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

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<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>
<CAPTION>

Total Leverage Ratio                   Per Annum Percentage for               Per Annum Percentage for Base
                                       LIBOR Loans                            Rate Loans
------------------------------------- ------------------------------------- ----------------------------------------

<S>                                   <C>                                   <C>
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.

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     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).

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<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

     (c)  Philip J. Myers shall cease to own,  directly or indirectly,  at least
          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.

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<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

     (c)  all amounts  representing  minority  interests which are applicable to
          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.

                                       6

<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

                                       7

<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

                                       8

<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.

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<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

                                       10

<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

                                       11

<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

                                       12

<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.

                                       13

<PAGE>

     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.

                                       14
<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;

                                       15

<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:

                                       16

<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

                                       17
<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

                                       18
<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

                                       19
<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 .

                                       20
<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.

     Register. See ss.18.2.

     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.

22
<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.

                                       22

<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).

                                       23

<PAGE>

     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.

     (c) A reference to any law includes any amendment or  modification  to such
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.

                                       24

<PAGE>

     (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:

                                       25
<PAGE>

  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,

                                       26

<PAGE>

at the rate per annum  equal to the sum of the LIBOR  Rate  determined  for such
Interest Period plus the Applicable Margin.

     (c) The  Borrower  promises to pay interest on each Loan in arrears on each
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.

                                       27
<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;

                                       28

<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;

     (c) Each  Subsequent  Bank shall execute and deliver to the Agent a joinder
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

                                       29
<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.

     (c) If at any time the sum of the aggregate outstanding principal amount of
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

                                       30
<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.

                                       31

<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.

     (c) In the  event  that the  Borrower  does  not  notify  the  Agent of its
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

                                       32

<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.

     (c) Each Bank organized under the laws of a jurisdiction outside the United
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

                                       33
<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

                                       34
<PAGE>

     (c) impose or increase or render  applicable any special deposit,  reserve,
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

                                       35
<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

                                       36

<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.

     (c) In addition to the  circumstances  outlined in ss.5.2(a) and (b) above,
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,

                                       37

<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.

                                       38
<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.

     (c)  Authorization.   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 (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

                                       39
<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.

                                       40

<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
other Loan Documents.

     6.8 No Materially Adverse Contracts, Etc.

     None of the Borrower or any of its  Subsidiaries is subject to any charter,
corporate or other legal restriction,  or any judgment,  decree,  order, rule or
regulation  that has or is expected in the future to have a  materially  adverse
effect on the business,  assets or financial  condition of such Person.  None of
the Borrower nor any of its Subsidiaries is a party to any contract or agreement
that has or is  expected,  in the  judgment of the  partners or officers of such
Person, to have any materially adverse effect on the business of any of them.

     6.9 Compliance with Other Instruments, Laws, Etc.

     None of the  Borrower or any of its  Subsidiaries  is in  violation  of any
provision  of  its  charter  or  other  organizational  documents,  bylaws,  the
Indentures or any other agreement or instrument to which it may be subject or by
which it or any of its properties may be bound or any decree,  order,  judgment,
statute, license, rule or regulation.

     6.10 Tax Status.

     The  Borrower and each its  Subsidiaries  (a) has made or filed all federal
and state income and all other tax returns, reports and declarations required by
any  jurisdiction  to which it is  subject,  (b) has paid all  taxes  and  other
governmental  assessments  and  charges  shown or  determined  to be due on such
returns,  reports and  declarations,  except those being contested in good faith
and by appropriate  proceedings,  and (c) has set aside on its books  provisions
adequate for the payment of all taxes for periods  subsequent  to the periods to
which such returns,  reports or  declarations  apply.  There are no unpaid taxes
claimed to be due by the taxing authority of any jurisdiction,  and the partners
or officers of such Person know of no basis for any such claim.

                                       41

<PAGE>

     6.11 No Event of Default.

     No Default has occurred and is continuing and no Event of Default exists.

     6.12 Holding Company and Investment Company Acts.

     None of the Borrower or any of its  Subsidiaries  is or after giving effect
to any Loan will be,  subject to  regulation  under the Public  Utility  Holding
Company Act of 2005, the Federal Power Act or the Investment Company Act of 1940
or to any federal or state statute or  regulation  limiting its ability to incur
indebtedness for borrowed money.

     6.13 Absence of UCC Financing Statements, Etc.

     Except with respect to Permitted  Liens,  there is no financing  statement,
security  agreement,  chattel  mortgage,  real estate mortgage or other document
filed or recorded with any filing  records,  registry,  or other public  office,
that purports to cover,  affect or give notice of any present or possible future
lien on, or security interest or security title in, any property of the Borrower
or any of its Subsidiaries or rights thereunder.

     6.14 Certain Transactions.

     Except as set  forth on  Schedule  6.14,  none of the  officers,  trustees,
directors, or employees of the Borrower or any of its Subsidiaries is a party to
any  transaction  with  Borrower  or any of its  Subsidiaries  (other  than  for
services  as  employees,  officers  and  directors),   including  any  contract,
agreement or other  arrangement  providing for the  furnishing of services to or
by,  providing for rental of real or personal  property to or from, or otherwise
requiring  payments to or from any officer,  trustee,  director or such employee
or, to the  knowledge of the Borrower,  any  corporation,  partnership,  limited
liability  company,  trust  or  other  entity  in which  any  officer,  trustee,
director,  or any such  employee  has a  substantial  interest or is an officer,
director, trustee or partner.

     6.15 Employee Benefit Plans.

     The  Borrower  has  no  employees  and  thus  no  Employee  Benefit  Plans,
Multiemployer Plans or Guaranteed Pension Plans.

     6.16 Regulations T, U and X.

     No  portion  of any Loan is to be used for the  purpose  of  purchasing  or
carrying  any  "margin  security"  or  "margin  stock" as such terms are used in
Regulations T, U and X of the Board of Governors of the Federal  Reserve System,
12 C.F.R. Parts 220, 221 and 224.

     6.17 Subsidiaries.

     Schedule 6.17 sets forth all of the Subsidiaries of the Borrower,  the form
and jurisdiction of organization of each of the Subsidiaries, and the Borrower's
ownership interest therein.

                                       42

<PAGE>

     6.18 Loan Documents.

     All of the  representations  and  warranties  made by or on  behalf  of the
Borrower and its  Subsidiaries in this Agreement and the other Loan Documents or
any document or instrument delivered to the Agent or the Banks pursuant to or in
connection  with any of such Loan Documents are true and correct in all material
respects,  and neither the  Borrower nor any of its  Subsidiaries  has failed to
disclose  such  information  as is  necessary to make such  representations  and
warranties not misleading in any material respects.

     6.19 Brokers.

     None of the  Borrower  nor any of its  Subsidiaries  nor  the  Manager  has
engaged  or  otherwise  dealt  with any  broker,  finder  or  similar  entity in
connection with this Agreement or the Loans contemplated hereunder.

     6.20 Other Debt.

     None  of the  Borrower  or any of its  Subsidiaries  is in  default  of the
payment of any  Indebtedness or any other  agreement,  mortgage,  deed of trust,
deed to secure debt, security agreement, financing agreement, indenture or lease
to which any of them is a party.  The Borrower is not a party to or bound by any
agreement,  instrument or indenture that may require the  subordination in right
or time or  payment  of any of the  Obligations  to any  other  indebtedness  or
obligation of the  Borrower.  The Borrower has provided to the Agent a schedule,
and upon the  request  of the Agent  will  provide  copies,  of all  agreements,
mortgages,  deeds of trust, deeds to secure debt,  financing agreements or other
material  agreements  binding upon the Borrower and any of its  Subsidiaries  or
their  respective   properties,   and  entered  into  by  the  Borrower  or  its
Subsidiaries  as of the date of this Agreement with respect to any  Indebtedness
of the Borrower permitted under this Agreement.

     6.21 Solvency.

     As of the  Closing  Date  and  after  giving  effect  to  the  transactions
contemplated by this Agreement and the other Loan Documents, including all Loans
made or to be made hereunder,  neither the Borrower nor any of its  Subsidiaries
is insolvent on a balance sheet basis such that the sum of such Person's  assets
exceeds  the sum of such  Person's  liabilities,  such Person is able to pay its
debts as they become due, and such Person has sufficient capital to carry on its
business.

     6.22 No Fraudulent Intent.

     Neither the  execution  and delivery of this  Agreement or any of the other
Loan  Documents  nor  the  performance  of any  actions  required  hereunder  or
thereunder is being undertaken by the Borrower or any of its  Subsidiaries  with
or as a result of any actual  intent by any of such Persons to hinder,  delay or
defraud any entity to which any of such Persons is now or will hereafter  become
indebted.

                                       43

<PAGE>

     6.23 Transaction in Best Interests of Borrower; Consideration.

     The transaction evidenced by this Agreement and the other Loan Documents is
in the  best  interests  of the  Borrower,  each  of its  Subsidiaries  and  the
creditors  of such  Persons.  The direct and  indirect  benefits to inure to the
Borrower and each of its  Subsidiaries  pursuant to this Agreement and the other
Loan Documents constitute  substantially more than "reasonably equivalent value"
(as such term is used in  Section  548 of the  Bankruptcy  Code)  and  "valuable
consideration,"  "fair value," and "fair consideration," (as such terms are used
in any applicable state fraudulent conveyance law), in exchange for the benefits
to be provided by the  Borrower  and each of its  Subsidiaries  pursuant to this
Agreement and the other Loan Documents.

     6.24 Mortgage Loans.

     (a) Delivery of Mortgage Loan  Qualification  Documents.  The Mortgage Loan
Collateral  Documents  have been  delivered to Agent,  or Collateral  Agent,  as
applicable,  with  respect to each  Mortgage  Loan made by the  Borrower and the
Borrower  has  delivered  certification  to Agent that all other  Mortgage  Loan
Qualification  Documents are in the possession  and/or control of Borrower.  The
names of the Mortgage Loan Obligors,  amounts owing,  interest rates,  due dates
and other facts  furnished to Agent with  respect to any of the  Mortgage  Loans
have been and will be  correctly  stated  in all  material  respects.  As of the
Closing Date (i) all of the Excluded Mortgage Loans are accurately  described on
Schedule 1.1 hereto; (ii) all of the Initial Mortgage Loans held by the Borrower
are  accurately  described  on Schedule  1.2  hereto;  (iii) all of the OREO and
Non-Performing  Mortgage Loans are accurately  described on Schedule 1.3 hereto;
and (iv) the sole Initial  Interim Loan is accurately  described on Schedule 1.4
hereto.

     (b) Good Title.  Borrower is the sole,  lawful and beneficial  owner of the
Mortgage Loans free and clear of all liens,  restrictions,  claims,  pledges and
encumbrances whatsoever and has the full and complete right, power and authority
to  create  a  security  interest  in the  Mortgage  Loans  in favor of Agent in
accordance  with the terms and  provisions  of the  Collateral  Assignment.  The
security  interest in the Mortgage  Loans created by the  Collateral  Assignment
constitutes and will at all times continue to constitute a valid and enforceable
first  priority  perfected  security  interest in the Mortgage Loans in favor of
Agent, free and clear of all liens,  claims,  encumbrances and rights of others.
Borrower  has made no contract  or  arrangement  of any kind or type  whatsoever
(whether oral or written,  formal or informal),  the performance of which by the
other party thereto could give rise to a lien on the Mortgage Loans.

     (c)  Status  of the  Mortgage  Loans.  The  Mortgage  Loans  are  valid and
enforceable in accordance with the terms of the Mortgage Loan Documents, subject
to insolvency, bankruptcy, moratorium and other laws affecting creditors' rights
generally,  and are in compliance  with all  applicable  laws. The Mortgage Loan
Documents create a valid,  enforceable and perfected lien and security  interest
in all Bonds and Mortgage Loan  Collateral  covered  thereby.  The Mortgage Loan
Documents  provided to the Agent or Collateral Agent are true and correct copies
or  originals,  as  applicable,  thereof.  With  respect  to the  Mortgage  Loan
Collateral, there are no title, survey, environmental, entitlement/zoning issues
or defects  which could have a material  adverse  effect on the repayment of the
Mortgage Loans.

                                       44
<PAGE>

     (d) No Offset or  Defenses.  The  Mortgage  Loan Notes  evidence  bona fide
indebtedness  owing to Borrower by the Mortgage Loan Obligors,  and the Mortgage
Loan Obligors have no rights to setoff, counterclaim or defenses with respect to
the payment or performance of any obligations under the Mortgage Loan Documents,
including,  without limitation, laws relating to usury,  truth-in-lending,  real
estate  settlement   procedures,   consumer  credit  protection,   equal  credit
opportunity or disclosure laws relating to the Mortgage Loans.

     6.25 PATRIOT Act Provisions.

     (a) Neither  Borrower nor, to Borrower's  knowledge,  (i) any of Borrower's
directors,  officers,  shareholders,  members, managers, partners, or employees,
(ii) any  guarantor or  indemnitor,  (iii) any manager,  (iv) any Mortgage  Loan
Obligor, or (iv) any director, officer,  shareholder,  member, manager, partner,
employee, affiliate, or subsidiary of any of the foregoing is:

     (i)  a Prohibited  Person or is owned or controlled by, or acting on behalf
          of, a Prohibited Person; or

     (ii) in  violation  of any  applicable  law  relating to money  laundering,
          anti-terrorism,  trade embargoes or economic sanctions,  including the
          Executive Order (as hereinafter defined) and the PATRIOT Act.

     (b) Without  limiting the foregoing:  (i) none of the funds or other assets
of  Borrower or any  guarantor  or  indemnitor  constitute  property  of, or are
beneficially  owned (directly or indirectly) by any Prohibited  Person;  (ii) no
Prohibited  Person  has any  interest  of any  nature  whatsoever  (directly  or
indirectly)  in Borrower or any guarantor or  indemnitor;  and (iii) none of the
funds or other  assets of  Borrower or any  guarantor  or  indemnitor  have been
derived from any unlawful activity.

     (c) No portion of any of real  property or, to  Borrower's  knowledge,  the
Mortgage Loan  Collateral has been or will be purchased,  improved,  equipped or
furnished with proceeds of any unlawful activity.

     (d) Borrower has implemented procedures,  and will consistently apply those
procedures  throughout  the term of the  Loan,  to  ensure  that  the  foregoing
representations  and  warranties  remain true and correct during the term of the
Loan.

     (e) For purposes of this provision a "Prohibited Person" means any person:

     (i)  that is  listed  in the  Annex  to,  or is  otherwise  subject  to the
          provisions  of,  Executive  Order No.  13224 - Blocking  Property  and
          Prohibiting  Transactions with Persons who Commit, Threaten to Commit,
          or Support  Terrorism,  effective  September 24, 2001 (the  "Executive
          Order"),  including any person that commits, threatens or conspires to
          commit or supports "terrorism" as defined in the Executive Order;

     (ii) with  whom  the  Agent  or any  Bank is  prohibited  from  dealing  or
          otherwise  engaging in any  transaction by any applicable law relating
          to money

                                       45
<PAGE>

          laundering,  anti-terrorism,  trade  embargoes or economic  sanctions,
          including  the  Executive  Order,  the Patriot Act, the  International
          Emergency  Economic  Powers Act, 50 U.S.C.  ss.ss.  1701 et seq.,  the
          Trading  with the  Enemy  Act,  50  U.S.C.  App.  1 et  seq.,  and any
          executive orders or regulations promulgated thereunder;

     (iii) that is  named  as a  "specifically  designated  national  (SDN)  and
          blocked  person"  on the  most  recent  list of  specially  designated
          nationals and blocked persons  subject to financial  sanctions that is
          maintained by the U.S. Treasury  Department,  Office of Foreign Assets
          Control  ("OFAC")  and  any  other  similar  list  maintained  by OFAC
          pursuant to any  applicable  law (or if such list does not exist,  the
          similar list then being  maintained by the United States),  including,
          without  limitation,   trade  embargo,  economic  sanctions  or  other
          prohibitions  imposed by any  executive  order of the President of the
          United States (the "OFAC List"); or

     (iv) that is an affiliate  (including  any  principal,  director,  officer,
          shareholder,  member, manager,  partner,  employee,  agent, affiliate,
          subsidiary,  participant,  immediate family member or close associate)
          of a person  described in one or more of clauses (i) through  (iii) of
          this definition.

7.   AFFIRMATIVE COVENANTS OF THE BORROWER.

     The  Borrower  covenants  and agrees  that,  so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans:

     7.1 Punctual Payment.

     The Borrower will duly and punctually pay or cause to be paid the principal
and interest due on all of its Indebtedness outstanding from time to time (other
than the Loans),  including any fees provided for in the  underlying  agreements
evidencing  such  Indebtedness,  all  in  accordance  with  the  terms  of  such
agreements.

     7.2 Maintenance of Office.

     The Borrower and the Manager will maintain their chief executive  office at
10237 Yellow Circle Drive,  Minnetonka,  Minnesota 55343, or at such other place
in the United States of America as the Borrower or the Manager  shall  designate
upon  prior  written  notice  to  the  Agent  and  the  Banks,   where  notices,
presentations  and demands to or upon the  Borrower or the Manager in respect of
the Loan Documents may be given or made.

     7.3 Records and Accounts.

     The Borrower  will (a) keep,  and cause each of its  Subsidiaries  to keep,
true and accurate  records and books of account in which full,  true and correct
entries will be made in accordance with generally accepted accounting principles
and (b) maintain  adequate accounts and reserves for all taxes (including income
taxes),  depreciation  and  amortization of its properties and the properties of
its Subsidiaries, contingencies and other reserves. Neither the Borrower nor any
of its Subsidiaries  shall,  without the prior written consent of the Agent, (x)
make any material

                                       46

<PAGE>

changes  to the  accounting  principles  used by such  Person in  preparing  the
financial statements and other information described in ss.6.4 or (y) change its
fiscal year.

     7.4 Financial Statements, Certificates and Information.

     The Borrower will deliver or cause to be delivered to each of the Banks:

     (a) as soon as  practicable,  but in any event not later than  ninety  (90)
days after the end of each fiscal year of the Borrower, the audited Consolidated
balance sheet of the Borrower and its  Subsidiaries at the end of such year, and
the related audited Consolidated  statements of income, changes in shareholder's
equity and cash flows for such year, each setting forth in comparative  form the
figures for the previous fiscal year and all such statements to be in reasonable
detail,  prepared in accordance with generally accepted  accounting  principles,
and accompanied by an auditor's report prepared without qualification by Boulay,
Heutmaker & Zibell & Co. P.L.L.P.,  or by a "Big Four" accounting firm, any Form
10-KSB  filed with the SEC (unless the SEC has approved an  extension,  in which
event the Borrower will deliver to the Agent and each of the Banks a copy of the
Form  10-KSB  simultaneously  with  delivery  to the SEC),  a  statement  of the
Borrower's  taxable  net  income  for the  prior  fiscal  year,  and  any  other
information the Banks may need to complete a financial  analysis of the Borrower
and its Subsidiaries;

     (b) as soon as  practicable,  but in any event not later than  thirty  (30)
days after the end of each calendar  month,  copies of the internally  prepared,
unaudited Consolidated balance sheet of the Borrower and its Subsidiaries, as at
the end of such month,  and the related  unaudited  Consolidated  statements  of
income,  changes in  shareholder's  equity and cash flows for the portion of the
Borrower's  fiscal year then elapsed,  and a statement  showing the aging of the
receivables  and payables  for the Mortgage  Loans,  all in  reasonable  detail,
together with a certification by the principal  financial or accounting  officer
of the Borrower  that the  information  contained in such  financial  statements
fairly presents the financial  position of the Borrower and its  Subsidiaries on
the date thereof (subject to year-end  adjustments and adjustments that would be
required  under  generally   accepted   accounting   principles   applicable  to
accrual-based accounting).

     (c) as soon as practicable, but in any event not later than forty-five (45)
days  after  the end of each of the  first  three  (3)  fiscal  quarters  of the
Borrower in each year,  copies of any Form 10-QSB filed with the SEC (unless the
SEC has  approved an  extension  in which event the  Borrower  will deliver such
copies of the Form 10-QSB to the Agent and each of the Banks simultaneously with
delivery to the SEC);

     (d) as soon as practicable, but in any event not later than forty-five (45)
days  after  each  fiscal  quarter  of the  Borrower,  copies of a  Consolidated
statement  of Adjusted  EBITDA for such fiscal  quarter for the Borrower and its
Subsidiaries and a Consolidated  statement of Borrowing Base Adjusted EBITDA for
such fiscal quarter for the Borrower and its  Subsidiaries,  prepared on a basis
consistent with the statement  furnished  pursuant to ss.6.4(c)  together with a
certification by the principal  financial or accounting  officer of the Borrower
that the  information  contained in such statement  fairly presents the Adjusted
EBITDA and Borrowing Base Adjusted  EBITDA of the Borrower and its  Subsidiaries
for such period;

                                       47

<PAGE>

     (e) simultaneously  with the delivery of the financial  statements referred
to in subsections  (a) and (c) above,  a statement (a "Compliance  Certificate")
certified by the principal  financial or  accounting  officer of the Borrower in
the form of Exhibit C hereto  (or in such  other  form as the Agent may  approve
from time to time) setting forth in reasonable  detail  computations  evidencing
compliance  with  the  covenants  contained  in  ss.9  and the  other  covenants
described  therein,  and (if applicable)  reconciliations  to reflect changes in
generally accepted accounting principles since the Balance Sheet Date;

     (f) Borrower  shall submit not later than the fifteenth  (15th) day of each
calendar month and with each Draw request,  a Borrowing Base  Certificate in the
form of Exhibit D attached hereto pursuant to which Borrower shall calculate the
amount of the Borrowing Base as of the end of the immediately preceding calendar
month.

