Document:

FIXED RATE SENIOR NOTE

REGISTERED                                                      REGISTERED
No. FXR                                                         U.S. $
                                                                CUSIP: 61744Y561

     Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the
issuer or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name
as requested by an authorized representative of The Depository Trust Company
and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.

                                      A-1

<PAGE>

                                         MORGAN STANLEY DEAN WITTER & CO.
                                     SENIOR GLOBAL MEDIUM-TERM NOTE, SERIES C
                                                   (Fixed Rate)

                                           STOCK PARTICIPATION ACCRETING
                                  REDEMPTION QUARTERLY-PAY SECURITIES ("SPARQS")

                                            8% SPARQS DUE JUNE 30, 2003
                                             MANDATORILY EXCHANGEABLE
                                           FOR SHARES OF COMMON STOCK OF
                                                ORACLE CORPORATION
<TABLE>
<S>                           <C>                          <C>                         <C>
------------------------------------------------------------------------------------------------------------------
ORIGINAL ISSUE DATE:          INITIAL REDEMPTION           INTEREST RATE: 8 %           MATURITY DATE:
   July   , 2001                 DATE: See "MSDW              per annum (equivalent        June 30, 2003
                                 Call Right" below.           to $     per annum per
                                                              SPARQS)
------------------------------------------------------------------------------------------------------------------
INTEREST ACCRUAL              INITIAL REDEMPTION           INTEREST PAYMENT             OPTIONAL
   DATE: July   , 2001           PERCENTAGE: See              DATES: Each March            REPAYMENT
                                 "MSDW Call Right"            30, June 30, September       DATE(S):  N/A
                                 below.                       30 and December 30,
                                                              beginning September
                                                              30, 2001
------------------------------------------------------------------------------------------------------------------
SPECIFIED CURRENCY:           ANNUAL REDEMPTION            INTEREST PAYMENT             APPLICABILITY OF
   U.S. Dollars                  PERCENTAGE                   PERIOD: Quarterly            MODIFIED
                                 REDUCTION: N/A                                            PAYMENT UPON
                                                                                           ACCELERATION:
                                                                                           N/A
------------------------------------------------------------------------------------------------------------------
IF SPECIFIED                  REDEMPTION NOTICE            APPLICABILITY OF             If yes, state Issue Price:
   CURRENCY OTHER                PERIOD: At least 15          ANNUAL INTEREST
   THAN U.S. DOLLARS,            days but no more than        PAYMENTS: N/A
   OPTION TO ELECT               30 days.  See "MSDW
   PAYMENT IN U.S.               Call Right" below.
   DOLLARS: N/A
------------------------------------------------------------------------------------------------------------------
EXCHANGE RATE                 TAX REDEMPTION                                            ORIGINAL YIELD TO
   AGENT: N/A                    AND PAYMENT OF                                            MATURITY: N/A
                                 ADDITIONAL
                                 AMOUNTS: No
------------------------------------------------------------------------------------------------------------------
OTHER PROVISIONS:             If yes, state Initial Offering
   See below                  Date: N/A
------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S>                                     <C>
Issue Price..........................   $           per SPARQS

Record Dates.........................   Notwithstanding the definition of "Record Date" on page 16 hereof, the
                                        Record Date for each Interest Payment

                                                        A-2

<PAGE>

                                        Date, including the Interest Payment Date scheduled to occur on the
                                        Maturity Date, shall be the date 10 calendar days prior to such Interest
                                        Payment Date, whether or not that date is a Business Day; provided,
                                        however, that in the event that the Issuer exercises the MSDW Call Right,
                                        no Interest Payment Date shall occur after the MSDW Notice Date, except for
                                        any Interest Payment Date for which the MSDW Notice Date falls on or after
                                        the "ex-interest" date for the related interest payment, in which case the
                                        related interest payment shall be made on such Interest Payment Date; and
                                        provided, further, that accrued but unpaid interest payable on the Call
                                        Date, if any, shall be payable to the person to whom the Call Price is
                                        payable. The "ex- interest" date for any interest payment is the date on
                                        which purchase transactions in the SPARQS no longer carry the right to
                                        receive such interest payment.

                                        In the event that the Issuer exercises the MSDW Call Right and the MSDW
                                        Notice Date falls before the "ex- interest" date for an interest payment,
                                        so that as a result a scheduled Interest Payment Date will not occur, the
                                        Issuer shall cause the Calculation Agent to give notice to (i) the Trustee
                                        and (ii) DTC, in each case in the manner described in the third paragraph
                                        under "MSDW Call Right" below, that no Interest Payment Date will occur
                                        after such MSDW Notice Date.

Denominations........................   $            and integral multiples thereof

MSDW Call Right......................   On any scheduled Trading Day on or after July 22, 2002, the Issuer may
                                        call the SPARQS, in whole but not in part, for mandatory exchange for the
                                        Call Price (as defined below) paid in cash (together with accrued but
                                        unpaid interest) on the Call Date.

                                        On the MSDW Notice Date (as defined below), the Issuer shall give notice of
                                        the Issuer's exercise of the MSDW Call Right (i) to the holder of this
                                        SPARQS by mailing notice of such exercise by first class mail, postage
                                        prepaid, specifying the date (the "Call Date") on which the Issuer shall
                                        effect such exchange at the holder's last address as it shall appear upon
                                        the registry books, (ii) to the Trustee by telephone or facsimile confirmed
                                        by mailing such notice to the Trustee by first class mail,

                                                        A-3

<PAGE>

                                        postage prepaid, at its New York office and (iii) to DTC in accordance with
                                        the applicable procedures set forth in the Letter of Representations
                                        related to this SPARQS. Any notice which is mailed in the manner herein
                                        provided shall be conclusively presumed to have been duly given, whether or
                                        not the holder of this SPARQS receives the notice. Failure to give notice
                                        by mail or any defect in the notice to the holder of any SPARQS shall not
                                        affect the validity of the proceedings for the exercise of the MSDW Call
                                        Right with respect to any other SPARQS.

                                        The notice of the Issuer's exercise of the MSDW Call Right shall specify
                                        (i) the Call Date, (ii) the Call Price payable per SPARQS, (iii) the amount
                                        of accrued but unpaid interest payable per SPARQS on the Call Date, (iv)
                                        whether any subsequently scheduled Interest Payment Date shall no longer be
                                        an Interest Payment Date as a result of the exercise of the MSDW Call
                                        Right, (v) the place or places of payment of such Call Price, (vi) that
                                        such delivery will be made upon presentation and surrender of this SPARQS
                                        and (vii) that such exchange is pursuant to the MSDW Call Right.

                                        The notice of the Issuer's exercise of the MSDW Call Right shall be given
                                        by the Issuer or, at the Issuer's request, by the Trustee in the name and
                                        at the expense of the Issuer.

                                        If this SPARQS is so called for mandatory exchange by the Issuer, then the
                                        cash Call Price and any accrued but unpaid interest on this SPARQS to be
                                        delivered to the holder of this SPARQS shall be delivered on the Call Date
                                        fixed by the Issuer and set forth in its notice of its exercise of the MSDW
                                        Call Right, upon delivery of the SPARQS to the Trustee. The Issuer shall,
                                        or shall cause the Calculation Agent to, deliver such cash to the Trustee
                                        for delivery to the holders of this SPARQS.

                                        If this SPARQS is not surrendered for exchange on the Call Date, it shall
                                        be deemed to be no longer Outstanding under, and as defined in, the Senior
                                        Indenture (as defined below) after the Call Date, except with respect to
                                        the holder's right to receive cash due in connection with the MSDW Call
                                        Right.

                                                        A-4

<PAGE>

MSDW Notice Date.....................   The scheduled Trading Day on which the Issuer issues its notice of
                                        mandatory exchange, which must be at least 15 but not more than 30 days
                                        prior to the Call Date.

Call Date............................   The scheduled Trading Day on or after                  and on or prior to
                                        the Maturity Date specified in the Issuer's notice of mandatory exchange,
                                        on which the Issuer shall deliver cash to holders of SPARQS for mandatory
                                        exchange.

Call Price...........................   The Call Price with respect to any Call Date is an amount of cash per each
                                        $          principal amount of this SPARQS, as calculated by the
                                        Calculation Agent, such that the sum of the present values of all cash
                                        flows on each $        principal amount of this SPARQS to and including the
                                        Call Date (i.e., the Call Price and all of the interest payments on each
                                        SPARQS), discounted to the Original Issue Date from the applicable payment
                                        date at the Yield to Call rate of   % per annum computed on the basis of a
                                        360-day year of twelve 30-day months, equals the Issue Price.

Exchange at Maturity.................   At maturity, subject to a prior call of this SPARQS for cash in an amount
                                        equal to the Call Price by the Issuer as described under "MSDW Call Right"
                                        above, upon delivery of this SPARQS to the Trustee, each $       principal
                                        amount of this SPARQS shall be applied by the Issuer as payment for a
                                        number of shares of the common stock, $0.01 par value ("Oracle Stock"), of
                                        Oracle Corporation ("Oracle") at the Exchange Ratio.

                                        The number of shares of Oracle Stock to be delivered at maturity shall be
                                        subject to any applicable adjustments (i) to the Exchange Ratio and (ii) in
                                        the Exchange Property, as defined in paragraph 5 under "Antidilution
                                        Adjustments" below, to be delivered instead of, or in addition to, such
                                        Oracle Stock as a result of any corporate event described under
                                        "Antidilution Adjustments" below, in each case, required to be made through
                                        the close of business on the second scheduled Trading Day prior to
                                        maturity.

                                        All calculations with respect to the Exchange Ratio and Call Price for the
                                        SPARQS shall be rounded to the nearest

                                                        A-5

<PAGE>

                                        one hundred-thousandth, with five one-millionths rounded upwards (e.g.,
                                        .876545 would be rounded to .87655); all dollar amounts related to the Call
                                        Price resulting from such calculations shall be rounded to the nearest one
                                        ten- thousandth, with five one hundred-thousandths rounded upwards (e.g.,
                                        .76545 would be rounded to .7655); and all dollar amounts paid with respect
                                        to the Call Price on the aggregate number of SPARQS shall be rounded to the
                                        nearest cent, with one-half cent rounded upwards.

                                        The Issuer shall, or shall cause the Calculation Agent to, provide written
                                        notice to the Trustee at its New York Office and to the Depositary, on
                                        which notice the Trustee and Depositary may conclusively rely, on or prior
                                        to 10:30 a.m. on the Trading Day immediately prior to maturity of this
                                        SPARQS, of the amount of Oracle Stock (or the amount of Exchange Property)
                                        to be delivered with respect to each $           principal amount of this
                                        SPARQS and of the amount of any cash to be paid in lieu of any fractional
                                        share of Oracle Stock (or of any other securities included in Exchange
                                        Property, if applicable); provided that, if the maturity date of this
                                        SPARQS is accelerated (x) because of the consummation of a Reorganization
                                        Event (as defined in paragraph 5 of "Antidilution Adjustments" below) where
                                        the Exchange Property consists only of cash or (y) because of an
                                        Acceleration Event or otherwise, the Issuer shall give notice of such
                                        acceleration as promptly as possible, and in no case later than two
                                        Business Days following such deemed maturity date, (i) to the holder of
                                        this SPARQS by mailing notice of such acceleration by first class mail,
                                        postage prepaid and (ii) to the Trustee and the Depositary by telephone or
                                        facsimile confirmed by mailing such notice to the Trustee at its New York
                                        office and to the Depositary by first class mail, postage prepaid. Any
                                        notice that is mailed in the manner herein provided shall be conclusively
                                        presumed to have been duly given, whether or not the holder of this SPARQS
                                        receives the notice. If the maturity of this SPARQS is accelerated in the
                                        manner described in the immediately preceding sentence, no interest on the
                                        amounts payable with respect to this SPARQS shall accrue for the period
                                        from and after such accelerated maturity date; provided that the Issuer has
                                        deposited with the Trustee the Oracle Stock, the

                                                        A-6

<PAGE>

                                        Exchange Property or any cash due with respect to such acceleration.

                                        The Issuer shall, or shall cause the Calculation Agent to, deliver any such
                                        shares of Oracle Stock (or any Exchange Property) and cash in respect of
                                        interest and any fractional shares of Oracle Stock (or any Exchange
                                        Property) and cash otherwise due upon any acceleration described above to
                                        the Trustee for delivery to the holder. References to payment "per SPARQS"
                                        refer to each $      principal amount of this SPARQS.

                                        If this SPARQS is not surrendered for exchange at maturity, it shall be
                                        deemed to be no longer Outstanding under, and as defined in, the Senior
                                        Indenture, except with respect to the holder's right to receive the Oracle
                                        Stock (and, if applicable, any Exchange Property) due at maturity.

No Fractional Shares.................   Upon delivery of this SPARQS to the Trustee at maturity, the Issuer shall
                                        deliver the aggregate number of shares of Oracle Stock due with respect to
                                        this SPARQS, as described above, but the Issuer shall pay cash in lieu of
                                        delivering any fractional share of Oracle Stock in an amount equal to the
                                        corresponding fractional Market Price of such fraction of a share of Oracle
                                        Stock as determined by the Calculation Agent as of the second scheduled
                                        Trading Day prior to maturity of this SPARQS.

Exchange Ratio.......................   1.0, subject to adjustment for certain corporate events relating to Oracle.
                                             See "Antidilution Adjustments" below.

Market Price.........................   If Oracle Stock (or any other security for which a Market Price must be
                                        determined) is listed on a national securities exchange, is a security of
                                        the Nasdaq National Market or is included in the OTC Bulletin Board Service
                                        ("OTC Bulletin Board") operated by the National Association of Securities
                                        Dealers, Inc. (the "NASD"), the Market Price for one share of Oracle Stock
                                        (or one unit of any such other security) on any Trading Day means (i) the
                                        last reported sale price, regular way, of the principal trading session on
                                        such day on the principal United States securities exchange registered
                                        under the Securities

                                                        A-7

<PAGE>

                                        Exchange Act of 1934, as amended (the "Exchange Act"), on which Oracle
                                        Stock (or any such other security) is listed or admitted to trading or (ii)
                                        if not listed or admitted to trading on any such securities exchange or if
                                        such last reported sale price is not obtainable (even if Oracle Stock (or
                                        any such other security) is listed or admitted to trading on such
                                        securities exchange), the last reported sale price of the principal trading
                                        session on the over-the-counter market as reported on the Nasdaq National
                                        Market or OTC Bulletin Board on such day. If the last reported sale price
                                        of the principal trading session is not available pursuant to clause (i) or
                                        (ii) of the preceding sentence because of a Market Disruption Event or
                                        otherwise, the Market Price for any Trading Day shall be the mean, as
                                        determined by the Calculation Agent, of the bid prices for Oracle Stock (or
                                        any such other security) obtained from as many dealers in such security,
                                        but not exceeding three, as will make such bid prices available to the
                                        Calculation Agent. Bids of Morgan Stanley & Co. Incorporated ("MS & Co.")
                                        or any of its affiliates may be included in the calculation of such mean,
                                        but only to the extent that any such bid is the highest of the bids
                                        obtained. A "security of the Nasdaq National Market" shall include a
                                        security included in any successor to such system, and the term "OTC
                                        Bulletin Board Service" shall include any successor service thereto.

Trading Day..........................   A day, as determined by the Calculation Agent, on which trading is generally
                                        conducted on the New York Stock Exchange, Inc. ("NYSE"), the American Stock
                                        Exchange LLC, the Nasdaq National Market, the Chicago Mercantile Exchange
                                        and the Chicago Board of Options Exchange and in the over-the-counter
                                        market for equity securities in the United States.

Acceleration Event...................   If on any date the product of the Market Price per share of Oracle Stock,
                                        as determined by the Calculation Agent, and the Exchange Ratio is less than
                                        $    , the maturity date of this SPARQS shall be deemed to be accelerated
                                        to such date, and each $            principal amount of this SPARQS shall
                                        be applied by the Issuer as payment for a number of shares of Oracle Stock
                                        at the then current Exchange Ratio. See also "Antidilution Adjustments"
                                        below.

                                                        A-8

<PAGE>

Calculation Agent....................   MS & Co. and its successors.

                                        All determinations made by the Calculation Agent will be at the sole
                                        discretion of the Calculation Agent and will, in the absence of manifest
                                        error, be conclusive for all purposes and binding on the holder of this
                                        SPARQS and the Issuer.

Antidilution Adjustments.............   The Exchange Ratio shall be adjusted as follows:

                                           1. If Oracle Stock is subject to a stock split or reverse stock split,
                                        then once such split has become effective, the Exchange Ratio shall be
                                        adjusted to equal the product of the prior Exchange Ratio and the number of
                                        shares issued in such stock split or reverse stock split with respect to
                                        one share of Oracle Stock.

                                            2. If Oracle Stock is subject (i) to a stock dividend (issuance of
                                        additional shares of Oracle Stock) that is given ratably to all holders of
                                        shares of Oracle Stock or (ii) to a distribution of Oracle Stock as a
                                        result of the triggering of any provision of the corporate charter of
                                        Oracle, then once the dividend has become effective and Oracle Stock is
                                        trading ex-dividend, the Exchange Ratio shall be adjusted so that the new
                                        Exchange Ratio shall equal the prior Exchange Ratio plus the product of (i)
                                        the number of shares issued with respect to one share of Oracle Stock and
                                        (ii) the prior Exchange Ratio.

                                            3. There shall be no adjustments to the Exchange Ratio to reflect cash
                                        dividends or other distributions paid with respect to Oracle Stock other
                                        than distributions described in clauses (i), (iv) and (v) of paragraph 5
                                        below and Extraordinary Dividends as described below. A cash dividend or
                                        other distribution with respect to Oracle Stock shall be deemed to be an
                                        "Extraordinary Dividend" if such dividend or other distribution exceeds the
                                        immediately preceding non-Extraordinary Dividend for Oracle Stock by an
                                        amount equal to at least 10% of the Market Price of Oracle Stock (as
                                        adjusted for any subsequent corporate event requiring an adjustment
                                        hereunder, such as a stock split or reverse stock split) on the Trading Day
                                        preceding the ex-dividend date for the payment of such Extraordinary
                                        Dividend (the "ex-dividend date"). If an Extraordinary Dividend occurs

                                                        A-9
<PAGE>

                                        with respect to Oracle Stock, the Exchange Ratio with respect to Oracle
                                        Stock shall be adjusted on the ex- dividend date with respect to such
                                        Extraordinary Dividend so that the new Exchange Ratio shall equal the
                                        product of (i) the then current Exchange Ratio and (ii) a fraction, the
                                        numerator of which is the Market Price on the Trading Day preceding the
                                        ex-dividend date, and the denominator of which is the amount by which the
                                        Market Price on the Trading Day preceding the ex-dividend date exceeds the
                                        Extraordinary Dividend Amount. The "Extraordinary Dividend Amount" with
                                        respect to an Extraordinary Dividend for Oracle Stock shall equal (i) in
                                        the case of cash dividends or other distributions that constitute regular
                                        dividends, the amount per share of such Extraordinary Dividend minus the
                                        amount per share of the immediately preceding non-Extraordinary Dividend
                                        for Oracle Stock or (ii) in the case of cash dividends or other
                                        distributions that do not constitute regular dividends, the amount per
                                        share of such Extraordinary Dividend. To the extent an Extraordinary
                                        Dividend is not paid in cash, the value of the non-cash component shall be
                                        determined by the Calculation Agent, whose determination shall be
                                        conclusive. A distribution on Oracle Stock described in clause (i), (iv) or
                                        (v) of paragraph 5 below that also constitutes an Extraordinary Dividend
                                        shall cause an adjustment to the Exchange Ratio pursuant only to clause
                                        (i), (iv) or (v) of paragraph 5, as applicable.

                                            4. If Oracle issues rights or warrants to all holders of Oracle Stock
                                        to subscribe for or purchase Oracle Stock at an exercise price per share
                                        less than the Market Price of Oracle Stock on both (i) the date the
                                        exercise price of such rights or warrants is determined and (ii) the
                                        expiration date of such rights or warrants, and if the expiration date of
                                        such rights or warrants precedes the maturity of this SPARQS, then the
                                        Exchange Ratio shall be adjusted to equal the product of the prior Exchange
                                        Ratio and a fraction, the numerator of which shall be the number of shares
                                        of Oracle Stock outstanding immediately prior to the issuance of such
                                        rights or warrants plus the number of additional shares of Oracle Stock
                                        offered for subscription or purchase pursuant to

                                                        A-10

<PAGE>

                                        such rights or warrants and the denominator of which shall be the number of
                                        shares of Oracle Stock outstanding immediately prior to the issuance of
                                        such rights or warrants plus the number of additional shares of Oracle
                                        Stock which the aggregate offering price of the total number of shares of
                                        Oracle Stock so offered for subscription or purchase pursuant to such
                                        rights or warrants would purchase at the Market Price on the expiration
                                        date of such rights or warrants, which shall be determined by multiplying
                                        such total number of shares offered by the exercise price of such rights or
                                        warrants and dividing the product so obtained by such Market Price.

                                           5. If (i) there occurs any reclassification or change of Oracle Stock,
                                        including, without limitation, as a result of the issuance of any tracking
                                        stock by Oracle, (ii) Oracle or any surviving entity or subsequent
                                        surviving entity of Oracle (an "Oracle Successor") has been subject to a
                                        merger, combination or consolidation and is not the surviving entity, (iii)
                                        any statutory exchange of securities of Oracle or any Oracle Successor with
                                        another corporation occurs (other than pursuant to clause (ii) above), (iv)
                                        Oracle is liquidated, (v) Oracle issues to all of its shareholders equity
                                        securities of an issuer other than Oracle (other than in a transaction
                                        described in clause (ii), (iii) or (iv) above) (a "Spin-off Event") or (vi)
                                        a tender or exchange offer or going-private transaction is consummated for
                                        all the outstanding shares of Oracle Stock (any such event in clauses (i)
                                        through (vi), a "Reorganization Event"), the method of determining the
                                        amount payable upon exchange at maturity for this SPARQS shall be adjusted
                                        to provide that the holder of this SPARQS shall be entitled to receive at
                                        maturity, in respect of each $            principal amount of this SPARQS,
                                        securities, cash or any other assets distributed to holders of Oracle Stock
                                        in or as a result of any such Reorganization Event, including (i) in the
                                        case of the issuance of tracking stock, the reclassified share of Oracle
                                        Stock, (ii) in the case of a Spin-off Event, the share of Oracle Stock with
                                        respect to which the spun-off security was issued, and (iii) in the case of
                                        any other Reorganization Event where Oracle Stock continues to be held by
                                        the holders receiving such distribution, the Oracle

                                                       A-11

<PAGE>

                                        Stock (collectively, the "Exchange Property"), in an amount with a value
                                        equal to the amount of Exchange Property delivered with respect to a number
                                        of shares of Oracle Stock equal to the Exchange Ratio at the time of the
                                        Reorganization Event. Notwithstanding the above, if the Exchange Property
                                        received in any such Reorganization Event consists only of cash, the
                                        maturity date of this SPARQS shall be deemed to be accelerated to the date
                                        on which such cash is distributed to holders of Oracle Stock and the holder
                                        of this SPARQS shall receive in lieu of any Oracle Stock and as liquidated
                                        damages in full satisfaction of the Issuer's obligations under this SPARQS
                                        the product of (i) the amount of cash received per share of Oracle Stock
                                        and (ii) the then current Exchange Ratio. If Exchange Property consists of
                                        more than one type of property, the holder of this SPARQS shall receive at
                                        maturity a pro rata share of each such type of Exchange Property. If
                                        Exchange Property includes a cash component, the holder of this SPARQS will
                                        not receive any interest accrued on such cash component. In the event
                                        Exchange Property consists of securities, those securities shall, in turn,
                                        be subject to the antidilution adjustments set forth in paragraphs 1
                                        through 5.

                                        For purposes of paragraph 5 above, in the case of a consummated tender or
                                        exchange offer or going-private transaction involving Exchange Property of
                                        a particular type, Exchange Property shall be deemed to include the amount
                                        of cash or other property paid by the offeror in the tender or exchange
                                        offer with respect to such Exchange Property (in an amount determined on
                                        the basis of the rate of exchange in such tender or exchange offer or
                                        going- private transaction). In the event of a tender or exchange offer or
                                        a going-private transaction with respect to Exchange Property in which an
                                        offeree may elect to receive cash or other property, Exchange Property
                                        shall be deemed to include the kind and amount of cash and other property
                                        received by offerees who elect to receive cash.

                                        No adjustments to the Exchange Ratio shall be required unless such
                                        adjustment would require a change of at least 0.1% in the Exchange Ratio
                                        then in effect. The Exchange Ratio resulting from any of the adjustments
                                        specified above will be rounded to the nearest one hundred-thousandth,

                                                       A-12
<PAGE>

                                        with five one-millionths rounded upward. With respect to the Maturity Date,
                                        adjustments to the Exchange Ratio will be made through the close of
                                        business on the second scheduled Trading Day prior to the Maturity Date.

                                        No adjustments to the Exchange Ratio or method of calculating the Exchange
                                        Ratio shall be made other than those specified above. The adjustments
                                        specified above do not cover all events that could affect the Market Price
                                        of Oracle Stock, including, without limitation, a partial tender or
                                        exchange offer for Oracle Stock.

                                        The Calculation Agent shall be solely responsible for the determination and
                                        calculation of any adjustments to the Exchange Ratio or method of
                                        calculating the Exchange Ratio and of any related determinations and
                                        calculations with respect to any distributions of stock, other securities
                                        or other property or assets (including cash) in connection with any
                                        corporate event described in paragraph 5 above, and its determinations and
                                        calculations with respect thereto shall be conclusive in the absence of
                                        manifest error.

                                        The Calculation Agent shall provide information as to any adjustments to
                                        the Exchange Ratio or to the method of calculating the amount payable upon
                                        exchange at maturity of the SPARQS in accordance with paragraph 5 above
                                        upon written request by any holder of this SPARQS.

Market Disruption Event..............   "Market Disruption Event" means, with respect to Oracle Stock (and any other
                                        security that may be included as Exchange Property):

                                           (i) a suspension, absence or material limitation of trading of Oracle Stock
                                           (or any such other security) on the primary market for Oracle Stock (or any
                                           such other security) for more than two hours of trading or during the
                                           one-half hour period preceding the close of the principal trading session
                                           in such market; or a breakdown or failure in the price and trade reporting
                                           systems of the primary market for Oracle Stock (or any such other security)
                                           as a result of which the reported trading prices for Oracle Stock (or any
                                           such

                                                       A-13

<PAGE>

                                           other security) during the last one-half hour preceding the close of the
                                           principal trading session in such market are materially inaccurate; or the
                                           suspension, absence or material limitation of trading on the primary market
                                           for trading in options contracts related to Oracle Stock (or any such other
                                           security), if available, during the one-half hour period preceding the
                                           close of the principal trading session in the applicable market, in each
                                           case as determined by the Calculation Agent in its sole discretion; and

                                           (ii) a determination by the Calculation Agent in its sole discretion that
                                           any event described in clause (i) above materially interfered with the
                                           ability of the Issuer or any of its affiliates to unwind or adjust all or a
                                           material portion of the hedge with respect to the SPARQS.

                                        For purposes of determining whether a Market Disruption Event has occurred:
                                        (1) a limitation on the hours or number of days of trading shall not
                                        constitute a Market Disruption Event if it results from an announced change
                                        in the regular business hours of the relevant exchange, (2) a decision to
                                        permanently discontinue trading in the relevant options contract shall not
                                        constitute a Market Disruption Event, (3) limitations pursuant to NYSE Rule
                                        80A (or any applicable rule or regulation enacted or promulgated by the
                                        NYSE, any other self-regulatory organization or the Securities and Exchange
                                        Commission of scope similar to NYSE Rule 80A as determined by the
                                        Calculation Agent) on trading during significant market fluctuations shall
                                        constitute a suspension, absence or material limitation of trading, (4) a
                                        suspension of trading in options contracts on Oracle Stock (or any such
                                        other security) by the primary securities market trading in such options,
                                        if available, by reason of (x) a price change exceeding limits set by such
                                        securities exchange or market, (y) an imbalance of orders relating to such
                                        contracts or (z) a disparity in bid and ask quotes relating to such
                                        contracts shall constitute a suspension, absence or material limitation of
                                        trading in options contracts related to Oracle Stock (or any such other
                                        security) and (5) a suspension, absence or material limitation of trading
                                        on the primary securities market on which options contracts

                                                       A-14

<PAGE>

                                        related to Oracle Stock (or any such other security) are traded shall not
                                        include any time when such securities market is itself closed for trading
                                        under ordinary circumstances.

Alternate Exchange Calculation
in Case of an Event of Default.......   In case an event of default with respect to the SPARQS shall have occurred
                                        and be continuing, the amount declared due and payable per each $
                                        principal amount of this SPARQS upon any acceleration of this SPARQS shall
                                        be determined by the Calculation Agent and shall be an amount in cash equal
                                        to the product of (i) the Market Price of Oracle Stock as of the date of
                                        such acceleration and (ii) the then current Exchange Ratio; provided that
                                        if the Issuer has called the SPARQS in accordance with the MSDW Call Right,
                                        the amount declared due and payable upon any such acceleration shall be an
                                        amount in cash for each $         principal amount of the SPARQS equal to
                                        the Call Price calculated as though the date of acceleration were the Call
                                        Date, plus accrued but unpaid interest to but excluding the date of
                                        acceleration.

Treatment of SPARQS for
United States Federal
Income Tax Purposes..................   The Issuer, by its sale of this SPARQS, and the holder of this SPARQS (and
                                        any successor holder of this SPARQS), by its respective purchase hereof,
                                        agree (in the absence of an administrative determination or judicial ruling
                                        to the contrary) to characterize each $         principal amount of this
                                        SPARQS for all tax purposes as an investment unit consisting of (A) a
                                        terminable contract (the "Terminable Forward Contract") that (i) requires
                                        the holder of this SPARQS (subject to the MSDW Call Right) to purchase, and
                                        the Issuer to sell, for an amount equal to $         (the "Forward Price"),
                                        Oracle Stock at maturity and (ii) allows the Issuer, upon exercise of the
                                        MSDW Call Right, to terminate the Terminable Forward Contract by returning
                                        to such holder the Deposit (as defined below) and paying to such holder an
                                        amount of cash equal to the difference between the Deposit and the Call
                                        Price and (B) a deposit with the Issuer of a fixed amount of cash, equal to
                                        the issue price per each $      principal amount of this SPARQS, to secure
                                        the holder's

                                                       A-15

<PAGE>

                                        obligation to purchase Oracle Stock pursuant to the Terminable Forward
                                        Contract (the "Deposit"), which Deposit bears an annual yield of   % per
                                        annum.

                                                       A-16
</TABLE>

<PAGE>

     Morgan Stanley Dean Witter & Co., a Delaware corporation (together with
its successors and assigns, the "Issuer"), for value received, hereby promises
to pay to CEDE & CO., or registered assignees, the amount of Oracle Stock (or
other Exchange Property), as determined in accordance with the provisions set
forth under "Exchange at Maturity" above, due with respect to the principal sum
of U.S. $          (UNITED STATES DOLLARS            ) on the Maturity Date
specified above (except to the extent redeemed or repaid prior to maturity) and
to pay interest thereon at the Interest Rate per annum specified above, from
and including the Interest Accrual Date specified above until the principal
hereof is paid or duly made available for payment weekly, monthly, quarterly,
semiannually or annually in arrears as specified above as the Interest Payment
Period on each Interest Payment Date (as specified above), commencing on the
Interest Payment Date next succeeding the Interest Accrual Date specified
above, and at maturity (or on any redemption or repayment date); provided,
however, that if the Interest Accrual Date occurs between a Record Date, as
defined below, and the next succeeding Interest Payment Date, interest payments
will commence on the second Interest Payment Date succeeding the Interest
Accrual Date to the registered holder of this Note on the Record Date with
respect to such second Interest Payment Date; and provided, further, that if
this Note is subject to "Annual Interest Payments," interest payments shall be
made annually in arrears and the term "Interest Payment Date" shall be deemed
to mean the first day of March in each year.

     Interest on this Note will accrue from and including the most recent date
to which interest has been paid or duly provided for, or, if no interest has
been paid or duly provided for, from and including the Interest Accrual Date,
until, but excluding the date the principal hereof has been paid or duly made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the date 15
calendar days prior to such Interest Payment Date (whether or not a Business
Day (as defined below)) (each such date, a "Record Date"); provided, however,
that interest payable at maturity (or any redemption or repayment date) will be
payable to the person to whom the principal hereof shall be payable. As used
herein, "Business Day" means any day, other than a Saturday or Sunday, (a) that
is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close (x) in The City of New
York or (y) if this Note is denominated in a Specified Currency other than U.S.
dollars, euro or Australian dollars, in the principal financial center of the
country of the Specified Currency, or (z) if this Note is denominated in
Australian dollars, in Sydney and (b) if this Note is denominated in euro, that
is also a day on which the Trans-European Automated Real-time Gross Settlement
Express Transfer System ("TARGET") is operating (a "TARGET Settlement Day").

     Payment of the principal of this Note, any premium and the interest due at
maturity (or any redemption or repayment date), unless this Note is denominated
in a Specified Currency other than U.S. dollars and is to be paid in whole or
in part in such Specified Currency, will be made in immediately available funds
upon surrender of this Note at the office or agency of the Paying Agent, as
defined on the reverse hereof, maintained for that purpose in the Borough of
Manhattan, The City of New York, or at such other paying agency as the Issuer
may determine, in U.S. dollars. U.S. dollar payments of interest, other than
interest due at maturity or on any date of redemption or

                                      A-17

<PAGE>

repayment, will be made by U.S. dollar check mailed to the address of the
person entitled thereto as such address shall appear in the Note register. A
holder of U.S. $10,000,000 (or the equivalent in a Specified Currency) or more
in aggregate principal amount of Notes having the same Interest Payment Date,
the interest on which is payable in U.S. dollars, shall be entitled to receive
payments of interest, other than interest due at maturity or on any date of
redemption or repayment, by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received by the Paying Agent
in writing not less than 15 calendar days prior to the applicable Interest
Payment Date.

