Document:

<PAGE>   1
                                                                   EXHIBIT 10.17

                              SEPARATION AGREEMENT

      This Separation Agreement (this "Agreement") is made and entered into as
of the 18th day of August, 2000, by and between Laurence A. Dawson, Jr.
("Dawson") and American Homestar Corporation, a Texas corporation (the
"Company").

                               W I T N E S E T H :

      WHEREAS, the parties hereto desire to restructure their business
relationship and to effect the releases set forth herein;

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

      1. Separation Obligations. The parties hereto hereby agree as follows:

            (a) Dawson hereby resigns as the Chief Executive Officer, President
      and as a Director of the Company, effective as of the date hereof.

            (b) Notwithstanding the above resignation, the parties hereto agree
      to treat such resignation as a termination under Section 6, subpart (f) of
      the Employment Agreement, dated as of November 15, 1996, as amended as of
      April 1, 2000, by and between the Company and Dawson (the "Employment
      Agreement"), except that Dawson shall be entitled to receive from the
      Company the following compensation, and in lieu of any other compensation
      which Dawson is or may be entitled to receive under the Employment
      Agreement:

                  (i) Fixed Payments. The Company shall pay Dawson semi-monthly
            payments of $15,000 (an annual rate of $360,000) until June 30, 2004
            (prorated through June 30, 2004 for partial months).

                  (ii) Payments Based Upon Bonus Profit. Dawson shall, on an
            annual basis through the fiscal year 2004 ended June 30, 2004, be
            paid an additional payment equal to 2.25% of Bonus Profit. "Bonus
            Profit" shall mean the net consolidated operating profit of the
            Company after income tax accruals and employee bonuses (other than
            bonuses of senior officers of the Company or its subsidiaries who
            are parties to comparable bonus arrangements with the Company), with
            the tax rate being deemed to be the effective combined tax rate for
            the Company and its subsidiaries. Each payment to Dawson under this
            subsection (ii) shall be paid to Dawson within five days after final
            audited financial statements of the Company for each fiscal year
            have been completed and delivered to the Company. Dawson and the
            Company agree that no bonuses are due or payable for the Company's
            fiscal year 2000, ended June 30, 2000.

                  (iii) Benefits. Dawson shall receive, until June 30, 2003,
            such group benefits as the Company may provide to its employees
            whose salaries and responsibilities are comparable to what Dawson
            had during the final year of his
<PAGE>   2
            employment with the Company. In addition, until June 30, 2003,
            Dawson shall receive a car allowance of $750 per month.

                  (iv) Insurance. The Company shall maintain the existing Salary
            Continuation Agreement and Disability Compensation Agreement for
            Dawson from now until June 30, 2003. The Company will, through June
            30, 2003, fund the following insurance policies currently in place
            for Dawson: (A) disability insurance policy; and (B) whole life
            split dollar insurance policy in which the Company retains ownership
            of the cash value and/or proceeds up to the total dollar amount of
            premium payments funded by the Company, of which Dawson's life
            insurance trust is the beneficiary.

                  (v) Expenses. Dawson shall be entitled to be reimbursed for
            any reasonable out-of-pocket expenses incurred in performing
            services for the Company at the request of the Chief Executive
            Officer of the Company. The Company acknowledges and agrees that
            Dawson is under no obligation to perform any services on behalf of
            the Company.

                  (vi) Stock Options. The Company and Dawson agree that they are
            parties to the following stock option agreements of the Company (the
            "Option Agreements"):
<TABLE>
<CAPTION>
                                     Total    Exercise
            Option                  Shares      Price       Vested    Unvested
            ------                  ------    --------      ------    --------
<S>                                <C>        <C>           <C>       <C>
            1994/NQ                 76,688       $9.07      76,688           0
            1994/ISO                17,063        9.97      17,063           0
            1997/NQ*               140,625        9.07      93,742      46,883
            1994/NQ                 25,000       15.38       8,334      16,666
            1999/NQ                200,000       15.38           0     200,000
                                   -------                 -------     -------
                  Total            459,376                 195,827     263,549
</TABLE>
----------------
            *This option was issued under a special Co-CEO Plan. This option
            continues to vest despite termination of employment, with mandatory
            full-vesting on November 15, 2005 (i.e., the last tranche vests on
            November 15, 2000 if the Company has a market capitalization prior
            to such time of $500 million or more, but it automatically vests in
            full on November 15, 2005).

            The Company and Dawson further agree that: (A) all unvested portions
            of the Option Agreements shall be cancelled as of the date hereof
            (except for the 1997/NQ Option which shall continue to vest pursuant
            to its terms); and (B) the vested portions of the Option Agreements
            may be exercised as follows:

                  (1)   The 1994/NQ (76,688 vested shares), 1994/ISO (17,063
                        vested shares) and 1994/NQ (8,334 vested shares) may be
                        exercised in whole or in part at any time on or prior to
                        November 18, 2000.

                  (2)   The 1997/NQ may be exercised in whole or in part on or
                        prior to November 15, 2006.

                                       2
<PAGE>   3
                  (3)   The 1999/NQ is not vested and is not exercisable.

            (c) The Employment Agreement is hereby terminated and of no further
      force or effect, except (i) as provided above in subsection (b) above;
      (ii) that Section 5(a) and 5(c) shall be in full force and effect until
      June 30, 2004; (iii) Section 5(e) shall be in full force and effect until
      August 18, 2001; and (iv) Sections 8, 9, 10 and 12-19 shall be in full
      force and effect until June 30, 2004.

            (d) Simultaneously with the execution and delivery of this Agreement
      by Dawson, Dawson shall deliver to the Company all Company credit cards,
      travel vouchers and all other property of the Company in his possession,
      excluding the computers installed at Dawson's homes in Texas and Colorado
      (including the installed software, but Dawson agrees to immediately delete
      all information regarding the Company and its subsidiaries).

            (e) Except as provided in this Agreement, Dawson shall not be
      entitled to receive any other compensation or benefits from the Company,
      and Dawson acknowledges and agrees that the Company does not owe him any
      money and is not obligated in any way to him.

      2. Releases.

            (a) Release by the Company. The Company, on its own behalf and on
      behalf of its directors, officers, agents, employees, successors, heirs,
      legal representatives and the respective successors, heirs, legal
      representatives and assigns of each of the foregoing (collectively, the
      "Company Releasors") agrees to release and does hereby release, acquit and
      forever discharge Dawson, his agents, attorneys, heirs, legal
      representatives and assigns of each of the foregoing (collectively, the
      "Dawson Releasees") from, and extinguishes, any and all claims, demands,
      debts, damages, costs, losses, expenses, commissions, actions, causes of
      action, rights, liabilities, obligations and choses in action of whatever
      nature or type which any of the Company Releasors have, or may have, or
      which have been, or could have been, or in the future otherwise might have
      been asserted in connection with any acts or inactions of the Dawson
      Releasees or any of them occurring on or prior to the date hereof (the
      "Company Claims"), except that in no event shall this paragraph operate to
      release any of the Dawson Releasees from any claims or liability resulting
      from a breach of the representations, warranties, covenants and agreements
      of Dawson contained in this Agreement.

