

Enhancement Issuer shall be entitled, without further authorization

from the Borrower, (1) to direct the Agent to charge, whereupon the

Agent shall charge the amount of such Drawing and the related

transaction fee to the Designated Account and shall remit such amount

to the Enhancement Issuer, and (2) to the extent that the

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balance of the Designated Account is insufficient to cover such Drawing

and the related transaction fee, to charge the amount of such Drawing

and the related transaction fee to any other deposit account maintained

by the Borrower with the Enhancement Issuer. Should the Borrower's

deposit balances with the Enhancement Issuer be insufficient to

reimburse the Enhancement Issuer for any Drawing under the 1993

Direct-Pay Letter of Credit, together with the related transaction fee,

then the Borrower shall pay to the Enhancement Issuer immediately and

unconditionally upon demand, an amount equal to the unreimbursed

portion of such Drawing and the related transaction fee, together with

interest on such amount at the Floating Rate, plus Two Percent (2%) per

annum from the date of payment of such Drawing until the amount thereof

is reimbursed to the Enhancement Issuer. In the case of any Remarketing

Drawing, the Borrower shall unconditionally pay to the Enhancement

Issuer on the ninetieth (90th) day following payment by the Enhancement

Issuer of such Drawing, or if such ninetieth day is not a Business Day,

then on the next following Business Day, any balance of the amount of

such Drawing which shall not then have been reimbursed to the

Enhancement Issuer by the payment of remarketing proceeds to the

Enhancement Issuer or otherwise, together with interest on such

portions of such Remarketing Drawing as shall not, from time to time,

have been reimbursed to the Enhancement Issuer, accrued at the Floating

Rate, plus One Percent (1%) per annum, and with interest thereafter

accrued at the Floating Rate, plus Three Percent (3%) per annum. Upon

being reimbursed in full with interest as provided in this Agreement

for any Remarketing Drawing, the Enhancement Issuer shall deliver any

Pledged Bonds that were purchased by the 1993 Trustee with the proceeds

of such Remarketing Drawing, and which shall not have previously been

delivered by the Enhancement Issuer upon sale by the Remarketing Agent,

to the 1993 Trustee for cancellation pursuant to the terms of the 1993

Trust Indenture. As used in this paragraph (and in Section 2.23, as the

context requires), the term "remarketing proceeds" means proceeds from

the resale of Pledged Bonds by the Remarketing Agent, which Pledged

Bonds shall have been tendered or deemed tendered to the 1993 Trustee

for repurchase pursuant to the terms of the 1993 Trust Indenture.

2.21.2 Commission and Transaction Fees. On each Commission

Due Date, the Borrower shall pay to the Enhancement Issuer a commission

for maintaining the 1993 Direct-Pay Letter of Credit, computed on the

adjusted 1993 Maximum Available Credit at a rate per annum equal to the

Applicable LC Fee in effect for each Commission Due Date, for the

period beginning on the Commission Due Date and ending on the next

following Commission Due Date. As used in the preceding sentence, the

term "adjusted 1993 Maximum Available Credit" means the 1993 Maximum

Available Credit as it is scheduled to increase and decrease during the

period beginning on a Commission Due Date and ending on the following

Commission Due Date by reason of anticipated draws for scheduled

payments of principal and interest on the 1993 Bonds, and assuming the

reinstatement of the availability of all Interest Drawings to the

extent provided for in the 1993 Direct-Pay Letter of Credit, provided

that for purposes of computing each annual commission, the amount of an

Interest Drawing which is subject to automatic reinstatement will be

considered to be reinstated as of the date of such Drawing. There shall

be no reduction in the amount of commission due and payable on any

Commission Due Date, nor shall any refund of commission be due the

Borrower on account of full or partial prepayment of the 1993 Bonds or

because of the cancellation of the Pledged Bonds purchased with the

proceeds of a Remarketing Drawing during the year following the

Commission Due Date as of which the amount of such commission is

established or on account of the election of the Bank not to restore

the availability of any Interest Drawing. The amount of commission due

and payable as of any Commission Due Date shall not be reduced, nor

shall any refund of the commission be due

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because of cancellation or termination of the 1993 Direct-Pay Letter of

