Release of Guarantor
                                       and
                        Amendment to Guaranty Agreements


         THIS  RELEASE AND  AMENDMENT is entered into as of December 31, 1999 by
and among First Commercial Bank (the "Bank") and Patriot Homes,  Inc.,  Cavalier
Homes, Inc. Southern Energy Homes, Inc. (the "Corporate Guarantors") and Lee Roy
Jordan (together with the Corporate Guarantors, the "Guarantors"),  and in favor
of Schult  Operating  Company  ("Schult  Operating"),  Schult Homes  Corporation
("Schult Homes", and together with Schult Operating "Schult"), and Oakwood Homes
Corporation ("Oakwood").

                                    Recitals

         A.  The  Guarantors  are limited  partners in  the  Texas  limited
partnerships  known as Lamraft,  L.P.  ("Lamraft")  and    WoodPerfect of Texas,
L.P.  ("WoodPerfect").  The Corporate  Guarantors are limited partners in    the
Texas limited  partnership known as Hillsboro Manufacturing, L.P. ("Hillsboro").


         B.  Each Guarantor executed and delivered to the Bank:

         (1) a Limited Credit Guaranty Agreement dated July 15, 1997, as amended
by Amendment to Limited Credit  Guaranty  Agreement  dated March 24, 1999,  (the
"1997 Lamraft Guaranties") pursuant to which such Guarantor guaranteed,  subject
to the Maximum Guaranteed Percentage (as defined therein), Lamraft's obligations
under the Credit Agreement (Letter of Credit) between Lamraft and the Bank dated
July 15, 1997 (the "1997 Lamraft Credit Agreement");

         (2) a Limited Credit Guaranty  Agreement dated September 1, 1999 (the "
1999 Lamraft Guaranties"),  pursuant to which such Guarantor guaranteed, subject
to the Maximum Guaranteed Percentage (as defined therein), Lamraft's obligations
under the Credit  Agreement dated September 1, 1999 between Lamraft and the Bank
(the "1999 Lamraft Credit Agreement"); and

         (3) a Limited Credit Guaranty Agreement dated July 15, 1997, as amended
by Amendment to Limited Credit  Guaranty  Agreement  dated March 24, 1997,  (the
"WoodPerfect  Guaranties") pursuant to which such Guarantor guaranteed,  subject
to  the  Maximum  Guaranteed  Percentage  (as  defined  therein),  WoodPerfect's
obligations under the Credit and Security Agreement between  WoodPerfect and the
Bank dated July 15,  1997,  as amended by the  Amendment  to Credit and Security
Agreement dated March 24, 1999 (the "WoodPerfect Credit Agreement").



<PAGE>




         C.  Each  Corporate  Guarantor  executed  and  delivered  to the Bank a
Limited Credit  Guaranty  Agreement dated July 15, 1997, as amended by Amendment
to Limited  Credit  Guaranty  Agreement  dated March 24, 1999,  (the  "Hillsboro
Guaranties") pursuant to which such Corporate Guarantor  guaranteed,  subject to
the Maximum Guaranteed Percentage (as defined therein),  Hillsboro's obligations
under the Credit and Security  Agreement  between  Hillsboro  and the Bank dated
July 15, 1997,  as amended by the  Amendment  to Credit and  Security  Agreement
dated March 24, 1999 (the "Hillsboro Credit Agreement").

         D. Schult Operating is also a limited partner in Lamraft, Hillsboro and
WoodPerfect,  and Schult  Operating  Company  and its owner,  Schult  Homes each
entered into three Limited Credit Guaranty  Agreements  dated July 15, 1997 (the
"Schult Guaranties") guaranteeing,  subject to the Maximum Guaranteed Percentage
(as defined therein), the obligations guaranteed by the 1997 Lamraft Guaranties,
the WoodPerfect Guaranties and the Hillsboro Guaranties.

         E   Oakwood Homes  Corporation   purchased   all of the stock of Schult
Homes  and  Schult  Operating   and  executed    and  delivered  to the Bank the
following guaranty agreements (the "Oakwood Guaranties"):

         1.  Limited Credit Guaranty Agreement dated March 24, 1999 guaranteeing
             the obligations of Lamraft under the 1997 Lamraft Credit Agreement;

         2.  Limited Credit Guaranty Agreement dated March 24, 1999 guaranteeing
             the   obligations   of   WoodPerfect under the   WoodPerfect Credit
             Agreement;

         3.  Limited Credit Guaranty Agreement dated March 24, 1999 guaranteeing
             the obligations of Hillsboro under the  Hillsboro Credit Agreement;
             and

         4.  Limited   Credit   Guaranty   Agreement   dated   September 1, 1999
             guaranteeing the obligations of Lamraft under the Credit  Agreement
             dated  September  1, 1999  between  Lamraft and the Bank.

