Document:

Exhibit 10.9

 

Walter
Industries, Inc.

Long-Term Incentive Award Plan

Restricted Stock Unit Award Agreement

 

THIS AGREEMENT, effective as of the Date of Grant set forth below,
represents a grant of restricted stock units (“RSUs”) by Walter Industries, Inc.,
a Delaware corporation (the “Company”), to the Participant named below,
pursuant to the provisions of the [Amended 1995[ [ 2002 ] Long-Term
Incentive Stock Plan of Walter Industries, Inc. (the “Plan”). You have
been selected to receive a grant of RSUs pursuant to the Plan, as specified
below.

 

The
Plan provides a complete description of the terms and conditions governing the
grant of RSUs.  If there is any inconsistency between the terms of this
Agreement and the terms of the Plan, the Plan’s terms shall completely
supersede and replace the conflicting terms of this Agreement.  All
capitalized terms shall have the meanings ascribed to them in the Plan, unless
specifically set forth otherwise herein.

 

Participant: «FirstName» «MI» «LastName»

 

Date of Grant: << date>>

 

Number of RSUs Granted: «RSU_Shares»

 

Purchase Price: None

 

[ Annual Share Price Targets:

 

	
  First Anniversary

  	
   

  	
  $

  	
   

  
	
  Second Anniversary

  	
   

  	
  $

  	
   

  
	
  Third Anniversary

  	
   

  	
  $

  	
   

  
	
  Fourth Anniversary

  	
   

  	
  $

  	
   

  
	
  Fifth Anniversary

  	
   

  	
  $

  	
   

  
	
  Sixth Anniversary

  	
   

  	
  $

  	
   

  
	
  Seventh Anniversary

  	
   

  	
  $

  	
   

  

 

]

 

The
parties hereto agree as follows:

 

1.             Employment with the Company.  Except as may otherwise be
provided in Section 6, the RSUs granted hereunder are granted on the
condition that the Participant remains an Employee of the Company or its
Subsidiaries from the Date of Grant through (and including) the vesting date,
as set forth in Section 2 (referred to herein as the “Period of
Restriction”).

 

This
grant of RSUs shall not confer any right to the Participant (or any other
Participant) to be granted RSUs or other Awards in the future under the Plan.

 

1

 

2.             Vesting.  RSUs shall vest            
percent (      %) at the end of the         th
anniversary following the Date of Grant [; provided,
however, if the predetermined Annual Share Price Targets (as set forth on page 1)
are achieved and you remain employed by the Company, vesting of the RSUs shall
accelerate as follows:

 

(a)           Twenty-five percent (25%) of the total number of RSUs
granted shall vest on the first anniversary of the Date of Grant (i.e., you
must be employed by the Company on such anniversary date and achieve the Annual
Share Price Target to vest) if the closing price of the Company’s stock is at
least equal to <<  >>dollars and <<  >>cents
($  ) for any period of sixty (60) consecutive calendar days during
the calendar year preceding the first anniversary.

 

(b)           Fifty percent (50%) of the total number of RSUs
granted, less the number of any RSUs previously vested, shall vest on the
second anniversary of the Date of Grant (i.e., you must be employed by the
Company on such anniversary date and achieve the Annual Share Price Target to
vest) if the closing price of the Company’s stock is at least equal to
<< >> dollars and << >> cents ($   )
for any period of sixty (60) consecutive calendar days preceding the second
anniversary.

 

(c)           Seventy-five percent (75%) of the total number of RSUs
granted, less the number of any RSUs previously vested, shall vest on the third
anniversary of the Date of Grant (i.e., you must be employed by the Company on
such anniversary date and achieve the Annual Share Price Target to vest) if the
closing price of the Company’s stock is at least equal to
<< >> dollars and << >> cents
($   ) for any period of sixty (60) consecutive calendar days
preceding the third anniversary.

 

(d)           One hundred percent (100%) of the total number of RSUs
granted, less the number of any RSUs previously vested, shall vest on the
fourth anniversary of the Date of Grant (i.e., you must be employed by the
Company on such anniversary date and achieve the Annual Share Price Target to
vest) if the closing price of the Company’s stock is at least equal to
<< >> dollars and << >> cents
($   ) for any period of sixty (60) consecutive calendar days
preceding the fourth anniversary.

 

(e)           One hundred percent (100%) of the total number of RSUs
granted, less the number of any RSUs previously vested, shall vest at any time
up to and including the fifth anniversary of the Date of Grant if the closing price
of the Company’s stock is at least equal to << >> dollars and
<< >> cents ($   ) for any period of sixty (60)
consecutive calendar days preceding the fifth anniversary.  Unless
otherwise elected in a properly executed Deferral Election Form, payout will
occur as soon as administratively feasible after fulfilling the Annual Share
Price Target goal.

 

2

 

(f)            One hundred percent (100%) of the total number of RSUs
granted, less the number of any RSUs previously vested, shall vest at any time
up to and including the sixth anniversary of the Date of Grant if the closing
price of the Company’s stock is at least equal to << >>
dollars and << >> cents ($   ) for any period
of sixty (60) consecutive calendar days preceding the sixth anniversary.
 Unless otherwise elected in a properly executed Deferral Election Form,
payout will occur as soon as administratively feasible after fulfilling the
Annual Share Price Target goal.

 

(g)           One hundred percent (100%) of the total number of RSUs
granted, less the number of any RSUs previously vested, shall vest at any time
up to and including the seventh anniversary of the Date of Grant if the closing
price of the Company’s stock is at least equal to << >>
dollars and << >> cents ($   ) for any period of
sixty (60) consecutive calendar days preceding the seventh anniversary.
 Unless otherwise elected in a properly executed Deferral Election Form,
payout will occur as soon as administratively feasible after fulfilling the
Annual Share Price Target goal. ]

 

[ The following table summarizes the
vesting treatment of a hypothetical grant of 1,000 RSUs, based upon whether or
not Annual Share Price Targets are achieved.

 

	
   

  	
   

  	
  Number of RSUs That Vest

  	
   

  
	
  Earliest Date on Which RSUs Vest

  	
   

  	
  If Share Price

  Targets Achieved

  	
   

  	
  If Share Price

  Targets Not Achieved

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First anniversary of Date of Grant

  	
   

  	
  250

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Second anniversary of Date of Grant

  	
   

  	
  500 less RSUs previously
  vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Third anniversary of Date of Grant

  	
   

  	
  750 less RSUs previously
  vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fourth anniversary of Date of Grant

  	
   

  	
  1,000 less RSUs previously
  vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fifth anniversary of Date of Grant

  	
   

  	
  1,000 less RSUs previously
  vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sixth anniversary of Date of Grant

  	
   

  	
  1,000 less RSUs previously
  vested

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Seventh anniversary of Date of Grant

  	
   

  	
  1,000 less RSUs previously
  vested

  	
   

  	
  1,000

  	
   

  

 

]

 

3.             Timing of Payout.  Payout of all RSUs shall occur as
soon as administratively feasible after vesting, unless a Participant elects to
defer the payout of RSUs upon vesting by completing in writing and returning to
the Company an irrevocable deferral election form within six (6) months of
the Date of Grant.