     (g)  contemporaneously  with the filing or mailing  thereof,  copies of all
material of a financial nature filed with the SEC or sent to the stockholders of
the Borrower as a group;

     (h) as soon as practicable but in any event not later than thirty (30) days
after the end of each calendar month, a spreadsheet with respect to the Mortgage
Loans  with  respect  to such  calendar  month,  showing  outstanding  principal
balances, principal amortizations,  prepayments,  interest earned, delinquencies
and any other  information  regarding  the  Mortgage  Loans as the  Agent  shall
request, such spreadsheet to be in form satisfactory to the Agent, and certified
by the principal financial or accounting officer of the Borrower;

     (i) promptly after they are filed with the Internal Revenue Service, copies
of all annual federal income tax returns and amendments  thereto of the Borrower
and its Subsidiaries;

     (j) not later than thirty (30) days prior to the end of each fiscal year of
the Borrower, a budget and business plan for the next fiscal year;

     (k) contemporaneously  with the provision of the same to the trustees under
the Indentures,  true and correct copies of all compliance certificates required
to be provided by Borrower under the terms of the Indentures; and

     (l) from time to time such  other  financial  data and  information  in the
possession of the Borrower or its  Subsidiaries  (including  without  limitation
auditors' management letters, and information as to legal and regulatory changes
affecting the Borrower) as the Agent may request.

     7.5 Notices.

     (a) Defaults. The Borrower will promptly notify the Agent in writing of the
occurrence  of any  Default or Event of  Default.  If any Person  shall give any
notice or take any other action in respect of a claimed default  (whether or not
constituting  an Event of  Default)  under  this  Agreement  or under  any note,
evidence of indebtedness, indenture or other obligation to which or with respect
to which the Borrower or any of its Subsidiaries is a party or obligor,  whether
as principal or surety, and such default would permit the holder of such note or
obligation or other evidence of indebtedness to accelerate the maturity thereof,
the Borrower

                                       48

<PAGE>

shall  forthwith give written notice thereof to the Agent and each of the Banks,
describing the notice or action and the nature of the claimed default.

     (b) Notification of Claims Against  Collateral.  By the tenth (10th) day of
each calendar  month,  Borrower will, or will cause Manager to, notify the Agent
in writing of (i) any setoff,  claims  (including,  with respect to any Mortgage
Loan Collateral,  environmental claims), withholdings or other defenses to which
any of the  Collateral,  or the rights of the Agent or the Banks with respect to
the  Collateral,  are subject,  or (ii) the  occurrence of a default or event of
default under any of the Mortgage Loans.

     (c) Notice of Litigation and  Judgments.  The Borrower and the Manager will
give notice to the Agent in writing  within five (5)  Business  Days of becoming
aware of any  litigation  or  proceedings  threatened  in writing or any pending
litigation and proceedings  affecting the Borrower or any of its Subsidiaries or
to which  the  Borrower  or any of its  Subsidiaries  is or is to become a party
involving an  uninsured  claim  against the Borrower or any of its  Subsidiaries
that could  reasonably  be expected to have a materially  adverse  effect on the
Borrower and stating the nature and status of such  litigation  or  proceedings.
The Borrower and the Manager will give notice to the Agent, in writing,  in form
and  detail  satisfactory  to the Agent and each of the Banks,  within  five (5)
Business  Days of any  judgment  not  covered  by  insurance,  whether  final or
otherwise,  against  the  Borrower  or any of its  Subsidiaries  in an amount in
excess of $100,000.

     (d) Key Man Insurance Trigger Events. The Borrower will promptly notify the
Agent in writing of the occurrence of any Key Man Insurance  Trigger Event,  and
of the action the Borrower proposes to take with respect thereto.

     7.6 Existence; Maintenance of Properties.

     (a) The  Borrower  will do or  cause  to be done all  things  necessary  to
preserve  and  keep in full  force  and  effect  its  existence  as a  Minnesota
corporation.  The Borrower will cause each of its Subsidiaries to do or cause to
be done all things necessary to preserve and keep in full force and effect their
respective legal existences and good standing in their respective  jurisdictions
of  incorporation,  organization or formation (as the case may be). The Borrower
will do or cause to be done all things  necessary to preserve or establish  its,
and  each of its  Subsidiaries',  good  standing  as a  foreign  entity  and due
authorization  to  do  business  in  the  jurisdictions   described  in  Section
6.1(a)(ii)  hereof.  The Borrower  shall continue to own directly and indirectly
one hundred percent (100%) of the Voting Interests and economic interests in its
Subsidiaries  other than  Securitization  Subsidiaries.  The Borrower will do or
cause to be done all things  necessary  to  preserve  and keep in full force and
effect all of its  rights  and  franchises  and those of its  Subsidiaries.  The
Borrower will, and will cause each of its  Subsidiaries  to,  continue to engage
primarily in the businesses now conducted by it and in related businesses.

     (b) The  Borrower  (i) will  cause all of its  properties  and those of its
Subsidiaries  used or useful in the conduct of its  business or the  business of
its Subsidiaries to be maintained and kept in good condition, repair and working
order  (ordinary  wear and  tear  excepted)  and  supplied  with  all  necessary
equipment,  and (ii)  will  cause to be made all  necessary  repairs,  renewals,
replacements,  betterments  and  improvements  thereof in all cases in which the
failure

                                       49

<PAGE>

so to do would have a material adverse effect on the financial condition, assets
or operations of the Borrower or any of its Subsidiaries.

     7.7 Taxes.

     The Borrower and each Subsidiary  will duly pay and discharge,  or cause to
be paid and  discharged,  before  the same  shall  become  overdue,  all  taxes,
assessments and other governmental charges imposed upon it and upon its Mortgage
Loans, or any part thereof,  or upon the income or profits  therefrom as well as
all claims for labor,  materials, or supplies that if unpaid might by law become
a lien  or  charge  upon  any of its  property;  provided  that  any  such  tax,
assessment,  charge,  levy or claim need not be paid if the  validity  or amount
thereof shall  currently be contested in good faith by  appropriate  proceedings
and if the  Borrower  or such  Subsidiary  shall  have set  aside  on its  books
adequate  reserves with respect  thereto;  and provided,  further that forthwith
upon the  commencement  of  proceedings  to  foreclose  any  lien  that may have
attached as security  therefor,  the  Borrower and each such  Subsidiary  of the
Borrower  either (i) will  provide a bond issued by a surety  acceptable  to the
Agent and  sufficient  to stay all such  proceedings  or (ii) if no such bond is
provided, will pay each such tax, assessment, charge, levy or claim.

     7.8 Inspection of Properties and Books.

     The Borrower  shall permit  and/or shall cause Manager to permit the Banks,
through  the  Agent  or  any  representative  designated  by the  Agent,  at the
Borrower's  expense,  to visit and inspect any of the properties of the Borrower
or any of its Subsidiaries,  to examine the books of account of the Borrower and
its  Subsidiaries  (and to make copies  thereof and extracts  therefrom)  and to
discuss the affairs,  finances and accounts of the Borrower and its Subsidiaries
with,  and to be advised as to the same by, its officers,  all at such times and
intervals as the Agent or any Bank may request.  Banks shall also have the right
to contact  Mortgage Loan  Obligors to verify the status of Mortgage  Loans that
are Collateral for the Loans.

7.9      Compliance with Laws, Contracts, Licenses, and Permits.

     The Borrower will comply with, and will cause each of its  Subsidiaries  to
comply in all respects  with,  (i) all applicable  laws and  regulations  now or
hereafter in effect  wherever its business is conducted,  (ii) the provisions of
its corporate,  limited  liability  company or other charter (as applicable) and
other charter documents,  operating agreements, and bylaws, (iii) all agreements
and  instruments  to which it is a party or by which it or any of its properties
may be bound, (iv) all applicable  decrees,  orders, and judgments,  and (v) all
licenses and permits required by applicable laws and regulations for the conduct
of its business or the ownership, use or operation of its properties.  If at any
time while any Loan or Note is  outstanding  or the Banks have any obligation to
make Loans hereunder, any authorization,  consent,  approval,  permit or license
from any  officer,  agency or  instrumentality  of any  government  shall become
necessary  or  required  in  order  that the  Borrower  may  fulfill  any of its
obligations hereunder,  the Borrower will, or will cause Manager to, immediately
take or cause to be taken all steps  necessary  to  obtain  such  authorization,
consent,  approval,  permit or license  and furnish the Agent and the Banks with
evidence thereof.

                                       50

<PAGE>

     7.10 Use of Proceeds.

     The Borrower will use the proceeds of the Loans solely to provide financing
(a) for the  making  of  Qualifying  Mortgage  Loans,  (b) to repay  outstanding
Indebtedness,  (c) for working  capital (not to exceed an amount  outstanding at
any one time of  $1,000,000),  and (d) for such  other  lawful  purposes  as the
Requisite Banks in their discretion from time to time may agree to in writing.

     7.11 Further Assurances.

     The Borrower will cooperate  with, and will cause each of its  Subsidiaries
and the  Manager  to  cooperate  with the Agent and the Banks and  execute  such
further  instruments  and  documents as the Banks or the Agent shall  request to
carry out to their satisfaction the transactions  contemplated by this Agreement
and the other Loan Documents.

     7.12 Compliance.

     The  Borrower  shall  operate  its  business,  and shall  cause each of its
Subsidiaries  and the Manager to operate its business,  in  compliance  with the
terms and  conditions  of this  Agreement  and the  other  Loan  Documents.  The
Borrower  shall at all times comply with all  requirements  of  applicable  laws
necessary to maintain  REIT Status and shall  operate its business in compliance
with the terms and conditions of this Agreement and the other Loan Documents.

     7.13 Interest Rate Contract.

     If the Interest  Hedging  Ratio as of the end of any fiscal  quarter of the
Borrower  shall  be less  than  1.50  to 1.0,  as set  forth  in the  Compliance
Certificate  delivered by the Borrower with respect to such quarter  pursuant to
Section  7.4(d),  then on or before the date that is three (3) months  after the
end of such fiscal quarter, the Borrower shall obtain and thereafter maintain in
full  force  and  effect  an  Interest  Rate  Contract  in  form  and  substance
satisfactory  to Agent on a notional  amount of Unhedged  Variable  Rate Debt at
least  equal to the lesser of (a) the  Interest  Rate  Hedging  Cap and (b) that
amount which would have to be subtracted  from Variable Rate Debt in calculating
the  Interest   Hedging  Ratio  such  that  the  Interest   Hedging  Ratio,   if
re-calculated  immediately  after giving effect to such Interest Rate  Contract,
would equal or exceed 1.50 to 1.0. Each Interest Rate Contract would be required
to have a term ending no sooner than the earliest of (i) the Maturity Date, (ii)
the date which is the second  anniversary of the effective date of such Interest
Rate Contract,  and (iii) such earlier date as the Agent may approve in its sole
discretion  (provided,  however,  that the  approval  by the  Agent of a shorter
duration for any particular  Interest Rate Contract shall not obligate the Agent
to approve such shorter duration for any other Interest Rate Contract). Promptly
following the  effectiveness of each Interest Rate Contract,  the Borrower shall
assign such Interest  Rate Contract to the Agent as additional  security for the
Obligations  pursuant to the  Assignment  of Hedge.  Each Interest Rate Contract
shall be provided by any Bank which is a party to this Agreement or by a bank or
other  financial  institution  that has  unsecured,  uninsured and  unguaranteed
long-term debt which is rated at least A-3 by Moody's Investor Service,  Inc. or
at least A by Standard & Poor's Rating  Services,  a division of The McGraw-Hill
Companies, Inc. The Borrower shall, upon the request of the

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<PAGE>

Agent,  provide to the Agent  evidence  that the  Interest  Rate  Contract is in
effect,  or that no Interest Rate  Contract is then required  under the terms of
this Agreement.

     7.14 More Restrictive Agreements.

     Should the  Borrower  or any of its  Subsidiaries  enter into or modify any
agreements  or documents  pertaining to any existing or future  Indebtedness  or
Equity  Offering  permitted  hereunder,  which  agreements or documents  include
covenants,  whether  affirmative or negative (or any other  provision  which may
have the same practical effect as any of the foregoing),  which are individually
or in the aggregate more  restrictive  against the Borrower or its  Subsidiaries
(other than  Securitization  Subsidiaries) than those set forth in ss.8 and ss.9
of this  Agreement,  the  Borrower  shall  promptly  notify  the Agent  and,  if
requested by the Requisite  Banks,  the Borrower,  the Agent,  and the Requisite
Banks  shall  promptly  amend this  Agreement  and the other Loan  Documents  to
include some or all of such more  restrictive  provisions  as  determined by the
Requisite Banks in their sole discretion.  The Borrower agrees to deliver to the
Agent  copies  of  any  agreements  or  documents  (or  modifications   thereof)
pertaining to existing or future Indebtedness or Equity Offering of the Borrower
or any of its Subsidiaries as the Agent from time to time may request.

     7.15 Lockbox Account.

     The Beacon  Lockbox  Account shall at all times be  maintained  with Beacon
Bank, and the KeyBank  Lockbox Account shall at all times be maintained with the
Agent,  in each case in the name of the Borrower  bearing a designation  clearly
indicating  that the funds  deposited  therein  are held for the  benefit of the
Agent  for the  benefit  of the  Banks,  and  shall be  subject  to the  Lockbox
Agreement.  The Borrower  shall request in writing and otherwise take such steps
to ensure that all Mortgage Loans Obligors forward all payments  directly to the
appropriate Lockbox Account,  as provided in the Lockbox Agreement.  At any time
after an Event of  Default  has  occurred,  the Agent,  with the  consent of the
Requisite Banks,  shall do any or all of the following:  (i) exercise  exclusive
dominion and control over the funds deposited in the Lockbox Account,  (ii) have
collections  that are sent to the  Lockbox  Account  redirected  pursuant to its
instruction,  (iii)  apply  the  balance  in the  Lockbox  Account  against  the
Obligations in such order and manner as the Agent may deem  desirable,  and (iv)
take any or all  other  actions  the Agent is  permitted  to take  hereunder  or
pursuant  to the  Lockbox  Agreement.  The Agent shall at all times have a first
priority perfected security interest in the Lockbox Account as more particularly
described in the Lockbox Agreement.

     7.16 Mortgage Loans.

     (a) No  Termination  or  Release.  Except  in the  ordinary  course  of the
Borrower's  lending  business  and in  accordance  with  the  provisions  of the
Mortgage  Loan  Documents,  the  Borrower  shall not abandon,  cancel,  release,
relinquish  or terminate  any of the  Mortgage  Loans or any part thereof or any
interest therein or any Bonds or Mortgage Loan Collateral, and any attempt to do
so without the prior written consent of the Agent shall be void and ineffective.

     (b)  Information  About Mortgage  Loans.  On a monthly basis,  the Borrower
shall execute and deliver to the Agent a sworn affidavit setting forth in detail
any and all amounts or

                                       52

<PAGE>

payments  received by Borrower with respect to the Mortgage Loans or any portion
thereof during any period specified by Agent.

     (c) No Future  Encumbrance  or Transfer.  The Borrower  shall not encumber,
pledge,  anticipate,  borrow against,  or create any right of offset against the
Mortgage  Loans,  and  except  for  the  sale  of  Mortgage  Loans  as part of a
securitization,  the net  proceeds of which sale are paid to the Agent to reduce
the Outstanding  Loans, shall not transfer,  assign,  sell, or convey all or any
portion of the Mortgage Loans.

     (d) Mortgage Loans  Compliance and Defense.  The Borrower shall comply with
all  obligations of the lender under the Mortgage  Loans.  The Borrower,  at its
sole cost and expense, shall diligently and in good faith do all things and take
all actions, including, without limitation, bringing appropriate actions against
the  Mortgage  Loan  Obligors  which are  necessary  or desirable to enforce the
obligations  of the  Mortgage  Loan  Obligors  to make all  payments  under  the
Mortgage Loan  Documents,  and to protect and preserve the interest of the Agent
under the Collateral Assignment.

     (e)  Appraisals.  The Agent may  require  the  Borrower  to obtain  updated
Appraisals with respect to any of the Mortgage Loan Collateral,  where the Agent
reasonably  believes that the value of the Mortgage Loan Collateral with respect
to a Mortgage Loan has been  materially and adversely  affected,  or may perform
internal  studies  updating and revising prior  Appraisals for the Mortgage Loan
Collateral for the purpose of determining current Appraised Value and compliance
with the  requirements of this Agreement.  The Borrower shall cooperate with the
Agent in regard to such  efforts and shall bear the cost and expense of all such
Appraisals and updates performed pursuant to this ss.7.16(e).

     7.17 Securitization Transactions.

     (a)  Within  a  reasonable   time  prior  to  the   consummation   of  each
securitization   transaction   (whether   or  not  giving   rise  to   Permitted
Securitization   Indebtedness),   the  Borrower   shall  deliver  to  the  Agent
substantially  final  drafts  of the  operative  documents,  all  organizational
documents of the applicable Securitization Subsidiaries,  and all legal opinions
to be  delivered by counsel for the  Borrower or any  Securitization  Subsidiary
(including,   without  limitation,   the  "true  sale"  and  "non-consolidation"
opinions,  if any),  in connection  with such  securitization  transaction.  The
Borrower will obtain the prior written  consent and approval of the Agent to the
terms,  provisions and structure of such securitization  transaction  (including
the legal and organizational  structure of all  Securitization  Subsidiaries and
the  restrictions  imposed  thereon) prior to consummating  such  securitization
transaction,  which  consent and approval  shall not  unreasonably  be withheld,
delayed  or  conditioned.  After  such  consent  and  approval  is  granted,  no
modifications  shall be made to the approved  documents or opinions  without the
further  written  consent of the Agent,  which  consent and  approval  shall not
unreasonably  be withheld,  delayed or conditioned.  Contemporaneously  with the
consummation of each securitization  transaction  (whether or not giving rise to
Permitted Securitization  Indebtedness),  the Borrower shall deliver or cause to
be delivered to the Agent each of the following:

     (i) Evidence satisfactory to the Agent that (i) the related  securitization
transaction has been consummated, and (ii) the proceeds from such securitization

                                       53
<PAGE>

transaction (net of transaction  costs and expenses incurred by the Borrower and
the applicable  Securitization  Subsidiary) are substantially  contemporaneously
being used to reduce the aggregate  principal amount outstanding under the Loans
and to satisfy other Obligations;

     (ii) True,  correct and complete  copies of  certificates  of existence and
good standing  issued as of a recent date with respect to such  Subsidiaries  by
the  Secretary  of  State  of  the  Subsidiaries'  respective  jurisdictions  of
incorporation;

     (iii) A certificate signed by the principal financial or accounting officer
of the Borrower (i) stating that (1) all  representations  and warranties of the
Borrower herein and all representations and warranties of the documents executed
and delivered in connection  with such  securitization  transaction are true and
correct as of the date given, (2) no Default or Event of Default exists, and (3)
after giving pro forma effect to such  securitization  transaction no Default or
Event of Default would result therefrom,  including,  without limitation,  under
any of the covenants  set forth in ss. 9 of this  Agreement  (which  certificate
will contain  calculations  of such covenants in accordance with ss. 1.3 of this
Agreement,  in form and substance satisfactory to the Agent), (ii) setting forth
the new Borrowing Base, and (iii) certifying that the aggregate principal amount
of the  Outstanding  Loans does not exceed the Borrowing Base  Availability,  in
each case after giving pro forma effect to such securitization transaction; and

     (iv) Evidence  satisfactory to the Agent that the Borrower has obtained all
necessary third party consents to such securitization transaction.

     (b)  Within   sixty  (60)  days   following   the   consummation   of  each
securitization   transaction   (whether   or  not  giving   rise  to   Permitted
Securitization Indebtedness), or such later time as Agent in its sole discretion
may agree to, the Borrower  shall deliver true,  correct and complete  copies of
all  executed  operative   documents  in  connection  with  such  securitization
transaction,  all organizational  documents of the  Securitization  Subsidiaries
involved in such transaction and all legal opinions delivered in connection with
such transaction.

     7.18 Redemption of Certain Debt Certificates.

     Prior to August 1, 2007, the Borrower shall redeem  $1,956,000 in aggregate
principal  amount of the Debt  Certificates  issued  and  outstanding  under the
Series A Indenture.