     If this Note is denominated in a Specified Currency other than U.S.
dollars, and the holder does not elect (in whole or in part) to receive payment
in U.S. dollars pursuant to the next succeeding paragraph, payments of
interest, principal or any premium with regard to this Note will be made by
wire transfer of immediately available funds to an account maintained by the
holder hereof with a bank located outside the United States if appropriate wire
transfer instructions have been received by the Paying Agent in writing, with
respect to payments of interest, on or prior to the fifth Business Day after
the applicable Record Date and, with respect to payments of principal or any
premium, at least ten Business Days prior to the Maturity Date or any
redemption or repayment date, as the case may be; provided that, if payment of
interest, principal or any premium with regard to this Note is payable in euro,
the account must be a euro account in a country for which the euro is the
lawful currency, provided, further, that if such wire transfer instructions are
not received, such payments will be made by check payable in such Specified
Currency mailed to the address of the person entitled thereto as such address
shall appear in the Note register; and provided, further, that payment of the
principal of this Note, any premium and the interest due at maturity (or on any
redemption or repayment date) will be made upon surrender of this Note at the
office or agency referred to in the preceding paragraph.

     If so indicated on the face hereof, the holder of this Note, if
denominated in a Specified Currency other than U.S. dollars, may elect to
receive all or a portion of payments on this Note in U.S. dollars by
transmitting a written request to the Paying Agent, on or prior to the fifth
Business Day after such Record Date or at least ten Business Days prior to the
Maturity Date or any redemption or repayment date, as the case may be. Such
election shall remain in effect unless such request is revoked by written
notice to the Paying Agent as to all or a portion of payments on this Note at
least five Business Days prior to such Record Date, for payments of interest,
or at least ten days prior to the Maturity Date or any redemption or repayment
date, for payments of principal, as the case may be.

     If the holder elects to receive all or a portion of payments of principal
of and any premium and interest on this Note, if denominated in a Specified
Currency other than U.S. dollars, in U.S. dollars, the Exchange Rate Agent (as
defined on the reverse hereof) will convert such payments into U.S. dollars. In
the event of such an election, payment in respect of this Note will be based
upon the exchange rate as determined by the Exchange Rate Agent based on the
highest bid quotation in The City of New York received by such Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the applicable payment date from three recognized foreign
exchange dealers (one of which may be the Exchange Rate Agent unless such

                                      A-18

<PAGE>

Exchange Rate Agent is an affiliate of the Issuer) for the purchase by the
quoting dealer of U.S. dollars for the Specified Currency for settlement on
such payment date in the amount of the Specified Currency payable in the
absence of such an election to such holder and at which the applicable dealer
commits to execute a contract. If such bid quotations are not available, such
payment will be made in the Specified Currency. All currency exchange costs
will be borne by the holder of this Note by deductions from such payments.

     Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Senior Indenture, as defined on the
reverse hereof, or be valid or obligatory for any purpose.

                                      A-19

<PAGE>

     IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.

DATED: July     , 2001                     MORGAN STANLEY DEAN WITTER & CO.

                                           By:
                                              ----------------------------------
                                              Name:   Alexander C. Frank
                                              Title:  Treasurer

TRUSTEE'S CERTIFICATE
  OF AUTHENTICATION

This  is one of the Notes referred
  to in the within-mentioned Senior
  Indenture.

THE CHASE MANHATTAN BANK,
  as Trustee

By:
   ----------------------------------
   Authorized Officer

                                      A-20

<PAGE>

                              REVERSE OF SECURITY

     This Note is one of a duly authorized issue of Senior Global Medium-Term
Notes, Series C, having maturities more than nine months from the date of issue
(the "Notes") of the Issuer. The Notes are issuable under an Amended and
Restated Senior Indenture, dated as of May 1, 1999, between the Issuer and The
Chase Manhattan Bank, as Trustee (the "Trustee," which term includes any
successor trustee under the Senior Indenture) (as may be amended or
supplemented from time to time, the "Senior Indenture"), to which Senior
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights, duties and
immunities of the Issuer, the Trustee and holders of the Notes and the terms
upon which the Notes are, and are to be, authenticated and delivered. The
Issuer has appointed The Chase Manhattan Bank at its corporate trust office in
The City of New York as the paying agent (the "Paying Agent," which term
includes any additional or successor Paying Agent appointed by the Issuer) with
respect to the Notes. The terms of individual Notes may vary with respect to
interest rates, interest rate formulas, issue dates, maturity dates, or
otherwise, all as provided in the Senior Indenture. To the extent not
inconsistent herewith, the terms of the Senior Indenture are hereby
incorporated by reference herein.

     Unless otherwise indicated on the face hereof, this Note will not be
subject to any sinking fund and, unless otherwise provided on the face hereof
in accordance with the provisions of the following two paragraphs, will not be
redeemable or subject to repayment at the option of the holder prior to
maturity.

     If so indicated on the face hereof, this Note may be redeemed in whole or
in part at the option of the Issuer on or after the Initial Redemption Date
specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption. If
this Note is subject to "Annual Redemption Percentage Reduction," the Initial
Redemption Percentage indicated on the face hereof will be reduced on each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction specified on the face hereof until the redemption price of this Note
is 100% of the principal amount hereof, together with interest accrued and
unpaid hereon to the date of redemption. Notice of redemption shall be mailed
to the registered holders of the Notes designated for redemption at their
addresses as the same shall appear on the Note register not less than 30 nor
more than 60 days prior to the date fixed for redemption or within the
Redemption Notice Period specified on the face hereof, subject to all the
conditions and provisions of the Senior Indenture. In the event of redemption
of this Note in part only, a new Note or Notes for the amount of the unredeemed
portion hereof shall be issued in the name of the holder hereof upon the
cancellation hereof.

     If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments
of $1,000 or, if this Note is denominated in a Specified Currency other than
U.S. dollars, in increments of 1,000 units of such Specified Currency (provided
that any remaining principal amount hereof shall not be less than the minimum
authorized denomination hereof) at the option of the holder hereof at a price
equal to 100% of the principal amount to be repaid, together with interest

                                      A-21

<PAGE>

accrued and unpaid hereon to the date of repayment. For this Note to
be repaid at the option of the holder hereof, the Paying Agent must
receive at its corporate trust office in the Borough of Manhattan, The
City of New York, at least 15 but not more than 30 days prior to the
date of repayment, (i) this Note with the form entitled "Option to
Elect Repayment" below duly completed or (ii) a telegram, telex,
facsimile transmission or a letter from a member of a national
securities exchange or the National Association of Securities Dealers,
Inc. or a commercial bank or a trust company in the United States
setting forth the name of the holder of this Note, the principal
amount hereof, the certificate number of this Note or a description of
this Note's tenor and terms, the principal amount hereof to be repaid,
a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note, together with the form
entitled "Option to Elect Repayment" duly completed, will be received
by the Paying Agent not later than the fifth Business Day after the
date of such telegram, telex, facsimile transmission or letter;
provided, that such telegram, telex, facsimile transmission or letter
shall only be effective if this Note and form duly completed are
received by the Paying Agent by such fifth Business Day. Exercise of
such repayment option by the holder hereof shall be irrevocable. In
the event of repayment of this Note in part only, a new Note or Notes
for the amount of the unpaid portion hereof shall be issued in the
name of the holder hereof upon the cancellation hereof.

     Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Unless otherwise provided on
the face hereof, interest payments for this Note will be computed and paid on
the basis of a 360-day year of twelve 30-day months.

     In the case where the Interest Payment Date or the Maturity Date (or any
redemption or repayment date) does not fall on a Business Day, payment of
interest, premium, if any, or principal otherwise payable on such date need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the Interest Payment Date or on the
Maturity Date (or any redemption or repayment date), and no interest on such
payment shall accrue for the period from and after the Interest Payment Date or
the Maturity Date (or any redemption or repayment date) to such next succeeding
Business Day.

     This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and pari passu with all other existing and future unsecured
and unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.

     This Note, and any Note or Notes issued upon transfer or exchange hereof,
is issuable only in fully registered form, without coupons, and, if denominated
in U.S. dollars, unless otherwise stated above, is issuable only in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof. If this Note is denominated in a Specified Currency other than U.S.
dollars, then, unless a higher minimum denomination is required by applicable
law, it is issuable only in denominations of the equivalent of U.S. $1,000
(rounded to an integral multiple of 1,000 units of such Specified Currency), or
any amount in excess thereof which is an integral multiple of 1,000 units of
such Specified Currency, as determined by reference to the noon dollar buying
rate

                                      A-22

<PAGE>

in The City of New York for cable transfers of such Specified Currency
published by the Federal Reserve Bank of New York (the "Market Exchange Rate")
on the Business Day immediately preceding the date of issuance.

     The Trustee has been appointed registrar for the Notes, and the Trustee
will maintain at its office in The City of New York a register for the
registration and transfer of Notes. This Note may be transferred at the
aforesaid office of the Trustee by surrendering this Note for cancellation,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and duly executed by the registered holder hereof in person or by the
holder's attorney duly authorized in writing, and thereupon the Trustee shall
issue in the name of the transferee or transferees, in exchange herefor, a new
Note or Notes having identical terms and provisions and having a like aggregate
principal amount in authorized denominations, subject to the terms and
conditions set forth herein; provided, however, that the Trustee will not be
required (i) to register the transfer of or exchange any Note that has been
called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Senior
Indenture with respect to the redemption of Notes. Notes are exchangeable at
said office for other Notes of other authorized denominations of equal
aggregate principal amount having identical terms and provisions. All such
exchanges and transfers of Notes will be free of charge, but the Issuer may
require payment of a sum sufficient to cover any tax or other governmental
charge in connection therewith. All Notes surrendered for exchange shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and executed by the registered holder in person or by the holder's
attorney duly authorized in writing. The date of registration of any Note
delivered upon any exchange or transfer of Notes shall be such that no gain or
loss of interest results from such exchange or transfer.

     In case this Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and this Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, the Issuer in its discretion may execute a new Note
of like tenor in exchange for this Note, but, if this Note is destroyed, lost
or stolen, only upon receipt of evidence satisfactory to the Trustee and the
Issuer that this Note was destroyed or lost or stolen and, if required, upon
receipt also of indemnity satisfactory to each of them. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Note shall be borne by the
owner of the Note mutilated, defaced, destroyed, lost or stolen.

     The Senior Indenture provides that (a) if an Event of Default (as defined
in the Senior Indenture) due to the default in payment of principal of,
premium, if any, or interest on, any series of debt securities issued under the
Senior Indenture, including the series of Senior Medium-Term Notes of which
this Note forms a part, or due to the default in the performance or breach of
any other covenant or warranty of the Issuer applicable to the debt securities
of such series but not

                                      A-23

<PAGE>

applicable to all outstanding debt securities issued under the Senior Indenture
shall have occurred and be continuing, either the Trustee or the holders of not
less than 25% in principal amount of the debt securities of each affected
series (voting as a single class) may then declare the principal of all debt
securities of all such series and interest accrued thereon to be due and
payable immediately and (b) if an Event of Default due to a default in the
performance of any other of the covenants or agreements in the Senior Indenture
applicable to all outstanding debt securities issued thereunder, including this
Note, or due to certain events of bankruptcy or insolvency of the Issuer, shall
have occurred and be continuing, either the Trustee or the holders of not less
than 25% in principal amount of all debt securities issued under the Senior
Indenture then outstanding (treated as one class) may declare the principal of
all such debt securities and interest accrued thereon to be due and payable
immediately, but upon certain conditions such declarations may be annulled and
past defaults may be waived (except a continuing default in payment of
principal (or premium, if any) or interest on such debt securities) by the
holders of a majority in principal amount of the debt securities of all
affected series then outstanding.

     If the face hereof indicates that this Note is subject to "Modified
Payment upon Acceleration," then (i) if the principal hereof is declared to be
due and payable as described in the preceding paragraph, the amount of
principal due and payable with respect to this Note shall be limited to the
aggregate principal amount hereof multiplied by the sum of the Issue Price
specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of declaration, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of declaration), (ii) for the
purpose of any vote of securityholders taken pursuant to the Senior Indenture
prior to the acceleration of payment of this Note, the principal amount hereof
shall equal the amount that would be due and payable hereon, calculated as set
forth in clause (i) above, if this Note were declared to be due and payable on
the date of any such vote and (iii) for the purpose of any vote of
securityholders taken pursuant to the Senior Indenture following the
acceleration of payment of this Note, the principal amount hereof shall equal
the amount of principal due and payable with respect to this Note, calculated
as set forth in clause (i) above.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," this Note may be redeemed, as a whole, at
the option of the Issuer at any time prior to maturity, upon the giving of a
notice of redemption as described below, at a redemption price equal to 100% of
the principal amount hereof, together with accrued interest to the date fixed
for redemption (except that if this Note is subject to "Modified Payment upon
Acceleration or Redemption," such redemption price would be limited to the
aggregate principal amount hereof multiplied by the sum of the Issue Price
specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of redemption, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of redemption) (the "Amortized
Amount")), if the Issuer determines that, as a result of any change in or
amendment to the laws (or any regulations or rulings promulgated thereunder) of
the United States or of any political subdivision or taxing authority thereof
or therein affecting taxation, or any

                                      A-24

<PAGE>

change in official position regarding the application or interpretation of such
laws, regulations or rulings, which change or amendment becomes effective on or
after the Initial Offering Date hereof, the Issuer has or will become obligated
to pay Additional Amounts (as defined below) with respect to this Note as
described below. Prior to the giving of any Notice of redemption pursuant to
this paragraph, the Issuer shall deliver to the Trustee (i) a certificate
stating that the Issuer is entitled to effect such redemption and setting forth
a statement of facts showing that the conditions precedent to the right of the
Issuer to so redeem have occurred, and (ii) an opinion of independent counsel
satisfactory to the Trustee to such effect based on such statement of facts;
provided that no such notice of redemption shall be given earlier than 60 days
prior to the earliest date on which the Issuer would be obligated to pay such
Additional Amounts if a payment in respect of this Note were then due.

     Notice of redemption will be given not less than 30 nor more than 60 days
prior to the date fixed for redemption or within the Redemption Notice Period
specified on face hereof, which date and the applicable redemption price will
be specified in the Notice.

     If the face hereof indicates that this Note is subject to "Tax Redemption
and Payment of Additional Amounts," the Issuer will, subject to certain
exceptions and limitations set forth below, pay such additional amounts (the
"Additional Amounts") to the holder of this Note who is a United States Alien
as may be necessary in order that every net payment of the principal of and
interest on this Note and any other amounts payable on this Note, after
withholding for or on account of any present or future tax, assessment or
governmental charge imposed upon or as a result of such payment by the United
States (or any political subdivision or taxing authority thereof or therein),
will not be less than the amount provided for in this Note to be then due and
payable. The Issuer will not, however, be required to make any payment of
Additional Amounts to any such holder for or on account of:

          (a) any such tax, assessment or other governmental charge that would
     not have been so imposed but for (i) the existence of any present or
     former connection between such holder (or between a fiduciary, settlor,
     beneficiary, member or shareholder of such holder, if such holder is an
     estate, a trust, a partnership or a corporation) and the United States and
     its possessions, including, without limitation, such holder (or such
     fiduciary, settlor, beneficiary, member or shareholder) being or having
     been a citizen or resident thereof or being or having been engaged in a
     trade or business or present therein or having, or having had, a permanent
     establishment therein or (ii) the presentation by the holder of this Note
     for payment on a date more than 15 days after the date on which such
     payment became due and payable or the date on which payment thereof is
     duly provided for, whichever occurs later;

          (b) any estate, inheritance, gift, sales, transfer or personal
     property tax or any similar tax, assessment or governmental charge;

          (c) any tax, assessment or other governmental charge imposed by
     reason of such holder's past or present status as a personal holding
     company or foreign personal holding company or controlled foreign
     corporation or passive foreign investment company with respect to the
     United

                                      A-25

<PAGE>

     States or as a corporation which accumulates earnings to avoid United
     States federal income tax or as a private foundation or other tax-exempt
     organization;

          (d) any tax, assessment or other governmental charge that is payable
     otherwise than by withholding from payments on or in respect of this Note;

          (e) any tax, assessment or other governmental charge required to be
     withheld by any Paying Agent from any payment of principal of, or interest
     on, this Note, if such payment can be made without such withholding by any
     other Paying Agent in a city in Western Europe;

          (f) any tax, assessment or other governmental charge that would not
     have been imposed but for the failure to comply with certification,
     information or other reporting requirements concerning the nationality,
     residence or identity of the holder or beneficial owner of this Note, if
     such compliance is required by statute or by regulation of the United
     States or of any political subdivision or taxing authority thereof or
     therein as a precondition to relief or exemption from such tax, assessment
     or other governmental charge;

          (g) any tax, assessment or other governmental charge imposed by
     reason of such holder's past or present status as the actual or
     constructive owner of 10% or more of the total combined voting power of
     all classes of stock entitled to vote of the Issuer or as a direct or
     indirect subsidiary of the Issuer; or

          (h) any combination of items (a), (b), (c), (d), (e), (f) or (g);

nor shall Additional Amounts be paid with respect to any payment on this Note
to a United States Alien who is a fiduciary or partnership or other than the
sole beneficial owner of such payment to the extent such payment would be
required by the laws of the United States (or any political subdivision
thereof) to be included in the income, for tax purposes, of a beneficiary or
settlor with respect to such fiduciary or a member of such partnership or a
beneficial owner who would not have been entitled to the Additional Amounts had
such beneficiary, settlor, member or beneficial owner been the holder of this
Note.

     The Senior Indenture permits the Issuer and the Trustee, with the consent
of the holders of not less than a majority in aggregate principal amount of the
debt securities of all series issued under the Senior Indenture then
outstanding and affected (voting as one class), to execute supplemental
indentures adding any provisions to or changing in any manner the rights of the
holders of each series so affected; provided that the Issuer and the Trustee
may not, without the consent of the holder of each outstanding debt security
affected thereby, (a) extend the final maturity of any such debt security, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption or
repayment thereof, or change the currency of payment thereof, or modify or
amend the provisions for conversion of any currency into any other currency, or
modify or amend the provisions for conversion or exchange of the debt security
for securities of the Issuer or other entities (other than as provided in the
antidilution provisions or other similar adjustment provisions of the debt
securities or otherwise in accordance

                                      A-26

<PAGE>

with the terms thereof), or impair or affect the rights of any holder to
institute suit for the payment thereof without the consent of the holder of
each debt security so affected or (b) reduce the aforesaid percentage in
principal amount of debt securities the consent of the holders of which is
required for any such supplemental indenture.

     Except as set forth below, if the principal of, premium, if any, or
interest on, this Note is payable in a Specified Currency other than U.S.
dollars and such Specified Currency is not available to the Issuer for making
payments hereon due to the imposition of exchange controls or other
circumstances beyond the control of the Issuer or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions within the international banking community,
then the Issuer will be entitled to satisfy its obligations to the holder of
this Note by making such payments in U.S. dollars on the basis of the Market
Exchange Rate on the date of such payment or, if the Market Exchange Rate is
not available on such date, as of the most recent practicable date; provided,
however, that if the euro has been substituted for such Specified Currency, the
Issuer may at its option (or shall, if so required by applicable law) without
the consent of the holder of this Note effect the payment of principal of,
premium, if any, or interest on, any Note denominated in such Specified
Currency in euro in lieu of such Specified Currency in conformity with legally
applicable measures taken pursuant to, or by virtue of, the treaty establishing
the European Community (the "EC"), as amended by the treaty on European Union
(as so amended, the "Treaty"). Any payment made under such circumstances in
U.S. dollars or euro where the required payment is in an unavailable Specified
Currency will not constitute an Event of Default. If such Market Exchange Rate
is not then available to the Issuer or is not published for a particular
Specified Currency, the Market Exchange Rate will be based on the highest bid
quotation in The City of New York received by the Exchange Rate Agent at
approximately 11:00 a.m., New York City time, on the second Business Day
preceding the date of such payment from three recognized foreign exchange
dealers (the "Exchange Dealers") for the purchase by the quoting Exchange
Dealer of the Specified Currency for U.S. dollars for settlement on the payment
date, in the aggregate amount of the Specified Currency payable to those
holders or beneficial owners of Notes and at which the applicable Exchange
Dealer commits to execute a contract. One of the Exchange Dealers providing
quotations may be the Exchange Rate Agent unless the Exchange Rate Agent is an
affiliate of the Issuer. If those bid quotations are not available, the
Exchange Rate Agent shall determine the market exchange rate at its sole
discretion.

     The "Exchange Rate Agent" shall be Morgan Stanley & Co. Incorporated,
unless otherwise indicated on the face hereof.

     All determinations referred to above made by, or on behalf of, the Issuer
or by, or on behalf of, the Exchange Rate Agent shall be at such entity's sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on holders of Notes and coupons.

     So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said Borough of
Manhattan for the registration, transfer and exchange as aforesaid of the
Notes. The

                                     A-27

<PAGE>

Issuer may designate other agencies for the payment of said principal, premium
and interest at such place or places (subject to applicable laws and
regulations) as the Issuer may decide. So long as there shall be such an
agency, the Issuer shall keep the Trustee advised of the names and locations of
such agencies, if any are so designated.

     With respect to moneys paid by the Issuer and held by the Trustee or any
Paying Agent for payment of the principal of or interest or premium, if any, on
any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting
in any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.

     No provision of this Note or of the Senior Indenture shall alter or impair
the obligation of the Issuer, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Note at the time, place,
and rate, and in the coin or currency, herein prescribed unless otherwise
agreed between the Issuer and the registered holder of this Note.

     Prior to due presentment of this Note for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.

     No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Note, for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Senior Indenture or any
indenture supplemental thereto, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Issuer or of any
successor corporation, either directly or through the Issuer or any successor
corporation, whether by virtue of any constitution, statute or rule of law or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.

     This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.

     As used herein, the term "United States Alien" means any person who, for
United States federal income tax purposes, is a foreign corporation, a
non-resident alien individual, a non-resident alien fiduciary of a foreign
estate or trust, or a foreign partnership one or more of the members of which
is a foreign corporation, a non-resident alien individual or a non-resident
alien fiduciary of a foreign estate or trust.

                                      A-28

<PAGE>

     All terms used in this Note which are defined in the Senior Indenture and
not otherwise defined herein shall have the meanings assigned to them in the
Senior Indenture.

                                      A-29

<PAGE>

                                 ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

       TEN COM - as tenants in common
       TEN ENT - as tenants by the entireties
       JT TEN  - as joint tenants with right of survivorship and not as tenants
                 in common

     UNIF GIFT MIN ACT -________________________ Custodian______________________
                                (Minor)                           (Cust)

     Under Uniform Gifts to Minors Act__________________________________________
                                                        (State)

     Additional abbreviations may also be used though not in the above list.

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

                                      A-30

<PAGE>

     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

----------------------------------------
[PLEASE INSERT SOCIAL SECURITY OR OTHER
     IDENTIFYING NUMBER OF ASSIGNEE]

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

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

--------------------------------------------------------------------------------
[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.

Dated:
      -------------------------------

NOTICE:   The signature to this assignment must correspond with the name as
          written upon the face of the within Note in every particular without
          alteration or enlargement or any change whatsoever.

                                      A-31

<PAGE>

                           OPTION TO ELECT REPAYMENT

     The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its
terms at a price equal to the principal amount thereof, together with interest
to the Optional Repayment Date, to the undersigned at

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

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

--------------------------------------------------------------------------------
        (Please print or typewrite name and address of the undersigned)

     If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
_______________________________;  and specify the denomination or denominations
(which shall not be less than the minimum authorized denomination) of the Notes
to be issued to the holder for the portion of the within Note not being repaid
(in the absence of any such specification, one such Note will be issued for the
portion not being repaid): ____________________________.

Dated:
     --------------------------------   ----------------------------------------
                                        NOTICE: The signature on this Option to
                                        Elect Repayment must correspond with
                                        the name as written upon the face of
                                        the within instrument in every
                                        particular without alteration or
                                        enlargement.

                                      A-32<PAGE>

                                                             Exhibit 10.1 (k) #1

                              FINANCING AGREEMENT

                     $35,000,000 Revolving Credit Facility

                                      and

                        $10,000,000 Term Loan Facility

                              Dated May 31, 2001

                                By and Between

                         AMERICAN WOODMARK CORPORATION

                                      And

                            BANK OF AMERICA, N. A.

                                       1
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                          <C>
ARTICLE I DEFINITIONS......................................................   1
Section 1.1 Certain Defined Terms..........................................   1
Section 1.2 Accounting Terms and Other Definitional Provisions.............  12

ARTICLE II THE CREDIT FACILITIES...........................................  13
Section 2.1 The Revolving Credit Facility..................................  13
    2.1.1   Revolving Credit Facility......................................  13
    2.1.2   Procedure for Making Advances Under the Revolving Loan;........  13
    2.1.2   Lender Protection Loans........................................  13
    2.1.3   Revolving Credit Note..........................................  14
    2.1.4   Optional Prepayments of Revolving Loan.........................  14
    2.1.5   Revolving Loan Account.........................................  14
    2.1.6   Revolving Credit Unused Line Fee...............................  15
Section 2.2 The Letter of Credit Facility..................................  15
    2.2.1   Letters of Credit..............................................  15
    2.2.2   Letter of Credit Fees..........................................  15
    2.2.3   Terms of Letters of Credit.....................................  16
    2.2.4   Procedure for Letters of Credit................................  16
    2.2.5   Change in Law; Increased Cost..................................  16
Section 2.3 The Term Loan Facility.........................................  17
    2.3.1   Term Loan Commitment...........................................  17
    2.3.2   The Term Note..................................................  17
    2.3.3   Optional Prepayments of Term Loan..............................  17
Section 2.4 General Financing Provisions...................................  17
    2.4.1   Borrower's Representatives.....................................  17
    2.4.2   Use of Proceeds of the Loans...................................  18
    2.4.3   Computation of Interest and Fees...............................  18
    2.4.4   Payments.......................................................  18
    2.4.5   Liens; Setoff..................................................  18
    2.4.6   Requirements of Law............................................  18
Section 2.5 Interest.......................................................  19
    2.5.2   Inability to Determine Eurodollar Base Rate....................  19
    2.5.3   Payment of Interest............................................  20
    2.5.4   Default Interest Rate on the Obligations.......................  20

ARTICLE III REPRESENTATIONS AND WARRANTIES.................................  20
Section 3.1 Representations and Warranties.................................  20
    3.1.1   Subsidiaries...................................................  20
    3.1.2   Good Standing..................................................  20
    3.1.3   Power and Authority............................................  20
    3.1.4   Binding Agreements.............................................  21
    3.1.5   No Conflicts...................................................  21
    3.1.6   No Defaults, Violations........................................  21
    3.1.7   Compliance with Laws...........................................  21
    3.1.8   Margin Stock...................................................  22
    3.1.9   Investment Company Act; Margin Securities......................  22
    3.1.10  Litigation.....................................................  22
    3.1.11  Financial Condition............................................  22
    3.1.12  Full Disclosure................................................  23
    3.1.13  Indebtedness for Borrowed Money................................  23
</TABLE>

                                       2
<PAGE>

<TABLE>
<S>                                                                                        <C>
    3.1.14   Taxes....................................................................   23
    3.1.15   ERISA....................................................................   23
    3.1.16   Title to Properties......................................................   24
    3.1.17   Patents, Trademarks, Etc.................................................   24
    3.1.18   Employee Relations.......................................................   24
    3.1.19   Presence of Hazardous Materials or Hazardous Materials Contamination.....   24
Section 3.2  Survival; Updates of Representations and Warranties......................   25

ARTICLE IV CONDITIONS PRECEDENT.......................................................   25
Section 4.1  Conditions to the Initial Advance and Initial Letter of Credit...........   25
    4.1.1    Organizational Documents-Borrower........................................   25
    4.1.2    Opinion of Borrower's Counsel............................................   26
    4.1.3    Consents, Licenses, Approvals, Etc.......................................   26
    4.1.4    Notes....................................................................   26
    4.1.5    Financing Documents......................................................   26
    4.1.6    Other Financing Documents................................................   26
    4.1.7    Other Documents, Etc.....................................................   26
    4.1.8    Payment of Fees..........................................................   26
    4.1.9    Insurance Certificate....................................................   26
Section 4.2  Conditions to all Extensions of Credit...................................   27
    4.2.1    Compliance...............................................................   27
    4.2.2    Default..................................................................   27
    4.2.3    Representations and Warranties...........................................   27
    4.2.4    Adverse Change...........................................................   27
    4.2.5    Legal Matters............................................................   27

ARTICLE V COVENANTS OF THE BORROWER...................................................   27
Section 5.1  Affirmative Covenants....................................................   27
    5.1.1    Financial Statements.....................................................   27
    5.1.2    Reports to SEC and to Stockholders.......................................   29
    5.1.3    Recordkeeping, Rights of Inspection, Field Examination, Etc..............   29
    5.1.4    Corporate Existence......................................................   29
    5.1.5    Compliance with Laws.....................................................   29
    5.1.6    Preservation of Properties...............................................   30
    5.1.7    Line of Business.........................................................   30
    5.1.8    Insurance................................................................   30
    5.1.9    Taxes....................................................................   30
    5.1.10   ERISA....................................................................   31
    5.1.11   Notification of Events of Default and Adverse Developments...............   31
    5.1.12   Hazardous Materials; Contamination.......................................   32
    5.1.13   Disclosure of Significant Transactions...................................   32
    5.1.14   Financial Covenants......................................................   33
Section 5.2  Negative Covenants.......................................................   33
    5.2.1    Merger, Acquisition or Sale of Assets....................................   33
    5.2.2    Subsidiaries.............................................................   33
    5.2.3    Purchase or Redemption of Securities. Error! Bookmark not defined........
    5.2.4    Indebtedness.............................................................   33
    5.2.5    Investments, Loans and Other Transactions................................   34
    5.2.6    Stock of Subsidiaries....................................................   35
    5.2.7    Subordinated Indebtedness................................................   35
    5.2.8    Liens; Confessed Judgment................................................   35
    5.2.9    Transactions with Affiliates.............................................   36
    5.2.10   Other Businesses.........................................................   36
    5.2.11   ERISA Compliance.........................................................   36
    5.2.12   Prohibition on Hazardous Materials.......................................   36
    5.2.13   Method of Accounting; Fiscal Year........................................   36
</TABLE>

                                       3
<PAGE>

<TABLE>
<S>                                                                         <C>
ARTICLE VI DEFAULT AND RIGHTS AND REMEDIES................................  36
Section 6.1  Events of Default............................................  36
    6.1.1    Failure to Pay...............................................  37
    6.1.2    Breach of Representations and Warranties.....................  37
    6.1.3    Failure to Comply with Covenants.............................  37
    6.1.4    Default Under Other Financing Documents or Obligations.......  37
    6.1.5    Receiver; Bankruptcy.........................................  37
    6.1.6    Involuntary Bankruptcy, etc..................................  37
    6.1.7    Judgment.....................................................  38
    6.1.8    Default Under Other Borrowings...............................  38
    6.1.9    Challenge to Agreements......................................  38
    6.1.10   Material Adverse Change......................................  38
    6.1.11   Liquidation, Termination, Dissolution, Change in Management,
             etc..........................................................  38
Section 6.2  Remedies.....................................................  38
    6.2.1    Acceleration.................................................  39
    6.2.2    Further Advances.............................................  39
    6.2.3    Performance by Lender........................................  39
    6.2.4    Other Remedies...............................................  39

ARTICLE VII MISCELLANEOUS.................................................  40
Section 7.1  Notices......................................................  40
Section 7.2  Amendments; Waivers..........................................  40
Section 7.3  Cumulative Remedies..........................................  41
Section 7.4  Severability.................................................  42
Section 7.5  Assignments by Lender........................................  42
Section 7.6  Successors and Assigns.......................................  42
Section 7.7  Continuing Agreements........................................  43
Section 7.8  Enforcement Costs............................................  43
Section 7.9  Applicable Law; Jurisdiction.................................  43
    7.9.1    Applicable Law...............................................  43
    7.9.2    Jurisdiction.................................................  43
    7.9.3    Appointment of Agent for Service of Process..................  44
    7.9.4    Service of Process...........................................  44
Section 7.10 Duplicate Originals and Counterparts.........................  44
Section 7.11 Headings.....................................................  44
Section 7.12 No Agency....................................................  45
Section 7.13 Date of Payment..............................................  45
Section 7.14 Entire Agreement.............................................  45
Section 7.15 Waiver of Trial by Jury......................................  45
Section 7.16 Liability of the Lender......................................  46
Section 7.17 Indemnification..............................................  46
</TABLE>

                                       4
<PAGE>

                              FINANCING AGREEMENT
                              -------------------

     THIS FINANCING AGREEMENT (this "Agreement") is made as of the 31st day of
May, 2001, by and between AMERICAN WOODMARK CORPORATION, a corporation organized
under the laws of the Commonwealth of Virginia (the "Borrower"), and BANK OF
AMERICA, N. A., a national banking association (the "Lender").

                                    RECITALS
                                    --------

     A.   The Borrower has applied to the Lender for certain credit facilities
consisting of a revolving credit facility in the maximum principal amount of
$35,000,000, a letter of credit facility as a part of the revolving credit
facility and a term loan in the original principal amount of $10,000,000 to be
used by the Borrower for the Permitted Uses described in this Agreement.

     B.   The Lender is willing to make the credit facilities available to the
Borrower upon the terms and subject to the conditions set forth in this
Agreement.

                                   AGREEMENTS
                                   ----------

     NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereby agree as follows:

DEFINITIONS

     Section 1.1  Certain Defined Terms.

     As used in this Agreement, the terms defined in the Preamble and Recitals
hereto shall have the respective meanings specified therein, and the following
terms shall have the following meanings:

     "Additional Borrower" means each Person that has executed and delivered an
Additional Borrower Joinder Supplement that has been accepted and approved by
the Lender.

     "Additional Borrower Joinder Supplement" means an Additional Borrower
Joinder Supplement in substantially the form attached hereto as EXHIBIT A, with
the blanks appropriately completed and executed and delivered by the Additional
Borrower and the Borrower.

     "Affiliate" means, with respect to any designated Person, any other Person,
(a) directly or indirectly controlling, directly or indirectly controlled by, or
under direct or indirect common control with the Person designated, (b) directly
or indirectly owning or holding five percent (5%) or more of any equity interest
in such designated Person, or (c) five percent (5%) or more of whose stock or
other equity interest is directly or indirectly owned or held by such designated
Person.  For purposes of this definition, the term "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with") means

                                       5
<PAGE>

the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities or other equity interests or by contract or otherwise.

     "Agreement" means this Financing Agreement, as amended, restated,
supplemented or otherwise modified in writing in accordance with the provisions
of Section 7.2 (Amendments; Waivers).

     "Applicable Interest Rate" means the Eurodollar Rate.

     "Applicable Margin" means the applicable rate per annum added, as set forth
in Section 2.5(b)(Interest) to the Eurodollar Rate.

     "Assets" means at any date all assets that, in accordance with GAAP
consistently applied should be classified as assets on a consolidated balance
sheet of the Borrower and its Subsidiaries.