 

4.             Form of Payout.  Vested RSUs will be paid out
solely in the form of shares of stock of the Company.

 

5.             Voting Rights and Dividends.  Until such time as the RSUs are
paid out in shares of Company stock, the Participant shall not have voting
rights.  Further, no dividends shall be paid on any RSUs.

 

3

 

6.             Termination of Employment.  In the event of the Participant’s
termination of employment with the Company or its Subsidiaries for any reason
during the Period of Restriction, all RSUs held by the Participant at the time
of employment termination and still subject to the Period of Restriction
shall be forfeited by the Participant to the Company.  However, the
Committee may, in its sole discretion, vest all or any portion of the RSUs held
by the Participant.  For all previously vested RSUs that have been
properly deferred, payout shall occur upon the earlier to occur of the elected
deferred vesting date or the date of your employment termination for any
reason.

 

7.             Change in Control.  Notwithstanding anything to the
contrary in this Agreement, in the event of a Change in Control of the
Company during the Period of Restriction and prior to the Participant’s
termination of employment, the Period of Restriction imposed on the RSUs shall
immediately lapse, with all such RSUs vesting subject to applicable federal and
state securities laws.

 

8.             Restrictions on Transfer.  Unless and until actual shares of
stock of the Company are received upon payout, RSUs granted pursuant to this
Agreement may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated (a “Transfer”), other than by will or by the laws of
descent and distribution, except as provided in the Plan.  If any
Transfer, whether voluntary or involuntary, of RSUs is made, or if any
attachment, execution, garnishment, or lien shall be issued against or placed
upon the RSUs, the Participant’s right to such RSUs shall be immediately
forfeited by the Participant to the Company, and this Agreement shall lapse.

 

9.             Recapitalization.  In the event of any change in the
capitalization of the Company such as a stock split or a corporate transaction
such as any merger, consolidation, separation, or otherwise, the number and
class of RSUs subject to this Agreement may be equitably adjusted by the
Committee, in its sole discretion, to prevent dilution or enlargement of
rights.

 

10.          Beneficiary Designation.  The Participant may, from time to
time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under this Agreement is to be paid in case of
his or her death before he or she receives any or all of such benefit.
 Each such designation shall revoke all prior designations by the
Participant, shall be in a form prescribed by the Company, and will be
effective only when filed by the Participant in writing with the Secretary of
the Company during the Participant’s lifetime.  In the absence of any such
designation, benefits remaining unpaid at the Participant’s death shall be paid
to the Participant’s estate.

 

11.          Continuation of Employment.  This Agreement shall not confer
upon the Participant any right to continue employment with the Company or its
Subsidiaries, nor shall this Agreement interfere in any way with the Company’s
or its Subsidiaries’ right to terminate the Participant’s employment at any
time.

 

4

 

12.          Miscellaneous.

 

(a)           This Agreement and the rights of the Participant
hereunder are subject to all the terms and conditions of the Plan, as the same
may be amended from time to time, as well as to such rules and regulations
as the Committee may adopt for administration of the Plan.  The Committee
shall have the right to impose such restrictions on any shares acquired
pursuant to this Agreement, as it may deem advisable, including, without
limitation, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such shares are then
listed and/or traded, and under any blue sky or state securities laws
applicable to such shares.  It is expressly understood that the Committee
is authorized to administer, construe, and make all determinations necessary or
appropriate to the administration of the Plan and this Agreement, all of which
shall be binding upon the Participant.

 

(b)           The Committee may terminate, amend, or modify the
Plan; provided, however, that no such termination, amendment, or modification
of the Plan may in any material way adversely affect the Participant’s rights
under this Agreement, without the written consent of the Participant.

 

(c)           The Participant may elect, subject to any procedural rules adopted
by the Committee, to satisfy the withholding requirement, in whole or in part,
by having the Company withhold and sell shares having an aggregate Fair Market
Value on the date the tax is to be determined, equal to the amount required to
be withheld.

 

The Company shall have the power and the right to
deduct or withhold from the Participant’s compensation, or require the
Participant to remit to the Company, an amount sufficient to satisfy federal,
state, and local taxes (including the Participant’s FICA obligation), domestic
or foreign, required by law to be withheld with respect to any payout to the
Participant under this Agreement.

 

(d)           The Participant agrees to take all steps necessary to
comply with all applicable provisions of federal and state securities laws in
exercising his or her rights under this Agreement.

 

(e)           This Agreement shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.

 

(f)            All obligations of the Company under the Plan and this
Agreement, with respect to the RSUs, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.

 

(g)           To the extent not preempted by federal law, this
Agreement shall be governed by, and construed in accordance with, the laws of
the state of Delaware.

 

5

 

IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed
effective as of the Date of Grant.

 

	
   

  	
   

  	
  Walter Industries, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Title of Company
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Participant

  

 

6Exhibit 10.13.1

 

OMNIBUS AMENDMENT

 

THIS
OMNIBUS AMENDMENT (this “Amendment”) is made as of July 30, 2007,
by and among MID-STATE TRUST IX, as borrower
(the “Borrower”), YC SUSI TRUST,
as a lender, ATLANTIC ASSET SECURITIZATION LLC,
as a lender, TREASURY BANK, A DIVISION OF COUNTRYWIDE BANK
FSB (f/k/a Treasury Bank, a Division of Countrywide Bank, N.A.), as
custodian  (the “Custodian”), THE BANK OF NEW YORK, as trustee (the “Trustee”), BANK OF AMERICA, NATIONAL ASSOCIATION, as agent (the “Agent”),
a managing agent and a bank investor, CALYON NEW YORK BRANCH,
as a managing agent and a bank investor, AMBAC ASSURANCE
CORPORATION, as surety provider and insurer (the “Surety Provider”),
WALTER MORTGAGE COMPANY (successor by
merger to Mid-State Homes, Inc.), as depositor (in such capacity, the “Depositor”)
and as master servicer (in such capacity, the “Master Servicer”), JIM WALTER HOMES, INC., as originator (the “Originator”), NEATHERLIN HOMES, INC., as eligible originator, DREAM HOMES, INC., as eligible originator, DREAM HOMES USA, INC., as eligible originator, and JIM WALTER HOMES OF ARKANSAS, INC., as eligible originator.