8.   CERTAIN NEGATIVE COVENANTS OF THE BORROWER.

     The  Borrower  covenants  and agrees  that,  so long as any Loan or Note is
outstanding or any of the Banks has any obligation to make any Loans:

     8.1 Restrictions on Indebtedness.

     The  Borrower  will not,  and will not permit any of its  Subsidiaries  to,
create,  incur,  assume,  guarantee  or be or  remain  liable,  contingently  or
otherwise, with respect to any Indebtedness other than:

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     (a) Indebtedness to the Banks arising under any of the Loan Documents,  and
Indebtedness  and obligations in respect of the Interest Rate Contract  required
pursuant to ss.7.13;

     (b) current liabilities of the Borrower or its Subsidiaries incurred in the
ordinary course of business but not incurred through (i) the borrowing of money,
or (ii) the  obtaining  of credit  except  for credit on an open  account  basis
customarily extended and in fact extended in connection with normal purchases of
goods and services;

     (c) Indebtedness in respect of taxes, assessments,  governmental charges or
levies and claims for labor,  materials  and supplies to the extent that payment
therefor  shall not at the time be  required to be made in  accordance  with the
provisions of ss.7.7;

     (d)  Indebtedness in respect of judgments or awards that have been in force
for less than the applicable period for taking an appeal so long as execution is
not levied  thereunder or in respect of which the Borrower  shall at the time in
good faith be prosecuting an appeal or proceedings  for review and in respect of
which a stay of  execution  shall  have been  obtained  pending  such  appeal or
review;

     (e) endorsements  for collection,  deposit or negotiation and warranties of
products or services, in each case incurred in the ordinary course of business;

     (f) Permitted Indebtedness; and

     (g) Indebtedness in respect of reverse repurchase  agreements having a term
of not more than 180 days with respect to Investments described in ss.8.3(a)(iv)
or (v).

     8.2 Restrictions on Liens Etc.

     The Borrower will not, nor will it permit any of its  Subsidiaries  to, (a)
create  or incur or  suffer  to be  created  or  incurred  or to exist any lien,
encumbrance, mortgage, pledge, charge, restriction or other security interest of
any kind upon any of its property or assets of any  character  whether now owned
or hereafter acquired, or upon the income or profits therefrom; (b) transfer any
of its property or assets or the income or profits  therefrom for the purpose of
subjecting the same to the payment of  Indebtedness  or performance of any other
obligation  in priority to payment of its general  creditors;  (c)  acquire,  or
agree or have an option to acquire, any property or assets upon conditional sale
or other  title  retention  or  purchase  money  security  agreement,  device or
arrangement;  (d)  suffer to exist  for a period of more than 30 days  after the
same shall have been  incurred any  Indebtedness  or claim or demand  against it
that if unpaid might by law or upon bankruptcy or insolvency,  or otherwise,  be
given any priority  whatsoever over its general creditors;  or (e) sell, assign,
pledge or otherwise transfer any accounts, contract rights, general intangibles,
chattel  paper or  instruments,  with or  without  recourse;  provided  that the
Borrower and any of its Subsidiaries may create or incur or suffer to be created
or incurred or to exist:

     (a)  liens  in  favor  of the  Borrower  on all or  part of the  assets  of
Subsidiaries of the Borrower (other than Collateral) securing Indebtedness owing
by Subsidiaries of the Borrower to the Borrower;

                                       55

<PAGE>

     (b) liens on properties and assets to secure taxes,  assessments  and other
governmental  charges or claims for labor,  material  or  supplies in respect of
obligations not overdue;

     (c) deposits or pledges made in connection  with, or to secure  payment of,
workers' compensation,  unemployment insurance, old age pensions or other social
security obligations;

     (d)  liens on assets  of the  Borrower  other  than the  Collateral  or any
interest  therein  in  respect  of  judgments,   awards  or  indebtedness,   the
Indebtedness with respect to which is permitted by ss.8.1(d);

     (e) liens on the Excluded  Mortgage  Loans  securing  the  repayment of the
Permitted Indebtedness (other than Permitted Securitization Indebtedness);

     (f) liens on assets of any  Securitization  Subsidiary  securing  Permitted
Securitization Indebtedness; and

     (g) liens in favor of the Agent and the Banks under the Loan Documents.

     8.3 Restrictions on Investments.

     (a) the Borrower will not, and will not permit any of its  Subsidiaries to,
make  or  permit  to  exist  or to  remain  outstanding  any  Investment  except
Investments in:

     (i)  marketable  direct or guaranteed  obligations  of the United States of
America  that  mature  within  one (1) year  from the  date of  purchase  by the
Borrower or its Subsidiary;

     (ii) marketable  direct  obligations of any of the following:  Federal Home
Loan Mortgage Corporation, Student Loan Marketing Association, Federal Home Loan
Banks,  Federal National  Mortgage  Association,  Government  National  Mortgage
Association,  Bank for Cooperatives,  Federal Intermediate Credit Banks, Federal
Financing Banks, Export-Import Bank of the United States, Federal Land Banks, or
any other agency or instrumentality of the United States of America;

     (iii) demand  deposits,  certificates of deposit,  bankers  acceptances and
time  deposits  of  United  States  banks  having  total  assets  in  excess  of
$100,000,000;  provided,  however,  that  the  aggregate  amount  at any time so
invested  with any single bank having total  assets of less than  $1,000,000,000
will not exceed $1,000,000;

     (iv)  securities   commonly  known  as  "commercial   paper"  issued  by  a
corporation  organized  and  existing  under  the laws of the  United  States of
America  or any  State  which  at the time of  purchase  are  rated  by  Moody's
Investors Service,  Inc. or by Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies,  Inc., at not less than "P1" if then rated by Moody's
Investors  Service,  Inc.,  and not less than "A1",  if then rated by Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.;

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<PAGE>

     (v)  mortgage-backed  securities  guaranteed  by  the  Government  National
Mortgage  Association,  the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation and other mortgage-backed bonds which at the time
of purchase are rated by Moody's Investors Service, Inc. or by Standard & Poor's
Ratings  Services,  a division of The McGraw-Hill  Companies,  Inc., at not less
than "Aa" if then rated by Moody's  Investors  Service,  Inc.  and not less than
"AA" if then rated by  Standard & Poor's  Ratings  Services,  a division  of The
McGraw-Hill Companies, Inc.;

     (vi) repurchase  agreements having a term not greater than ninety (90) days
and fully secured by securities  described in the foregoing subsection (i), (ii)
or (v) with banks described in the foregoing  subsection (iii) or with financial
institutions   or  other   corporations   having   total  assets  in  excess  of
$500,000,000;

     (vii) shares of so-called  "money  market  funds"  registered  with the SEC
under the Investment Company Act of 1940 which maintain a level per-share value,
invest  principally in investments  described in the foregoing  subsections  (i)
through (vi) and have total assets in excess of $50,000,000;

     (viii) Investments in Mortgage Loans, subject to the following limitations:

     1. no more than twenty percent (20%) of Borrower's Consolidated Total Asset
Value may be invested in Mortgage Loans consisting of Construction Loans;

     2. no  Mortgage  Loans  shall be  subordinate  in rank,  time of  payments,
priority of lien or any other respect to any other  indebtedness of the Mortgage
Loan Obligors, except for Permitted Subordinate Mortgage Loans;

     3.  the  aggregate  principal  balance  of all  Interim  Loans  at any time
outstanding shall not exceed $3,000,000; and

     4. no Investments may be made in Compound Bonds;

     (ix)  Investments in "Unimproved Real Property" (as such term is defined in
the  Borrower's  2006  Annual  Report),  provided  that in no event  shall  such
Investments  exceed  in the  aggregate  five  percent  (5%)  of  the  Borrower's
Consolidated Total Asset Value; and

     (x)  commercial  mortgage  backed  securities  issued  by a  Securitization
Subsidiary;

     (xi) OREO;

     (xii)  First  mortgage  serial  bonds of a church,  church  school or other
nonprofit  organization  the  repayment of which is secured by a first  priority
lien on or  security  title to the  real  property  owned by such  organization,
provided  that  the  aggregate  principal  amount  of  such  bonds  at any  time
outstanding  shall not exceed thirty  percent  (30%) of Borrower's  Consolidated
Total Asset Value; and

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<PAGE>

     (xiii)  Membership  interests  or other equity  interests in any  Permitted
Securitization Subsidiary.

     (b)  The  sum  of  the  Investments  described  in  ss.8.3(a)(viii)(1)  and
ss.8.3(a)(ix)  above shall not exceed  twenty  percent  (20%) of the  Borrower's
Consolidated Total Asset Value at any time outstanding.

     (c) The Borrower will not create or open any investment or similar accounts
to hold any Mortgage Loan Collateral  without an account control  agreement,  in
form and substance acceptable to the Agent covering such account.

     8.4 Merger, Consolidation.

     The  Borrower  will not and will not  permit  any of its  Subsidiaries  to,
become a party to any merger or  consolidation  nor  dissolution  except (a) the
merger  or  consolidation  of one or more of the  Subsidiaries  of the  Borrower
(other than a  Securitization  Subsidiary) with and into the Borrower or (b) the
merger or consolidation of two or more  Subsidiaries of the Borrower (other than
a Securitization Subsidiary).

     8.5 Conduct of Business.

     The  Borrower  will not conduct any of its business  operations  other than
through the Borrower and its  Subsidiaries  or the  Manager;  provided  that the
Borrower shall not acquire,  form or otherwise create a Subsidiary (other than a
Securitization Subsidiary) without the prior written approval of the Agent.

     8.6 Distributions.

     The  Borrower  shall not make any  Distributions  which  would  cause it to
violate any of the following covenants:

     (a) The Borrower will not permit  Distributions  made by Borrower to exceed
one hundred percent (100%) of Borrower's Funds Available for Distribution in any
fiscal quarter;  provided,  however, that the amount distributed for any quarter
may be more or less than the Funds Available for  Distribution for such quarter,
so long as the total  amount  distributed  does not exceed Funds  Available  for
Distribution for the applicable year-to-date;

     (b) The Borrower  shall not make,  or permit any  Subsidiary to make (other
than to the Borrower,  or to Borrower's  Subsidiaries  necessary as intermediate
distributions   prior  to  making  such  Distribution  to  the  Borrower),   any
Distributions  directly  or  indirectly  from  proceeds  of  any  securitization
transaction;

     (c) In the  event  that an Event of  Default  shall  have  occurred  and be
continuing, the Borrower shall not make any Distributions other than the minimum
Distributions  required  under  the  Code to  maintain  the REIT  Status  of the
Borrower,  as  evidenced  by a  certification  of  the  principal  financial  or
accounting officer of the Borrower containing  calculations in reasonable detail
satisfactory in form and substance to Agent;  provided,  however,  that Borrower
shall  not be  entitled  to  make  any  Distributions  in  connection  with  the
repurchase of common or

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<PAGE>

preferred  stock of the  Borrower  at any time a Default  or an Event of Default
shall have occurred and be continuing; and

     (d)  Notwithstanding  the  foregoing,  at any time when an Event of Default
shall have occurred and the maturity of the  Obligations  has been  accelerated,
the  Borrower  shall  not  make  any  Distributions   whatsoever,   directly  or
indirectly.

8.7      Asset Sales.

     Subject  to  the  provisions  of  ss.5.2,  neither  the  Borrower  nor  any
Subsidiary  thereof  shall  sell,  transfer or  otherwise  dispose of any of its
assets unless there shall have been  delivered to the Agent a statement  that no
Default or Event of Default exists  immediately prior to such sale,  transfer or
other  disposition or would exist after giving effect to such sale,  transfer or
other disposition.

8.8      Management.

     There shall not occur,  without the prior written consent of the Agent, any
change  in  the  identity  of  the  Manager  or  any   termination,   amendment,
modification or supplementation of the Management  Agreement.  In no event shall
the  Management  Fee exceed the sum of 1.25% of  Average  Invested  Assets up to
$35,000,000,   1.00%  of  Average   Invested  Assets  between   $35,000,000  and
$50,000,000,  and 0.75% of Average Invested Assets in excess of $50,000,000, nor
shall the Manager  retain,  or be entitled  to retain,  more than fifty  percent
(50%) of the  origination  fees charged to Mortgage  Loan Obligors in connection
with the Mortgage Loans, or any renewals thereof.

8.9      Debt Certificates.

     Borrower shall not issue any additional Debt Certificates after the Closing
Date,  other  than Debt  Certificates  solely  evidencing  the  renewal  of Debt
Certificates  outstanding  immediately  prior  to such  renewal,  such  that the
aggregate  principal  amount of all Debt  Certificates  at any time  outstanding
shall not exceed (a)  $25,376,000,  less (b) the aggregate  principal  amount of
Debt Certificates  redeemed,  repaid or otherwise retired since the Closing Date
and not renewed as permitted herein.  Borrower shall not supplement or amend the
Indentures,  or either of them,  without the prior  consent of the Agent in each
instance. The Agent hereby consents to the Indenture Amendments.

         9. FINANCIAL COVENANTS OF THE BORROWER.

     The  Borrower  covenants  and agrees  that,  so long as any Loan or Note is
outstanding  or any Bank has any  obligation  to make any Loans,  it will comply
with the following:

     9.1 Borrowing Base.

     (a) The Borrower  will not at any time permit the  Outstanding  Loans as of
the date of determination to be greater than the Borrowing Base  Availability as
determined as of the same date.

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<PAGE>

     (b)  Borrower  will not, as of the end of any fiscal  quarter of  Borrower,
permit  Borrowing  Base Adjusted  EBITDA for the period  covered by the four (4)
previous  consecutive fiscal quarters (treated as a single accounting period) to
be less than 1.60 times the Facility Interest Expense for such period.

     (c) The Borrower  will at all times comply with the  following  limitations
regarding the Borrowing Base and the  Qualifying  Mortgage Loans included in the
Borrowing Base,  unless the Agent shall have given its prior written approval to
the contrary in each instance:

     (i) The book  value of any one  Qualifying  Mortgage  Loan shall not exceed
$2,000,000;

     (ii) The book value of Qualifying  Mortgage Loans made to all Mortgage Loan
Obligors affiliated with one religious  denomination (as denominated  separately
in the Handbook of  Denominations  in the United States,  New Tenth Edition,  by
Frank S.  Mead,  Revised  by  Samuel  S.  Hill,  published  by  Abington  Press,
Nashville) shall not account for more than thirty percent (30%) of the Borrowing
Base;  provided,   however,   that  "independent   churches"  (i.e.,  those  not
financially  or  organizationally  owned  or  controlled  by one  of the  larger
denominations) shall not count toward any denomination concentration limit;

     (iii) The aggregate  outstanding  principal balance of Qualifying  Mortgage
Loans  secured by Mortgage Loan  Collateral  located in any one (1) State (other
than New York and Texas) shall not exceed twenty  percent (20%) of the Borrowing
Base;

     (iv) The aggregate  outstanding  principal  balance of Qualifying  Mortgage
Loans  secured by Mortgage Loan  Collateral  located in New York and Texas shall
not exceed sixty  percent (60%) of the  Borrowing  Base on a combined  basis and
forty percent (40%) on an individual State basis;

     (v) The aggregate  outstanding  principal  balance of  Qualifying  Mortgage
Loans secured by Mortgage Loan  Collateral  located in any one (1) MSA shall not
exceed twenty percent (20%) of the Borrowing Base;

     (vi) The  weighted  average  loan to value  ratio of all of the  Qualifying
Mortgage  Loans  included  in the  Borrowing  Base  (based  on the  most  recent
Appraised Value of the Mortgage Loan Collateral securing the Qualifying Mortgage
Loans)  shall  not  exceed  seventy-five   percent  (75%)  (an  example  of  the
calculation  contained in this  ss.9.1(c)(vi) is attached hereto as Schedule 9.1
and by this reference incorporated herein); and

     (vii) No Qualifying Mortgage Loan included in the Borrowing Base shall have
a loan to value ratio (based on the most recent  Appraised Value of the Mortgage
Loan Collateral securing such Qualifying Mortgage Loan) exceeding eighty percent
(80%).

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<PAGE>

     9.2 Liabilities to Assets Ratio.

     The Borrower  will not at any time permit the ratio of  Consolidated  Total
Liabilities to Consolidated  Total Adjusted  Tangible Asset Value to exceed 0.70
to 1.

     9.3 Cash Flow Coverage.

     The Borrower will not, as of the end of any fiscal quarter of the Borrower,
permit the  Borrower's  Adjusted  EBITDA for the period  covered by the four (4)
previous  consecutive fiscal quarters (treated as a single accounting period) to
be less than 1.60 times the Interest Expense of the Borrower for such period.

     9.4 Consolidated Tangible Net Worth.

     The  Borrower  will not at any time permit its  Consolidated  Tangible  Net
Worth to be less than  $17,000,000  plus  seventy-five  percent (75%) of any Net
Offering Proceeds received by the Borrower after the date of this Agreement.

     9.5 Non-Performing Assets.

     The  Borrower  will  not at  any  time  permit  the  aggregate  outstanding
principal  balances of all  Non-Performing  Assets to exceed an amount  equal to
twenty  percent  (20%) of the sum of its  Consolidated  Tangible  Net Worth plus
Actual Loan Loss Reserve Balance.

10.  CLOSING CONDITIONS.

     The obligation of the Agent and the Banks to make the Loans to the Borrower
is subject to the satisfaction of the following conditions precedent on or prior
to the Closing Date:

     10.1 Loan Documents.

     The Borrower and its  Subsidiaries  and the Manager,  as applicable,  shall
have duly  executed  and  delivered  to the Agent each of the Loan  Documents to
which such Person is a party  (except that each Bank shall have received a fully
executed  counterpart  of its  Note),  each of which  shall be in full force and
effect and shall be in form and substance satisfactory to the Agent.

     10.2 Resolutions.

     All action on the part of the  Borrower,  any of its  Subsidiaries  and the
Manager,  as  applicable,  necessary  for  the  valid  execution,  delivery  and
performance  by such Person of this  Agreement  and the other Loan  Documents to
which  such  Person  is or is to  become  a  party  shall  have  been  duly  and
effectively  taken,  and evidence  thereof  satisfactory to the Agent shall have
been provided to the Agent. The Agent shall have received from the Borrower true
copies of the  resolutions  adopted by its board of  directors  authorizing  the
transactions described herein, certified by its secretary or assistant secretary
as of a recent date to be true and complete.

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     10.3 Incumbency Certificate; Authorized Signers.

     The Agent shall have received incumbency certificates, dated as of the date
of this  Agreement,  signed by a duly  authorized  officer of the  Borrower  and
giving the name and bearing a specimen signature of each individual who shall be
authorized to sign,  in the name and on behalf of such Person,  each of the Loan
Documents to which such Person is or is to become a party.  The Agent shall have
also  received  from the  Borrower a  certificate,  dated as of the date of this
Agreement,  signed by a duly  authorized  officer of the Borrower and giving the
name and specimen  signature of each  individual who shall be authorized to make
Loan and  Conversion  Requests  and to give  notices and to take other action on
behalf of the Borrower under the Loan Documents.

     10.4 Opinions of Counsel.

     (a) The Agent shall have  received a  favorable  opinion  addressed  to the
Banks  and the Agent  and  dated as of the date of this  Agreement,  in form and
substance satisfactory to the Banks and the Agent, from counsel of the Borrower,
the Manager and AIGI (including,  without limitation,  such local counsel as the
Agent may  require) as to such  matters as the Agent shall  request,  including,
without limitation, the creation and perfection of the security interests in the
Collateral by the Security Documents.

     (b) The Agent shall have  received a  favorable  opinion  addressed  to the
Banks  and the Agent  and  dated as of the date of this  Agreement,  in form and
substance  satisfactory  to the Agent,  from  counsel to the Borrower as to such
matters  relating  to the  Indenture  Amendments  as the  Agent  shall  request,
including,  without limitation,  the satisfaction of the applicable requirements
under the  Indentures for the Indenture  Amendments  and the due  authorization,
execution, delivery and enforceability of the Indenture Amendments .

     10.5 Performance; No Default.

     The  Borrower  shall  have  performed  and  complied  with  all  terms  and
conditions herein required to be performed or complied with by it on or prior to
the Closing Date,  and on the Closing Date there shall exist no Default or Event
of Default.

     10.6 Representations and Warranties.

     The  representations  and  warranties  made  by  the  Borrower,  any of its
Subsidiaries  or the Manager in the Loan  Documents or  otherwise  made by or on
behalf of the  Borrower,  any of its  Subsidiaries  or the Manager in connection
therewith  or after the date  thereof  shall  have been true and  correct in all
respects  when made and shall also be true and  correct in all  respects  on the
Closing Date.

10.7     Actions, Proceedings and Documents.

         All actions have been performed and all documents authenticated, filed
or both in order to perfect Agent's security interest in and to all Collateral.
All proceedings in connection with the transactions contemplated by this
Agreement and the other Loan Documents shall be satisfactory to the Agent and
the Agent's Special Counsel in form and substance, and the Agent

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<PAGE>

shall have received all information and such counterpart  originals or certified
copies of such documents and such other  certificates,  opinions or documents as
the Agent and the Agent's Special Counsel may require.

     10.8 Compliance Certificate.

     A Compliance  Certificate and a Borrowing Base Certificate calculated as of
the  most  recent  month-end  and  dated  as  of  the  date  of  this  Agreement
demonstrating compliance with each of the covenants calculated therein as of the
most recent  fiscal  quarter end for which the Borrower  has provided  financial
statements under ss.6.4 shall have been delivered to the Agent.

     10.9 Mortgage Loan Qualification Documents.

     The  Collateral  Agent shall have  received  the Mortgage  Loan  Collateral
Documents  for  all of the  Initial  Mortgage  Loans  and  Borrower  shall  have
certified  to  the  Agent  and  the  Banks  that  the  remaining  Mortgage  Loan
Qualification Documents are in Borrower's possession and control.

     10.10 Management Agreement.

     The Agent  shall have  received a true and correct  copy of the  Management
Agreement in form and substance  satisfactory to the Agent and the Subordination
of Management Agreement duly executed and delivered by the Manager.

