REVOLVING CREDIT AGREEMENT

Revolving Credit Agreement

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KEYBANK NATIONAL ASSOCIATION

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Title: REVOLVING CREDIT AGREEMENT
Date: 8/1/2007

REVOLVING CREDIT AGREEMENT, Parties: keybank national association

Exhibit 10.1

Execution Version

REVOLVING CREDIT AGREEMENT

This REVOLVING CREDIT AGREEMENT is made as of the 26th day of July, 2007,

by and among AMERICAN CHURCH MORTGAGE COMPANY, a Minnesota corporation (the

"Borrower"), KEYBANK NATIONAL ASSOCIATION, a national banking association

("KeyBank"), the other lending institutions which may become parties hereto

pursuant to ss.18 (collectively, the "Banks"), and KEYBANK NATIONAL ASSOCIATION,

a national banking association, as Agent for the Banks (the "Agent").

RECITALS

WHEREAS, the Borrower has requested that the Banks make available to it a

revolving credit facility; and

WHEREAS, the Banks are willing to make such revolving credit facility

available to Borrower upon the terms and conditions contained herein;

NOW, THEREFORE, in consideration of the terms and conditions herein, the

parties hereto hereby agree as follows:

1. DEFINITIONS AND RULES OF INTERPRETATION.

1.1 Definitions.

The following terms shall have the meanings set forth in this ss.1 or

elsewhere in the provisions of this Agreement referred to below:

Actual Loan Loss Reserve Balance. The actual loan loss reserve determined

in accordance with generally accepted accounting principles reported on the

Borrower's balance sheet.

Adjusted EBITDA. With respect to the Borrower on a Consolidated basis with

its Subsidiaries for any period, Net Income for such period, plus Interest

Expense, federal, state and local income taxes, and depreciation and

amortization expense for such period (in each case to the extent deducted in

calculating Net Income), less the Loan Loss Reserve for such period, to the

extent not already deducted in determining Net Income. Adjusted EBITDA shall

also exclude, without duplication, any gains or losses relating to OREO and any

gains or losses resulting from the sale of real property.

Affiliate. An Affiliate, as applied to any Person, shall mean any other

Person directly or indirectly controlling,

<PAGE>

controlled by, or under common control with, that Person. For purposes of this

definition, "control" (including, with correlative meanings, the terms

"controlling", "controlled by" and "under common control with"), as applied to

any Person, means (a) the possession, directly or indirectly, of the power to

vote ten percent (10%) or more of the stock, shares, voting trust certificates,

beneficial interest, partnership interests, member interests or other interests

having voting power for the election of directors of such Person or otherwise to

direct or cause the direction of the management and policies of that Person,

whether through the ownership of voting securities or by contract or otherwise,

or (b) the ownership of (i) a general partnership interest, (ii) a managing

member's interest in a limited liability company or (iii) a limited partnership

interest or preferred stock (or other ownership interest) representing ten

percent (10%) or more of the outstanding limited partnership interests,

preferred stock or other ownership interests of such Person. Without limiting

the generality of the foregoing portion of this definition, as of the Agreement

Date, AIGI, CLA, Apostle Holdings, Corp., Philip J. Myers, Charter Oak American

Church Holdings, LLC and Charter Oak Capital Partners, L.P. are each deemed to

be Affiliates of the Borrower.

Agent. KeyBank, acting as agent for the Banks, its successors and assigns.

Agent's Head Office. The Agent's head office located at 127 Public Square,

Cleveland, Ohio 44114, or at such other location as the Agent may designate from

time to time by notice to the Borrower and the Banks.

Agent's Special Counsel. Powell Goldstein LLP or such other counsel as may

be approved by the Agent.

Agreement. This Revolving Credit Agreement, including the Schedules and

Exhibits hereto.

Agreement Regarding Fees. The letter agreement dated July 16, 2007,

executed and delivered by the Agent and the Borrower, amending and restating the

March 21, 2007 letter agreement between such parties regarding certain fees

payable by the Borrower in connection with this Agreement.

AIGI. American Investors Group, Inc., a Minnesota corporation.

Applicable Margin. With respect to any Loan, a rate per annum determined in

accordance with this definition. The initial "Applicable Margin" shall be a rate

per Per Annum Per Annum annum equal to Percentage for Percentage 1.875% for

LIBOR Loans for Base LIBOR Loans and Rate Loans a rate per annum of 0.50% for

Base Rate Loans. As of the end of each fiscal quarter of the Borrower

(commencing June 30, 2007), the Applicable Margin shall be adjusted upward or

downward, as applicable, to the respective amounts shown in the schedule below

based on the Consolidated Total Leverage Ratio, tested on an average daily basis

for the most recent fiscal quarter of the Borrower and its Subsidiaries. For

purposes hereof, any such adjustment in the respective amounts of the Applicable

Margin, whether upward or downward, shall be effective ten (10) Business Days

after the Borrowing Base Certificate of the Borrower and its Subsidiaries with

respect to the final month of such fiscal quarter has been delivered to and

received by the Agent in accordance with the terms of 7.4(f) hereof; provided,

however, if any such Borrowing Base Certificate is not delivered in a timely

manner as required under the terms of said Section, the Applicable Margin from

the date such Borrowing Base Certificate was

<PAGE>

due until ten (10) Business Days after Agent and Lenders receive the same will

be the highest level set forth below for the Applicable Margin.

<TABLE>

Total Leverage Ratio Per Annum Percentage for Per Annum Percentage for Base

LIBOR Loans Rate Loans

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

Greater than or equal to 60% 1.875% 0.50%

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

Less than 60% but greater than or

equal to 55% 1.50% 0.25%

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

Less than 55% 1.35% 0.00%

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

</TABLE>

Appraisal. With respect to each Mortgage Loan, an appraisal of the value of

the Mortgage Loan Collateral therefor, determined on a fair value basis,

performed by an independent appraiser approved by the Borrower who is not an

employee of the Mortgage Loan Obligor, the Agent or a Bank, the form and

substance of such appraisal and the identity of the appraiser to be in

compliance with all regulatory laws and policies (both regulatory and internal)

applicable to the Borrower and otherwise acceptable to the Agent.

Appraised Value. The fair value of a parcel of Mortgage Loan Collateral

determined by the most recent Appraisal of such parcel or update obtained

pursuant to ss.7.16(e), subject, however, to such changes or adjustments to the

value determined thereby as may be required by the appraisal department of the

Borrower or the Agent.

Arranger. KeyBanc Capital Markets.

Assignment and Acceptance Agreement. See ss.18.1.

Assignment of Hedge. An Assignment of Hedge Agreement, made by the Borrower

to the Agent for the benefit of the Banks pursuant to which the Interest Rate

Contract described in ss.7.13 is pledged as security for the Obligations, as the

same may be modified or amended, such assignment to be in form and substance

satisfactory to the Agent, and any consents, acknowledgments or financing

statements that may be delivered in connection therewith as required by Agent.

Average Invested Assets. For any period, the average of the aggregate book

values of the assets of the Borrower invested, directly or indirectly, in the

Mortgage Loans (or an interest in the Mortgage Loans) and the Excluded Mortgage

Loans, before reserves for depreciation or bad debts or other similar non-cash

reserves, computed by taking the average of such values at the end of each month

during such period.

Balance Sheet Date. December 31, 2006.

Banks. KeyBank, the other Banks which are a party to this Agreement and any

other Person who becomes an assignee of any rights of a Bank pursuant to ss.18.

<PAGE>

Base Rate. The greater of (a) the variable annual rate of interest

announced from time to time by Agent at Agent's Head Office as its "prime rate"

or (b) one-half of one percent (0.5%) above the Federal Funds Effective Rate

(rounded upwards, if necessary, to the next one-eighth of one percent). The Base

Rate is a reference rate and does not necessarily represent the lowest or best

rate being charged to any customer. Any change in the rate of interest payable

hereunder resulting from a change in the Base Rate shall become effective as of

the opening of business on the day on which such change in the Base Rate becomes

effective, without notice or demand of any kind.

Base Rate Loans. Those Loans bearing interest calculated by reference to

the Base Rate.

Beacon Bank. As defined in the Lockbox Agreement.

Bond Payors. With respect to any Bonds, all trustees, paying agents, escrow

agents and other persons (other than the applicable Mortgage Loan Obligors)

making payments to or for the account of Borrower in connection with such Bonds.

Bonds. The first mortgage serial bonds of a Mortgage Loan Obligor issued

pursuant to a First Mortgage Indenture, or in the case of the Initial Interim

Loan, first mortgage serial bonds of a Mortgage Loan Obligor, the repayment of

which is secured by a first priority lien on or security title to the real

property owned by such Mortgage Loan Obligor, granted in favor of the trustee

for such bonds, for the pari passu benefit of all holders of such Bonds,

including any Bonds pledged to secure the Initial Interim Loan.

Borrower. As defined in the preamble hereto.

Borrower Party. See ss.12.1(p).

Borrowing Base. At any time with respect to the Borrower, the Borrowing

Base shall be the sum of the book values of the Qualifying Mortgage Loans. To

the extent a Mortgage Loan ceases to be a Qualifying Mortgage Loan or there is a

violation of any of the Borrowing Base limitations described in ss.9.1(c) below,

the non-compliant Mortgage Loan shall be automatically removed from the

Borrowing Base and the Borrowing Base Availability will be recalculated.

Borrowing Base Adjusted EBITDA. For any period, the Adjusted EBITDA

calculated only with respect to Qualifying Mortgage Loans included in the

Borrowing Base. For purposes of calculating the Borrowing Base Adjusted EBITDA,

the Management Fee and the Loan Loss Reserve shall be allocated to Qualified

Mortgage Loans pro rata, in proportion to the respective outstanding principal

balances thereof as of the relevant date of determination.

Borrowing Base Availability. At any time with respect to the Borrower, the

Borrowing Base Availability shall be the lesser of (i) the Total Commitment and

(ii) sixty-five percent (65%) of the Borrowing Base.

Borrowing Base Certificate. See ss. 7.4(f).

<PAGE>

Business Day. Any day on which banking institutions located in the same

city and state as the Agent's Head Office are open for the transaction of

banking business and, in the case of LIBOR Rate Loans, which also is a LIBOR

Business Day.

Change of Control. A Change of Control shall exist upon the occurrence of

one or more of the following:

(a) the Manager shall cease to be the sole manager of Borrower, or the

Management Agreement shall be terminated or not renewed; or

(b) Philip J. Myers shall cease to hold the position of President of the

Borrower or the Manager, or both; or

twenty percent (20%) of the issued and outstanding voting shares of

CLA; or

(d) the occurrence of a "Change of Control" as defined in either of the

Indentures.

CLA. Church Loan Advisors, Inc., a Minnesota corporation.

Closing Date. The first date on which all of the conditions set forth in

ss.10 and ss.11 have been satisfied.

Code. The Internal Revenue Code of 1986, as amended, or any successor

federal tax statute. Any reference to any provision of the Code shall also

include the income tax regulations promulgated thereunder, whether final,

temporary or proposed.

Collateral. All of the property, rights and interests of the Borrower or

any of its Subsidiaries (other than Securitization Subsidiaries) which are or

are intended to be subject to the security interests, liens and collateral

assignments created by the Security Documents, including, without limitation,

the Mortgage Loans, but specifically excluding the Excluded Mortgage Loan

Collateral.

Collateral Agency Agreement. That certain Collateral Agency Agreement dated

of even date herewith by and among Borrower, Agent for the benefit of the Banks,

and the Collateral Agent, as subsequently modified or amended, such agreement to

be in form and substance satisfactory to Agent.

<PAGE>

Collateral Agent. Herring Bank, a Texas state banking institution, or any

successor thereto appointed by Agent.

Collateral Assignment. The Collateral Assignment of Documents, Rights and

Claims dated of even date herewith, made by Borrower in favor of Agent for the

benefit of the Banks, pursuant to which all of the Mortgage Loans shall be

collaterally assigned as security for repayment of the Obligations, as

subsequently supplemented, modified or amended, such collateral assignment to be

in form and substance satisfactory to Agent, and any consents, acknowledgements

or financing statements that may be delivered in connection therewith, as

required by Agent.

Commitment. With respect to each Bank, the amount set forth on Schedule 1

hereto as the amount of such Bank's Commitment to make or maintain Loans to the

Borrower, as the same may be changed from time to time in accordance with the

terms of this Agreement.

Commitment Percentage. With respect to each Bank, the percentage set forth

on Schedule 1 hereto as such Bank's percentage of the aggregate Commitments of

all of the Banks.

Compliance Certificate. See ss.7.4(e).

Compound Bond. A Bond which accrues interest rather than makes periodic

interest payments, and the face amount of which Bond at its maturity is greater

than the face amount at its issuance.

Consolidated or combined. With reference to any term defined herein, that

term as applied to the accounts of a Person and its Subsidiaries, consolidated

or combined in accordance with generally accepted accounting principles.

Consolidated Tangible Net Worth. The amount by which Consolidated Total

Adjusted Tangible Asset Value exceeds Consolidated Total Liabilities, and less

the sum of:

(a) the total book value of all assets of the Borrower and its

Subsidiaries properly classified as intangible assets under generally

accepted accounting principles, including such items as good will, the

purchase price of acquired assets in excess of the fair market value

thereof, trademarks, trade names, service marks, brand names,

copyrights, patents and licenses, and rights with respect to the

foregoing; plus

(b) all amounts representing any write-up in the book value of any assets

of the Borrower or its Subsidiaries resulting from a revaluation

thereof subsequent to the Balance Sheet Date; plus

third parties.