 

PRELIMINARY STATEMENTS

 

WHEREAS, reference is made
to: (i) the Second Amended and Restated Variable Funding Loan Agreement,
dated as of June 15, 2006 (as previously amended and supplemented prior to
the date hereof, the “Loan Agreement”), among the Borrower, the Trustee, the
Custodian, the Agent and the Lenders, Managing Agents and Bank Investors from
time to time party thereto; (ii) the Second Amended and Restated Insurance
and Indemnity Agreement, dated as of June 15, 2006 (as previously amended
and supplemented prior to the date hereof, the “Insurance Agreement”), among
the Borrower, the Surety Provider, the Depositor, the Master Servicer, the
Trustee and the Originators party thereto; (iii) the Custodian/Trustee
Agreement, dated as of June 15, 2006 (as previously amended and
supplemented prior to the date hereof, the “CTA Agreement”), among the
Borrower, the Custodian, the Trustee, the Agent, the Surety Provider and the
Lenders and Managing Agents party thereto; (iv) the Amended and Restated
Depositor Account Transfer Agreement, dated as of June 15, 2006 (as
previously amended and supplemented prior to the date hereof, the “DAT
Agreement”), among the Originator, the Depositor and the Eligible Originators
party thereto; (v) the Amended and Restated Borrower Account Transfer
Agreement, dated as of June 15, 2006 (as previously amended and
supplemented prior to the date hereof, the “BAT Agreement”), between the
Depositor and the Borrower; (vi) the Second Amended and Restated Master
Servicing Agreement, dated as of June 15, 2006 (as previously amended and
supplemented prior to the date hereof, the “Servicing Agreement”), among the
Borrower, the Master Servicer, the Trustee and the Custodian; and (vii) the
other Operative Documents (as defined in Annex A to the Loan Agreement)
(collectively, the documents in clauses (i) thru (vii) above, the “Transaction
Documents”).

 

WHEREAS, the parties hereto
desire to have the Loan Agreement and other Transaction Documents amended and
supplemented to: (i) extend the Scheduled Termination Date; (ii) add
Jim Walter Homes of Arkansas, Inc. as an Eligible Originator; and (iii) make
certain further and additional clarifications and amendments to the Loan
Agreement and other Transaction Documents as provided herein; and

 

 

WHEREAS, the parties to the
Transaction Documents have agreed to the terms of this Amendment as set forth
herein.

 

NOW THEREFORE, in
consideration of the premises and the agreements contained herein, the parties
to this Amendment hereto agree as follows:

 

ARTICLE
I

DEFINITIONS

 

Section 1.01.  Amendments to Certain Definitions in the Loan Agreement.  The following definitions in Annex A of the
Loan Agreement (and elsewhere in the Transaction Documents, where applicable)
are hereby amended in their entirety to read as follows:

 

“Eligible Account”
means, on any date, any Account:

 

(a)           for which the information
set forth with respect to such Account in the Schedule of Accounts is true and
correct as of the date as of which such information is given;

 

(b)           with respect to which the
related building or sales contract or loan agreement (as applicable), as the
case may be, has been duly executed by the parties thereto and the duties to be
performed thereunder prior to the date the first payment in connection with
such contract or loan agreement (as applicable) is due have been performed;

 

(c)           with respect to which the
Account Documents have been duly executed by the related Obligor and the
Mortgage has been duly executed by such Obligor and, to the extent required
under local law for recordation or enforcement, properly acknowledged;

 

(d)           with respect to which the
Mortgage has been properly recorded as required by law; the Mortgage
constitutes a valid first priority lien upon and security title to the property
described therein, which is a single family detached dwelling, and such
Mortgage and the Account Note secured thereby are or shall be fully enforceable
in accordance with their terms, except as enforceability thereof may be limited
by bankruptcy, insolvency, moratorium or other laws affecting creditors’ rights
generally and by general principles of equity (whether in a proceeding in
equity or at law);

 

(e)           with respect to which the
Borrower is the sole owner of such Account and has good and marketable title to
such Account, free and clear of all Adverse Claims and full right and authority
to transfer such Account and to Grant such Account to the Trustee;

 

(f)            with respect to which all
costs, fees, intangible, documentary and recording taxes and expenses incurred
in making, closing, and recording such Account have been paid;

 

2

 

(g)           for which no part of the
Mortgaged Property purporting to secure the related Account Note has been, or
shall have been, released from the lien or security title of the Mortgage
securing such Account Note except for a Mortgaged Property securing an Account
Note which has been prepaid in full between the Cut-Off Date and the applicable
Borrowing Date, the amount of such prepayments to be deposited in the
Collection Account on or before such Borrowing Date;

 

(h)           except to the extent
permitted by the Master Servicing Agreement, with respect to which no term or
provision of such Account has been or will be altered, changed or modified in
any way by the Master Servicer, any applicable Subservicer or the Borrower
without the consent of the Trustee, the Controlling Party and the Agent;

 

(i)            which Account the Borrower
acquired title to in good faith, for value and without notice of any Adverse
Claim;

 

(j)            for which the Account Note
evidences an account bearing a fixed rate of interest and fully amortizing
level monthly payments (other than with respect to Adjustable Rate Accounts and
with respect to Balloon Accounts insofar as such payment is the final payment
on such Account) and, in the case of Accounts other than Accounts purchased by
Walter Mortgage Company, which payments are due monthly; for which the Account
Note related to any Account other than an Adjustable Rate Account bears an
interest rate of not less than 6.5% per annum; for which the interest rate of
such Account together with the interest rate for all other Accounts, does not
result in the weighted average interest rate of all Accounts to be less than
8.85% per annum; and for which the Account Note has an original term to
maturity not in excess of (i) 25 years with respect to Accounts on which
the sales price (or loan amount in the case of WMC Accounts) to the customer is
less than $25,000 and (ii) 30 years with respect to Accounts on which the
sales price (or loan amount in the case of WMC Accounts) to the customer is
equal to or greater than $25,000;

 

(k)           which is not subject to any
action, suit, proceeding, or other litigation, and with respect to which there
is no right of rescission, setoff, defense or counterclaim to such Account Note
or the related Mortgage, including both the obligation of the Obligor to pay
the unpaid principal or interest on such Account Note and the defense of usury;
furthermore, neither the operation of any of the terms of the Account Note and
the Mortgage nor the exercise of any right thereunder will render the Account
Note or the Mortgage unenforceable, in whole or in part, or subject such
Account Note or Mortgage to any right of rescission, setoff, counterclaim or
defense, including the defense of usury, and no such right of rescission,
setoff, counterclaim or defense has been asserted with respect thereto;

 

(l)            with respect to which there
are no mechanics’ liens or claims for work, labor or material (and to the best
of the Borrower’s knowledge, no rights are outstanding that could give rise to
such lien under applicable law) affecting the related Mortgaged Property which
are or may be a lien prior to, or equal with, the lien of such Mortgage;

 

3

 