     "Bank Facilities" means any credit facility provided by the Lender to the
Borrower through Bank of America Leasing and/or any private placement by the
Lender for the Borrower's benefit from the Closing Date and through April 30,
2002 for equipment acquisition and financing, but specifically excluding an
existing commitment from Bank of America Leasing in the maximum principal amount
of $3,000,000 and issued and outstanding letters of credit as of the date hereof
more specifically identified on Schedule 1.1 attached hereto and made a part
hereof and all renewals of such letters of credit.

     "Bankruptcy Code" means the United States Bankruptcy Code, as amended from
time to time.

     "Base Rate" means the floating and fluctuating per annum prime rate of
interest of the Lender, as established and declared by the Lender at any time or
from time to time.  The Base Rate does not necessarily represent the lowest or
best rate of interest charged by the Lender to Borrower.

     "Borrower" means each Person defined as a "Borrower" in the preamble of
this Agreement and each Additional Borrower; "Borrowers" means the collective
reference to all Persons defined as "Borrower" in the preamble to this Agreement
and all Additional Borrowers.

     "Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in the State are authorized or required to close.

     "Capital Lease" means any lease of real or personal property, for which the
related Lease Obligations have been or should be, in accordance with GAAP
consistently applied capitalized on the balance sheet.

     "Cash Equivalents" means (a) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit with
maturities of one (1) year or less from the date of acquisition of, or money
market accounts maintained with, the Lender, any Affiliate of the Lender, or any
other domestic commercial bank having capital and surplus in excess of One
Hundred Million Dollars ($100,000,000.00) or such other domestic financial
institutions or domestic brokerage houses to the extent disclosed to, and
approved by, the Lender and (c) commercial paper of a

                                       6
<PAGE>

domestic issuer rated at least either A-1 by Standard & Poor's Corporation or P-
1 by Moody's Investors Service, Inc. with maturities of six (6) months or less
from the date of acquisition.

     "Cash Flow" means as to the Borrower and its Subsidiaries for any period of
determination thereof, the sum of (a) net income (or loss) after deduction of
interest expenses and taxes, plus (b) the aggregate amount of depreciation and
amortization, all calculated in accordance with GAAP consistently applied.

     "Closing Date" means the Business Day, in any event not later than May 31,
2001 on which the Lender shall be satisfied that the conditions precedent set
forth in 0 (Conditions to Initial Advance) have been fulfilled.

     "Commitment" means the Revolving Credit Commitment, the Letter of Credit
Commitment or the Term Loan Commitment, as the case may be, and "Commitments"
means collectively the Revolving Credit Commitment, the Letter of Credit
Commitment and the Term Loan Commitment.

     "Committed Amount" means the Revolving Credit Committed Amount, the Letter
of Credit Committed Amount or the Term Loan Committed Amount, as the case may
be, and "Committed Amounts" means collectively the Revolving Credit Committed
Amount, the Letter of Credit Committed Amount and the Term Loan Committed
Amount.

     "Compliance Certificate" means a periodic Compliance Certificate described
in Section 5.1.1 (Financial Statements).

     "Commonly Controlled Entity" means an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of Section
414(b) or (c) of the Internal Revenue Code.

     "Copyrights" means and includes, in each case whether now existing or
hereafter arising, all of the Borrower's rights, title and interest in and to
(a) all copyrights, rights and interests in copyrights, works protectable by
copyright, copyright registrations, copyright applications, and all renewals of
any of the foregoing, (b) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing, including, without
limitation, damages or payments for past, current or future infringements of any
of the foregoing, (c) the right to sue for past, present and future
infringements of any of the foregoing, and (d) all rights corresponding to any
of the foregoing throughout the world.

     "Credit Facility" means the Revolving Credit Facility, the Letter of Credit
Facility or the Term Loan Facility, as the case may be, and "Credit Facilities"
means collectively the Revolving Credit Facility, the Letter of Credit Facility,
the Term Loan Facility and any and all other credit facilities now or hereafter
extended under or secured by this Agreement.

     "Current Assets" means at any date, the amount which, in accordance with
GAAP consistently applied, would be set forth opposite the caption "total
current assets" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries.

                                       7
<PAGE>

     "Default" means an event which, with the giving of notice or lapse of time,
or both, could or would constitute an Event of Default under the provisions of
this Agreement.

     "EBITDA" means as to the Borrower and its Subsidiaries for any period of
determination thereof, the sum of earnings before deduction of interest and
taxes plus depreciation and amortization.

     "Enforcement Costs" means all expenses, charges, costs and fees whatsoever
(including, without limitation, reasonable outside and allocated in-house
counsel attorney's fees and expenses) of any nature whatsoever paid or incurred
by or on behalf of the Lender in connection with (a) any or all of the
Obligations, this Agreement and/or any of the other Financing Documents, (b) the
creation, collection, maintenance, preservation, defense, protection,
realization upon, or enforcement of all or any part of this Agreement or any of
the other Financing Documents, including, without limitation, those costs and
expenses more specifically enumerated in 0 (Enforcement Costs), and (c) the
monitoring, administration, processing and/or servicing of any or all of the
Obligations or the Financing Documents.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

     "Eurodollar Base Rate" means for any Interest Period with respect to any
Eurodollar Loan, the per annum interest rate rounded upward, if necessary, to
the nearest 1/100 of 1%, appearing on Telerate Page 3750 (or any successor page)
as the London interbank offered rate for deposits in Dollars at or about 11:00
a.m. (London time) on the date that is two (2) Eurodollar Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period.  If for any reason such rate is not available, the term "Eurodollar Base
Rate" shall mean, for any Eurodollar Loan for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two (2) Eurodollar
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest
1/100 of 1%).

     "Eurodollar Business Day" means any Business Day on which dealings in
United States Dollar deposits are carried out on the London interbank market and
on which commercial banks are open for domestic and international business
(including dealings in Dollar deposits) in London, England.

     "Eurodollar Loan" means any Loan for which interest is to be computed with
reference to the Eurodollar Rate.

     "Eurodollar Rate" means for any Interest Period with respect to any
Eurodollar Loan, (a) the Applicable Margin, plus (b) the per annum rate of
interest calculated pursuant to the following formula:

                    Eurodollar Base Rate
                    1.00 - Reserve Percentage

     "Event of Default" has the meaning described in ARTICLE VI (Default and
Rights and Remedies).

                                       8
<PAGE>

     "Facilities" means the collective reference to the loan, letter of credit,
interest rate protection, foreign exchange risk, cash management, and other
credit facilities now or hereafter provided to the Borrower by the Lender
whether under this Agreement or otherwise.

     "Fees" means the collective reference to each fee payable to the Lender
under the terms of this Agreement or under the terms of any of the other
Financing Documents.

     "Financing Documents" means at any time collectively this Agreement, the
Notes, the Letter of Credit Documents, and any other instrument, agreement or
document previously, simultaneously or hereafter executed and delivered by the
Borrower and/or any other Person, singly or jointly with another Person or
Persons, evidencing, securing, guarantying or in connection with this Agreement,
the Notes, any of the Facilities, and/or any of the Obligations.

     "Fixed Charge Coverage Ratio" means for any period, the ratio of (a) EBITDA
plus operating lease payments to (b) the aggregate of all lease payments,
interest expense, scheduled payments due on Indebtedness for Borrowed Money,
dividends, share repurchases and cash income taxes paid.

     "Fixed or Capital Assets" of a Person at any date means all assets which
would, in accordance with GAAP consistently applied, be classified on the
balance sheet of such Person as property, plant or equipment at such date.

     "Funded Debt" is defined as the sum of senior debt, letter of credit
obligations (excluding letters of credit securing Indebtedness for Borrowed
Money), stockholder debt, Subordinated Indebtedness and the value of all
capitalized and synthetic leases.

     "GAAP" means generally accepted accounting principles in the United States
of America in effect from time to time.

     "Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any department, agency or instrumentality thereof.

     "Hazardous Materials" means (a) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976, as amended from time to time,
and regulations promulgated thereunder; (b) any "hazardous substance" as defined
by the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, and regulations promulgated thereunder; (c)
any substance the presence of which on any property now or hereafter owned,
acquired or operated by the Borrower is prohibited by any Law similar to those
set forth in this definition; and (d) any other substance which by Law requires
special handling in its collection, storage, treatment or disposal.

     "Hazardous Materials Contamination" means the contamination (whether
presently existing or occurring after the date of this Agreement) by Hazardous
Materials of any property owned, operated or controlled by the Borrower or for
which the Borrower has responsibility, including, without

                                       9
<PAGE>

limitation, improvements, facilities, soil, ground water, air or other elements
on, or of, any property now or hereafter owned, acquired or operated by the
Borrower, and any other contamination by Hazardous Materials for which the
Borrower is, or is claimed to be, responsible.

     "Indebtedness" of a Person means at any date the total liabilities of such
Person at such time determined in accordance with GAAP consistently applied.

     "Indebtedness for Borrowed Money" of a Person means at any time the sum at
such time of (a) indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, (b) any obligations of such
Person in respect of letters of credit, banker's or other acceptances or similar
obligations issued or created for the account of such Person, (c) Lease
Obligations of such Person with respect to Capital Leases, (d) all liabilities
secured by any Lien on any property owned by such Person, to the extent attached
to such Person's interest in such property, even though such Person has not
assumed or become personally liable for the payment thereof, (e) obligations of
third parties which are being guarantied or indemnified against by such Person
or which are secured by the property of such Person; (f) any obligation of such
Person under an employee stock ownership plan or other similar employee benefit
plan; (g) any obligation of such Person or a Commonly Controlled Entity to a
Multi-employer Plan; and (h) any obligations, liabilities or indebtedness,
contingent or otherwise, under or in connection with, any interest rate or
currency swap agreements, cap, floor, and collar agreements, currency spot,
foreign exchange and forward contracts and other similar agreements and
arrangements; but excluding trade and other accounts payable in the ordinary
course of business in accordance with customary trade terms and which are not
overdue (as determined in accordance with customary trade practices) or which
are being disputed in good faith by such Person and for which adequate reserves
are being provided on the books of such Person in accordance with GAAP.

     "Interest Period" means as to any Eurodollar Loan, the period commencing on
and including the date such Eurodollar Loan is made and ending on and including
the day which is thirty (30) days thereafter, and thereafter, each period
commencing on the last day of the then preceding Interest Period for such
Eurodollar Loan and ending on and including the day which is thirty (30) days
thereafter, as selected by the Borrower in accordance with the provisions of
this Agreement; provided, however that:

               (a)  the first day of any Interest Period shall be a Eurodollar
Business Day;

               (b)  if any Interest Period would end on a day that shall not be
a Eurodollar Business Day, such Interest Period shall be extended to the next
succeeding Eurodollar Business Day unless such next succeeding Eurodollar
Business Day would fall in the next calendar month, in which case, such Interest
Period shall end on the next preceding Eurodollar Business Day; and

               (c)  no Interest Period shall extend beyond the Revolving Credit
Expiration Date.

                                       10
<PAGE>

     "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the Income Tax Regulations issued and proposed to be
issued thereunder.

     "Item of Payment" means each check, draft, cash, money, instrument, item,
and other remittance in payment; and "Items of Payment" means the collective
reference to all of the foregoing.

     "Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any Governmental Authority.

     "Lease Obligations" of a Person means for any period the rental commitments
of such Person for such period under leases for real and/or personal property
(net of rent from subleases thereof, but including taxes, insurance, maintenance
and similar expenses which such Person, as the lessee, is obligated to pay under
the terms of said leases, except to the extent that such taxes, insurance,
maintenance and similar expenses are payable by sublessees), including rental
commitments under Capital Leases.

     "Letter of Credit" and "Letters of Credit" shall have the meanings
described in Section 2.2.1 (Letters of Credit).

     "Letter of Credit Agreement" means the collective reference to each letter
of credit application and agreement substantially in the form of the Lender's
then standard form of application for letter of credit or such other form as may
be approved by the Lender, executed and delivered by the Borrower in connection
with the issuance of a Letter of Credit, as the same may from time to time be
amended, restated, supplemented or modified and "Letter of Credit Agreements"
means all of the foregoing in effect at any time and from time to time.

     "Letter of Credit Commitment" means the agreement of the Lender relating to
the issuance of Letters of Credit subject to and in accordance with the
provisions of this Agreement.

     "Letter of Credit Commitment Period" means the period of time from the
Closing Date to the Business Day preceding the Revolving Credit Termination
Date.

     "Letter of Credit Documents" means any and all drafts under or purporting
to be under a Letter of Credit, any Letter of Credit Agreement, and any other
instrument, document or agreement executed and/or delivered by the Borrower or
any other Person under, pursuant to or in connection with a Letter of Credit or
any Letter of Credit Agreement.

     "Letter of Credit Facility" means the facility established by the Lender
pursuant to Section 0 (Letter of Credit Facility).

     "Letter of Credit Fee" and "Letter of Credit Fees" have the meanings
described in Section 2.2.2 (Letter of Credit Fees).

     "Letter of Credit Obligations" means all Obligations of the Borrower with
respect to the Letters of Credit and the Letter of Credit Agreements.

     "Lien" means any mortgage, deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, lien,

                                       11
<PAGE>

hypothecation, provision in any instrument or other document for confession of
judgment, cognovit or other similar right or remedy, claim or charge of any
kind, whether perfected or unperfected, avoidable or unavoidable, including,
without limitation, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction,
excluding the precautionary filing of any financing statement by any lessor in a
true lease transaction, by any bailor in a true bailment transaction or by any
consignor in a true consignment transaction under the Uniform Commercial Code of
any jurisdiction or the agreement to give any financing statement by any lessee
in a true lease transaction, by any bailee in a true bailment transaction or by
any consignee in a true consignment transaction.

     "Loan" means the Revolving Loan or the Term Loan, as the case may be, and
"Loans" means the collective reference to the Revolving Loan and the Term Loan.

     "Loan Notice" has the meaning described in Section 2.1.2 (Procedure for
Making Advances).

     "Management" means the Chairman of the Board, President or Chief Financial
Officer of the Borrower.

     "Multi-employer Plan" means a Plan which is a multi-employer plan as
defined in Section 4001(a)(3) of ERISA.

     "Net Worth" means the consolidated shareholders' equity, defined in
accordance with GAAP, of the Borrower and its Subsidiaries.

     "Note" means the Revolving Credit Note or the Term Note, individually as
the context implies and "Notes" means the Revolving Credit Note and the Term
Note, collectively.

     "Obligations" means all present and future indebtedness, duties,
obligations, and liabilities, whether now existing or contemplated or hereafter
arising, of the Borrower to the Lender under, arising pursuant to, in connection
with and/or on account of the provisions of this Agreement, each Note, each
Security Document, and/or any of the other Financing Documents, the Loans, any
Hedge Transaction and/or any of the Facilities including, without limitation,
the principal of, and interest on, each Note, late charges, the Fees,
Enforcement Costs, and prepayment fees (if any), letter of credit reimbursement
obligations, letter of credit fees or fees charged with respect to any guaranty
of any letter of credit; also means all other present and future indebtedness,
duties, obligations, and liabilities, whether now existing or contemplated or
hereafter arising, of the Borrower to the Lender of any nature whatsoever,
regardless of whether such indebtedness, duties, obligations, and liabilities be
direct, indirect, primary, secondary, joint, several, joint and several, fixed
or contingent; and also means any and all renewals, extensions, substitutions,
amendments, restatements and rearrangements of any such indebtedness, duties,
obligations, and liabilities.

     "Outstanding Letter of Credit Obligations" has the meaning described in
Section 2.2.3 (Terms of Letters of Credit).

                                       12
<PAGE>

     "Patents" means and includes, in each case whether now existing or
hereafter arising, all of the Borrower's rights, title and interest in and to
(a) any and all patents and patent applications, (b) any and all inventions and
improvements described and claimed in such patents and patent applications, (c)
reissues, divisions, continuations, renewals, extensions and continuations-in-
part of any patents and patent applications, (d) income, royalties, damages,
claims and payments now or hereafter due and/or payable under and with respect
to any patents or patent applications, including, without limitation, damages
and payments for past and future infringements, (e) rights to sue for past,
present and future infringements of patents, and (f) all rights corresponding to
any of the foregoing throughout the world.

     "PBGC" means the Pension Benefit Guaranty Corporation.

     "Permitted Liens" means:  (a) Liens for Taxes which are not delinquent or
which the Lender has determined in the exercise of its sole and absolute
discretion (i) are being diligently contested in good faith and by appropriate
proceedings, and such contest operates to suspend collection of the contested
Taxes and enforcement of a Lien, (ii) the Borrower has the financial ability to
pay, with all penalties and interest, at all times without materially and
adversely affecting the Borrower, and (iii) are not, and will not be with
appropriate filing, the giving of notice and/or the passage of time, entitled to
priority over any Lien of the Lender; (b) deposits or pledges to secure
obligations under workers' compensation, social security or similar laws, or
under unemployment insurance in the ordinary course of business; (c) judgment
Liens to the extent the entry of such judgment does not constitute a Default or
an Event of Default under the terms of this Agreement; (d) protective filings
recorded in connection with lease transactions; and (e) purchase money security
interests securing Indebtedness for Borrowed Money for the purchase of Equipment
in arms-length, commercially reasonable transactions with persons who are not
Affiliates; provided, however, that (i) the indebtedness secured shall not
exceed the unpaid purchase price of the Equipment acquired, plus reasonable
finance charges and the reasonable costs of collection (including, without
limitation, reasonable attorneys fees); and (ii) each item of Equipment shall
secure only its portion of the indebtedness described in item (i).

     "Permitted Uses" means (a) with respect to the Loans, the payment of
expenses incurred in the ordinary course of the Borrower's business, including
capital expenditures related to manufacturing expansion contemplated as of the
date hereof and (b) with respect to the Letter of Credit Facility, the issuance
of documentary and standby letters of credit.

     "Person" means and includes an individual, a corporation, a partnership, a
joint venture, a limited liability company, corporation or partnership, a trust,
an unincorporated association, a Governmental Authority, or any other
organization or entity.

     "Plan" means any pension plan that is covered by Title IV of ERISA and in
respect of which the Borrower or a Commonly Controlled Entity is an "employer"
as defined in Section 3 of ERISA.

     "Post-Default Rate" means the Base Rate in effect from time to time, plus
two percent (2%) per annum.

                                       13
<PAGE>

     "Prepayment" means a Revolving Loan Optional Prepayment or a Term Loan
Optional Prepayment, as the case may be and "Prepayments" mean collectively all
Revolving Loan Optional Prepayments and all Term Loan Optional Prepayments.

     "Pricing Ratio" means the Borrowers' ratio of Funded Debt to EBITDA.

     "Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA or the regulations thereunder.

     "Reserve Percentage" means, at any time, the then current maximum rate for
which reserves (including any basic, supplemental, marginal and emergency
reserves) are required to be maintained by member banks of the Federal Reserve
System under Regulation D  of the Board of Governors of the Federal Reserve
System against "Eurocurrency liabilities", as that term is defined in Regulation
D.  The Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Percentage.

     "Responsible Officer" means the chief executive officer of the Borrower or
the president of the Borrower or, with respect to financial matters, the chief
financial officer of the Borrower.

     "Revolving Credit Commitment" means the agreement of the Lender relating to
the making of the Revolving Loan and advances thereunder subject to and in
accordance with the provisions of this Agreement.

     "Revolving Credit Commitment Period" means the period of time from the
Closing Date to the Business Day preceding the Revolving Credit Termination
Date.

     "Revolving Credit Committed Amount" has the meaning described in Section
2.1.1 (Revolving Credit Facility).

     "Revolving Credit Expiration Date" means February __, 2005.

     "Revolving Credit Facility" means the facility established by the Lender
pursuant to Section 2.1 (Revolving Credit Facility).

     "Revolving Credit Note" has the meaning described in Section 2.1.3
(Revolving Credit Note).

     "Revolving Credit Unused Line Fee" and "Revolving Credit Unused Line Fees"
have the meanings described in Section 2.1.6 (Revolving Credit Unused Fee).

     "Revolving Credit Termination Date" means the earlier of (a) the Revolving
Credit Expiration Date, or (b) the date on which the Revolving Credit Commitment
is terminated pursuant to Section 6.2 or otherwise.

     "Revolving Loan" has the meaning described in Section 2.1.1 (Revolving
Credit Facility).

     "Revolving Loan Account" has the meaning described in Section 2.1.5
(Revolving Loan Account).

                                       14
<PAGE>

     "Revolving Loan Optional Prepayment" and "Revolving Loan Optional
Prepayments" have the meanings described in Section 2.1.4 (Optional Prepayment
of Revolving Loan).

     "State" means the State of Maryland.

     "Subordinated Indebtedness" means all Indebtedness, incurred at any time by
the Borrower, which is in amounts, subject to repayment terms, and subordinated
to the Obligations, as set forth in one or more written agreements, all in form
and substance satisfactory to the Lender in its sole and absolute discretion.

     "Subsidiary" means any corporation the majority of the voting shares of
which at the time are owned directly by the Borrower and/or by one or more
Subsidiaries of the Borrower.

     "Tangible Net Worth" means as to the Borrower and its Subsidiaries at any
date of determination thereof, the sum at such time of:  the Net Worth less the
total of (a) all Assets which would be classified as intangible assets under
GAAP consistently applied and (b) the amount of all loans and advances to, or
investments in, any Person, excluding Cash Equivalents and deposit accounts
maintained by the Borrower or its Subsidiaries with any financial institution.

     "Taxes" means all taxes and assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character
(including all penalties or interest thereon), which at any time may be
assessed, levied, confirmed or imposed by any Governmental Authority on the
Borrower or any of its properties or assets or any part thereof or in respect of
any of its franchises, businesses, income or profits.

     "Term Loan" has the meaning described in Section 2.3.1 (Term Loan
Commitment).

     "Term Loan Commitment" has the meaning described in Section 2.3.1 (Term
Loan Commitment).

     "Term Loan Committed Amount" has the meaning described in Section 2.3.1
(Term Loan Commitment).

     "Term Loan Facility" means the facility established by the Lender pursuant
to Section 2.3 (Term Loan Facility).

     "Term Loan Optional Prepayment" and "Term Loan Optional Prepayments" have
the meanings described in Section 2.3.3 (Optional Prepayments of Term Loan).

     "Term Note" has the meaning described in Section 2.3.2 (The Term Note).

     "Trademarks" means and includes in each case whether now existing or
hereafter arising, all of the Borrower's rights, title and interest in and to
(a) any and all trademarks (including service marks), trade names and trade
styles, and applications for registration thereof and the goodwill of the
business symbolized by any of the foregoing, (b) any and all licenses of
trademarks, service marks, trade names and/or trade styles, whether as licensor
or licensee, (c) any renewals of any and all trademarks, service

                                       15
<PAGE>

marks, trade names, trade styles and/or licenses of any of the foregoing, (d)
income, royalties, damages and payments now or hereafter due and/or payable with
respect thereto, including, without limitation, damages, claims, and payments
for past, present and future infringements thereof, (e) rights to sue for past,
present and future infringements of any of the foregoing, including the right to
settle suits involving claims and demands for royalties owing, and (f) all
rights corresponding to any of the foregoing throughout the world.

     "Uniform Commercial Code" means, unless otherwise provided in this
Agreement, the Uniform Commercial Code as adopted by and in effect from time to
time in the State or in any other jurisdiction, as applicable.

     "Wholly Owned Subsidiary" means any domestic United States corporation all
the shares of stock of all classes of which (other than directors' qualifying
shares) at the time are owned directly or indirectly by the Borrower and/or by
one or more Wholly Owned Subsidiaries of the Borrower.

     Section 1.2  Accounting Terms and Other Definitional Provisions.

     Unless otherwise defined herein, as used in this Agreement and in any
certificate, report or other document made or delivered pursuant hereto,
accounting terms not otherwise defined herein, and accounting terms only partly
defined herein, to the extent not defined, shall have the respective meanings
given to them under GAAP, as consistently applied to the applicable Person.
Unless otherwise defined herein, all terms used herein which are defined by the
Uniform Commercial Code shall have the same meanings as assigned to them by the
Uniform Commercial Code unless and to the extent varied by this Agreement.  The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references are references to articles, sections or
subsections of, or schedules or exhibits to, as the case may be, this Agreement
unless otherwise specified.  As used herein, the singular number shall include
the plural, the plural the singular and the use of the masculine, feminine or
neuter gender shall include all genders, as the context may require.  Reference
to any one or more of the Financing Documents shall mean the same as the
foregoing may from time to time be amended, restated, substituted, extended,
renewed, supplemented or otherwise modified.

                                  ARTICLE II

                             THE CREDIT FACILITIES

     Section 2.1  The Revolving Credit Facility.

                  2.1.1  Revolving Credit Facility.

                  Subject to and upon the provisions of this Agreement, the
Lender establishes a revolving credit facility in favor of the Borrower. The
aggregate of all advances under the Revolving Credit Facility is sometimes
referred to in this Agreement collectively as the "Revolving Loan".

                                       16
<PAGE>

          The principal amount of Thirty Five Million Dollars ($35,000,000) is
the "Revolving Credit Committed Amount".  If at any time the unpaid principal
balance of the Revolving Loan exceeds the Revolving Credit Committed Amount in
effect from time to time, the Borrower shall pay such excess to the Lender ON
DEMAND.

          During the Revolving Credit Commitment Period, the Lender agrees to
make advances under the Revolving Loan requested by the Borrower from time to
time provided that after giving effect to the Borrower's request, the
outstanding principal balance of the Revolving Loan and of the Letter of Credit
Obligations would not exceed the Revolving Credit Committed Amount less the
aggregate outstanding principal amount under the Bank Facilities and Term Notes,
if any.

          Unless sooner paid, the unpaid Revolving Loan, together with interest
accrued and unpaid thereon, and all other Obligations shall be due and payable
in full on the Revolving Credit Expiration Date.

          2.1.2  Procedure for Making Advances Under the Revolving Loan; Lender
                 Protection Loans.

          The Borrower may borrow under the Revolving Credit Commitment on any
Business Day.  Advances under the Revolving Loan shall be deposited to a demand
deposit account of the Borrower with the Lender (or an Affiliate of the Lender)
or shall be otherwise applied as directed by the Borrower, which direction the
Lender may require to be in writing.  No later than 1:00 p.m. (Eastern time) on
the date of the requested borrowing, the Borrower shall give the Lender oral or
written notice (a "Loan Notice") of the amount and (if requested by the Lender)
the purpose of the requested borrowing.  Any oral Loan Notice shall be confirmed
in writing by the Borrower within five (5) Business Days after the making of the
requested Revolving Loan.  Each Loan Notice shall be irrevocable.  In addition,
the Borrower hereby irrevocably authorizes the Lender at any time and from time
to time if the Lender determines that an event has occurred which impairs the
prospect of payment of the Obligations, without further request from or notice
to the Borrower, to make advances under the Revolving Loan which the Lender, in
its sole and absolute discretion, deems necessary or appropriate to protect the
Lender's interests under this Agreement, including, without limitation, advances
under the Revolving Loan made to cover debit balances in the Revolving Loan
Account, and/or principal of, and/or interest on, any Loan, prior to, on, or
after the termination of other advances under this Agreement, regardless of
whether the outstanding principal amount of the Revolving Loan that the Lender
may make hereunder exceeds the Revolving Credit Committed Amount.

          2.1.3  Revolving Credit Note.

          The obligation of the Borrower to pay the Revolving Loan, with
interest, shall be evidenced by a promissory note (as from time to time
extended, amended, restated, supplemented or otherwise modified, the "Revolving
Credit Note") substantially in the form of EXHIBIT B-1 attached hereto and made
a part hereof, with appropriate insertions.  The Revolving Credit Note shall be
dated as of the Closing Date, shall be payable to the order of the Lender at the
times provided in the Revolving Credit Note, and shall be in the principal
amount of the Revolving Credit Committed Amount.  The Borrower acknowledges and
agrees that, if the outstanding principal

                                       17
<PAGE>

balance of the Revolving Loan outstanding from time to time exceeds the face
amount of the Revolving Credit Note, the excess shall bear interest at the Post-
Default Rate for the Revolving Loan and shall be payable, with accrued interest,
ON DEMAND. The Revolving Credit Note shall not operate as a novation of any of
the Obligations or nullify, discharge, or release any such Obligations or the
continuing contractual relationship of the parties hereto in accordance with the
provisions of this Agreement.

          2.1.4  Optional Prepayments of Revolving Loan.

          The Borrower shall have the option, at any time and from time to time,
to prepay (each a "Revolving Loan Optional Prepayment" and collectively the
"Revolving Loan Optional Prepayments") the Revolving Loan, in whole or in part
without premium or penalty.

          2.1.5  Revolving Loan Account.

          The Lender will establish and maintain a loan account on its books
(the "Revolving Loan Account") to which the Lender will (a) debit (i) the
principal amount of each advance of the Revolving Loan made by the Lender
hereunder as of the date made, (ii) the amount of any interest accrued on the
Revolving Loan as and when due, and (iii) any other amounts due and payable by
the Borrower to the Lender from time to time under the provisions of this
Agreement in connection with the Revolving Loan, including, without limitation,
Enforcement Costs, Fees, late charges, and service and collection fees, as and
when due and payable, and (b) credit all payments made by the Borrower to the
Lender on account of the Revolving Loan as of the date made.  The Lender may
debit the Revolving Loan Account for the amount of any Item of Payment which is
returned to the Lender unpaid.  All credit entries to the Revolving Loan Account
are conditional and shall be readjusted as of the date made if final and
indefeasible payment is not received by the Lender in cash or solvent credits.
Any and all periodic or other statements or reconciliations, and the information
contained in those statements or reconciliations, of the Revolving Loan Account
shall be final, binding and conclusive upon the Borrower in all respects, absent
manifest error, unless the Lender receives specific written objection thereto
from the Borrower within thirty (30) Business Days after such statement or
reconciliation shall have been sent by the Lender.

          2.1.6  Revolving Credit Unused Line Fee.

          The Borrower shall pay to the Lender a quarterly revolving credit
facility fee on the average daily unused and undisbursed portion of the
Revolving Credit Committed Amount in effect from time to time less the aggregate
outstanding principal amount under the Bank Facilities and Term Notes, if any,
accruing during each calendar quarter (collectively, the "Revolving Credit
Unused Line Fees" and individually, a "Revolving Credit Unused Line Fee") in an
amount determined quarterly based upon the achievement of the Pricing Ratio as
set forth in the following table:

          -----------------------------------------------------------
               Pricing Ratio                         Unused Fee
          -----------------------------------------------------------
           2.50:1 * but ** 1.51 to 1.0            35 basis points
          -----------------------------------------------------------
           1.50:1 * but ** 1.01 to 1.0            30 basis points
          -----------------------------------------------------------
           1.0 to 1 or less                       20 basis points
          -----------------------------------------------------------

*  More than
** Less than or equal to

                                       18
<PAGE>

                  The accrued and unpaid portion of the Revolving Credit Unused
Line Fee shall be paid by the Borrower to the Lender on the first day of each
quarter, commencing on the first such date following the date hereof, and on the
Revolving Credit Termination Date.

     Section 2.2  The Letter of Credit Facility

                  2.2.1  Letters of Credit.

                  Subject to and upon the provisions of this Agreement, and as a
part of the Revolving Credit Commitment, the Borrower may, upon the prior
approval of the Lender, obtain standby or documentary letters of credit (as the
same may from time to time be amended, supplemented or otherwise modified, each
a "Letter of Credit" and collectively the "Letters of Credit") from the Lender
from time to time from the Closing Date until the Business Day preceding the
Revolving Credit Termination Date. The Borrower will not be entitled to obtain a
Letter of Credit hereunder unless (a) the Borrower is then able to obtain a
Revolving Loan from the Lenders in an amount not less than the proposed face
amount of the Letter of Credit requested by the Borrower and (b) the sum of the
then Outstanding Letter of Credit Obligations (including the amount of the
requested Letter of Credit) does not exceed Five Million Dollars ($5,000,000).

                  2.2.2  Letter of Credit Fees.

                  Prior to or simultaneously with the opening of each standby
Letter of Credit, the Borrower shall pay to the Lender, a letter of credit fee
in an amount equal to the customary fees charged by the Lender for standby
letters of credit or such other amount as may be negotiated and upon negotiation
of each documentary Letter of Credit the Borrower shall pay to the Lender, a
letter of credit fee in an amount equal to the customary fees charged by the
Lender for negotiation of documentary letters of credit (each a "Letter of
Credit Fee" and collectively the "Letter of Credit Fees"). Such Letter of Credit
Fees for standby Letters of Credit shall be paid upon the opening of the standby
Letter of Credit and upon each anniversary thereof, if any. In addition, the
Borrower shall pay to the Lender any and all additional issuance, negotiation,
processing, transfer or other fees to the extent and as and when required by the
provisions of any Letter of Credit Agreement; such additional fees are included
in and a part of the "Fees" payable by the Borrower under the provisions of this
Agreement.

                  2.2.3  Terms of Letters of Credit.

                  Each Letter of Credit shall (a) be opened pursuant to a Letter
of Credit Agreement, and (b) if a standby Letter of Credit, expire on a date not
later than the Business Day preceding the Revolving Credit Expiration Date and
if a documentary Letter of Credit, expire on a date not later than two hundred
and seventy (270) days from the date of issuance; provided, however, if any
Letter of Credit does have an expiration date later than the Business Day
preceding the Revolving Credit Termination Date, as of the Business Day
preceding the Revolving Credit Termination Date an advance of the Revolving
Credit Facility shall be made by the Lender in the face amount of such Letter of
Credit (or Letters of Credit) and the proceeds thereof shall be deposited in an
account titled in the name of the Lender as trustee for the Borrower. The
proceeds of the trustee account referred to in the immediately preceding
sentence shall be held as collateral for the Letter

                                       19
<PAGE>

of Credit (or Letters of Credit) and in the event of a draw under or negotiation
of the Letter of Credit (or Letters of Credit), used to pay any such draw or
negotiation. The aggregate face amount of all Letters of Credit at any one time
outstanding and issued by the Lender pursuant to the provisions of this
Agreement, plus the amount of any unpaid Letter of Credit Fees accrued or
scheduled to accrue thereon, and less the aggregate amount of all drafts issued
under or purporting to have been issued under such Letters of Credit that have
been paid by the Lender, is herein called the "Outstanding Letter of Credit
Obligations".

                  2.2.4  Procedure for Letters of Credit.

                  The Borrower shall give the Lender written notice at least
three (3) Business Days prior to the date on which a Letter of Credit is
requested to be opened of their request for a Letter of Credit. Such notice
shall be accompanied by a duly executed and delivered Letter of Credit
Agreement. Upon receipt of the Letter of Credit Agreement and the Letter of
Credit Fee, the Lender shall process such Letter of Credit Agreement in
accordance with its customary procedures and open such Letter of Credit on the
Business Day specified in such notice.