Credit for whatever reason, except that, so long as the Borrower's

fiscal year ends on or about August 31, upon delivery to the Agent by

the Borrower of the Borrower's annual audited Financial Statements for

the Borrower's fiscal year ended prior to any Commission Due Date in

any calendar year, the commission due on that Commission Due Date shall

be recalculated on the basis of the Leverage Ratio as indicated by such

audited Financial Statements. If the amount of the commission as so

recalculated is greater or less than the amount of commission paid on

such Commission Due Date, then the Enhancement Issuer will refund to

the Borrower the excess of the amount of the commission paid on such

Commission Due Date over the commission determined in accordance with

such recalculation (and each Lender shall pay to the Agent, for the

account of the Enhancement Issuer, its Pro Rata Share of the

Enhancement Issuer's refund to the Borrower), or the Borrower will pay

to the Enhancement Issuer the excess of the commission determined in

accordance with such recalculation over the commission paid on such

Commission Due Date, such refund or such payment of additional

commission to be due within ten (10) days following delivery of such

annual audited Financial Statements. A transaction fee shall be payable

by the Borrower to the Enhancement Issuer (solely for its own account)

for each Drawing under the 1993 Direct-Pay Letter of Credit in the

amount of One-Eighth of One Percent (1/8%) of the amount of the Drawing

or Sixty-Five Dollars ($65.00), whichever is greater. Transaction fees

on account of Drawings shall be due on the day when the Drawing is paid

by the Bank. On the Business Day preceding each Commission Due Date,

the Borrower shall deposit into the Designated Account such amount as

may be necessary to cause the balance of the Designated Account to be

not less than the amount of commission due on such Commission Due Date,

plus any other amounts required to be on deposit in the Designated

Account on such date pursuant to other provisions of this Agreement.

The Enhancement Issuer shall be entitled, without further authorization

from the Borrower, to direct the Agent to charge the amount of the

commission due on each Commission Due Date to the Designated Account,

and if the balance of the Designated Account is insufficient to satisfy

the entire amount then due to the Enhancement Issuer on account of the

commission, the Enhancement Issuer may, without further authorization

of the Borrower, charge such deficiency to any other deposit account of

the Borrower maintained with the Enhancement Issuer. All commissions

and fees payable under the terms of this Section 2.21(ii) shall be

payable with interest at the Floating Rate, plus Two Percent (2%) per

annum from the date due until paid. If the 1993 Direct-Pay Letter of

Credit is transferred to a new beneficiary pursuant to the terms

thereof, then the Borrower covenants and agrees to pay to the

Enhancement Issuer (solely for its own account) promptly upon its

demand a transfer fee in the amount then customarily assessed by the

Enhancement Issuer for transfers of letters of credit of the same type

and amount as the 1993 Direct-Pay Letter of Credit.

2.21.3 Remarketing Reimbursement Loan-1993 Bonds. At the

option of the Borrower exercised by a written notice to the Enhancement

Issuer given not less than ten (10) days prior to the expiration of a

period of ninety (90) days following a Remarketing Drawing on the 1993

Direct-Pay Letter of Credit (which expiration date is hereafter

referred to in this subsection as the "reimbursement due date"), the

Enhancement Issuer shall make a loan (a "Remarketing Reimbursement

Loan-1993 Bonds") to the Borrower on the reimbursement due date,

provided that the 1993 Direct-Pay Letter of Credit as it may have been

extended from time to time shall not then have expired or been

terminated, and provided further that no Default or Unmatured Default

shall have occurred and is then continuing. Each Remarketing

Reimbursement Loan-1993 Bonds shall be in an amount not in excess of

the amount due to the Enhancement Issuer from the Borrower on the

related reimbursement due date on account of the portion of the

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Remarketing Drawing representing the Principal Amount. The term

"Principal Amount" is used in the preceding sentence as that term is

defined in the 1993 Direct-Pay Letter of Credit. Proceeds of the

Remarketing Reimbursement Loan-1993 Bonds shall be used solely to

reimburse the Enhancement Issuer for all or a portion of the Principal

Amount of the related Remarketing Drawing for the 1993 Bonds which have

not been sold by the Remarketing Agent subsequent to the Remarketing

Drawing. Each Remarketing Reimbursement Loan-1993 Bonds shall be

represented by the promissory note of the Borrower (a "Remarketing

Reimbursement Note-1993 Bonds"), delivered to the Enhancement Issuer

contemporaneously with the making of the Remarketing Reimbursement

Loan-1993 Bonds, with each such note substantially in the form of the

Term Note, with the following exceptions:

(a) No Remarketing Reimbursement Loan-1993 Bonds will be made

after the earlier of the expiration or termination of the 1993

Direct-Pay Letter of Credit;

(b) The final maturity of such Remarketing Reimbursement Note-1993

Bonds shall be a date which is the earlier of (1) 288 days

after the date the Remarketing Reimbursement Loan-1993 Bonds

evidenced by such Note was made, or (2) the date that the 1993

Direct-Pay Letter of Credit (as it may have been extended from

time to time in the Required Lenders' sole discretion) expires

or is terminated;

(c) Each Remarketing Reimbursement Note-1993 Bonds shall bear

interest prior to maturity at a per annum rate equal to the

Floating Rate plus One Percent (1%) and after maturity at a

per annum rate equal to the Floating Rate plus Three Percent

(3%) per annum;

(d) All accrued interest on the outstanding principal balance of

the Remarketing Reimbursement Loan-1993 Bonds is due and

payable prior to maturity on each Payment Date, and after

maturity, all interest is due and payable as accrued and

without demand; and

(e) The principal of each Remarketing Reimbursement Note-1993

Bonds shall be payable prior to maturity on the same dates as

the scheduled principal payments under the 1993 Bonds

purchased with the related Remarketing Drawing would have

become due and payable, and the principal amount payable on

each such date shall be equal to the principal payments

scheduled to have been paid on the same date on the 1993 Bonds

redeemed with the related Remarketing Drawing.

2.22 The 1994 Refunding Direct-Pay Letter of Credit. The

Enhancement Issuer previously has issued its Letter of Credit No. ST04846 (as

the same has been or hereafter may be amended, modified, extended, supplemented

and/or restated from time to time and at any time, the "1994 Refunding

Direct-Pay Letter of Credit") in the original principal amount of $2,976,750 in

favor of the 1994 Refunding Trustee for the account of the Borrower. On the

Closing Date, the Enhancement Issuer shall issue an amendment to the 1994

Refunding Direct-Pay Letter of Credit extending the expiration date thereof to

September 1, 2004. The 1994 Refunding Direct-Pay Letter of Credit secures

payment of the 1994 Refunding Bonds and is subject to the terms stated therein.

The 1994 Refunding Direct-Pay Letter of Credit is subject to the following terms

and conditions, and all other terms and conditions of this Agreement concerning

the Borrower's obligations with respect to the 1994 Refunding Direct-Pay Letter

of Credit:

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2.22.1 Reimbursement. So long as the 1994 Refunding

Direct-Pay Letter of Credit is outstanding, the Borrower will maintain

the Designated Account through which the transactions described in this

Section 2.22 will regularly be accomplished. On the Credit Enhancement

Business Day of each calendar month which is two (2) Credit Enhancement

Business Days prior to an Interest Payment Date for the 1994 Refunding

Bonds, the Borrower will deposit into the Designated Account such

amount as may be necessary to cause the balance of the Designated

Account to be not less than the sum of (i) the anticipated amount of

interest that will be due on account of the 1994 Refunding Bonds at the

next Interest Payment Date for the 1994 Refunding Bonds, plus (ii) the

amount of the transaction fee provided for in Section 2.22.2 which will

be due upon the Enhancement Issuer's payment of the related Drawing or

Drawings under the 1994 Refunding Direct-Pay Letter of Credit, plus

(iv) any balance required under other provisions of this Agreement. On

the Credit Enhancement Business Day which is two (2) Credit Enhancement

Business Days prior to the 1994 Maturity Date, the Borrower will

deposit into the Designated Account such amount as may be necessary to

cause the balance of the Designated Account to be not less than the sum

of: (a) any amount required by this Section 2.22.1 to be deposited in

connection with the payment of interest on the 1994 Refunding Bonds,

plus (b) the amount of outstanding principal of the 1994 Refunding

Bonds that will be due on the 1994 Maturity Date, plus (c) the amount

of the transaction fee provided for in Section 2.22.2 which will be due

upon the Enhancement Issuer's payment of the related Drawing or

Drawings under the 1994 Refunding Direct-Pay Letter of Credit, plus (d)

any balance required under other provisions of this Agreement. Only

after honoring a Drawing, the Enhancement Issuer shall be entitled,

without further authorization from the Borrower, (1) to direct the

Agent to charge, whereupon the Agent shall charge the amount of such

Drawing and the related transaction fee to the Designated Account and

shall remit such amount to the Enhancement Issuer, and (2) to the

extent that the balance of the Design