(m)          for which the Account Note
at the time of origination complied in all material respects with applicable
local, state and federal laws, including, without limitation, usury, equal
credit opportunity, predatory and abusive lending laws, real estate settlement
procedures, truth-in-lending and disclosure laws, and consummation of the
transactions contemplated hereby will not involve the violation of any such
laws;

 

(n)           with respect to which, if
the related Mortgage constitutes a deed of trust, a trustee, duly qualified
under applicable law to serve as such, is properly designated, serving and
named in such Mortgage;

 

(o)           with respect to which there
has been no fraud, dishonesty, misrepresentation or negligence on the part of
the Originator or any Eligible Originator in connection with the origination of
the related Account Note or in connection with the sale of the related Account;

 

(p)           which is evidenced by one
original Account Note;

 

(q)           which is denominated and
payable only in United States dollars in the United States;

 

(r)            as to which the Depositor
has satisfied all of its obligations under the BAT Agreement;

 

(s)           which satisfies all
applicable underwriting guidelines and/or credit policies;

 

(t)            the Obligor on which has
been directed to make all payments directly to the Master Servicer or any
applicable Subservicer or to a post office box of the Master Servicer or any applicable
Subservicer;

 

(u)           with respect to which, if
such Account is a Jumbo Account, the Principal Balance thereof together with
the aggregate Principal Balance of all other Jumbo Accounts, does not exceed 5%
of the aggregate Principal Balance of all Accounts (other than Defaulted
Accounts, Delinquent Accounts and any Accounts excluded from eligibility in
their entirety); provided, however, that a Jumbo Account which
satisfies the criteria specified hereunder shall cease to be an Eligible
Account if it causes the average Principal Balance of all Accounts to be
greater than $115,000;

 

(v)           which has not previously
been removed from the facility or the related Mortgaged Property of which has
not been repossessed and the Account resold more than three times prior to its
acquisition by the Borrower pursuant to the BAT Agreement;

 

(w)          which is not a Defaulted
Account, Delinquent Account or an Account with respect to which the Borrower
has received notice from the Trustee no less than five Business Days prior to a
Borrowing Date (or if such Borrowing Date is also a Remittance Date, the fifth
day of the calendar month in which such Remittance Date occurs, or if such day
is not a Business Day, the next succeeding Business Day) is a Defective
Account;

 

4

 

(x)            the Obligor on which is a
natural person who is a U.S. resident, is not an Affiliate of Walter Industries, Inc.
and is not a Governmental Authority;

 

(y)           with respect to which the
related Mortgaged Property is located in the United States; provided, however,
that (i) the aggregate Principal Balance related to Mortgaged Properties
in each of the following states individually, may not exceed 15% of the
aggregate Principal Balance of all Accounts (other than Defaulted Accounts,
Delinquent Accounts and any Accounts excluded from eligibility in their
entirety); California, Mississippi, Florida, Alabama, South Carolina,
Louisiana, Georgia, North Carolina, Tennessee, Arkansas, Oklahoma, Virginia,
Kentucky, West Virginia, Indiana, Ohio, New Mexico and Michigan; (ii) the
aggregate Principal Balance related to Mortgaged Properties in the state of
Texas may not exceed 45% of the aggregate Principal Balance of all Accounts
(other than Defaulted Accounts, Delinquent Accounts and any Accounts excluded
from eligibility in their entirety); (iii) the aggregate Principal Balance
related to Mortgaged Properties in any state not otherwise provided for in this
clause (y) may not exceed 5% of the aggregate Principal Balance of all
Accounts (other than Defaulted Accounts, Delinquent Accounts and any Accounts
excluded from eligibility in their entirety); (iv) the aggregate Principal
Balance related to Mortgaged Properties in any single zip code may not exceed
5% of the aggregate Principal Balance of all Accounts (other than Defaulted
Accounts, Delinquent Accounts and any Accounts excluded from eligibility in
their entirety); and (v) the aggregate Principal Balance related to
Mortgaged Properties in a zip code characterized as unknown by the Master
Servicer may not exceed 5% of the aggregate Principal Balance of all Accounts
(other than Defaulted Accounts, Delinquent Accounts and any Accounts excluded
from eligibility in their entirety);

 

(z)            which has been (i) originated
by the Originator, or by an Eligible Originator or (ii) in the case of
Walter Mortgage Company, purchased, in the ordinary course of its business and
is assignable pursuant to its terms and under applicable law without the
consent of the Obligor thereunder, unless such consent has been obtained and is
in effect or such notice has been given;

 

(aa)         which Account (i) has
been originated in compliance with all applicable laws, including, but not
limited to, all applicable anti-predatory and abusive lending laws, (ii) is
not a High Cost Loan or Covered Loan, as applicable (as such terms are defined
in the then current Standard & Poor’s LEVELS® Glossary, which is now
Version 6.0 Revised, Appendix E), (iii) if originated on or after October 1,
2002 through March 6, 2003, is not subject to the Georgia Fair Lending
Act; and (iv) is not subject to the provisions of the Home Ownership and
Equity Protection Act of 1994, as amended, nor is such Account a “high cost” or
“predatory” Account under any federal, state or local laws or regulations;

 

(bb)         with respect to any Account
originated (or in the case of Walter Mortgage Company, originated or purchased)
by an Eligible Originator, such Account was originated (or in the case of
Walter Mortgage Company, originated or purchased) in accordance with any
applicable underwriting guideline and/or credit policy;

 

5

 

(cc)         which (together with the
Related Security) has been the subject of either a valid transfer and
assignment from, or the grant of, a first priority perfected security interest
therein by the Borrower to the Trustee, on behalf of the Secured Parties of all
of the Borrower’s right, title and interest therein;

 

(dd)         which is an “eligible asset”
as defined in Rule 3a-7 under the Investment Company Act of 1940, as
amended;

 

(ee)         which does not have a
Loan-to-Value Ratio in excess of 100%;

 

(ff)           with respect to which the
date of transfer of such Account to the Trustee occurred less than 24 months
prior to such date;

 

(gg)         with respect to which, if
such Account is a Resale Account, the Principal Balance thereof together with
Principal Balance of all other Resale Accounts, may not exceed 10% of the
aggregate Principal Balance of all Accounts (other than Defaulted Accounts,
Delinquent Accounts and any Accounts excluded from eligibility in their
entirety);

 

(hh)         which is a Full
Documentation Account; provided, however, if such Account is a
Low Documentation Account, the Principal Balance thereof, together with the
Principal Balance of all other such Accounts, may not exceed 20% of the
aggregate Principal Balance of all Accounts (other than Defaulted Accounts,
Delinquent Accounts and any Accounts excluded from eligibility in their
entirety);

 

(ii)           with respect to an Account
purchased by Walter Mortgage Company, the purchase of such Account complies
with the underwriting guidelines and credit policies of Walter Mortgage
Company;