         F. The Guarantors have agreed to purchase Schult  Operating's  interest
in Lamraft and WoodPerfect and the Corporate  Guarantors have agreed to purchase
Schult Operating's interest in Hillsboro in consideration of (i) the Guarantors'
assuming  Oakwood's  and  Schult's  obligations  under  the  Oakwood  Guaranties
described in Recital E.1., E.2., and E.4., and under the Schult  Guaranties that
relate to Lamraft and WoodPerfect,  and (ii) the Corporate  Guarantors' assuming
Oakwood's  and  Schult's  obligations  under the Oakwood  Guaranty  described in
Recital E.3 and the Schult Guaranty that relates to Hillsboro.

         G. To facilitate the purchase of Schult Operating's limited partnership
interest in Lamraft,  WoodPerfect  and Hillsboro and the assumption of Oakwood's
and Schult's obligations under the Oakwood Guaranties and the Schult Guaranties,
the Guarantors have requested the Bank to release Oakwood,  Schult Operating and
Schult Homes from all of their obligations and liabilities under and pursuant to
the Oakwood Guaranties and the Schult Guaranties,  respectively, under the terms
and conditions of this Release and Amendment.
<PAGE>
                                    Agreement

         NOW,  THEREFORE,  in  consideration  of the Recitals and other good and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged, the parties hereto hereby agree as follows.

         1.  Release  of  Oakwood  and  Schult.  The Bank  hereby  releases  and
discharges  Oakwood from all of its obligations and liability under and pursuant
to the  Oakwood  Guaranties.  The Bank hereby  releases  and  discharges  Schult
Operating and Schult Homes from all of their obligations and liability under and
pursuant to the Schult Guaranties.

         2.  Guarantors'  Consent.  Each   Guarantor  hereby  consents  to   the
release by the Bank of Oakwood from its obligations under the Oakwood Guaranties
and Schult Operating and Schult Homes from their obligations    under the Schult
Guaranties.

         3.  Amendment of Guaranty Agreements.

         (a) Each of the 1997 Lamraft  Guaranties,  the 1999 Lamraft  Guaranties
and the  WoodPerfect  Guaranties is hereby  amended to change the  definition of
Maximum Guaranteed Percentage therein to read as follows:

         "Maximum Guaranteed Percentage" shall mean thirty percent (30%).

         (b) Each of the Hillsboro  Guaranties  is hereby  amended to change the
definition of Maximum Guaranteed Percentage therein to read as follows:

         "Maximum Guaranteed Percentage" shall mean forty percent (40%).

         4.  No Events of  Default;  No Claims;  Continuing  Effect of  Guaranty
Agreements.  Each Guarantor hereby represents and warrants that (i) no Events of
Default,  and no events that with the passage of time or the giving of notice or
both would  constitute  an Event of Default,  have  occurred  under any guaranty
agreement  referred  to herein to which it or he is a party and (ii) that to the
best of its or his  knowledge  no  defaults or Events of Default  have  occurred
under any credit  agreement  referred to herein.  Each Guarantor  represents and
warrants that it has no claims against the Bank and no defenses,  counterclaims,
or setoffs to or against its or his  obligations  under any  guaranty  agreement
referred  to herein to which it or he is a party and  agrees  that to the extent
that such claims, defenses,  counterclaims or setoffs exist, the same are hereby
released and relinquished.  Except as expressly amended hereby, each of the 1997
Lamraft Guaranties,  the 1999 Lamraft Guaranties, the WoodPerfect Guaranties and
the Hillsboro Guaranties remains in full force and effect in accordance with its
terms.

         5.  Governing  Law.  This Release and Amendment shall be construed   in
accordance  with and governed by the laws of the State of Alabama.



<PAGE>


         6.  Modification;  etc.  No  modification,  amendment  or waiver of any
provision of this Release and  Amendment  and no consent to any departure by the
Bank  therefrom,  shall be  effective  unless the same  shall be in writing  and
signed by the Bank,  and then such waiver or consent shall be effective  only in
the specific instance and for the purpose for which given.

         7.  Counterparts.  This  Release  and  Amendment  may be  executed   in
two or  more  counterparts,  each  of  which   shall   constitute  an  original,
but when taken together   all such   counterparts   shall  constitute  but   one
agreement, and any party may execute this Release and Amendment by executing any
one or more of such counterparts.

         8. Successors and Assigns,  etc. Whenever in this Release and Amendment
any  party is  referred  to,  such  reference  shall be deemed  to  include  the
successors  and assigns of such party.  All  consents,  covenants,  promises and
agreements  made  herein  shall  bind  the  heirs,   personal   representatives,
successors  and assigns of the  promissor  and shall inure to the benefit of the
promissee's successors and assigns.

         9. Entire  Agreement.  This  Release   and  Amendment  constitutes  the
entire   agreement and understanding  between the Bank and the   Guarantors with
respect to   the subject matter hereof and supersedes all prior   agreements and
understandings   between the Bank and the  Guarantors  relating to  the  subject
matter thereof.

              [Signatures Appear on Signature Pages which follow]


<PAGE>



         IN WITNESS  WHEREOF,  the Bank has caused this Release and Amendment to
be executed as of the day and year first written above.