     10.11 Other Documents.

     To the  extent  requested  by the  Agent,  the Agent  shall  have  received
executed copies of all material agreements of any nature whatsoever to which the
Borrower or any Subsidiary is a party affecting or relating to the  origination,
closing or servicing of the Mortgage Loans.

     10.12 Payment of Fees.

     The Borrower  shall have paid to the Agent and KeyBank the fees required by
ss.4.2 and ss.4.3.

     10.13 UCC Searches.

     Agent's  Special  Counsel shall have received the results of completed UCC,
tax and  judgment  lien  searches  for the  jurisdictions  of  incorporation  of
Borrower  certified by a nationally  recognized search firm and dated within two
(2) Business Days before the Closing Date (none of which shall indicate  filings
covering any of the Collateral).

     10.14 Lockbox Account.

     Evidence that each Lockbox Account has been  established in accordance with
ss.7.15,  and that notice has been given to all Mortgage Loan Obligors regarding
the making of payments on the Mortgage Loans to the appropriate Lockbox Account,
as provided in the Lockbox

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Agreement,  or that provision for such notice to be given  immediately after the
Closing Date has been duly made to the Agent's satisfaction.

     10.15 Indenture Amendments.

     Evidence that the Indenture  Amendments have been approved by any requisite
consent of the  holders of the related  Debt  Certificates,  that the  Indenture
Amendments  have been duly  authorized,  executed  and  delivered by all parties
thereto and are in effect,  and that all Existing  Indenture  Defaults have been
waived in accordance with the applicable terms of the respective Indentures.

     10.16 Other.

     The  Agent  shall  have   reviewed  such  other   documents,   instruments,
certificates,  opinions, assurances,  consents and approvals as the Agent or the
Agent's Special Counsel may have requested.

11.  CONDITIONS TO ALL BORROWINGS.

     The obligations of the Banks to make any Loan, whether on or after the date
of this  Agreement,  shall also be subject to the  satisfaction of the following
conditions precedent:

     11.1 Prior Conditions Satisfied.

     All  conditions set forth in ss.10 shall continue to be satisfied as of the
date upon which any Loan is to be made.

     11.2 Representations True; No Default.

     Each of the  representations  and  warranties  made by or on  behalf of the
Borrower or any of its Subsidiaries or the Manager  contained in this Agreement,
the other Loan Documents or in any document or instrument  delivered pursuant to
or in connection  with this  Agreement  shall be true as of the date as of which
they  were made and  shall  also be true at and as of the time of the  making of
such Loan, with the same effect as if made at and as of that time (except to the
extent that such  representations  and warranties relate expressly to an earlier
date), and no Default or Event of Default shall have occurred and be continuing.
The Agent  shall  have  received  a  certificate  of the  Borrower  signed by an
authorized officer of the Borrower to such effect.

     11.3 No Legal Impediment.

     There shall be no law or regulations thereunder or interpretations  thereof
that in the  reasonable  opinion of any Bank would make it illegal for such Bank
to make such Loan.

     11.4 Governmental Regulation.

     Each Bank  shall  have  received  such  statements  in  substance  and form
satisfactory  to  such  Bank as such  Bank  shall  require  for the  purpose  of
compliance with any applicable regulations of the Comptroller of the Currency or
the Board of Governors of the Federal Reserve System.

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     11.5 Proceedings and Documents.

     All  proceedings  in  connection  with the Loan  shall be  satisfactory  in
substance  and in form to the  Agent,  and the Agent  shall  have  received  all
information and such counterpart  originals or certified or other copies of such
documents as the Agent may request.

     11.6 Borrowing Documents.

     In the case of any request for a Loan,  the Agent shall have  received  the
Loan  Request  required  by  ss.2.5  in the  form of  Exhibit  B  hereto,  fully
completed.

     11.7 Mortgage Loan Qualification Documents.

     The  Collateral  Agent shall have  received  the Mortgage  Loan  Collateral
Documents for each Mortgage  Loan and the Borrower  shall have  certified to the
Agent and the Banks that the remaining Mortgage Loan Qualification Documents for
each such  Mortgage  Loan are in  Borrower's  possession  and  control.  For any
Mortgage  Loan  made  after  the  Closing  Date,  delivery  to  Agent of (i) the
certification of possession of the Mortgage Loan  Qualification  Documents on or
prior to the tenth  (10th) day of each  calendar  month for all  Mortgage  Loans
closed during the immediately  preceding  calendar month, and (ii) a copy of the
title  certificate  or "marked"  title binder for each such Mortgage Loan within
fifteen (15) days after the closing date of such Mortgage  Loan, and delivery to
the Collateral Agent on or before the tenth (10th) day of each calendar month of
the Mortgage Loan Collateral  Documents for all Mortgage Loans closed during the
immediately  preceding  calendar month,  shall  constitute  compliance with this
Section.

12.  EVENTS OF DEFAULT; ACCELERATION; ETC.

     12.1 Events of Default and Acceleration.

     If any of the  following  events  ("Events of Default" or, if the giving of
notice or the lapse of time or both is required,  then,  prior to such notice or
lapse of time, "Defaults") shall occur:

     (a) the  Borrower  shall fail to pay any  principal  of the Loans after the
same shall become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;

     (b) the  Borrower  shall fail to pay any interest on the Loans or any other
fees or sums due  hereunder  or under any of the other Loan  Documents  when the
same shall become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;

     (c) Borrower  shall fail to comply with any covenant  contained in ss.7.18,
ss.8 or ss.9 hereof;

     (d) the Borrower or any of its Subsidiaries shall fail to perform any other
term,  covenant  or  agreement  contained  herein  or in any of the  other  Loan
Documents (other than those specified above in this ss.12.1);

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     (e) any  representation or warranty made by or on behalf of the Borrower or
any of its Subsidiaries in this Agreement or any other Loan Document,  or in any
report,  certificate,  financial statement,  request for a Loan, or in any other
document  or  instrument  delivered  pursuant  to or  in  connection  with  this
Agreement,  any advance of a Loan or any of the other Loan Documents shall prove
to have  been  false or  misleading  in any  respect  upon the date when made or
deemed to have been made or repeated;

     (f) (i) the  Borrower or any of its  Subsidiaries  shall (A) fail to pay at
maturity,  or within any applicable period of grace, any obligation for borrowed
money or credit received or other Indebtedness (other than the Obligations),  or
(B) fail to observe or perform any term,  covenant or agreement contained in any
agreement by which it is bound,  evidencing or securing any such borrowed  money
or credit received or other Indebtedness for such period of time, as in the case
of  either  clause  (i)(A)  or  (i)(B)  would  permit  (assuming  the  giving of
appropriate  notice  if  required)  the  holder  or  holders  thereof  or of any
obligations  issued  thereunder to accelerate the maturity of, or otherwise seek
immediate repayment in full of, Indebtedness  exceeding  $1,000,000,  or (ii) an
"event of default"  shall occur and be  continuing  under  either or both of the
Indentures;

     (g) the Borrower or any of its  Subsidiaries,  (i) shall make an assignment
for the benefit of creditors,  or admit in writing its general  inability to pay
or  generally  fail to pay its  debts as they  mature or  become  due,  or shall
petition  or  apply  for  the  appointment  of a  trustee  or  other  custodian,
liquidator  or  receiver of any such  Person or of any  substantial  part of the
assets of any thereof, (ii) shall commence any case or other proceeding relating
to  any  such  Person  under  any   bankruptcy,   reorganization,   arrangement,
insolvency,  readjustment of debt,  dissolution or liquidation or similar law of
any jurisdiction,  now or hereafter in effect, or (iii) shall take any action to
authorize or in furtherance of any of the foregoing;

     (h) a  petition  or  application  shall be filed for the  appointment  of a
trustee or other custodian, liquidator or receiver of any of the Borrower or any
of its Subsidiaries or any substantial  part of the assets of any thereof,  or a
case or other  proceeding  shall be commenced  against any such Person under any
bankruptcy,  reorganization,  arrangement,  insolvency,  readjustment  of  debt,
dissolution or liquidation or similar law of any jurisdiction,  now or hereafter
in effect,  and any such Person shall  indicate its  approval  thereof,  consent
thereto  or  acquiescence  therein  or  such  petition,   application,  case  or
proceeding  shall not have been dismissed  within ninety (90) days following the
filing or commencement thereof;

     (i) a  decree  or order  is  entered  appointing  any  trustee,  custodian,
liquidator  or  receiver  or  adjudicating  any  of the  Borrower  or any of its
Subsidiaries bankrupt or insolvent,  or approving a petition in any such case or
other  proceeding,  or a decree or order for relief is entered in respect of any
such  Person in an  involuntary  case under  federal  bankruptcy  laws as now or
hereafter constituted;

     (j) there shall remain in force,  undischarged,  unsatisfied  and unstayed,
for more than thirty (30) days,  whether or not consecutive,  any final judgment
against  any of the  Borrower  or any of its  Subsidiaries  that,  undischarged,
either alone or in the aggregate with other outstanding final judgments, exceeds
$200,000;

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<PAGE>

     (k) any of the Loan  Documents  shall be canceled,  terminated,  revoked or
rescinded  otherwise  than in  accordance  with the  terms  thereof  or with the
express prior written agreement, consent or approval of the Banks, or any action
at law, suit in equity or other legal  proceeding  to cancel,  revoke or rescind
any of the Loan  Documents  shall be commenced by or on behalf of the  Borrower,
any of its  Subsidiaries,  or any court or any other  governmental or regulatory
authority or agency of competent  jurisdiction shall make a determination  that,
or issue a judgment, order, decree or ruling to the effect that, any one or more
of the Loan Documents is illegal,  invalid or  unenforceable  in accordance with
the terms thereof;

     (l) any suit or  proceeding  shall be filed  against the Borrower or any of
its  Subsidiaries  or any of the  Collateral  which in the good  faith  business
judgment of the Requisite Banks after giving  consideration to the likelihood of
success of such suit or proceeding  and the  availability  of insurance to cover
any judgment with respect thereto and based on the information available to them
if adversely  determined,  would have a materially adverse effect on the ability
of the Borrower or any of its  Subsidiaries to perform each and every one of its
obligations  under  and by  virtue  of the  Loan  Documents  and  such  suit  or
proceeding is not dismissed  within one hundred  twenty (120) days following the
filing or commencement thereof;

     (m) the Borrower or the Manager,  shall be indicted for a federal  crime, a
punishment  for which could include the forfeiture of any assets of such Person,
including the Collateral;

     (n)  without  the prior  written  consent of all of the Banks,  a Change of
Control shall occur;

     (o) any Event of  Default,  as defined in any of the other Loan  Documents,
shall  occur  (it being  understood  that,  for  avoidance  of  doubt,  the mere
occurrence of a default or event of default under any Mortgage Loan Document, in
and of itself, does not constitute an Event of Default hereunder,  except if and
to the extent such  default or event of default  results in a  violation  of the
covenants contained in ss.8 or ss.9 hereof, or any of them); or

     (p) any amendment to or  termination  of a financing  statement  naming the
Borrower as debtor and the Agent as secured party,  or any correction  statement
with respect  thereto,  is filed in any jurisdiction by, or caused by, or at the
instance  of the  Borrower  or by,  or  caused  by,  or at the  instance  of any
principal,  member,  general  partner or officer of the Borrower  (collectively,
"Borrower  Party")  without  the prior  written  consent  of the  Agent;  or any
amendment  to or  termination  of a financing  statement  naming the Borrower as
debtor and the Agent as secured party, or any correction  statement with respect
thereto,  is filed in any  jurisdiction by any party other than a Borrower Party
or the Agent or the Agent's Special Counsel without the prior written consent of
the Agent and the Borrower  fails to use its best efforts to cause the effect of
such filing to be completely  nullified to the  satisfaction of the Agent within
thirty (30) days after notice to the Borrower thereof;

     then,  and in any such  event,  the Agent may,  and upon the request of the
Requisite Banks shall, by notice in writing to the Borrower  declare all amounts
owing with respect to this Agreement,  the Notes and the other Loan Documents to
be, and they shall  thereupon  forthwith  become,  immediately  due and  payable
without presentment,  demand,  protest or other notice of any kind, all of which
are hereby expressly  waived by the Borrower;  provided that in the event of any
Event of Default  specified in ss.12.l(g),  ss.12.1(h) or  ss.12.1(i),  all such
amounts  shall  become  immediately  due and payable  automatically  without any
requirement of notice from any of the Banks or the Agent.

     12.2 Limitation of Cure Periods.

     (a) Notwithstanding  anything contained in ss.12.1 to the contrary,  (i) no
Event of Default  shall  exist  hereunder  upon the  occurrence  of any  failure
described in  ss.12.1(b) in the event that  Borrower  cures such Default  within
five  (5)  Business  Days  from the  date  the  same  shall be due and  payable,
provided,  however, that Borrower shall not be entitled to receive more than two
(2) cure periods in the  aggregate  pursuant to this clause (i) in any period of
365 days  ending on the date of any such  occurrence  of Default,  and  provided
further  that no such  cure  period  shall  apply to any  payments  due upon the
maturity of any of the Notes, and (ii) no Event of Default shall exist hereunder
upon the  occurrence  of any failure  described in  ss.12.1(d) in the event that
Borrower cures such Default within thirty (30) days following the earlier of (A)
its receipt of written notice of such Default or (B) any officer of the Borrower
obtaining actual  knowledge of the existence of such Default.  The provisions of
clause (ii) shall not pertain to Defaults excluded from any provision of cure of
Defaults contained in any other of the Loan Documents.

     (b)  Notwithstanding  anything in this Agreement or any other Loan Document
to the contrary,  any reference in this  Agreement or any other Loan Document to
"the  continuance  of a default" or "the  continuance of an Event of Default" or
any similar phrase shall not create or be deemed to create any right on the part
of Borrower or any other party to cure any Default  following the  expiration of
any applicable grace or notice and cure period.

     12.3 Termination of Commitments.

     If any one or more Events of Default specified in ss.12.1(g), ss.12.1(h) or
ss.12.1(i)  shall occur,  then immediately and without any action on the part of
the Agent or any Bank any unused portion of the credit hereunder shall terminate
and the  Banks  shall  be  relieved  of all  obligations  to make  Loans  to the
Borrower. If any other Event of Default shall have occurred, the Agent, upon the
election of the Requisite Banks,  shall by notice to the Borrower  terminate the
obligation  to make Loans to the  Borrower.  No  termination  under this ss.12.3
shall  relieve the Borrower of its  obligations  to the Banks arising under this
Agreement or the other Loan Documents.

     12.4 Remedies.

     In case any one or more of the Events of Default shall have occurred and be
continuing,  and whether or not the Banks shall have accelerated the maturity of
the Loans pursuant to ss.12.1,  the Agent on behalf of the Banks shall, with the
consent and at the direction of the Requisite  Banks but not otherwise,  proceed
to protect and enforce their rights and remedies under this Agreement, the Notes
or any of the other Loan  Documents  by suit in  equity,  action at law or other
appropriate proceeding,  whether for the specific performance of any covenant or
agreement  contained  in this  Agreement  and the other  Loan  Documents  or any
instrument  pursuant to which the  Obligations  are evidenced,  including to the
full extent permitted by applicable law the

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obtaining of the ex parte  appointment of a receiver,  and, if such amount shall
have become due, by  declaration  or  otherwise,  proceed to enforce the payment
thereof or any other legal or equitable  right. No remedy herein  conferred upon
the Agent or the holder of any Note is  intended  to be  exclusive  of any other
remedy and each and every remedy shall be cumulative and shall be in addition to
every other  remedy given  hereunder  or now or hereafter  existing at law or in
equity or by statute or any other provision of law. In the event that all or any
portion of the  Obligations is collected by or through an  attorney-at-law,  the
Borrower  shall pay all  costs of  collection  including,  but not  limited  to,
reasonable attorneys' fees.

     12.5 Distribution of Collateral Proceeds.

     In the event that,  following the  occurrence or during the  continuance of
any Event of Default, any monies are received in connection with the enforcement
of any of the Security  Documents,  or otherwise with respect to the realization
upon any of the Collateral,  such monies shall be distributed for application as
follows:

     (a) First, to the payment of, or (as the case may be) the reimbursement of,
the Agent for or in  respect of all costs,  expenses,  disbursements  and losses
which shall have been  incurred or sustained by the Agent to protect or preserve
the Collateral or in connection with the collection of such monies by the Agent,
for the exercise,  protection or  enforcement  by the Agent of all or any of the
rights, remedies, powers and privileges of the Agent under this Agreement or any
of the other Loan Documents or in respect of the Collateral or in support of any
provision of adequate indemnity to the Agent against any taxes or liens which by
law shall  have,  or may  have,  priority  over the  rights of the Agent to such
monies;

     (b) Second,  to all other  Obligations  in such order or  preference as the
Requisite Banks shall determine;  provided,  however,  that (i) distributions in
respect of such  Obligations  shall be made pari passu  among  Obligations  with
respect to the Agent's fee payable pursuant to ss.4.3 and all other Obligations,
(ii) in the event that any Bank shall have wrongfully  failed or refused to make
an advance  under  ss.2.6  and such  failure  or  refusal  shall be  continuing,
advances  made by other Banks  during the  pendency  of such  failure or refusal
shall be entitled to be repaid as to principal and accrued  interest in priority
to the other  Obligations  described in this  subsection  (b),  (iii) payment of
Obligations  owing to the Banks with respect to each type of Obligation  such as
interest,  principal, fees and expenses, shall be made among the Banks pro rata,
and (iv) amounts received or realized from the Borrower shall be applied against
the Obligations of the Borrower; and provided,  further that the Requisite Banks
may in  their  discretion  make  proper  allowance  to  take  into  account  any
Obligations not then due and payable; and

     (c) Third, the excess, if any, shall be returned to the Borrower or to such
other Persons as are entitled thereto.

13.  SETOFF.

     Regardless of the adequacy of any collateral, during the continuance of any
Event of Default, any deposits (general or specific, time or demand, provisional
or final, regardless of currency, maturity, or the branch of where such deposits
are held) or other sums credited by or

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due from any of the Banks to the Borrower or any Guarantor and any securities or
other  property of the Borrower or any Guarantor in the  possession of such Bank
may be applied to or set off against the payment of  Obligations  of such Person
and any and all other liabilities,  direct, or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising,  of such Person to such
Bank.  Each of the Banks  agrees  with each  other  Bank that if such Bank shall
receive  from the  Borrower  or any  Guarantor,  whether by  voluntary  payment,
exercise of the right of setoff, or otherwise, and shall retain and apply to the
payment  of the Note or Notes  held by such  Bank any  amount  in  excess of its
ratable portion of the payments received by all of the Banks with respect to the
Notes  held by all of the  Banks,  such  Bank will  make  such  disposition  and
arrangements with the other Banks with respect to such excess,  either by way of
distribution,  pro tanto assignment of claims, subrogation or otherwise as shall
result  in  each  Bank  receiving  in  respect  of  the  Notes  held  by it  its
proportionate payment as contemplated by this Agreement; provided that if all or
any part of such excess  payment is thereafter  recovered  from such Bank,  such
disposition and  arrangements  shall be rescinded and the amount restored to the
extent of such recovery, but without interest.

14.  THE AGENT AND THE BANKS.

     14.1 Authorization.

     Each of the Banks hereby irrevocably  appoints KeyBank to act on its behalf
as Agent  hereunder and under the other Loan  Documents and authorizes the Agent
to take such actions on its behalf and to exercise  such powers as are delegated
to the Agent by the terms  hereof or  thereof,  together  with such  actions and
powers  as are  reasonably  incidental  thereto,  provided  that  no  duties  or
responsibilities  not  expressly  assumed  herein or therein shall be implied to
have been  assumed by the Agent.  The  obligations  of the Agent  hereunder  are
primarily  administrative in nature,  and nothing contained in this Agreement or
any of the other Loan Documents  shall be construed to constitute the Agent as a
trustee for any Bank or to create a fiduciary relationship.  The Agent shall act
as the contractual  representative of Banks hereunder,  and  notwithstanding the
use of the term "Agent",  it is  understood  and agreed that the Agent shall not
have any  fiduciary  duties  or  responsibilities  to any Bank by reason of this
Agreement or any other Loan Document and is acting as an independent contractor,
the duties and  responsibilities  of which are  limited to those  expressly  set
forth in this Agreement and the other Loan Documents. The Borrower and any other
Person shall be entitled to conclusively rely on a statement from the Agent that
it has the  authority to act for and bind the Banks  pursuant to this  Agreement
and the other Loan Documents.

     14.2 Employees and Agents.

     The Agent may exercise its rights and powers and execute any and all of its
duties  hereunder  or under any other Loan  Document by or through  employees or
agents  and  shall be  entitled  to  take,  and to rely on,  advice  of  counsel
concerning all matters  pertaining to its rights and duties under this Agreement
and the other Loan  Documents.  The Agent and any such agent may perform any and
all of its duties  and  exercise  its  rights  and  powers by or  through  their
respective Related Parties.  The exculpatory  provisions of this ss. shall apply
to any such agent and to the  Related  Parties of the Agent and any such  agent,
and  shall  apply  to  their  respective   activities  in  connection  with  the
syndication of the credit  facilities  provided for herein as well as

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activities  as the Agent.  The Agent may utilize the services of such Persons as
the  Agent may  determine,  and all  reasonable  fees and  expenses  of any such
Persons shall be paid by the Borrower.