Consolidated Total Adjusted Asset Value. The sum of all assets of the

Borrower and its Subsidiaries determined on a Consolidated basis. The assets of

the Borrower and its Subsidiaries on the consolidated financial statements of

the Borrower and its Subsidiaries shall be adjusted to reflect the Borrower's

allocable share of such asset, for the relevant period or as of the date of

determination, taking into account (a) the relative proportion of each such item

derived from assets directly owned by the Borrower and from assets owned by its

Subsidiaries, and (b) the Borrower's respective ownership interest in its

Subsidiaries.

Consolidated Total Adjusted Tangible Asset Value. Consolidated Total

Adjusted Asset Value less intangible assets, goodwill and OREO.

Consolidated Total Liabilities. All liabilities of the Borrower and its

Subsidiaries determined on a Consolidated basis and all Indebtedness of the

Borrower and its Subsidiaries, whether or not so classified.

<PAGE>

Construction Loan. Shall mean a short-term loan (12 to 18 months maturity)

made to, a Mortgage Loan Obligor to finance new construction of improvements,

typically payable on an interest-only basis with principal due in full at

maturity.

Conversion Request. A notice given by the Borrower to the Agent of its

election to convert or continue a Loan in accordance with ss.4.1.

Debt Certificates. Series A secured investor certificates and Series B

secured investor certificates issued from time to time by the Borrower pursuant

to the Indentures, as the same may be renewed from time to time in accordance

with the provisions of the applicable Indenture (which for purposes of this

Section shall be deemed to include rolling a maturing Series A Debt Certificate

into a Series B Debt Certificate of equal or lesser amount, in accordance with

the terms, and subject to the limitations, of the Indenture pursuant to which

the Series B Debt Certificates were issued).

Default. See ss.12.1

Delinquent Bank. See ss.14.5(c).

Deposit Account Control Agreement. That certain Deposit Account Control

Agreement dated of even date herewith, by and among Beacon Bank, the Borrower

and the Agent, as the same may be modified or amended hereafter.

Directions. See ss.27(b).

Distribution. With respect to any Person, the declaration or payment of any

cash, cash flow, dividend or distribution on or in respect of any shares of any

class of capital stock or other beneficial interest of such Person other than

dividends or distributions payable solely in equity securities of such Person;

the purchase, redemption, exchange or other retirement of any shares of any

class of capital stock or other beneficial interest of such Person, directly or

indirectly through a Subsidiary of such Person or otherwise; the return of

capital by such Person to its shareholders, partners or other owners as such; or

any other distribution on or in respect of any shares of any class of capital

stock or other beneficial interest of such Person.

Dollars or $. Dollars in lawful currency of the United States of America.

Domestic Lending Office. Initially, the office of each Bank designated as

such in Schedule 1 hereto; thereafter, such other office of such Bank, if any,

located within the United States that will be making or maintaining Base Rate

Loans.

Drawdown Date. The date on which any Loan is made or is to be made, and the

date on which any Loan which is made prior to the Maturity Date is converted or

combined in accordance with ss.4.1.

Eligible Assignee: (i) Any Bank; (ii) any commercial bank, savings bank,

savings and loan association or similar financial institution which (A) has

total assets of Five Billion Dollars ($5,000,000,000) or more, (B) is "well

capitalized" within the meaning of such term under the regulations promulgated

under the auspices of the Federal Deposit Insurance Corporation

<PAGE>

Improvement Act of 1991, (C) in the sole judgment of the Agent, is engaged in

the business of lending money and extending credit, and buying loans or

participations in loans under credit facilities substantially similar to those

extended under this Agreement, and (D) in the sole judgment of the Agent, is

operationally and procedurally able to meet the obligations of a Bank hereunder

to the same degree as a commercial bank; (iii) any insurance company in the

business of writing insurance which (A) has total assets of Five Billion Dollars

($5,000,000,000) or more (B) is "best capitalized" within the meaning of such

term under the applicable regulations of the National Association of Insurance

Commissioners, and (C) meets the requirements set forth in subclauses (C) and

(D) of clause (ii) above; and (iv) any other financial institution having total

assets of Five Billion Dollars ($5,000,000,000) or more (including a mutual fund

or other fund under management of any investment manager having under its

management total assets of Five Billion Dollars ($5,000,000,000) or more) which

meets the requirement set forth in subclauses (C) and (D) of clause (ii) above;

provided that each Eligible Assignee must (w) be organized under the Laws of the

United States of America, any state thereof or the District of Columbia, or, if

a commercial bank, be organized under the Laws of the United States of America,

any state thereof or the District of Columbia, the Cayman Islands or any country

which is a member of the Organization for Economic Cooperation and Development,

or a political subdivision of such a country, (x) act under the Loan Documents

through a branch, agency or funding office located in the United States of

America, (y) be exempt from withholding of tax on interest and deliver the

documents related thereto pursuant to the Internal Revenue Code as in effect

from time to time and (z) not be the Borrower or an Affiliate of the Borrower.

Employee Benefit Plan. Any employee benefit plan within the meaning of

ss.3(3) of ERISA maintained or contributed to by the Borrower or any ERISA

Affiliate, other than a Multiemployer Plan.

Environmental Laws. Collectively, the Resource Conservation and Recovery

Act ("RCRA"), the Comprehensive Environmental Response, Compensation and

Liability Act of 1980, as amended ("CERCLA"), the Superfund Amendments and

Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal

Clean Air Act, the Toxic Substances Control, or any state or local statute,

regulation, ordinance, order or decree relating to the environment.

Equity Offering. The issuance and sale by the Borrower of any equity

securities of the Borrower.

ERISA. The Employee Retirement Income Security Act of 1974, as amended and

in effect from time to time.

ERISA Affiliate. Any Person which is treated as a single employer with the

Borrower under ss.414 of the Code.

Event of Default. See ss.12.1.

Excluded Mortgage Loans. The loans described on Schedule 1.1 attached

hereto and by this reference incorporated herein and any other loans or Bonds

that have been pledged by the Borrower or a Subsidiary to secure Permitted

Indebtedness; provided, however, that in no event

<PAGE>

shall Excluded Mortgage Loans securing outstanding Debt Certificates exceed the

minimum collateralization levels specified in the related Indentures by more

than $200,000 for any series of Debt Certificates.

Excluded Mortgage Loan Collateral. Any and all Collateral securing the

Excluded Mortgage Loans.

Executive Order. See ss.6.25(e)(i).

Existing Indenture Defaults. Any and all defaults and events of default

occurring under the Indentures prior to the Closing Date arising from the fact

that the Borrower's outstanding Indebtedness exceeded or exceeds the limitations

set forth in the financial covenant contained in Section 4.7(ii) of the

respective Indentures, which originally limited the Borrower's outstanding

Indebtedness to an amount not exceeding the Borrower's shareholders' equity.

Facility Interest Expense. For any period, Interest Expense with respect to

the Loans only.

Federal Funds Effective Rate. For any day, the rate per annum (rounded

upward to the nearest one one-hundredth of one percent (1/100th of 1%) equal to

the weighted average of the rates on overnight Federal funds transactions with

members of the Federal Reserve System arranged by Federal funds brokers, as

published for such day (or, if such day is not a Business Day, for the next

preceding Business Day) by the Federal Reserve Bank of New York, or, if such

rate is not so published for any day that is a Business Day, the average of the

quotations for such day on such transactions received by the Agent from three

Federal funds brokers of recognized standing selected by the Agent. Any change

in the Federal Funds Effective Rate shall become effective as of the opening of

business on the day on which such change in the Federal Funds Effective Rate

becomes effective, without notice or demand of any kind.

First Mortgage Indenture. Any trust indenture now or hereafter executed and

delivered by a Mortgage Loan Obligor pursuant to which Bonds are or are to be

issued, which indenture (i) contains, or is otherwise secured by, a Mortgage on

the Real Property of the Mortgage Loan Obligor for the benefit of the holders of

such Bonds and, if the Borrower has made an Interim Loan to such Mortgage Loan

Obligor, then also for the benefit of the Borrower in its capacity as the

Interim Loan lender; (ii) provides that the related Bonds and any such Interim

Loan shall be treated on a parity basis for all purposes under such indenture

(including application and use of trust moneys collected by the trustee under

such indenture in the exercise of its rights and remedies under the First

Mortgage Indenture); (iii) if an Interim Loan is made, requires the Mortgage

Loan Obligor to instruct such trustee to pay interest on, and the principal of,

such Interim Loan as and when due (whether at scheduled maturity, by prepayment

or upon acceleration) to the Borrower from the Mortgage Loan Obligor's sinking

fund and from the Bond proceeds account established under such indenture; and

(iv) if an Interim Loan is made, accords to the Borrower (as Interim Loan

lender) on a pro rata basis all rights and privileges accorded to the

Bondholders, including the right to direct, remove or terminate the Trustee and

direct the Trustee's conduct.

<PAGE>

Funds Available for Distribution. Consolidated net income (loss) of the

Borrower and its Subsidiaries before extraordinary items, computed in accordance

with generally accepted accounting principles, plus, to the extent deducted in

determining taxable income (loss) and without duplication, (i) gains (or losses)

from debt restructuring and sales of Mortgage Loans, (ii) non-recurring charges,

(iii) real estate related depreciation, amortization and other non-cash charges,

and (iv) amortization of organizational expenses.

generally accepted accounting principles. Principles that are (a)

consistent with the principles promulgated or adopted by the Financial

Accounting Standards Board and its predecessors, as in effect from time to time

and (b) consistently applied with past financial statements of the Person

adopting the same principles; provided that a certified public accountant would,

insofar as the use of such accounting principles is pertinent, be in a position

to deliver an unqualified opinion (other than a qualification regarding changes

in generally accepted accounting principles) as to financial statements in which

such principles have been properly applied.

Guaranteed Pension Plan. Any employee pension benefit plan within the

meaning of ss.3(2) of ERISA maintained or contributed to by the Borrower or any

ERISA Affiliate the benefits of which are guaranteed on termination in full or

in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer

Plan.

Hazardous Substances. Collectively, any hazardous waste, as defined by 42

U.S.C. ss.9601(5), any hazardous substances as defined by 42 U.S.C. ss.9601(14),

any pollutant or contaminant as defined by 42 U.S.C. ss.9601(33) or any toxic

substances, oil or hazardous materials or other chemicals or substances

regulated by any Environmental Laws.

ICA Account. As defined in the Securities Account Control Agreement.

Increasing Bank. See ss.2.7.

Indebtedness. All obligations, contingent and otherwise that in accordance

with generally accepted accounting principles should be classified upon the

obligor's balance sheet as liabilities, or to which reference should be made by

footnotes thereto, but without any double counting, including in any event and

whether or not so classified: (a) all debt and similar monetary obligations,

whether direct or indirect (including, without limitation, any obligations

evidenced by bonds, debentures, notes or similar debt instruments); (b) all

liabilities secured by any mortgage, pledge, security interest, lien, charge or

other encumbrance existing on property owned or acquired subject thereto,

whether or not the liability secured thereby shall have been assumed; (c) all

guarantees, endorsements and other contingent obligations whether direct or

indirect in respect of indebtedness of others, including any obligation to

supply funds to or in any manner to invest directly or indirectly in a Person,

to purchase indebtedness, or to assure the owner of indebtedness against loss

through an agreement to purchase goods, supplies or services for the purpose of

enabling the debtor to make payment of the indebtedness held by such owner,

through indemnity or otherwise, and the obligation to reimburse the issuer in

respect of any letter of credit; (d) all obligations with respect to letters of

credit or similar instruments issued by a Person; (e) all subordinated debt; (f)

all indebtedness, obligations or other liabilities under or with respect to (i)

interest rate swap, collar, cap or similar agreements providing interest rate

<PAGE>

protection and (ii) foreign currency exchange agreements; (g) current

liabilities of a Person incurred in the ordinary course of business including

credit on an open account basis customarily extended and in fact extended in

connection with normal purchases of goods and services; and (h) unfunded loan

commitments.

Indemnification Agreement. That certain Indemnification Agreement dated as

of the Closing Date from Borrower and the Manager, jointly and severally as

indemnitors, in favor of the Agent and the Banks, indemnifying the Agent and the

Banks against certain claims or liabilities relating to, among other things, the

Existing Indenture Defaults and the Indenture Amendments.

Indenture Amendments. Collectively, (a) that certain First Supplemental

Indenture dated as of July 2, 2007, between Borrower and Herring Bank, a Texas

banking corporation (formerly The Herring National Bank, a national banking

association), as trustee, amending the Series A Indenture, and (b) that certain

First Supplemental Indenture dated as of July 2, 2007, between Borrower and

Herring Bank, a Texas banking corporation (formerly The Herring National Bank, a

national banking association), as trustee, amending the Series B Indenture.