            (b) Release by Dawson. Dawson, on his own behalf and on behalf of
      his attorneys, agents, successors, heirs, legal representatives and
      assigns (collectively, the "Dawson Releasors") agrees to release and does
      hereby release, acquit and forever discharge the Company and its
      directors, officers, agents, employees and attorneys and the respective
      successors, heirs, legal representatives and assigns of each of the
      foregoing (collectively, the "Company Releasees") from, and extinguishes,
      any and all claims, demands, debts, damages, costs, losses, expenses,
      commissions, actions, causes of action, rights, liabilities, obligations
      and choses in action of whatever nature or type which any of the Dawson
      Releasors have, or may have, or which have been, or could have been, or in
      the future otherwise might have been asserted in connection with any acts
      or inactions of the Company Releasees, or any of them, occurring on or
      prior to the date hereof (the "Dawson Claims"), including, but not limited
      to: (i) all claims under the Age Discrimination in Employment Act of 1967;
      (ii) all claims under the Americans With

                                       3
<PAGE>   4
      Disabilities Act; (iii) all claims under the Family Leave Act; (iv) all
      claims under the Employee Retirement Income Security Act of 1974 and the
      Texas Commission on Human Rights Act; (v) all claims related to Dawson's
      employment with the Company; (vi) all claims of unlawful discrimination
      based on age, sex, race, religion, national origin, handicap, disability,
      equal pay or otherwise; (vii) all claims of wrongful discharge, breach of
      any implied or express employment contract, negligent or intentional
      infliction of emotional distress, libel, defamation, breach of privacy,
      fraud and breach of any implied covenant of good faith and fair dealing;
      and (viii) all claims related to unpaid wages, salary, overtime
      compensation, bonuses, severance pay, vacation pay or other compensation
      or benefits arising out of Dawson's employment with the Company through
      the date of this Agreement (including, without limitation, any deferred
      wages, salary or bonuses), except that in no event shall this paragraph
      operate to release the Company from any claims or liability resulting from
      a breach of the representations, warranties, covenants and agreements of
      the Company contained in this Agreement. Dawson hereby agrees that he will
      not file any claims with the Texas Unemployment Commission with respect to
      his leaving the Company.

      3. Representations and Warranties of Dawson. Dawson hereby represents and
warrants that the following are true and correct as of the date hereof: (a)
Dawson has the power and authority to execute, deliver and perform his
obligations under this Agreement, and this Agreement constitutes the valid and
binding obligation of Dawson enforceable against him in accordance with the
terms hereof; (b) none of the Dawson Releasors have assigned, sold, conveyed or
otherwise transferred all or any portion of the Dawson Claims; and (c) Dawson
has consulted or has had sufficient opportunity to discuss with any person,
including an attorney of his choice, all provisions of this Agreement, that he
has carefully read and fully understands all the provisions of this Agreement,
that he is competent to execute this Agreement, and that he is voluntarily
entering into this Agreement of his own free will and accord, without reliance
upon any statement or representation of any person or parties released, or their
representatives, concerning the nature and extent of the damages and/or legal
liability therefor.

      4. Representations and Warranties of the Company. The Company hereby
represents and warrants that the following are true and correct as of the date
hereof: (a) the Company is a corporation validly existing and in good standing
under the laws of the State of Texas; (b) the Company has the corporate power
and authority to execute, deliver and perform its obligations under this
Agreement, and the execution, delivery and performance by it of this Agreement
has been duly authorized by all necessary action, and this Agreement constitutes
the valid and binding obligation of the Company, enforceable against it in
accordance with the terms hereof; and (c) none of the Company Releasors have
assigned, sold, conveyed or otherwise transferred all or any portion of the
Company Claims.

      5. Amendment and Assignment. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by each of the parties
hereto. This Agreement shall extend to and be binding upon each of the parties
and their respective heirs, successors, assigns, legal representatives and any
corporation or other entity into or with which any party hereto may merge or
consolidate. Notwithstanding the above, neither this Agreement nor any right
created hereby shall be assignable to any party hereto.

                                       4
<PAGE>   5
      6. Notice. Any notice or communication must be in writing and given by
depositing the same in the United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested, or by delivering the same in person or by facsimile. Any such notice
or communication shall be deemed received, if not earlier received, on the third
business day following the date on which it is mailed, or on the day on which it
is hand delivered or delivered by facsimile, as the case may be. For purposes of
notice, the addresses of the parties shall be as set forth opposite their names
on the signature page hereto. Any party may change its address for notice by
written notice similarly given to the other parties.

      7. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings, oral or written, relating to the subject
matter hereof.

      8. Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable by a court of competent jurisdiction, such provisions
shall be deemed severable and this Agreement shall be construed and enforced as
if such illegal, invalid or unenforceable provisions did not comprise a part
hereof unless the loss of such provision causes this Agreement to fail of its
essential purpose; and the remaining provisions hereof shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom except as aforesaid.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, the
parties agree to meet to determine in good faith, or will ask the court to
determine, a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable
and such provision so determined shall then be added as part of this Agreement.

      9. Governing Law. This Agreement and the rights and obligations of the
parties hereto, shall be governed, construed and enforced in accordance with the
laws of the State of Texas.

      10. Revocation. It is expressly agreed that for seven (7) days following
execution of this Agreement by Dawson, Dawson may revoke this Agreement; it is
further expressly agreed by the parties that this Agreement shall not become
effective or enforceable until the seven (7) day revocation period described
above has expired, after which there this Agreement shall be deemed effective
and enforceable as of the date first above written.

                                       5
<PAGE>   6
      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                                          /s/ LAURENCE A. DAWSON JR.
                                          -------------------------------
                                              Laurence A. Dawson, Jr.

                                     Address: 17919 Cedar Creek Canyon
                                              Dallas, Texas 75252
                                              and
                                              P.O. Box 6656
                                              Snowmass Village, Colorado  81615

                                     AMERICAN HOMESTAR CORPORATION

                                     /s/ DALE V. KESLER
                                     ------------------------------------------
                                     Title: Interim President and Chief
                                            Executive Officer

                                     Address: 2450 South Shore Blvd., Suite 300
                                              League City, Texas  77573
                                              Attn:  Chief Executive Officer

                                       6<PAGE>   1

                                                                   EXHIBIT 10.20

Draft dated October 10, 2000

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

                          AMERICAN HOMESTAR CORPORATION

                     2000-B AMENDMENT AND WARRANT AGREEMENT

                         dated as of September 29, 2000

                                       to

  Amended and Restated Note Purchase Agreements dated as of September 15, 1998

  Re:               $61,000,000 8.32% Senior Notes
                          Due July 10, 2007

                               and

             Note Purchase Agreements dated as of September 15, 1998

  Re:           $46,000,000 7.25% Senior Notes, Series A
                        Due September 15, 2008

                               and

                     $5,000,000 7.14% Senior Notes, Series B
                             Due September 15, 2008

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

<PAGE>   2

                                TABLE OF CONTENTS

                          (Not a part of the Agreement)

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                HEADING                                                PAGE
<S>                        <C>                                                                                <C>
SECTION 1.                 WAIVERS AND AMENDMENTS TO EXISTING NOTE PURCHASE AGREEMENTS AND
                           OUTSTANDING NOTES......................................................................2

SECTION 2.                 CONDITIONS PRECEDENT...................................................................8

SECTION 3.                 REPRESENTATIONS AND WARRANTIES.........................................................9

SECTION 4.                 MISCELLANEOUS.........................................................................10

Signature Pages..................................................................................................11
</TABLE>

SCHEDULE I -- Holder Information
EXHIBIT A  -- Form of Warrant
EXHIBIT B  -- Form of Opinion of Counsel to the Company
EXHIBIT C  -- Form of New Outstanding Amended and Restated Note
EXHIBIT D  -- Form of New Outstanding 1998 Note
EXHIBIT E  -- Form of PIK Note relative to Outstanding Amended and
              Restated Notes
EXHIBIT F  -- Form of PIK Note relative to Outstanding 1998 Notes

                                      -i-

<PAGE>   3

                          AMERICAN HOMESTAR CORPORATION

                     2000-B AMENDMENT AND WARRANT AGREEMENT

          Re: Amended and Restated Note Purchase Agreements dated as of
                             September 15, 1998 and
             Note Purchase Agreements dated as of September 15, 1998

                                                                     Dated as of
                                                              September 29, 2000

To Each of the Noteholders
listed in Schedule I
to this 2000-B Amendment and Warrant Agreement

Ladies and Gentlemen:

         Reference is made to (i) the separate Amended and Restated Note
Purchase Agreements each dated as of September 15, 1998, as previously amended
and/or restated (the "Existing Amended and Restated Note Purchase Agreements")
between American Homestar Corporation, a Texas corporation (the "Company"), and
the Purchasers named on Schedule A attached thereto, respectively, under and
pursuant to which the Company issued, and there are currently outstanding
$61,000,000 aggregate principal amount of 8.32% Senior Notes due July 10, 2007
as previously amended or restated (the "Outstanding Amended and Restated Notes")
and to (ii) the separate Note Purchase Agreements each dated as of September 15,
1998, as previously amended (the "Existing 1998 Note Purchase Agreements")
between the Company and Purchasers named on Schedule A attached thereto,
respectively, under and pursuant to which the Company issued, and there are
currently outstanding $46,000,000 aggregate principal amount of 7.25% Senior
Notes, Series A, due September 15, 2008, as amended (the "Outstanding Series A
1998 Notes") and $5,000,000 aggregate principal amount of 7.14% Senior Notes,
Series B, due September 15, 2008, amended (the "Outstanding Series B 1998 Notes"
and together with the Outstanding Series A 1998 Notes, the "Outstanding 1998
Notes"). The Outstanding Amended and Restated Notes and the Outstanding 1998
Notes are sometimes hereinafter referred to collectively as the "Outstanding
Notes" and the Existing Amended and Restated Note Purchase Agreements and
Existing 1998 Note Purchase Agreements are sometimes hereinafter referred to
collectively as the "Existing Note Purchase Agreements."

         For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company requests the amendment of certain
provisions of the Existing Note Purchase Agreements and Outstanding Notes as
hereinafter provided.

         Upon your acceptance hereof in the manner hereinafter provided and upon
satisfaction of all conditions to the effectiveness hereof and receipt by the
Company of similar acceptances from all of the holders of the Outstanding Notes,
this 2000-B Amendment and Warrant

<PAGE>   4

Agreement shall constitute a contract between us amending the Existing Note
Purchase Agreements and Outstanding Notes in the respects, but only in the
respects, hereinafter set forth:

SECTION 1.  WAIVERS AND AMENDMENTS TO EXISTING NOTE PURCHASE AGREEMENTS AND
            OUTSTANDING NOTES.

         Section 1.1. Upon satisfaction of the conditions set forth in Section 2
hereof, the Noteholders hereby waive compliance (from and after September 30,
2000 to and including September 29, 2001), and the effects of non-compliance
(from and after September 30, 2000 to and including September 29, 2001), by the
Company with Section 10.5 of the Existing Note Purchase Agreements to the extent
that the Fixed Charges Coverage Ratio is less than the respective ratio set
forth opposite each date set forth below in the following table:

                                                   Minimum Fixed Charges
        Fiscal Quarter End                            Coverage Ratio
        -------------------                        ----------------------
        September 30, 2000                                 1.50x
        December 31, 2000                                  1.50x
        March 31, 2001                                     1.75x
        June 30, 2001                                      2.0x

For the avoidance of doubt, the Company specifically understands and
acknowledges that the waiver set forth above does not extend to any Default or
Event of Default under Section 10.5 for the quarter ended September 30, 2001.

         The Company understands and agrees that the waivers contained in this
Section 1.1 pertain only to the Defaults and Events of Default herein described
and only to the extent so described and not to any other Default or Event of
Default which may exist under, or any other matters arising in connection with,
the Existing Note Purchase Agreements or to any rights which the Noteholders
have arising by virtue of any such other actions or matters.

         Section 1.2. Section 1.2 of each of the Existing Amended and Restated
Note Purchase Agreements shall be and is hereby amended and restated to read as
follows:

                  "Section 1.2. Additional Interest. (a) In addition to, and not
         in limitation or reduction of, any other amounts paid or payable by the
         Company in respect of the Notes (including additional interest at the
         Default Rate), the stated interest rate payable on the Notes from
         September 30, 2000 to and including September 29, 2001 shall be
         increased by 5.25% to an aggregate interest rate of 13.57% per annum
         plus applicable interest payable upon an Event of Default and shall
         continue to bear interest after September 29, 2001 at a rate per annum
         equal to 10.07% (plus, when applicable, additional interest at the
         Default Rate) provided, however, that the interest rate applicable to
         the Notes shall be 8.32% per annum (plus, if applicable, additional
         interest at the Default Rate), for any and all periods after September
         29, 2001 during which (i) the Fixed Charges Coverage Ratio determined
         in accordance with Section 10.5 is greater than 2.25 to 1.00 and (ii)
         no Event of Default shall exist. Any such additional amount of interest
         shall be payable, with

                                      -2-
<PAGE>   5

         respect to each Note, as additional interest on the Notes on the next
         scheduled interest payment date.

                   (b) You agree that on any date for payment of interest on the
         Notes from and including December 31, 2000 to and including September
         30, 2001 (the "Interest Payment Dates"), the Company may elect to pay
         any interest in excess of 10.07% (per annum) then accrued on the Notes
         (such interest being referred to as the "Deferred Interest") by the
         issuance and delivery to you of Senior PIK Notes (the "PIK Notes") in
         an amount not exceeding such Deferred Interest, such PIK Notes to bear
         interest at the rate of 13.57% per annum, payable at maturity, to be
         expressed to mature on September 30, 2001 and to be substantially in
         the form attached hereto as Exhibit 1-B; provided that if the Company
         shall make an election to so pay any such Deferred Interest by the
         issuance of PIK Notes, it shall do so by the issuance of PIK Notes to
         all holders of outstanding Notes on an equal and ratable basis.
         Delivery of the PIK Notes will be made directly to you in the manner
         provided in SECTION 18 (other than facsimile communication) on each
         Interest Payment Date (the "PIK Issuance Dates") on which the Company
         elects to pay Deferred Interest on the Notes by the issue and delivery
         of PIK Notes. Unless you otherwise specify prior to any PIK Issuance
         Date, the PIK Notes delivered to you on such PIK Issuance Date will be
         delivered to you in the form of a single PIK Note registered in your
         name or in the name of such nominee as may be specified in Schedule I
         attached hereto. References to the "Notes" herein shall include the PIK
         Notes.

                   (c) Notwithstanding anything contained in this Section 1.2 or
         in this Agreement to the contrary, the PIK Notes shall be subject to
         prepayment at the unpaid principal amount thereof together with accrued
         and unpaid interest thereon at any time and from time to time provided
         that the Company shall have given prior written notice of such
         prepayment to the holders not less than 30 days or more than 60 days
         prior to the date selected for such prepayment by the Company in such
         written notice. The PIK Note shall be due and payable on the date for
         prepayment designated in such notice.

                   (d) Notwithstanding anything contained herein or in the Notes
         (including the PIK Notes) to the contrary, if on September 30, 2001,
         the Company shall pay in full in cash all accrued and unpaid interest
         on the PIK Notes, and no other Default or Event of Default exists
         hereunder as of September 29, 2001, the Company shall have the right,
         by written election to the holders of the Notes to be delivered on or
         prior to September 30, 2001, to elect that the unpaid principal amount
         of the PIK Notes (including the PIK Notes issued on September 30, 2001)
         be deemed to be incorporated into the principal amount of the related
         Note with respect to which the PIK Notes were originally issued. In
         such event, the PIK Notes shall be deemed to have been paid in full and
         such principal amount shall then and thereafter be deemed to be
         incorporated into the principal amount of the related Note from and
         after September 30, 2001 and the holder of such related Note shall have
         the right, at its written request to the Company, to have its Note
         replaced by a new Note reflecting such increased principal amount."