     14.3 No Liability.

     Neither  the  Agent nor any of its  shareholders,  directors,  officers  or
employees nor any other Person  assisting them in their duties nor any agent, or
employee thereof, shall be liable to any of the Banks for any waiver, consent or
approval given or any action taken,  or omitted to be taken, in good faith by it
or them  hereunder or under any of the other Loan  Documents,  or in  connection
herewith or therewith,  or be responsible for the  consequences of any oversight
or error of judgment whatsoever,  except that the Agent or such other Person, as
the case may be, may be liable for losses due to its willful misconduct or gross
negligence  as  determine  by  a  court  of  competent  jurisdiction  after  the
exhaustion of all applicable appeal periods. The Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon,  any notice,  request,
certificate,   consent,  statement,   instrument,   document  or  other  writing
(including any electronic message, Internet or intranet website posting or other
distribution)  reasonably  believed by it to be genuine and to have been signed,
sent or otherwise  authenticated  by the proper Person.  The Agent also may rely
upon any statement made to it orally or by telephone and reasonably  believed by
it to have been made by the proper Person, and shall not incur any liability for
relying thereon.  In determining  compliance with any condition hereunder to the
making of a Loan,  that by its terms must be fulfilled to the  satisfaction of a
Bank,  the Agent may presume that such  condition is  satisfactory  to such Bank
unless the Agent shall have received notice to the contrary from such Bank prior
to the making of such Loan. The Agent may consult with legal counsel (who may be
counsel for Borrower), independent accountants and other experts selected by it,
and shall not be liable  for any action  taken or not taken by it in  accordance
with the advice of any such counsel, accountants or experts.

     14.4 No Representations.

     The Agent shall not have any duties or obligations  except those  expressly
set  forth  herein  and  in the  other  Loan  Documents.  Without  limiting  the
generality of the foregoing, the Agent:

     (a)  shall  not be  subject  to any  fiduciary  or  other  implied  duties,
regardless of whether a Default has occurred and is continuing;

     (b) shall not have any duty to take any  discretionary  action or  exercise
any  discretionary  powers,  except  discretionary  rights and powers  expressly
contemplated hereby or by the other Loan Documents that the Agent is required to
exercise as directed in writing by the Requisite  Banks (or such other number or
percentage  of Banks as shall be  expressly  provided for herein or in the other
Loan  Documents),  provided  that the Agent  shall not be  required  to take any
action that,  in its opinion or the opinion of its Special  Counsel,  may expose
the Agent to  liability or that is contrary to any Loan  Document or  applicable
law; and

     (c) shall not,  except as expressly  set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any

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<PAGE>

information  relating to Borrower or any of its Affiliates  that is communicated
to or obtained by the Person  serving as the Agent or any of its  Affiliates  in
any capacity.

     The Agent  shall not be liable for any action  taken or not taken by it (i)
with the consent or at the request of the Requisite  Banks (or such other number
or percentage of the Banks as shall be necessary,  or as the Agent shall believe
in good faith shall be necessary,  under the  circumstances as provided in ss.27
and  ss.12.4)  or (ii) in the  absence  of its own gross  negligence  or willful
misconduct.  The Agent  shall be deemed  not to have  knowledge  of any  Default
unless and until  notice  describing  such  Default is given to the Agent by the
Borrower or any Bank.

     The  Agent  shall not be  responsible  for the  execution  or  validity  or
enforceability of this Agreement,  the Notes, any of the other Loan Documents or
any instrument at any time constituting,  or intended to constitute,  collateral
security for the Notes, or for the value of any such collateral  security or for
the validity,  enforceability  or  collectability of any such amounts owing with
respect  to  the  Notes,  or for  any  recitals  or  statements,  warranties  or
representations  made  herein,  or  any  agreement,  instrument  or  certificate
delivered in  connection  therewith or in any of the other Loan  Documents or in
any certificate or instrument  hereafter  furnished to it by or on behalf of the
Borrower or any of its  Subsidiaries,  or be bound to ascertain or inquire as to
the  performance  or  observance of any of the terms,  conditions,  covenants or
agreements herein or in any other of the Loan Documents.

     The Agent shall not be  responsible  for or have any duty to  ascertain  or
inquire  into  (i)  any  statement,  warranty  or  representation  made in or in
connection with this Agreement or any other Loan Document,  (ii) the contents of
any certificate,  report or other document delivered  hereunder or thereunder or
in connection herewith or therewith,  (iii) the performance or observance of any
of the  covenants,  agreements or other terms or conditions  set forth herein or
therein or the  occurrence of any Default,  (iv) the  validity,  enforceability,
effectiveness  or genuineness of this Agreement,  any other Loan Document or any
other agreement, instrument or document or (v) the satisfaction of any condition
set forth in ss.10 or elsewhere  herein,  other than to confirm receipt of items
expressly required to be delivered to the Agent. The Agent has not made nor does
it now make any representations or warranties,  express or implied,  nor does it
assume any  liability  to the Banks,  with  respect to the  creditworthiness  or
financial  condition of the Borrower or any of its  Subsidiaries or the value of
the Collateral or any of the assets of the Borrower or its Subsidiaries.

     Each Bank acknowledges that it has, independently and without reliance upon
the Agent or any other Bank or any of their Related Parties, and based upon such
information  and  documents  as it has deemed  appropriate,  made its own credit
analysis and decision to enter into this Agreement.  Each Bank also acknowledges
that it will,  independently  and without  reliance  upon the Agent or any other
Bank or any of their Related Parties,  based upon such information and documents
as it deems  appropriate at the time,  continue to make its own credit  analysis
and decisions in taking or not taking action or based upon this  Agreement,  any
other Loan Document or any related agreement or any document furnished hereunder
or thereunder.

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     14.5 Payments.

     (a) A payment by the  Borrower to the Agent  hereunder  or under any of the
other Loan  Documents for the account of any Bank shall  constitute a payment to
such Bank.  The Agent agrees to  distribute  to each Bank not later than one (1)
Business Day after the Agent's  receipt of good funds,  determined in accordance
with the  Agent's  customary  practices,  such Bank's pro rata share of payments
received by the Agent for the account of the Banks except as otherwise expressly
provided herein or in any of the other Loan  Documents;  provided,  however,  if
Agent  receives a Borrower  payment  prior to 1:00 pm on a Business  Day,  Agent
shall disburse Bank's pro rata share of such payment on the same Business Day as
received.

     (b) If in the opinion of the Agent the  distribution of any amount received
by it in such capacity hereunder, under the Notes or under any of the other Loan
Documents might involve it in liability, it may refrain from making distribution
until its right to make  distribution  shall have been adjudicated by a court of
competent jurisdiction.  If a court of competent jurisdiction shall adjudge that
any amount received and distributed by the Agent is to be repaid, each Person to
whom any such distribution  shall have been made shall either repay to the Agent
its proportionate share of the amount so adjudged to be repaid or shall pay over
the same in such  manner  and to such  Persons  as shall be  determined  by such
court.

     (c) Notwithstanding anything to the contrary contained in this Agreement or
any of the other Loan  Documents,  any Bank that fails (i) to make  available to
the Agent its pro rata share of any Loan or (ii) to comply  with the  provisions
of ss.13 with respect to making  dispositions  and  arrangements  with the other
Banks,  where such Bank's  share of any payment  received,  whether by setoff or
otherwise,  is in excess of its pro rata share of such  payments due and payable
to all of the Banks,  in each case as, when and to the full  extent  required by
the  provisions of this  Agreement,  shall be deemed  delinquent (a  "Delinquent
Bank") and shall be deemed a Delinquent Bank until such time as such delinquency
is  satisfied.  A Delinquent  Bank shall be deemed to have  assigned any and all
payments due to it from the Borrower,  whether on account of outstanding  Loans,
interest,   fees  or  otherwise,   to  the  remaining  nondelinquent  Banks  for
application  to, and  reduction  of,  their  respective  pro rata  shares of all
outstanding Loans in accordance with the terms of this Agreement. The Delinquent
Bank  hereby   authorizes   the  Agent  to  distribute   such  payments  to  the
nondelinquent  Banks in  proportion to their  respective  pro rata shares of all
outstanding Loans. A Delinquent Bank shall be deemed to have satisfied in full a
delinquency when and if, as a result of application of the assigned  payments to
all  outstanding  Loans  of the  nondelinquent  Banks  or as a  result  of other
payments  by  the  Delinquent  Banks  to the  nondelinquent  Banks,  the  Banks'
respective  pro rata shares of all  outstanding  Loans have returned to those in
effect  immediately  prior to such  delinquency and without giving effect to the
nonpayment causing such delinquency.

     14.6 Holders of Notes.

     Subject  to the terms of  ss.18,  the Agent may deem and treat the payee of
any Note as the  absolute  owner or purchaser  thereof for all  purposes  hereof
until it shall have been  furnished  in writing  with a  different  name by such
payee or by a subsequent holder, assignee or transferee.

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<PAGE>

     14.7 Indemnity.

     The Banks  ratably  hereby agree to indemnify  and hold  harmless the Agent
from and against any and all claims,  actions and suits  (whether  groundless or
otherwise),  losses,  damages, costs, expenses (including any expenses for which
the Agent has not been  reimbursed  by the  Borrower as required by ss.15),  and
liabilities  of every  nature and  character  arising  out of or related to this
Agreement,  the Notes,  or any of the other Loan  Documents or the  transactions
contemplated  or  evidenced  hereby or  thereby,  or the Agent's  actions  taken
hereunder  or  thereunder,  except to the  extent  that any of the same shall be
directly caused by the Agent's willful misconduct or gross negligence.

     14.8 Agent as Bank.

     In its capacity as a Bank,  KeyBank shall have the same obligations and the
same rights,  powers and  privileges in respect to its  Commitment and the Loans
made by it,  and as the  holder of any of the Notes as it would have were it not
also the Agent and the term "Bank" or "Banks" shall,  unless otherwise expressly
indicated or unless the context otherwise  requires,  include the Person serving
as  the  Agent  hereunder  in its  individual  capacity.  Such  Person  and  its
Affiliates may accept deposits from, lend money to, act as the financial advisor
or in any  other  advisory  capacity  for and  generally  engage  in any kind of
business with Borrower or any Subsidiary or other  Affiliate  thereof as if such
Person were not the Agent hereunder and without any duty to account  therefor to
Banks.

     14.9 Resignation.

     The Agent may at any time give notice of its  resignation  to the Banks and
the  Borrower.  Upon receipt of any such notice of  resignation,  the  Requisite
Banks shall have the right,  in  consultation  with the  Borrower,  to appoint a
successor Agent any Bank or any bank whose senior debt obligations are rated not
less than "A" or its equivalent by Moody's Investors  Service,  Inc. or not less
than "A" or its  equivalent by Standard & Poor's Rating Group Inc. and which has
a net worth of not less than $500,000,000.  Unless a Default shall have occurred
and be continuing,  such successor  Agent shall be reasonably  acceptable to the
Borrower.  If no successor  Agent shall have been so appointed by the  Requisite
Banks and shall have accepted such appointment within 30 days after the retiring
Agent's giving of notice of resignation,  then the retiring Agent may, on behalf
of the Banks,  appoint a successor Agent,  meeting the  qualifications set forth
above provided that if the Agent shall notify the Borrower and the Banks that no
qualifying  Person has accepted such  appointment,  then such resignation  shall
nonetheless become effective in accordance with such notice and (a) the retiring
Agent shall be discharged  from its duties and  obligations  hereunder and under
the other Loan  Documents  (except that in the case of any  collateral  security
held by the Agent on behalf of the Banks  under any of the Loan  Documents,  the
retiring Agent shall continue to hold such  collateral  security until such time
as a successor  Agent is  appointed)  and (b) all payments,  communications  and
determinations  provided to be made by, to or through the Agent shall instead be
made by or to each Bank directly, until such time as the Requisite Banks appoint
a successor Agent as provided for above in this  paragraph.  Upon the acceptance
of a successor's appointment as Agent hereunder, such successor shall succeed to
and become vested with all of the rights,  powers,  privileges and duties of the
retiring (or retired) Agent, and the retiring Agent shall be discharged from all
of its duties and

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<PAGE>

obligations  hereunder  or  under  the  other  Loan  Documents  (if not  already
discharged  therefrom as provided above in this paragraph).  The fees payable by
the  Borrower  to a successor  Agent  shall be the same as those  payable to its
predecessor  unless  otherwise  agreed between the Borrower and such  successor.
After the  retiring  Agent's  resignation  hereunder  and  under the other  Loan
Documents,  the  provisions  of this  Agreement  and this ss. shall  continue in
effect  for the  benefit  of such  retiring  Agent,  its sub  agents  and  their
respective  Related  Parties in respect  of any  actions  taken or omitted to be
taken by any of them while the retiring Agent was acting as Agent.

     14.10 Duties in the Case of Enforcement.

     In  case  one or  more  Events  of  Default  have  occurred  and  shall  be
continuing,  and  whether  or not  acceleration  of the  Obligations  shall have
occurred,  the Agent shall,  if (a) so requested by the Requisite  Banks and (b)
the Banks have provided to the Agent such additional  indemnities and assurances
against expenses and liabilities as the Agent may reasonably request, proceed to
enforce the provisions of the Security  Documents  authorizing the sale or other
disposition  of all or any part of the  Collateral  and exercise all or any such
other legal and equitable and other rights or remedies as it may have in respect
of such  Collateral.  The Requisite  Banks may direct the Agent in writing as to
the  method  and the  extent  of any such sale or other  disposition,  the Banks
hereby  agreeing to indemnify and hold the Agent  harmless from all  liabilities
incurred  in respect of all  actions  taken or omitted in  accordance  with such
directions,  provided that the Agent need not comply with any such  direction to
the extent that the Agent reasonably  believes the Agent's  compliance with such
direction  to  be  unlawful  or  commercially  unreasonable  in  any  applicable
jurisdiction.  Notwithstanding the foregoing, the Agent shall not be required to
obtain the  consent of the Banks to its  taking any action  with  respect to the
Loans if  immediate  action is required to be taken in the best  interest of the
Banks to preserve or protect  the  Collateral  or the  continued  perfection  or
priority  of the  Agent's  security  title  and  lien on the  Collateral  or the
continued enforceability of the Loan Documents; provided however, that the Agent
shall endeavor to notify the Banks of any such actions as soon as practicable.

     14.11 Intentionally Omitted.

     14.12 Withholding Tax.

     (a) If any Bank is a "foreign corporation, partnership or trust" within the
meaning of the Code and such Bank claims exemption from, or a reduction of, U.S.
withholding  tax under Sections 1441 or 1442 of the Code,  such Bank agrees with
and in favor of the Agent, to deliver to the Agent:

     (i)  if such Bank claims an exemption from, or a reduction of,  withholding
          tax under a United  States tax treaty,  properly  completed  IRS Forms
          1098 W8-BEN or Form 1098 W8-ECI  before the payment of any interest in
          the first calendar year and before the payment of any interest in each
          third succeeding calendar year during which interest may be paid under
          this Agreement;

     (ii) if such Bank claims that interest paid under this  Agreement is exempt
          from United States withholding tax because it is effectively connected
          with a United States trade or business of such Bank,  two (2) properly
          completed  and executed

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<PAGE>

          copies of IRS Form 4224 before the  payment of any  interest is due in
          the first  taxable  year of such Bank and in each  succeeding  taxable
          year of such  Bank  during  which  interest  may be  paid  under  this
          Agreement, and IRS Form W-9;

     (iii) such other form or forms as may be  required  under the Code or other
          laws of the  United  States  as a  condition  to  exemption  from,  or
          reduction of, United States withholding tax; and

     (iv) in the case of any Bank claiming  exemption from U.S.  Withholding Tax
          under Section  871(b) or 881(c) of the Code,  with respect to payments
          of  "Portfolio  Interest",  a Form  W-8,  or any  subsequent  versions
          thereof or  successors  thereto and if the Bank delivers a Form W-8, a
          certificate  representing that such Bank is not a bank for purposes of
          Section  881(c) of the Code,  is not a ten percent  (10%)  shareholder
          (within the meaning of Section  871(h)(3)(b) of the Code) of Borrower,
          and  is not a  controlled  foreign  corporation  related  to  Borrower
          (within the meaning of Section 864(d)(4) of the Code).

     Each  such  certificate  and form  shall  be  properly  completed  and duly
executed by such Bank claiming  complete  exemption  from a reduced rate of U.S.
Withholding  Tax on  payments by Borrower  under this  Agreement  and other Loan
Documents.  Each  Bank  agrees  to  promptly  notify  Agent  of  any  change  in
circumstances  which would  modify or render  invalid any claimed  exemption  or
reduction.

     (b) If any Bank claims  exemption  from, or reduction of,  withholding  tax
under a United  States tax treaty by providing IRS Form 1098 W8-BEN or Form 1098
W8-ECI and such Bank sells,  assigns,  grants a  participation  in, or otherwise
transfers  all or part of the  Obligations  of Borrower to such Bank,  such Bank
agrees to notify the Agent of the percentage amount in which it is no longer the
beneficial  owner of Obligations of Borrower to such Bank. To the extent of such
percentage amount, the Agent will treat such Bank's IRS Form 1098 W8-BEN or Form
1098 W8-ECI as no longer valid.

     (c) If any Bank claiming  exemption from United States  withholding  tax by
filing IRS Form 4224 with the Agent sells,  assigns,  grants a participation in,
or otherwise  transfers all or part of the Obligations of Borrower to such Bank,
such  Bank  agrees to  undertake  sole  responsibility  for  complying  with the
withholding tax requirements imposed by Sections 1441 and 1442 of the Code.

     (d) If any Bank is entitled to a reduction  in the  applicable  withholding
tax,  the Agent may withhold  from any  interest  payment to such Bank an amount
equivalent  to the  applicable  withholding  tax after  taking into account such
reduction. If the forms or other documentation required by ss.14.12(a) above are
not  delivered  to the  Agent,  then the Agent may  withhold  from any  interest
payment to such Bank not providing such forms or other  documentation  an amount
equivalent to the applicable withholding tax.

     (e) If the IRS or any other governmental  authority of the United States or
other jurisdiction  asserts a claim that the Agent did not properly withhold tax
from  amounts paid to or for the account of any Bank  (because  the  appropriate
form was not delivered,  was not properly

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<PAGE>

executed,  or  because  such  Bank  failed  to  notify  the Agent of a change in
circumstances  which rendered the exemption  from, or reduction of,  withholding
tax  ineffective,  or for any other reason) such Bank shall  indemnify the Agent
fully for all  amounts  paid,  directly  or  indirectly,  by the Agent as tax or
otherwise,  including penalties and interest, and including any taxes imposed by
any  jurisdiction  on the  amounts  payable to the Agent  under  this  ss.14.12,
together with all costs and expenses (including  reasonable  attorney's fees and
legal  expenses).  The obligation of the Banks under this ss.14.12 shall survive
the payment of all Obligations and the resignation or replacement of the Agent.

     (f) The indemnity provision of ss.14.12(e) above may be suspended or waived
by the Agent  with  respect  to any Bank at its sole  election  ("Non-Indemnitor
Bank"). In addition to any other rights of offset contained in this Agreement or
under any applicable law, or so long as a Non-Indemnitor  Bank is a Bank, in the
event  that any  amounts  would  otherwise  be  covered  by an  indemnity  under
ss.14.12(e)  of  this  Agreement  from  a  Non-Indemnitor  Bank,  such  as  U.S.
Withholding  Tax due and payable and any  penalties  or  interest  with  respect
thereto and fees and expenses of collection, then in such event, the Agent shall
be  authorized  to offset any such  amounts  against  the  amounts  payable to a
Non-Indemnitor  Bank hereunder  until  otherwise  indemnified  amounts are fully
paid. The right of offset contained herein shall be in addition to and shall not
limit or otherwise waive or diminish any right or remedy that the Agent may have
against a Non-Indemnitor Bank under any applicable law.

     14.13 Bankruptcy.

     In the event a bankruptcy or other insolvency proceeding is commenced by or
against the Borrower, the Agent shall have the sole and exclusive right and duty
to file and  pursue a joint  proof of claim on  behalf of all  Banks.  Each Bank
irrevocably  waives its right to file or pursue a separate proof of claim in any
such proceedings.

     14.14 Notice of Event of Default.

     The Agent shall not be deemed to have knowledge or notice of the occurrence
of any  Default or Event of  Default,  except  with  respect to  defaults in the
payment of principal, interest and fees required to be paid to the Agent for the
account of the  Banks,  unless the Agent has  received  notice  from a Bank or a
Borrower  referring  to  the  Loan  Documents  and  describing  with  reasonable
specificity  such  Default or Event of Default and stating that such notice is a
"notice of default".