Indentures. Collectively, (i) that certain Indenture dated as of April 26,

2002 (the "Series A Indenture"), between Borrower and Herring Bank, a Texas

banking corporation (formerly The Herring National Bank, a national banking

association), as trustee, pursuant to which Borrower has issued its Series A

secured investor certificates outstanding on the Closing Date in the aggregate

principal amount of $9,353,000, and (ii) that certain Indenture dated as of

September 28, 2004 (the "Series B Indenture"), between Borrower and Herring

Bank, a Texas banking corporation (formerly The Herring National Bank, a

national banking association), as trustee, pursuant to which Borrower has issued

its Series B secured investor certificates outstanding on the Closing Date in

the aggregate principal amount of $16,023,000.

Initial Interim Loan. The Mortgage Loan described on Schedule 1.4 attached

hereto and by this reference incorporated herein, which shall be pledged to

Agent for the benefit of the Banks as of the Closing Date pursuant to the

Collateral Assignment.

Initial Mortgage Loans. The Mortgage Loans described on Schedule 1.2

attached hereto and by this reference incorporated herein, which shall be

pledged to Agent for the benefit of the Banks as of the Closing Date pursuant to

the Collateral Assignment.

Interest Expense. For any period, the sum of all interest due and payable

by Borrower and its Subsidiaries on a consolidated basis during such period

(including the amortization of debt discounts and the amortization of all fees

payable in connection with the incurrence of such Indebtedness).

Interest Hedging Ratio. As of the last day of any fiscal quarter of

Borrower, the ratio equal to (1) the sum of (a) Adjusted EBITDA for the period

of four (4) consecutive fiscal quarters ending on such determination date, plus

(b) the product of (i) the aggregate principal amount of Variable Rate Debt

outstanding on such date of determination, multiplied by (ii) one-half of one

percent (0.50%) per annum, divided by (2) the sum of (a) Interest Expense for

such rolling four (4) fiscal quarter period plus (b) the product of (i) Unhedged

Variable Rate Debt multiplied by (ii) one-half of one percent (0.50%) per annum.

To the extent Variable Rate Debt

<PAGE>

is hedged through an interest rate cap, the multiplier for that portion shall be

the lesser of one-half of one percent (0.50%) or the amount until which the

interest rate cap becomes effective.

Interest Income. For any period, the gross interest income and fees

received by Borrower from Mortgage Loans.

Interest Payment Date. As to each Base Rate Loan, the first day of each

calendar month during the term of such Base Rate Loan, and as to each LIBOR Rate

Loan, the first day of each calendar month during the term of such LIBOR Rate

Loan and the last day of the Interest Period relating thereto.

Interest Period. With respect to each LIBOR Rate Loan (a) initially, the

period commencing on the Drawdown Date of such Loan (which shall be a LIBOR

Business Day) and ending one, two or three months thereafter, to the extent

deposits with such maturities are available to Agent, and (b) thereafter, each

period commencing on the day following the last day of the next preceding

Interest Period applicable to such Loan and ending on the last day of one of the

periods set forth above, as selected by the Borrower in a Conversion Request;

provided that all of the foregoing provisions relating to Interest Periods are

subject to the following:

(1) if any Interest Period with respect to a LIBOR Rate Loan would

otherwise end on a day that is not a LIBOR Business Day, that Interest

Period shall end and the next Interest Period shall commence on the

next succeeding LIBOR Business Day as determined conclusively by the

Agent in accordance with the then current bank practice in the London

Interbank Market, unless the result would be that such Interest Period

would be extended to the next succeeding calendar month, in which case

such Interest Period shall end on the next preceding LIBOR Business

Day;

(2) if any Interest Period which begins on a day for which there is no

numerically corresponding date in the calendar month in which such

Interest Period would otherwise end shall instead end on the last

LIBOR Business Day of such calendar month;

(3) if the Borrower shall fail to give notice as provided in ss.4.1, the

Borrower shall be deemed to have requested a conversion of the

affected LIBOR Rate Loan to a Base Rate Loan on the last day of the

then current Interest Period with respect thereto; and

(4) no Interest Period relating to any LIBOR Rate Loan shall extend beyond

the Maturity Date.

Interest Rate Contracts. Interest rate swap, collar, cap or similar

agreements providing interest rate protection.

Interest Rate Hedging Cap. With respect to any Interest Rate Contract, as

of the trade date therefor, the amount which, when added to the aggregate

notional amount of all other Interest Rate Contracts then in effect, equals the

lesser of (a) the aggregate principal amount of

<PAGE>

Loans then outstanding under this Agreement, and (b) an amount equal to fifty

percent (50%) of the Total Commitment.

Interim Loans. The Initial Interim Loan and any other loan or line of

credit having a maturity date not later than one year from the initial advance

thereunder (or such longer term as the Agent may approve in its sole

discretion), made by the Borrower to a Mortgage Loan Obligor to provide interim

financing pending the issuance and sale of Bonds by such Mortgage Loan Obligor,

which loan or line of credit is to be repaid and retired with net proceeds from

the sale of such Bonds and which is secured by a First Mortgage Indenture (or,

in the case of the Initial Interim Loan, which is secured by the pledge of Bonds

registered in the name of the Mortgage Loan Obligor and issued under an

indenture secured by a first priority Mortgage for the benefit of all holders of

Bonds issued under such indenture).

Investments. With respect to any Person, all shares of capital stock,

evidences of Indebtedness and other securities issued by any other Person, all

loans, advances, or extensions of credit to, or contributions to the capital of,

any other Person, all purchases of the securities or business or integral part

of the business of any other Person and commitments and options to make such

purchases, all interests in real property, and all other investments; provided,

however, that the term "Investment" shall not include (i) equipment, inventory

and other tangible personal property acquired in the ordinary course of

business, or (ii) current trade and customer accounts receivable for services

rendered in the ordinary course of business and payable in accordance with

customary trade terms. In determining the aggregate amount of Investments

outstanding at any particular time: (a) the amount of any Investment represented

as a guaranty shall be taken at not less than the principal amount of the

obligations guaranteed and still outstanding; (b) there shall be included as an

Investment all interest accrued with respect to Indebtedness constituting an

Investment unless and until such interest is paid; (c) there shall be deducted

in respect of each such Investment any amount received as a return of capital

(but only by repurchase, redemption, retirement, repayment, liquidating dividend

or liquidating distribution); (d) there shall not be deducted in respect of any

Investment any amounts received as earnings on such Investment, whether as

dividends, interest or otherwise, except that accrued interest included as

provided in the foregoing clause (b) may be deducted when paid; and (e) there

shall not be deducted from the aggregate amount of Investments any decrease in

the value thereof.

Key Man Insurance Trigger Event. With respect to any policy of "key man"

insurance collaterally assigned as security for a Mortgage Loan, the lapse,

surrender or other termination of such policy.

KeyBank. KeyBank National Association.

KeyBank Lockbox Account. As defined in the Lockbox Agreement.

LIBOR Business Day. Any day on which commercial banks are open for

international business (including dealings in Dollar deposits) in London.

LIBOR Lending Office. Initially, the office of each Bank designated as such

in Schedule 1 hereto; thereafter, such other office of such Bank, if any, that

shall be making or maintaining LIBOR Rate Loans.

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LIBOR Rate. As applicable to any Interest Period for any LIBOR Rate Loan,

the rate per annum (rounded upwards, if necessary, to the nearest 1/16th of one

percent) as determined on the basis of the offered rates for deposits in Dollars

as shown on Reuters Screen LIBOR01 Page as of 11:00 a.m. London time on the day

that is two (2) LIBOR Business Days preceding the first day of such Interest

Period, with a maturity approximately equal to such Interest Period and in an

amount approximately equal to the amount of such LIBOR Rate Loan to which such

Interest Period relates, adjusted for reserves and taxes if required by future

regulations. If Reuters no longer reports such rate or Agent determines in good

faith that the rate so reported no longer accurately reflects the rate available

to Agent in the London Interbank Market, Agent may select a replacement index.

In the event that Agent is unable to obtain any such quotation as provided

above, it will be deemed that the LIBOR Rate pursuant to a LIBOR Rate Loan

cannot be determined and the provisions of ss.4.6 shall apply. In the event that

the Board of Governors of the Federal Reserve System shall impose a Reserve

Percentage with respect to LIBOR deposits of Agent, then for any period during

which such Reserve Percentage shall apply, the LIBOR Rate shall be equal to the

amount determined above divided by an amount equal to 1 minus the Reserve

Percentage.

LIBOR Rate Loans. Loans bearing interest calculated by reference to a LIBOR

Rate.

Loan Documents. This Agreement, the Notes, the Security Documents, the

Collateral Agency Agreement, the Indemnification Agreement, and all other

documents, instruments or agreements now or hereafter executed or delivered by

or on behalf of the Borrower or any of its Subsidiaries in connection with the

Loans, as the same may be amended, restated, supplemented or otherwise modified

from time to time.

Loan Loss Reserve. With regard to the Borrower for any period, a reserve in

the amount of one percent (1%) of the sum of the following amounts shown on the

Borrower's balance sheet for such period: (i) "Loans Receivable" plus (ii)

"Held-to-Maturity Securities" plus (iii) OREO held by the Borrower for sale;

provided, however, that if the Requisite Banks shall determine that the

Borrower's practices regarding the establishment and maintenance of loan loss

reserves with respect to items (i), (ii) and (iii) are adequate without the

mandated reserve otherwise required by this definition, the amount of the Loan

Loss Reserve shall be zero; provided, further, that nothing contained herein

shall preclude the Agent, at the direction of the Requisite Banks, from

requiring or re-instituting the requirement (as the case may be) of the one

percent (1%) Loan Loss Reserve hereinabove provided.

Loan Request. See ss.2.5.

Loans. See ss.2.1.

Lockbox Account. As defined in the Lockbox Agreement.

Lockbox Agreement. That certain Lockbox Account Agreement dated of even

date herewith by and between Borrower and Agent for the benefit of the Banks, as

subsequently modified or amended, pursuant to which Interest Income and other

payments on the Mortgage Loans shall be deposited by the Mortgage Loan Obligors

in the Lockbox Account and subsequently disbursed to the Borrower, subject to

the limitations set forth therein.

<PAGE>

Management Agreement. That certain Amended and Restated Advisory Agreement

dated as of January 22, 2004, between the Borrower and the Manager.

Management Fee. The monthly or other periodic management fee, and any other

fees, commissions or similar compensation for its services paid or payable to

the Manager by the Borrower pursuant to the Management Agreement.

Manager. Church Loan Advisors, Inc., a Minnesota corporation.

Maturity Date. July 26, 2010, or such earlier date on which the Loans shall

become due and payable pursuant to the terms hereof.

Mortgage. With respect to each Mortgage Loan, each mortgage, deed of trust

or deed to secure debt, as applicable in the particular jurisdiction, which

creates the first priority lien on the Mortgage Loan Collateral in favor of

Borrower as security for the repayment of such Mortgage Loan or, with respect to

an Interim Loan or Bonds, in favor of the trustee under the related indenture,

as security for repayment of (i) the Bonds, or (ii) the Mortgage Note evidencing

the Interim Loan or (iii) in the case of the Initial Interim Loan, the Bonds

pledged to secure the Initial Interim Loan.

Mortgage Assignment. With respect to each Mortgage Loan (excluding Bonds

and Interim Loans), a transfer and assignment of the Mortgage with respect

thereto from Borrower executed in blank, in recordable form for the applicable

jurisdiction.

Mortgage Loan. Each Construction Loan, permanent loan, Interim Loan, line

of credit loan or other real property secured loan made by, or Bond purchased

by, Borrower to a Mortgage Loan Obligor, but excluding any Excluded Mortgage

Loan.

Mortgage Loan Collateral. With respect to each Mortgage Loan, the real

property, improvements, fixtures, personalty, insurance policies, accounts,

escrows and any other collateral pledged by the Mortgage Loan Obligor (and, if

applicable, by any guarantor of such Mortgage Loan) to (i) Borrower as security

for such Mortgage Loan (or applicable guaranty) pursuant to the applicable

Mortgage and other Mortgage Loan Collateral Documents, (ii) in the case of Bonds

and Interim Loans (other than the Initial Interim Loan), to the trustee under

the related First Mortgage Indenture as pari passu security for such Mortgage

Loans (or applicable guaranty) and the Bonds issued under the applicable First

Mortgage Indenture, and (iii) in the case of the Initial Interim Loan, to the

trustee under the indenture pursuant to which the Bonds pledged to secure the

Initial Interim Loan have been issued, as pari passu security for all Bonds

issued under such indenture. Mortgage Loan Collateral shall not include Excluded

Mortgage Loan Collateral.

Mortgage Loan Collateral Documents. With respect to:

(i) each Mortgage Loan (other than Bonds owned by the Borrower), the

original Mortgage Loan Note, an original allonge to each Mortgage Loan

Note duly executed in blank by Borrower, the original Mortgage and the

original Mortgage Assignment;

<PAGE>

(ii) the Initial Interim Loan, an original assignment of the loan, pledge

and security agreement and the control agreement for the pledged Bonds

as well as an endorsement duly executed in blank by Borrower, and a

copy of the indenture pursuant to which such pledged Bonds were

issued;

(iii) each Mortgage Loan consisting of Bonds owned by the Borrower and

issued in certificated form, the original Bonds and an endorsement

duly executed in blank by the Borrower, and a copy of the related

First Mortgage Indenture; and

(iv) each Mortgage Loan consisting of Bonds issued in book-entry form

(except for those Bonds held in the ICA Account subject to the

Securities Account Control Agreement), the control agreement executed

by the trustee under the applicable First Mortgage Indenture, and a

copy of the First Mortgage Indenture pursuant to which such Bonds were

issued.