         Section 1.3. Section 1.2 of each of the Existing 1998 Note Purchase
Agreements shall be and is hereby amended and restated to read as follows:

                                      -3-
<PAGE>   6

                  "Section 1.2 Additional Interest. (a) In addition to, and not
         in limitation or reduction of, any other amounts paid or payable by the
         Company in respect of the Notes (including additional interest at the
         Default Rate), the stated interest rate payable on the Notes from
         September 30, 2000 to and including September 29, 2001 shall be
         increased by 5.25% to an aggregate amount of 12.50% per annum in
         respect of the Series A Notes, and 12.39% per annum in respect of the
         Series B Notes, plus applicable interest payable upon an Event of
         Default and shall continue to bear interest after September 29, 2001 at
         a rate per annum equal to 9.00% in the case of the Series A Notes and
         8.89% in the case of the Series B Notes (plus, when applicable,
         additional interest at the Default Rate) provided, however, that the
         interest rate applicable to the Notes shall be 7.25% in the case of the
         Series A Notes and 7.14% in the case of the Series B Notes, in each
         case per annum (plus, if applicable, additional interest at the Default
         Rate), for any and all periods after September 29, 2001 during which
         (i) the Fixed Charges Coverage Ratio determined in accordance with
         Section 10.5 is greater than 2.25 to 1.00 and (ii) no Event of Default
         shall exist. Any such additional amount of interest shall be payable,
         with respect to each Note, as additional interest on the Notes on the
         next scheduled interest payment date.

                   (b) (i) You agree that on any date for payment of interest on
         the Series A Notes from December 31, 2000 to and including September
         30, 2001 (the "Series A Interest Payment Dates"), the Company may elect
         to pay any interest in excess of 9.00% (per annum) then accrued on the
         Series A Notes (such interest being referred to as the "Series A
         Deferred Interest") by the issuance and delivery to you of Series A PIK
         Notes (the "Series A PIK Notes") in an amount not exceeding such Series
         A Deferred Interest, such Series A PIK Notes to bear interest at the
         rate of 12.50% per annum, payable at maturity, to be expressed to
         mature on September 30, 2001 and to be substantially in the form
         attached hereto as Exhibit 1-C; provided that if the Company shall make
         an election to so pay any such Series A Deferred Interest by the
         issuance and delivery of PIK Notes, it shall do so by the issuance of
         Series A PIK Notes to all holders of outstanding Series A Notes on an
         equal and ratable basis.

                           (ii) You agree that on any date for payment of
                  interest on the Series B Notes from and including December 31,
                  2000 to and including September 30, 2001 (the "Series B
                  Interest Payment Dates," and together with the Series A
                  Interest Payment Dates, the "Interest Payment Dates"), the
                  Company may elect to pay any interest in excess of 8.89% (per
                  annum) then accrued on the Series B Notes (such interest being
                  referred to as the "Series B Deferred Interest") by the
                  issuance and delivery to you of Series B PIK Notes (the
                  "Series B PIK Notes", together with the Series A PIK Notes,
                  the "PIK Notes") in an amount not exceeding such Series B
                  Deferred Interest, such Series B PIK Notes to bear interest at
                  the rate of 12.39% per annum, payable at maturity, to be
                  expressed to mature on September 29, 2001 and to be
                  substantially in the form attached hereto as Exhibit 1-D;
                  provided that if the Company shall make an election to so pay
                  any such Series B Deferred Interest by the issuance and
                  delivery of PIK Notes, it shall do so by the issuance and
                  delivery of Series B PIK Notes to all holders of outstanding
                  Series B Notes on an equal and ratable basis.

                                      -4-
<PAGE>   7

                          (iii) Delivery of the PIK Notes will be made directly
                  to you in the manner provided in SECTION 18 (other than
                  facsimile communication) on each Interest Payment Date (the
                  "PIK Issuance Dates") on which the Company elects to pay
                  interest on the Notes by the issuance of PIK Notes. Unless you
                  otherwise specify prior to any PIK Issuance Date, the PIK
                  Notes delivered to you on such PIK Issuance Date will be
                  delivered to you in the form of a single PIK Note registered
                  in your name or in the name of such nominee as may be
                  specified in Schedule I attached hereto.

                   (c) Notwithstanding anything contained in this Section 1.2 or
         in this Agreement to the contrary, the PIK Notes shall be subject to
         prepayment at the unpaid principal amount thereof together with accrued
         and unpaid interest thereon at any time and from time to time provided
         that the Company shall have given prior written notice of such
         prepayment to the holders not less than 30 days or more than 60 days
         prior to the date selected for such prepayment by the Company in such
         written notice. The PIK Note shall be due and payable on the date for
         prepayment designated in such notice.

                   (d) Notwithstanding anything contained herein or in the Notes
         (including the PIK Notes) to the contrary, if on September 30, 2001,
         the Company shall pay in full in cash all accrued and unpaid interest
         on the PIK Notes, and no other Default or Event of Default exists
         hereunder as of September 29, 2001, the Company shall have the right,
         by written election to the holders of the Notes to be delivered on or
         prior to September 30, 2001, to elect that the unpaid principal amount
         of the PIK Notes (including the PIK Notes issued on September 30, 2001)
         be deemed to be incorporated into the principal amount of the related
         Note with respect to which the PIK Notes were originally issued. In
         such event, the PIK Notes shall be deemed to have been paid in full and
         such principal amount shall then and thereafter be deemed to be
         incorporated into the principal amount of the related Note from and
         after September 30, 2001 and the holder of such related Note shall have
         the right, at its written request to the Company to have its Note
         replaced by a new Note reflecting such increased principal amount."

        Section 1.4A. Section 8.1 of each of the Existing Note Purchase
Agreements shall be and is hereby amended by adding the following thereto at the
end thereof:

                  "In the event and to the extent that the principal amount of
         any PIK Notes is deemed added to the principal amount of the Notes with
         respect to which the PIK Notes were issued (such principal amount of
         the PIK Notes being referred to as the "Capitalized Interest Amount"),
         such Capitalized Interest Amount shall be subject to equal annual
         mandatory prepayment on each of the dates referred to hereinabove in
         this Section 8.1, which payments shall be at the par amount thereof and
         without the payment of the Make-Whole Amount.

         Section 1.4. Sections 10.4(a) and (b) of each of the Existing Note
Purchase Agreements shall be and are hereby amended as follows:

                                      -5-
<PAGE>   8

                  "(a) Total Senior Debt minus the sum of (x) cash and cash
         equivalents of the Company and its Restricted Subsidiaries and (y) the
         amount of the Collateral subject to the Security Agreement, is less
         than (i) in the case of any determination prior to or on September 29,
         2001, the lesser of (A) $200,000,000 and (B) 70% of Total
         Capitalization and (ii) in the case of any determination on or after
         September 30, 2001, 56% of Total Capitalization,

                  (b) the sum of Total Senior Debt plus Total Subordinated Debt
         minus the sum of (x) cash and cash equivalents of the Company and its
         Restricted Subsidiaries and (y) the amount of the Collateral subject to
         the Security Agreement is less than (i) in the case of any
         determination prior to or on September 29, 2001, the lesser of (A)
         $200,000,000 and (B) 70% of Total Capitalization and (ii) in the case
         of any determination after September 29, 2001, 65% of Total
         Capitalization,"

         Section 10.4 of each of the Existing Note Purchase Agreements shall be
and is hereby further amended by adding the following to the end thereof:

                  "Notwithstanding anything contained in this Agreement
                  (including, without limitation, the provisions of Section
                  10.4(c) or Section 10.8(l)) to the contrary, the Company will
                  not, and will not permit any Restricted Subsidiary to,
                  directly or indirectly, create, incur, assume, guaranty or
                  otherwise become, directly or indirectly liable with respect
                  to any Priority Debt at any time on or after September 29,
                  2000 provided that the foregoing shall not prohibit the
                  creation, incurrence, assumption or guaranty of any Priority
                  Debt on and after September 30, 2001, if, at the time thereof
                  and after giving effect to such Priority Debt (or such Lien as
                  contemplated under Section 10.9(l)) and the concurrent
                  retirement of any other Debt, no Default or Event of Default
                  shall exist hereunder including, without limitation, under
                  Section 10.4(c) or Section 10.9(l)."