     15. EXPENSES.

     The Borrower agrees to pay (a) the costs of producing and reproducing  this
Agreement,  the other Loan Documents and the other  agreements  and  instruments
mentioned herein, (b) any taxes (including any interest and penalties in respect
thereto)  payable by the Agent or any of the Banks  (other than taxes based upon
the  Agent's or any Bank's  gross or net  income,  except that the Agent and the
Banks shall be entitled to indemnification  for any and all amounts paid by them
in  respect of taxes  based on income or other  taxes  assessed  by any State in
which  Collateral is located,  such  indemnification  to be limited to taxes due
solely on account of the granting of Collateral under the Security Documents and
to be net of any credit allowed to the indemnified

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<PAGE>

party from any other State on account of the payment or  incurrence  of such tax
by such indemnified party),  including any recording,  mortgage,  documentary or
intangibles  taxes in connection  with the Collateral  Assignment and other Loan
Documents,  or  other  taxes  payable  on or with  respect  to the  transactions
contemplated by this Agreement, including any such taxes payable by the Agent or
any of the Banks  after  the  Closing  Date (the  Borrower  hereby  agreeing  to
indemnify the Agent and each Bank with respect thereto), (c) all title insurance
premiums,  appraisal  fees,  engineer's  fees,  internal  charges  of the  Agent
(determined in good faith and in accordance with the Agent's  internal  policies
applicable  generally  to  its  customers)  for  commercial  finance  exams  and
engineering and environmental  reviews and the fees,  expenses and disbursements
of the Agent  Special  Counsel  and any  local  counsel  to the  Agent  actually
incurred in connection with the preparation, administration or interpretation of
the  Loan  Documents  and  other  instruments  mentioned  herein,  each  closing
hereunder, and amendments, modifications,  approvals, consents or waivers hereto
or hereunder,  (d) the fees, expenses and disbursements of the Agent incurred by
the Agent in  connection  with the  preparation  or  interpretation  of the Loan
Documents and other instruments mentioned herein, and the making of each advance
hereunder,  (e) all out-of-pocket expenses (including reasonable attorneys' fees
and costs,  which  attorneys  may be  employees of any Bank or the Agent and the
fees and costs of  appraisers,  engineers,  investment  bankers or other experts
retained  by any  Bank  or the  Agent)  incurred  by any  Bank or the  Agent  in
connection  with (i) the  enforcement of or  preservation of rights under any of
the Loan Documents against the Borrower or the administration  thereof after the
occurrence of a Default or Event of Default and (ii) any litigation,  proceeding
or dispute  whether  arising  hereunder or otherwise,  in any way related to the
Agent's or any of the Bank's  relationship with the Borrower,  and (f) all fees,
expenses  and  disbursements  of the  Agent  incurred  in  connection  with  UCC
searches,  UCC filings,  title rundowns,  title searches or document recordings.
The covenants of this ss.15 shall survive  payment or satisfaction of payment of
amounts owing with respect to the Notes.

16.  INDEMNIFICATION.

     The Borrower agrees to indemnify and hold harmless the Agent, the Banks and
the Arranger and each director, officer, employee, agent and Person who controls
the Agent or any Bank from and against  any and all  claims,  actions and suits,
whether  groundless or otherwise,  and from and against any and all liabilities,
losses,  damages and  expenses of every nature and  character  arising out of or
relating  to  this  Agreement  or  any  of  the  other  Loan  Documents  or  the
transactions contemplated hereby and thereby including,  without limitation, (a)
any leasing fees and any brokerage, finders or similar fees asserted against any
Person  indemnified  under this ss.16 based upon any  agreement,  arrangement or
action made or taken,  or alleged to have been made or taken, by the Borrower or
any of its Subsidiaries,  (b) any condition of the Collateral, (c) any actual or
proposed use by the Borrower of the proceeds of any of the Loans, (d) any actual
or alleged  infringement of any patent,  copyright,  trademark,  service mark or
similar right of any of the Borrower or any of its Subsidiaries comprised in the
Collateral,  (e) the Borrower  entering into or performing this Agreement or any
of the other Loan Documents,  or (f) any actual or alleged violation of any law,
ordinance, code, order, rule, regulation,  approval,  consent, permit or license
relating to the Collateral,  in each case  including,  without  limitation,  the
reasonable  fees and  disbursements  of counsel and allocated  costs of internal
counsel actually incurred in connection with any such investigation,  litigation
or other proceeding; provided, however, that the Borrower shall not be obligated
under this ss.16 to indemnify any Person for liabilities arising

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<PAGE>

from such Person's own gross  negligence or willful  misconduct.  If, and to the
extent that the  obligations of the Borrower under this ss.16 are  unenforceable
for any reason,  the Borrower hereby agrees to make the maximum  contribution to
the payment in  satisfaction  of such  obligations  which is  permissible  under
applicable  law. The provisions of this ss.16 shall survive the repayment of the
Loans and the termination of the obligations of the Banks hereunder.

17.  SURVIVAL OF COVENANTS, ETC.

     All covenants,  agreements,  representations and warranties made herein, in
the  Notes,  in any of the other Loan  Documents  or in any  documents  or other
papers  delivered  by or on behalf of the  Borrower  or any of its  Subsidiaries
pursuant hereto or thereto shall be deemed to have been relied upon by the Banks
and the Agent, notwithstanding any investigation heretofore or hereafter made by
any of them,  and shall survive the making by the Banks of any of the Loans,  as
herein contemplated,  and shall continue in full force and effect so long as any
amount due under this  Agreement or the Notes or any of the other Loan Documents
remains  outstanding  or any Bank has any  obligation  to make  any  Loans.  The
indemnification  obligations of the Borrower  provided herein and the other Loan
Documents shall survive the full repayment of amounts due and the termination of
the  obligations of the Banks  hereunder and  thereunder to the extent  provided
herein and therein.  All statements  contained in any certificate or other paper
delivered  to any Bank or the Agent at any time by or on behalf of the  Borrower
or  any  of  its  Subsidiaries   pursuant  hereto  or  in  connection  with  the
transactions contemplated hereby shall constitute representations and warranties
by such Person hereunder.

18.  ASSIGNMENT AND PARTICIPATION.

     18.1 Conditions to Assignment by Banks.

     Except as provided  herein,  each Bank may assign to any Eligible  Assignee
all or a portion of its interests,  rights and obligations  under this Agreement
(including all or a portion of its Commitment  Percentage and Commitment and the
same  portion  of the Loans at the time  owing to it, and the Notes held by it);
provided that (a) the Agent shall have given its prior  written  consent to such
assignment  (provided that such consent shall not be required for any assignment
to another Bank, to a bank which is under common control with the assigning Bank
or to a  wholly-owned  Subsidiary of such Bank provided that such assignee shall
remain a wholly-owned  Subsidiary of such Bank),  (b) each such assignment shall
be of a constant,  and not a varying,  percentage  of all the  assigning  Bank's
rights and obligations under this Agreement,  (c) the parties to such assignment
shall  execute and  deliver to the Agent,  for  recording  in the  Register  (as
hereinafter  defined),  a  notice  of such  assignment  in the  form  reasonably
required by Agent,  together with any Notes subject to such  assignment  (in the
event that any of the original  Notes have been lost or  destroyed,  a lost-note
affidavit shall be delivered in place of such lost or destroyed Notes), (d) such
assignee shall acquire an interest in the Loans of not less than $2,000,000, (e)
the assignor shall assign its entire interest in the Loans or retain an interest
in the Loans of not less than  $2,000,000,  and (f) the  assignee  and  assignor
shall execute and deliver to Agent an Assignment and Acceptance Agreement in the
form of Exhibit E attached  hereto and made a part hereof.  Upon such execution,
delivery,  acceptance  and  recording,  of such  notice of  assignment,  (i) the
assignee  thereunder  shall  be a party  hereto  and all  other  Loan  Documents
executed by the Banks and, to the extent provided in such  assignment,  have the
rights and

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obligations  of a Bank  hereunder,  and (ii) the  assigning  Bank shall,  to the
extent  provided  in such  assignment  and  upon  payment  to the  Agent  of the
registration fee referred to in ss.18.2,  be released from its obligations under
this Agreement. In connection with each assignment, the assignee shall represent
and warrant to the Agent,  the  assignor  and each other Bank as to whether such
assignee is  controlling,  controlled  by, under  common  control with or is not
otherwise  free from  influence  or  control  by,  the  Borrower.  Upon any such
assignment,  the Agent may  unilaterally  amend  Schedule 1 to reflect  any such
assignment.

     18.2 Register.

     The Agent shall  maintain a copy of each  assignment  delivered to it and a
register or similar list (the  "Register")  for the recordation of the names and
addresses of the Banks and the Commitment  Percentages of, and principal  amount
of the Loans owing to the Banks from time to time.  The entries in the  Register
shall be conclusive,  in the absence of manifest  error,  and the Borrower,  the
Agent and the Banks may treat each Person whose name is recorded in the Register
as a Bank  hereunder for all purposes of this  Agreement.  The Register shall be
available for inspection by the Borrower and the Banks at any time and from time
to time upon reasonable prior notice. Upon each such recordation,  the assigning
Bank agrees to pay to the Agent a registration fee in the sum of $3,500.

     18.3 New Notes.

     Upon  its  receipt  of an  assignment  executed  by  the  parties  to  such
assignment,  together with each Note subject to such assignment, the Agent shall
(a) record the  information  contained  therein  in the  Register,  and (b) give
prompt  notice  thereof to the Borrower and the Banks (other than the  assigning
Bank).  Within five (5) Business Days after receipt of such notice, the Borrower
shall execute and deliver to the Agent, in exchange for each surrendered Note, a
new Note to the order of such assignee in an amount equal to the amount  assumed
by such assignee  pursuant to such  assignment  and, if the  assigning  Bank has
retained some portion of its obligations  hereunder,  a new Note to the order of
the  assigning  Bank in an amount equal to the amount  retained by it hereunder.
Such new Notes shall  provide  that they are  replacements  for the  surrendered
Notes,  shall  be in an  aggregate  principal  amount  equal  to  the  aggregate
principal amount of the surrendered  Notes, shall be dated the effective date of
such assignment and shall otherwise be in substantially the form of the assigned
Notes. The surrendered Notes shall be canceled and returned to the Borrower.

     18.4 Participations.

     Each Bank may sell participations to one or more banks or other entities in
all or a portion of such Bank's rights and obligations  under this Agreement and
the other Loan Documents; provided that (a) any such sale or participation shall
not affect the rights and duties of the selling Bank  hereunder to the Borrower,
(b) such  participation  shall not  entitle  such  participant  to any rights or
privileges  under  this  Agreement  or any  Loan  Documents,  including  without
limitation, the right to approve waivers, amendments or modifications,  (c) such
participant  shall have no direct rights against the Borrower  except the rights
granted to the Banks pursuant to ss.13,  (d) such sale is effected in accordance
with  all  applicable  laws,  and (e)  such  participant  shall  not be a Person
controlling, controlled by or under common control with, or

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<PAGE>

which is not otherwise free from influence or control by the Borrower.  Any Bank
which sells a participation shall promptly notify the Agent of such sale and the
identity of the purchaser of such interest.

     18.5 Pledge by Bank.

     Any Bank may at any time  pledge  all or any  portion of its  interest  and
rights under this Agreement (including all or any portion of its Note) to any of
the twelve Federal  Reserve Banks  organized  under ss.4 of the Federal  Reserve
Act, 12 U.S.C.  ss.341 or,  with  Agent's  prior  written  approval,  to another
Person. No such pledge or the enforcement thereof shall release the pledgor Bank
from its obligations hereunder or under any of the other Loan Documents.

     18.6 No Assignment by Borrower.

     The Borrower  shall not assign or transfer any of its rights or obligations
under any of the Loan Documents without the prior written consent of each of the
Banks.

     18.7 Cooperation; Disclosure.

     At no cost or expense to the  Borrower,  the  Borrower  agrees to  promptly
cooperate  with  any  Bank  in  connection  with  any  proposed   assignment  or
participation of all or any portion of its Commitment. The Borrower agrees that,
in addition to disclosures made in accordance with standard  lending  practices,
any Bank  may  disclose  information  obtained  by such  Bank  pursuant  to this
Agreement to assignees or participants  and potential  assignees or participants
hereunder.  Notwithstanding  anything herein to the contrary, the Agent and each
Bank may disclose to any and all Persons,  without  limitation of any kind,  any
information  with respect to the "tax  treatment"  and "tax  structure" (in each
case,  within the  meaning  of  Treasury  Regulation  Section  1.6011-4)  of the
transactions  contemplated  hereby  and all  materials  of any  kind  (including
opinions  or other  tax  analyses)  that are  provided  to the Agent or any Bank
relating to such tax treatment and tax structure;  provided that with respect to
any document or similar item that in either case contains information concerning
the  tax  treatment  or tax  structure  of the  transaction  as  well  as  other
information,  this sentence shall only apply to such portions of the document or
similar item that relate to the tax  treatment or tax structure of the Loans and
transactions contemplated hereby.

     18.8 Amendments to Loan Documents.

     Upon any such assignment or  participation,  the Borrower  shall,  upon the
request of the Agent,  enter into such documents as may be required by the Agent
to modify the Loan Documents to reflect such assignment or participation.

     18.9 Co-Agents.

     The Arranger shall not have any additional  rights or obligations under the
Loan Documents, except for those rights and obligations, if any, as a Bank.

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<PAGE>

     18.10 Treatment of Certain Information; Confidentiality.

     Each of Agent  and Banks  agrees to  maintain  the  confidentiality  of the
Information (as defined below),  except that Information may be disclosed (a) to
its Affiliates and to its and its Affiliates'  respective  partners,  directors,
officers,  employees,  agents,  advisors  and  other  representatives  (it being
understood  that the Persons to whom such disclosure is made will be informed of
the  confidential  nature  of such  Information  and  instructed  to  keep  such
Information  confidential),  (b)  to the  extent  requested  by  any  regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners),  (c) to
the extent  required by  applicable  laws or  regulations  or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise  of any  remedies  hereunder  or under any other Loan  Document  or any
action or  proceeding  relating to this  Agreement or any other Loan Document or
the enforcement of rights  hereunder or thereunder,  (f) subject to an agreement
containing  provisions  substantially the same as those of this Section,  to (i)
any assignee of or participant in, or, with Borrower's consent,  any prospective
assignee  of or  participant  in,  any of its rights or  obligations  under this
Agreement or (ii) any actual or  prospective  counterparty  (or its advisors) to
any swap or derivative transaction relating to Borrower and its obligations, (g)
with the consent of Borrower or (h) to the extent such  Information  (x) becomes
publicly  available  other  than as a result of a breach of this  Section or (y)
becomes available to the Agent, any Bank, or any of their respective  Affiliates
on a nonconfidential basis from a source other than the Borrower.

     For purposes of this Section,  "Information" means all information received
from the Borrower or any of its Subsidiaries  relating to the Borrower or any of
its Subsidiaries or any of its businesses,  other than any such information that
is  available  to the  Agent or any  Bank on a  nonconfidential  basis  prior to
disclosure  by the Borrower or any of its  Subsidiaries,  provided  that, in the
case of information  received from the Borrower or any of its Subsidiaries after
the date hereof,  such information is clearly identified at the time of delivery
as  confidential.  Any  Person  required  to  maintain  the  confidentiality  of
Information  as provided in this Section  shall be  considered  to have complied
with its  obligation  to do so if such Person has  exercised  the same degree of
care to maintain the  confidentiality  of such  Information as such Person would
accord to its own confidential information.

     19. NOTICES.

     Each notice,  demand,  election or request  provided for or permitted to be
given  pursuant  to this  Agreement  (hereinafter  in this ss.19  referred to as
"Notice"), but specifically excluding to the maximum extent permitted by law any
notices of the institution or commencement of foreclosure  proceedings,  must be
in writing and shall be deemed to have been properly given or served by personal
delivery or by sending same by overnight  courier or by  depositing  same in the
United  States Mail,  postpaid  and  registered  or  certified,  return  receipt
requested,  or as  expressly  permitted  herein,  by telecopy  or  telefax,  and
addressed as follows:


<PAGE>


     If to Agent or any Bank, at the address set forth on the signature page for
Agent or such Bank, with a copy to Agent's Special Counsel:

         Powell Goldstein LLP
         One Atlantic Center, Fourteenth Floor
         1201 W. Peachtree Street, NW
         Atlanta, Georgia  30309-3488
         Attention:  Julian D. Nealy
         Facsimile: (404) 572-6999

         If to the Borrower:

         American Church Mortgage Company
         10237 Yellow Circle Drive
         Minnetonka, Minnesota 55343
         Attn:  Philip J. Myers, President
         Facsimile: (952) 945-9433

         With a copy to:

         Winthrop & Weinstine, P.A.
         Suite 3500
         225 South Sixth Street
         Minneapolis, Minnesota  55402-4629
         Attention:  Philip T. Colton, Esq.
         Facsimile:  (612) 604-6929

to each other Bank a party hereto at the address for such party set forth on the
signature page for such Bank, and to each other Bank which may hereafter  become
a party to this  Agreement  at such address as may be  designated  by such Bank.
Each Notice shall be  effective  upon being  personally  delivered or upon being
sent by overnight  courier,  upon being  deposited in the United  States Mail or
upon  being  faxed as  aforesaid,  except  that no Notice to the Agent  shall be
effective  unless and until actually  received by the Agent.  The time period in
which a response to such Notice must be given or any action  taken with  respect
thereto  (if any),  however,  shall  commence to run from the date of receipt if
personally  delivered  or sent by overnight  courier,  or if so deposited in the
United  States  Mail,  the earlier of three (3)  Business  Days  following  such
deposit or the date of receipt as disclosed on the return receipt.  Rejection or
other refusal to accept or the inability to deliver  because of changed  address
for which no notice was given shall be deemed to be receipt of the Notice  sent.
By giving at least fifteen (15) days prior Notice thereof,  the Borrower, a Bank
or the Agent  shall have the right from time to time and at any time  during the
term of this Agreement to change their respective  addresses and each shall have
the right to specify as its address any other  address  within the United States
of America.

20.  RELATIONSHIP.

     Neither  the  Agent  nor any Bank has any  fiduciary  relationship  with or
fiduciary  duty  to  the  Borrower  or  it  Subsidiaries  arising  out  of or in
connection with this Agreement or the other

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Loan Documents or the transactions  contemplated  hereunder and thereunder,  and
the  relationship  between each Bank and the Borrower is solely that of a lender
and borrower, and nothing contained herein or in any of the other Loan Documents
shall in any manner be construed as making the parties  hereto  partners,  joint
venturers or any other relationship other than lender and borrower. In addition,
the Borrower agrees that  notwithstanding any other relationship that KeyBank or
any affiliate thereof may have with the Borrower,  in any proceeding relating to
Borrower  under  any  bankruptcy,   reorganization,   arrangement,   insolvency,
readjustment  of debt,  dissolution,  liquidation  or  similar  proceeding,  the
Borrower  will  not  challenge  the  Banks'  right  to  receive  payment  of the
Obligations  as a creditor  of the  Borrower  on the  grounds  of the  equitable
subordination  principles  contained in ss.510 of the United  States  Bankruptcy
Code (11 U.S.C.  ss.101 et seq.),  as from time to time amended,  or any similar
provision under any applicable law. The covenants  contained in this ss.20 are a
material consideration and inducement to the Banks to enter into the Agreement.

21.  GOVERNING LAW: CONSENT TO JURISDICTION AND SERVICE.

THIS AGREEMENT  AND  EACH  OF THE  OTHER  LOAN  DOCUMENTS  EXCEPT  AS  OTHERWISE
     SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF
     GEORGIA AND SHALL FOR ALL  PURPOSES BE  CONSTRUED  IN  ACCORDANCE  WITH AND
     GOVERNED  BY THE  LAWS OF SUCH  STATE  (EXCLUDING  THE LAWS  APPLICABLE  TO
     CONFLICTS  OR CHOICE OF LAW).  THE  BORROWER  AGREES  THAT ANY SUIT FOR THE
     ENFORCEMENT  OF THIS  AGREEMENT OR ANY OF THE OTHER LOAN  DOCUMENTS  MAY BE
     BROUGHT IN THE COURTS OF THE STATE OF GEORGIA OR ANY FEDERAL  COURT SITTING
     THEREIN AND CONSENT TO THE NONEXCLUSIVE  JURISDICTION OF SUCH COURT AND THE
     SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT
     THE ADDRESS  SPECIFIED IN ss.19.  THE BORROWER  HEREBY WAIVES ANY OBJECTION
     THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH
     COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.

22.  HEADINGS.

The  captions in this Agreement are for  convenience of reference only and shall
     not define or limit the provisions hereof.

23.  COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION.

     (a)  Counterparts;  Integration;  Effectiveness.  This  Agreement  and  any
amendment hereof may be executed in several  counterparts and by each party on a
separate  counterpart,  each of which when so executed and delivered shall be an
original, and all of which together shall constitute one instrument.  In proving
this Agreement it shall not be necessary to produce or account for more than one
such counterpart  signed by the party against whom  enforcement is sought.  This
Agreement and the other Loan Documents,  and any separate letter agreements with
respect to fees payable to the Agent,  constitute the entire  contract among the
parties relating to

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<PAGE>

the subject  matter  hereof and supersede  any and all previous  agreements  and
understandings,  oral or written,  relating to the subject matter hereof. Except
as provided in ss.10,  this Agreement shall become  effective when it shall have
been executed by the Agent and when the Agent shall have  received  counterparts
hereof  that,  when taken  together,  bear the  signatures  of each of the other
parties hereto.  Delivery of an executed counterpart of a signature page of this
Agreement  by telecopy  shall be  effective  as delivery of a manually  executed
counterpart of this Agreement.

     (b) Electronic Execution of Assignments.  The words "execution,"  "signed,"
"signature," and words of like import in any Assignment and Assumption Agreement
shall be deemed to include  electronic  signatures  or the keeping of records in
electronic  form,  each of which shall be of the same legal effect,  validity or
enforceability  as a manually  executed  signature  or the use of a  paper-based
recordkeeping  system,  as the case may be, to the extent and as provided for in
any applicable law,  including the Federal  Electronic  Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other  similar  state laws based on the Uniform  Electronic  Transactions
Act.

