Exhibit 10

FIRST AMENDMENT TO SECOND AMENDED AND
RESTATED CREDIT AGREEMENT

     THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(“First Amendment”) is executed as of the 24th day of January, 2003 (the “First
Amendment Effective Date”), by DMI FURNITURE, INC. a Delaware corporation
(“Borrower”), the Lenders from time to time party to the Agreement and BANK ONE,
NA, a national banking association having its principal office in Chicago,
Illinois, as agent for the Lenders (the “Agent”).

Recitals

     1.     Borrower, the Lenders from time to time party thereto and the Agent
are parties to a Second Amended and Restated Credit Agreement, dated as of
November 22, 2002 (the “Agreement”).

     2.     Borrower has requested the Lenders and the Agent to agree to various
amendments to the Agreement. Subject to the terms and conditions stated in this
First Amendment, the Lenders and the Agent are willing to modify and amend the
Agreement, as provided in this First Amendment.

Agreement

     NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements herein, and each act performed and to be performed hereunder,
Borrower, the Lenders and the Agent agree as follows:

     1.     Definitions. All terms used in this First Amendment that are defined
in the Agreement, and that are not otherwise defined herein, shall have the same
meanings in this First Amendment as are ascribed to them in the Agreement.

     2.     Amendments to the Agreement.

          (a) Amended Definitions. The following definitions, as set forth in
Article I of the Agreement, are amended, and as so amended, restated as of the
First Amendment Effective Date to read in their respective entireties as
follows:

  ““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.,

 

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  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 last day of the third Fiscal Month
of each fiscal year of the Borrower and ending on the second to last day of the
sixth Fiscal Month of the same fiscal year of the Borrower, and during the
period beginning on the last day of the seventh Fiscal Month of each fiscal year
of the Borrower and ending on the second to 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.”     ““Fixed Charge Coverage Ratio” means, with respect to the
Borrower and its Subsidiaries for each period of four (4) consecutive fiscal
quarters ending on the last day of a fiscal quarter, the ratio of Consolidated
EBITDA for such period to Consolidated Fixed Charges for such period.”    
““Maximum Availability” means, as of any date of determination, the lesser of:
(i) $22,000,000.00; or (ii) the Borrowing Base, minus the LC Obligations in
respect of Facility LCs.”     “Pro Rata Share” (i) when used in reference to the
Revolving Loan and Advances thereunder, and when used in Section 2.5, means,
with respect to each Lender, a portion equal to a fraction the numerator of
which is such Lender’s Revolving Commitment and the denominator of which is the
aggregate Revolving Commitments of all Lenders, (ii) when used in Section 2.19
and otherwise in reference to any Facility LC and LC Obligations in respect of
Facility LCs, means, with respect to each Lender, a portion equal to a fraction
the numerator of which is such Lender’s

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  LC Commitment and the denominator of which is the aggregate LC Commitments of
all Lenders, (iii) when used in Section 11.2, means, with respect to each
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; and
(iv) for all other purposes, means, with respect to each Lender, the percentage
set opposite such Lender’s signature on this Agreement.

          (b) Amendment of Section 2.19.1. Section 2.19.1 of the Agreement, is
amended, and as so amended, restated in its entirety as of the First Amendment
Effective Date to read as follows:

  “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)
$4,000,000.00 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.”

          (c) Amendment of Section 6.26. Section 6.26 of the Agreement, is
amended, and as so amended, restated in its entirety as of the First Amendment
Effective Date to read as follows:

  “6.26 Survey. Not later than February 15, 2003, the Borrower shall provide to
the Agent, at the Borrower’s expense, a boundary survey of the real estate
subject to the 1997 Project Mortgage. If such boundary survey suggests that any
improvements are located on such real estate, the Borrower shall provide to the
Agent, at the Borrower’s expense and within forty-five (45) days after the
Agent’s request, an ALTA minimum standard survey of such real estate. Upon
completion of such surveys, Borrower shall provide to the Agent, at the
Borrower’s expense, a mortgagee’s title

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  insurance policy in an amount acceptable to the Agent insuring the Agent’s
interest under the 1997 Project Mortgage on the American Land Title Association
form of mortgagee’s title policy (1992 Revision), subject to an ALTA form of
comprehensive endorsement, an ALTA form 3.1 zoning endorsement, a mechanics lien
endorsement, an access endorsement and such other endorsements as the Agent may
reasonably request. The coverage provided by the title insurance policy shall
not be subject to the standard exceptions as to rights of parties in possession
and matters which would be disclosed by survey, easements not shown by the
public records and mechanic’s liens not shown by the public records, and
otherwise the coverage shall be subject to no exceptions other than
(A) easements and use restrictions and encroachments disclosed by survey which
do not materially and adversely affect the value or marketability of the real
estate or the usefulness of the real estate in the operations of the Company and
(B) Permitted Liens.”

     3.     From and after the First Amendment Effective Date, each Lender’s
respective LC Commitment, Revolving Commitment, and Term Loan Commitment is as
follows:

                  Commitment/Pro Rata Share   Bank One, NA Fifth Third Bank,
Kentucky, Inc.

