Tax Indemnification Agreement

FORM OF
TAX INDEMNIFICATION
AGREEMENT


AGREEMENT, dated as of , 1999, by and among American Home Mortgage Holdings, Inc., a Delaware corporation (the "Company"), American
------- Home Mortgage Corp., a New York corporation ("S Sub"), and Michael Strauss, the
----- sole shareholder of each of the Company and S Sub (the "Shareholder").
-----------


Preliminary Statement


Shareholder owns 100 shares of Common Stock, par value $0.01 per share (the "Company Common Stock"), of the Company and 200 shares of Common Stock,
-------------------- without par value (the "S Sub Common Stock"), of S Sub. The S Sub has
------------------ distributed to Shareholder, in the form of a promissory note, substantially all previously earned and undistributed taxable S corporation earnings through the date before the date of the Transfer and the closing of the initial public offering (the "IPO") the Company intends to make of its Company Common Stock. Immediately prior to the closing of the IPO, Shareholder will exchange his shares of S Sub Common Stock for an aggregate of 4,999,900 shares of Company Common Stock (the "Exchange"). As a result of the Exchange, S Sub will no
-------- longer be treated as an S corporation under the Internal Revenue Code of 1986, as amended. The parties hereby desire to set forth their respective rights and obligations following the IPO and hereby agree as follows.


1. Definitions.
-----------


"Affiliate" shall mean, with respect to another entity, an entity that
--------- directly or indirectly controls or is controlled by, or is under the direct or indirect control of the same person as, such other entity.


"Code" shall mean the Internal Revenue Code of 1986, as amended.
----


"Company" shall mean American Home Mortgage Holdings, Inc.
-------


"Company Common Stock" shall have the meaning ascribed to such term in
-------------------- the Preliminary Statement.


"S Sub" shall mean American Home Mortgage Corp.
-----


"S Sub Common Stock" shall have the meaning ascribed to such term in
------------------ the Preliminary Statement.


"Shareholder" shall mean Michael Strauss.
-----------


"Shares" shall mean the shares of Company Common Stock owned by
------ Shareholder.
"Straddle Period" shall mean any and all taxable periods which
--------------- includes, but does not end, on the day before the Transfer Date.


"Tax" shall mean all federal, state, county, local, municipal, foreign
--- and other taxes, assessments, duties or similar charges of any kind whatsoever, including all corporate franchise, income, sales, use, ad valorem, receipts, value added, profits, license, withholding, payroll, employment, excise, premium, property, customs, net worth, capital gains, transfer, stamp, documentary, social security, environmental, alternative minimum, occupation, recapture, and other taxes, and including all interest, penalties and additions imposed with respect to such amounts, and all amounts payable pursuant to any agreement or arrangement with respect to Taxes.


"Taxing Authorities" shall mean all federal, state, county, local,
------------------ municipal, foreign or other governmental agency or organization.


"Tax Returns" shall mean all reports, estimates, information
----------- statements and returns relating to, or required to be filed in connection with, any Taxes pursuant to the statutes, rules and regulations of any federal state, local or foreign government taxing authority.


"Transfer" shall mean the transfer of the shares of American Home
-------- Mortgage Corp. to American Home Mortgage Holdings, Inc. on the Transfer Date.


"Transfer Date" shall mean the date on which the shares of American
------------- Home Mortgage Corp. are transferred to American Home Mortgage Holdings, Inc. by Michael Strauss.


2. Obligations After The Transfer Of The Shares.
--------------------------------------------


2.1 Closing of Tax Year. The Shareholder, the S Sub. and the Company hereby
------------------- acknowledge that, effective as of the passing of title to the Shares on the Transfer Date and the IPO, the S Sub will cease to be an S corporation under the Code and the taxation statutes of all states in which an "S" election is in effect. As a result, the S corporation taxable year of the S Sub will terminate as of the day before the transfer of the Shares and the S Sub will be required to file Tax Returns for the period beginning on the first day of its then current fiscal year and ending on the day before the transfer of the Shares (the "Final S Tax Period"). The Shareholder, the S Sub and the Company hereby
------------------ agree that the S Sub shall be treated as an S corporation for federal income Tax purposes, and by all states in which an "S" election is in effect, for the Final S Tax Period of the S Sub.


2.2 Tax Return Filings. The Company shall, or shall cause the S Sub to, timely
------------------ prepare and file with the relevant Taxing Authorities all Tax Returns of the S Sub, whether the due date for filing of which, determined taking into account Tax extensions, is before or after the transfer of the Shares, including the Tax Returns for the Final S Tax Period of the S Sub, and including Tax Returns for the Straddle Period; provided that the Company or the S Sub shall furnish the
-------- ---- Shareholder with a copy of such Tax Returns that the Company or the S Sub is preparing and filing (or causing to be prepared and filed) at least fifteen (15) days before such Tax Returns are due, and no such Tax Returns shall be filed without the prior written consent of the Shareholder, which consent shall not be unreasonably withheld. Any Tax Returns


-2-


that the Company or the S Sub is preparing and filing (or causing to be prepared and filed) shall be prepared on a basis consistent with the past practices. All Tax Returns for a taxable period including the Straddle Period shall be filed on the basis that the relevant taxable period ended as of the close of business on the day before the Transfer Date, unless the relevant Taxing Authority will not accept such a Tax Return or otherwise required by law. Whenever it is necessary to determine the liability for Taxes attributable to tax periods prior to the Transfer Date (such periods, "Pre-Transfer Tax Periods" ...