     (c) Electronic Communication. Notices and other communications to the Agent
and  the  Banks   hereunder   may  be  delivered  or  furnished  by   electronic
communication  (including e-mail and Internet or intranet  websites) pursuant to
procedures approved by the Agent, provided that the foregoing shall not apply to
notices to any Bank  pursuant to Article 4 if such Bank has  notified  the Agent
that it is  incapable  of receiving  notices  under such  Article by  electronic
communication. The Agent or the Borrower may, in its discretion, agree to accept
notices and other  communications  to it hereunder by electronic  communications
pursuant to procedures approved by it, provided that approval of such procedures
may be  limited  to  particular  notices  or  communications.  Unless  the Agent
otherwise  prescribes,  (i) notices and other  communications  sent to an e-mail
address shall be deemed received upon the sender's receipt of an  acknowledgment
from the intended recipient (such as by the "return receipt requested" function,
as available,  return e-mail or other written acknowledgment),  provided that if
such notice or other  communication is not sent during the normal business hours
of the recipient, such notice or communication shall be deemed to have been sent
at the opening of business on the next business day for the recipient,  and (ii)
notices or  communications  posted to an Internet or intranet  website  shall be
deemed received upon the deemed receipt by the intended  recipient at its e-mail
address as  described  in the  foregoing  clause (i) of  notification  that such
notice or  communication  is  available  and  identifying  the  website  address
therefor.

24.  ENTIRE AGREEMENT, ETC.

     The Loan Documents and any other documents executed in connection  herewith
or therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Agreement nor any term hereof may
be changed, waived, discharged or terminated, except as provided in ss.27.

25.  WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS.

     EACH OF THE BORROWER,  THE AGENT AND THE BANKS HEREBY WAIVES ITS RIGHT TO A
JURY TRIAL WITH  RESPECT TO ANY ACTION OR CLAIM  ARISING  OUT OF ANY  DISPUTE IN
CONNECTION WITH THIS

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<PAGE>

AGREEMENT,  ANY  NOTE  OR  ANY  OF THE  OTHER  LOAN  DOCUMENTS,  ANY  RIGHTS  OR
OBLIGATIONS  HEREUNDER  OR  THEREUNDER  OR THE  PERFORMANCE  OF SUCH  RIGHTS AND
OBLIGATIONS.  EXCEPT TO THE EXTENT  EXPRESSLY  PROHIBITED  BY LAW,  THE BORROWER
HEREBY  WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH  LITIGATION
ANY SPECIAL,  EXEMPLARY,  PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
THAN, OR IN ADDITION TO,  ACTUAL  DAMAGES.  THE BORROWER (A)  CERTIFIES  THAT NO
REPRESENTATIVE,  AGENT OR  ATTORNEY  OF ANY BANK OR THE AGENT  HAS  REPRESENTED,
EXPRESSLY OR  OTHERWISE,  THAT SUCH BANK OR THE AGENT WOULD NOT, IN THE EVENT OF
LITIGATION,  SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE
AGENT AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS  CONTAINED IN THIS ss.25. THE BORROWER  ACKNOWLEDGES  THAT IT HAS
HAD AN  OPPORTUNITY  TO REVIEW  THIS ss.25 WITH ITS LEGAL  COUNSEL  AND THAT THE
BORROWER AGREES TO THE FOREGOING AS ITS FREE, KNOWING AND VOLUNTARY ACT.

26.  DEALINGS WITH THE BORROWER.

     The Banks and their  Affiliates may accept deposits from,  extend credit to
and generally  engage in any kind of banking,  trust or other  business with the
Borrower  and its  Subsidiaries  or any of their  Affiliates  regardless  of the
capacity of the Bank hereunder.

27.  CONSENTS, AMENDMENTS, WAIVERS, ETC.

     (a) Except as otherwise  expressly provided in this Agreement,  any consent
or approval required or permitted by this Agreement may be given and any term of
this Agreement or of any other instrument related hereto or mentioned herein may
be amended,  and the  performance  or observance by the Borrower of any terms of
this  Agreement or such other  instrument or the  continuance  of any Default or
Event of Default may be waived (either generally or in a particular instance and
either  retroactively or prospectively) with, but only with, the written consent
of the Requisite  Banks;  provided,  however,  that the consent of the Requisite
Banks  shall  be  required  to  modify  or amend or  waive  the  performance  or
observance by the Borrower of any of the  provisions  of ss.ss.8.1,  8.3, 8.4 or
Article  9.  Notwithstanding  the  foregoing,  none of the  following  may occur
without the written consent of each Bank: (i) a decrease in the rate of interest
on the Notes;  (ii) a change in the term of the Notes;  (iii) an increase in the
amount of the Commitments of the Banks except pursuant to ss.18.1; (iv) a change
in the manner of determining  the Borrowing Base; (v) a change in the definition
of  Qualifying  Mortgage  Loans  or  the  manner  of  determining  same;  (vi) a
forgiveness,  reduction  or waiver of the  principal  of any unpaid  Loan or any
interest  thereon;  (vii) the  postponement of any date fixed for any payment of
principal  of or interest  on the Loans;  (viii) a decrease of the amount of any
fee (other than late fees) payable to a Bank hereunder;  (ix) the release of the
Borrower or any Collateral except as otherwise  provided herein; (x) a change in
the manner of  distribution  of any payments to the Banks or the Agent;  (xi) an
amendment  of the  definition  of Requisite  Banks or Requisite  Banks or of any
requirement for consent by all of the Banks; (xii) a Change in Control; (xiii)
an

                                       86
<PAGE>

increase in the Total  Commitment;  or an amendment of this ss.27. The amount of
the Agent's fee payable for the Agent's  account and the provisions of ss.14 may
not be amended without the written consent of the Agent.  The Borrower agrees to
enter into such  modifications or amendments of this Agreement or the other Loan
Documents  as may be requested  by KeyBank or the Agent in  connection  with the
syndication  of the  Loan,  provided  that no  such  amendment  or  modification
materially  affects  or  increases  any  of  the  obligations  of  the  Borrower
hereunder.  No waiver shall  extend to or affect any  obligation  not  expressly
waived or impair any right consequent  thereon. No course of dealing or delay or
omission  on the part of the Agent or any Bank in  exercising  any  right  shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or
demand upon the Borrower  shall entitle the Borrower to other or further  notice
or demand in similar or other circumstances.

     (b) If written  consent is  required  for some  action  under this ss.27 or
otherwise  under  this  Agreement,  each Bank  agrees to give Agent or the other
Banks,  within  fifteen (15)  Business Days of receipt of the request for action
together with all  reasonably  requested  information  related  thereto (or such
lesser  period of time required by the terms of the Loan  Documents),  notice in
writing of its approval or disapproval (collectively "Directions") in respect of
any action requested or proposed in writing  pursuant to the terms hereof.  Each
Bank shall be entitled to assume that any officer of the other Banks  delivering
any notice,  consent,  certificate  or other  writing is authorized to give such
notice,  consent,  certificate  or other writing  unless such Bank has otherwise
been notified.

     (c) If written consent is required for the requested action,  any Bank that
fails to respond to a request for  Directions  within the  required  time period
shall be deemed to be a "Non-Consenting Bank". Within thirty (30) days after the
date for delivery of the consent to the Direction,  the Agent, by written notice
to the  Non-Consenting  Bank,  shall  have the right to elect to  purchase  such
Non-Consenting  Bank's Commitment.  The purchase price for such Commitment shall
be an amount equal to any and all amounts  outstanding and owned by the Borrower
to such Non-Consenting Bank including principal,  accrued interest and any fees.
Upon payment of the purchase price,  the  Non-Consenting  Bank's interest in the
Obligations and under this Agreement shall terminate and the Non-Consenting Bank
shall deliver to the Agent such documents as are reasonably  necessary to effect
the transfer of its Commitment to the Agent.

28.  SEVERABILITY.

     The provisions of this  Agreement are  severable,  and if any one clause or
provision  hereof shall be held invalid or  unenforceable in whole or in part in
any  jurisdiction,  then such invalidity or  unenforceability  shall affect only
such clause or provision,  or part thereof, in such jurisdiction,  and shall not
in any manner affect such clause or provision in any other jurisdiction,  or any
other clause or provision of this Agreement in any jurisdiction.

29.  TIME OF THE ESSENCE.

     Time is of the essence with respect to each and every  covenant,  agreement
and  obligation  of the  Borrower  under  this  Agreement  and  the  other  Loan
Documents.

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<PAGE>

30.  NO UNWRITTEN AGREEMENTS.

     THE  WRITTEN  LOAN  DOCUMENTS  REPRESENT  THE FINAL  AGREEMENT  BETWEEN THE
PARTIES AND MAY NOT BE  CONTRADICTED  BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS  OR
SUBSEQUENT  ORAL  AGREEMENTS  OF  THE  PARTIES.  THERE  ARE  NO  UNWRITTEN  ORAL
AGREEMENTS  BETWEEN THE PARTIES.  ANY ADDITIONAL TERMS OF THE AGREEMENT  BETWEEN
THE PARTIES ARE SET FORTH BELOW.

31.  REPLACEMENT OF NOTES.

     Upon  receipt of evidence  reasonably  satisfactory  to the Borrower of the
loss, theft,  destruction or mutilation of any Note, and in the case of any such
loss, theft or destruction,  upon delivery of an indemnity agreement  reasonably
satisfactory  to the  Borrower  or,  in the  case of any such  mutilation,  upon
surrender and cancellation of the applicable Note, the Borrower will execute and
deliver, in lieu thereof, a replacement Note, identical in form and substance to
the  applicable  Note and dated as of the date of the  applicable  Note and upon
such  execution and delivery all  references in the Loan  Documents to such Note
shall be deemed to refer to such replacement Note.

32.  RIGHTS OF THIRD PARTIES.

     This  Agreement and the other Loan  Documents are made and entered into for
the sole protection and legal benefit of the Borrower,  the Banks and the Agent,
and their  permitted  successors  and  assigns,  and no other  Person shall be a
direct or indirect legal beneficiary of, or have any direct or indirect cause of
action or claim in  connection  with,  this  Agreement  or any of the other Loan
Documents. All conditions to the performance of the obligations of the Agent and
the Banks under this  Agreement,  including the  obligation  to make Loans,  are
imposed solely and exclusively for the benefit of the Agent and the Banks and no
other Person shall have standing to require  satisfaction  of such conditions in
accordance  with their  terms or be  entitled  to assume  that the Agent and the
Banks will refuse to make Loans in the absence of strict  compliance with any or
all thereof and no other Person shall, under any circumstances,  be deemed to be
a beneficiary of such  conditions,  any and all of which may be freely waived in
whole  or in part by the  Agent  and the  Banks  at any  time if in  their  sole
discretion they deem it desirable to do so.

            [The remainder of this page is intentionally left blank.]


                                       88
<PAGE>


     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly  executed by their duly  authorized  officers,  all as of the date and year
first above written.


                                               BORROWER:
                                               AMERICAN CHURCH MORTGAGE
                                               COMPANY, a Minnesota corporation


                                                 By: /s/ Philip J. Myers
                                                 ----------------------------
                                                         Philip J. Myers
                                                          President








                    [Signatures Continued on Following Page]




<PAGE>





                                                KEYBANK NATIONAL ASSOCIATION,
                                                as a Bank and as the Agent


                                                By: /s/ Tayven R. Hike
                                                        ---------------------
                                                         Tayven R. Hike
                                                         Vice President






<PAGE>


                                    EXHIBIT A

                                  FORM OF NOTE

$_________________                                             __________, 20__



     FOR VALUE RECEIVED,  the undersigned  AMERICAN CHURCH MORTGAGE  COMPANY,  a
Minnesota   corporation   (the   "Borrower"),   hereby   promises   to   pay  to
______________________________________________________________(the  "Payee")  or
order, in accordance with the terms of that certain  Revolving  Credit Agreement
dated as of July 26,  2007 (as  amended,  restated,  supplemented  or  otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, KeyBank
National  Association  ("KeyBank"),  for itself and as the Agent, and such other
Banks as may be from time to time named therein,  to the extent not sooner paid,
on    or    before    the    Maturity     Date,    the    principal    sum    of
_______________________________________  and ____/100 Dollars ($______________),
or such amount as may be advanced by the Payee under the Credit Agreement,  with
daily  interest  from  the  date  hereof  computed  as  provided  in the  Credit
Agreement,  on the principal  amount hereof from time to time unpaid,  at a rate
per annum on each  portion of the  principal  amount which shall at all times be
equal to the rate of interest  applicable to such portion in accordance with the
Credit  Agreement,  and with  interest on overdue  principal  and, to the extent
permitted  by  applicable  law, on overdue  installments  of  interest  and late
charges,  at the rates provided in the Credit Agreement (this "Note").  Interest
shall be payable on the dates specified in the Credit Agreement, except that all
accrued  interest shall be paid at the stated or accelerated  maturity hereof or
upon the  prepayment  in full  hereof.  Capitalized  terms  used  herein and not
otherwise  defined  herein  shall  have the  meanings  set  forth in the  Credit
Agreement.

     Payments hereunder shall be made to KeyBank, as the Agent for the Payee, at
127 Public Square,  Cleveland, Ohio 44114, or at such other address as the Agent
may designate from time to time.

     This Note is one of one or more Notes  evidencing  borrowings  under and is
entitled to the benefits and subject to the provisions of the Credit  Agreement.
The  principal  of this Note may be due and payable in whole or in part prior to
the  Maturity  Date and is subject to  mandatory  prepayment  in the amounts and
under the circumstances set forth in the Credit Agreement, and may be prepaid in
whole or from time to time in part, all as set forth in the Credit Agreement.

     Notwithstanding  anything  in this  Note to the  contrary,  all  agreements
between  the  undersigned  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

<PAGE>

maximum amount  permitted under applicable law; and if from any circumstance the
Banks shall ever 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  undersigned  Borrower and to the payment of interest or, if such  excessive
interest  exceeds the unpaid  balance of  principal  of the  Obligations  of the
undersigned Borrower, such excess shall be refunded to the undersigned 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 undersigned  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  paragraph  shall
control all agreements  between the  undersigned  Borrower and the Banks and the
Agent.

     In case an Event of Default  shall occur,  the entire  principal  amount of
this Note may become or be  declared  due and payable in the manner and with the
effect provided in said Credit  Agreement.  In addition to and not in limitation
of the foregoing and the  provisions of the Credit  Agreement,  the  undersigned
further agrees, subject only to any limitation imposed by applicable law, to pay
all expenses,  including reasonable attorneys' fees and legal expenses, incurred
by the  holder  of this Note in  endeavoring  to  collect  any  amounts  payable
hereunder which are not paid when due, whether by acceleration or otherwise.

     This Note shall be governed by and construed in accordance with the laws of
the State of Georgia (without giving effect to the conflict of laws rules of any
jurisdiction). Time is of the essence of this Note.

     The  undersigned  maker and all  guarantors  and  endorsers,  hereby  waive
presentment,  demand,  notice,  protest,  notice of intention to accelerate  the
indebtedness  evidenced  hereby,  notice  of  acceleration  of the  indebtedness
evidenced  hereby  and all other  demands  and  notices in  connection  with the
delivery,  acceptance,  performance  and  enforcement  of this  Note,  except as
specifically  otherwise  provided  in  the  Credit  Agreement,   and  assent  to
extensions of time of payment or forbearance or other indulgence without notice.

     IN WITNESS  WHEREOF the  undersigned  has by its duly  authorized  officer,
executed this Note under seal as of the day and year first above written.


                                    AMERICAN CHURCH MORTGAGE
                                    COMPANY, a Minnesota corporation


                                   By:_______________________________
                                     Name:  _________________________
                                     Title: _________________________

                                        [CORPORATE SEAL]

<PAGE>



                                    EXHIBIT B

                            FORM OF REQUEST FOR LOAN

KeyBank National Association, as Agent
1200 Abernathy Road, N.E., Suite 1550
Atlanta, Georgia  30328
Attn:  Tayven Hike

Ladies and Gentlemen:

     Pursuant to the  provisions  of ss.2.5 of the  Revolving  Credit  Agreement
dated as of July 26, 2007,  (as  amended,  restated,  supplemented  or otherwise
modified  from time to time,  the "Credit  Agreement"),  among  American  Church
Mortgage Company (the "Borrower"),  KeyBank National Association, for itself and
as the  Agent,  and  the  other  Banks  from  time to time  party  thereto,  the
undersigned Borrower hereby requests and certifies as follows:

     1. Loan. The  undersigned  Borrower  hereby requests a Loan under ss.2.1 of
the Credit Agreement:

                  Principal Amount: $
                                     -------------------------

                  Type (LIBOR, Base Rate):
                                           -------------------

                  Drawdown Date__________, 20__

                  Interest Period:
                                   ---------------------------

by credit to the general account of the  undersigned  Borrower with the Agent at
the Agent's Head Office.

2.   Use of  Proceeds.  Such  Loan  shall  be used  for the  following  purposes
     permitted by ss.7.10 of the Credit Agreement:

                  [Describe]

3.   No Default.  The undersigned chief financial or chief accounting officer of
     the Borrower  certifies that the Borrower is and will be in compliance with
     all covenants under the Loan Documents after giving effect to the making of
     the Loan requested hereby.

4.   Representations True. Each of the representations and warranties made by or
     on behalf of the  Borrower  and its  Subsidiaries  contained  in the Credit
     Agreement,  in the other Loan  Documents or in any  document or  instrument
     delivered  pursuant to or in connection with the Credit  Agreement was true
     as of the date as of which it was made and shall  also be true at and as of
     the Drawdown Date for the Loan requested hereby, with the same effect as if
     made at and as of such  Drawdown  Date  (except  to the  extent  that  such

<PAGE>

     representations  and warranties relate expressly to an earlier date) and no
     Default or Event of Default has occurred and is continuing.

5.   Other Conditions.  All other conditions to the making of the Loan requested
     hereby set forth in ss.11 of the Credit Agreement have been satisfied.

6.   Drawdown Date. Except to the extent,  if any,  specified by notice actually
     received by the Agent  prior to the  Drawdown  Date  specified  above,  the
     foregoing  representations and warranties shall be deemed to have been made
     by the Borrower on and as of such Drawdown Date.

7.   Definitions. Terms defined in the Credit Agreement are used herein with the
     meanings so defined.

     IN  WITNESS  WHEREOF,  we have  hereunto  set  our  hands  this  ___ day of
_____________, 20__.


                                         AMERICAN CHURCH MORTGAGE
                                         COMPANY, a Minnesota corporation

                                      By:_________________________________
                                         Name:  __________________________
                                         Title: __________________________

                                                [CORPORATE SEAL]

<PAGE>

                                    EXHIBIT C

                                     FORM OF
                             COMPLIANCE CERTIFICATE



KeyBank National Association, as Agent
1200 Abernathy Road, N.E., Suite 1550
Atlanta, Georgia  30328
Attn:  Tayven Hike

Ladies and Gentlemen:

     Reference is made to the Revolving  Credit  Agreement  dated as of July 26,
2007 (as amended,  restated,  supplemented  or otherwise  modified  from time to
time, the "Credit Agreement") by and among American Church Mortgage Company (the
"Borrower"),  KeyBank National Association, for itself and as the Agent, and the
other  Banks  from time to time  party  thereto.  Terms  defined  in the  Credit
Agreement  and not  otherwise  defined  herein are used herein as defined in the
Credit Agreement.

     Pursuant  to the  Credit  Agreement,  the  Borrower  is  furnishing  to you
herewith (or has most recently furnished to you) the financial statements of the
Borrower and its Subsidiaries for the fiscal period ended  _____________________
(the "Balance  Sheet Date").  Such  financial  statements  have been prepared in
accordance with generally accepted accounting  principles and present fairly the
financial  position of the Borrower and the Subsidiaries  covered thereby at the
date  thereof  and the  results  of their  operations  for the  periods  covered
thereby, subject in the case of interim statements only to normal year-end audit
adjustments.

     This certificate is submitted in compliance with  requirements of ss.7.4(e)
or ss.10.8 of the Credit  Agreement.  If this  certificate  is provided  under a
provision  other  than  ss.7.4(e),  the  calculations  set forth on  Appendix  A
attached  hereto and made a part hereof are made using the financial  statements
of the Borrower and its  Subsidiaries  as of the Balance  Sheet Date adjusted in
the best  good-faith  estimate of the Borrower to give effect to the making of a
Loan,  acquisition  or disposition of property or other event that occasions the
preparation of this certificate; and the nature of such event and the Borrower's
estimate  of its  effects  are set  forth in  reasonable  detail in  Appendix  A
attached  hereto  and by this  reference  made a part  hereof.  The  undersigned
officer is the chief financial or chief accounting officer of the Borrower.

     The undersigned  officer has caused the provisions of the Loan Documents to
be reviewed and has no knowledge of any Default or Event of Default.  [Note:  If
the signer does have  knowledge of any Default or Event of Default,  the form of
certificate  should be revised to specify the  Default or Event of Default,  the
nature thereof and the actions taken, being taken or proposed to be taken by the
Borrower with respect thereto.]

<PAGE>

     The  Borrower  is  providing  the  attached   information   to  demonstrate
compliance  as of the date hereof  with the  covenants  described  in Appendix A
hereto.