                  2.2.5  Change in Law; Increased Cost.

                  If any change in any law or regulation or in the
interpretation thereof by any court or other Governmental Authority charged with
the administration thereof shall either (a) impose, modify or deem applicable
any reserve, special deposit or similar requirement against Letters of Credit
issued by the Lender, or (b) impose on the Lender any other condition regarding
this Agreement or any Letter of Credit, and the result of any event referred to
in clauses (a) or (b) above shall be to increase the cost to the Lender of
issuing, maintaining or extending the Letter of Credit or the cost to the Lender
of funding any obligation under or in connection with the Letter of Credit,
then, upon demand by the Lender, the Borrower shall immediately pay to the
Lender from time to time as specified by the Lender, additional amounts which
shall be sufficient to compensate the Lender for such increased cost, together
with interest on each such amount from the date demanded until payment in full
thereof at a rate per annum equal to the then highest current rate of interest
on the Revolving Loan. A certificate as to such increased cost incurred by the
Lender, submitted by the Lender to the Borrower, shall be conclusive, absent
manifest error.

     Section 2.3  The Term Loan Facility.

                  2.3.1  Term Loan Commitment.

                  Subject to and upon the provisions of this Agreement, the
Lender agrees to make a loan (the "Term Loan") to the Borrower on the Closing
Date in the principal amount of Ten Million Dollars ($10,000,000) (herein called
the "Term Loan Committed Amount"). The obligation of the Lender to make the Term
Loan is herein called its "Term Loan Commitment".

                  2.3.2  The Term Note.

                  The obligation of the Borrower to pay the Term Loan with
interest shall be evidenced by a promissory note (as from time to time extended,
amended, restated, supplemented or otherwise modified, the "Term

                                       20
<PAGE>

Note") substantially in the form of EXHIBIT B-2 attached hereto and made a part
hereof with appropriate insertions.

                  2.3.3 Optional Prepayments of Term Loan.

                  The Borrower shall have the option, at any time and from time
to time, to prepay (each a "Term Loan Optional Prepayment" and collectively the
"Term Loan Optional Prepayments") the Term Loan, in whole or in part, upon five
(5) Business Days prior written notice, specifying the date and amount of
prepayment. The amount to be so prepaid, together with interest accrued thereon
to date of prepayment if the amount is intended as a prepayment of the Term Loan
in whole, shall be paid by the Borrower to the Lender on the date specified for
such prepayment. Partial Term Loan Optional Prepayments shall be in an amount
not less than the aggregate amount of the next principal installment under the
Term Note and shall be applied first to all accrued and unpaid interest on the
principal of the Term Note, then to the balloon payment due at maturity and then
to principal against the principal installments in the inverse order of their
maturity.

     Section 2.4  General Financing Provisions.

                  2.4.1  Borrower's Representatives.

                  The Lender is hereby irrevocably authorized by the Borrower to
make advances under the Loans to the Borrower pursuant to the provisions of this
Agreement upon the written, oral or telephone request of any one of the Persons
who is from time to time a Responsible Officer of the Borrower under the
provisions of the most recent "Certificate" of corporate resolutions of the
Borrower on file with the Lender or who is an officer or employee of the
Borrower whom a Responsible Officer from time to time authorizes in writing to
do so. The Lender does not and shall not assume any responsibility or liability
for any errors, mistakes, and/or discrepancies in the oral, telephonic, written
or other transmissions of any instructions, orders, requests and confirmations
between the Lender and the Borrower in connection with the Credit Facilities,
any Loan or any other transaction in connection with the provisions of this
Agreement.

                  2.4.2  Use of Proceeds of the Loans.

                  The proceeds of each advance under the Loans and each Letter
of Credit issued hereunder shall be used by the Borrower for Permitted Uses, and
for no other purposes except as may otherwise be agreed by the Lender in
writing.

                  2.4.3  Computation of Interest and Fees.

                  All applicable Fees and interest shall be calculated on the
basis of a year of 360 days for the actual number of days elapsed. Any change in
the interest rate on any of the Obligations resulting from a change in the
Eurodollar Base Rate shall become effective as of the opening of business on the
day on which such change in the Eurodollar Base Rate is announced.

                  2.4.4  Payments.

                                       21
<PAGE>

          All payments of the Obligations, including, without limitation,
principal, interest, Prepayments, and Fees, shall be paid by the Borrower
without setoff, recoupment or counterclaim to the Lender in immediately
available funds not later than 12:00 noon (Eastern time) on the due date of such
payment.  All such payments shall be made to the Lender's principal office in
Baltimore, Maryland or at such other location as the Lender may at any time and
from time to time notify the Borrower.  Alternatively, at its sole discretion,
the Lender may charge any deposit account of the Borrower at the Lender or any
Affiliate of the Lender with all or any part of any amount due to the Lender
under this Agreement or any of the other Financing Documents to the extent that
the Borrower shall have not otherwise tendered payment to the Lender.  All
payments shall be applied first to any unpaid Fees, second to any and all
accrued and unpaid late charges and Enforcement Costs, third to any and all
accrued and unpaid interest on the Obligations, and then to the then unpaid
principal balance of the Obligations, all in such order and manner as shall be
determined by the Lender in its sole and absolute discretion.

          2.4.5  Liens; Setoff.

          The Borrower hereby grants to the Lender as collateral and security
for all of the Obligations, a continuing Lien on any and all monies, Securities,
and like assets of the Borrower and any and all proceeds thereof, now or
hereafter held or received by, or in transit to, the Lender or any Affiliate of
the Lender from, or for the account of, the Borrower, and also upon any and all
depository accounts (whether general or special) and credits of the Borrower, if
any, with the Lender or any Affiliate of the Lender, at any time existing,
excluding any depository accounts held by the Borrower in its capacity as
trustee for Persons who are not Affiliates of the Borrower.  Without implying
any limitation on any other rights the Lender may have under the Financing
Documents or applicable Laws, during the continuance of an Event of Default, the
Lender is hereby authorized by the Borrower at any time and from time to time at
the Lender's option, without notice to, or consent of, the Borrower, to set off,
appropriate, seize, freeze and apply any or all items hereinabove referred to
against all Obligations then outstanding (whether or not then due), all in such
order and manner as shall be determined by the Lender in its sole and absolute
discretion.

          2.4.6  Requirements of Law.

          In the event that the Lender shall have determined in good faith that
(a) the adoption of any Laws regarding capital adequacy, or (b) any change in
such Laws or in the interpretation or application thereof or (c) compliance by
the Lender or any corporation controlling the Lender with any request or
directive regarding capital adequacy (whether or not having the force of law)
from any Governmental Authority or central bank, does or shall have the effect
of reducing the rate of return on the capital of the Lender or such controlling
corporation as a consequence of the Lender's obligations under this Agreement to
a level below that which the Lender or such corporation would have achieved but
for such adoption, change or compliance (taking into consideration the policies
of the Lender and its controlling corporation with respect to capital adequacy)
by an amount deemed by the Lender, in its discretion, to be material, then from
time to time, after submission by the Lender to the Borrower of a written
request therefor and a statement of the basis for the Lender's determination,
the Borrower

                                       22
<PAGE>

shall pay to the Lender such additional amount or amounts in order to compensate
the Lender or its controlling corporation for any such reduction.

     Section 2.5  Interest.

                         (a) Each Loan shall bear interest until maturity
(whether by acceleration, declaration, extension or otherwise) at the Eurodollar
Rate or as otherwise determined in accordance with the provisions of this
Section 2.5, and as may be adjusted from time to time in accordance with the
provisions of Section 2.5.2 (Inability to Determine Eurodollar Base Rate).

                         (b) The Applicable Margin for Eurodollar Loans shall be
fifty (50) basis points per annum until a change is required by the operation of
Section 2.5(c).

                         (c) Changes in the Applicable Margin shall be made not
more frequently than quarterly based on the Borrower's Pricing Ratio, determined
by the Lender in the exercise of its sole and absolute discretion, five (5)
Business Days after Lender's receipt of the quarterly reports required by
Section 5.1.1(b) (Quarterly Statements and Certificates). The first such
determination shall be made based on the Borrower's most recent quarterly
statements for the period ended January 31, 2001. The Applicable Margin
(expressed as basis points) shall vary depending upon the Borrower's Pricing
Ratio, as follows:

               ---------------------------------------------------------
                      Pricing Ratio                 Spread Over LIBOR
               ---------------------------------------------------------
                2.50:1 * but ** 1.51 to 1.0                 125 bp
               ---------------------------------------------------------
                1.50:1 * but ** 1.01 to 1.0                  85 bp
               ---------------------------------------------------------
                1.0 to 1 * but **.51 to 1.0                67.5 bp
               ---------------------------------------------------------
                .50 to 1 or less                             50 bp
               ---------------------------------------------------------

                  2.5.2  Inability to Determine Eurodollar Base Rate.

                  In the event that (a) the Lender shall have determined that,
by reason of circumstances affecting the London interbank eurodollar market,
adequate and reasonable means do not exist for ascertaining the Eurodollar Base
Rate or (b) the Lender shall determine that the Eurodollar Base Rate does not
adequately and fairly reflect the cost to the Lender of funding, the Lender
shall give telephonic or written notice of such determination to the Borrower at
least one (1) day prior to the proposed date for funding such Loan. If such
notice is given, any request for a Eurodollar Loan shall be made as a Base Rate
Loan. Until such notice has been withdrawn by the Lender, the Borrower will not
request that any Loan be made as a Eurodollar Loan.

                  2.5.3  Payment of Interest.

                         (a) Unpaid and accrued interest on any portion of the
Revolving Loan shall be paid monthly, in arrears, on the first day of each
calendar month, commencing on the first such date after the date of this
Agreement, and on the first day of each calendar month thereafter, and at
maturity (whether by acceleration, declaration, extension or otherwise).

*  More than
** Less than or equal to

                                       23
<PAGE>

               (b)  Unpaid and accrued interest on any portion of the Term Loan
shall be paid quarterly, in arrears, on the last day of each fiscal quarter
beginning August 31, 2001, and on the last day of each fiscal quarter
thereafter, and at maturity (whether by acceleration, declaration, extension or
otherwise).

          2.5.4  Default Interest Rate on the Obligations.

          Notwithstanding any provision contained herein to the contrary,
following the occurrence and during the continuance of an Event of Default, at
the option of the Lender, all Loans and all other Obligations shall bear
interest at the Post-Default Rate.

                                  ARTICLE III

                        REPRESENTATIONS AND WARRANTIES

     Section 3.1  Representations and Warranties.

     The Borrower represents and warrants to the Lender, as follows:

          3.1.1  Subsidiaries.

          The Borrower has the Subsidiaries listed on Schedule 0 attached hereto
and made a part hereof and no others.  Each of the Subsidiaries is a Wholly
Owned Subsidiary except as shown on Schedule 0, which correctly indicates the
nature and amount of the Borrower's ownership interests therein.

          3.1.2  Good Standing.

          Each of the Borrower and its Subsidiaries, is a corporation duly
organized, existing and in good standing under the laws of the jurisdiction of
its formation, (b) has the power to own its property and to carry on its
business as now being conducted, and (c) is duly qualified to do business and is
in good standing in each jurisdiction in which the character of the properties
owned by it therein or in which the transaction of its business makes such
qualification necessary.

          3.1.3  Power and Authority.

          The Borrower has full power and authority to execute and deliver this
Agreement, the other Financing Documents to which it is a party, to make the
borrowings under this Agreement and to incur and perform the Obligations whether
under this Agreement, the other Financing Documents or otherwise, all of which
have been duly authorized by all proper and necessary corporate action.  No
consent or approval of shareholders or any creditors of the Borrower, and no
consent, approval, filing or registration with or notice to any Governmental
Authority on the part of the Borrower, is required as a condition to the
execution, delivery, validity or enforceability of this Agreement, the other
Financing Documents, the performance by the Borrower of the Obligations.

          3.1.4  Binding Agreements.

                                       24
<PAGE>

          This Agreement and the other Financing Documents executed and
delivered by the Borrower have been properly executed and delivered and
constitute the valid and legally binding obligations of the Borrower and are
fully enforceable against the Borrower in accordance with their respective
terms, subject to bankruptcy, insolvency, reorganization, moratorium and other
laws of general applications affecting the rights and remedies of creditors and
secured parties, and general principles of equity regardless of whether applied
in a proceeding in equity or at law.

          3.1.5  No Conflicts.

          Neither the execution, delivery and performance of the terms of this
Agreement or of any of the other Financing Documents executed and delivered by
the Borrower nor the consummation of the transactions contemplated by this
Agreement will conflict with, violate or be prevented by (a) the Borrower's
articles of organization of operating agreement, (b) any existing mortgage,
indenture, contract or agreement binding on the Borrower or affecting any of its
property, or (c) to its knowledge, any Laws.

          3.1.6  No Defaults, Violations.

                 (a) No Default or Event of Default has occurred and is
continuing.

                 (b) Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any obligation under any existing mortgage,
indenture, contract or agreement binding on it or affecting its property in any
respect which could be materially adverse to the business, operations, property
or financial condition of the Borrower, or which could materially adversely
affect the ability of the Borrower to perform its obligations under this
Agreement or the other Financing Documents, to which the Borrower is a party.

          3.1.7  Compliance with Laws.

          To the best of its knowledge, neither the Borrower nor any of its
Subsidiaries is in violation of any applicable Laws (including, without
limitation, any Laws relating to employment practices, to environmental,
occupational and health standards and controls) or order, writ, injunction,
decree or demand of any court, arbitrator, or any Governmental Authority
affecting the Borrower or any of its properties, the violation of which,
considered in the aggregate, could materially adversely affect the business,
operations or properties of the Borrower and/or its Subsidiaries.

          3.1.8  Margin Stock.

          None of the proceeds of the Loans will be used, directly or
indirectly, by the Borrower or any Subsidiary for the purpose of purchasing or
carrying, or for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry, any "margin security" within the
meaning of Regulation G (12 CFR Part 207), or "margin stock" within the meaning
of Regulation U (12 CFR Part 221), of the Board of Governors of the Federal
Reserve System or for any other purpose which might make the transactions
contemplated in this Agreement a "purpose credit" within the meaning of said
Regulation G or Regulation U, or cause this

                                       25
<PAGE>

Agreement to violate any other regulation of the Board of Governors of the
Federal Reserve System or the Securities Exchange Act of 1934 or the Small
Business Investment Act of 1958, as amended, or any rules or regulations
promulgated under any of such statutes.

          3.1.9  Investment Company Act; Margin Securities.

          Neither the Borrower nor any of its Subsidiaries is an investment
company within the meaning of the Investment Company Act of 1940, as amended,
nor is it, directly or indirectly, controlled by or acting on behalf of any
Person which is an investment company within the meaning of said Act.  Neither
the Borrower nor any of its Subsidiaries is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying "margin security" within the meaning of Regulation G (12
CFR Part 207), or "margin stock" within the meaning of Regulation U (12 CFR Part
221), of the Board of Governors of the Federal Reserve System.

          3.1.10 Litigation.

          Except as otherwise disclosed to the Lender on Schedule 0 attached to
and made a part of this Agreement, there are no proceedings, actions or
investigations pending or, so far as the Borrower knows, threatened before or by
any court, arbitrator or any Governmental Authority which, in any one case or in
the aggregate, if determined adversely to the interests of the Borrower or any
Subsidiary, would have a material adverse effect on the business, properties,
condition (financial or otherwise) or operations, present or prospective, of the
Borrower.

          3.1.11 Financial Condition.

          The financial statements of the Borrower dated January 31, 2001, are
complete and correct and fairly present the financial position of the Borrower
and its Subsidiaries and the results of their operations and transactions in
their surplus accounts as of the date and for the period referred to and have
been prepared in accordance with GAAP applied on a consistent basis throughout
the period involved.  There are no liabilities, direct or indirect, fixed or
contingent, of the Borrower or any Subsidiary as of the date of such financial
statements that are not reflected therein or in the notes thereto.  There has
been no adverse change in the financial condition or operations of the Borrower
or any Subsidiary since the date of such financial statements and to the
Borrower's knowledge no such adverse change is pending or threatened.  Neither
the Borrower nor any Subsidiary has guaranteed the obligations of, or made any
investment in or advances to, any Person, except as disclosed in such financial
statements.

          3.1.12 Full Disclosure.

          The financial statements referred to in Section 0 (Financial
Condition), the Financing Documents (including, without limitation, this
Agreement), and the statements, reports or certificates furnished by the
Borrower in connection with the Financing Documents (a) do not contain any
untrue statement of a material fact and (b) when taken in their entirety, do not
omit any material fact necessary to make the statements contained therein not
misleading.  There is no fact known to the Borrower which the Borrower has not
disclosed to the Lender in writing prior

                                       26
<PAGE>

to the date of this Agreement with respect to the transactions contemplated by
the Financing Documents which materially and adversely affects or in the future
could, in the reasonable opinion of the Borrower materially adversely affect the
condition, financial or otherwise, results of operations, business, or assets of
the Borrower or of any Subsidiary.

          3.1.13 Indebtedness for Borrowed Money.

          Except for the Obligations and except as set forth in Schedule 3.1.13
attached to and made a part of this Agreement, the Borrower has no Indebtedness
for Borrowed Money.  The Lender has received photocopies of all promissory notes
evidencing any Indebtedness for Borrowed Money set forth in Schedule 3.1.13,
together with any and all subordination agreements, other agreements, documents,
or instruments securing, evidencing, guarantying or otherwise executed and
delivered in connection therewith.

          3.1.14 Taxes.

          The Borrower and its Subsidiaries have filed all returns, reports and
forms for Taxes which, to the knowledge of the Borrower, are required to be
filed, and has paid all Taxes as shown on such returns or on any assessment
received by it, to the extent that such Taxes have become due, unless and to the
extent only that such Taxes, assessments and governmental charges are currently
contested in good faith and by appropriate proceedings by the Borrower, such
Taxes are not the subject of any Liens other than Permitted Liens, and adequate
reserves therefor have been established as required under GAAP.  All tax
liabilities of the Borrower were as of the date of audited financial statements
referred to in Section 0 (Financial Condition), and are now, adequately provided
for on the books of the Borrower or its Subsidiaries, as appropriate.  No tax
liability has been asserted by the Internal Revenue Service or any state or
local authority against the Borrower for Taxes in excess of those already paid.

          3.1.15 ERISA.

          With respect to any "pension plan" as defined in Section 3(2) of
ERISA, which plan is now or previously has been maintained or contributed to by
the Borrower and/or by any commonly controlled entity: (a) no "accumulated
funding deficiency" as defined in Code (S)412 or ERISA (S)302 has occurred,
whether or not that accumulated funding deficiency has been waived; (b) no
Reportable Event has occurred; (c) no termination of any plan subject to Title
IV of ERISA has occurred; (d) neither the Borrower nor any commonly controlled
entity (as defined under ERISA) has incurred a "complete withdrawal" within the
meaning of ERISA (S)4203 from any Multi-employer Plan; (e) neither the Borrower
nor any commonly controlled entity has incurred a "partial withdrawal" within
the meaning of ERISA (S)4205 with respect to any Multi-employer Plan; (f) no
Multi-employer Plan to which the Borrower or any commonly controlled entity has
an obligation to contribute is in "reorganization" within the meaning of ERISA
(S)4241 nor has notice been received by the Borrower or any commonly controlled
entity that such a Multi-employer Plan will be placed in "reorganization".

          3.1.16 Title to Properties.

          The Borrower has good and marketable title to all of its properties,
including, without limitation, the properties and assets

                                       27
<PAGE>

reflected in the balance sheets described in Section 3.1.11 (Financial
Condition). The Borrower has legal, enforceable and uncontested rights to use
freely such property and assets.

          3.1.17 Patents, Trademarks, Etc.

          The Borrower and its Subsidiaries owns, possesses, or has the right to
use all necessary Patents, licenses, Trademarks, Copyrights, permits and
franchises to own its properties and to conduct its business as now conducted,
without known conflict with the rights of any other Person.  Any and all
obligations to pay royalties or other charges with respect to such properties
and assets are properly reflected on the financial statements described in
Section 3.1.11 (Financial Condition).

          3.1.18 Employee Relations.

          Except as disclosed on Schedule 0 attached hereto and made a part
hereof, (a) neither the Borrower nor any Subsidiary thereof nor the Borrower's
or Subsidiary's employees is subject to any collective bargaining agreement, (b)
no petition for certification or union election is pending with respect to the
employees of the Borrower or any Subsidiary and no union or collective
bargaining unit has sought such certification or recognition with respect to the
employees of the Borrower, (c) there are no strikes, slowdowns, work stoppages
or controversies pending or, to the best knowledge of Borrower after due
inquiry, threatened between the Borrower and its employees, and (d) neither the
Borrower nor any Subsidiary is subject to a written employment contract,
severance agreement, commission contract, consulting agreement or bonus
agreement in an amount in excess of One Hundred Thousand Dollars ($100,0000) per
year.  Hours worked and payments made to the employees of the Borrower have not
been in violation of the Fair Labor Standards Act or any other applicable law
dealing with such matters.  All payments due from the Borrower or for which any
claim may be made against the Borrower, on account of wages and employee and
retiree health and welfare insurance and other benefits have been paid or
accrued as a liability on its books.  The consummation of the transactions
contemplated by the Financing Agreement or any of the other Financing Documents,
will not give rise to a right of termination or right of renegotiation on the
part of any union under any collective bargaining agreement to which the
Borrower is a party or by which it is bound.

          3.1.19 Presence of Hazardous Materials or Hazardous Materials
Contamination.

          Except as disclosed on Schedule 3.1.19 attached hereto and made a part
hereof, to the best of the Borrower's knowledge, (a) no Hazardous Materials are
located on any real property owned, controlled or operated by of the Borrower or
for which the Borrower is, or is claimed to be, responsible, except for
reasonable quantities of necessary supplies for use by the Borrower in the
ordinary course of its current line of business and stored, used and disposed in
accordance with applicable Laws; and (b) no property owned, controlled or
operated by the Borrower or for which the Borrower has, or is claimed to have,
responsibility has ever been used as a manufacturing, storage, or dump site for
Hazardous Materials nor is affected by Hazardous Materials Contamination at any
other property.

     Section 3.2  Survival; Updates of Representations and Warranties.

                                       28
<PAGE>

     All representations and warranties contained in or made under or in
connection with this Agreement and the other Financing Documents shall survive
the Closing Date, the making of any advance under the Loans and extension of
credit made hereunder, and the incurring of any other Obligations and shall be
deemed to have been made at the time of each request for, and again at the time
the making of, each advance under the Loans or the issuance of each Letter of
Credit, except that the representations and warranties which relate to financial
statements which are referred to in Section 0 (Financial Condition), shall also
be deemed to cover financial statements furnished from time to time to the
Lender pursuant to Section 0 (Financial Statements).

                                  ARTICLE IV

                             CONDITIONS PRECEDENT

     Section 4.1  Conditions to the Initial Advance and Initial Letter of
Credit.

     The making of the initial advance under the Loans and the issuance of the
initial Letter of Credit is subject to the fulfillment on or before the Closing
Date of the following conditions precedent in a manner satisfactory in form and
substance to the Lender and its counsel:

               4.1.1  Organizational Documents-Borrower.

     The Lender shall have received:

                      (a) a certificate of good standing for the Borrower
     certified by the Secretary of State, or other appropriate Governmental
     Authority, of the state of incorporation for the Borrower;

                      (b) a certificate of qualification to do business for the
     Borrower certified by the Secretary of State or other Governmental
     Authority of each state in which the Borrower conducts business;

                      (c) a certificate dated as of the Closing Date by the
     Secretary or an Assistant Secretary of the Borrower covering:

                              (i)   true and complete copies of the Borrower's
          corporate charter, bylaws, and all amendments thereto;

                              (ii)  true and complete copies of the resolutions
          of its Board of Directors authorizing (A) the execution, delivery and
          performance of the Financing Documents, (ii) the borrowings hereunder,
          and (C) the granting of the Liens contemplated by this Agreement; and

                              (iii) the incumbency, authority and signatures of
          the officers of the Borrower authorized to

                                       29
<PAGE>

          sign this Agreement and the other Financing Documents to which the
          Borrower is a party.

               4.1.2  Opinion of Borrower's Counsel.

               The Lender shall have received the favorable opinion of counsel
for the Borrower addressed to the Lender.

               4.1.3  Consents, Licenses, Approvals, Etc.

               The Lender shall have received copies of all consents, licenses
and approvals, required in connection with the execution, delivery, performance,
validity and enforceability of the Financing Documents, and such consents,
licenses and approvals shall be in full force and effect.

               4.1.4  Notes.

               The Lender shall have received the Revolving Credit Note and the
Term Note, conforming to the requirements hereof and executed by a Responsible
Officer of the Borrower and attested by a duly authorized representative of the
Borrower.

               4.1.5  Financing Documents.

               The Borrower shall have executed and delivered the Financing
Documents to be executed by them.

               4.1.6  Other Financing Documents.

               In addition to the Financing Documents to be delivered by the
Borrower, the Lender shall have received the Financing Documents duly executed
and delivered by Persons other than the Borrower.

               4.1.7  Other Documents, Etc.

               The Lender shall have received such other certificates, opinions,
documents and instruments confirmatory of or otherwise relating to the
transactions contemplated hereby as may have been reasonably requested by the
Lender.

               4.1.8  Payment of Fees.

               The Lender shall have received payment of any Fees due on or
before the Closing Date.

               4.1.9  Insurance Certificate.

               The Lender shall have received an insurance certificate in
accordance with the provisions of Section 5.1.8(Insurance).

     Section 4.2  Conditions to all Extensions of Credit.

     The making of all advances under the Loans and the issuance of all Letters
of Credit is subject to the fulfillment of the following conditions precedent in
a manner satisfactory in form and substance to the Lender and its counsel:

                                       30
<PAGE>

               4.2.1  Compliance.

               The Borrower shall have complied and shall then be in compliance
with all terms, covenants, conditions and provisions of this Agreement and the
other Financing Documents that are binding upon it.

               4.2.2  Default.

               There shall exist no Event of Default or Default hereunder.

               4.2.3  Representations and Warranties.

               The representations and warranties of the Borrower contained
among the provisions of this Agreement shall be true and with the same effect as
though such representations and warranties had been made at the time of the
making of, and of the request for, each advance under the Loans or the issuance
of each Letter of Credit, except that the representations and warranties which
relate to financial statements which are referred to in Section 3.1.11
(Financial Condition), shall also be deemed to cover financial statements
furnished from time to time to the Lender pursuant to Section 5.1.1 (Financial
Statements).

               4.2.4  Adverse Change.

               No adverse change shall have occurred in the condition (financial
or otherwise), operations or business of the Borrower that would, in the good
faith judgment of the Lender, materially impair the ability of the Borrower to
pay or perform any of the Obligations.

               4.2.5  Legal Matters.

               All legal documents incident to each advance under the Loans and
each of the Letters of Credit shall be reasonably satisfactory to counsel for
the Lender.

                                   ARTICLE V

                           COVENANTS OF THE BORROWER

     Section 5.1  Affirmative Covenants.

     So long as any of the Obligations or the Commitments shall be outstanding
hereunder, the Borrower agrees with the Lender as follows:

               5.1.1  Financial Statements.

               The Borrower shall furnish to the Lender:

                    (a) Annual Statements and Certificates. The Borrower shall
furnish to the Lender as soon as available, but in no event more than ninety
(90) days after the close of each fiscal year of the Borrower, (i) a copy of the
annual financial statement in reasonable detail

                                       31
<PAGE>

satisfactory to the Lender relating to the Borrower and its Subsidiaries,
prepared in accordance with GAAP and examined and certified by independent
certified public accountants satisfactory to the Lender, which financial
statement shall include a consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal year and consolidated statements of
income, cash flows and changes in shareholders equity of the Borrower and its
Subsidiaries for such fiscal year, (ii) a Compliance Certificate, in
substantially the form attached to this Agreement as EXHIBIT C, as may be
amended by the Lender from time to time, containing a detailed computation of
each financial covenant which is applicable for the period reported and a cash
flow projection report, each prepared by a Responsible Officer of the Borrower
in a format acceptable to the Lender, and (iii) a management letter in the form
prepared by the Borrower's independent certified public accountants.

                    (b) Quarterly Statements and Certificates. The Borrower
shall furnish to the Lender as soon as available, but in no event more than
forty five (45) days after the close of the Borrower's fiscal quarters,
consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the close of such period, consolidated and consolidating
income, cash flows and changes in shareholders equity statements for such
period, and a Compliance Certificate, in substantially the form attached to this
Agreement as EXHIBIT C, containing a detailed computation of each financial
covenant which is applicable for the period reported and a cash flow projection
report, each prepared by a Responsible Officer of the Borrower in a format
acceptable to the Lender, all as prepared and certified by a Responsible Officer
of the Borrower and accompanied by a certificate of that officer stating whether
any event has occurred which constitutes a Default or an Event of Default
hereunder, and, if so, stating the facts with respect thereto.

                    (c) Tax Returns. The Borrower will furnish to the Lender,
not later than thirty (30) days after the date of filing with the Internal
Revenue Service, a complete copy of the Borrower's corporate tax return.

                    (d) Annual Budget and Projections. The Borrower shall
furnish to the Lender as soon as available, but in no event later than the
forty-fifth (45/th/) day after the close of the previous fiscal year:

                         (i)   a consolidated budget and pro forma financial
          statements on a quarterly basis for the following fiscal year, and

                         (ii)  three (3) year projections.

               The Lender agrees that it shall keep confidential all projections
delivered to it by the Borrower pursuant to the terms of this subsection.

                    (e) Additional Reports and Information. The Borrower shall
furnish to the Lender promptly, such additional information, reports or
statements as the Lender may from time to time reasonably request.

                                       32
<PAGE>

               5.1.2  Reports to SEC and to Stockholders.

               The Borrower will furnish to the Lender, promptly upon the filing
or making thereof, at least one (1) copy of all financial statements, reports,
notices and proxy statements sent by the Borrower to its stockholders, and of
all regular and other reports filed by the Borrower with any securities exchange
or with the Securities and Exchange Commission.

               5.1.3  Recordkeeping, Rights of Inspection, Field Examination,
Etc.

                    (a) The Borrower shall, and shall cause each of its
Subsidiaries to, maintain (i) a standard system of accounting in accordance with
GAAP, and (ii) proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
properties, business and activities.

                    (b) The Borrower shall, and shall cause each of its
Subsidiaries to, permit authorized representatives of the Lender to visit and
inspect the properties of the Borrower and its Subsidiaries, to review, audit,
check and inspect the Borrower's other books of record at any time with or
without notice and to make abstracts and photocopies thereof, and to discuss the
affairs, finances and accounts of the Borrower and/or any Subsidiaries, with the
officers, directors, employees and other representatives of the Borrower and/or
any Subsidiaries and their respective accountants, all at such times during
normal business hours and other reasonable times and as often as the Lender may
reasonably request.

                    (c) The Borrower hereby irrevocably authorizes all
accountants and auditors employed by the Borrower and/or any Subsidiaries at any
time prior to the repayment in full of the Obligations to exhibit and deliver to
the Lender copies of any and all of the financial statements, trial balances,
management letters, or other accounting records of any nature of the Borrower
and/or any Subsidiaries in the accountant's or auditor's possession, and to
disclose to the Lender any information they may have concerning the financial
status and business operations of the Borrower and its Subsidiaries. Further,
the Borrower hereby authorizes all Governmental Authorities to furnish to the
Lender copies of reports or examinations relating to the Borrower and/or any
Subsidiaries, whether made by the Borrower or otherwise.

               5.1.4  Corporate Existence.

               The Borrower shall maintain, and cause each of its Subsidiaries
to maintain, its corporate existence in good standing in the jurisdiction in
which it is incorporated and in each other jurisdiction where it is required to
register or qualify to do business if the failure to do so in such other
jurisdiction might have a material adverse effect on the ability of the Borrower
to perform the Obligations, the conduct of the Borrower's operations, the
Borrower's financial condition, or the value of, or the ability of the Lender to
realize upon, the Collateral.

               5.1.5  Compliance with Laws.

               The Borrower shall comply, and cause each of its Subsidiaries to
comply, with all applicable Laws and observe the valid

                                       33
<PAGE>

requirements of Governmental Authorities, the noncompliance with or the non-
observance of which might have a material adverse effect on the ability of the
Borrower to perform the Obligations, the conduct of the Borrower's operations,
or the Borrower's financial condition.

               5.1.6  Preservation of Properties.

               The Borrower will, and will cause each of its Subsidiaries to, at
all times (a) maintain, preserve, protect and keep its properties, whether owned
or leased, in good operating condition, working order and repair (ordinary wear
and tear excepted), and from time to time will make all proper repairs,
maintenance, replacements, additions and improvements thereto needed to maintain
such properties in good operating condition, working order and repair, and (b)
do or cause to be done all things necessary to preserve and to keep in full
force and effect its material franchises, leases of real and personal property,
trade names, Patents, Trademarks, Copyrights and permits which are necessary for
the orderly continuance of its business.

               5.1.7  Line of Business.

               The Borrower will continue to engage substantially only in the
business of manufacturing and distribution of cabinetry.

               5.1.8  Insurance.

               The Borrower will, and will cause each of its Subsidiaries to, at
all times maintain with A-or better rated insurance companies such insurance as
is required by applicable Laws and such other insurance, all in such amounts not
less than the Lender shall reasonably determine from time to time, of such types
and against such risks, hazards, liabilities, casualties and contingencies as
are usually insured against in the same geographic areas by business entities
engaged in the same or similar business. Without limiting the generality of the
foregoing, the Borrower will, and will cause each of its Subsidiaries to, keep
adequately insured all of its property against loss or damage resulting from
fire or other risks insured against by extended coverage and maintain public
liability insurance against claims for personal injury, death or property damage
occurring upon, in or about any properties occupied or controlled by it, or
arising in any manner out of the businesses carried on by it and business
interruption coverage. The Borrower shall deliver to the Lender on the Closing
Date (and thereafter on each date there is a material change in the insurance
coverage) a certificate of a Responsible Officer of the Borrower containing a
detailed list of the insurance then in effect and stating the names of the
insurance companies, the types, the amounts and rates of the insurance, dates of
the expiration thereof and the properties and risks covered thereby. Within
thirty (30) days after notice in writing from the Lender, the Borrower will
obtain such additional insurance as the Lender may reasonably request and which
is customarily provided to the Lender by borrowers in a like industry at the
time.