         Section 1.5. Section 10.7 of each of the Existing Note Purchase
Agreements shall be and is hereby amended to add at the end of such section the
following paragraph:

                  "Notwithstanding the foregoing, the Company shall not be in
                  default under this Section 10.7 if the Company maintains
                  Consolidated Net Worth at not less than, as of each of the
                  dates in the column set forth below, the respective amount set
                  forth each such date, in connection with any determination
                  prior to or on September 29, 2001.

                                                       MINIMUM CONSOLIDATED
                  FISCAL QUARTER END                        NET WORTH

                  September 30, 2000                       $79,000,000
                  December 31, 2000                        $72,000,000
                  March 31, 2001                           $68,000,000
                  June 30, 2001                            $69,000,000

                                      -6-
<PAGE>   9

                  For the purposes of determining the amount of any Consolidated
                  Net Worth under this paragraph only prior to or on September
                  29, 2001, the Company may exclude one-time charges resulting
                  from restructurings, inventory sales/write-downs and the
                  closure/sales of facilities incurred from and after September
                  30, 2000.

         Section 1.6. Section 10.11 of each of the Existing Note Purchase
Agreements shall be and is hereby deleted and the following new Section 10.11
shall be substituted therefor as follows:

                  "Section 10.11. EBITDA Ratio. The Company will not permit the
                  EBITDA Ratio determined as of the end of each fiscal quarter
                  set forth in the table below to be less than the amount set
                  forth opposite each such quarter end in the table below
                  provided, for the purposes of a determination under this
                  Section 10.11, the determination for September 30, 2000 shall
                  cover the three month period ending on said date, the
                  calculation for December 31, 2000 shall cover the six month
                  period ending on such date, the calculation for March 31, 2001
                  shall cover the nine month period ending on such date and the
                  calculation for June 30, 2001 shall cover the fiscal year
                  ending on such date:

                  FISCAL QUARTER ENDING                MINIMUM EBITDA RATIO

                  September 30, 2000                         0.15x
                  December 31, 2000                          0.30x
                  March 31, 2001                             0.60x
                  June 30, 2001                               .95x

         Section 1.7. The term "Restricted Investments" contained in Schedule B
of each of the Existing Note Purchase Agreements shall be and is hereby amended
by adding the following to the end thereof:

                  "The Investments described in clauses (h) and (i) of the
                  definition of the term "Restricted Investments" shall be
                  excluded from "Restricted Investments" only if and to the
                  extent such Investments were made on or prior to September 29,
                  2000.

         Section 1.8. The defined term "EBITDA Ratio" shall be inserted in
alphabetical order in Schedule B of each of the Existing Purchase Agreements and
shall read as follows:

                  "EBITDA Ratio" shall mean, with respect to any period of
                  calculation under Section 10.11, the ratio of (i) the sum of

                                      -7-
<PAGE>   10

                  Earnings Before Interest and Taxes plus depreciation and
                  amortization taken by the Company during such period in
                  accordance with GAAP, to (ii) Interest Charges for such period
                  excluding from such Interest Charges referred to in this
                  clause (ii), however, for the purposes of determining the
                  EBITDA Ratio (but only to the extent otherwise included in
                  Interest Charges), all deferred or capitalized interest and
                  all debt discount and expense amortized or required to be
                  amortized in the determination of Consolidated Net Income for
                  such period.

         Section 1.9. Each of the Existing Note Purchase Agreements shall be and
is hereby amended by substituting for the respective Exhibits 1 to each of said
Existing Note Purchase Agreements a new Exhibit 1 in the form of Exhibit C
hereto, in the case of the Existing Amended and Restated Note Purchase
Agreements and in the form of Exhibit D hereto, in the case of the Existing 1998
Note Purchase Agreements. In addition, each of the Existing Note Purchase
Agreements shall contain a new Exhibit 1-B in the form of Exhibit E hereto, in
the case of the Existing Amended and Restated Note Purchase Agreements and in
the form of Exhibit F hereto, in the case of the Existing 1998 Note Purchase
Agreements.

SECTION 2.  CONDITIONS PRECEDENT.

         Section 2.1. Conditions Precedent. This 2000-B Amendment and Warrant
Agreement shall be effective as of September 29, 2000 (the "2000-A Amendment
Effective Date") when each of the following conditions shall have been
satisfied:

                   (a) Each Noteholder shall have received this 2000-B Amendment
         and Warrant Agreement, duly executed by the Company.

                   (b) The Required Holders in respect of each of the Existing
         Note Purchase Agreements shall have consented to this 2000-B Amendment
         and Warrant Agreement as evidenced by their execution thereof; provided
         that the amendments contained in Section 1.2 of this 2000-B Amendment
         and Warrant Agreement shall be effective only as to each holder of
         Notes which has consented hereto.

                   (c) The representations and warranties of the Company set
         forth in Section 3 hereof are true and correct as of the date of the
         execution and delivery of this 2000-B Amendment and Warrant Agreement.

                   (d) The Company shall have issued, executed and delivered to
         each of the Noteholders a Warrant substantially in the form of Exhibit
         A hereto relating to the number of shares of Common Stock of the
         Company indicated in Schedule I hereto.

                   (e) Any consents or approvals from any holder or holders of
         any outstanding Security of the Company or any Subsidiary and any
         amendments of agreements pursuant to which any Securities may have been
         issued which shall be necessary to permit the consummation of the
         transactions contemplated hereby shall have been obtained and all

                                      -8-
<PAGE>   11

         such consents or amendments shall be reasonably satisfactory in form
         and substance to the Noteholders and their special counsel.

                   (f) The Company shall have paid, or have provided a
         satisfactory retainer for, the fees and disbursements of the
         Noteholders' special counsel, Chapman and Cutler, incurred in
         connection with the negotiation, preparation, execution and delivery of
         this 2000-B Amendment and Warrant Agreement, as required by Section
         15.1 of the Existing Note Purchase Agreements.

                   (g) Independent counsel for the Company shall have delivered
         legal opinions of such counsel to the Noteholders in form and substance
         satisfactory to the Noteholders, dated as of the 2000-A Amendment
         Effective Date covering the matters set forth in Exhibit B hereto and
         covering such other matters incident to the transactions contemplated
         hereby as the Noteholders or their counsel may reasonably request (and
         the Company hereby instructs its counsel to deliver such opinion to the
         Noteholders).

                   (h) Each Noteholder shall have received a new Note of the
         appropriate issue and series in exchange for its outstanding Note,
         which new Note shall be dated the date of the last full interest
         payment and shall be substantially in the form of Exhibit C, in the
         case of the Outstanding Amended and Restated Notes and in the form of
         Exhibit D, in the case of the Outstanding 1998 Notes. Any Noteholder
         shall have the right to waive this condition precedent with respect to
         itself without prejudice to its rights under Section 4.6 hereof. In the
         event that any replacement Note is in fact issued by the Company as
         contemplated in this Section 2.1(h), the old Note with respect to which
         the new replacement Note was issued shall be deemed replaced and
         superseded by the new Note notwithstanding any failure of a Noteholder
         to deliver such old Note on a timely basis.

SECTION 3.   REPRESENTATIONS AND WARRANTIES.

         Section 3.1. Representations and Warranties. The Company hereby
represents and warrants that as of the date hereof and as of the date of
execution and delivery of this 2000-B Amendment and Warrant Agreement:

                   (a) This 2000-B Amendment and Warrant Agreement, the Existing
         Note Purchase Agreements (as amended hereby), Outstanding Notes (as
         amended hereby), the PIK Notes referred to hereinabove and the Warrants
         are within the corporate powers of the Company, have been duly
         authorized by all necessary corporate action on the part of the
         Company, have been duly executed and delivered by the Company and
         constitute legal, valid and binding obligations of the Company
         enforceable in accordance with their respective terms.

                   (b) The Outstanding Amended and Restated Notes and the
         Outstanding 1998 Notes held by the Noteholders are amended hereby as
         set forth herein without regard to any exchange of Outstanding Notes
         for New Notes.