 

(jj)           which complies with Article XVI,
Section 50(a)(6) of the Texas Constitution;

 

(kk)         with respect to which, if
the Obligor of the related Account does not have a FICO score, the Principal
Balance thereof together with the aggregate Principal Balance of all Accounts
where the related Obligor does not have a FICO Score, may not exceed 10% of the
aggregate Principal Balance of all Accounts (other than Defaulted Accounts,
Delinquent Accounts and any Accounts excluded from eligibility in their
entirety);

 

(ll)           which Account, together with
all other Accounts, does not result in the aggregate Principal Balance of all
Accounts that are Ninety Percent Complete Accounts being less than 90% of the
aggregate Principal Balance of all Accounts (other than Defaulted Accounts,
Delinquent Accounts and any Accounts excluded from eligibility in their
entirety);

 

(mm)       the Obligor of which has a
FICO score such that, together with the FICO scores of all other Obligors of
Accounts, does not result in the weighted average FICO scores for all Obligors
of Accounts to be less than 585;

 

6

 

(nn)         with respect to which, if
the related Account is an Adjustable Rate Account, the Account Note evidences
an Account that (i) has fully amortizing monthly payments, (ii) has
no negative amortization, (iii) is not an interest-only loan, (iv) is
not secured by a lien on a Manufactured Home, (v) the Principal Balance
thereof together with the aggregate Principal Balance of all other Adjustable
Rate Accounts does not exceed 5% of the aggregate Principal Balance of all
Accounts (other than Defaulted Accounts, Delinquent Accounts and any Accounts
excluded from eligibility in their entirety), and (vi) if such Adjustable
Rate Account has 2/28 terms, the Principal Balance thereof together with the
aggregate Principal Balance of all other Adjustable Rate Accounts with 2/28
terms does not exceed 1% of the aggregate Principal Balance of all Accounts
(other than Defaulted Accounts, Delinquent Accounts and any Accounts excluded
from eligibility in their entirety), provided, however, that an
Adjustable Rate Account which satisfies the criteria specified hereunder shall
cease to be an Eligible Account upon the earlier to occur of (x) the date
that is three months prior to the date on which the related interest rate
adjusts, (y) a Take-Out and (z) a Facility Termination Event;

 

(oo)         with respect to which, if (i) such
Account is a Balloon Account, (ii) such Account is an Account with respect
to which the related Mortgaged Property is a two-to-four family dwelling, an
individual condominium unit in a condominium project or an individual unit in a
townhouse or (iii) the Obligor of such Account is an officer, director or
employee of Walter Industries, Inc. or any Affiliate thereof, the
Principal Balance thereof together with the aggregate Principal Balance of all
such Accounts may not exceed 5% of the aggregate Principal Balance of all
Accounts (other than Defaulted Accounts, Delinquent Accounts and any Accounts
excluded from eligibility in their entirety);

 

(pp)         which Account, together with
all other Accounts, does not result in the weighted average Seasoning of all
Accounts at the time of the acquisition of each Account by the Borrower to be
in excess of six months;

 

(qq)         which Account, at the time
of its origination (if it was originated by the Originator or an Eligible
Originator), had no indebtedness secured by a subordinate lien in the related
Mortgaged Property originated simultaneously by the Originator or an Eligible
Originator;

 

(rr)           with respect to which, if
the related Account is such that any payment, or part thereof, remains unpaid
for more than 30 but less than 60 days, the Principal Balance thereof together
with the aggregate Principal Balance of all other such Accounts may not exceed
3% of the Principal Balance of all Accounts (other than Defaulted Accounts,
Delinquent Accounts and any Accounts excluded from eligibility in their
entirety);

 

(ss)         if such Account is a
Purchased Account, the Principal Balance thereof, together with the Principal
Balance of all other Purchased Accounts, may not exceed 30% of the Principal
Balance of all Accounts (other than Defaulted Accounts, Delinquent Accounts and
any Accounts excluded from eligibility in their entirety);

 

7

 

(tt)           which Account is not a
Manufactured Home Account; and

 

(uu)         which Account, together with
all other Accounts, does not result in the weighted average Loan-to-Value Ratio
of all Accounts exceeding 90%.

 

“Eligible Bank Account”
means a segregated account that is a segregated trust account maintained with
the Trustee or the Managing Agents in its fiduciary capacity in its corporate
trust department.

 

“Excess Spread”
means, for any Collection Period, the percentage computed as of the last day of
such Collection Period equal to (a) the Portfolio Yield for such
Collection Period minus (b) the sum of the (i) weighted average
Discount payable to the Lenders (determined as of the last day of the
Collection Period), (ii) the Program Fee, (iii) the Facility Fee, (iv) the
Servicing Fee and (v) the premium payable to the Surety Provider pursuant
to Section 3.02(d)(ii) of the Insurance Agreement (in each case
expressed on an annualized percentage basis).

 

“Portfolio Yield”
means for any Collection Period, the weighted average interest rate on all
Accounts that are part of the Collateral as of the last day of such Collection
Period.

 

“Scheduled Reserve
Account Payment” means, (x) on any Remittance Date other than such a
Remittance Date described in clause (y) below and on the Facility
Termination Date, 50% of the Available Collections remaining after Available Collections
are applied pursuant to clauses (i) through (v) of Section 4.1(d) of
the CTA Agreement; provided, however, if after the 15th Remittance
Date following the Closing Date but prior to a Take-Out or after the 6th
Remittance Date following the most recent Take-Out, the Reserve Account Balance
is below the Specified Reserve Account Requirement for three consecutive
Collection Periods or following the occurrence of a Reserve Account Event, the
Scheduled Reserve Account Payment shall mean 100% of the Available Collections
remaining after application pursuant to such clauses (i) through (v) of
Section 4.1(d) of the CTA Agreement and (y) on any Remittance
Date after a Take-Out has occurred and on which no Loans are outstanding as of
the close of business on such Remittance Date and all amounts payable to the
Surety Provider under the CTA Agreement, the Policy and the Insurance Agreement
have been paid, zero.

 

“Specified Reserve
Account Requirement” means, (x) on any Remittance Date other than such
a Remittance Date described in clause (y) below and on the Facility
Termination Date, the product of 2% and the Net Investment as of the last day
of the related Collection Period (after giving effect to any Loans made on such
date and any reductions in the Net Investment made on such date); provided,
however, that following the occurrence of a Reserve Account Event, and for so
long as such Reserve Account Event is continuing, the Specified Reserve Account
Requirement shall be equal to the product of 4% and the Net Investment as of
the last day of the related Collection Period (after giving effect to any Loans
made on such date and any reductions of the Net Investment made on such date)
and (y) on any Remittance Date after a Take-Out has occurred and on which
no Loans are outstanding as of the close of business on such Remittance Date,
and all amounts payable to the Surety Provider under the CTA Agreement, the
Policy and the Insurance Agreement have been paid, zero.