The Mortgage Loan Collateral Documents shall be delivered to the Collateral

Agent as provided in ss.11.7.

Mortgage Loan Documents. With respect to each Mortgage Loan, collectively,

all of the documents evidencing, guaranteeing, securing or otherwise relating to

such Mortgage Loan, as any of the foregoing may be modified, amended,

supplemented, restated or renewed from time to time, including, without

limitation, the following documents:

(i) Mortgage Loan Note (or the Bond, if such Mortgage Loan is evidenced by

a certificated Bond);

(ii) Mortgage and related security agreement, fixture filing and financing

statement;

(iii) With respect to the Initial Interim Loan, the loan, pledge and

security agreement with respect to the Bonds, and the control

agreement, and the indenture pursuant to which such Bonds were issued;

(iv) With respect to each Bond owned by the Borrower and issued in

book-entry form (except for those Bonds held in the ICA Account

subject to the Securities Account Control Agreement),, the control

agreement executed by the trustee under the applicable First Mortgage

Indenture, and such First Mortgage Indenture.

Mortgage Loan Note. With respect to each Mortgage Loan, the negotiable

promissory note, bond or other debt instrument made by the Mortgage Loan Obligor

in favor of Borrower.

Mortgage Loan Obligor. With respect to each Mortgage Loan, the church,

school, other non-profit organization or other Person obligated to make the

scheduled payments of principal, interest and other amounts due under the

Mortgage Loan Documents, including, without limitation, any guarantor of such

Mortgage Loan.

Mortgage Loan Qualification Documents. With respect to each Mortgage Loan,

each of the following items:

<PAGE>

(i) the original Mortgage Loan Note, together with an original allonge to

such Mortgage Loan Note duly executed in blank by the Borrower; or for

Mortgage Loans evidenced by certificated Bonds owned by the Borrower,

the original of such Bond, together with an original endorsement

thereof duly executed in blank by the Borrower; or for Bonds issued in

book-entry form (except for those Bonds held in the ICA Account

subject to the Securities Account Control Agreement), the control

agreement executed by the trustee under the applicable First Mortgage

Indenture;

(ii) for any Mortgage Loan evidenced by Bonds and for Interim Loans (other

than the Initial Interim Loan), a copy of the related First Mortgage

Indenture;

(iii) the Collateral Assignment, or with respect to the Mortgage Loans

closed by the Borrower after the Closing Date, a duly executed and

delivered modification to the Collateral Assignment adding such

Mortgage Loan to the Collateral;

(iv) a duly executed and delivered Mortgage Assignment, if applicable;

(v) the original counterparts of the other Mortgage Loan Documents, or the

original recorded counterpart upon return from recording or filing;

(vi) with respect to each Mortgage Loan, other than the Initial Interim

Loan, a favorable legal opinion of counsel to the Mortgage Loan

Obligor qualified to practice in the State in which the Mortgage Loan

Collateral is located, addressed to the Borrower, as to the

enforceability of the Mortgage Loan Documents; provided, however, that

for Mortgage Loans outstanding on the Closing Date, no legal opinions

of counsel shall be required if they were not obtained by Borrower in

connection with closing such Mortgage Loans;

(vii) the Appraisal or estimate of value, Survey, Surveyor Certification

and Title Policy for the Mortgage Loan Collateral, as required by

Borrower's internal policies; provided, however, that for Mortgage

Loans outstanding on the Closing Date, no Survey, Surveyor

Certification or Title Policy shall be required if they were not

obtained by Borrower in connection with closing such Mortgage Loans;

(viii) for Mortgage Loans made subsequent to the date of this Agreement,

(a) if such Mortgage Loan is equal to or greater than $2,000,000, a

Phase I environmental site assessment report concerning Hazardous

Substances and asbestos on the Mortgage Loan Collateral dated or

updated not more than six (6) months prior to the inclusion of such

Mortgage Loan in the Collateral, from an environmental engineer

acceptable to the Borrower, such report to contain no material

qualifications, and (b) if such Mortgage Loan is less than $2,000,000,

an environmental database review as requested by the Agent; and

(ix) for Mortgage Loans that are secured or required to be secured by "key

man" insurance insuring the life of the senior pastor of the Mortgage

Loan Obligor, or a pledge or collateral assignment thereof, a

collateral assignment or other pledge of

<PAGE>

such "key man insurance" to the Agent in form and substance

satisfactory to the Agent, plus the original policy if available, but

a copy thereof in any event.

MSA. A "Metropolitan Statistical Area" as identified by the United States

Bureau of the Census.

Multiemployer Plan. Any multiemployer plan within the meaning of ss.3(37)

of ERISA maintained or contributed to by the Borrower or any ERISA

Affiliate.

Net Income. With respect to any Person for any period, net income of such

Person for the applicable calculation period determined in accordance with

generally accepted accounting principles; provided, that there shall not be

included in such calculation of net income (a) any gains or losses from

dispositions of property or assets in connection with a securitization

transaction permitted under ss.7.17 of this Agreement, (b) the net income or

loss of any other Person that is not a Subsidiary of such Person for whom net

income is being calculated (or is accounted for by such Person by the equity

method of accounting), (c) the net income (or loss) of any other Person acquired

by, or merged with, such Person for whom net income is being calculated or any

of its Subsidiaries for any period prior to the date of such acquisition, and

(d) the net income of any Subsidiary of such Person for whom net income is being

calculated to the extent that the declaration or payment of dividends or similar

distributions by such Subsidiary of such net income is not at the time permitted

by operation of the terms of its charter, certificate of incorporation or

formation or other constituent document or any agreement or instrument or legal

requirement applicable to such Subsidiary, all as determined in accordance with

generally accepted accounting principles.

Net Offering Proceeds. The gross cash proceeds received by the Borrower as

a result of an Equity Offering less the customary and reasonable costs, fees,

expenses, underwriting commissions and discounts incurred by the Borrower in

connection therewith.

Non-Consenting Bank. See ss.27(c).

Non-Indemnitor Bank. See ss.14.12(f).

Non-Performing Assets. All Non-Performing Mortgage Loans and OREO.

Non-Performing Mortgage Loan. A Mortgage Loan that does not constitute a

Performing Mortgage Loan, is more than ninety (90) days past due, or is on a

non-accrual basis.

Notes. See ss.2.3.

Notice. See ss.19.

Obligations. All indebtedness, obligations and liabilities of the Borrower

to any of the Banks and the Agent, individually or collectively, under this

Agreement, under any of the other Loan Documents, under any Interest Rate

Contract with a Bank (including, without limitation, with respect to an Interest

Rate Contract, obligations owed thereunder to any Person who was a Bank or an

Affiliate of a Bank at the time such Interest Rate Contract was entered into),

or in respect of any of the Loans or the Notes, or other instruments at any time

evidencing any of the

<PAGE>

foregoing, whether existing on the date of this Agreement or arising or incurred

hereafter, direct or indirect, joint or several, absolute or contingent, matured

or unmatured, liquidated or unliquidated, secured or unsecured, arising by

contract, operation of law or otherwise, whether for principal, interest

(including, without limitation, interest which, but for the filing of a petition

in bankruptcy with respect to the Borrower, would have accrued on any

Obligation, whether or not a claim is allowed against the Borrower for such

interest in the related bankruptcy proceeding), payments for early termination

of Interest Rate Contracts, fees, expenses, indemnification or otherwise. OFAC.

See ss.6.25(e)(iii)

OFAC List. See ss.6.25(e)(iii).

OREO. Mortgage Loan Collateral acquired by the Borrower pursuant to

foreclosure proceedings, deed in lieu of conveyance of foreclosure or a similar

conveyance transaction as the result of a defaulted Mortgage Loan.

Outstanding. With respect to the Loans, the aggregate unpaid principal

thereof as of any date of determination.

PATRIOT Act. The Uniting and Strengthening America by Providing Appropriate

Tools Required to Intercept and Obstruct Terrorism Act of 2001, as the same may

be amended from time to time and corresponding provisions of future laws.

PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of ERISA

and any successor entity or entities having similar responsibilities.

Performing Mortgage Loan. A Mortgage Loan with respect to which the

Mortgage Loan Obligor has met all of the material terms and conditions set forth

in the Mortgage Loan Documents and no default or event, which with the passage

of time or giving of notice, or both, might constitute a default, exists and has

continued for more than 60 days under such Mortgage Loan Documents.

Permitted Indebtedness. Collectively, (a) the Debt Certificates of the

Borrower outstanding on the Closing Date, in the aggregate face principal amount

of up to $25,376,000, less any Debt Certificates redeemed by the Borrower

pursuant to ss.7.18 hereof, and (b) Permitted Securitization Indebtedness.

Permitted Liens. Liens, security interests and other encumbrances permitted

by ss.8.2.

Permitted Securitization Indebtedness. With respect to the Borrower and its

Subsidiaries and Securitization Subsidiaries on a consolidated basis, as of any

date of determination, the aggregate outstanding amount of Indebtedness

evidenced by certificates of participation, notes or other interests sold or

issued to third Persons in connection with a securitization program pursuant to

which the Borrower or any Securitization Subsidiary receives proceeds arising

out of a pledge, financing, sale, transfer or other encumbrance of Mortgage

Loans ("Securitization Assets") transferred by the Borrower to a Securitization

Subsidiary; provided, that (i) such

<PAGE>

Indebtedness is non-recourse to the Borrower and its Subsidiaries other than any

Securitization Subsidiary (except with respect to breaches of certain

representations and warranties made by the Borrower or its Subsidiaries in

connection with the transfer of the Securitization Assets, provided that such

recourse is not related to the creditworthiness of the Mortgage Loan Obligors

under the Securitization Assets), and (ii) such Indebtedness is incurred in

compliance with the provisions of Section 7.17.

Permitted Subordinate Mortgage Loan. Any Mortgage Loan outstanding on the

Closing Date and identified on Schedule 1.1, that is subordinate in rank, time

of payments, priority of lien or any other respect to any other indebtedness of

the Mortgage Loan Obligors, provided that (i) the Borrower or an Affiliate is

and continues to be the holder of both such subordinated Mortgage Loan and the

first priority Mortgage Loan made by the Borrower or an Affiliate to the same

Mortgage Loan Obligor, and (ii) both the subordinated Mortgage Loan and the

senior Mortgage Loan to which it is subordinated otherwise meet all applicable

requirements of this Agreement for Qualified Mortgage Loans.

Person. Any individual, corporation, partnership, limited liability

company, trust, unincorporated association, business, or other legal entity, and

any government or any governmental agency or political subdivision thereof.

Qualifying Mortgage Loan. A Mortgage Loan with respect to which each and

all of the following conditions and requirements have been met as evidenced by

written certification delivered by Borrower to Agent:

(i) Collateral Agent shall have received the Mortgage Loan Collateral

Documents, all of which remain in full force and effect.

(ii) Each of the Mortgage Loan Documents evidencing, securing or otherwise

relating to the Mortgage Loan shall have been executed by the Mortgage

Loan Obligor and shall be legal, valid and binding on and enforceable

against the Mortgage Loan Obligor.

(iii) The making of such Mortgage Loan by Borrower was in all material

respects in compliance with and was not in violation of Borrower's

standard underwriting guidelines and criteria, as approved by Agent,

and any applicable law.

(iv) Based on the Appraised Value of the Mortgage Loan Collateral for such

Mortgage Loan, the loan to value ratio of such Mortgage Loan shall not

be greater than seventy-five percent (75%), unless such Mortgage Loan

is guaranteed by a credit party acceptable to the Requisite Banks, and

the Mortgage Loan Collateral shall not have any material title,

survey, environmental, entitlement/zoning issues or other defects.

(v) The Mortgage Loan is a Performing Mortgage Loan.

(vi) The representations and warranties in ss.6.24 shall be true and

correct with respect to such Mortgage Loan .

<PAGE>

(vii) The Mortgage Loan Documents shall be free and clear of all Liens

other than the lien in favor of Agent pursuant to the Collateral

Assignment.

Agent and the Banks acknowledge and agree that all of the Initial Mortgage Loans

(other than the Permitted Subordinate Mortgage Loans, if any) shall constitute

Qualifying Mortgage Loans on the Closing Date. In addition, a Key Man Insurance

Trigger Event occurs with respect to any Qualifying Mortgage Loan secured by a

"key man" insurance policy, or by a collateral assignment or pledge thereof, and

such "key man" insurance policy shall not be reinstated or replaced to the

satisfaction of the Agent within sixty (60) days, together with the delivery of

all documentation required by the Agent to reaffirm or establish the perfection

of the collateral assignment of such policy, then and in such event the Agent

shall be entitled, in its sole discretion, to either (A) declare by written

notice to the Borrower that such Mortgage Loan is no longer a Qualifying

Mortgage Loan, (B) to otherwise reduce the Borrowing Base up to the amount of

the Borrowing Base represented by such Mortgage Loan immediately prior to the

Agent's taking such action, or (C) to take other action with regard thereto as

the Agent may deem appropriate under the circumstances.