                                          FIRST COMMERCIAL BANK

                                          By:   /S/ PAUL M. SCHABACKER
                                             -----------------------------------
                                          Name:   Paul M. Schabacker
                                          Title:  Vice President


STATE OF ALABAMA )

JEFFERSON COUNTY )

         The undersigned , a Notary Public in and for said County in said State,
hereby  certify that Paul M.  Schabacker , whose name as Vice President of First
Commercial Bank, a corporation, is signed to the foregoing instrument and who is
known to me,  acknowledged  before me on this day that,  being  informed  of the
contents of said  instrument,  he/she,  as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.

         Given under my hand and official seal this the 7th day of March , 1999.


                                             /s/ EDWARD J. ASHTON
                                          -----------------------------
                                                Notary Public


AFFIX SEAL
My commission expires:   9-20-2001
                        -----------
<PAGE>



         IN WITNESS WHEREOF,  the undersigned  Guarantor has caused this Release
and Amendment to be executed as of the day and year first written above.


                                          PATRIOT HOMES, INC.

                                          By:    /S/ STEVEN K. LIKE
                                             -----------------------------------
                                          Name:    Steven K. Like
                                          Title:   Executive Vice President


STATE OF INDIANA  )

ELKHART COUNTY    )

         The undersigned , a Notary Public in and for said County in said State,
hereby  certify that Steven K. Like,  whose name as Executive  Vice President of
Patriot Homes,  Inc., a corporation,  is signed to the foregoing  instrument and
who is known to me,  acknowledged  before me on this day that, being informed of
the  contents  of  said  instrument,  he/she,  as such  officer  and  with  full
authority, executed the same voluntarily for and as the act of said corporation.

         Given under my hand and  official  seal this the 21st day of  December,
1999.


                                            /S/ LORETTA DEAL
                                          ------------------------
                                              Notary Public


AFFIX SEAL
My commission expires:   3/5/01
                       ----------


<PAGE>


         IN WITNESS WHEREOF,  the undersigned  Guarantor has caused this Release
and Amendment to be executed as of the day and year first written above.



                                          CAVALIER HOMES, INC.

                                          By:        /S/ DAVID ROBERSON
                                             -----------------------------------
                                          Name:    David Roberson
                                          Title:   President

STATE OF ALABAMA )

WINSTON COUNTY   )

         The undersigned , a Notary Public in and for said County in said State,
hereby certify that David  Roberson,  whose name as President of Cavalier Homes,
Inc., a corporation,  is signed to the foregoing  instrument and who is known to
me,  acknowledged  before me on this day that, being informed of the contents of
said instrument,  he/she, as such officer and with full authority,  executed the
same voluntarily for and as the act of said corporation.

         Given under my hand and  official  seal this the 17th day of  December,
1999.


                                            /S/ LOUANN MARCUM
                                          ------------------------
                                              Notary Public


AFFIX SEAL
My commission expires:     7/13/03
                       ---------------

<PAGE>
         IN WITNESS WHEREOF,  the undersigned  Guarantor has caused this Release
and Amendment to be executed as of the day and year first written above.



                                          SOUTHERN ENERGY HOMES, INC.

                                          By:         /S/ KEITH BROWN
                                             -----------------------------------
                                          Name:     Keith Brown
                                          Title:    Executive Vice President


STATE OF ALABAMA )

WINSTON COUNTY   )

         The undersigned , a Notary Public in and for said County in said State,
hereby  certify that Keith  Brown,  whose name as  Executive  Vice  President of
Southern  Energy  Homes,  Inc.,  a  corporation,  is  signed  to  the  foregoing
instrument  and who is known to me,  acknowledged  before  me on this day  that,
being informed of the contents of said instrument,  he/she,  as such officer and
with full  authority,  executed the same  voluntarily for and as the act of said
corporation.

         Given under my hand and  official  seal this the 29th day of  December,
1999.


                                              /S/ CHERYL ENGLE
                                          --------------------------
                                                Notary Public


AFFIX SEAL
My commission expires:    December 11, 2001
                       -----------------------




<PAGE>


         IN WITNESS WHEREOF, the undersigned Guarantor has executed this Release
and Amendment as of the day and year first written above.

                                             /S/ LEE ROY JORDAN
                                          -------------------------
                                               Lee Roy Jordan


STATE OF ALABAMA )

MOBILE COUNTY    )


         I, the undersigned authority, a Notary Public in and for said county in
said state,  hereby  certify  that Lee Roy  Jordan,  whose name is signed to the
foregoing instrument, and who is known to me, acknowledged before me on this day
that,  being informed of the contents of said  instrument,  he executed the same
voluntarily on the day the same bears date.

          Given under my hand and official seal this 20th day of December, 1999.


                                             /S/ SHARON C. ADAMS
                                          ---------------------------
                                               Notary Public

AFFIX SEAL
My commission expires:  9-14-03
                      ----------