               5.1.9  Taxes.

               Except to the extent that the validity or amount thereof is being
contested in good faith and by appropriate proceedings, the Borrower will, and
will cause each of its Subsidiaries to, pay and discharge all Taxes prior to the
date when any interest or penalty would accrue for the

                                       34
<PAGE>

nonpayment thereof. The Borrower shall furnish to the Lender at such times as
the Lender may require proof satisfactory to the Lender of the making of
payments or deposits required by applicable Laws including, without limitation,
payments or deposits with respect to amounts withheld by the Borrower from wages
and salaries of employees and amounts contributed by the Borrower on account of
federal and other income or wage taxes and amounts due under the Federal
Insurance Contributions Act, as amended.

               5.1.10 ERISA.

               The Borrower will, and will cause each of its Subsidiaries and
Affiliates to, comply with the funding requirements of ERISA with respect to
employee pension benefit plans for its respective employees.  The Borrower will
not permit with respect to any employee benefit plan or plans covered by Title
IV of ERISA (a) any prohibited transaction or transactions under ERISA or the
Internal Revenue Code, which results, or may result, in any material liability
of the Borrower and/or any Subsidiary and/or Affiliate, or (b) any Reportable
Event if, upon termination of the plan or plans with respect to which one or
more such Reportable Events shall have occurred, there is or would be any
material liability of the Borrower and/or any Subsidiary and/or Affiliate to the
PBGC.  Upon the Lender's request, the Borrower will deliver to the Lender a copy
of the most recent actuarial report, financial statements and annual report
completed with respect to any "defined benefit plan", as defined in ERISA.

               5.1.11 Notification of Events of Default and Adverse
Developments.

               The Borrower shall promptly notify the Lender upon obtaining
knowledge of the occurrence of:

                    (a) any Event of Default;

                    (b) any Default;

                    (c) any litigation instituted or threatened against the
     Borrower or its Subsidiaries and of the entry of any judgment or Lien
     (other than any Permitted Liens) against any of the assets or properties of
     the Borrower or any Subsidiary where the claims against the Borrower or any
     of its Subsidiaries exceed Five Hundred Thousand Dollars ($500,000) and are
     not covered by insurance;

                    (d) any event, development or circumstance whereby the
     financial statements furnished hereunder fail in any material respect to
     present fairly, in accordance with GAAP, the financial condition and
     operational results of the Borrower or any of its Subsidiaries;

                    (e) any judicial, administrative or arbitral proceeding
     pending against the Borrower or any of its Subsidiaries and any judicial or
     administrative proceeding known by the Borrower to be threatened against it
     or any of its Subsidiaries which, if adversely decided, could materially

                                       35
<PAGE>

     adversely affect its financial condition or operations (present or
     prospective);

                    (f) the receipt by the Borrower or any of its Subsidiaries
     of any notice, claim or demand from any Governmental Authority which
     alleges that the Borrower or any Subsidiary is in violation of any of the
     terms of, or has failed to comply with any applicable Laws regulating its
     operation and business, including, but not limited to, the Occupational
     Safety and Health Act and the Environmental Protection Act; and

                    (g) any other development in the business or affairs of the
     Borrower and any of its Subsidiaries which may be materially adverse;

in each case describing in detail satisfactory to the Lender the nature thereof
and the action the Borrower propose to take with respect thereto.

               5.1.12  Hazardous Materials; Contamination.

               The Borrower agrees to:

                    (a) give notice to the Lender immediately upon the
Borrower's acquiring knowledge of the presence of any Hazardous Materials and of
any Hazardous Materials Contamination on any property owned or controlled by the
Borrower or for which the Borrower is, or is claimed to be, responsible
(provided that such notice shall not be required for Hazardous Materials placed
or stored on such property in accordance with applicable Laws in the ordinary
course (including, without limitation, quantity) of the Borrower's line of
business expressly described in this Agreement) or of any Hazardous Materials
Contamination, with a full description thereof;

                    (b) promptly comply with any Laws requiring the removal,
treatment or disposal of Hazardous Materials or Hazardous Materials
Contamination and provide the Lender with satisfactory evidence of such
compliance;

                    (c) provide the Lender, within thirty (30) days after a
demand by the Lender, with a bond, letter of credit or similar financial
assurance evidencing to the Lender's satisfaction that the necessary funds are
available to pay the cost of removing, treating, and disposing of such Hazardous
Materials or Hazardous Materials Contamination and discharging any Lien which
may be established as a result thereof on any property owned or controlled by
the Borrower or for which the Borrower is, or is claimed to be, responsible; and

                    (d) as part of the Obligations, defend, indemnify and hold
harmless the Lender and its agents, employees, trustees, successors and assigns
from any and all claims which may now or in the future (whether before or after
the termination of this Agreement) be asserted as a result of the presence of
any Hazardous Materials or of any Hazardous Materials Contamination on any
property owned or controlled by the Borrower or for which the Borrower is, or is
claimed to be, responsible. The Borrower acknowledges and agrees that this
indemnification shall survive the

                                       36
<PAGE>

termination of this Agreement and the Commitments and the payment and
performance of all of the other Obligations.

               5.1.13 Disclosure of Significant Transactions.

               The Borrower shall deliver to the Lender a written notice
describing in detail each transaction by it involving the purchase, sale, lease,
or other acquisition or loss or casualty to or disposition of an interest in
Fixed or Capital Assets which exceeds Five Hundred Thousand Dollars
($500,000.00), said notices to be delivered to the Lender within thirty (30)
days of the occurrence of each such transaction.

               5.1.14 Financial Covenants.

                    (a) Fixed Charge Coverage Ratio. The Borrower will maintain,
tested as of the end of each fiscal quarter for the quarter then ending and the
three (3) immediately preceding quarters, a Fixed Charge Coverage Ratio equal to
not less than 2.25 to 1.0.

                    (b) Funded Debt to EBITDA Ratio. The Borrower will maintain,
tested as of the end of each fiscal quarter for the quarter then ending and the
three (3) immediately preceding quarters, a Funded Debt to EBITDA Ratio equal to
not less than 2.0 to 1.0.

                    (c) Tangible Net Worth. The Borrower will maintain a minimum
Tangible Net Worth at all times equal to not less than $65,000,000 through April
30, 2001 which amount shall increase cumulatively as of the end of each fiscal
year for the succeeding fiscal year in an amount equal to sixty seven percent
(67%) of positive net income for the fiscal year then ending.

     Section 5.2  Negative Covenants.

     So long as any of the Obligations or the Commitments shall be outstanding
hereunder, the Borrower agrees with the Lender as follows:

               5.2.1  Merger, Acquisition or Sale of Assets.

               The Borrower will not enter into any merger or consolidation or
amalgamation, windup or dissolve itself (or suffer any liquidation or
dissolution) or acquire all or substantially all the assets of any Person, or
sell, lease or otherwise dispose of any of its assets except assets disposed of
in the ordinary course of business prior to an Event of Default and the transfer
of the Humboldt Facility.  Any consent of the Lender to the disposition of any
assets may be conditioned on a specified use of the proceeds of disposition.

               5.2.2  Subsidiaries.

               Unless the Subsidiary executes an Additional Borrower Joinder
Supplement in the form of EXHIBIT C, the Borrower will not create or acquire any
Subsidiaries other than the Subsidiaries existing as of the date hereof and
identified on Schedule 3.1.1 (Subsidiaries).

               5.2.3  Indebtedness.

                                      37
<PAGE>

               The Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or suffer to exist any Indebtedness for Borrowed Money, or
permit any Subsidiary so to do, except:

                    (a) the Obligations;

                    (b) accounts payable arising in the ordinary course;

                    (c) Indebtedness for Borrowed Money secured by Permitted
Liens;

                    (d) other Bank Facilities;

                    (e) Indebtedness of the Borrower existing on the date hereof
     and reflected on the financial statements furnished pursuant to Section
     3.1.11 (Financial Condition);

                    (f) Indebtedness of the Borrower identified on Schedule
     5.2.3 attached hereto and made a part hereof;

                    (g) Capital Leases;

                    (h) Other Indebtedness of the Borrower in an aggregate
     amount outstanding at any time equal to not more than $1,000,000;

                    (i) Subordinated Indebtedness; and

                    (j) Indebtedness incurred in connection with the Humboldt
     and Monticello facilities to effect favorable tax treatment.

          5.2.4  Investments, Loans and Other Transactions.

          Except as otherwise provided in this Agreement, the Borrower will not,
and will not permit any of its Subsidiaries to, (a) make, assume, acquire or
continue to hold any investment in any real property (unless used in connection
with its business and treated as a Fixed or Capital Asset of the Borrower or the
Subsidiary) or any Person, whether by stock purchase, capital contribution,
acquisition of indebtedness of such Person or otherwise (including, without
limitation, investments in any joint venture or partnership), (b) guaranty or
otherwise become contingently liable for the indebtedness or obligations of any
Person, or (c) make any loans or advances, or otherwise extend credit to any
Person, except:

                    (i) any advance to an officer of the Borrower or of any
     Subsidiary for travel or other business expenses in the ordinary course of
     business, provided that the aggregate amount of all such advances by the
     Borrower and its Subsidiaries (taken as a whole) outstanding at any time
     shall not exceed One Hundred Thousand Dollars ($100,000);

                                       38
<PAGE>

                    (ii) advances or loans to an officer of the Borrower or of
     any Subsidiary or to employees of the Borrower or of any Subsidiary made in
     the ordinary course of business;

                    (iii)the endorsement of negotiable instruments for
     deposit or collection or similar transactions in the ordinary course of
     business;

                    (iv) any investment in Cash Equivalents, which are pledged
     to the Lender as collateral and security for the Obligations; and

                    (v) trade credit extended to customers in the ordinary
     course of business.

               5.2.5  Stock of Subsidiaries.

               The Borrower will not sell or otherwise dispose of any shares of
capital stock of any Subsidiary (except in connection with a merger or
consolidation of a Wholly Owned Subsidiary into the Borrower or another Wholly
Owned Subsidiary or with the dissolution of any Subsidiary) or permit any
Subsidiary to issue any additional shares of its capital stock except pro rata
to its stockholders.

               5.2.6  Subordinated Indebtedness.

               The Borrower will not, and will not permit any Subsidiary to
make:

                    (a) any payment of principal of, or interest on, any of the
     Subordinated Indebtedness, including, without limitation, the Subordinated
     Debt, if a Default or an Event of Default then exists hereunder or would
     result from such payment;

                    (b) any payment of the principal or interest due on the
     Subordinated Indebtedness as a result of acceleration thereunder or a
     mandatory prepayment thereunder;

                    (c) any amendment or modification of or supplement to the
     documents evidencing or securing the Subordinated Indebtedness; or

                    (d) payment of principal or interest on the Subordinated
     Indebtedness other than when due (without giving effect to any acceleration
     of maturity or mandatory prepayment).

               5.2.7  Liens; Confessed Judgment; Negative Pledge Agreements.

               The Borrower agrees that it (a) will not create, incur, assume or
suffer to exist any Lien upon any of its properties or assets, whether now owned
or hereafter acquired, or permit any Subsidiary so to do, except for Liens
securing the Obligations and Permitted Liens, (b) will not agree to, assume or
suffer to exist any provision in any instrument or other

                                       39
<PAGE>

document for confession of judgment, cognovit or other similar right or remedy,
(c) will not enter into any contracts for the consignment of goods to the
Borrower, (e) will not execute or suffer the filing of any financing statements
or the posting of any signs giving notice of consignments to the Borrower; (f)
will not, as a material part of its business, engage in the sale of goods
belonging to others and (g) other than an existing negative pledge agreement in
favor of Wells Fargo Bank, will not agree to, or execute any agreement in which
it agrees to, not pledge any of its accounts or inventory or grant a Lien on any
of accounts receivable or inventory.

               5.2.8  Transactions with Affiliates.

               Except as disclosed on Schedule 5.2.8, the Borrower and its
Subsidiaries will not enter into or participate in any transaction with any
Affiliate or, except in the ordinary course of business, with the officers,
directors, employees and other representatives of the Borrower and/or any
Subsidiary.

               5.2.9  Other Businesses.

               Neither the Borrower nor its Subsidiaries will engage directly or
indirectly in any business other than its current line of business described
elsewhere in this Agreement.

               5.2.10 ERISA Compliance.

               Neither the Borrower nor any Commonly Controlled Entity shall:
(a) engage in or permit any "prohibited transaction" (as defined in ERISA); (b)
cause any "accumulated funding deficiency" as defined in ERISA and/or the
Internal Revenue Code; (c) terminate any pension plan in a manner which could
result in the imposition of a lien on the property of the Borrower pursuant to
ERISA; (d) terminate or consent to the termination of any Multi-employer Plan;
or (e) incur a complete or partial withdrawal with respect to any Multi-employer
Plan.

               5.2.11 Prohibition on Hazardous Materials.

               The Borrower shall not place, manufacture or store or permit to
be placed, manufactured or stored any Hazardous Materials on any property owned,
operated or controlled by the Borrower or for which the Borrower is responsible
other than Hazardous Materials placed or stored on such property in accordance
with applicable Laws in the ordinary course.

               5.2.12 Method of Accounting; Fiscal Year.

               (a) The Borrower shall not change the method of accounting
employed in the preparation of any financial statements furnished to the Lender
under the provisions of Section 5.1.1 (Financial Statements), unless required to
conform to GAAP and on the condition that the Borrower's accountants shall
furnish such information as the Lender may request to reconcile the changes with
the Borrower's prior financial statements.

               (b) Without the prior written consent of the Lender, the Borrower
will not change their fiscal year from a year ending on April 30.

                                       40
<PAGE>

                                  ARTICLE VI

                        DEFAULT AND RIGHTS AND REMEDIES

     Section 6.1  Events of Default.

     The occurrence of any one or more of the following events shall constitute
an "Event of Default" under the provisions of this Agreement:

                  6.1.1  Failure to Pay.

                  The failure of the Borrower to pay any of the Obligations as
and when due and payable in accordance with the provisions of this Agreement,
the Notes and/or any of the other Financing Documents.

                  6.1.2  Breach of Representations and Warranties.

                  Any representation or warranty made in this Agreement or in
any report, statement, schedule, certificate, opinion (including any opinion of
counsel for the Borrower), financial statement or other document furnished in
connection with this Agreement, any of the other Financing Documents, or the
Obligations, shall prove to have been false or misleading when made (or, if
applicable, when reaffirmed) in any material respect.

                  6.1.3  Failure to Comply with Covenants.

                  The failure of the Borrower to perform, observe or comply with
any covenant, condition or agreement contained in this Agreement.

                  6.1.4  Default Under Other Financing Documents or Obligations.

                  A default shall occur under any of the other Financing
Documents or under any other Obligations, and such default is not cured within
any applicable grace period provided therein.

                  6.1.5  Receiver; Bankruptcy.

                  The Borrower or any Subsidiary shall (a) apply for or consent
to the appointment of a receiver, trustee or liquidator of itself or any of its
property, (b) admit in writing its inability to pay its debts as they mature,
(c) make a general assignment for the benefit of creditors, (d) be adjudicated a
bankrupt or insolvent, (e) file a voluntary petition in bankruptcy or a petition
or an answer seeking or consenting to reorganization or an arrangement with
creditors or to take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation law or statute, or an answer
admitting the material allegations of a petition filed against it in any
proceeding under any such law, or take corporate action for the purposes of
effecting any of the foregoing, or (f) by any act indicate its consent to,
approval of or acquiescence in any such proceeding or the appointment of any
receiver of or trustee for any of its property, or suffer any such receivership,
trusteeship or proceeding to continue undischarged for a period of sixty (60)
days, or (g) by any act indicate its consent to, approval of or acquiescence in
any order, judgment or decree by any court of competent jurisdiction or any
Governmental Authority enjoining or otherwise prohibiting the operation of a
material portion of the

                                       41
<PAGE>

Borrower's or any Subsidiary's business or the use or disposition of a material
portion of the Borrower's or any Subsidiary's assets.

          6.1.6  Involuntary Bankruptcy, etc.

          (a) An order for relief shall be entered in any involuntary case
brought against the Borrower or any Subsidiary under the Bankruptcy Code, or (b)
any such case shall be commenced against the Borrower or any Subsidiary and
shall not be dismissed within sixty (60) days after the filing of the petition,
or (c) an order, judgment or decree under any other Law is entered by any court
of competent jurisdiction or by any other Governmental Authority on the
application of a Governmental Authority or of a Person other than the Borrower
or any Subsidiary (i) adjudicating the Borrower, or any Subsidiary  bankrupt or
insolvent, or (ii) appointing a receiver, trustee or liquidator of the Borrower
or of any Subsidiary, or of a material portion of the Borrower's or any
Subsidiary's assets, or (iii) enjoining, prohibiting or otherwise limiting the
operation of a material portion of the Borrower's or any Subsidiary's business
or the use or disposition of a material portion of the Borrower's or any
Subsidiary's assets, and such order, judgment or decree continues unstayed and
in effect for a period of thirty (30) days from the date entered.

          6.1.7  Judgment.

          Unless adequately insured or bonded in the opinion of the Lender, the
entry of a final judgment for the payment of money involving more than
$1,000,000 against the Borrower or any Subsidiary, and the failure by the
Borrower or such Subsidiary to discharge the same, or cause it to be discharged,
within thirty (30) days from the date of the order, decree or process under
which or pursuant to which such judgment was entered, or to secure a stay of
execution pending appeal of such judgment.

          6.1.8  Default Under Other Borrowings.

          Default shall be made with respect to any Indebtedness for Borrowed
Money (other than the Loans and the Outstanding Letter of Credit Obligations) if
the effect of such default is to accelerate the maturity of such Indebtedness
for Borrowed Money or to permit the holder or obligee thereof or other party
thereto to cause any such Indebtedness for Borrowed Money to become due prior to
its stated maturity.

          6.1.9  Challenge to Agreements.

          The Borrower shall challenge the validity and binding effect of any
provision of any of the Financing Documents or shall state its intention to make
such a challenge of any of the Financing Documents or any of the Financing
Documents shall for any reason (except to the extent permitted by its express
terms) cease to be effective.

          6.1.10 Material Adverse Change.

          The Lender in its sole discretion determines in good faith that a
material adverse change has occurred in the financial condition of the Borrower.

                                       42
<PAGE>

                  6.1.11 Liquidation, Termination, Dissolution, Change in
Management, etc.

                  The Borrower shall liquidate, dissolve or terminate its
existence or shall suspend or terminate a substantial portion of its business
operations or any change occurs in the Management of the Borrower without the
prior written consent of the Lender.

     Section 6.2  Remedies.

     Upon the occurrence of any Default or Event of Default, the Lender may at
any time thereafter exercise any one or more of the following rights, powers or
remedies:

                  6.2.1  Acceleration.

                  The Lender may declare the Obligations to be immediately due
and payable, notwithstanding anything contained in this Agreement or in any of
the other Financing Documents to the contrary, without presentment, demand,
protest, notice of protest or of dishonor, or other notice of any kind, all of
which the Borrower hereby waives.

                  6.2.2  Further Advances.

                  The Lender may from time to time without notice to the
Borrower suspend, terminate or limit any further loans or other extensions of
credit under this Agreement and under any of the other Financing Documents.
Further, upon the occurrence of an Event of Default or Default specified in
Sections 0 (Receiver; Bankruptcy) or 0 (Involuntary Bankruptcy, etc.), the
Commitments and any agreement in any of the Financing Documents to provide
additional credit shall immediately and automatically terminate and the unpaid
principal amount of the Notes (with accrued interest thereon) and all other
Obligations then outstanding, shall immediately become due and payable without
further action of any kind and without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Borrower.

                  6.2.3  Performance by Lender.

                  Upon the occurrence and continuation of an Event of Default,
the Lender without notice to or demand upon the Borrower and without waiving or
releasing any of the Obligations or any Default or Event of Default, may (but
shall be under no obligation to) at any time thereafter make such payment or
perform such act for the account and at the expense of the Borrower, and may
enter upon the premises of the Borrower for that purpose and take all such
action thereon as the Lender may consider necessary or appropriate for
suchpurpose and the Borrower hereby irrevocably appoints the Lender as its
attorney-in-fact to do so, with power of substitution, in the name of the Lender
or in the name of the Borrower or otherwise, for the use and benefit of the
Lender, but at the cost and expense of the Borrower and without notice to the
Borrower. All sums so paid or advanced by the Lender together with interest
thereon from the date of payment, advance or incurring until paid in full at the
Post-Default Rate and all costs and expenses, shall be deemed part of the
Enforcement Costs, shall be paid by the Borrower to the Lender on demand, and
shall constitute and become a part of the Obligations.

                                       43
<PAGE>

                  6.2.4  Other Remedies.

                  The Lender may from time to time proceed to protect or enforce
its rights by an action or actions at law or in equity or by any other
appropriate proceeding, whether for the specific performance of any of the
covenants contained in this Agreement or in any of the other Financing
Documents, or for an injunction against the violation of any of the terms of
this Agreement or any of the other Financing Documents, or in aid of the
exercise or execution of any right, remedy or power granted in this Agreement,
the Financing Documents, and/or applicable Laws. The Lender is authorized to
offset and apply to all or any part of the Obligations all moneys, credits and
other property of any nature whatsoever of the Borrower now or at any time
hereafter in the possession of, in transit to or from, under the control or
custody of, or on deposit with, the Lender.

                                  ARTICLE VII

                                 MISCELLANEOUS

     Section 7.1  Notices.

     All notices, requests and demands to or upon the parties to this Agreement
shall be in writing and shall be deemed to have been given or made when
delivered by hand on a Business Day, or two (2) days after the date when
deposited in the mail, postage prepaid by registered or certified mail, return
receipt requested, or when sent by overnight courier, on the Business Day next
following the day on which the notice is delivered to such overnight courier,
addressed as follows:

        Borrower:        American Woodmark Corporation
                         3102 Shawnee Drive
                         Winchester, Virginia 22601
                         Attention:  Chief Financial Officer

        Lender:          Bank of America, N. A
                         6610 Rockledge Drive, 3/rd/ Floor
                         Bethesda, Maryland 20815
                         Attention:  Michael J. Landini

     By written notice, each party to this Agreement may change the address to
which notice is given to that party, provided that such changed notice shall
include a street address to which notices may be delivered by overnight courier
in the ordinary course on any Business Day.

     Section 7.2  Amendments; Waivers.

     This Agreement and the other Financing Documents may not be amended,
modified, or changed in any respect except by an agreement in writing signed by
the Lender and the Borrower.  No waiver of any provision of this Agreement or of
any of the other Financing Documents, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing.  No course of dealing between the Borrower and the Lender and no act or
failure to act from time to time on the part of the Lender shall constitute a
waiver, amendment or modification of any provision of this Agreement or any of
the other Financing Documents or any right or remedy under this Agreement, under
any of the other Financing Documents or under applicable Laws.

                                       44
<PAGE>

     Without implying any limitation on the foregoing:

          (a)  Any waiver or consent shall be effective only in the specific
     instance, for the terms and purpose for which given, subject to such
     conditions as the Lender may specify in any such instrument.

          (b)  No waiver of any Default or Event of Default shall extend to any
     subsequent or other Default or Event of Default, or impair any right
     consequent thereto.

          (c)  No notice to or demand on the Borrower in any case shall entitle
     the Borrower to any other or further notice or demand in the same, similar
     or other circumstance.

          (d)  No failure or delay by the Lender to insist upon the strict
     performance of any term, condition, covenant or agreement of this Agreement
     or of any of the other Financing Documents, or to exercise any right, power
     or remedy consequent upon a breach thereof, shall constitute a waiver,
     amendment or modification of any such term, condition, covenant or
     agreement or of any such breach or preclude the Lender from exercising any
     such right, power or remedy at any time or times.

          (e)  By accepting payment after the due date of any amount payable
     under this Agreement or under any of the other Financing Documents, the
     Lender shall not be deemed to waive the right either to require prompt
     payment when due of all other amounts payable under this Agreement or under
     any of the other Financing Documents, or to declare a default for failure
     to effect such prompt payment of any such other amount.

     Section 7.3  Cumulative Remedies.

     The rights, powers and remedies provided in this Agreement and in the other
Financing Documents are cumulative, may be exercised concurrently or separately,
may be exercised from time to time and in such order as the Lender shall
determine and are in addition to, and not exclusive of, rights, powers and
remedies provided by existing or future applicable Laws.  In order to entitle
the Lender to exercise any remedy reserved to it in this Agreement, it shall not
be necessary to give any notice, other than such notice as may be expressly
required in this Agreement.  Without limiting the generality of the foregoing,
the Lender may:

          (a)  proceed against the Borrower with or without proceeding against
any Person who may be liable (by endorsement, guaranty, indemnity or otherwise)
for all or any part of the Obligations;

          (b)  proceed against the Borrower with or without proceeding under any
of the other Financing Documents or against any collateral and security for all
or any part of the Obligations;

          (c)  without reducing or impairing the obligation of the Borrower and
without notice, release or

                                       45
<PAGE>

     compromise with any guarantor or other Person liable for all or any part of
     the Obligations under the Financing Documents or otherwise;

                    (d)  without reducing or impairing the obligations of the
     Borrower and without notice thereof: approve the making of advances under
     the Revolving Loan under this Agreement, approve the issuance of Letters of
     Credit under this Agreement, waive any provision of this Agreement or the
     other Financing Documents, exercise or fail to exercise rights of set-off
     or other rights, or accept partial payments or extend from time to time the
     maturity of all or any part of the Obligations.

     Section 7.4  Severability.

     In case one or more provisions, or part thereof, contained in this
Agreement or in the other Financing Documents shall be invalid, illegal or
unenforceable in any respect under any Law, then without need for any further
agreement, notice or action:

                    (a)  the validity, legality and enforceability of the
     remaining provisions shall remain effective and binding on the parties
     thereto and shall not be affected or impaired thereby;

                    (b)  the obligation to be fulfilled shall be reduced to the
     limit of such validity;

                    (c)  if such provision or part thereof pertains to repayment
     of the Obligations, then, at the sole and absolute discretion of the
     Lender, all of the Obligations of the Borrower to the Lender shall become
     immediately due and payable; and

                    (d)  if the affected provision or part thereof does not
     pertain to repayment of the Obligations, but operates or would
     prospectively operate to invalidate this Agreement in whole or in part,
     then such provision or part thereof only shall be void, and the remainder
     of this Agreement shall remain operative and in full force and effect.

     Section 7.5  Assignments by Lender.

     The Lender may, without notice to, or consent of, the Borrower, sell,
assign or transfer to or participate with any Person or Persons all or any part
of the Obligations, and each such Person or Persons shall have the right to
enforce the provisions of this Agreement and any of the other Financing
Documents as fully as the Lender, provided that the Lender shall continue to
have the unimpaired right to enforce the provisions of this Agreement and any of
the other Financing Documents as to so much of the Obligations that the Lender
has not sold, assigned or transferred.  In connection with the foregoing, the
Lender shall have the right to disclose to any such actual or potential
purchaser, assignee, transferee or participant all financial records,
information, reports, financial statements and documents obtained in connection
with this Agreement and any of the other Financing Documents or otherwise.

                                       46
<PAGE>

     Section 7.6  Successors and Assigns.

     This Agreement and all other Financing Documents shall be binding upon and
inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender.

     Section 7.7  Continuing Agreements.

     All covenants, agreements, representations and warranties made by the
Borrower in this Agreement, in any of the other Financing Documents, and in any
certificate delivered pursuant hereto or thereto shall survive the making by the
Lender of the Loans, the issuance of Letters of Credit by the Lender and the
execution and delivery of the Notes, shall be binding upon the Borrower
regardless of how long before or after the date hereof any of the Obligations
were or are incurred, and shall continue in full force and effect so long as any
of the Obligations are outstanding and unpaid.  From time to time upon the
Lender's request, and as a condition of the release of any one or more of the
Security Documents, the Borrower and other Persons obligated with respect to the
Obligations shall provide the Lender with such acknowledgments and agreements as
the Lender may require to the effect that there exists no defenses, rights of
setoff or recoupment, claims, counterclaims, actions or causes of action of any
kind or nature whatsoever against the Lender, its agents and others, or to the
extent there are, the same are waived and released.

     Section 7.8  Enforcement Costs.

     The Borrower shall pay to the Lender on demand all Enforcement Costs,
together with interest thereon from the date incurred or advanced until paid in
full at a per annum rate of interest equal at all times to the Post-Default
Rate.  Enforcement Costs shall be immediately due and payable at the time
advanced or incurred, whichever is earlier.  Without implying any limitation on
the foregoing, the Borrower shall pay, as part of the Enforcement Costs, upon
demand any and all stamp and other Taxes and fees payable or determined to be
payable in connection with the execution and delivery of this Agreement and the
other Financing Documents and to save the Lender harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
omission to pay any Taxes or fees referred to in this Section.  The provisions
of this Section shall survive the execution and delivery of this Agreement, the
repayment of the other Obligations and shall survive the termination of this
Agreement.

     Section 7.9  Applicable Law; Jurisdiction.

                  7.9.1  Applicable Law.

                  As a material inducement to the Lender to enter into this
Agreement, the Borrower acknowledges and agrees that the Financing Documents,
including, this Agreement, shall be governed by the Laws of the State, as if
each of the Financing Documents and this Agreement had each been executed,
delivered, administered and performed solely within the State even though for
the convenience and at the request of the Borrower, one or more of the Financing
Documents may be executed elsewhere. The Lender acknowledges, however, that
remedies under certain of the Financing Documents that relate

                                       47
<PAGE>

to property outside the State may be subject to the laws of the state in which
the property is located.

               7.9.2  Jurisdiction.

                  The Borrower irrevocably submits to the jurisdiction of any
state or federal court sitting in the State over any suit, action or proceeding
arising out of or relating to this Agreement or any of the other Financing
Documents. The Borrower irrevocably waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding brought in any such court and any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. Final judgment in any such suit, action or
proceeding brought in any such court shall be conclusive and binding upon the
Borrower and may be enforced in any court in which the Borrower is subject to
jurisdiction, by a suit upon such judgment, provided that service of process is
effected upon the Borrower in one of the manners specified in this Section or as
otherwise permitted by applicable Laws.

                  7.9.3 Appointment of Agent for Service of Process.

               The Borrower hereby irrevocably designates and appoints Ann L.
Ramsey, Esquire, McGuireWoods Battle & Boothe LLP, at 7 St. Paul Street, Suite
1000, Baltimore, Maryland, 21202, as the Borrower's authorized agent to receive
on the Borrower's behalf service of any and all process that may be served in
any suit, action or proceeding of the nature referred to in this Section in any
state or federal court sitting in the State. If such agent shall cease so to
act, the Borrower shall irrevocably designate and appoint without delay another
such agent in the State satisfactory to the Lender and shall promptly deliver to
the Lender evidence in writing of such other agent's acceptance of such
appointment and its agreement that such appointment shall be irrevocable.

               7.9.4  Service of Process.

                  The Borrower hereby consents to process being served in any
suit, action or proceeding of the nature referred to in this Section by (a) the
mailing of a copy thereof by registered or certified mail, postage prepaid,
return receipt requested, to the Borrower at the Borrower's address designated
in or pursuant to Section 7.1 (Notices), and (b) serving a copy thereof upon the
agent, if any, designated and appointed by the Borrower as the Borrower's agent
for service of process by or pursuant to this Section. The Borrower irrevocably
agrees that such service (y) shall be deemed in every respect effective service
of process upon the Borrower in any such suit, action or proceeding, and (z)
shall, to the fullest extent permitted by law, be taken and held to be valid
personal service upon the Borrower. Nothing in this Section shall affect the
right of the Lender to serve process in any manner otherwise permitted by law or
limit the right of the Lender otherwise to bring proceedings against the
Borrower in the courts of any jurisdiction or jurisdictions.

     Section 7.10 Duplicate Originals and Counterparts.

     This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be

                                       48
<PAGE>

deemed to be an original and all taken together shall constitute but one and the
same instrument.

     Section 7.11 Headings.

     The headings in this Agreement are included herein for convenience only,
shall not constitute a part of this Agreement for any other purpose, and shall
not be deemed to affect the meaning or construction of any of the provisions
hereof.

     Section 7.12 No Agency.

     Nothing herein contained shall be construed to constitute the Borrower as
the Lender's agent for any purpose whatsoever or to permit the Borrower to
pledge any of the Lender's credit.  The Lender shall not, by anything herein or
in any of the Financing Documents or otherwise, assume the Borrower's
obligations under any contract or agreement assigned to the Lender, and the
Lender shall not be responsible in any way for the performance by the Borrower
of any of the terms and conditions thereof.

     Section 7.13 Date of Payment.

     Should the principal of or interest on any of the Notes become due and
payable on other than a Business Day, the maturity thereof shall be extended to
the next succeeding Business Day and in the case of principal, interest shall be
payable thereon at the rate per annum specified in the applicable Note during
such extension.

     Section 7.14 Entire Agreement.

     This Agreement is intended by the Lender and the Borrower to be a complete,
exclusive and final expression of the agreements contained herein.  Neither the
Lender nor the Borrower shall hereafter have any rights under any prior
agreements pertaining to the matters addressed by this Agreement but shall look
solely to this Agreement for definition and determination of all of their
respective rights, liabilities and responsibilities under this Agreement.

     Section 7.15 Waiver of Trial by Jury.

     THE BORROWER AND THE LENDER HEREBY JOINTLY AND SEVERALLY WAIVE TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO WHICH THE BORROWER AND THE LENDER MAY BE
PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO (A) THIS AGREEMENT OR (B)
ANY OF THE FINANCING DOCUMENTS.  THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY
JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING
CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT.

     This waiver is knowingly, willingly and voluntarily made by the Borrower
and the Lender, and the Borrower and the Lender hereby represent that no
representations of fact or opinion have been made by any individual to induce
this waiver of trial by jury or to in any way modify or nullify its effect.  The
Borrower and the Lender further represent that they have been represented in the
signing of this Agreement and in the making of this waiver by independent legal
counsel, selected of their own free will, and that they have had the opportunity
to discuss this waiver with counsel.

                                       49
<PAGE>

     Section 7.16 Liability of the Lender.

     The Borrower hereby agrees that the Lender shall not be chargeable for any
negligence, mistake, act or omission of any accountant, examiner, agency or
attorney employed by the Lender in making examinations, investigations or
collections.

     By inspecting any properties of the Borrower or by accepting or approving
anything required to be observed, performed or fulfilled by the Borrower or to
be given to the Lender pursuant to this Agreement or any of the other Financing
Documents, the Lender shall not be deemed to have warranted or represented the
condition, sufficiency, legality, effectiveness or legal effect of the same, and
such acceptance or approval shall not constitute any warranty or representation
with respect thereto by the Lender.