 

8

 

“Scheduled Termination
Date” means July 28, 2008, or such later date to which the Scheduled
Termination Date may be extended by the Agent, the Borrower, the Surety
Provider and some or all of the Bank Investors, each in its sole discretion,
pursuant to Section 2.16 of the Loan Agreement.

 

Section 1.02.  Additional Definitions to be Added to the Loan Agreement.  The following definitions are hereby added to
Annex A of the Loan Agreement:

 

“Account Value”
means, with respect to any Account, (i) if the Account was purchased by
Walter Mortgage Company, the value of the related Mortgaged Property as
determined by an independent appraiser in a written appraisal performed in
connection with the origination or acquisition of such Account or as determined
by a broker price opinion, or (ii) if the Account was not purchased by
Walter Mortgage Company, the sum of: (A) the value of the raw land
component of the related Mortgaged Property determined by a field
representative of the Servicer or by an independent appraiser in a written
appraisal performed in connection with the origination of the Account, plus (B) the
sale price of the dwelling constructed on such related raw land.

 

“Escrow Account”
means the Eligible Bank Account or Eligible Bank Accounts created and maintained
pursuant to Section 2.16 of the Master Servicing Agreement.

 

“Escrow Payments”
means the amounts constituting ground rents, taxes, assessments, water rates,
mortgage insurance premiums, fire and hazard insurance premiums and other
payments required to be escrowed by the applicable Obligor pursuant to any
Mortgage.

 

“Insolvent” has
the meaning provided in Section 101(32) of the U.S. Bankruptcy Code.

 

“Loan-to-Value
Ratio” means, as of any date of determination, with respect to any
Account, the ratio of (i) the Principal Balance thereof, to (ii) the
Account Value on such date.

 

“Ninety-Percent
Complete Account” means an Account the related dwelling of which has, at a
minimum, a completed interior except for interior paint, floor coverings and
utility hook ups.

 

“Parity Deficiency Amount”
means, with respect to any Remittance Date prior to the Facility Termination
Date, after giving effect to all payments to be made in reduction of the Net
Investment pursuant to Section 2.6(d) of the Loan Agreement and Section 4.1(c) and
4.1(d) of the CTA Agreement on or prior to such Remittance Date, the
excess, if any, of the remaining unpaid Net Investment over the aggregate
Principal Balance as of such Remittance Date of the Accounts pledged to the
Trustee under the CTA Agreement; provided, however, that for purposes of this
definition, the Principal Balance of any Account that is 120 or more days
delinquent shall be deemed to be zero.

 

“Purchased Account”
means an Account which is not directly originated by the Originator or an
Eligible Originator but that is acquired by the Originator or an Eligible
Originator from an unaffiliated third-party.

 

9

 

“Seasoning” means,
with respect to any Account as of any date of determination, the period of time
from: (a) with respect to each Purchased Account, the date of the
origination of such Purchased Account to such date of determination; or (b) with
respect to all Accounts which are not Purchased Accounts, the date of the
acquisition of such Account by the Trust to such date of determination.

 

Section 1.03.  Other Definitions. 
Except as otherwise amended or added pursuant to this Article, all
defined terms used in this Amendment shall have the meanings assigned to such
terms in Annex A of the Loan Agreement.

 

ARTICLE
II

 

ADDITION OF JIM WALTER HOMES OF ARKANSAS, INC.

 

Section 2.01. 
Addition of Jim Walter Homes of Arkansas, Inc. as an Eligible
Originator.  As of the date hereof, Jim Walter Homes of
Arkansas, Inc. shall be a party to the DAT Agreement, the Insurance
Agreement and each other applicable Transaction Document as an Eligible
Originator.  Jim Walter Homes of Arkansas, Inc.
hereby: (a) confirms that it has received a copy of the DAT Agreement, the
Insurance Agreement and each other applicable Transaction Document; (b) agrees
to be bound by all of the terms of the DAT Agreement, the Insurance Agreement
and each other Transaction Document applicable to an Eligible Originator; (c) agrees
to perform all obligations and duties required of an Eligible Originator under
the DAT Agreement, the Insurance Agreement and each other applicable
Transaction Document; (d) makes each of the representations and warranties
attributed to it in such documents as of the date of this Amendment; and (e) specifies
as its address for notices the office set forth on Schedule I hereto.

 

ARTICLE
III

ADDITIONAL AMENDMENTS TO THE TRANSACTION DOCUMENTS

 

Section 3.01.  Amendment to Section 2.3(a) of the
Loan Agreement.  Section 2.3(a) of the Loan
Agreement is amended to reduce from $100,000 to $25,000 the integral multiples
in excess of $1,000,000 the Borrower is permitted to request with respect to
the amount of a Loan.

 

Section 3.02.  Amendment to Section 4.2 of the Loan
Agreement.  A new subsection (n) is added to Section 4.2
of the Loan Agreement providing as follows: “(n)  the amount on deposit in
the Reserve Account shall equal the Specified Reserve Account Requirement.”.

 

Section 3.03.  Amendment to Section 6.1 of the Loan Agreement.  Section 6.1(i) of the Loan
Agreement is hereby amended in its entirety to read as follows:

 

“The amount on deposit in the Reserve Account fails to
reach the Specified Reserve Account Requirements on or prior to the 15th
Remittance Date following the Closing Date or on or prior to the sixth
Remittance Date following a Reserve Account Event; provided that (i) for
the period extending six (6) Remittance Dates following each Take-Out,
there shall be no Event of Default under this

 

10

 

clause (i) unless the amount on deposit in the
Reserve Account shall fail to be equal to or greater than the sum of (A) the
Scheduled Reserve Account Payment for such Remittance Date and (B) $1,000,000;
provided, further, however, that during any time following a
Take-Out which reduces the Net Investment to zero, and so long as no amounts
are due to the Surety Provider under the CTA Agreement or the Policy and prior
to the date the first Loan after such Take-Out is made hereunder, there shall
be no Event of Default under this clause (i) if the amount on deposit in
the Reserve Account shall be less than the amounts previously specified in this
clause (i), including if such amount is zero;”

 

Section 3.04.  Amendment to Section 8.2 of the Loan Agreement.  A new sentence is added to the end of Section 8.2(b) of
the Loan Agreement as follows: “No material amendment to any provision of this
Loan Agreement shall be effective without prior written notice thereof being
provided to the Rating Agencies.”  The
parties hereto agree that this provision shall only apply with respect to
amendments occurring after the date hereof.