                                      -9-
<PAGE>   12

                   (c) After giving effect to this 2000-B Amendment and Warrant
         Agreement, no Default or Event of Default has occurred and is
         continuing.

                   (d) The execution, delivery and performance of this 2000-B
         Amendment and Warrant Agreement including the issuance of the Warrants
         and the PIK Notes referred to hereinabove by the Company does not and
         will not result in a violation of or default under (A) the articles of
         incorporation or bylaws of the Company, (B) any material agreement to
         which the Company is a party or by which it is bound or to which the
         Company or any of its properties is subject, (C) any order, writ,
         injunction or decree binding on the Company, or (D) any statute,
         regulation, rule or other law applicable to the Company.

SECTION 4.   MISCELLANEOUS.

         Section 4.1. Except as amended herein, all terms and provisions of the
Existing Note Purchase Agreements and the Outstanding Notes are hereby ratified,
confirmed and approved in all respects.

         Section 4.2. Any and all notices, requests, certificates and other
instruments, including the Outstanding Notes as amended hereby, may refer to the
"Note Purchase Agreements" without making specific reference to this 2000-B
Amendment and Warrant Agreement, but nevertheless all such references shall be
deemed to include this 2000-B Amendment and Warrant Agreement unless the context
shall otherwise require.

         Section 4.3. This 2000-B Amendment and Warrant Agreement and all
covenants herein contained shall be binding upon and inure to the benefit of the
respective successors and assigns of the parties hereunder. All covenants made
by the Company herein shall survive the closing and the delivery of this 2000-B
Amendment and Warrant Agreement.

         Section 4.4. This 2000-B Amendment and Warrant Agreement shall be
governed by and construed in accordance with Illinois law.

         Section 4.5. The capitalized terms used in this 2000-B Amendment and
Warrant Agreement shall have the respective meanings specified in the related
Existing Note Purchase Agreements unless otherwise herein defined or the context
hereof shall otherwise require.

         Section 4.6. The Company will, at its own expense, upon the request of
any Noteholder who has not previously received a new Note prepare a new Note of
the appropriate issue and series and execute and deliver such new Note to such
Noteholder, which new Note shall be substantially in the form of Exhibit C, in
the case of the Outstanding Amended and Restated Notes and in the form of
Exhibit D, in the case of the Outstanding 1998 Notes.

                                      -10-
<PAGE>   13

         The execution hereof by the respective Noteholders shall constitute a
contract among the Company and the Noteholders for the uses and purposes
hereinabove set forth. This 2000-B Amendment and Warrant Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together only one agreement. Counterpart signature pages are
deemed to be evidence of agreement to deliver original executed counterparts of
such signature pages as promptly as practicable thereafter.

                              AMERICAN HOMESTAR CORPORATION

                              By           /s/ CRAIG A. REYNOLDS
                                ------------------------------------------------
                                Its    Executive Vice President - CFO

                                      -11-
<PAGE>   14

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                              MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
                                By: David L. Babson and Company Incorporated,
                                    as Investment Adviser

                                By:           /s/ KATHLEEN LYNCH
                                   ---------------------------------------------
                                  Name:           Kathleen Lynch
                                       -----------------------------------------
                                  Title:        Managing Director
                                        ----------------------------------------

                                      -12-
<PAGE>   15

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               ALLSTATE LIFE INSURANCE COMPANY

                               By /s/ RONALD A. MENDEL
                                 -----------------------------------------------
                                 Its  Authorized Signatory

                               By /s/ PATRICIA W. WILSON
                                 -----------------------------------------------
                                 Its  Authorized Signatory

                                      -13-
<PAGE>   16

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               ALLSTATE INSURANCE COMPANY

                               By /s/ RONALD A. MENDEL
                                 -----------------------------------------------
                                 Its  Authorized Signatory

                               By /s/ PATRICIA W. WILSON
                                 -----------------------------------------------
                                 Its  Authorized Signatory

                                      -14-

<PAGE>   17

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

                               By /s/ JEROME R. BAIER
                                 -----------------------------------------------
                                 Its  Authorized Representative

                                      -15-
<PAGE>   18

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               NORTHERN LIFE INSURANCE COMPANY

                               By /s/ GARY L. JACOBSEN
                                 -----------------------------------------------
                                 Its  Assistant Treasurer

                                      -16-
<PAGE>   19

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               WASHINGTON SQUARE ADVISERS PRIVATE
                                 PLACEMENT TRUST FUND

                               By /s/ FRANK P. PINTENS
                                 -----------------------------------------------
                                 Its  Senior Vice President

                                      -17-

<PAGE>   20

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK

                               By /s/ GARY L. JACOBSEN
                                 -----------------------------------------------
                                 Its  Vice President, Investments

                                      -18-
<PAGE>   21

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY

                               By /s/ JON LUCIA
                                 -----------------------------------------------
                                 Its  Investment Officer

                                      -19-
<PAGE>   22

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               KEMPER INVESTORS LIFE INSURANCE COMPANY

                               By /s/ DAVID JORGENSEN
                                  ---------------------------------------
                                  Its  Corporate Controller and Treasurer

                               By /s/ DEBRA REZABEK
                                  ---------------------------------------
                                  Its  Executive Vice President, General
                                       Counsel and Corporate Secretary

                                      -20-

<PAGE>   23

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               FEDERAL KEMPER LIFE ASSURANCE COMPANY

                               By /s/ DAVID JORGENSEN
                                  ---------------------------------------
                                  Its  Corporate Controller and Treasurer

                               By /s/ DEBRA REZABEK
                                  ---------------------------------------
                                  Its  Executive Vice President, General
                                       Counsel and Corporate Secretary

                                      -21-
<PAGE>   24

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               ZURICH LIFE INSURANCE COMPANY OF AMERICA

                               By /s/ DAVID JORGENSEN
                                  ---------------------------------------
                                  Its  Corporate Controller and Treasurer

                               By /s/ DEBRA REZABEK
                                  ---------------------------------------
                                  Its  Executive Vice President, General
                                       Counsel and Corporate Secretary

                                     -22-

<PAGE>   25

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               FIDELITY LIFE ASSOCIATION

                               By /s/ DAVID JORGENSEN
                                  ---------------------------------------
                                  Its  Corporate Controller and Treasurer

                               By /s/ DEBRA REZABEK
                                  ---------------------------------------
                                  Its  Executive Vice President, General
                                       Counsel and Corporate Secretary

                                      -23-
<PAGE>   26

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               AMERICAN BANKERS LIFE ASSURANCE
                                 COMPANY OF FLORIDA

                               By          /s/ ROBERT C. LINDBERG
                                 -----------------------------------------------
                                 Its             Vice President

                                      -24-
<PAGE>   27

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               AMERICAN BANKERS LIFE INSURANCE
                                 COMPANY INC. OF FLORIDA

                               By         /s/ ROBERT C. LINDBERG
                                 -----------------------------------------------
                                 Its            Vice President

                                      -25-
<PAGE>   28

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               BAYSTATE HEALTH SYSTEM, INC.
                               By:  David L. Babson and Company Incorporated,
                                    as Investment Sub-Adviser

                               By: /s/ JILL A. FIELDS
                                  ----------------------------------------------
                               Name:   Jill A. Fields
                                    --------------------------------------------
                               Title:  Managing Director
                                     -------------------------------------------

                                      -26-
<PAGE>   29

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               C.M. LIFE INSURANCE COMPANY
                               By:  David L. Babson and Company Incorporated,
                                    as Investment Sub-Adviser

                               By: /s/ THOMAS P. SHEA
                                  ----------------------------------------------
                               Name:   Thomas P. Shea
                                    --------------------------------------------
                               Title:  Managing Director
                                     -------------------------------------------

                                      -27-

<PAGE>   30

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               RELIASTAR LIFE INSURANCE COMPANY

                               By /s/ GARY L. JACOBSON
                                 -----------------------------------------------
                                 Its  Authorized Representative

                                      -28-
<PAGE>   31

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               SECURITY CONNECTICUT LIFE INSURANCE COMPANY

                               By /s/ GARY L. JACOBSON
                                 -----------------------------------------------
                               Its  Assistant Treasurer

                                      -29-

<PAGE>   32

         This foregoing 2000-B Amendment and Warrant Agreement is hereby
accepted and agreed to as of the date aforesaid.