Record. The grid attached to any Note, or the continuation of such grid, or

any other similar record, including computer records, maintained by Agent with

respect to any Loan referred to in such Note.

REIT Status. With respect to the Borrower, its status as a real estate

investment trust as defined in ss.856(a) of the Code.

Related Parties. With respect to any Person, such Person's Affiliates and

the partners, directors, officers, employees, agents and advisors of such Person

and of such Person's Affiliates.

Requisite Banks. As of any date, any Bank or collection of Banks whose

aggregate Commitment Percentage is greater than or equal to sixty-six and

two-thirds percent (66 2/3%); provided, that, in determining said percentage at

any given time, all then existing Delinquent Banks will be disregarded and

excluded and the Commitment Percentages of the Banks shall be redetermined for

voting purposes only, to exclude the Commitment Percentages of such Delinquent

Banks.

Reserve Percentage. For any day with respect to a LIBOR Rate Loan, the

maximum rate (expressed as a decimal) at which any Bank subject thereto would be

required to maintain reserves (including, without limitation, all base,

supplemental, marginal and other reserves) under Regulation D of the Board of

Governors of the Federal Reserve System (or any successor or similar regulations

relating to such reserve requirements) against "Eurocurrency Liabilities" (as

that term is used in Regulation D or any successor or similar regulation), if

such liabilities were outstanding. The Reserve Percentage shall be adjusted

automatically on and as of the effective date of any change in the Reserve

Percentage.

SEC. The federal Securities and Exchange Commission.

<PAGE>

Securities Account Control Agreement. That certain Securities Account

Control Agreement dated of even date herewith, by and among Herring Bank, the

Borrower and the Agent, as the same may be modified or amended hereafter.

Securitization Subsidiary. Any corporation, association, partnership,

limited liability company, trust, or other business entity that is directly or

indirectly wholly-owned by the Borrower created solely for the purpose of, and

which engages in no activities other than activities in connection with or

incidental to, the incurrence of Permitted Securitization Indebtedness, so long

as it: (a) has no other Indebtedness; (b) is not a party to any agreement,

contract, arrangement or understanding with the Borrower or any other Subsidiary

of the Borrower (other than another Securitization Subsidiary in connection with

the same securitization program) unless the terms of any such agreement,

contract, arrangement or understanding are no less favorable to the Borrower or

such Subsidiary than those that might be obtained at the time from Persons who

are not Affiliates of the Borrower; (c) is a Person with respect to which

neither the Borrower nor any of its other Subsidiaries has any direct obligation

to maintain or preserve such Person's financial condition or to cause such

Person to achieve any specified levels of operating results; and (d) has not

guaranteed or otherwise directly provided credit support for any Indebtedness of

the Borrower or any of its other Subsidiaries other than such Permitted

Securitization Indebtedness.

Security Agreement. That certain Security Agreement dated of even date

herewith, made by Borrower in favor of Agent, as the same may be modified or

amended hereafter.

Security Documents. The Collateral Assignment, the Security Agreement, the

Lockbox Agreement, the Subordination of Management Agreement, the Assignment of

Hedge Agreement, the Deposit Account Control Agreement, the Securities Account

Control Agreement, any other blocked account agreement and any further

collateral assignments or security agreements to the Agent for the benefit of

the Banks, including, without limitation, UCC-1 financing statements authorized

and delivered in connection therewith.

Short-term Investments. Investments described in subsections (a)(i) through

(vii), inclusive, of ss.8.3.

State. A state of the United States of America.

Subordination of Management Agreement. That certain Subordination of

Management Agreement dated as of the date hereof, from Borrower and Manager in

favor of Agent, as the same may be modified or amended from time to time,

pursuant to which Borrower and Manager shall consent to the subordination of the

Manager's rights to the rights of Agent.

Subsequent Bank. Seess.2.7.

Subsidiary. (a) Any corporation, association, partnership, limited

liability company, trust, or other business entity of which the designated

parent shall at any time own directly or indirectly through a Subsidiary or

Subsidiaries at least a majority (by number of votes or controlling interests)

of the outstanding Voting Interests, and (b) any Securitization Subsidiary.

<PAGE>

Survey. An instrument survey of the real property Mortgage Loan Collateral

prepared by a registered land surveyor duly licensed in the State in which such

real property Mortgage Loan Collateral is located which shall show the location

of all buildings, structures, easements and utility lines on such property,

shall be sufficient to remove the standard survey exception from the

corresponding Title Policy for such Mortgage Loan Collateral, shall show that

all buildings and structures are within the lot lines and shall not show any

material encroachments by others, shall show rights of way, adjoining sites,

establish building lines and street lines, the distance to, and names of the

nearest intersecting streets and such other details as Borrower may require;

shall show the zoning district or districts in which the Mortgage Loan

Collateral is located and shall show whether or not the real property Mortgage

Loan Collateral is located in a flood hazard district as established by the

Federal Emergency Management Agency or any successor agency or is located in any

flood plain, flood hazard or wetland protection district established under

federal, state or local law, and shall otherwise be in form and substance

satisfactory to the Borrower.

Surveyor Certification. With respect to each parcel of Mortgage Loan

Collateral, a certificate executed by the surveyor who prepared the Survey with

respect thereto, dated within six (6) months of the closing date of the Mortgage

Loan or such longer period of time as the Title Insurance Company may permit

(provided that the Title Insurance Company issuing the Title Policy with respect

to such Mortgage Loan insures title to the Mortgage without exception for any

survey matters arising after the date of such Surveyor Certification), and

containing such information relating to such parcel as the Borrower or the Title

Insurance Company may reasonably require, such certificate to be satisfactory to

Borrower in form and substance.

Title Insurance Company. A nationally recognized title insurance company or

companies approved by the Borrower to issue Title Policies with respect to the

Mortgage Loans.

Title Policy. With respect to each parcel of Mortgage Loan Collateral, an

ALTA standard form title insurance policy (or, if such form is not available, an

equivalent form of or legally promulgated form of mortgagee title insurance

policy acceptable to the Borrower) issued by a Title Insurance Company (with

such reinsurance or coinsurance as the Borrower may require, any such

reinsurance to be with direct access endorsements to the extent available under

applicable law) in such amount as the Borrower may require insuring the first

priority position of the applicable Mortgage and that the Mortgage Loan Obligor

holds marketable fee simple title to such parcel, subject only to the

encumbrances permitted by the applicable Mortgage and which shall not contain

standard exceptions for mechanics liens, persons in occupancy (other than

tenants as tenants only under leases) or matters which would be shown by a

survey, shall not insure over any matter except to the extent that any such

affirmative insurance is acceptable to Borrower, and shall contain such

endorsements and affirmative insurance as the Borrower reasonably may require

and are available in the State in which the Mortgage Loan Collateral is located.

Total Commitment. The sum of the Commitments to the Banks, as in effect

from time to time. As of the Closing Date, the Total Commitment is Fifteen

Million and No/100 Dollars ($15,000,000).

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Total Leverage Ratio. As of any date of determination, Consolidated Total

Liabilities divided by Consolidated Total Adjusted Tangible Asset Value.

Type. As to any Loan, its nature as a Base Rate Loan or a LIBOR Rate Loan.

Unhedged Variable Rate Debt. As of any date of determination, the aggregate

principal amount of Variable Rate Debt then outstanding less the aggregate

notional amount of all floating-to-fixed Interest Rate Contracts then in effect.

Variable Rate Debt. Indebtedness of the Borrower and its Consolidated

Subsidiaries bearing interest at a rate which may fluctuate or be re-determined

prior to maturity from time to time, whether or not the subject of an Interest

Rate Contract.

Voting Interests. Stock or similar ownership interests, of any class or

classes (however designated), the holders of which are at the time entitled, as

such holders, (a) to vote for the election of a majority of the directors (or

persons performing similar functions) of the corporation, association,

partnership, trust, limited liability company or other business entity involved,

or (b) to control, manage, or conduct the business of the corporation,

partnership, association, trust or other business entity involved.

1.2 Rules of Interpretation.

(a) Unless otherwise expressly provided to the contrary, a reference to any

document or agreement shall include such document or agreement as amended,

extended, renewed, modified supplemented or restated from time to time in

accordance with its terms and the terms of this Agreement.

(b) The singular includes the plural and the plural includes the singular.

law.

(d) A reference to any Person includes its permitted successors and

permitted assigns.

(e) Accounting terms not otherwise defined herein have the meanings

assigned to them by generally accepted accounting principles applied on a

consistent basis by the accounting entity to which they refer.

(f) The words "include", "includes" and "including" are not limiting.

(g) The words "approval" and "approved", as the context so determines,

means an approval in writing given to the party seeking approval after full and

fair disclosure to the party giving approval of all material facts necessary in

order to determine whether approval should be granted.

(h) All terms not specifically defined herein or by generally accepted

accounting principles, which terms are defined in the Uniform Commercial Code as

in effect in the State of Georgia, have the meanings assigned to them therein.

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(i) Reference to a particular "ss.", refers to that section of this

Agreement unless otherwise indicated.

(j) The words "herein", "hereof", "hereunder" and words of like import

shall refer to this Agreement as a whole and not to any particular section or

subdivision of this Agreement.

1.3 Pro Forma Calculations. Pro forma compliance with financial covenants

as required in this Agreement shall be calculated as if the subject transaction

(including the application of any proceeds thereof) had occurred on the first

day of the most recently completed period of four (4) trailing fiscal quarters.

2. THE REVOLVING CREDIT FACILITY.

2.1 Commitment to Lend.

Subject to the terms and conditions set forth in this Agreement, each of

the Banks severally agrees to lend to the Borrower (the "Loans"), and the

Borrower may borrow (and repay and reborrow) from time to time between the

Closing Date and the Maturity Date upon notice by the Borrower to the Agent

given in accordance with ss.2.5, such sums as are requested by the Borrower for

the purposes set forth in ss.7.10 up to a maximum aggregate principal amount

Outstanding at any one time equal to the lesser of (a) such Bank's Commitment

and (b) an amount equal to the Borrowing Base Availability multiplied by such

Bank's Commitment Percentage; provided, that, in all events no Default or Event

of Default shall have occurred and be continuing; and provided, further that the

Outstanding Loans (after giving effect to all amounts requested) shall not at

anytime exceed the Total Commitment. The Loans shall be made pro rata in

accordance with each Bank's Commitment Percentage. Each request for a Loan

hereunder shall constitute a representation and warranty by the Borrower that

all of the conditions set forth in ss.10 and ss.11, in the case of the initial

Loan, and ss.11, in the case of all other Loans, have been satisfied on the date

of such request.

2.2 Unused Facility Fee.

The Borrower agrees to pay to the Agent for the account of the Banks in

accordance with their respective Commitment Percentages a facility fee

calculated at the rate per annum as set forth below on the average daily amount

by which the Total Commitment exceeds the Outstanding Loans during each calendar

quarter or portion thereof commencing on the date three (3) months after the

Closing Date and ending on the Maturity Date, with the first payment being due

on October 18, 2007. The facility fee shall be calculated based on the ratio

(expressed as a percentage) of (a) the average daily amount of the Outstanding

Loans during such quarter to (b) the Total Commitment as follows:

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Ratio of Outstanding Principal Balance to Total Per Annum Rate

Commitment

1st Quartile (0% - 25% outstanding) 0.40%

2nd Quartile 0.30%

3rd Quartile 0.20%

4th Quartile 0.10%

The unused facility fee shall be calculated by working through the fee tiers

from the top quartile to the bottom quartile. For illustrative purposes only, if

the Borrower were to draw down thirty percent (30%) of the Total Commitment,

zero percent of the Total Commitment (0%) would be subject to a 0.40% fee,

twenty percent (20%) of the Total Commitment (i.e., $3,000,000) would be subject

to a 0.30% fee, twenty-five percent (25%) of the Total Commitment (i.e.,

$3,750,000) would be subject to a 0.20% fee, and twenty-five percent (25%) of

the Total Commitment (i.e., $3,750,000) would be subject to a 0.10% fee. The

facility fee shall be payable quarterly in arrears on the first Business Day of

each calendar quarter for the immediately preceding calendar quarter or portion

thereof (on a prorated basis), or on any earlier date on which the Commitments

shall be reduced or terminated as provided in ss.12.3, with a final payment on

the Maturity Date and shall be fully earned when due and non refundable when

paid.

2.3 Notes.

The Loans shall be evidenced by separate promissory notes of the Borrower

in substantially the form of Exhibit A hereto (collectively, the "Notes"), dated

as of even date as this Agreement or dated as of even date of any Assignment and

Acceptance Agreement and completed with appropriate insertions. Each Note shall

be payable to the order of the relevant Bank in the principal amount equal to

such Bank's Commitment, plus interest accrued thereon as set forth below. The

Borrower irrevocably authorizes Agent to make or cause to be made, at or about

the time of the Drawdown Date of any Loan or at the time of receipt of any

payment of principal thereof, an appropriate notation on Agent's Record

reflecting the making of such Loan or (as the case may be) the receipt of such

payment. The outstanding amount of the Loans set forth on Agent's Record shall

be prima facie evidence of the principal amount thereof owing and unpaid to each

Bank, but the failure to record, or any error in so recording, any such amount

on Agent's Record shall not limit or otherwise affect the obligations of the

Borrower hereunder or under any Note to make payments of principal of or

interest on any Note when due.