 

Section 3.05.  Amendment to Section 3.02(d)(i) of the Insurance
Agreement.  Section 3.02(d)(i) of
the Insurance Agreement is amended to replace the first sentence thereof in its
entirety to read as follows:

 

“On each Remittance Date until the Policy terminates in accordance with
its terms, the Trustee on behalf of the Borrower shall distribute to the
Insurer, in consideration of the issuance by the Insurer of the Policy, a
premium payable in arrears for the prior calendar month, in an amount equal to
..15% per annum (calculated on the actual number of days elapsed and a 360-day
year) of the average amount of the Net Investment during such month.”

 

Section 3.06.  Amendment to Section 4.1(d)(vi) of
the CTA Agreement.  Section 4.1(d)(vi) of the CTA
Agreement is hereby amended in its entirety to read as follows:

 

“Sixth, prior to the
Facility Termination Date, on any Remittance Date when any Loans are outstanding
or if any amounts due to the Surety Provider remain unpaid, to the Reserve
Account, in an amount equal to the greater of (A) the lesser of (i) the
Scheduled Reserve Account Payment for such Remittance Date and (ii) the
amount necessary to increase the amount on deposit in the Reserve Account to
the Specified Reserve Account Requirement for such Remittance Date and (B) the
amount necessary to increase the amount on deposit in the Reserve Account to
$1,000,000;”

 

Section 3.07.  Amendment to Section 4.1(d)(x) of the CTA Agreement.  Section 4.1(d) of the CTA Agreement
is hereby amended to delete clause (x) (clause “Tenth”) in
its entirety.

 

Section 3.08.  Amendment to Section 4.5(g) of the CTA Agreement.  In addition, the Insurer may, at
its sole option, at any time following the Facility Termination Date, direct
the Trustee to submit a claim for payment hereunder in respect of any Parity
Deficiency Amount (without giving effect to the language in such term such that
the term only has meaning prior to the Facility Termination Date).  For the avoidance of doubt, the Insurer’s
ability to exercise such

 

11

 

option shall not limit
the ability of the Trustee to submit a claim hereunder, to the extent that the
Trustee’s claim is otherwise permitted in accordance with the terms hereof, and
so long as such claim submitted by the Trustee is with respect to a different
claim than the above-referenced claim of the Insurer.

 

Section 3.09.  Amendment to Section 2.7(a) of the Servicing Agreement.  Section 2.7(a) of the Servicing
Agreement is hereby amended to replace the first sentence thereof in its
entirety to read as follows:

 

“In accordance with the
servicing standards set forth in Section 2.1, the Master Servicer shall
use its reasonable best efforts to cause each Obligor to make all payments in
respect of his or her Account to the Master Servicer and to collect all
payments (including amounts for taxes, insurance and other Escrow Payments, as
applicable) called for under the terms and provisions of the Accounts (other
than any fees and charges the collectibility of which is not legally
enforceable).”

 

Section 3.10.  Amendment to Section 2.7(b) of the Servicing Agreement.  Section 2.7(b) of the Servicing
Agreement is hereby amended to replace the second sentence thereof in its
entirety to read as follows:

 

“On or before the Closing
Date, and as received thereafter, the Master Servicer shall cause all payments
received with respect to the Accounts, other than Escrow Payments, to be
deposited into the Holding Account.”

 

Section 3.11.  Amendment to Section 5.1(b) of the Servicing Agreement.  Section 5.1(b) of the
Servicing Agreement is hereby amended to replace the first sentence thereof in
its entirety to read as follows:

 

“If a Servicer Default shall have occurred and be continuing, the
Borrower (with the prior written consent of the Controlling Party) or the
Trustee (with the prior written consent of the Controlling Party) (subject to
the provisions of the CTA Agreement) or the Controlling Party may, by notice
given to the Master Servicer (with a copy to the party not giving such notice),
terminate all of the rights and powers of the Master Servicer under this Master
Servicing Agreement (“Master Servicer Termination”), including without
limitation all rights of the Master Servicer to receive the Servicing Fee.”

 

Section 3.12.  Amendment to Section 7.1(b) of the Servicing Agreement.  Section 7.1(b) of the
Servicing Agreement is hereby amended to replace the first sentence thereof in
its entirety to read as follows:

 

“Following an Event of Default under the Loan Agreement and foreclosure
upon the Collateral pursuant to the CTA Agreement, the successor to the rights
of the Borrower (with
the prior written consent of the Controlling Party) (including, without
limitation, the Trustee, with the prior written consent of the Controlling Party, or the
Controlling Party) shall have the right to terminate this Master Servicing
Agreement by notice to the Master Servicer and the Borrower, within

 

12

 

90 days after the date such successor shall
have succeeded to such rights of the Borrower.”

 

Section 3.13.  Additional Provisions to the Servicing Agreement.  The following Sections are hereby
added to the Servicing Agreement in the appropriate numerical order.

 

“Section 2.16.
Establishment of Escrow Accounts; Deposits in Escrow Accounts. The
Master Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage which constitute Escrow Payments separate and apart
from any of its own funds and general assets and shall establish and maintain
one or more escrow accounts, in the form of time deposit or demand accounts
(each an “Escrow Account” and collectively, the “Escrow Accounts”) and in
accordance with all applicable laws, rules and regulations.  A copy of the letter agreement(s) governing
such Escrow Account(s) between the Master Servicer and the depositary
institution(s) with which such Escrow Account(s) are maintained shall
be furnished to the Trustee upon request. 
Each Escrow Account shall be an Eligible Bank Account.  The Master Servicer shall deposit in the
Escrow Account or Escrow Accounts on a daily basis, within two Business Days of
receipt, and retain therein, all Escrow Payments collected on account of the
Purchased Accounts, for the purpose of effecting timely payment of any such
items as required under the terms of this Agreement.  The Master Servicer shall make withdrawals
therefrom only to effect such payments as are required under this Agreement,
and for such other purposes as shall be set forth in, or in accordance with, Section 2.17.  To the extent permitted by all applicable
laws, rules or regulations, the Master Servicer shall be entitled to
retain any interest paid on funds deposited in the Escrow Account by the
depository institution other than interest on escrowed funds required by law to
be paid to the Obligor and, to the extent required by the related Mortgage, the
Master Servicer shall pay interest on escrowed funds to the Obligor
notwithstanding that the Escrow Account is non-interest bearing or that
interest paid thereon is insufficient for such purposes.  The Master Servicer shall prepare and deliver
to each Obligor all statements required to be delivered to the Obligor under
applicable laws, rules and regulations regarding the use of Escrow
Payments and any other statements so required. The Master Servicer shall use
Escrow Payments only in accordance with applicable laws, rules and
regulations.