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LC Commitment
  $ 2,950,000.00     $ 1,050,000.00  

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Revolving Commitment
  $ 15,000,000.00     $ 7,000,000.00  

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Term Loan Commitment
  $ 2,613,000.00     $ 1,407,000.00  

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     4.     Representations and Warranties. Borrower represents and warrants to
the Lenders that:

     (a)(i) The execution, delivery and performance of this First Amendment and
all agreements and documents delivered pursuant hereto by Borrower have been
duly authorized by all necessary corporate action, as applicable, and does not
and will not violate any provision of any law, rule, regulation, order,
judgment, injunction, or writ presently in effect applying to Borrower, or the
Articles of Incorporation of Borrower, or result in a breach of or constitute a
default under any material agreement, lease or instrument to which Borrower is a
party or by which Borrower or any of the properties of Borrower may be bound or
affected; (ii) no authorization, consent, approval, license, exemption or filing
of a registration with any court or governmental department, agency or
instrumentality is or will be necessary to the valid execution, delivery or
performance by Borrower of this First Amendment and all agreements and documents
delivered pursuant hereto; and (iii) this First Amendment and all agreements and
documents delivered pursuant hereto by Borrower are the legal, valid and binding
obligations of Borrower, as a signatory thereto, and enforceable against
Borrower in accordance with the terms thereof.

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     (b) After giving effect to the amendments contained in this First
Amendment, the representations and warranties contained in Article V of the
Agreement are true and correct on and as of the First Amendment Effective Date
with the same force and effect as if made on and as of the First Amendment
Effective Date, except that the reference to the financial statements in
Section 5.4 of the Agreement shall be to the most recent financial statements of
Borrower provided to the Agent prior to the First Amendment Effective Date.

     (c) No Event of Default has occurred and is continuing or will exist under
the Agreement as of the First Amendment Effective Date.

     5.     Conditions. The obligation of the Lenders and the Agent to execute
and to perform this First Amendment shall be subject to full satisfaction of all
of the following conditions precedent on or before the First Amendment Effective
Date:

          (a) Copies, certified as of the First Amendment Effective Date, of
such corporate documents and resolutions of Borrower evidencing necessary action
by Borrower to authorize the execution and performance of this First Amendment
and all other agreements or documents delivered pursuant hereto.

          (b) This First Amendment shall have been duly executed by Borrower and
delivered to the Agent and executed by the Agent and the Lenders.

          (c) Borrower shall have executed and delivered to the Agent for the
benefit of Bank One an Amended and Restated Revolving Note in form and substance
the same as Exhibit A to this First Amendment.

          (d) Concurrently with execution of this First Amendment, Borrower
shall have paid to Bank One an arrangement fee as provided in the letter
agreement between Borrower and Bank One of even date.

          (e) Borrower shall have paid all fees and expenses of the Agent’s
counsel, Baker & Daniels, incurred by the Agent prior to the First Amendment
Effective Date, in the amount of $25,147.35.

     6.     Binding on Successors and Assigns. All of the terms and provisions
of this First Amendment shall be binding upon and inure to the benefit of the
parties hereto, their respective successors, assigns and legal representatives.

     7.     Governing Law/Entire Agreement/Survival. This First Amendment is a
contract made under, and shall be governed by and construed in accordance with,
the laws of the State of Indiana applicable to contracts made and to be
performed entirely with such state and without giving effect to the choice of
law principals of such state. This First Amendment constitutes and expresses the
entire understanding between the parties hereto with respect to the subject
matter hereof, and supersedes all prior agreements and understandings,
commitments, inducements or conditions, whether expressed or implied, oral or
written. All covenants, agreements, undertakings, representations and warranties
made in this First Amendment shall

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survive the execution and delivery of this First Amendment, and shall not be
affected by any investigation made by any party.

     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed and delivered as of the First Amendment Effective Date.

  BANK ONE, NA, as a Lender, the LC
Issuer, the Enhancement Issuer and the
Agent     By:_____________________________________
      Robert E. McElwain, First Vice President    
  FIFTH THIRD BANK, KENTUCKY, INC     By:_____________________________________
      Edward B. Martin, Vice President    
  DMI FURNITURE, INC     By:_____________________________________
      Phillip J. Keller, Vice President Finance and
      Chief Financial Officer    

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GUARANTOR CONSENT

     The undersigned, being a guarantor of payment of the Obligations (the
“Guarantor”) unconditionally consents to the execution and performance of the
First Amendment to Second Amended and Restated Credit Agreement by Borrower and
agrees that the same shall not impair, diminish, terminate or affect in any way,
or provide any defense to the validity or enforcement of the Second Amended and
Restated Guaranty, dated as of November 22, 2002 (the “Guaranty”), and hereby
acknowledges, affirms and agrees that the Guaranty is in favor of the Agent for
the benefit of the Lenders under the Agreement.

      Dated:  January 24, 2003   DMI MANAGEMENT, INC.      
By:________________________       Printed:_____________________      
Title:_______________________

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