2.4 Interest on Loans.

(a) Each Base Rate Loan shall bear interest, for the period commencing with

the Drawdown Date thereof and ending on the date on which such Base Rate Loan is

repaid or is converted to a LIBOR Rate Loan, at the per annum rate equal to the

sum of the Base Rate plus the Applicable Margin.

(b) Each LIBOR Rate Loan shall bear interest, for the period commencing

with the Drawdown Date thereof and ending on the last day of the Interest Period

with respect thereto,

<PAGE>

at the rate per annum equal to the sum of the LIBOR Rate determined for such

Interest Period plus the Applicable Margin.

Interest Payment Date with respect thereto, or on any earlier date on which the

Commitments shall terminate as provided in ss.12.3.

(d) Base Rate Loans and LIBOR Rate Loans may be converted to Loans of the

other Type as provided in ss.4.1.

2.5 Requests for Loans.

The Borrower (i) shall notify the Agent of a potential request for a Loan

as soon as possible prior to the Borrower's proposed Drawdown Date, and (ii)

shall give to the Agent written notice in the form of Exhibit B hereto (or

telephonic notice confirmed in writing in the form of Exhibit B hereto) of each

Loan requested hereunder (a "Loan Request") no less than three (3) Business Days

prior to the proposed Drawdown Date with respect to LIBOR Rate Loans, provided

that such advance notice period may be reduced by Agent in its discretion with

respect to any LIBOR Rate Loan made on the Closing Date and by 2:00 p.m.

(Cleveland time) on the Business Day preceding the proposed Drawdown Date with

respect to Base Rate Loans. Each such notice shall specify with respect to the

requested Loan the proposed principal amount, Drawdown Date, Interest Period (if

applicable) and Type. Each such notice shall also contain (i) a statement as to

the purpose for which such advance shall be or has been used (which purpose

shall be in accordance with the terms of ss.7.10), and (ii) a certification by

the chief financial or chief accounting officer of the Borrower that the

Borrower is and will be in compliance with all covenants under the Loan

Documents after giving effect to the making of such Loan. Promptly upon receipt

of any such notice, the Agent shall notify each of the Banks thereof. Except as

provided in this ss.2.5, each such Loan Request shall be irrevocable and binding

on the Borrower and shall obligate the Borrower to accept the Loan requested

from the Banks on the proposed Drawdown Date, provided that, in addition to the

Borrower's other remedies against any Bank which fails to advance its

proportionate share of a requested Loan, such Loan Request may be revoked by the

Borrower by notice received by the Agent no later than the Drawdown Date if any

Bank fails to advance its proportionate share of the requested Loan in

accordance with the terms of this Agreement, provided further, that the Borrower

shall be liable in accordance with the terms of this Agreement to any Bank which

is prepared to advance its proportionate share of the requested Loan for any

costs, expenses or damages actually incurred by such Bank as a result of the

Borrower's election to revoke such Loan Request. Nothing herein shall prevent

the Borrower from seeking recourse against any Bank that fails to advance its

proportionate share of a requested Loan as required by this Agreement. The

Borrower may without cost or penalty revoke a Loan Request by delivering notice

thereof to each of the Banks no later than two (2) Business Days prior to the

Drawdown Date. Each Loan Request shall be (a) for a Base Rate Loan in the

minimum aggregate amount of $250,000 or an integral multiple of $10,000 in

excess thereof, or (b) for a LIBOR Rate Loan in a minimum aggregate amount of

$250,000 or an integral multiple of $10,000 in excess thereof; provided,

however, that there shall be no more than five (5) LIBOR Rate Loans outstanding

at any one time.

<PAGE>

2.6 Funds for Loans.

(a) Not later than 11:00 a.m. (Cleveland time) on the proposed Drawdown

Date of any Loans, each of the Banks will make available to the Agent, at the

Agent's Head Office, in immediately available funds, the amount of such Bank's

Commitment Percentage of the amount of the requested Loans which may be

disbursed pursuant to ss.2.1. Upon receipt from each Bank of such amount, and

upon receipt of the documents required by ss.10 and ss.11 and the satisfaction

of the other conditions set forth therein, to the extent applicable, the Agent

will make available to the Borrower the aggregate amount of such Loans made

available to the Agent by the Banks by crediting such amount to the account of

the Borrower maintained at the Agent's Head Office. The failure or refusal of

any Bank to make available to the Agent at the aforesaid time and place on any

Drawdown Date the amount of its Commitment Percentage of the requested Loans

shall not relieve any other Bank from its several obligation hereunder to make

available to the Agent the amount of such other Bank's Commitment Percentage of

any requested Loans, including any additional Loans that may be requested

subject to the terms and conditions hereof to provide funds to replace those not

advanced by the Bank so failing or refusing, provided that the Borrower may by

notice received by the Agent no later than the Drawdown Date refuse to accept

any Loan which is not fully funded in accordance with the Borrower's Loan

Request subject to the terms of ss.2.5. In the event of any such failure or

refusal, the Banks not so failing or refusing shall be entitled to a priority

secured position as against the Bank or Banks so failing or refusing for such

Loans as provided in ss.12.5.

(b) Unless the Agent shall have been notified by any Bank prior to the

applicable Drawdown Date that such Bank will not make available to the Agent

such Bank's pro rata share of a proposed Loan, the Agent may in its discretion

assume that such Bank has made such share of the proposed Loan available to

Agent in accordance with the provisions of this Agreement and the Agent may, if

it chooses, in reliance upon such assumption make such Loan available to

Borrower, and such Bank shall be liable to the Agent for the amount of such

advance. If such Bank does not pay such corresponding amount upon the Agent's

demand therefor, the Agent will promptly notify the Borrower, and the Borrower

shall promptly pay such corresponding amount to the Agent. The Agent shall also

be entitled to recover from the Bank or the Borrower, as the case may be,

interest on such corresponding amount in respect of each day from the date such

corresponding amount was made available by the Agent to the Borrower to the date

such corresponding amount is recovered by the Agent at a per annum rate equal to

(i) from the Borrower at the applicable rate for such Loan or (ii) from a Bank

at the Federal Funds Effective Rate.

2.7 Increase in Total Commitment. At any time and from time to time prior

to the second anniversary of the Closing Date, the Agent may, at the written

request of the Borrower, increase the Total Commitment by (i) increasing the

Commitment of any Bank (each, an "Increasing Bank"), or (ii) admitting

additional Banks hereunder (each, a "Subsequent Bank"), subject to the following

conditions:

(a) Each Subsequent Bank shall meet the conditions for an Eligible Assignee

under Section 18.1 hereof;

<PAGE>

(b) The Borrower shall execute new Notes, payable to the order of each

Subsequent Bank (if any), and a replacement Note payable to the order of each

Increasing Bank (if any), as applicable;

to this Agreement in form and substance satisfactory to the Agent;

(d) The Borrower and the Agent shall have executed modifications of the

Security Documents and other Loan Documents to reflect the increase in the Total

Commitment and the Borrower shall have paid to the Agent any and all documentary

stamp tax, non-recurring intangible tax or other taxes imposed in connection

with the recording of such modifications of the Security Documents and other

Loan Documents or increase in the Total Commitment;

(e) After giving effect to the admission of any Subsequent Bank or the

increase in the Commitment of any Increasing Bank, the Total Commitment does not

exceed $25,000,000;

(f) Each increase in the Total Commitment shall be in the amount of at

least $5,000,000, or a greater integral multiple of $1,000,000;

(g) No admission of any Subsequent Bank shall increase the Total Commitment

of any existing Bank without the written consent of such Bank;

(h) All of the representations and warranties of the Borrower in the Loan

Documents shall be true and correct as of the effective date of the increase in

the Total Commitment (or if such representations and warranties by their terms

relate solely to an earlier date, then as of such earlier date);

(i) No Default or Event of Default exists;

(j) No Bank shall be an Increasing Bank without the written consent of such

Bank;

(k) No increase in the Total Commitment, if applicable, will be implemented

unless Subsequent Bank or Banks or a combination thereof commit to fund each

such increase in accordance with the terms and conditions of this Agreement; and

(l) The Borrower shall have executed such other modifications and documents

and made such other deliveries as the Agent may require and shall pay or

reimburse the Agent and the Agent's Special Counsel for all fees, expenses and

costs in connection with the foregoing and the Borrower shall also pay such Loan

fees and placement fees, if any, as may be required for such increase in the

Total Commitment.

In the case of a new Commitment for any Increasing Bank or Subsequent Bank,

the Agent shall promptly provide each Bank and the Borrower with a new Schedule

1 to this Agreement (and each Bank acknowledges that its Commitment Percentage

under Schedule 1 and allocated portion of the outstanding Loan will change in

accordance with its pro rata share of the increased Total Commitment). From and

after the effective date of an increase in the Total Commitment, such new amount

shall for all purposes under this Agreement be deemed to be the

<PAGE>

"Total Commitment," as that term is used in herein, notwithstanding anything to

the contrary contained in this Agreement except that the Total Commitment shall

in no event exceed Twenty-Five Million Dollars ($25,000,000).

3. REPAYMENT OF THE LOANS.

3.1 Stated Maturity.

The Borrower promises to pay on the Maturity Date and there shall become

absolutely due and payable on the Maturity Date all of the Loans outstanding on

such date, together with any and all accrued and unpaid interest thereon.

3.2 Mandatory Prepayments.

(a) If at any time there shall occur, whether voluntarily, involuntarily or

by operation of law, any repayment (including, without limitation, principal

amortization on the Mortgage Loans), redemption, sale, transfer, assignment,

conveyance, option or other disposition of, or any mortgage, hypothecation,

encumbrance, financing or refinancing of any of the Collateral (whether

individually or through a securitization transaction), then Borrower shall

immediately pay to Agent for the respective account of the Banks for application

to the Loans together with any and all accrued interest thereon, the proceeds

received therefrom; provided, however, that principal amortization on the

Mortgage Loans shall be aggregated through the end of the prior calendar month,

reduced by Mortgage Loans made during the prior calendar month, and the balance

paid to Agent on the tenth (10th) day of each calendar month rather than as each

payment is received by the Borrower. In connection with such payment of the

Loans, Borrower shall pay to Agent for the account of the Banks any sums that

may be due under ss.4.8.

(b) Without limiting the terms of this Agreement, in the event that a

Change of Control shall occur, then Borrower shall immediately pay to Agent for

the respective accounts of the Banks for application to the Loans, all of the

Loans outstanding on such date, together with any and all accrued and unpaid

interest thereon. In connection with such payment of the Loans, Borrower shall

pay to Agent for the account of the Banks any sums that may be due under ss.4.8.

the Loans exceeds the lesser of (i) the Total Commitment, or (ii) the Borrowing

Base Availability, then Borrower shall immediately pay the amount of such excess

to Agent for the respective accounts of the Banks, as applicable, for

application to the Loans as provided in ss.3.4, together with any additional

amounts payable pursuant to ss.4.8. Until such time as Borrower has paid such

amount to Agent for the respective accounts of the Banks pursuant to the

preceding clause (and without limiting the other rights or remedies of the Agent

and the Banks), the Banks shall have no obligation to make additional funds

available to Borrower pursuant to this Agreement.

3.3 Optional Prepayments.

The Borrower shall have the right, at its election, to prepay the

outstanding amount of the applicable Loans, as a whole or in part, at any time

without penalty or premium; provided, that the full or partial prepayment of the

outstanding amount of any LIBOR Rate Loans pursuant to this ss.3.3 may be made

only on the last day of the Interest Period relating thereto except

<PAGE>

as otherwise required pursuant to ss.4.7. The Borrower shall give the Agent, no

later than 10:00 a.m., Cleveland time, at least three (3) Business Days' prior

written notice of any prepayment pursuant to this ss.3.3, in each case

specifying the proposed date of payment of Loans and the principal amount to be

paid.

3.4 Partial Prepayments.

Each partial prepayment of the Loans pursuant to ss.3.3 with respect to

LIBOR Rate Loans shall be in the minimum amount of $1,000,000 or an integral

multiple of $100,000 in excess thereof. There shall be no minimum amount

requirement for prepayments of Base Rate Loans. Each partial prepayment shall be

accompanied by the payment of accrued interest on the principal prepaid to the

date of payment and, after payment of such interest, shall be applied, in the

absence of instruction by the Borrower, first to the principal of Base Rate

Loans and then to the principal of LIBOR Rate Loans.

3.5 Effect of Prepayments.

Amounts of the Loans prepaid pursuant to ss.3.2 and ss.3.3 prior to the

Maturity Date may be reborrowed as provided in ss.2. Except as otherwise

expressly provided herein, all payments shall first be applied to accrued but

unpaid interest and then to principal as provided in ss.3.4 above.