 

Section 2.17.
Permitted Withdrawals From Escrow Accounts. Withdrawals from the Escrow
Accounts may be made by the Master Servicer (i) to effect timely payments
of ground rents, taxes, assessments, water rates, fire, flood and hazard
insurance premiums and comparable items in a manner and at a time that assures
that the lien priority of the Mortgage is not jeopardized (or, with respect to
the payment of taxes, in a manner and at a time that avoids the loss of the
Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien), (ii) to reimburse the Master Servicer for any advance made by it
with respect to a related Mortgage but only from amounts received on the
related Mortgage which represent Escrow Payments thereunder with respect to
taxes and assessments and with respect to hazard insurance, (iii) to
refund to the Obligor any funds as may

 

13

 

be determined to be
overages, (iv) for transfer to the Holding Account in accordance with the
terms of this Agreement, (v) to pay to the Master Servicer, or to the
Obligor to the extent required by the related Mortgage, any interest paid on
the funds deposited in the Escrow Account or (vi) to clear and terminate
the Escrow Account on the termination of this Agreement. Notwithstanding the
foregoing, the Master Servicer shall withdraw funds from an Escrow Account,
only for payments of amounts, and only to the extent and at times permitted by
applicable laws, rules and regulations. In the event the Master Servicer
shall deposit in the Escrow Account any amount not required to be deposited
therein, it may at any time withdraw such amount from the Escrow Account, any
provision herein to the contrary notwithstanding.”

 

Section 3.14.  Amendment to Section 3(c) of the DAT Agreement.  Section 3(c) of the DAT Agreement
is hereby amended to add a new Section 3(c)(xviii) providing: “(xviii)  The Originator and Eligible Originators are
not subject to any Proceedings under the Bankruptcy Code and the transactions
under this DAT Agreement and the other Transaction Documents do not and will
not render the Originator or any Eligible Originator Insolvent.”

 

Section 3.15.  Amendment to Section 3(c) of the BAT Agreement.  Section 3(c) of the BAT Agreement
is hereby amended to add a new Section 3(c)(xxi) providing: “(xxi)  The Depositor is not subject to any
Proceedings under the Bankruptcy Code and the transactions under this BAT
Agreement and the other Transaction Documents do not and will not render the
Depositor Insolvent.”

 

Section 3.16.  Borrower Payment Information. 
The notice and payment information of the Borrower and Surety Provider
shall be as set forth on Schedule I hereto.

 

ARTICLE
IV

 

CONDITIONS PRECEDENT

 

Section 4.01.  This Amendment.  The
Agent, each Managing Agent and the Surety Provider shall have received
counterparts of this Amendment, duly executed by each of the parties hereto.

 

Section 4.02.  Officer’s Certificates. 
The Agent, each Managing Agent and the Surety Provider shall have
received Officer’s Certificates from Jim Walter Homes of Arkansas, Inc.,
with respect to this Amendment and the transactions contemplated hereby.

 

Section 4.03.  Opinions of Counsel. 
The Agent, each Managing Agent and the Surety Provider shall have
received Opinions of Counsel of special counsel to the Borrower, the
Originator, the Eligible Originators and the Depositor covering certain
corporate, enforceability, perfection, priority, true sale and
non-consolidation matters in a form reasonably acceptable to such parties.

 

Section 4.04.  UCC Search Results. 
The Agent, each Managing Agent and the Surety Provider shall have
received lien searches with respect to Jim Walter Homes of Arkansas, Inc.,
in form and substance reasonably satisfactory to the Agent and the Surety
Provider.

 

14

 

Section 4.05.  UCC Financing Statements. 
The Agent, each Managing Agent and the Surety Provider shall have
received financing statements on Form UCC-1 naming Jim Walter Homes of
Arkansas, Inc. as debtor/seller, the Depositor as assignor secured party
and the Trustee as assignee secured party.

 

Section 4.06.  Fees.  All amounts,
fees and expenses required to be paid on or prior to the date hereof pursuant
to a Fee Letter shall have been paid and Mayer, Brown, Rowe & Maw LLP,
special counsel to the Groups, shall have been paid its reasonable fees and
out-of-pocket expenses, and Dewey Ballantine LLP, counsel to the Surety
Provider, shall have been paid its reasonable fees and out of pocket expenses.

 

Section 4.07.  Confirmation Letters. 
Confirmation letters shall have been received by the Agent and the
Surety Provider from Moody’s and Standard & Poor’s confirming the
shadow ratings on the Note.

 

Section 4.08.  Other.  The Agent,
each Managing Agent and the Surety Provider shall have received such other
approvals, documents, instruments, certificates and opinions as they may
reasonably request.

 

ARTICLE
V

MISCELLANEOUS

 

Section 5.01.  Transaction Documents in Full Force and Effect as Amended.  Except as specifically amended hereby, all of
the terms and conditions of the Transaction Documents shall remain in full
force and effect.  All references to any
Transaction Document in any other document or instrument shall be deemed to mean
such Transaction Document, as amended by this Amendment.  This Amendment shall not constitute a
novation of the Transaction Documents, but shall constitute an amendment
thereof.  The parties hereto agree to be
bound by the terms and obligations of the Transaction Documents, as amended by
this Amendment, as though the terms and obligations of this Amendment were set
forth in the Transaction Documents.

 

Section 5.02.  Prior Understandings. 
This Amendment sets forth the entire understanding of the parties
relating to the subject matter hereof, and supersedes all prior understandings
and agreements, written or oral.

 

Section 5.03.  Counterparts.  This
Amendment may be executed in any number of counterparts and by separate parties
hereto on separate counterparts, each of which when executed shall be deemed an
original, but all such counterparts taken together shall constitute one and the
same instrument.

 

Section 5.04.  GOVERNING LAW.  EXCEPT
WITH RESPECT TO ANY SECTIONS HEREIN TO THE EXTENT THAT THEY AFFECT THE TRUST
AGREEMENT, WHICH SECTIONS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
DELAWARE, THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

 

15

 

Section 5.05.  Limitation of Liability. 
It is expressly understood and agreed by the parties hereto that (a) this
Amendment is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as trustee of the Borrower, in the
exercise of the powers and authority conferred and vested in it under the Trust
Agreement, (b) each of the representations, undertakings and agreements
herein or therein made on the part of the Borrower is made and intended not as
personal representations, undertakings and agreements by Wilmington Trust
Company but is made and intended for the purpose of binding only the Borrower
and (c) under no circumstances shall Wilmington Trust Company be
personally liable for the payment of any indebtedness or expenses of the
Borrower or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Borrower under
this Amendment.

 

Section 5.06.  Representations and Warranties.  The Borrower hereby certifies that (i) the
representations and warranties made by it in Section 3.1 of the Loan
Agreement are true and correct as of the date hereof, as though made on and as
of the date hereof and (ii) as of the date hereof, there is no Event of
Default or event which, with the passage of time or the giving of notice, could
result in an Event of Default.

 

Section 5.07.  Waiver of Notice. 
Each of the parties hereto hereby waives any notice in connection with
the execution and delivery of this Amendment.

 

[Signature pages omitted]

 

16

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