                               PROVIDENT MUTUAL LIFE INSURANCE COMPANY

                               By /s/ JAMES D. KESTNER
                                 -----------------------------------------------
                               Its  Vice President

                                      -30-
<PAGE>   33

                                   Schedule I
                  (to 2000-B Amendment and Warrant Agreement)

<TABLE>
<CAPTION>

                                       OUTSTANDING PRINCIPAL AMOUNT OF                                             NUMBER OF
                                           OUTSTANDING AMENDED AND        OUTSTANDING PRINCIPAL AMOUNT OF          SHARES OF
                                          RESTATED NOTES HELD AS OF      OUTSTANDING 1998 NOTES HELD AS OF       COMMON STOCK
        NAME OF HOLDER                        SEPTEMBER 29, 2000                SEPTEMBER 29, 2000              ISSUABLE UNDER
        OF NOTES                                                                                                    WARRANT
<S>                                    <C>                                 <C>                                   <C>
MASSACHUSETTS MUTUAL LIFE INSURANCE               $9,800,000                        $7,750,000
     COMPANY                                      $4,200,000                        $2,000,000
                                                                                    $1,500,000

BAYSTATE HEALTH SYSTEM, INC.                                                         $500,000

CM LIFE INSURANCE COMPANY                                                            $250,000

ALLSTATE LIFE INSURANCE COMPANY                   $1,000,000
                                   $3,000,000
                                   $1,500,000
                                   $3,000,000
                                   $1,500,000

ALLSTATE INSURANCE COMPANY                                                          $5,000,000

THE NORTHWESTERN MUTUAL LIFE                     $10,000,000                        $10,000,000
     INSURANCE COMPANY

NORTHERN LIFE INSURANCE COMPANY                   $4,500,000                        $2,000,000

WASHINGTON SQUARE ADVISERS PRIVATE                $2,500,000
     PLACEMENT TRUST FUND

RELIASTAR LIFE INSURANCE COMPANY OF               $1,000,000
     NEW YORK (FORMERLY RELIASTAR
     BANKERS SECURITY LIFE INSURANCE
     COMPANY)

RELIASTAR LIFE INSURANCE COMPANY                  $1,000,000                        $4,000,000

SECURITY CONNECTICUT LIFE INSURANCE                                                 $2,000,000
     COMPANY
</TABLE>

<PAGE>   34
<TABLE>
<CAPTION>

                                       OUTSTANDING PRINCIPAL AMOUNT OF                                             NUMBER OF
                                           OUTSTANDING AMENDED AND        OUTSTANDING PRINCIPAL AMOUNT OF          SHARES OF
                                          RESTATED NOTES HELD AS OF      OUTSTANDING 1998 NOTES HELD AS OF       COMMON STOCK
        NAME OF HOLDER                        SEPTEMBER 29, 2000                SEPTEMBER 29, 2000              ISSUABLE UNDER
        OF NOTES                                                                                                    WARRANT
<S>                                    <C>                                 <C>                                   <C>

GENERAL ELECTRIC CAPITAL ASSURANCE                $6,000,000
     COMPANY (FORMERLY GREAT NORTHERN
     INSURED ANNUITY CORPORATION)

KEMPER INVESTORS LIFE INSURANCE                   $2,900,000                        $6,900,000
     COMPANY

FEDERAL KEMPER LIFE ASSURANCE COMPANY             $1,400,000                        $3,400,000

ZURICH LIFE INSURANCE COMPANY OF                   $200,000                          $500,000
     AMERICA

FIDELITY LIFE ASSOCIATION                          $175,000                         $1,200,000
                                    $175,000
                                    $150,000

AMERICAN BANKERS LIFE ASSURANCE                   $4,000,000
     COMPANY OF FLORIDA

AMERICAN BANKERS LIFE INSURANCE                                                     $1,000,000
     COMPANY INC. OF FLORIDA

PROVIDENT MUTUAL LIFE INSURANCE                   $3,000,000                        $3,000,000
     COMPANY

</TABLE>

                                       I-2

<PAGE>   35

                                    EXHIBIT A
                   (to 2000-B Amendment and Warrant Agreement)

                               [FORM OF WARRANTS]

<PAGE>   36

                                    EXHIBIT B
                   (to 2000-B Amendment and Warrant Agreement)

                    FORM OF OPINION OF COUNSEL TO THE COMPANY

<PAGE>   37

                                   EXHIBIT 1
                          (to Note Purchase Agreement)
                                    EXHIBIT C
                   (to 2000-B Amendment and Warrant Agreement)

                FORM OF NEW OUTSTANDING AMENDED AND RESTATED NOTE

                          AMERICAN HOMESTAR CORPORATION

                      13.57% Senior Note Due July 10, 2007

No.[___________]                                              September 30, 2000

$[______________]                                               PPN 026651 _____

         FOR VALUE RECEIVED, the undersigned, AMERICAN HOMESTAR CORPORATION
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Texas, hereby promises to pay to
[_______________________________], or registered assigns, the principal sum of
[______________________________] DOLLARS on July 10, 2007, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 13.57% per annum from the date hereof,
payable quarterly, on the last day of March, June, September and December in
each year, and at maturity, commencing with the first of such dates next
succeeding the date hereof, until the principal hereof shall have become due and
payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount or Modified Make-Whole Amount
(as defined in the Note Purchase Agreements referred to below), payable
quarterly as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the greater of (i)
15.57% or (ii) 2.0% over the rate of interest publicly announced by Citibank,
N.A., or any successor thereof, from time to time in New York, New York as its
"base" or "prime" rate. This Note may bear a lower rate of interest pursuant to
Section 1.2 of the Note Purchase Agreements (defined below) to which reference
is hereby made. A portion of the interest hereon on certain interest payment
dates may be paid in the form of PIK Notes in accordance with the provisions of
Section 1.2 of the Note Purchase Agreements. The principal amount hereof may be
increased by the unpaid principal amount of the PIK Notes from and after
September 30, 2001 pursuant to and in accordance with the provisions of Section
1.2 of the Note Purchase Agreements.

         Payments of principal of, interest on and any Make-Whole Amount or
Modified Make-Whole Amount with respect to this Note are to be made in lawful
money of the United States of America at Bank One, N.A. in Chicago, Illinois or
at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreements referred to
below.

         This Note is one of the Senior Notes (herein called the "Notes") issued
pursuant to separate Amended and Restated Note Purchase Agreements, dated as of
September 15, 1998 (as from time to time amended, the "Note Purchase
Agreements"), between the Company and the respective Holders named therein and
is entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set

<PAGE>   38

forth in Section 20 of the Note Purchase Agreements and (ii) to have made the
representation set forth in Section 6 of the Note Purchase Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

         The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreements. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreements, but not
otherwise.

         If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount or Modified Make-Whole Amount) and with the effect
provided in the Note Purchase Agreements.

         The Company and the holder hereof acknowledge and agree that the
interest rate or other forbearance payable on the Notes shall not exceed the
highest rate permitted under applicable law.