4. CERTAIN GENERAL PROVISIONS.

4.1 Conversion Options.

(a) The Borrower may elect from time to time to convert any of its

outstanding Loans to a Loan of another Type and such Loan shall thereafter bear

interest as a Base Rate Loan or a LIBOR Rate Loan, as applicable; provided that

(i) with respect to any such conversion of a LIBOR Rate Loan to a Base Rate

Loan, the Borrower shall give the Agent at least three (3) Business Days' prior

written notice of such election, and such conversion shall only be made on the

last day of the Interest Period with respect to such LIBOR Rate Loan; (ii) with

respect to any such conversion of a Base Rate Loan to a LIBOR Rate Loan the

Borrower shall give the Agent at least three (3) LIBOR Business Days' prior

written notice of such election and the Interest Period requested for such Loan,

the principal amount of the Loan so converted shall be in a minimum aggregate

amount of $250,000 or an integral multiple of $10,000 in excess thereof and,

after giving effect to the making of such Loan there shall be no more than five

(5) LIBOR Rate Loans outstanding at any one time; and (iii) no Loan may be

converted into a LIBOR Rate Loan when any Default or Event of Default has

occurred and is continuing. All or any part of the outstanding Loans of any Type

may be converted as provided herein, provided that no partial conversion shall

result in a Loan in an aggregate principal amount of less than $250,000, and

that the aggregate principal amount of each Loan shall be in an integral

multiple of $10,000. On the date on which such conversion is being made, each

Bank shall take such action as is necessary to transfer its Commitment

Percentage of such Loans to its Domestic Lending Office or its LIBOR Lending

Office, as the case may be. Each Conversion Request relating to the conversion

of a Base Rate Loan to a LIBOR Rate Loan shall be irrevocable by the Borrower.

<PAGE>

(b) Any Loan may be continued as such Type upon the expiration of an

Interest Period with respect thereto by compliance by the Borrower with the

terms of ss.4.1(a); provided that no LIBOR Rate Loan may be continued as such

when any Default or Event of Default has occurred and is continuing, but shall

be automatically converted to a Base Rate Loan on the last day of the Interest

Period relating thereto ending during the continuance of any Default or Event of

Default.

election hereunder with respect to any Loan to it, such Loan shall be

automatically converted to a Base Rate Loan at the end of the applicable

Interest Period.

4.2 Syndication, Underwriting and Accordion Fees.

The Borrower shall pay to KeyBank certain fees for services rendered or to

be rendered in connection with the Loan as provided pursuant to the Agreement

Regarding Fees.

4.3 Agent's Fee.

If and so long as there shall be at least three (3) Banks, the Borrower

will pay to the Agent, for the Agent's own account, an annual Agent's fee in the

amount and payable at such times as shall be set forth in a supplement or

amendment to the Agreement Regarding Fees executed or to be executed by the

Agent and the Borrower.

4.4 Funds for Payments.

(a) All payments of principal, interest, unused facility fees, Agent's

fees, closing fees and any other amounts due hereunder or under any of the other

Loan Documents shall be made to the Agent, for the respective accounts of the

Banks and the Agent, as the case may be, at the Agent's Head Office, not later

than 11:00 a.m. (Cleveland time) on the day when due, in each case in lawful

money of the United States in immediately available funds. The Agent is hereby

authorized to charge the accounts of the Borrower with KeyBank designated by the

Borrower, on the dates when the amount thereof shall become due and payable,

with the amounts of the principal of and interest on the Loans and all fees,

charges, expenses and other amounts owing to the Agent and/or the Banks under

the Loan Documents.

(b) All payments by the Borrower hereunder and under any of the other Loan

Documents shall be made without setoff or counterclaim and free and clear of and

without deduction for any taxes, levies, imposts, duties, charges, fees,

deductions, withholdings, compulsory loans, restrictions or conditions of any

nature now or hereafter imposed or levied by any jurisdiction or any political

subdivision thereof or taxing or other authority therein unless the Borrower is

compelled by law to make such deduction or withholding. If any such obligation

is imposed upon the Borrower with respect to any amount payable by them

hereunder or under any of the other Loan Documents, the Borrower will pay to the

Agent, for the account of the Banks or (as the case may be) the Agent, on the

date on which such amount is due and payable hereunder or under such other Loan

Document, such additional amount in Dollars as shall be necessary to enable the

Banks or the Agent to receive the same net amount which the Banks or the Agent

would have received on such due date had no such obligation been imposed upon

the Borrower. The Borrower will deliver promptly to the Agent certificates or

other valid vouchers

<PAGE>

for all taxes or other charges deducted from or paid with respect to payments

made by the Borrower hereunder or under such other Loan Document.

States, if requested in writing by the Borrower (but only so long as such Bank

remains lawfully able to do so), shall provide the Borrower with such duly

executed form(s) or statement(s) which may, from time to time, be prescribed by

law and, which, pursuant to applicable provisions of (i) an income tax treaty

between the United States and the country of residence of such Bank, (ii) the

Code, or (iii) any applicable rules or regulations in effect under (i) or (ii)

above, indicates the withholding status of such Bank; provided that nothing

herein (including without limitation the failure or inability to provide such

form or statement) shall relieve the Borrower of its obligations under

ss.4.4(b). In the event that the Borrower shall have delivered the certificates

or vouchers described above for any payments made by the Borrower and such Bank

receives a refund of any taxes paid by Borrower pursuant to ss.4.4(b), such Bank

will pay to the Borrower the amount of such refund promptly upon receipt

thereof; provided that if at any time thereafter such Bank is required to return

such refund, the Borrower shall promptly repay to such Bank the amount of such

refund.

4.5 Computations.

All computations of interest on the Loans and of other fees to the extent

applicable shall be based on a 360-day year and paid for the actual number of

days elapsed. Except as otherwise provided in the definition of the term

"Interest Period" with respect to LIBOR Rate Loans, whenever a payment hereunder

or under any of the other Loan Documents becomes due on a day that is not a

Business Day, the due date for such payment shall be extended to the next

succeeding Business Day, and interest shall accrue during such extension. The

outstanding amount of the Loans as reflected on the records of the Agent from

time to time shall be considered prima facie evidence of such amount.

4.6 Inability to Determine LIBOR Rate.

In the event that, prior to the commencement of any Interest Period

relating to any LIBOR Rate Loan, the Agent shall determine that adequate and

reasonable methods do not exist for ascertaining the LIBOR Rate for such

Interest Period, the Agent shall forthwith give notice of such determination

(which shall be conclusive and binding on the Borrower and the Banks) to the

Borrower and the Banks. In such event (a) any Loan Request with respect to LIBOR

Rate Loans shall be automatically withdrawn and shall be deemed a request for

Base Rate Loans and (b) each LIBOR Rate Loan will automatically, on the last day

of the then current Interest Period thereof, become a Base Rate Loan, and the

obligations of the Banks to make LIBOR Rate Loans shall be suspended until the

Agent determines that the circumstances giving rise to such suspension no longer

exist, whereupon the Agent shall so notify the Borrower and the Banks.

4.7 Illegality.

Notwithstanding any other provisions herein, if any present or future law,

regulation, treaty or directive or the interpretation or application thereof

shall make it unlawful, or any central bank or other governmental authority

having jurisdiction over a Bank or its LIBOR

<PAGE>

Lending Office shall assert that it is unlawful, for any Bank to make or

maintain LIBOR Rate Loans, such Bank shall forthwith give notice of such

circumstances to the Agent and the Borrower and thereupon (a) the commitment of

the Banks to make LIBOR Rate Loans or convert Loans of another type to LIBOR

Rate Loans shall forthwith be suspended and (b) the LIBOR Rate Loans then

outstanding shall be converted automatically to Base Rate Loans on the last day

of each Interest Period applicable to such LIBOR Rate Loans or within such

earlier period as may be required by law.

4.8 Additional Interest.

If any LIBOR Rate Loan or any portion thereof is repaid or is converted to

a Base Rate Loan for any reason on a date which is prior to the last day of the

Interest Period applicable to such LIBOR Rate Loan, or if repayment of the Loans

has been accelerated as provided in ss.12.1, the Borrower will pay to the Agent

upon demand for the account of the Banks in accordance with their respective

Commitment Percentages, in addition to any amounts of interest otherwise payable

hereunder, any amounts required to compensate the Banks for any losses, costs or

expenses which may be incurred as a result of such payment or conversion,

including, without limitation, an amount equal to daily interest for the

unexpired portion of such Interest Period on the LIBOR Rate Loan or portion

thereof so repaid or converted at a per annum rate equal to the excess, if any,

of (a) the interest rate calculated on the basis of the LIBOR Rate applicable to

such LIBOR Rate Loan (including any spread over such LIBOR Rate) minus (b) the

yield obtainable by the Agent upon the purchase of debt securities customarily

issued by the Treasury of the United States of America which have a maturity

date most closely approximating the last day of such Interest Period (it being

understood that the purchase of such securities shall not be required in order

for such amounts to be payable and that a Bank shall not be obligated or

required to have actually obtained funds at the LIBOR Rate or to have actually

reinvested such amounts as described above).

4.9 Additional Costs, Etc.

Notwithstanding anything herein to the contrary, if any present or future

applicable law, which expression, as used herein, includes statutes, rules and

regulations thereunder and legally binding interpretations thereof by any

competent court or by any governmental or other regulatory body or official with

appropriate jurisdiction charged with the administration or the interpretation

thereof and requests, directives, instructions and notices at any time or from

time to time hereafter made upon or otherwise issued to any Bank or the Agent by

any central bank or other fiscal, monetary or other authority (whether or not

having the force of law), shall:

(a) subject any Bank or the Agent to any tax, levy, impost, duty, charge,

fee, deduction or withholding of any nature with respect to this Agreement, the

other Loan Documents, such Bank's Commitment or the Loans (other than taxes

based upon or measured by the income or profits of such Bank or the Agent), or

(b) materially change the basis of taxation (except for changes in taxes on

income or profits) of payments to any Bank of the principal of or the interest

on any Loans or any other amounts payable to any Bank under this Agreement or

the other Loan Documents, or

<PAGE>

assessment, liquidity, capital adequacy or other similar requirements (whether

or not having the force of law) against assets held by, or deposits in or for

the account of, or loans by, or commitments of an office of any Bank, or

(d) impose on any Bank or the Agent any other conditions or requirements

with respect to this Agreement, the other Loan Documents, the Loans, such Bank's

Commitment, or any class of loans or commitments of which any of the Loans or

such Bank's Commitment forms a part; and the result of any of the foregoing is

(i) to increase the cost to any Bank of making, funding, issuing, renewing,

extending or maintaining any of the Loans or such Bank's Commitment, or

(ii) to reduce the amount of principal, interest or other amount payable to

such Bank or the Agent hereunder on account of such Bank's Commitment or any of

the Loans, or

(iii) to require such Bank or the Agent to make any payment or to forego

any interest or other sum payable hereunder, the amount of which payment or

foregone interest or other sum is calculated by reference to the gross amount of

any sum receivable or deemed received by such Bank or the Agent from the

Borrower hereunder,

then, and in each such case, the Borrower, upon demand made by such Bank or (as

the case may be) the Agent at any time and from time to time and as often as the

occasion therefor may arise, pay to such Bank or the Agent such additional

amounts as such Bank or the Agent shall determine in good faith to be sufficient

to compensate such Bank or the Agent for such additional cost, reduction,

payment or foregone interest or other sum. Each Bank and the Agent in

determining such amounts may use any reasonable averaging and attribution

methods, generally applied by such Bank or the Agent.

4.10 Capital Adequacy.

If after the date hereof any Bank determines that (a) the adoption of or

change in any law, rule, regulation, guideline, directive or request (whether or

not having the force of law) regarding capital requirements for banks or bank

holding companies or any change in the interpretation or application thereof by

any governmental authority, central bank or comparable agency charged with the

administration thereof, or (b) compliance by such Bank or its parent bank

holding company with any guideline, request or directive of any such entity

regarding capital adequacy or any amendment or change in interpretation of any

existing guideline, request or directive (whether or not having the force of

law), has the effect of reducing the return on such Bank's or such holding

company's capital as a consequence of such Bank's commitment to make Loans

hereunder to a level below that which such Bank or holding company could have

achieved but for such adoption, change or compliance (taking into consideration

such Bank's or such holding company's then existing policies with respect to

capital adequacy and assuming the full utilization of such entity's capital) by

any amount deemed by such Bank to be material, then such Bank may notify the

Borrower thereof. The Borrower agrees to pay to such Bank the amount of such

reduction in the return on capital as and when such reduction is determined,

upon presentation by such Bank of a statement of the amount and setting forth

such Bank's calculation

<PAGE>

thereof. In determining such amount, such Bank may use any reasonable averaging

and attribution methods. Notwithstanding the foregoing, the Borrower shall have

the right, in lieu of making the payment referred to in this ss.4.10, to prepay

the Loans of the applicable Bank within fifteen (15) days of such demand and

avoid the payment of the amounts otherwise due under this ss.4.10, provided,

however, that the Borrower shall be required to pay together with such

prepayment of the Loan all other costs, damages and expenses otherwise due under

this Agreement as a result of such prepayment.

4.11 Indemnity of Borrower.

The Borrower agrees to indemnify each Bank and to hold each Bank harmless

from and against any loss, cost or expense that such Bank may sustain or incur

as a consequence of (a) default by the Borrower in payment of the principal

amount of or any interest on any LIBOR Rate Loans as and when due and payable,

including any such loss or expense arising from interest or fees payable by such

Bank to lenders of funds obtained by it in order to maintain its LIBOR Rate

Loans, (b) default by the Borrower in making a borrowing or conversion after the

Borrower has given (or is deemed to have given) a Loan Request or a Conversion

Request, or (c) default by Borrower in making the payments or performing their

obligations under ss.ss.4.9, 4.10 or 4.12.