     Section 7.17 Indemnification.

     The Borrower agrees to indemnify and hold harmless, the Lender, the
Lender's parent and Affiliates and the Lender's parent's and Affiliates'
officers, directors, shareholders, employees and agents (each an "Indemnified
Party," and collectively, the "Indemnified Parties"), from and against any and
all claims, liabilities, losses, damages, costs and expenses (whether or not
such Indemnified Party is a party to any litigation), including without
limitation, reasonable attorney's fees and costs and costs of investigation,
document production, attendance at depositions or other discovery, incurred by
any Indemnified Party with respect to, arising out of or as a consequence of (a)
this Agreement or any of the other Financing Documents, including without
limitation, any failure of the Borrower to pay when due (at maturity, by
acceleration or otherwise) any principal, interest, fee or any other amount due
under this Agreement or the other Financing Documents, or any other Event of
Default (b) the use by the Borrower of any proceeds advanced hereunder; (c) the
transactions contemplated hereunder; or (d) any claim, demand, action or cause
of action being asserted against (i) the Borrower or any of its Affiliates by
any other Person, or (ii) any Indemnified Party by the Borrower in connection
with the transactions contemplated hereunder.  Notwithstanding anything herein
or elsewhere to the contrary, the Borrower shall not be obligated to indemnify
or hold harmless any Indemnified Party from any liability, loss or damage
resulting from the gross negligence, willful misconduct or unlawful actions of
such Indemnified Party.  Any amount payable to the Lender under this Section
will bear interest at the Post-Default Rate from the due date until paid.

     IN WITNESS WHEREOF, each of the parties hereto have executed and delivered
this Agreement under their respective seals as of the day and year first written
above.

WITNESS OR ATTEST:                   AMERICAN WOODMARK CORPORATION

________________________             By:____________________________(Seal)
                                        Kent Guichard
                                        Chief Financial Officer

                                       50
<PAGE>

WITNESS:                                BANK OF AMERICA, N. A.

_________________________               By:____________________________(Seal)
                                           Michael J. Landini
                                           Senior Vice President

                                       51
<PAGE>

                               LIST OF EXHIBITS

A     Additional Borrower Joinder Supplement

B-1.  Revolving Credit Note

B-2   Term Note

C.    Form of Compliance Certificate

                                       1
<PAGE>

                                                                       EXHIBIT A

ADDITIONAL BORROWER JOINDER SUPPLEMENT

     THIS ADDITIONAL BORROWER JOINDER SUPPLEMENT (this "Agreement") is made this
day of      200  , by and among AMERICAN WOODMARK CORPORATION, a corporation
organized under the laws of the Commonwealth of Virginia ("Designated
Borrower"), the other "Existing Borrowers" (as that term is defined below),
, a          corporation (the "Additional Borrower"), and wholly-owned
subsidiary of Designated Borrower, and BANK OF AMERICA, N.A., a national banking
association (the "Lender").

     NOW, THEREFORE, for value received the undersigned agree as follows:

     1.  Reference is hereby made to the Financing and Security Agreement dated
as of May 31, 2001 (as amended, modified, restated, substituted, extended and
renewed at any time and from time to time, the "Financing Agreement") by and
among Designated Borrower, and       , constituting each Person which is
included in the definition of "Borrower" (as that term is defined in the
Financing Agreement) immediately prior to the date of this Agreement (together
with Designated Borrower, the "Existing Borrowers") and the Lender. Capitalized
terms not otherwise defined in this Agreement shall have the meanings given to
them in the Financing Agreement.

     2.  (a) The Additional Borrower and the Existing Borrowers hereby
acknowledge, confirm and agree that on and as of the date of this Agreement the
Additional Borrower has become an "Additional Borrower" (as that term is defined
in the Financing Agreement), and, along with the Existing Borrowers, is included
in the definition of "Borrower" under the Financing Agreement and the other
Financing Documents for all purposes thereof, and as such shall be jointly and
severally liable, as provided in the Financing Documents, for all Obligations
thereunder (whether incurred or arising prior to, on, or subsequent to the date
hereof) and otherwise bound by all of the terms, provisions and conditions
thereof.

         (b) Without in any way implying any limitation on any of the
provisions of this Agreement, the Financing Agreement, or any of the other
Financing Documents, the Additional Borrower hereby assigns, pledges and grants
to the Lender, and agrees that the Lender shall have a perfected and continuing
security interest in, and Lien on, (i) all of the Borrower's Accounts,
Inventory, Chattel Paper, Documents, Instruments, Equipment, Securities, and
General Intangibles, whether now owned or existing or hereafter acquired or
arising, (ii) all returned, rejected or repossessed goods, the sale or lease of
which shall have given or shall give rise to an

                                       2
<PAGE>

Account or Chattel Paper, (iii) all insurance policies relating to the
foregoing, (iv) all books and records in whatever media (paper, electronic or
otherwise) recorded or stored, with respect to the foregoing and all equipment
and general intangibles necessary or beneficial to retain, access and/or process
the information contained in those books and records, and (v) all cash and non-
cash proceeds and products of the foregoing. The Additional Borrower further
agrees that the Lender shall have in respect thereof all of the rights and
remedies of a secured party under the Uniform Commercial Code as well as those
provided in this Agreement, under each of the other Financing Documents and
under applicable Laws.

          (c) Without in any way implying any limitation on any of the
provisions of this Agreement, the Additional Borrower agrees to execute such
financing statements, instruments, and other documents as the Lender may require
including, without limitation, an allonge for each of the Notes.

          (d) Without in any way implying any limitation on any of the
provisions of this Agreement, the Additional Borrower hereby represents and
warrants that all of the representations and warranties contained in the
Financing Documents are true and correct on and as of the date hereof as if made
on and as of such date, both before and after giving effect to this Joinder
Supplement, and that no Event of Default or Default has occurred and is
continuing or exists or would occur or exist after giving effect to this Joinder
Supplement.

     3.   Each Person included in the term "Borrower" hereby covenants and
agrees with the Lender as follows:

          (a) The Obligations include all present and future indebtedness,
duties, obligations, and liabilities, whether now existing or contemplated or
hereafter arising, of any one or more of the Additional Borrower or the Existing
Borrowers.

          (b) Reference in this Agreement, the Financing Agreement and the other
Financing Documents to the "Borrower" or otherwise with respect to any one or
more of the Persons now or hereafter included in the definition of "Borrower"
shall mean each and every such Person and any one or more of such Persons,
jointly and severally, unless the context requires otherwise (by way of example,
and not limitation, if only one such Person is the owner of the real property
which is the subject of a mortgage).

          (c) Each Person included in the term "Borrower" in the discretion of
its respective management is to agree among themselves as to the allocation of
the benefits of Letters of Credit and the proceeds of Loans, provided, however,
that each such Person be deemed to have represented and warranted to the Lender
at the time of allocation that each benefit and

                                       3
<PAGE>

use of proceeds is a Permitted Use.

          (d) For administrative convenience, each Person included in the term
"Borrower" hereby irrevocably appoints Designated Borrower as the Borrower's
attorney-in-fact, with power of substitution (with the prior written consent of
the Lender in the exercise of its sole and absolute discretion), in the name of
Designated Borrower or in the name of the Borrower or otherwise to take any and
all actions with respect to the this Agreement, the other Financing Documents,
the Obligations and/or the Collateral (including, without limitation, the
proceeds thereof) as Designated Borrower may so elect from time to time,
including, without limitation, actions to (i) request advances under the Loans,
apply for and direct the benefits of Letters of Credits, and direct the Lender
to disburse or credit the proceeds of any Loan directly to an account of
Designated Borrower, any one or more of such Persons or otherwise, which
direction shall evidence the making of such Loan and shall constitute the
acknowledgement by each such Person of the receipt of the proceeds of such Loan
or the benefit of such Letter of Credit, (ii) enter into, execute, deliver,
amend, modify, restate, substitute, extend and/or renew this Agreement, any
Additional Borrower Joinder Supplement, any other Financing Documents, security
agreements, mortgages, deposit account agreements, instruments, certificates,
waivers, letter of credit applications, releases, documents and agreements from
time to time, and (iii) endorse any check or other item of payment in the name
of such Person or in the name of Designated Borrower. The foregoing appointment
is coupled with an interest, cannot be revoked without the prior written consent
of the Lender, and may be exercised from time to time through Designated
Borrower' duly authorized officer, officers or other Person or Persons
designated by Designated Borrower to act from time to time on behalf of
Designated Borrower.

          (e) Each Person included in the term "Borrower hereby irrevocably
authorizes the Lender to make Loans to any one or more all of such Person, and
hereby irrevocably authorizes the Lender to issue or cause to be issued Letters
of Credit for the account of any or all of such Persons, pursuant to the
provisions of this Agreement upon the written, oral or telephone request any one
or more of the Persons who is from time to time a Responsible Officer of a
Borrower under the provisions of the most recent certificate of corporate
resolutions and/or incumbency of the Person included in the term "Borrower" on
file with the Lender and also upon the written, oral or telephone request of any
one of the Persons who is from time to time a Responsible Officer of Designated
Borrower under the provisions of the most recent certificate of corporate
resolutions and/or incumbency for Designated Borrower on file with the Lender.

          (f) The Lender assumes no responsibility or liability for any errors,
mistakes, and/or discrepancies in the oral, telephonic, written or other
transmissions of any instructions, orders, requests and confirmations between
the Lender and any one or more of the Persons included in the term "Borrower" in
connection with the Credit Facilities, any Loan, any Letter of Credit or any
other transaction in connection with the provisions of this Agreement.

                                       4
<PAGE>

     4.  Without implying any limitation on the joint and several nature of the
Obligations, the Lender agrees that, notwithstanding any other provision of this
Agreement, the Persons included in the term "Borrower," may create reasonable
inter-company indebtedness between or among the Borrowers with respect to the
allocation of the benefits and proceeds of the advances and Credit Facilities
under this Agreement. The Borrowers agree among themselves, and the Lender
consents to that agreement, that each Borrower shall have rights of contribution
from all of the other Borrowers to the extent such Borrower incurs Obligations
in excess of the proceeds of the Loans received by, or allocated to purposes for
the direct benefit of, such Borrower. All such indebtedness and rights shall be,
and are hereby agreed by the Borrowers to be, subordinate in priority and
payment to the indefeasible repayment in full in cash of the Obligations, and,
unless the Lender agrees in writing otherwise, shall not be exercised or repaid
in whole or in part until all of the Obligations have been indefeasibly paid in
full in cash. The Borrowers agree that all of such inter-company indebtedness
and rights of contribution are part of the Collateral and secure the
Obligations. Each Borrower hereby waives all rights of counterclaim, recoupment
and offset between or among themselves arising on account of that indebtedness
and otherwise. Each Borrower shall not evidence the inter-company indebtedness
or rights of contribution by note or other instrument, and shall not secure such
indebtedness or rights of contribution with any Lien or security.
Notwithstanding anything contained in this Agreement to the contrary, the amount
covered by each Borrower under the Obligations shall be limited to an aggregate
amount (after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Borrower in
respect of the Obligations) which, together with other amounts owing by such
Borrowers to the Lender under the Obligations, is equal to the largest amount
that would not be subject to avoidance under the Bankruptcy Code or any
applicable provisions of any applicable, comparable state or other Laws.

     5.  (a) Each Person included in the term "Borrower" hereby represents and
warrants to the Lender that each of them will derive benefits, directly and
indirectly, from each Letter of Credit and from each Loan, both in their
separate capacity and as a member of the integrated group to which each such
Person belongs and because the successful operation of the integrated group is
dependent upon the continued successful performance of the functions of the
integrated group as a whole, because (i) the terms of the consolidated financing
provided under this Agreement are more favorable than would otherwise would be
obtainable by such Persons individually, and (ii) the additional administrative
and other costs and reduced flexibility associated with individual financing
arrangements which would otherwise be required if obtainable would substantially
reduce the value to such Persons of the financing

         (b) Each Person included in the term "Borrower" hereby represents and
warrants that all of the representations and warranties contained in the
Financing Documents are true and correct on and as of the date hereof as if made
on and as of such date, both before and after giving effect to this Agreement,
and that no Event of Default or Default has

                                       5
<PAGE>

occurred and is continuing or exists or would occur or exist after giving effect
to this Agreement.

     6.  Guaranty.

         (a)   Each Person included in the term "Borrower" hereby
unconditionally and irrevocably, guarantees to the Lender:

               (i)   the due and punctual payment in full (and not merely the
     collectibility) by the other Persons included in the term "Borrower" of the
     Obligations, including unpaid and accrued interest thereon, in each case
     when due and payable, all according to the terms of this Agreement, the
     Notes and the other Financing Documents;

               (ii)  the due and punctual payment in full (and not merely the
     collectibility) by the other Persons included in the term "Borrower" of all
     other sums and charges which may at any time be due and payable in
     accordance with this Agreement, the Notes or any of the other Financing
     Documents;

               (iii) the due and punctual performance by the other Persons
     included in the term "Borrower" of all of the other terms, covenants and
     conditions contained in the Financing Documents; and

               (iv)  all the other Obligations of the other Persons included in
the term "Borrower".

         (b)   The obligations and liabilities of each Person included in the
term "Borrower" as a guarantor under this paragraph 6 shall be absolute and
unconditional and joint and several, irrespective of the genuineness, validity,
priority, regularity or enforceability of this Agreement, any of the Notes or
any of the Financing Documents or any other circumstance which might otherwise
constitute a legal or equitable discharge of a surety or guarantor. Each Person
included in the term "Borrower" in its capacity as a guarantor expressly agrees
that the Lender may, in its sole and absolute discretion, without notice to or
further assent of such Borrower and without in any way releasing, affecting or
in any way impairing the joint and several obligations and liabilities of such
Person as a guarantor hereunder:

               (i)   waive compliance with, or any defaults under, or grant any
     other indulgences under or with respect to any of the Financing Documents;

               (ii)  modify, amend, change or terminate any provisions of any of
     the Financing Documents;

               (iii) grant extensions or renewals of or with respect to

                                       6
<PAGE>

     the Credit Facilities, the Notes or any of the other Financing Documents;

               (iv)   effect any release, subordination, compromise or
     settlement in connection with this Agreement, any of the Notes or any of
     the other Financing Documents;

               (v)    agree to the substitution, exchange, release or other
     disposition of the Collateral or any part thereof, or any other collateral
     for the Loan or to the subordination of any lien or security interest
     therein;

               (vi)   make advances for the purpose of performing any term,
     provision or covenant contained in this Agreement, any of the Notes or any
     of the other Financing Documents with respect to which the Borrower shall
     then be in default;

               (vii)  make future advances pursuant to the Financing Agreement
     or any of the other Financing Documents;

               (viii) assign, pledge, hypothecate or otherwise transfer the
     Commitments, the Obligations, the Notes, any of the other Financing
     Documents or any interest therein, all as and to the extent permitted by
     the provisions of this Agreement;

               (ix)   deal in all respects with the other Persons included in
     the term "Borrower" as if this paragraph 6 were not in effect;

               (x)    effect any release, compromise or settlement with any of
     the other Persons included in the term "Borrower", whether in their
     capacity as a Borrower or as a guarantor under this paragraph 6 or any
     other guarantor; and

               (xi)   provide debtor-in-possession financing or allow use of
     cash collateral in proceedings under the Bankruptcy Code, it being
     expressly agreed by all Persons included in the term "Borrower" that any
     such financing and/or use would be part of the Obligations.

          (c)  The obligations and liabilities of each Person included in the
term "Borrower", as guarantor under this paragraph 6 shall be primary, direct
and immediate, shall not be subject to any counterclaim, recoupment, set oft
reduction or defense based upon any claim that such Person may have against any
one or more of the other Persons included in the term "Borrower", the Lender
and/or any other guarantor and shall not be conditional or contingent upon
pursuit or enforcement by the Lender of any remedies it may have against Persons
included in the term "Borrower" with respect to this Agreement, the Notes or any
of the other Financing Documents, whether

                                       7
<PAGE>

pursuant to the terms thereof or by operation of law. Without limiting the
generality of the foregoing, the Lender shall not be required to make any demand
upon any of the Persons included in the term "Borrower", or to sell the
Collateral or otherwise pursue, enforce or exhaust its or their remedies against
the Persons included in the term "Borrower" or the Collateral either before,
concurrently with or after pursuing or enforcing its rights and remedies
hereunder. Any one or more successive or concurrent actions or proceedings may
be brought against each Person included in the term "Borrower" under this
paragraph 6, either in the same action, if any, brought against any one or more
of the Persons included in the term "Borrower" or in separate actions or
proceedings, as often as the Lender may deem expedient or advisable. Without
limiting the foregoing, it is specifically understood that any modification,
limitation or discharge of any of the liabilities or obligations of any one or
more of the Persons included in the term "Borrower", any other guarantor or any
obligor under any of the Financing Documents, arising out of, or by virtue of,
any bankruptcy, arrangement, reorganization or similar proceeding for relief of
debtors under federal or state law initiated by or against any one or more of
the Persons included in the term "Borrower", in their respective capacities as
borrowers and guarantors under this paragraph 6, or under any of the Financing
Documents shall not modify, limit, lessen, reduce, impair, discharge, or
otherwise affect the liability of each Borrower under this paragraph 6 in any
manner whatsoever, and this paragraph 6 shall remain and continue in full force
and effect. It is the intent and purpose of this paragraph 6 that each Person
included in the term "Borrower" shall and does hereby waive all rights and
benefits which might accrue to any other guarantor by reason of any such
proceeding, and the Persons included in the term "Borrower" agree that they
shall be liable for the full amount of the obligations and liabilities under
this paragraph 6 regardless of, and irrespective to, any modification,
limitation or discharge of the liability of any one or more of the Persons
included in the term "Borrower", any other guarantor or any obligor under any of
the Financing Documents, that may result from any such proceedings.

          (d)  Each Person included in the term "Borrower", as guarantor under
this paragraph 6, hereby unconditionally, jointly and severally, irrevocably and
expressly waives:

               (i)   presentment and demand for payment of the Obligations and
          protest of non-payment;

               (ii)  notice of acceptance of this paragraph 6 and of
          presentment, demand and protest thereof;

               (iii) notice of any default hereunder or under the Notes or any
          of the other Financing Documents and notice of all indulgences;

                                       8
<PAGE>

               (iv)   notice of any increase in the amount of any portion of or
          all of the indebtedness guaranteed by this paragraph 6;

               (v)    demand for observance, performance or enforcement of any
          of the terms or provisions of this paragraph 6, the Notes or any of
          the other Financing Documents;

               (vi)   all errors and omissions in connection with the Lender's
          administration of all indebtedness guaranteed by this paragraph 6;

               (vii)  any right or claim of right to cause a marshalling of the
          assets of any one or more of the other Persons included in the term
          "Borrower";

               (viii) any act or omission of the Lender which changes the scope
          of the risk as guarantor hereunder; and

               (ix)   all other notices and demands otherwise required by law
          which such Person may lawfully waive.

     (e)  Within ten (10) days following any request of the Lender so to do,
each Person included in the term "Borrower" will furnish the Lender and such
other persons as the Lender may direct with a written certificate, duly
acknowledged stating in detail whether or not any credits, offsets or defenses
exist with respect to this paragraph 6.

     7.   This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Virginia, without regard to
principles of choice of law.

     WITNESS the due execution hereof as of the day and year first written
     above.

WITNESS:                          ADDITIONAL BORROWER

                                  By:                     (SEAL)
                                      Name:
                                      Title:

WITNESS:                          AMERICAN WOODMARK CORPORATION

                                  By:                     (SEAL)
                                      Name:
                                      Title:

                                       9
<PAGE>

WITNESS:                          BANK OF AMERICA, N. A.

                                  By:
                                      Name:
                                      Title:

                                       10
<PAGE>

                                                                     EXHIBIT B-1

                             REVOLVING CREDIT NOTE

$35,000,000                                             Bethesda, Maryland

                                                              May 31, 2001

     FOR VALUE RECEIVED, AMERICAN WOODMARK CORPORATION, a corporation organized
under the laws of the Commonwealth of Virginia (the "Borrower"), promises to pay
to the order of BANK OF AMERICA, N. A., a national banking association (the
"Lender"), the principal sum of THIRTY FIVE MILLION DOLLARS ($35,000,000) (the
"Principal Sum"), or so much thereof as has been or may be advanced or re-
advanced to or for the account of the Borrower pursuant to the terms and
conditions of the Financing Agreement (as hereinafter defined), together with
interest thereon at the rate provided in the Financing Agreement.  All
capitalized terms used, but not specifically defined herein, shall have the
meanings given such terms in the Financing Agreement.

     1.  Interest.

     Commencing as of the date hereof and continuing until repayment in full of
all sums due hereunder, the unpaid Principal Sum shall bear interest at the
Applicable Interest Rate.  The rate of interest charged under this Note shall
change immediately and contemporaneously with any change in the Applicable
Interest Rate.  All interest payable under the terms of this Note shall be
calculated on the basis of a 360-day year and the actual number of days elapsed.

     2.  Payments and Maturity.

     The unpaid Principal Sum, together with interest thereon at the rate
provided above, shall be payable as follows:

         (a) Interest shall be paid at the times for the payment of interest set
forth in Section 2.4 of the Financing Agreement; and

         (b) Unless sooner paid, the unpaid Principal Sum, together with
interest accrued and unpaid thereon, shall be due and payable in full on the
Revolving Credit Termination Date.

     The fact that the balance hereunder may be reduced to zero from time to
time pursuant to the Financing Agreement will not affect the continuing validity
of this Note or the Financing Agreement, and the balance may be increased to the
Principal Sum after any such reduction to zero.

     3.  Default Interest.

     Upon the occurrence of an Event of Default (as hereinafter defined), the
unpaid Principal Sum shall bear interest thereafter at the Post-Default Rate (as
defined in the Financing Agreement) until such Event of Default is cured.

                                       11
<PAGE>

     4.  Late Charges.

     If the Borrower shall fail to make any payment under the terms of this Note
within fifteen (15) days after the date such payment is due, the Borrower shall
pay to the Lender on demand a late charge equal to five percent (5%) of such
payment.

     5.  Application and Place of Payments.

     All payments, made on account of this Note shall be applied first to the
payment of any late charge then due hereunder, second to the payment of any
prepayment fee then due hereunder, third to the payment of accrued and unpaid
interest then due hereunder, and the remainder, if any, shall be applied to the
unpaid Principal Sum.  All payments on account of this Note shall be paid in
lawful money of the United States of America in immediately available funds
during regular business hours of the Lender at its principal office in Bethesda,
Maryland or at such other times and places as the Lender may at any time and
from time to time designate in writing to the Borrower.

     6.  Prepayment.

         (a)  The Borrower may prepay the Principal Sum in whole or in part at
any time without premium or penalty.

         (b)  Payment of the indebtedness evidenced by this Note in whole or in
part subsequent to an Event of Default shall be deemed to be a prepayment of the
Principal Sum subject to any prepayment fee due hereunder.

     7.  Financing Agreement and Other Financing Documents.

     This Note is the "Revolving Credit Note" described in a Financing Agreement
of even date herewith by and between the Borrower and the Lender (as amended,
modified, restated, substituted, extended and renewed at any time and from time
to time, the "Financing Agreement").  The indebtedness evidenced by this Note is
included within the meaning of the term "Obligations" as defined in the
Financing Agreement.  The term "Financing Documents" as used in this Note shall
mean collectively this Note, the Financing Agreement and any other instrument,
agreement, or document previously, simultaneously, or hereafter executed and
delivered by the Borrower, and/or any other person, singularly or jointly with
any other person, evidencing, securing, guaranteeing, or in connection with the
Principal Sum, this Note and/or the Financing Agreement.

     8.  Events of Default.

     The occurrence of any one or more of the following events shall constitute
an event of default (individually, an "Event of Default" and collectively, the
"Events of Default") under the terms of this Note:

         (a) The failure of the Borrower to pay to the Lender when due any and
all amounts payable by the Borrower to the Lender under the terms of this Note;
or

         (b) The occurrence of an event of default (as defined therein) under
the terms and conditions of any of the other Financing Documents.

                                       12
<PAGE>

     9.  Remedies.

     Upon the occurrence of an Event of Default, at the option of the Lender,
all amounts payable by the Borrower to the Lender under the terms of this Note
shall immediately become due and payable by the Borrower to the Lender without
notice to the Borrower or any other person, and the Lender shall have all of the
rights, powers, and remedies available under the terms of this Note, any of the
other Financing Documents and all applicable laws.  The Borrower and all
endorsers, guarantors, and other parties who may now or in the future be
primarily or secondarily liable for the payment of the indebtedness evidenced by
this Note hereby severally waive presentment, protest and demand, notice of
protest, notice of demand and of dishonor and non-payment of this Note and
expressly agree that this Note or any payment hereunder may be extended from
time to time without in any way affecting the liability of the Borrower,
guarantors and endorsers.

     10.  Expenses.

     The Borrower promises to pay to the Lender on demand by the Lender all
costs and expenses incurred by the Lender in connection with the collection and
enforcement of this Note, including, without limitation, reasonable attorneys'
fees and expenses and all court costs.

     11.  Notices.

     Any notice, request, or demand to or upon the Borrower or the Lender shall
be deemed to have been properly given or made when delivered in accordance with
Section 7.1 of the Financing Agreement.

     12.  Miscellaneous.

     Each right, power, and remedy of the Lender as provided for in this Note or
any of the other Financing Documents, or now or hereafter existing under any
applicable law or otherwise shall be cumulative and concurrent and shall be in
addition to every other right, power, or remedy provided for in this Note or any
of the other Financing Documents or now or hereafter existing under any
applicable law, and the exercise or beginning of the exercise by the Lender of
any one or more of such rights, powers, or remedies shall not preclude the
simultaneous or later exercise by the Lender of any or all such other rights,
powers, or remedies.  No failure or delay by the Lender to insist upon the
strict performance of any term, condition, covenant, or agreement of this Note
or any of the other Financing Documents, or to exercise any right, power, or
remedy consequent upon a breach thereof, shall constitute a waiver of any such
term, condition, covenant, or agreement or of any such breach, or preclude the
Lender from exercising any such right, power, or remedy at a later time or
times.  By accepting payment after the due date of any amount payable under the
terms of this Note, the Lender shall not be deemed to waive the right either to
require prompt payment when due of all other amounts payable under the terms of
this Note or to declare an Event of Default for the failure to effect such
prompt payment of any such other amount.  No course of dealing or conduct shall
be effective to amend, modify, waive, release, or change any provisions of this
Note.

                                       13
<PAGE>

     13.  Partial Invalidity.

     In the event any provision of this Note (or any part of any provision) is
held by a court of competent jurisdiction to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision (or remaining part of the affected
provision) of this Note; but this Note shall be construed as if such invalid,
illegal, or unenforceable provision (or part thereof) had not been contained in
this Note, but only to the extent it is invalid, illegal, or unenforceable.

     14.  Captions.

     The captions herein set forth are for convenience only and shall not be
deemed to define, limit, or describe the scope or intent of this Note.

     15.  Applicable Law.

     The Borrower acknowledges and agrees that this Note shall be governed by
the laws of the State of Maryland, even though for the convenience and at the
request of the Borrower, this Note may be executed elsewhere.

     16.  Consent to Jurisdiction.

     The Borrower irrevocably submits to the jurisdiction of any state or
federal court sitting in the State of Maryland over any suit, action, or
proceeding arising out of or relating to this Note or any of the other Financing
Documents.  The Borrower irrevocably waives, to the fullest extent permitted by
law, any objection that the Borrower may now or hereafter have to the laying of
venue of any such suit, action, or proceeding brought in any such court and any
claim that any such suit, action, or proceeding brought in any such court has
been brought in an inconvenient forum.  Final judgment in any such suit, action,
or proceeding brought in any such court shall be conclusive and binding upon the
Borrower and may be enforced in any court in which the Borrower is subject to
jurisdiction by a suit upon such judgment, provided that service of process is
effected upon the Borrower as provided in this Note or as otherwise permitted by
applicable law.

     17.  Service of Process.

     The Borrower hereby irrevocably designates and appoints Ann L. Ramsey,
Esquire, McGuireWoods Battle & Boothe LLP, at 7 St. Paul Street, Suite 1000,
Baltimore, Maryland 21202, as the Borrower's authorized agent to receive on the
Borrower's behalf service of any and all process that may be served in any suit,
action, or proceeding instituted in connection with this Note in any state or
federal court sitting in the State of Maryland.  If such agent shall cease so to
act, the Borrower shall irrevocably designate and appoint without delay another
such agent in the State of Maryland satisfactory to the Lender and shall
promptly deliver to the Lender evidence in writing of such agent's acceptance of
such appointment and its agreement that such appointment shall be irrevocable.

     The Borrower hereby consents to process being served in any suit, action,
or proceeding instituted in connection with this Note by (a) the mailing of a
copy thereof by certified mail, postage prepaid, return receipt requested, to
the Borrower and (b) serving a copy thereof upon the agent

                                       14
<PAGE>

hereinabove designated and appointed by the Borrower as the Borrower's agent for
service of process. The Borrower irrevocably agrees that such service shall be
deemed in every respect effective service of process upon the Borrower in any
such suit, action or proceeding, and shall, to the fullest extent permitted by
law, be taken and held to be valid personal service upon the Borrower. Nothing
in this Section shall affect the right of the Lender to serve process in any
manner otherwise permitted by law or limit the right of the Lender otherwise to
bring proceedings against the Borrower in the courts of any jurisdiction or
jurisdictions.

     18.  WAIVER OF TRIAL BY JURY.

     THE BORROWER AND THE LENDER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH THE BORROWER AND THE LENDER MAY BE PARTIES, ARISING OUT OF
OR IN ANY WAY PERTAINING TO (A) THIS NOTE OR (B) THE FINANCING DOCUMENTS.  IT IS
AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF
ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS
AGAINST PARTIES WHO ARE NOT PARTIES TO THIS NOTE.

     THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE BORROWER,
AND THE BORROWER HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION
HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN
ANY WAY MODIFY OR NULLIFY ITS EFFECT. THE BORROWER FURTHER REPRESENTS THAT IT
HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT
HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

     IN WITNESS WHEREOF, the Borrower has caused this Note to be executed under
seal by its duly authorized officers as of the date first written above.

WITNESS OR ATTEST:                      AMERICAN WOODMARK CORPORATION

________________________                By:____________________________(Seal)
                                           Kent Guichard
                                           Chief Financial Officer

                                       15
<PAGE>

                                                                     EXHIBIT B-2

                                   TERM NOTE

$10,000,000                                                   Bethesda, Maryland

                                                                    May 31, 2001

     FOR VALUE RECEIVED, AMERICAN WOODMARK CORPORATION, a corporation organized
under the laws of the Commonwealth of Virginia (the "Borrower"), promises to pay
to the order of BANK OF AMERICA, N. A., a national banking association (the
"Lender"), the principal sum of TEN MILLION DOLLARS ($10,000,000) (the
"Principal Sum"), together with interest thereon at the rate provided in the
Financing Agreement.  All capitalized terms used, but not specifically defined
herein, shall have the meanings given such terms in the Financing Agreement.

     1.  Interest.

     Commencing as of the date hereof and continuing until repayment in full of
all sums due hereunder, the unpaid Principal Sum shall bear interest at the
Applicable Interest Rate.  The rate of interest charged under this Note shall
change immediately and contemporaneously with any change in the Applicable
Interest Rate.  All interest payable under the terms of this Note shall be
calculated on the basis of a 360-day year and the actual number of days elapsed.

     2.  Payments and Maturity.

     The unpaid Principal Sum, together with interest thereon at the rate
provided above, shall be payable as follows:

          (a)  Interest only on the unpaid Principal Sum shall be due and
payable quarterly, commencing August 31, 2001, and on the last day of each
fiscal quarter thereafter to maturity; and

          (b)  Unless sooner paid, the unpaid Principal Sum, together with
interest accrued and unpaid thereon, shall be due and payable in full on May 31,
2006.

     3.   Default Interest.

     Upon the occurrence of an Event of Default (as hereinafter defined), the
unpaid Principal Sum shall bear interest thereafter at the Post-Default Rate (as
defined in the Financing Agreement) until such Event of Default is cured.

     4.   Late Charges.

     If the Borrower shall fail to make any payment under the terms of this Note
within fifteen (15) days after the date such payment is due, the Borrower shall
pay to the Lender on demand a late charge equal to five percent (5%) of such
payment.

                                       16
<PAGE>

     5.   Application and Place of Payments.

     All payments, made on account of this Note shall be applied first to the
payment of any late charge then due hereunder, second to the payment of any
prepayment fee then due hereunder, third to the payment of accrued and unpaid
interest then due hereunder, and the remainder, if any, shall be applied to the
unpaid Principal Sum.  All payments on account of this Note shall be paid in
lawful money of the United States of America in immediately available funds
during regular business hours of the Lender at its principal office in Bethesda,
Maryland or at such other times and places as the Lender may at any time and
from time to time designate in writing to the Borrower.

     6.   Prepayment.

          (a)  The Borrower may prepay the Principal Sum in whole or in part at
any time without premium or penalty.

          (b)  Payment of the indebtedness evidenced by this Note in whole or in
part subsequent to an Event of Default shall be deemed to be a prepayment of the
Principal Sum subject to any prepayment fee due hereunder.

     7.   Financing Agreement and Other Financing Documents.

     This Note is the "Term Note" described in a Financing Agreement of even
date herewith by and between the Borrower and the Lender (as amended, modified,
restated, substituted, extended and renewed at any time and from time to time,
the "Financing Agreement").  The indebtedness evidenced by this Note is included
within the meaning of the term "Obligations" as defined in the Financing
Agreement.  The term "Financing Documents" as used in this Note shall mean
collectively this Note, the Financing Agreement and any other instrument,
agreement, or document previously, simultaneously, or hereafter executed and
delivered by the Borrower and/or any other person, singularly or jointly with
any other person, evidencing, securing, guaranteeing, or in connection with the
Principal Sum, this Note and/or the Financing Agreement.

     8.   Events of Default.

     The occurrence of any one or more of the following events shall constitute
an event of default (individually, an "Event of Default" and collectively, the
"Events of Default") under the terms of this Note:

          (a)  The failure of the Borrower to pay to the Lender when due any and
all amounts payable by the Borrower to the Lender under the terms of this Note;
or

          (b)  The occurrence of an event of default (as defined therein) under
the terms and conditions of any of the other Financing Documents.