         This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

                               AMERICAN HOMESTAR CORPORATION

                               By
                                 -----------------------------------------------
                                 Its
                                    --------------------------------------------

                                      C-2
<PAGE>   39

                                    EXHIBIT 1
                          (to Note Purchase Agreement)
                                    EXHIBIT D
                   (to 2000-B Amendment and Warrant Agreement)

                        FORM OF NEW OUTSTANDING 1998 NOTE

                          AMERICAN HOMESTAR CORPORATION

         [12.50/12.39]% Senior Note, Series [__], Due September 15, 2008

No.[___________]                                              September 30, 2000

$[______________]                                               PPN 026651 _____

         FOR VALUE RECEIVED, the undersigned, AMERICAN HOMESTAR CORPORATION
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Texas, hereby promises to pay to
[_______________________________], or registered assigns, the principal sum of
[______________________________] DOLLARS on September 15, 2008, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of [12.50/12.39]% per annum from the date
hereof, payable quarterly, on the last day of March, June, September and
December in each year, and at maturity, commencing with the first of such dates
next succeeding the date hereof, until the principal hereof shall have become
due and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of interest
and any overdue payment of any Make-Whole Amount or Modified Make-Whole Amount
(as defined in the Note Purchase Agreements referred to below), payable
quarterly as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the greater of (i)
[14.50/14.39]% or (ii) 2.0% over the rate of interest publicly announced by
Citibank, N.A., or any successor thereof, from time to time in New York, New
York as its "base" or "prime" rate. This Note may bear a lower rate of interest
pursuant to Section 1.2 of the Note Purchase Agreements (defined below) to which
reference is hereby made. A portion of the interest hereon on certain interest
payment dates may be paid in the form of PIK Notes in accordance with the
provisions of Section 1.2 of the Note Purchase Agreements. The principal amount
hereof may be increased by the unpaid principal amount of the PIK Notes from and
after September 30, 2001 pursuant to and in accordance with the provisions of
Section 1.2 of the Note Purchase Agreements.

         Payments of principal of, interest on and any Make-Whole Amount or
Modified Make-Whole Amount with respect to this Note are to be made in lawful
money of the United States of America at Bank One, N.A. in Chicago, Illinois or
at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreements referred to
below.

         This Note is one of the Series [__] of Senior Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, dated as of
September 15, 1998 (as from time to time amended, the "Note Purchase
Agreements"), between the Company and the respective Purchasers named therein
and is entitled to the benefits thereof. Each holder of this Note will be
deemed, by its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in

<PAGE>   40

Section 20 of the Note Purchase Agreements and (ii) to have made the
representation set forth in Section 6 of the Note Purchase Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

         The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreements. This Note is also
subject to optional prepayment, in whole or from time to time in part, at the
times and on the terms specified in the Note Purchase Agreements, but not
otherwise.

         If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount or Modified Make-Whole Amount) and with the effect
provided in the Note Purchase Agreements.

         The Company and the holder hereof acknowledge and agree that the
interest rate or other forbearance payable on the Notes shall not exceed the
highest rate permitted under applicable law.

         This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

                               AMERICAN HOMESTAR CORPORATION

                               By
                                 -----------------------------------------------
                                 Its
                                    --------------------------------------------

                                      D-2
<PAGE>   41

                                   EXHIBIT 1-B
                          (to Note Purchase Agreement)
                                    EXHIBIT E
                   (to 2000-B Amendment and Warrant Agreement)

           FORM OF PIK NOTE RE: OUTSTANDING AMENDED AND RESTATED NOTES

                          AMERICAN HOMESTAR CORPORATION

                  13.57% Senior PIK Note Due September 30, 2001

No.[___________]                                                          [Date]

$[______________]                                              PPN 026651 ______

         FOR VALUE RECEIVED, the undersigned, AMERICAN HOMESTAR CORPORATION
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Texas, hereby promises to pay to
[_______________________________], or registered assigns, the principal sum of
[______________________________] DOLLARS on September 30, 2001, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 10.07% per annum from the date hereof,
payable at maturity, and (b) to the extent permitted by law on any overdue
payment (including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make-Whole Amount or Modified Make-Whole
Amount (as defined in the Note Purchase Agreements referred to below), payable
at maturity as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the greater of (i)
15.57% or (ii) 2.0% over the rate of interest publicly announced by Citibank,
N.A., or any successor thereof, from time to time in New York, New York as its
"base" or "prime" rate. It is specifically acknowledged and agreed that any
Senior PIK Note issued on September 30, 2001 shall also be and become
immediately due and payable on September 30, 2001.

         Payments of principal of, interest on and any Make-Whole Amount or
Modified Make-Whole Amount with respect to this Note are to be made in lawful
money of the United States of America at Bank One, N.A. in Chicago, Illinois or
at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreements referred to
below.

         This Note is one of the Senior PIK Notes (herein called the "Notes")
issued pursuant to separate Amended and Restated Note Purchase Agreements, dated
as of September 15, 1998 (as from time to time amended, the "Note Purchase
Agreements"), between the Company and the respective Holders named therein and
is entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 20 of the Note Purchase Agreements and (ii) to have made the
representation set forth in Section 6 of the Note Purchase Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney

<PAGE>   42

duly authorized in writing, a new Note for a like principal amount will be
issued to, and registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat the person in
whose name this Note is registered as the owner hereof for the purpose of
receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.

         This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.

         If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount or Modified Make-Whole Amount) and with the effect
provided in the Note Purchase Agreements.

         The Company and the holder hereof acknowledge and agree that the
interest rate or other forbearance payable on the Notes shall not exceed the
highest rate permitted under applicable law.

         This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

                               AMERICAN HOMESTAR CORPORATION

                               By
                                 -----------------------------------------------
                                 Its
                                    --------------------------------------------

                                      E-2

<PAGE>   43

                                   EXHIBIT 1-B
                          (to Note Purchase Agreement)
                                    EXHIBIT F
                   (to 2000-B Amendment and Warrant Agreement)

                   FORM OF PIK NOTE RE: OUTSTANDING 1998 NOTES

                          AMERICAN HOMESTAR CORPORATION

       [12.50/12.39]% Senior PIK Note, Series [__], Due September 30, 2001

No.[___________]                                                          [Date]

$[______________]                                              PPN 026651 ______

         FOR VALUE RECEIVED, the undersigned, AMERICAN HOMESTAR CORPORATION
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Texas, hereby promises to pay to
[_______________________________], or registered assigns, the principal sum of
[______________________________] DOLLARS on September 30, 2001, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of [12.50/12.39]% per annum from the date
hereof, payable at maturity, and (b) to the extent permitted by law on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest and any overdue payment of any Make-Whole Amount or Modified
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable at maturity as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum from time to time equal to the
greater of (i) [14.50/14.39]% or (ii) 2.0% over the rate of interest publicly
announced by Citibank, N.A., or any successor thereof, from time to time in New
York, New York as its "base" or "prime" rate. It is specifically acknowledged
and agreed that any Senior PIK Note issued on September 30, 2001 shall also be
and become immediately due and payable on September 30, 2001.

         Payments of principal of, interest on and any Make-Whole Amount or
Modified Make-Whole Amount with respect to this Note are to be made in lawful
money of the United States of America at Bank One, N.A. in Chicago, Illinois or
at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreements referred to
below.

         This Note is one of the Senior PIK Notes, Series [___] (herein called
the "Notes") issued pursuant to separate Note Purchase Agreements, dated as of
September 15, 1998 (as from time to time amended, the "Note Purchase
Agreements"), between the Company and the respective Holders named therein and
is entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 20 of the Note Purchase Agreements and (ii) to have made the
representation set forth in Section 6 of the Note Purchase Agreements.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written

<PAGE>   44

instrument of transfer duly executed, by the registered holder hereof or such
holder's attorney duly authorized in writing, a new Note for a like principal
amount will be issued to, and registered in the name of, the transferee. Prior
to due presentment for registration of transfer, the Company may treat the
person in whose name this Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.

         This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.

         If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount or Modified Make-Whole Amount) and with the effect
provided in the Note Purchase Agreements.

         The Company and the holder hereof acknowledge and agree that the
interest rate or other forbearance payable on the Notes shall not exceed the
highest rate permitted under applicable law.

         This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

                               AMERICAN HOMESTAR CORPORATION

                               By
                                 -----------------------------------------------
                                 Its
                                    --------------------------------------------

                                      F-2

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