4.12 Interest on Overdue Amounts; Late Charge.

Following the occurrence and during the continuance of any Event of

Default, and regardless of whether or not the Banks shall have accelerated the

maturity of the Loans, all Loans shall bear interest payable on demand at a rate

per annum equal to two percent (2%) above the rate that would otherwise be

applicable at such time, until such amount shall be paid in full (after as well

as before judgment), or if such rate shall exceed the maximum rate permitted by

law, then at the maximum rate permitted by law. In addition, Borrower shall pay

a late charge equal to five percent (5%) of any amount of interest and/or

principal payable on the Loans or any other amounts payable hereunder or under

the Loan Documents, which is not paid within ten (10) days of the date when due.

4.13 Certificate.

A certificate setting forth any amounts payable pursuant to ss.4.8, ss.4.9,

ss.4.10, ss.4.11 or ss.4.12 and a brief explanation of such amounts which are

due, submitted by any Bank or the Agent to the Borrower, shall be conclusive in

the absence of manifest error.

4.14 Limitation on Interest.

Notwithstanding anything in this Agreement to the contrary, all agreements

between the Borrower and the Banks and the Agent, whether now existing or

hereafter arising and whether written or oral, are hereby limited so that in no

contingency, whether by reason of acceleration of the maturity of any of the

Obligations or otherwise, shall the interest contracted for, charged or received

by the Banks exceed the maximum amount permissible under applicable law. If,

from any circumstance whatsoever, interest would otherwise be payable to the

Banks in excess of the maximum lawful amount, the interest payable to the Banks

shall be reduced to the maximum amount permitted under applicable law; and if

from any circumstance the Banks shall ever

<PAGE>

receive anything of value deemed interest by applicable law in excess of the

maximum lawful amount, an amount equal to any excessive interest shall be

applied to the reduction of the principal balance of the Obligations of the

Borrower and to the payment of interest or, if such excessive interest exceeds

the unpaid balance of principal of the Obligations of the Borrower, such excess

shall be refunded to the Borrower. All interest paid or agreed to be paid to the

Banks shall, to the extent permitted by applicable law, be amortized, prorated,

allocated and spread throughout the full period until payment in full of the

principal of the Obligations of the Borrower (including the period of any

renewal or extension thereof) so that the interest thereon for such full period

shall not exceed the maximum amount permitted by applicable law. This section

shall control all agreements between the Borrower and the Banks and the Agent.

5. COLLATERAL SECURITY.

5.1 Collateral.

The Obligations of the Borrower shall be secured by a perfected first

priority lien or security interest to be held by the Agent for the benefit of

the Banks in (i) all Mortgage Loans held pursuant to the terms of the Collateral

Assignment, (ii) any Interest Rate Contract pursuant to the Assignment of Hedge,

(iii) the Lockbox Account pursuant to the Lockbox Agreement, and (iv) any other

assets of the Borrower pursuant to the terms of any other Security Document.

5.2 Release of Collateral.

(a) Upon termination of this Agreement and the Commitment of the Banks to

make Loans hereunder and the payment in full of all of the Obligations, the

Agent, on behalf of the Banks, shall promptly release the Collateral and shall

execute such instruments of release as the Borrower and its counsel may

reasonably request.

(b) So long as no Event of Default has occurred and is then continuing, the

Collateral Agent shall be authorized to release each Mortgage Loan from the lien

of the Collateral Assignment as it is repaid in full or sold so that the

Borrower may in turn release the Mortgage and return the original Mortgage Loan

Note to the Mortgage Loan Obligor or deliver the Mortgage Loan Note and Mortgage

Loan Documents to the purchaser of such Mortgage Loan, as more particularly

described in the Collateral Agency Agreement. Upon the occurrence and during the

continuance of an Event of Default, one hundred percent (100%) of the loan

repayment proceeds of each Mortgage Loan or other proceeds from the sale or

other realization upon the Mortgage Loan Collateral or Bonds shall be applied to

payment of the Outstanding Loans, as more particularly provided in the Lockbox

Agreement and upon receipt of such proceeds in the Lockbox with respect to a

Mortgage Loan, the Agent shall instruct the Collateral Agent to execute a

partial release from the lien of the Collateral Assignment with respect to such

Mortgage Loan.

and provided no Default or Event of Default shall have occurred and be

continuing hereunder (or would exist immediately after giving effect to the

transactions contemplated by this ss.5.2), the Collateral Agent shall release a

Mortgage Loan from the lien or security interest in the Collateral Assignment,

upon the written direction of the Agent (or the written direction of the

Borrower,

<PAGE>

consented to in writing by the Agent), which direction or consent shall be given

or withheld at the Agent's sole discretion (other than in connection with a

securitization transaction permitted by ss.7.17 hereof, in which case such

consent of the Agent shall not be withheld so long as all other terms and

conditions of this ss.5.2(c) are satisfied), subject to and upon the following

terms and conditions:

(i) the Borrower shall deliver to the Agent and the Collateral Agent

written notice of its desire to obtain such release no later than three (3)

Business Days prior to the date on which such release is to be effected;

(ii) the Borrower shall pay all reasonable administrative costs and

expenses of the Agent in connection with such release, including without

limitation, reasonable attorney's fees; and

(iii) the Borrower shall pay to the Agent for the account of the Banks a

release price in an amount necessary to reduce the outstanding principal balance

of the Loans so that no Event of Default shall exist under ss.12 following such

release.

The Agent agrees under such circumstances to consent to the release of any

Mortgage Loan specifically requested in writing by the Borrower for the purpose

of enabling the Borrower to pledge such Mortgage Loan to secure Debt

Certificates to the extent such pledge is required to maintain the minimum

required collateralization level under the relevant Indenture, and the Borrower

will pledge such Mortgage Loan for such purpose.

5.3 Addition of Collateral; Guarantors.

The Borrower shall grant a first priority security interest in and to all

Mortgage Loans entered into by the Borrower after the date hereof. Such addition

to the Collateral shall be effected by the completion and delivery within thirty

(30) calendar days of the actual closing of the Mortgage Loan to the Collateral

Agent for the benefit of the Agent and the Banks of each of the Mortgage Loan

Collateral Documents with respect to Mortgage Loans made during the preceding

calendar month and the delivery to the Agent by the tenth (10th) day of each

calendar month of a certification by the Borrower that each of the other

Mortgage Loan Qualification Documents are in the possession and/or control of

the Borrower. In addition, to the extent the Borrower desires to form a

Subsidiary to originate or hold any Mortgage Loans after the Closing Date, the

Borrower shall obtain the prior written consent of the Agent to the formation of

such Subsidiary. If approved by the Agent, each such Subsidiary other than a

Securitization Subsidiary shall execute a guaranty of the Obligations in form

and substance satisfactory to the Agent and such other documents as required by

the Agent and shall be subject to all of the terms and provisions of this

Agreement relating to Subsidiaries.

<PAGE>

6. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.

The Borrower represents and warrants to the Agent and the Banks as follows.

6.1 Corporate Authority, Etc.

(a) Incorporation; Good Standing. The Borrower is a Minnesota corporation

duly incorporated pursuant to its articles of incorporation filed with the

Minnesota Secretary of State on May 27, 1994, and is validly existing and in

good standing under the laws of the State of Minnesota. The Manager is a

Minnesota corporation duly incorporated pursuant to its articles of

incorporation filed with the Minnesota Secretary of State on May 27, 1994, and

is validly existing and in good standing under the laws of the State of

Minnesota. Each of Borrower and the Manager (i) has all requisite power to own

its property and conduct its business as now conducted and as presently

contemplated, and (ii) is in good standing as a foreign entity and is duly

authorized to do business in the jurisdictions where the Mortgage Loans are

solicited and made and in each other jurisdiction where such Person is legally

required to be so qualified. The Borrower is a real estate investment trust in

full compliance with and entitled to the benefits of ss.856 of the Code.

(b) Subsidiaries. Each of the Subsidiaries of the Borrower (i) is a

corporation, limited partnership, limited liability company or trust duly

incorporated, formed or organized (as applicable) under the laws of its State of

incorporation, formation or organization and is validly existing and in good

standing under the laws thereof, (ii) has all requisite power to own its

property and conduct its business as now conducted and as presently contemplated

and (iii) is in good standing and is duly authorized to do business in each

jurisdiction where Mortgage Loans held by it are solicited and made and in each

other jurisdiction where such Person is legally required to be so qualified. The

Subsidiaries other than Securitization Subsidiaries are wholly-owned direct

Subsidiaries of the Borrower.

Agreement and the other Loan Documents to which the Borrower or any of its

Subsidiaries is or is to become a party and the transactions contemplated hereby

and thereby (i) are within the power and authority of such Person, (ii) have

been duly authorized by all necessary proceedings on the part of such Person,

(iii) do not and will not conflict with or result in any breach or contravention

of any provision of law, statute, rule or regulation to which such Person is

subject or any judgment, order, writ, injunction, license or permit applicable

to such Person, (iv) do not and will not conflict with or constitute a default

(whether with the passage of time or the giving of notice, or both) under any

provision of the articles of incorporation, partnership agreement, declaration

of trust or other charter documents, operating agreement or bylaws of, or any

mortgage, indenture, agreement, contract or other instrument binding upon, such

Person or any of its properties or to which such person is subject, and (v) do

not and will not result in or require the imposition of any lien or other

encumbrance on any of the properties, assets or rights of such Person except for

the Liens and security title granted by the Loan Documents.

(d) Enforceability. The execution and delivery of this Agreement and the

other Loan Documents to which the Borrower or any of its Subsidiaries is or is

to become a party are valid and legally binding obligations of such Person

enforceable in accordance with the

<PAGE>

respective terms and provisions hereof and thereof, except as enforceability is

limited by bankruptcy, insolvency, reorganization, moratorium or other laws

relating to or affecting generally the enforcement of creditors' rights and

except to the extent that availability of the remedy of specific performance or

injunctive relief is subject to the discretion of the court before which any

proceeding therefor may be brought.

6.2 Governmental Approvals.

The execution, delivery and performance of this Agreement and the other

Loan Documents to which the Borrower or any of its Subsidiaries is or is to

become a party and the transactions contemplated hereby and thereby do not

require the approval or consent of, or filing with, any governmental agency or

authority other than those already obtained and the filing of the Security

Documents in the appropriate records office with respect thereto.

6.3 Title to Properties; Lease.

The Borrower and its Subsidiaries own all of the assets reflected in the

consolidated balance sheet of the Borrower and the Subsidiaries as of the

Balance Sheet Date or acquired since that date (except property and assets sold

or otherwise disposed of in the ordinary course of business since that date),

subject to no rights of others, including any mortgages, leases, conditional

sales agreements, title retention agreements, liens or other encumbrances except

Permitted Liens.

6.4 Financial Statements.

The Borrower has delivered to each of the Banks: (a) the consolidated

balance sheet of the Borrower and its Subsidiaries as of the Balance Sheet Date,

(b) the most recent 10KSB and 10QSB of the Borrower, (c) the Schedules of the

Initial Mortgage Loans, the Excluded Mortgage Loans, the OREO and the

Non-Performing Mortgage Loans attached to this Agreement, and (d) certain other

financial information relating to the Borrower and the Mortgage Loans. Such

balance sheet and statements have been prepared in accordance with generally

accepted accounting principles and fairly present the financial condition of the

Borrower and its Subsidiaries as of such dates and the results of the operations

of the Borrower for such periods. There are no liabilities, contingent or

otherwise, of the Borrower or any of its Subsidiaries involving material amounts

not disclosed in said financial statements and the related notes thereto.

6.5 No Material Changes.

Since the Balance Sheet Date, there has occurred no materially adverse

change in the financial condition or business of the Borrower or any of its

Subsidiaries as shown on or reflected in the consolidated balance sheet of the

Borrower and its Subsidiaries as of the Balance Sheet Date, or its consolidated

statement of income or cash flows for the fiscal year then ended, other than

changes in the ordinary course of business that have not had any materially

adverse effect either individually or in the aggregate on the business or

financial condition of such Person.

<PAGE>

6.6 Franchises, Patents, Copyrights, Etc.

The Borrower and its Subsidiaries possess all franchises, patents,

copyrights, trademarks, trade names, servicemarks, licenses and permits, and

rights in respect of the foregoing, adequate for the conduct of their business

substantially as now conducted without known conflict with any rights of others.

6.7 Litigation.

There are no actions, suits, proceedings or investigations of any kind

pending or to the knowledge of such person threatened against the Borrower or

any of its Subsidiaries before any court, tribunal, arbitrator, mediator or

administrative agency or board that, if adversely determined, might, either in

any case or in, the aggregate, materially adversely affect the properties,

assets, financial condition or business of such Person or materially impair the

right of such Person to carry on business substantially as now conducted by it,

or result in any liability not adequately covered by insurance, or for which

adequate reserves are not maintained on the balance sheet of such Person, or

which question the validity of this Agreement or any of the other Loan

Documents, any action taken or to be taken pursuant hereto or thereto or any

lien or security interest created or intended to be created pursuant hereto or

thereto, or which will adversely affect the ability of the Borrower to pay and

perform the Obligations in the manner contemplated by this Agreement and the

AGREEMENTS / CONTRACTS

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