     9.   Remedies.

     Upon the occurrence of an Event of Default, at the option of the Lender,
all amounts payable by the Borrower to the Lender under the terms of this Note
shall immediately become due and payable by the Borrower to the Lender without
notice to the Borrower or any other person, and the Lender shall have all of the
rights, powers, and remedies available under the terms of this Note, any of the
other Financing Documents and all applicable laws.

                                       17
<PAGE>

The Borrower and all endorsers, guarantors, and other parties who may now or in
the future be primarily or secondarily liable for the payment of the
indebtedness evidenced by this Note hereby severally waive presentment, protest
and demand, notice of protest, notice of demand and of dishonor and non-payment
of this Note and expressly agree that this Note or any payment hereunder may be
extended from time to time without in any way affecting the liability of the
Borrower, guarantors and endorsers.

     10.  Expenses.

     The Borrower promises to pay to the Lender on demand by the Lender all
costs and expenses incurred by the Lender in connection with the collection and
enforcement of this Note, including, without limitation, reasonable attorneys'
fees and expenses and all court costs.

     11.  Notices.

     Any notice, request, or demand to or upon the Borrower or the Lender shall
be deemed to have been properly given or made when delivered in accordance with
Section 7.1 of the Financing Agreement.

     12.  Miscellaneous.

     Each right, power, and remedy of the Lender as provided for in this Note or
any of the other Financing Documents, or now or hereafter existing under any
applicable law or otherwise shall be cumulative and concurrent and shall be in
addition to every other right, power, or remedy provided for in this Note or any
of the other Financing Documents or now or hereafter existing under any
applicable law, and the exercise or beginning of the exercise by the Lender of
any one or more of such rights, powers, or remedies shall not preclude the
simultaneous or later exercise by the Lender of any or all such other rights,
powers, or remedies.  No failure or delay by the Lender to insist upon the
strict performance of any term, condition, covenant, or agreement of this Note
or any of the other Financing Documents, or to exercise any right, power, or
remedy consequent upon a breach thereof, shall constitute a waiver of any such
term, condition, covenant, or agreement or of any such breach, or preclude the
Lender from exercising any such right, power, or remedy at a later time or
times.  By accepting payment after the due date of any amount payable under the
terms of this Note, the Lender shall not be deemed to waive the right either to
require prompt payment when due of all other amounts payable under the terms of
this Note or to declare an Event of Default for the failure to effect such
prompt payment of any such other amount.  No course of dealing or conduct shall
be effective to amend, modify, waive, release, or change any provisions of this
Note.

     13.  Partial Invalidity.

     In the event any provision of this Note (or any part of any provision) is
held by a court of competent jurisdiction to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision (or remaining part of the affected
provision) of this Note; but this Note shall be construed as if such invalid,
illegal, or unenforceable provision (or part thereof) had not been contained in
this Note, but only to the extent it is invalid, illegal, or unenforceable.

                                       18
<PAGE>

     14.  Captions.

     The captions herein set forth are for convenience only and shall not be
deemed to define, limit, or describe the scope or intent of this Note.

     15.  Applicable Law.

     The Borrower acknowledges and agrees that this Note shall be governed by
the laws of the State of Maryland, even though for the convenience and at the
request of the Borrower, this Note may be executed elsewhere.

     16.  Consent to Jurisdiction.

     The Borrower irrevocably submits to the jurisdiction of any state or
federal court sitting in the State of Maryland over any suit, action, or
proceeding arising out of or relating to this Note or any of the other Financing
Documents.  The Borrower irrevocably waives, to the fullest extent permitted by
law, any objection that the Borrower may now or hereafter have to the laying of
venue of any such suit, action, or proceeding brought in any such court and any
claim that any such suit, action, or proceeding brought in any such court has
been brought in an inconvenient forum.  Final judgment in any such suit, action,
or proceeding brought in any such court shall be conclusive and binding upon the
Borrower and may be enforced in any court in which the Borrower is subject to
jurisdiction by a suit upon such judgment, provided that service of process is
effected upon the Borrower as provided in this Note or as otherwise permitted by
applicable law.

     17.  Service of Process.

     The Borrower hereby irrevocably designates and appoints Ann L. Ramsey,
Esquire, McGuireWoods Battle & Boothe LLP, at 7 St. Paul Street, Suite 1000,
Baltimore, Maryland 21202, as the Borrower's authorized agent to receive on the
Borrower's behalf service of any and all process that may be served in any suit,
action, or proceeding instituted in connection with this Note in any state or
federal court sitting in the State of Maryland.  If such agent shall cease so to
act, the Borrower shall irrevocably designate and appoint without delay another
such agent in the State of Maryland satisfactory to the Lender and shall
promptly deliver to the Lender evidence in writing of such agent's acceptance of
such appointment and its agreement that such appointment shall be irrevocable.

     The Borrower hereby consents to process being served in any suit, action,
or proceeding instituted in connection with this Note by (a) the mailing of a
copy thereof by certified mail, postage prepaid, return receipt requested, to
the Borrower and (b) serving a copy thereof upon the agent hereinabove
designated and appointed by the Borrower as the Borrower's agent for service of
process.  The Borrower irrevocably agrees that such service shall be deemed in
every respect effective service of process upon the Borrower in any such suit,
action or proceeding, and shall, to the fullest extent permitted by law, be
taken and held to be valid personal service upon the Borrower.  Nothing in this
Section shall affect the right of the Lender to serve process in any manner
otherwise permitted by law or limit the right of the Lender otherwise to bring
proceedings against the Borrower in the courts of any jurisdiction or
jurisdictions.

                                       19
<PAGE>

     18.  WAIVER OF TRIAL BY JURY.

     THE BORROWER AND THE LENDER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH THE BORROWER AND THE LENDER MAY BE PARTIES, ARISING OUT OF
OR IN ANY WAY PERTAINING TO (A) THIS NOTE OR (B) THE FINANCING DOCUMENTS.  IT IS
AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF
ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS
AGAINST PARTIES WHO ARE NOT PARTIES TO THIS NOTE.

     THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE BORROWER,
AND THE BORROWER HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION
HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN
ANY WAY MODIFY OR NULLIFY ITS EFFECT.  THE BORROWER FURTHER REPRESENTS THAT IT
HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT
HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

     IN WITNESS WHEREOF, the Borrower has caused this Note to be executed under
seal by its duly authorized officers as of the date first written above.

WITNESS OR ATTEST:                      AMERICAN WOODMARK CORPORATION

________________________                By:____________________________(Seal)
                                           Kent Guichard
                                           Chief Financial Officer

                                       20
<PAGE>

                                                                       EXHIBIT C

                             COMPLIANCE CERTIFICATE
                             ----------------------

     THIS CERTIFICATE is made as of __________________, 200_ , by AMERICAN
WOODMARK CORPORATION, a corporation organized under the laws of the Commonwealth
of Virginia (the "Borrower"), to Bank of America, N. A, a national banking
association (the "Lender"), pursuant to Section of the Financing Agreement dated
_________ __, 2001, (as amended, modified, restated, substituted, extended and
renewed at any time and from time to time, the "Financing Agreement") by and
between the Borrower and the Lender.

     I, ____________________, hereby certify that I am the ______________ of the
Borrower and am a Responsible Officer (as that term is defined in the Financing
Agreement) authorized to certify to the Lender on behalf the Borrower as
follows:

     1.  This Certificate is given to induce the Lender to make advances to the
Borrower under the Financing Agreement.

     2.  This Certificate accompanies the _____________ financial statements for
the period ended ___________________, 200__ (the "Current Financials") which the
Borrower is furnishing to the Lender pursuant to Section 5.1.1(__) of the
Financing Agreement. The Current Financials have been prepared in accordance
with GAAP (as that term is defined in the Financing Agreement).

     3.  As required by Section 5.1.1(__) of the Financing Agreement, I have set
forth on Schedule 1 a detailed computation of  each financial covenant in
Financing Agreement and a cash flow projection report.

     4.  As of the date hereof, there exists no Default or Event of Default, as
defined in the Article 6 of the Financing Agreement, nor any event which, upon
notice or the lapse of time, or both, would constitute such an Event of Default.

     5.  On the date hereof, the representations and warranties contained in
Article 3 of the Financing Agreement are true with the same effect as though
such representations and warranties had been made on the date hereof.

     WITNESS my signature this _____ day of ____________, 200_.

                              AMERICAN WOODMARK CORPORATION

                              __________________________
                              Name:
                              Title:

                                       21
<PAGE>

                                                                      Schedule 1

                                       22
<PAGE>

                                                                      Schedule 2

                                       23
<PAGE>

                               LIST OF SCHEDULES

Schedule 1.1             Outstanding Letters of Credit

Schedule 3.1.1           Subsidiaries

Schedule 3.1.10          Litigation

Schedule 3.1.13          Other Indebtedness

Schedule 3.1.18          Employee Relations

Schedule 3.1.19          Environmental Matters

Schedule 5.2.3           Indebtedness

Schedule 5.2.8           Transaction with Affiliates

                                       24
<PAGE>

                                                                    Schedule 1.1

                               LETTERS OF CREDIT
                               -----------------
<TABLE>

   L/C#                    Purpose                                     Expiration Date                        Amount
<S>           <C>                                                     <C>                                   <C>
  67339       Mohave County Industrial Revenue                        December 31, 2001                     $  462,125
              Bonds

  34778       Stephens County Industrial Revenue                      December 31, 2001                     $3,192,500
              Bonds

  34474       West Virginia Economic Development                      July 15, 2001                         $1,164,175
              Authority - Hardy County Lease

</TABLE>

                                       25
<PAGE>

                                                                  SCHEDULE 3.1.1
                                                                  --------------

                                  SUBSIDIARIES

SUBSIDIARY                            FED. ID #              % Owned

Amende Cabinet Corporation
Winchester, Virginia 22604            54-1444625                  100%

                                       26
<PAGE>

                                                                 Schedule 3.1.10

                                   LITIGATION
                                   ----------

SEE ATTACHED AMERICAN WOODMARK CORPORATION LITIGATION SUMMARY

                                       27
<PAGE>

SCHEDULE 3.1.13

<TABLE>

OTHER INDEBTEDNESS
<S>                                              <C>                       <C>                          <C>
Lendor                                                                     Original Balance             Current Balance

Mohave County, AZ                                 IRB
Industrial Revenue Bonds                                                     $ 4,000,000                  $   425,000
Stephens County, GA                               IRB
Industrial Revenue Bonds                                                     $ 8,000,000                  $ 3,000,000
West Virginia                                     Note
Economic Development Authority                                               $   500,000                  $   401,397
West Virginia                                     Note
Economic Development Authority                                               $ 1,000,000                  $   977,649
West Virginia                                     Lease
Economic Development Authority                                               $ 5,275,600                  $ 3,960,604
Wells Fargo Bank                                  Note                       $ 2,500,000                  $ 1,500,000
GMAC                                              Note                       $    35,339                  $     2,328
Pitney Bowes                                      Lease                      $   102,969                  $    19,672
The Industrial Development Board of The City of
 Humboldt, Tennessee                              Lease                      $20,366,888                  $20,261,781

</TABLE>

                                       28
<PAGE>

                                                                 SCHEDULE 3.1.18

                               EMPLOYEE RELATIONS

Section 3.1.18(a):

The following are the American Woodmark Corporation locations with collective
bargaining agreements:

109 Byrd Avenue               United Brotherhood of Carpenters and Joiners
Berryville, VA                of America #2488

25 Industrial Park Blvd.      United Brotherhood of Carpenters and Joiners of
                              America #2101

Section 3.1.18(d):

Written employment contracts in excess of $100,000:

Between New Business Development I Corporation and Randy Craig - $65,000
annually plus benefits.

Bonus agreements in excess of $100,000:

American Woodmark Corporation Shareholder Value Plan for Employees as adopted
May 14, 1996, and amended May 1, 1999.

American Woodmark Corporation Executive Bonus Program (Annual Cash Bonus) as
annually adopted by the Board.

                                       29
<PAGE>

                                                                 Schedule 3.1.19

                             ENVIRONMENTAL MATTERS
                             ---------------------

SEE ATTACHED AMERICAN WOODMARK CORPORATION LITIGATION SUMMARY REGARDING
SEABOARD, SITE OF ENVIRONMENTAL CLEANUP

                                       30
<PAGE>

                                                                  SCHEDULE 5.2.3
                                                                  --------------

                                  INDEBTEDNESS

                                           Original                Current
BORROWER             LENDOR            Amount Outstanding     Amount Outstanding

American Woodmark    Amende Cabinet
Corporation          Corporation       $4,500,000             $4,500,000

                                       31
<PAGE>

                                                                  SCHEDULE 5.2.8

                          TRANSACTIONS WITH AFFILIATES

                                           Original                Current
BORROWER             LENDOR            Amount Outstanding     Amount Outstanding

American Woodmark   Amende Cabinet
Corporation         Corporation        $4,500,000             $4,500,000

                                       32
<PAGE>

<TABLE>
<CAPTION>
American Woodmark Corporation, Litigation Summary:  ENVIRONMENTAL Reported as of May 16, 2001
                                                    -------------

====================================================================================================================================
CASE                       REPRESENTATIVES COSTS          CASE DESCRIPTION                          STATUS
------------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>             <C>            <C>                                       <C>
1.  Claimant:              Law Firm:       Legal Fees:    The Seaboard Chemical Corp. operated a    At the recommendation of our
    ---------              ---------       -----------
    North Carolina DEHNR   McGuire, Woods  Covered by AWC waste disposal site in North Carolina     attorneys, AWC joined the
                                                          until 1990.  When the North Carolina      Seaboard Group, an organization
    Defendant:             Attorney:       Settlement:    Department of Environment, Health and     that was formed to minimize
    ----------             ---------       -----------
    Seaboard Group         Donald Anderson Covered by AWC Natural Resources refused to renew their  participating company's
                                                          license, Seaboard went bankrupt and was   liability and fund the clean-up.
    Amount:                AWC Rep:                       financially unable to close (reclaim)     AWC also joined in participation
    -------                --------
    Approximately $35,000  Dave Blount                    the operation.                            of Seaboard Group II.

    Date of Suit:                                         State law dictates that those             Phase I, above ground clean-up
    -------------
    March 26, 1991                                        participating in waste disposal have      has been completed.  AWC paid
                                                          ultimate responsibility for closure and   $34,000 towards Phase I work.
                                                          clean-up of the site.  Since AWC disposed The Seaboard Group refunded AWC
                                                          of hazardous waste at the Seaboard site   $7,598.80 due to additional
                                                          from 1980-1988, Woodmark has a            PRP's having been identified.
                                                          responsibility to provide for closure of  An additional $232.97 was
                                                          site.                                     refunded on May 8, 1997.

                                                                                                    Seaboard Group II has been
                                                                                                    created to coordinate Phase II
                                                                                                    work, below ground clean-up of
                                                                                                    water and soil.

                                                                                                    Remedial investigation was
                                                                                                    concluded in September 1998. A
                                                                                                    report is due to NCDENR by
                                                                                                    12/31/98. A feasibility study is
                                                                                                    due by 2/29/99.

                                                                                                    In December of 1999, the State
                                                                                                    of North Carolina requested
                                                                                                    additional remedial
                                                                                                    investigation to research
                                                                                                    potential ground water
                                                                                                    contamination. Their research
                                                                                                    will not be concluded until the
                                                                                                    fall of 2000. The group still
                                                                                                    has on hand $3.5 million
                                                                                                    eliminating any short term
                                                                                                    assessments.

                                                                                                    Most of the remedial
                                                                                                    investigation and feasibility
                                                                                                    study work is done, but
                                                                                                    additional work in the field is
                                                                                                    necessary.

                                                                                                    It now appears that this work
                                                                                                    will be completed in time for a
                                                                                                    remedy selection to be made in
                                                                                                    the fall of 2001.

                                                                                                    A de minimis settlement is
                                                                                                    likely to be offered by the end
                                                                                                    of calendar year 2001 or in
                                                                                                    early 2002, at which time this
                                                                                                    matter would come to an end for
                                                                                                    AWC.
====================================================================================================================================
</TABLE>

                              ***Confidential***
<PAGE>

American Woodmark Corporation, Litigation Summary: CLASS ACTION Reported as of
                                                   ------------
May 16, 2001

<TABLE>
<CAPTION>
====================================================================================================================================
CASE                            REPRESENTATIVES             COSTS                  CASE DESCRIPTION
------------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                         <C>                    <C>
1.   Claimant:                  Law Firm:                   Legal Fees:            Class action suit for construction
     ---------                  ---------                   -----------
     Torres - et al             Anderson & Kriger           Insurance              defects, cabinets are not specifically
                                                                                   named in the allegations.
     Defendant:                 Attorney:                   Settlement:
     ----------                 ---------                   -----------
     All Valley Financial,      Dallas Simmons              AWC - warranty
     AWC, et al                                             Insurance - bodily
                                AWC Rep:                    injury and property
                                --------
     Amount:                    G. Eanes                    damage
     -------
     Unknown

     Received 7/01/00
------------------------------------------------------------------------------------------------------------------------------------

2.   Claimant:                  Law Firm:                   Legal Fees:            Class action suit for construction
     ---------                  ---------                   -----------
     Guy et al                  Anderson & Kriger           Insurance              defects, cabinets are not specifically
                                                                                   named in the allegations.
     Defendant:                 Attorney:                   Settlement:
     ----------                 ---------                   -----------
     Anden Group et al          Dallas Simmons              AWC - warranty
     Including AWC                                          Insurance - bodily
                                AWC Rep:                    injury and property
                                --------
     Amount:                    G. Eanes                    damage
     -------
     Unknown

     Received 08/01/00
------------------------------------------------------------------------------------------------------------------------------------
3.   Claimant:                  Law Firm:                   Legal Fees:            Class action suit for construction
     ---------                  ---------                   -----------
     Pacific Legends East                                   Insurance              defects, cabinets are not named in
     Pacific Homes - Cross                                                         allegations.
     Complaint - Furcolo &      Attorney:                   Settlement:
                                ---------                   -----------
     Assoc                      Kemper to assign an         Warranty - AWC
                                attorney                    Insurance - bodily
     Defendant:                                             injury & property
     ----------
     Pacific Homes              AWC Rep:                    damage
                                --------
     AWC                        G. Eanes

     Amount:
     -------
     Unknown

     Received 6/14/00
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
====================================================================================================================================
CASE                                              STATUS
------------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>
1.   Claimant:                                    Our attorney has filed an answer to the
     ---------
     Torres - et al                               complaint on 8/16/00.

     Defendant:                                   Hearing scheduled for 2/21/01, at which time
     ----------
     All Valley Financial,                        this case and Guy (below) will be combined into
     AWC, et al                                   one.

     Amount:                                      3/30/01 received Case Management Order to
     -------
     Unknown                                      consolidate these cases.

     Received 7/01/00
------------------------------------------------------------------------------------------------------------------------------------

2.   Claimant:                                    Our attorney has requested a list of specific
     ---------
     Guy et al                                    defects to determine our cost to repair or
                                                  settle.
     Defendant:                                   Hearing scheduled for 2/21/01, at which time
     ----------
     Anden Group et al                            this case and Torres (above) will be combined
     Including AWC                                into one.

     Amount:                                      3/30/01 received Case Management Order to
     -------
     Unknown                                      consolidate these cases.

     Received 08/01/00
------------------------------------------------------------------------------------------------------------------------------------

3.   Claimant:                                    Kemper is handling defense.  There appears to be
     ---------
     Pacific Legends East                         no liability from the detail list of
     Pacific Homes - Cross                        construction defects.
     Complaint - Furcolo &
     Assoc                                        No change in status.

     Defendant:
     ----------
     Pacific Homes
     AWC

     Amount:
     ------
     Unknown

     Received 6/14/00
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                              ***Confidential***
<PAGE>

American Woodmark Corporation, Litigation Summary: CLASS ACTION Reported as of
                                                   ------------
May 16, 2001

<TABLE>
<CAPTION>
====================================================================================================================================
CASE                            REPRESENTATIVES             COSTS                  CASE DESCRIPTION
------------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                         <C>                    <C>
4.   Claimant:                  Law Firm:                   Legal Fees:            Class action suit against Carlton Homes.
     ---------                  ---------                   -----------
     Chan; et al                Borsak & Assoc              Insurance              Carlton Homes is suing all their
     Calton Homes - Cross                                                          contractors and subcontractors.  Cabinets
     Compliant -                                            Settlement:            are named in the allegations of defects.
                                                            -----------
                                Attorney:                   AWC - warranty         Work was performed by AWC during 1991 and
                                ---------
     Defendant:                 John Davis                  Insurance - bodily     1992.
     ----------
     Calton Homes, and                                      injury & property
     AWC et,al                                              damage
                                AWC Rep:
                               ---------
     Amount:                    G. Eanes
     -------
     Unknown

     Date Received by AWC
     7/17/00

====================================================================================================================================
<CAPTION>
====================================================================================================================================
CASE                                                     STATUS
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>
4.   Claimant:                                           Our attorney is working to get a list of
     ---------
     Chan; et al                                         specific defects to determine our cost to repair
     Calton Homes - Cross                                or settle, as of today, we have not received
     Compliant -                                         that list.

     Defendant:
     ----------
     Calton Homes, and
     AWC et,al

     Amount:
     -------
     Unknown

     Date Received by
     AWC 7/17/00
====================================================================================================================================
</TABLE>

                              ***Confidential***
<PAGE>

American Woodmark Corporation, Litigation Summary: CLASS ACTION Reported as of
                                                   ------------
May 16, 2001

<TABLE>
<CAPTION>
====================================================================================================================================
CASE                            REPRESENTATIVES             COSTS                      CASE DESCRIPTION
====================================================================================================================================
<S>                             <C>                         <C>                        <C>
5.   Claimant:                  Law Firm:                   Legal Fees:                Class action suit against Mesa Homes.
     ---------                  ---------                   -----------
     Guffey et al               Lorber, Greenfield,         Unknown                    Mesa Homes filed a cross complaint suing
     Mesa Home, Cross           Baddoe, Dolito, and                                    all their contractors and
     Complaint, Larber,         Dongilly                    Settlement:                sub-contractors.  Cabinets are not
                                                            -----------
     Greefield, Daddoc,                                     AWC - warranty             specifically named in the allegations of
     Palito & Pensilly          Attorney:                   Insurance - bodily         defect.
                                ---------
                                Dallas Simmons              injury and property
     Defendant:                                             damage
     Mesa Homes                 AWC Rep:
                                --------
     AWC et al

     Amount:
     -------
     Unknown

     Date Received by AWC
     12/12/00
------------------------------------------------------------------------------------------------------------------------------------
6.   Claimant:                  Law Firm:                   Legal Fees:                Class action suit.
     ---------                  ---------                   -----------
     Willsey et al              Borsch & Associates         Insurance
     Calton Homes,                                                                     Construction defects.
     Cross-complaint            Attorney:                   Settlement:
                                ---------                   -----------
                                John Davis                  AWC - warranty
     Defendant:                                             Insurance -
     ----------
     Calton Homes               AWC Rep:                    property, damage,
                                --------
     AWC et al                  Glenn Eanes                 and bodily injury

     Amount:
     ------

     Unknown

     Date Received 12/14/00
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
====================================================================================================================================
CASE                                                        STATUS
====================================================================================================================================
<S>                                                         <C>
5.   Claimant:                                              Have forwarded complaints to Marsh to forward to
     ---------
     Guffey et al                                           Kemper, to see if Kemper will provide defense.
     Mesa Home, Cross
     Complaint, Larber,                                     2/03/01 - Our Attorney notified us that we will
     Greefield, Daddoc,                                     be dismissed from this case without prejudice.
     Palito & Pensilly

     Defendant:                                             3/22/01 - We had not received the dismissal
     Mesa Homes                                             notice, our attorney follow-up indicated the
     AWC et al                                              trial date was May 5, 2001.

     Amount:
     Unknown

     Date Received by AWC
     12/12/00

------------------------------------------------------------------------------------------------------------------------------------
6.   Claimant:                                              Forwarded cross-complaint to Marsh to forward to
     ---------
     Willsey et al                                          our Insurance Company on 12/14/00.
     Calton Homes,
     Cross-complaint                                        1/24/01 - Received a letter from Carlton Homes
                                                            Attorney (Jeffery Borsch) requesting AWC assume
     Defendant:                                             defense.  The letter was forwarded to Marsh to
     ----------                                             forward to Kemper.
     Calton Homes
     AWC et al
                                                            No change in status.
     Amount:
     ------
     Unknown

     Date Received
     12/14/00
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                              ***Confidential***
<PAGE>

American Woodmark Corporation, Litigation Summary: CLASS ACTION Reported as of
                                                   ------------
May 16, 2001

<TABLE>
<CAPTION>
==============================================================================================================================
CASE                        REPRESENTATIVES            COSTS                      CASE DESCRIPTION
------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>                        <C>                        <C>
7.   Claimant:              Law Firm:                  Legal Fees:                Class action suit for construction
     --------               --------                   ----------                 defects.  AWC is not named in suit.
     Maynard                Duke Gerstal Shearer,      Unknown                    Beaser has not filed a cross complaint
                            LLP                                                   against their sub-contractors.  Cabinets
                                                                                  are not specifically listed in the
     Defendant:             Attorney:                  Settlement:                allegations.
     ---------              --------                   ----------
     Beaser Homes           Lake & Mougin              AWC - warranty
                                                       Insurance -
     Amount:                AWC Rep:                   property damage
     ------                 -------                    and bodily injury
     Unknown                G. Eanes

------------------------------------------------------------------------------------------------------------------------------
8.   Claimant:              Law Firm:                  Legal Fees:                Class action for construction defects.
     --------               --------                   ----------
     Prevo, et al           Lorber, Greenfield,        Insurance
                            Baddoe, Dolito, and
     Defendant:             Dongilly                   Settlement:
     ---------                                         ----------
     Mesa Homes & AWC                                  AWC - Warranty
                            Attorney:                  Insurance.
                            --------                   Property and bodily
     Amount:                Dallas Simmons             injury.
     ------
     Unknown
                            AWC Rep:
                            -------
                            G. Eanes
------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
===================================================================================
CASE                       STATUS
-----------------------------------------------------------------------------------
<S>                        <C>
7.   Claimant:             Beaser has requested that our insurance company,
     --------              Kemper, participate in defense and cost of
     Maynard               settlement.  Kemper has denied coverage in this
                           case. Kemper will review claim if AWC is sued.

     Defendant:
     ---------
     Beaser Homes

     Amount:               No change.
     ------
     Unknown

-----------------------------------------------------------------------------------
8.   Claimant:             2/08/01 - Received copy of a letter from our
     --------              attorney to Claimants attorney.  AWC is to be
     Prevo, et al          dismissed, failing this, our attorney has
                           requested on extension in the trial date from
     Defendant:            5/05/01 to 5/05/02.
     ---------
     Mesa Homes & AWC

     Amount:               3/22/01 - Our attorney is still waiting for
     ------                dismissal order.  Trial set for May 5, 2001.
     Unknown               Have not heard if trial was postponed or if we
                           were dismissed.

-----------------------------------------------------------------------------------
</TABLE>

                              ***Confidential***
<PAGE>

American Woodmark Corporation, Litigation Summary: GENERAL Reported as of May
                                                   -------
16, 2001

<TABLE>
<CAPTION>
==============================================================================================================================
CASE                            REPRESENTATIVES             COSTS                  CASE DESCRIPTION
------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                         <C>                    <C>
1.   Claimant:                  Law Firm:                   Legal Fees:            Drawer front came off of cabinet drawer
     --------                   --------                    ----------             and struck Mrs. Schilling's feet and left
     Doris Schilling            Randall L. Miller           Insurance              ankle.

     Defendant:                 Attorney:                   Settlement:
     ---------                  --------                    ----------
     AWC                        Thomas Grace                Insurance, Damages     Second type of occurrence striking Mrs.
                                Bodell, Bove, Grace & Van                          Schilling on left foot.
     Amount:                    Horn
     ------
     In excess of $50,000
                                AWC Rep:
                                -------
                                Glenn Eanes

------------------------------------------------------------------------------------------------------------------------------
2.   Claimant:                  Law Firm:                   Legal Fees:            Accident occurred on 8/4/99.  Van pool
-------------                                               -----------            accident - hit a deer.  Craig Taylor
     Craig Taylor               Robert O. Kozory            Insurance              claims injuries.  VPSI owned the van and
     (defendant), and Joe                                                          carried the insurance.  Joe Digilaimo,
     Digilaimo                  Attorney:                   Settlement:            our employee, was the driver, AWC paid
                                ---------                   -----------            for the van pool.
                                Craig Coxen of Nancy        Insurance.
     Defendant:                 L. Harrison Law Offices     VPSI should be
     ----------                                             responsible
     VPSI & AWC
                                AWC Rep:                                           AWC has asked to be removed as a
                                --------                                           defendant in this case.
     Amount:
     -------
     $24,000

==============================================================================================================================

<CAPTION>
===================================================================================
CASE                           STATUS
-----------------------------------------------------------------------------------
<S>                           <C>
1.   Claimant:                 Claim filed August 1, 1998.
     --------
     Doris Schilling
                               Suit filed December 30, 1999.
     Defendant:
     ---------
     AWC                       Received interrogatories for us to answer
                               5/8/00.
     Amount:
     ------
     In excess of $50,000      Response filed July 10, 2000.  Bob Arslin and
                               Mike Robinson gave their depositions on 12/04/00.

                               12/13/00 - received update on dispositions
                               including Doris Schilling's.  Our attorney felt
                               good about the disposition.

                               3/5/01 - Received settlement demand for $97,500.

-----------------------------------------------------------------------------------
2.   Claimant:                 Court date has been set for 3/22/00.
-------------
     Craig Taylor
     (defendant), and Joe      Court date has been continued indefinitely as of
     Digilaimo                 3/27/00.

     Defendant:                No change in status.
     ----------
     VPSI & AWC

     Amount:
     -------
     $24,000

===================================================================================
</TABLE>

                              ***Confidential***
<PAGE>

<TABLE>
<CAPTION>
American Woodmark Corporation, Litigation Summary:  GENERAL Reported as of May 16, 2001
                                                    -------

====================================================================================================================================
CASE                         REPRESENTATIVES             COSTS          CASE DESCRIPTION                  STATUS
------------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>                         <C>            <C>                               <C>
3.   Claimant:               Law Firm:                   Legal Fees:    Mr. Nedderman purchased an        We received notice on
     ---------               ---------                   -----------    AWC kitchen. Issues with          3/9/00. Our original
     Craig Nedderman,        Nemeth, Freang, Masters,    AWC            kitchen were reported from        position was that we have
     Lowe's                  Hasinski, and Devetski,                    5/25/98 through 11/17/98.         lived up to all our
                             P.C.                        Settlement:    He returned the AWC kitchen       commitments and we will
     Defendant:                                          -----------    and bought Kraftmaid. Lowe's      not participate further.
     ----------              Attorney:                   AWC            offered $11,000 to settle,
     AWC                     ---------                                  lookingto AWC for 50% of          Received summons on
                             Shawn D. Ryan                              settlement.                       8/31/00. Answered
     Amount:                                                                                              complaint on 10/06/00.
     -------
     Unknown                 AWC Rep:                                   Mr. Nedderman demands $12,500     4/13/01 - AWC/Kemper is
                             --------                                   to settle. Summons does not       working to settle with
                                                                        include a cost.                   Nedderman for minimal
                                                                                                          amount. AWC has
                                                                                                          indemnified Lowe's.
                                                                                                          Lowe's is not settling,
                                                                                                          will have Nedderman
                                                                                                          seek releif from AWC. AWC
                                                                                                          will settle only once.

------------------------------------------------------------------------------------------------------------------------------------
4.   Claimant:               Law Firm:                   Legal Fees:    Washington Homes tendered         Kemper has denied
     ---------               ---------                   -----------    defense and indemnification       coverage; however, if AWC
     Randall Lee Cooper      Lawrence W.B. Cumberland    Insurance      to Kemper, due to faulty          is found liable Kemper
                                                                        installation resulting in         will have to respond. Not
     Defendant:              Attorney:                   Settlement:    injury to Christian Cooper.       sure of status with
     ----------              ---------                   -----------    Installation was performed by     Montgomery Mutual as of
     Washington Homes, Inc.  Nancy L. Harrison           Insurance      our sub-contractor, Marlon        12/14/00.
                                                                        S. Gentry.  Kemper has tendered
     Amount:                 AWC Rep:                                   defense and indemnification to    Received suit on 1/15/01.
     -------                 --------                                   Montgomery Mutual Insurance Co,   Forward information
     Unknown                 G. Eanes                                   Mr. Gentry's Insurance carrier.   relating to Marlon Gentry
                                                                                                          (the installer) to Kemper
                                                                                                          on 1/26/01.

     Received 6/23/00                                                                                     3/15/01 - Kemper selected
                                                                                                          Nancy L. Harrison to
                                                                                                          handle defense. We
                                                                                                          provided Ms. Harrison with
                                                                                                          our files related to M.
                                                                                                          Gentry. She is working on
                                                                                                          this case to push against
                                                                                                          M. Gentry.
------------------------------------------------------------------------------------------------------------------------------------
5.   Claimant:               Law Firm:                   Legal Fees:    Improper installation of          Insurance is monitoring.
     ---------               ---------                   -----------    utility cabinet caused Mrs. Lee
     Donna Lee               John Gemmill, Sanders &     Insurance      to fall backwards.
                             Parks                                                                        Donna Lee requested a
     Defendant:                                          Settlement:                                      meeting between Shea Homes
     ----------                                          -----------                                      and the Lee's. Shea
     AWC                     Attorney:                   Insurance                                        requested AWC's presence,
                             ---------                                                                    AWC requested a Kemper
                             Junker, Shiaros,                                                             representative also
     Amount:                 Harrington                                                                   attend. Meeting was held
     -------                                                                                              on 10/20/00, no
     Unknown                                                                                              commitments were made.

                             AWC Rep:                                                                     2/12/01 - Executed
                             --------                                                                     settlement authority for
                             Glenn Eanes                                                                  Kemper to settle for up to
                                                                                                          $50,000.

                                                                                                          Status change new on suit
                                                                                                          - AWC served on 2/27/01.

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                              *** Confidential ***
<PAGE>

<TABLE>
<CAPTION>
American Woodmark Corporation, Litigation Summary:  GENERAL Reported as of May 16, 2001
                                                    -------

====================================================================================================================================
CASE                    REPRESENTATIVES             COSTS                  CASE DESCRIPTION                STATUS
------------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>                         <C>                    <C>                             <C>
6.    Claimant:         Law Firm:                   Legal Fees:            Ms. Yvonne had a difficult      THD is seeking
      ---------         ---------                   -----------            experience throughout the       indemnification. AWC is
      Robin Yvonne      N/A                         AWC or Insurance       buying process with THD.        researching the case. We
                                                    (being reviewed)       This culminated with some       believe we have made end
      Defendant:        Attorney:                                          damaged cabinets and a          consumer whole and
      ----------        ---------                                          delayed shipment. Ms. Yvonne    believe suit is with THD.
      THD/AWC           N/A                         Settlement:            has filed a suit with THD.
                                                    -----------
                                                    AWC
      Amount:           AWC Rep:
      -------           --------
      Unknown           J. Schaefer/G. Eanes

------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                              *** Confidential ***
<PAGE>

<TABLE>
<CAPTION>
American Woodmark Corporation, Litigation Summary:  POTENTIAL  Reported as of May 16, 2001
                                                    ---------

====================================================================================================================================
CASE               REPRESENTATIVES  COSTS         CASE DESCRIPTION                         STATUS
------------------------------------------------------------------------------------------------------------------------------------
<S>                <C>              <C>           <C>                                      <C>
1. Claimant:       Law Firm:        Legal Fees:   Customer purchased mobile home from      AWC denies the allegation, but elected
   --------        --------         -----------   American Testing, which contained AWC    to offer a settlement to bring about
   Julie James     N/A              N/A           cabinets. Customer claims AWC cabinets   peace. Settlement and release mailed to
                                                  are source of formaldehyde, which is     customer on 11/8/96. Settlement amount is
   Defendant:      Attorney:        Settlement:   bothersome to the mobile home owner.     $600.
   ----------      ---------        -----------   Customer seeking compensation.
   AWC             N/A              Covered by                                             As of 10/31/98 no release has been
                                    Insurance                                              received, nor has the settlement check
   Amount:         AWC Rep:                                                                been cashed. AWC Marketing is addressing
   -------         --------                                                                the issue with our customer, American
   $600            Glenn Eanes                                                             Testing. AWC placed a stop pay on the
                                                                                           check.

                                                                                           No change in status.

------------------------------------------------------------------------------------------------------------------------------------
2. Claimant:       Law Firm:        Legal Fees:   Ms. Liebman claims cabinets fell from    Kemper is denying claim since customer
   ---------       ---------        -----------   wall. It appears that this is faulty     did their own installation.
   Marcia Liebman  N/A              Covered by    installation as mounting screws did
                                    insurance     not hit studs.                           No change during 1/st/ 2/nd/ 3/rd/ or
                                                                                           4/th/ Quarters.
   Defendants:     Attorney:        Settlement:
   -----------     ---------        -----------
   AWC             N/A              Covered by
                                    insurance
   Amount:         AWC Rep:
   -------         --------
   Undetermined    Nick Ungaro

====================================================================================================================================
</TABLE>

                              ***Confidential***
<PAGE>

<TABLE>
<CAPTION>
American Woodmark Corporation, Litigation Summary:  POTENTIAL  Reported as of May 16, 2001
                                                    ---------

====================================================================================================================================
CASE                  REPRESENTATIVES    COSTS         CASE DESCRIPTION                         STATUS
====================================================================================================================================
<S>                   <C>                <C>           <C>                                      <C>
3. Claimant:          Law Firm:          Legal Fees:   Home owner claims discoloration. Harlan  Sent letter to Commonwealth of
   ---------          ---------          -----------   Williamson states that cabinets are      Virginia and Office of Attorney
   Honey Auten        N/A                Paid by AWC   within spec.                             General. We stated our position on
   (not currently in                                                                            2/11/99, still waiting on a
   litigation)        Attorney:          Settlement:                                            response.
                      ---------          -----------
                      N/A                Paid by AWC                                            No response has been received as of
   Defendant:                                                                                   January 10, 2000. We believe the
   ----------                                                                                   matter may be closed.
   AWC                AWC Rep:
                      --------
                      Harlan Williamson                                                         No change in status.
   Amount:
   -------
   Undetermined

------------------------------------------------------------------------------------------------------------------------------------
4. Claimant:          Law Firm:          Legal Fees:   Drawer front came of cabinet and fell    Filed with Insurance carrier on
   ---------          ---------          -----------   on Ms. Harris' foot.                     August 3, 1999.
   Patricia Harris    None               Insurance
                                                                                                No change in status.
   Defendant:         Attorney:          Settlement:
   ----------         ---------          -----------
   AWC                None               Insurance

   Amount:            AWC Rep:
   -------            --------
   Unknown

====================================================================================================================================
</TABLE>

                              ***Confidential***
<PAGE>

American Woodmark Corporation, Litigation Summary: POTENTIAL Reported as of May
                                                   ---------
16, 2001

<TABLE>
<CAPTION>
====================================================================================================================================
 CASE                    REPRESENTATIVES   COSTS         CASE DESCRIPTION                        STATUS
------------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>                 <C>          <C>                                    <C>
 5.    Claimant:         Law Firm:         Legal Fees:   DLS driver struck Mr. Hendricks truck   This has been turned over to Marsh
       ---------         ---------         ----------    damaging right corner.                  and McLennan.  Estimates range in
       Jeff Hendricks    Unknown           Insurance                                             the $1000.00 to $1500.00.

       Defendant:        Attorney:         Settlement:
       ----------        ---------         -----------
       AWC               Unknown           Insurance

       Amount:           AWC Rep:
       -------           --------
       $1000 - $1500     Nick Synder

------------------------------------------------------------------------------------------------------------------------------------
 6.    Claimant:         Law Firm:         Legal Fees:   DLS Driver operating on behalf of AWC   Matter has been turned over to
       ---------         ---------         -----------   struck claimant's vehicle, breaking a   Kemper for handling.
       Justin Clarysse   Unknown                         tail light and denting a bumper
                                           Settlement:
                                           -----------
       Defendant:        Attorney:
       ----------        ---------
       AWC               Unknown

       Amount:           AWC Rep:
       -------           --------
       .$1,500

====================================================================================================================================
</TABLE>

                              *** Confidential***
<PAGE>

American Woodmark Corporation, Litigation Summary: POTENTIAL Reported as of May
                                                   ---------
16, 2001

<TABLE>
<CAPTION>
=====================================================================================================
 CASE                                    REPRESENTATIVES                  COSTS
-----------------------------------------------------------------------------------------------------
<S>                                      <C>                              <C>
 7.       Claimant:                      Law Firm:                        Legal Fees:
          ---------                      ---------                        -----------
          Lisa Hewell

          Defendant:                     Attorney:                        Settlement:
          ----------                     ---------                        -----------
          AWC

          Amount                         AWC Rep:
          ------                         --------

-----------------------------------------------------------------------------------------------------
 8.       Claimant:                      Law Firm:                        Legal Fees:
          ---------                      ---------                        -----------
          Al & Mary Alcontara,           Schulmer & Grade LLP,            Kemper
          et al                          Matthew L. Grade
                                                                          Settlement:
                                                                          -----------
          Defendant:                     Attorney:                        AWC
          ----------                     ---------
          Palm Gardens, Ltd.,            The Litigation Defense
          et al                          Group LLC, Jennifer L.
                                         Taylor
          Amount:
          -------
          Unknown                        AWC Rep:
                                         --------
                                         G. Eanes

-----------------------------------------------------------------------------------------------------
 9.       Claimant:                      Law Firm:                        Legal Fees:
          ---------                      ---------                        -----------
          Troy Alexander et al           Verborn, Whitake,                Kemper
                                         & Peta LLP
          Defendant:                     Fred Adelman                     Settlement:
          ----------                                                      -----------
          Mesa Homes                                                      AWC
                                         Attorney:
          Amount:                        ---------
          -------                        Dallas Simmons
          $170,000/home
                                         AWC Rep:
                                         --------
                                         Glenn Eanes

=====================================================================================================

<CAPTION>
====================================================================================================================================
 CASE                               CASE DESCRIPTION                                STATUS
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                                             <C>
 7.       Claimant:                 Mrs. Hewell is the wife of Eric Hewell          AWC's risk of exposure is minimal.
          ---------
          Lisa Hewell               who died as a result of an industrial
                                    accident in the Toccoa facility.  As you        No change in status.
          Defendant:                will recall there was a complete OSHA
          ----------
          AWC                       inspection where we received three minor
                                    fines.
          Amount
          ------

                                    We had no contact from Mrs. Hewell until
                                    recently when she called K. Lafy and
                                    stated that she didn't feel we "handled
                                    things" very well and we would be
                                    hearing from her attorney.

                                    This case bears watching. While AWC was
                                    not found to be in major violation of
                                    any safety rules, if this "threat" were
                                    to materialize and then proceed further,
                                    juries are often sympathetic to suits of
                                    this nature.
------------------------------------------------------------------------------------------------------------------------------------
 8.       Claimant:                 Class action suit for construction              Palm Gardens through their attorney  has
          ---------                 defects related to stucco, asphalt,             tendered defense to Kemper, our insurance
          Al & Mary Alcontara,      masonry block walls, roofing, drywall,          carrier, based  on a certificate of insurance
          et al                     slabs, concrete, and soils, as well as          we issued held by Rhodes Design & Development,
                                    other areas.  Cabinets are not named in         one of the named defendants.
                                    the allegations
          Defendant:                                                                Kemper has denied coverage; however, after
          ----------                                                                further review is providing defense coverage.
          Palm Gardens, Ltd.,                                                       AWC has not been named as a defendant as of this
          et al                                                                     date.

          Amount:
          -------
          Unknown
                                                                                    No change.
------------------------------------------------------------------------------------------------------------------------------------
 9.       Claimant:                 Construction defects.  Cabinets are             While AWC has not been named as a defendant,
          ---------                 specifically named, but no detail list          Mesa's attorney has tendered defense to AWC and
          Troy Alexander et al      of defects are known.                           we in turn to Kemper, effective 4/26/01.

          Defendant:
          ----------
          Mesa Homes

          Amount:
          -------
          $170,000/home

====================================================================================================================================
</TABLE>

                             *** Confidential ***

<PAGE>

American Woodmark Corporation, Litigation Summary: POTENTIAL Reported as of
                                                   ---------
May 16, 2001

<TABLE>
<CAPTION>
=============================== =========================== ======================
CASE                            REPRESENTATIVES             COSTS
------------------------------- --------------------------- ----------------------
<S>                             <C>                         <C>
10. Claimant:                   Law Firm:                   Legal Fees:
    ---------                   ---------                   -----------
     Don & Delores Malone       The Haynes Law Firm         AWC

     Defendant:                 Attorney:                   Settlement:
     ----------                 ---------                   -----------
     Lowes & AWC                None                        AWC

     Amount:                    AWC Rep:
    -------                     -------
     >$5,000.00                 S. Swiger

------------------------------- --------------------------- ----------------------
11.      Claimant:              Law Firm:                   Legal Fees:
------------------              ---------                   -----------
     David Schuble                                          AWC & Home Depot

     Defendant:                 Attorney:                   Settlement:
     ----------                 ---------                   -----------
     Home Depot & AWC                                       AWC & Home Depot

     Amount:                    AWC Rep:
     ------                     -------
     $13,814.71

=============================== =========================== ======================

<CAPTION>
=========================================== ==================================================
CASE DESCRIPTION                            STATUS
------------------------------------------- --------------------------------------------------
<S>                                         <C>
Product defect claim.  We replaced one      Customer claims economic damages of $3,900 plus
damaged cabinet 8/18/99 and nineteen        $1,000 attorney's fees.
doors 6/28/00.  Doors were within our
quality standards.                          Received letter on 6/13/00.  Ordered replacement
                                            doors on 6/14/00, and shipped on 6/27/00.  No
                                            other communication on this issue.

                                            No change in status.

------------------------------------------- --------------------------------------------------
Product defects                             Kemper is handling this claim due Florida
                                            statute 627,7264.  Claim denied.

                                            We have tried on numerous occasions to satisfy
                                            this customer.  We are not doing anymore at this
                                            time.

                                            No change in status.

=========================================== ==================================================
</TABLE>
<PAGE>

American Woodmark Corporation, Litigation Summary: POTENTIAL Reported as of
                                                   ---------
May 16, 2001

<TABLE>
<CAPTION>
=============================== =========================== ======================
CASE                            REPRESENTATIVES             COSTS
=============================== =========================== ======================
<S>                             <C>                         <C>
12.      Claimant:              Law Firm:                   Legal Fees:
------------------              ---------                   -----------
     Wayne Merrill              N/A

     Defendant:                 Attorney:                   Settlement:
     ----------                 ---------                   -----------
     Mountain City Cabinets     N/A

     Amount:                    AWC Rep:
     -------                    --------
     Unknown                    C. Whittle

------------------------------- --------------------------- ----------------------
13.      Claimant:              Law Firm:                   Legal Fees:
------------------              ---------                   -----------
     Ellen Hardy

     Defendant:                 Attorney:                   Settlement:
     ----------                 ---------                   -----------

     Amount:                    AWC Rep:
     -------                    --------

------------------------------- --------------------------- ----------------------
14.      Claimant               Law Firm:                   Legal Fees:
-----------------               ---------                   -----------
       Brenda Owen

       Defendant:               Attorney:                   Settlement:
       ----------               ---------                   -----------

       Amount:                  AWC Rep:
       ------                   --------

=============================== =========================== ======================

<CAPTION>
=========================================== ==================================================
CASE DESCRIPTION                            STATUS
=========================================== ==================================================
<S>                                         <C>
Mountain City Cabinets customer claims      AWC sold salvage cabinets to Mountain City as
that they purchased cabinets believed to    seconds or defects with no warranty.  Issue is
be guaranteed for vendor satisfaction;      sole responsibility of Mountain City.  AWC is
however, when the cabinets arrived there    pressing Mountain City to resolve.
were quality problems discovered.
Customers claims that they were not         No change in status
getting satisfaction from Mountain City
and they have contacted the Attorney
General

------------------------------------------- --------------------------------------------------
Approximately 2 years ago Ellen Hardy       AWC checked with legal counsel (MWBB).  If AWC
suffered a serious hand injury on the Rye   is involved at all it appears that it will be
Shaper.  She has since rehabilitated and    from an informational standpoint.  There does
returned to work.  Several months ago,      not appear to be any risk of exposure of
Moorefield received a call from an          liability.
attorney representing this woman who
informed AWC  that they were pursuing a     No change in status.
suit against the manufacturer of this
particular piece of equipment.  AWC was
not being held accountable.
------------------------------------------- --------------------------------------------------
Notice of Charge of Discrimination from     No further update as of this date.
former employee (dated 10/2/00), received
in Kingman 11/24/00, responded to 12/7/00.

=========================================== ==================================================
</TABLE>
<PAGE>

American Woodmark Corporation, Litigation Summary: CLOSED Reported as of May 16,
                                                   ------
2001

<TABLE>
<CAPTION>
====================================================================================================================================
CASE                            REPRESENTATIVES             COSTS                  CASE DESCRIPTION
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                        <C>                     <C>
1.   Claimant:                  Law Firm:                   Legal Fees:            Unfair labor charge relating to a no
--------------                  ---------                   -----------
     Local 2101                                                                    smoking policy instituted as a result of
     Carpenters East            Attorney:                                          county regulations.
                                ---------
     Coast Industrial           MWBB, Bill Twomey           Settlement:
                                                            -----------
     Council
                                AWC Rep:
                                --------
     Defendant:                 Jeff Reedy
     ----------
     AWC-Hardy County
     Plant

------------------------------------------------------------------------------------------------------------------------------------
2.   Claimant:                  Law Firm:                   Legal Fees:            EEOC case
--------------                  ---------                   -----------
     Brenda Richards

     Defendant:                 Attorney:                   Settlement:
     ----------                 ---------                   -----------

                                AWC Rep:
                                --------
------------------------------------------------------------------------------------------------------------------------------------
3.   Claimant:                  Law Firm:                   Legal Fees:            Discrimination - wrongful termination
--------------                  ---------                   -----------
     Christopher Sampson                                                           (Humboldt).  Basis:  disability and retaliation.

     Defendant:                 Attorney:                   Settlement:
     ----------                 ---------                   -----------

                                AWC Rep:
                                --------
------------------------------------------------------------------------------------------------------------------------------------
4.   Claimant:                  Law Firm:                   Legal Fees:            Class action suit for construction
--------------                  ---------                   -----------
     Fereydory Boudi et al      Stutz, Gallagher,           Insurance              defects, cabinets are named in the
                                Artians, Shinoff, & Holtz                          allegations of defects.
     Defendant:                                             Settlement:
     ----------                                             -----------
     Mesa Homes et al           Attorney:                   AWC-warranty           Work was performed by AWC between 2/01/90
                                ---------
     Including AWC              Dallas Simmons              Insurance - bodily     and 2/1/91.
                                                            injury & property
     Amount:                    AWC Rep:                    damage
     -------                    --------
     $4,200                     G. Eanes

     Dated Received by AWC
     08/10/00

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

<CAPTION>
=================================================================================
CASE                           STATUS
---------------------------------------------------------------------------------
<S>                            <C>
1.   Claimant:                 Union filed charge with NLRB - charges were
--------------
     Local 2101                dropped, however we have not yet received that
     Carpenters East           in writing.

     Coast Industrial

     Council                   Bill Twomey has received a letter stating that
                               the charge has been withdrawn.

     Defendant:
     ----------
     AWC-Hardy County
     Plant

---------------------------------------------------------------------------------
2.   Claimant:                 Case dismissed.
--------------
     Brenda Richards

     Defendant:
     ----------

---------------------------------------------------------------------------------
3.   Claimant:                 EEOC case was dismissed.
--------------
     Christopher Sampson

     Defendant:
     ----------

---------------------------------------------------------------------------------
4.   Claimant:                 Contingent settlement has been reached as of
--------------
     Fereydory Boudi et al     9/26/00 for $4,200.  The settlement is
                               contingent on a global settlement being
     Defendant:                reached.  Insurance paid settlement, AWC has not
     ----------
     Mesa Homes et al          been billed.

     Including AWC
                               12/18/01 - Received final settlement agreement
     Amount:                   which we executed and returned to our attorney.
     -------
     $4,200

     Dated Received by AWC
     08/10/00

---------------------------------------------------------------------------------
</TABLE>

                             *** Confidential ***
<PAGE>

American Woodmark Corporation, Litigation Summary: CLOSED Reported as of May 16,
                                                   ------
2001

<TABLE>
<CAPTION>
====================================================================================================================================
CASE                            REPRESENTATIVES             COSTS                  CASE DESCRIPTION
------------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>                        <C>                    <C>
5.    Claimant                  Law Firm:                   Legal Fees:            Customer purchased cabinets through
      --------                  ---------                   -----------
      John Toal                 N/A                         Paid by AWC            Hechinger Company, claims heat from his
                                                                                   kitchen range is causing cabinet doors &
      Defendant                 Attorney:                   Settlement             drawer fronts to peel.  Claimant has had
      ---------                 ---------                   ----------
      AWC                       N/A                         Paid by AWC            legal representation, Adams & Edens,
                                                                                   write a letter requesting remuneration to
      Amount                    AWC Rep:                                           redesign and re-install his cabinets and
      ------                    --------
      *$10,000                  Glenn Eanes                                        those of his daughters.

------------------------------------------------------------------------------------------------------------------------------------
6.    Claimant:                 Law Firm:                   Legal Fees:            Faulty installation of a cabinet
      ---------                 ---------                   -----------
      Danielle Baker            Craig A. Edmonston          Insurance              resulting in cabinet falling from wall
                                                                                   and being caught by claimant.  Should be
      Defendant:                Attorney:                   Settlement:            the Installers liability.  Installer is
      ----------                ---------                   -----------
      AWC                       N/A                         Insurance              Brain Scott Stevens.
      Brain Scott Stevens
      Service                   AWC Rep:
                                --------
                                Glenn Eanes
      Amount:
      -------

====================================================================================================================================

<CAPTION>
========================================================================================
CASE                                   STATUS
----------------------------------------------------------------------------------------
<S>                                   <C>
5.    Claimant                         This issue has been turned over to our insurance
      --------
      John Toal                        carrier, as well, Hechinger has liability for
                                       the kitchen layout given to Mr. Toal.
      Defendant
      ---------
      AWC                              Kemper has denied coverage since it  is only a
                                       product liability issue as no other property was
      Amount                           damaged.
      ------
      *$10,000

                                       No change during 1/st/, 2/nd/, 3/rd/, or 4/th/
                                       Quarters.

                                       Claim over three years old with no activity.

----------------------------------------------------------------------------------------
6.    Claimant:                        We have placed our insurance carry on notice.
      ---------
      Danielle Baker
                                       The installer's Insurance Company, as of
      Defendant:                       November 22, 1999, was negotiating a
      ----------
      AWC                              settlement.  AWC will be released upon the final
      Brain Scott Stevens              settlement.
      Service

                                       June 29, 2000 received a faxed signed copy of
      Amount:                          settlement for our file.
      -------

========================================================================================
</TABLE>

* - Less than sign

                             *** Confidential ***
<PAGE>

                  EIGHTH AMENDMENT TO REIMBURSEMENT AGREEMENT

     THIS EIGHTH AMENDMENT TO REIMBURSEMENT AGREEMENT (this "Agreement") is made
as of the 1st day of June, 2001, by AMERICAN WOODMARK CORPORATION, a corporation
organized under the laws of the Commonwealth of Virginia (the "Company"), and
BANK OF AMERICA, N. A. a national banking association, formerly known as NCNB
National Bank of North Carolina (the "Bank").

                                   RECITALS

     A.  The Company and the Bank entered into a Reimbursement Agreement dated
December 1, 1987, as amended by a First Amendment to Reimbursement Agreement
dated as of April 30, 1990, a Second Amendment to Reimbursement Agreement dated
as of October 31, 1990, a Third Amendment to Reimbursement Agreement dated as of
July 31, 1991, a Fourth Amendment to Reimbursement Agreement dated as of
December 18, 1991, a Fifth Amendment to Reimbursement Agreement dated as of
March 23, 1991, a Sixth Amendment to Reimbursement Agreement dated as of August
31, 1993 and as modified by a letter dated May 21, 1990 from the Bank to the
Company and a Seventh Amendment to Reimbursement Agreement dated as of March 26,
2001(the same, as amended, modified, substituted, extended, and renewed from
time to time, collectively, the "Reimbursement Agreement").

     B.  The Reimbursement Agreement provides for some of the agreements between
the Company and the Bank with respect to the "Letter of Credit" (as defined in
the Reimbursement Agreement).

     C.  The Company has requested that the Bank amend the financial covenants
contained in the Reimbursement Agreement.

     D.  The Bank is willing to agree to the Company's request on the condition,
among others, that this Agreement be executed.

                                  AGREEMENTS

     NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Company and
the Bank agree as follows:

     1.  The Company and the Bank agree that the Recitals above are a part of
this Agreement. Unless otherwise expressly defined in this Agreement, terms
defined in the Reimbursement Agreement shall have the same meaning under this
Agreement.

     2.  The Company represents and warrants to the Bank as follows:

         (a)  Company is a corporation duly organized, and validly existing and
in good standing under the laws of the Commonwealth of Virginia and is duly
qualified to do business as a foreign corporation in good standing in every
other state wherein the conduct of its business or the ownership of its property
requires such qualification;

         (b)  Company has the power and authority to execute and deliver this
Agreement and perform its obligations hereunder and has taken all

                                       1
<PAGE>

necessary and appropriate corporate action to authorize the execution, delivery
and performance of this Agreement;

         (c)  The Reimbursement Agreement, as heretofore amended and as amended
by this Agreement, and each of the other Financing Documents remains in full
force and effect, and each constitutes the valid and legally binding obligation
of Company, enforceable in accordance with its terms;

         (d)  All of Company's representations and warranties contained in the
Reimbursement Agreement are true and correct on and as of the date of Company's
execution of this Agreement; and

         (e)  No Event of Default and no event which, with notice, lapse of time
or both would constitute an Event of Default, has occurred and is continuing
under the Reimbursement Agreement or the other Financing Documents which has not
been waived in writing by the Bank.

     3.  The Reimbursement Agreement is hereby amended by deleting Sections
4.01(f) through (j) in their entirety and inserting the following sections in
place thereof:

         "(f) maintain, tested as of the end of each fiscal quarter for the
     quarter then ending and the three (3) immediately preceding quarters, a
     Fixed Charge Coverage Ratio equal to not less than 2.25 to 1.0.  "Fixed
     Charge Coverage Ratio" means for any period, the ratio of (i) EBITDA plus
     lease payments to (ii) the aggregate of all lease payments, interest
     expense, scheduled payments due on indebtedness for borrowed money,
     dividends, share repurchases and taxes paid.  "EBITDA" means as to the
     Company and its Subsidiaries for any period of determination thereof, the
     sum of earnings before deduction of interest and taxes plus depreciation
     and amortization.

          (g) maintain, tested as of the end of each fiscal quarter for the
     quarter then ending and the three (3) immediately preceding quarters, a
     Funded Debt to EBITDA Ratio equal to not less than 2.0 to 1.0.  "Funded
     Debt" is defined as the sum of senior debt, letter of credit obligations,
     stockholder debt, Subordinated Indebtedness and the value of all
     capitalized and synthetic leases.  "Subordinated Indebtedness" means all
     indebtedness, incurred at any time by the Company, which is in amounts,
     subject to repayment terms, and subordinated to the obligations hereunder,
     as set forth in one or more written agreements, all in form and substance
     satisfactory to the Bank in its sole and absolute discretion.

          (h) at all times maintain a minimum Tangible Net Worth equal to not
     less than $65,000,000 through December 31, 2001 which amount shall increase
     cumulatively as of the end of each fiscal year for the succeeding fiscal
     year in an amount equal to sixty seven percent (67%) of net income for the
     fiscal year then ending, with no reduction for losses incurred.  "Tangible
     Net Worth" means as to the Company and its Subsidiaries at any date of
     determination thereof, the sum at such time of:  the Net Worth less the
     total of (a) all Assets which would be classified as intangible assets
     under GAAP consistently applied, (b) leasehold improvements, (c) applicable
     reserves, allowances and other similar properly deductible items to the
     extent such reserves, allowances and other

                                       2
<PAGE>

     similar properly deductible items have not been previously deducted by the
     Bank in the calculation of Net Worth, (d) any revaluation or other write-up
     in book value of assets subsequent to the date of the most recent financial
     statements delivered to the Bank, and (e) the amount of all loans and
     advances to, or investments in, any Person, excluding Cash Equivalents and
     deposit accounts maintained by the Company or its Subsidiaries with any
     financial institution.

         (i)  Intentionally Deleted

         (j)  Intentionally Deleted"

     4.  The Company hereby issues, ratifies and confirms the representations,
warranties and covenants contained in the Reimbursement Agreement, as amended
hereby.  The Company agrees that this Agreement is not intended to and shall not
cause a novation with respect to any or all of the obligations under the
Reimbursement Agreement.

     5.  The Company acknowledges and warrants that the Bank has acted in good
faith and has conducted in a commercially reasonable manner its relationships
with the Company in connection with this Agreement and generally in connection
with the Reimbursement Agreement, the Company hereby waiving and releasing any
claims to the contrary.

     6.  The Company shall pay at the time this Agreement is executed and
delivered all fees, commissions, costs, charges, taxes and other expenses
incurred by the Bank and its counsel in connection with this Agreement,
including, but not limited to, reasonable fees and expenses of the Bank's
counsel and all recording fees, taxes and charges.

     7.  This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be deemed
to be an original and all taken together shall constitute but one and the same
instrument.  The Company agrees that the Bank may rely on a telecopy of any
signature of the Company.  The Bank agrees that the Company may rely on a
telecopy of this Agreement executed by the Bank.

     IN WITNESS WHEREOF, the Company and the Bank have executed this Agreement
under seal as of the date and year first written above.

WITNESS OR ATTEST:                     AMERICAN WOODMARK CORPORATION

__________________________             By:____________________________(Seal)
                                          Kent Guichard
                                          Chief Financial Officer

WITNESS:                               BANK OF AMERICA, N. A.

__________________________             By:____________________________(Seal)
                                          Michael J. Landini
                                          Senior Vice President

                                       3
<PAGE>

                  SECOND AMENDMENT TO REIMBURSEMENT AGREEMENT

     THIS SECOND AMENDMENT TO REIMBURSEMENT AGREEMENT (this "Agreement") is made
as of the 1st day of June, 2001, by AMERICAN WOODMARK CORPORATION, a corporation
organized under the laws of the Commonwealth of Virginia (the "Company"), and
BANK OF AMERICA, N. A. a national banking association, formerly known as NCNB
National Bank of North Carolina (the "Bank").

                                   RECITALS
                                   --------

     A.  The Company and the Bank entered into a Reimbursement Agreement dated
December 1, 1986, as modified by a letter dated May 21, 1990 from the Bank to
the Company and a First Amendment to Reimbursement Agreement dated March 26,
2001 (the same, as amended, modified, substituted, extended, and renewed from
time to time, collectively, the "Reimbursement Agreement").

     B.  The Reimbursement Agreement provides for some of the agreements between
the Company and the Bank with respect to the "Letter of Credit" (as defined in
the Reimbursement Agreement).

     C.  The Company has requested that the Bank amend the financial covenants
contained in the Reimbursement Agreement.

     D.  The Bank is willing to agree to the Company's request on the condition,
among others, that this Agreement be executed.

                                  AGREEMENTS
                                  ----------

     NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Company and
the Bank agree as follows:

     1.  The Company and the Bank agree that the Recitals above are a part of
this Agreement. Unless otherwise expressly defined in this Agreement, terms
defined in the Reimbursement Agreement shall have the same meaning under this
Agreement.

     2.  The Company represents and warrants to the Bank as follows:

         (a)   Company is a corporation duly organized, and validly existing and
     in good standing under the laws of the Commonwealth of Virginia and is duly
     qualified to do business as a foreign corporation in good standing in every
     other state wherein the conduct of its business or the ownership of its
     property requires such qualification;

         (b)   Company has the power and authority to execute and deliver this
     Agreement and perform its obligations hereunder and has taken all necessary
     and appropriate corporate action to authorize the execution, delivery and
     performance of this Agreement;

         (c)   The Reimbursement Agreement, as heretofore amended and as amended
     by this Agreement, and each of the other Financing Documents remains in
     full force and effect, and each constitutes the valid and legally binding
     obligation of Company, enforceable in accordance with its terms;

                                       1
<PAGE>

          (d)  All of Company's representations and warranties contained in the
Reimbursement Agreement are true and correct on and as of the date of execution
of this Agreement; and

          (e)  No Event of Default and no event which, with notice, lapse of
time or both would constitute an Event of Default, has occurred and is
continuing under the Reimbursement Agreement or the other Financing Documents
which has not been waived in writing by the Bank.

     3.   The Reimbursement Agreement is hereby amended by deleting Sections
4.01(f) through (j) in their entirety and inserting the following sections in
place thereof:

          "(f) maintain, tested as of the end of each fiscal quarter for the
     quarter then ending and the three (3) immediately preceding quarters, a
     Fixed Charge Coverage Ratio equal to not less than 2.25 to 1.0.  "Fixed
     Charge Coverage Ratio" means for any period, the ratio of (i) EBITDA plus
     lease payments to (ii) the aggregate of all lease payments, interest
     expense, scheduled payments due on indebtedness for borrowed money,
     dividends, share repurchases and taxes paid.  "EBITDA" means as to the
     Company and its Subsidiaries for any period of determination thereof, the
     sum of earnings before deduction of interest and taxes plus depreciation
     and amortization.

          (g)  maintain, tested as of the end of each fiscal quarter for the
     quarter then ending and the three (3) immediately preceding quarters, a
     Funded Debt to EBITDA Ratio equal to not less than 2.0 to 1.0.  "Funded
     Debt" is defined as the sum of senior debt, letter of credit obligations,
     stockholder debt, Subordinated Indebtedness and the value of all
     capitalized and synthetic leases.  "Subordinated Indebtedness" means all
     indebtedness, incurred at any time by the Company, which is in amounts,
     subject to repayment terms, and subordinated to the obligations hereunder,
     as set forth in one or more written agreements, all in form and substance
     satisfactory to the Bank in its sole and absolute discretion.

          (h)  at all times maintain a minimum Tangible Net Worth equal to not
     less than $65,000,000 through December 31, 2001 which amount shall increase
     cumulatively as of the end of each fiscal year for the succeeding fiscal
     year in an amount equal to sixty seven percent (67%) of net income for the
     fiscal year then ending, with no reduction for losses incurred.  "Tangible
     Net Worth" means as to the Company and its Subsidiaries at any date of
     determination thereof, the sum at such time of:  the Net Worth less the
     total of (a) all Assets which would be classified as intangible assets
     under GAAP consistently applied, (b) leasehold improvements, (c) applicable
     reserves, allowances and other similar properly deductible items to the
     extent such reserves, allowances and other similar properly deductible
     items have not been previously deducted by the Bank in the calculation of
     Net Worth, (d) any revaluation or other write-up in book value of assets
     subsequent to the date of the most recent financial statements delivered to
     the Bank, and (e) the amount of all loans and advances to, or investments
     in, any Person, excluding Cash

                                       2
<PAGE>

     Equivalents and deposit accounts maintained by the Company or its
     Subsidiaries with any financial institution.

          (i)  Intentionally Deleted

          (j)  Intentionally Deleted"

     4.   The Company hereby issues, ratifies and confirms the representations,
warranties and covenants contained in the Reimbursement Agreement, as amended
hereby. The Company agrees that this Agreement is not intended to and shall not
cause a novation with respect to any or all of the obligations under the
Reimbursement Agreement.

     5.   The Company acknowledges and warrants that the Bank has acted in good
faith and has conducted in a commercially reasonable manner its relationships
with the Company in connection with this Agreement and generally in connection
with the Reimbursement Agreement, the Company hereby waiving and releasing any
claims to the contrary.

     6.   The Company shall pay at the time this Agreement is executed and
delivered all fees, commissions, costs, charges, taxes and other expenses
incurred by the Bank and its counsel in connection with this Agreement,
including, but not limited to, reasonable fees and expenses of the Bank's
counsel and all recording fees, taxes and charges.

     7.   This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be deemed
to be an original and all taken together shall constitute but one and the same
instrument. The Company agrees that the Bank may rely on a telecopy of any
signature of the Company. The Bank agrees that the Company may rely on a
telecopy of this Agreement executed by the Bank.

     IN WITNESS WHEREOF, the Company and the Bank have executed this Agreement
under seal as of the date and year first written above.

WITNESS OR ATTEST:                AMERICAN WOODMARK CORPORATION

________________________          By:____________________________(Seal)
                                     Kent Guichard
                                     Chief Financial Officer

WITNESS:                          BANK OF AMERICA, N. A.

_________________________         By:____________________________(Seal)
                                     Michael J. Landini
                                     Senior Vice President

                                       3

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