     IN  WITNESS  WHEREOF,  we have  hereunto  set our  hand  this  ____  day of
_____________, 20_.


                                  AMERICAN CHURCH MORTGAGE
                                  COMPANY, a Minnesota corporation


                                  By: ______________________________
                                      Name:_________________________
                                     Title:_________________________

                                               [CORPORATE SEAL]


<PAGE>



                                   APPENDIX A
                                       to
                             COMPLIANCE CERTIFICATE






<PAGE>



                                    EXHIBIT D


                       FORM OF BORROWING BASE CERTIFICATE


     The  undersigned,  being the [ ] of AMERICAN  CHURCH  MORTGAGE  COMPANY,  a
Minnesota corporation (the "Borrower"),  hereby certifies, pursuant to ss.7.4(f)
of the  Revolving  Credit  Agreement  dated as of July 26,  2007,  (as  amended,
restated,  supplemented  or otherwise  modified  from time to time,  the "Credit
Agreement")  by and among the  Borrower,  the Banks (as  defined  in the  Credit
Agreement),  and KeyBank National  Association,  as the Agent (as defined in the
Credit Agreement):

     1. Attached hereto as Schedule 1, and incorporated herein by reference, are
calculations  performed  by the  Borrower  or under the  Borrower's  supervision
demonstrating  that the Borrower is in compliance with the Borrowing Base at and
as of the end of the (month/quarter) ending _________ __, 20__. The calculations
set forth on Schedule 1 are true, complete and correct.

     2. The Borrower is in compliance with the Borrowing Base requirements under
Section 9.1 at and as of the end of the  (month/quarter)  ending  _________  __,
20__.

     3. The  information in this Borrowing  Base  Certificate  complies with the
representations and warranties in the Credit Agreement in every respect.

     Capitalized terms used herein and not otherwise defined are used as defined
in the Credit Agreement.


     IN  WITNESS  WHEREOF,  the  undersigned  has  signed  this  Borrowing  Base
Certificate as of the ________ day of ______________, 20__.

                                           AMERICAN CHURCH MORTGAGE
                                           COMPANY, a Minnesota corporation


                                            By:_____________________________
                                               Name:_________________________
                                               Title:________________________
<PAGE>



                                   SCHEDULE 1

    Calculations Demonstrating Borrowers' Compliance with the Borrowing Base





<PAGE>


                                    EXHIBIT E


                   FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

                            ASSIGNMENT AND ACCEPTANCE

     This Assignment and Acceptance (the  "Assignment and  Acceptance") is dated
as of the  Effective  Date set forth  below and is entered  into by and  between
[the][each] Assignor identified in item 1 below ([the][each, an] "Assignor") and
[the][each] Assignee identified in item 2 below ([the][each, an] "Assignee"). It
is understood  and agreed that the rights and  obligations  of the Assignors and
the Assignees  hereunder are several and not joint.  Capitalized  terms used but
not defined herein shall have the meanings given to them in the Credit Agreement
identified  in items below (as  amended,  restated,  supplemented  or  otherwise
modified,  the  "Credit  Agreement"),  receipt  of a copy  of  which  is  hereby
acknowledged  by  [the][each]  Assignee.  The Standard  Terms and Conditions set
forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference  and made a part of this  Assignment  and  Acceptance  as if set forth
herein in full.

     For an agreed consideration,  [the][each] Assignor hereby irrevocably sells
and  assigns  to  [the  Assignee][the  respective  Assignees],  and  [the][each]
Assignee  hereby  irrevocably  purchases  and  assumes  from [the  Assignor][the
respective Assignors],  subject to and in accordance with the Standard Terms and
Conditions  and the Credit  Agreement,  as of the Effective Date inserted by the
Agent  as  contemplated  below  (i)  all  of  [the  Assignor's][the   respective
Assignors'] rights and obligations in [its capacity as a Bank][their  respective
capacities  as Banks]  under the Credit  Agreement  and any other  documents  or
instruments  delivered  pursuant thereto to the extent related to the amount and
percentage  interest  identified  below of all of such  outstanding  rights  and
obligations of [the  Assignor][the  respective  Assignors]  under the respective
facilities identified below (including without limitation any letters of credit,
guarantees,  and swingline  loans included in such  facilities)  and (ii) to the
extent permitted to be assigned under applicable law, all claims,  suits, causes
of action and any other right of [the  Assignor (in its capacity as a Bank)][the
respective  Assignors (in their  respective  capacities  as Banks)]  against any
Person, whether known or unknown, arising under or in connection with the Credit
Agreement,  any other documents or instruments delivered pursuant thereto or the
loan  transactions  governed thereby or in any way based on or related to any of
the foregoing,  including,  but not limited to,  contract  claims,  tort claims,
malpractice  claims,  statutory  claims and all other claims at law or in equity
related to the rights and obligations  sold and assigned  pursuant to clause (i)
above (the rights and  obligations  sold and assigned by [the][any]  Assignor to
[the][any]  Assignee  pursuant to clauses  (i) and (ii) above being  referred to
herein  collectively  as  [the][an]  "Assigned  Interest").  Each  such sale and
assignment is without  recourse to [the][any]  Assignor and, except as expressly
provided in this Assignment and Acceptance,  without  representation or warranty
by [the][any] Assignor.

1.       Assignor[s]:               ________________________________

                                    ________________________________

<PAGE>

2.       Assignee[s]:               ______________________________

                                    ______________________________
         [for each Assignee, indicate [Affiliate] of [identify Bank]

3.   Borrower: American Church Mortgage Company

4.   Agent:  KeyBank  National  Association,  as  the  agent  under  the  Credit
     Agreement

5.   Credit Agreement: That certain $15,000,000 Revolving Credit Agreement dated
     as of July 26, 2007 among American  Church Mortgage  Company,  as borrower,
     the Banks parties thereto, and KeyBank National Association, as the Agent.

6.                                  Assigned Interest[s]:
<TABLE>
<CAPTION>
----------------- ---------------- ------------- ------------------ ------------------- ----------------- ------------
<S>               <C>              <C>           <C>                <C>                 <C>               <C>
Assignor[s]        Assignee[s]     Facility        Aggregate          Amount of          Percentage        CUSIP
                                     Assigned        Amount of         Commitment/         Assigned of       Number
                                                    Commitment/       Loans Assigned       Commitment/
                                                    Loans for all                             Loans
                                                      Banks
----------------- ---------------- ------------- ------------------ ------------------- ----------------- ------------
----------------- ---------------- ------------- ------------------ ------------------- ----------------- ------------

                                                 $                  $
                                                                                                 %

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

                                                 $                  $
                                                                                                 %

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

                                                 $                  $
                                                                                                 %

----------------- ---------------- ------------- ------------------ ------------------- ----------------- ------------
</TABLE>

[7.      Trade Date:                ______________]

                            [Signature page follows]


<PAGE>



Effective Date:  _____________ ___, 20___ [TO BE INSERTED BY THE AGENT AND WHICH
SHALL  BE THE  EFFECTIVE  DATE  OF  RECORDATION  OF  TRANSFER  IN  THE  REGISTER
THEREFOR.]

The terms set forth in this Assignment and Acceptance are hereby agreed to:

                                                     ASSIGNOR[S] [NAME
                                                     OF ASSIGNOR]


                                                 By:___________________________
                                                      Title:

                                                   [NAME OF ASSIGNOR]


                                                  By:___________________________
                                                      Title:

                                                    ASSIGNEE[S] [NAME
                                                    OF ASSIGNEE]


                                                  By:___________________________
                                                      Title:


                                                   [NAME OF ASSIGNEE]


                                                  By:___________________________
                                                      Title:

[Consented to and] Accepted:

KeyBank National Association, a
   national banking association, as
  Agent

By:__________________________________

Name:________________________________

Title:_______________________________


<PAGE>



                                     ANNEX 1


                        STANDARD TERMS AND CONDITIONS FOR
                            ASSIGNMENT AND ACCEPTANCE

     1. Representations and Warranties.

     1.1 Assignor[s].  [The][Each] Assignor (a) represents and warrants that (i)
it is the legal and beneficial owner of [the][the  relevant]  Assigned Interest,
(ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim and (iii) it has full power and authority, and has taken all
action  necessary,  to execute and deliver this Assignment and Acceptance and to
consummate   the   transactions   contemplated   hereby;   and  (b)  assumes  no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection  with the Credit  Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower,  any of its  Subsidiaries  or Affiliates or any other
Person  obligated  in respect of any Loan  Document or (iv) the  performance  or
observance by the Borrower,  any of its  Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.

     1.2. Assignee[s]. [The][Each] Assignee (a) represents and warrants that (i)
it has full power and authority,  and has taken all action necessary, to execute
and deliver this  Assignment and  Acceptance and to consummate the  transactions
contemplated  hereby and to become a Bank under the  Credit  Agreement,  (ii) it
meets  all  the  requirements  to be an  assignee  under  ss.  18 of the  Credit
Agreement (subject to such consents,  if any, as may be required under ss. 27 of
the Credit  Agreement),  (iii) from and after the  Effective  Date,  it shall be
bound by the provisions of the Credit Agreement as a Bank thereunder and, to the
extent of [the][the relevant] Assigned Interest, shall have the obligations of a
Bank thereunder,  (iv) it is sophisticated  with respect to decisions to acquire
assets of the type  represented  by the Assigned  Interest and either it, or the
person  exercising  discretion  in making its  decision to acquire the  Assigned
Interest, is experienced in acquiring assets of such type, (v) it has received a
copy of the  Credit  Agreement,  and  has  received  or has  been  accorded  the
opportunity to receive copies of the most recent financial  statements delivered
pursuant  to ss.  7.4  thereof,  as  applicable,  and such other  documents  and
information as it deems appropriate to make its own credit analysis and decision
to enter  into  this  Assignment  and  Acceptance  and to  purchase  [the][such]
Assigned  Interest,  (vi) it has,  independently  and without  reliance upon the
Agent or any other Bank and based on such  documents and  information  as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Assignment and Acceptance and to purchase  [the][such]  Assigned  Interest,  and
(vii) if it is a foreign  lender  (as  contemplated  by ss.  14.12 of the Credit
Agreement),  attached to the  Assignment  and  Acceptance  is any  documentation
required to be  delivered  by it pursuant to the terms of the Credit  Agreement,
duly completed and executed by [the][such] Assignee;  and (b) agrees that (i) it
will,  independently and without reliance on the Agent,  [the][any]  Assignor or
any other Bank,  and based on such  documents and  information  as it shall deem
appropriate at the time,  continue to make its own credit decisions in taking or
not  taking


<PAGE>

action under the Loan  Documents,  and (ii) it will perform in  accordance  with
their terms all of the obligations  which by the terms of the Loan Documents are
required to be performed by it as a Bank.

     2.  Payments.  From and after the Effective  Date, the Agent shall make all
payments in respect of  [the][each]  Assigned  Interest  (including  payments of
principal, interest, fees and other amounts) to [the][the relevant] Assignor for
amounts which have accrued to but excluding the Effective  Date and to [the][the
relevant]  Assignee for amounts  which have accrued from and after the Effective
Date.

     3. General  Provisions.  This  Assignment and  Acceptance  shall be binding
upon,  and inure to the  benefit  of, the  parties  hereto and their  respective
successors  and assigns.  This  Assignment and Acceptance may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Acceptance
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance. This Assignment and Acceptance shall be governed
by, and construed in accordance  with, the law of the State of Georgia,  without
regard to the conflict of laws principles thereof.







<PAGE>


                                   SCHEDULE 1

                              Banks and Commitments


                                 Commitment                      Commitment
                                                                  Percentage

Key Bank National Association  $ 15,000,000                        100%
1200 Abernathy Road, NE
Suite 1550
Atlanta, Georgia  30328
Attn:  Tayven Hike
Facsimile:  770-510-2195




<PAGE>


                                  SCHEDULE 1.1

                             Excluded Mortgage Loans



                              See Attached Schedule



<PAGE>



                                  SCHEDULE 1.2

                             Initial Mortgage Loans





                              See Attached Schedule





<PAGE>

                                  SCHEDULE 1.3

                     OREO and Non-Performing Mortgage Loans







                              See Attached Schedule

<PAGE>


                                  SCHEDULE 1.4

                              Initial Interim Loan





                              See Attached Schedule





<PAGE>



                                  SCHEDULE 6.14

                             Affiliate Transactions






                                      None

<PAGE>



                                  SCHEDULE 6.17

                          Subsidiaries of the Borrower






                                      None



<PAGE>
<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

                                                                                                               Page
<S>     <C>

1.       DEFINITIONS AND RULES OF INTERPRETATION.................................................................1

         1.1      Definitions....................................................................................1

         1.2      Rules of Interpretation.......................................................................24

         1.3      Pro Forma Calculations........................................................................25

2.       THE REVOLVING CREDIT FACILITY..........................................................................25

         2.1      Commitment to Lend............................................................................25

         2.2      Unused Facility Fee...........................................................................25

         2.3      Notes.........................................................................................26

         2.4      Interest on Loans.............................................................................26

         2.5      Requests for Loans............................................................................27

         2.6      Funds for Loans...............................................................................28

3.       REPAYMENT OF THE LOANS.................................................................................30

         3.1      Stated Maturity...............................................................................30

         3.2      Mandatory Prepayments.........................................................................30

         3.3      Optional Prepayments..........................................................................30

         3.4      Partial Prepayments...........................................................................31

4.       CERTAIN GENERAL PROVISIONS.............................................................................31

         4.1      Conversion Options............................................................................31

         4.2      Syndication, Underwriting and Accordion Fees..................................................32

         4.3      Agent's Fee...................................................................................32

         4.4      Funds for Payments............................................................................32

         4.5      Computations..................................................................................33

         4.6      Inability to Determine LIBOR Rate.............................................................33

         4.7      Illegality....................................................................................33

         4.8      Additional Interest...........................................................................34

         4.9      Additional Costs, Etc.........................................................................34

         4.10     Capital Adequacy..............................................................................35

         4.11     Indemnity of Borrower.........................................................................36

         4.12     Interest on Overdue Amounts; Late Charge......................................................36

                                      -i-
<PAGE>

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         4.13     Certificate...................................................................................36

         4.14     Limitation on Interest........................................................................36

5.       COLLATERAL SECURITY....................................................................................37

         5.1      Collateral....................................................................................37

         5.2      Release of Collateral.........................................................................37

         5.3      Addition of Collateral; Guarantors............................................................38

6.       REPRESENTATIONS AND WARRANTIES OF THE BORROWER.........................................................39

         6.1      Corporate Authority, Etc......................................................................39

         6.2      Governmental Approvals........................................................................40

         6.3      Title to Properties; Lease....................................................................40

         6.4      Financial Statements..........................................................................40

         6.5      No Material Changes...........................................................................40

         6.6      Franchises, Patents, Copyrights, Etc..........................................................41

         6.7      Litigation....................................................................................41

         6.8      No Materially Adverse Contracts, Etc..........................................................41

         6.9      Compliance with Other Instruments, Laws, Etc..................................................41

         6.10     Tax Status....................................................................................41

         6.11     No Event of Default...........................................................................42

         6.12     Holding Company and Investment Company Acts...................................................42

         6.13     Absence of UCC Financing Statements, Etc......................................................42

         6.14     Certain Transactions..........................................................................42

         6.15     Employee Benefit Plans........................................................................42

         6.16     Regulations T, U and X........................................................................42

         6.17     Subsidiaries..................................................................................42

         6.18     Loan Documents................................................................................43

         6.19     Brokers.......................................................................................43

         6.20     Other Debt....................................................................................43

         6.21     Solvency......................................................................................43

         6.22     No Fraudulent Intent..........................................................................43

         6.23     Transaction in Best Interests of Borrower; Consideration......................................44

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         6.24     Mortgage Loans................................................................................44

         6.25     PATRIOT Act Provisions........................................................................45

7.       AFFIRMATIVE COVENANTS OF THE BORROWER..................................................................46

         7.1      Punctual Payment..............................................................................46

         7.2      Maintenance of Office.........................................................................46

         7.3      Records and Accounts..........................................................................46

         7.4      Financial Statements, Certificates and Information............................................47

         7.5      Notices.......................................................................................48

         7.6      Existence; Maintenance of Properties..........................................................49

         7.7      Taxes.........................................................................................50

         7.8      Inspection of Properties and Books............................................................50

         7.9      Compliance with Laws, Contracts, Licenses, and Permits........................................50

         7.10     Use of Proceeds...............................................................................51

         7.11     Further Assurances............................................................................51

         7.12     Compliance....................................................................................51

         7.13     Interest Rate Contract........................................................................51

         7.14     More Restrictive Agreements...................................................................52

         7.15     Lockbox Account...............................................................................52

         7.16     Mortgage Loans................................................................................52

         7.17     Securitization Transactions...................................................................53

8.       CERTAIN NEGATIVE COVENANTS OF THE BORROWER.............................................................54

         8.1      Restrictions on Indebtedness..................................................................54

         8.2      Restrictions on Liens Etc.....................................................................55

         8.3      Restrictions on Investments...................................................................56

         8.4      Merger, Consolidation.........................................................................58

         8.5      Conduct of Business...........................................................................58

         8.6      Distributions.................................................................................58

         8.7      Asset Sales...................................................................................59

         8.8      Management....................................................................................59

         8.9      Debt Certificates.............................................................................59

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                                   (continued)

9.       FINANCIAL COVENANTS OF THE BORROWER....................................................................59

         9.1      Borrowing Base................................................................................59

         9.2      Liabilities to Assets Ratio...................................................................61

         9.3      Cash Flow Coverage............................................................................61

         9.4      Consolidated Tangible Net Worth...............................................................61

         9.5      Non-Performing Assets.........................................................................61

10.      CLOSING CONDITIONS.....................................................................................61

         10.1     Loan Documents................................................................................61

         10.2     Resolutions...................................................................................61

         10.3     Incumbency Certificate; Authorized Signers....................................................62

         10.4     Opinions of Counsel...........................................................................62

         10.5     Performance; No Default.......................................................................62

         10.6     Representations and Warranties................................................................62

         10.7     Actions, Proceedings and Documents............................................................62

         10.8     Compliance Certificate........................................................................63

         10.9     Mortgage Loan Qualification Documents.........................................................63

         10.10    Management Agreement..........................................................................63

         10.11    Other Documents...............................................................................63

         10.12    Payment of Fees...............................................................................63

         10.13    UCC Searches..................................................................................63

         10.14    Lockbox Account...............................................................................63

         10.15    Indenture Amendments..........................................................................64

         10.16    Other.   64

11.      CONDITIONS TO ALL BORROWINGS...........................................................................64

         11.1     Prior Conditions Satisfied....................................................................64

         11.2     Representations True; No Default..............................................................64

         11.3     No Legal Impediment...........................................................................64

         11.4     Governmental Regulation.......................................................................64

         11.5     Proceedings and Documents.....................................................................65

         11.6     Borrowing Documents...........................................................................65

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         11.7     Mortgage Loan Qualification Documents.........................................................65

12.      EVENTS OF DEFAULT; ACCELERATION; ETC...................................................................65

         12.1     Events of Default and Acceleration............................................................65

         12.2     Limitation of Cure Periods....................................................................68

         12.3     Termination of Commitments....................................................................68

         12.4     Remedies......................................................................................68

         12.5     Distribution of Collateral Proceeds...........................................................69

13.      SETOFF.................................................................................................69

14.      THE AGENT AND THE BANKS................................................................................70

         14.1     Authorization.................................................................................70

         14.2     Employees and Agents..........................................................................70

         14.3     No Liability..................................................................................71

         14.4     No Representations............................................................................71

         14.5     Payments......................................................................................73

         14.6     Holders of Notes..............................................................................73

         14.7     Indemnity.....................................................................................74

         14.8     Agent as Bank.................................................................................74

         14.9     Resignation...................................................................................74

         14.10    Duties in the Case of Enforcement.............................................................75

         14.11    Intentionally Omitted.........................................................................75

         14.12    Withholding Tax...............................................................................75

         14.13    Bankruptcy....................................................................................77

         14.14    Notice of Event of Default....................................................................77

15.      EXPENSES...............................................................................................77

16.      INDEMNIFICATION........................................................................................78

17.      SURVIVAL OF COVENANTS, ETC.............................................................................79

18.      ASSIGNMENT AND PARTICIPATION...........................................................................79

         18.1     Conditions to Assignment by Banks.............................................................79

         18.2     Register......................................................................................80

         18.3     New Notes.....................................................................................80

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         18.4     Participations................................................................................80

         18.5     Pledge by Bank................................................................................81

         18.6     No Assignment by Borrower.....................................................................81

         18.7     Cooperation; Disclosure.......................................................................81

         18.8     Amendments to Loan Documents..................................................................81

         18.9     Co-Agents.....................................................................................81

         18.10    Treatment of Certain Information; Confidentiality.............................................82

19.      NOTICES................................................................................................82

20.      RELATIONSHIP...........................................................................................83

21.      GOVERNING LAW:  CONSENT TO JURISDICTION AND SERVICE....................................................84

22.      HEADINGS...............................................................................................84

23.      COUNTERPARTS; INTEGRATION; EFFECTIVENESS; ELECTRONIC EXECUTION.........................................84

24.      ENTIRE AGREEMENT, ETC..................................................................................85

25.      WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS.........................................................85

26.      DEALINGS WITH THE BORROWER.............................................................................86

27.      CONSENTS, AMENDMENTS, WAIVERS, ETC.....................................................................86

28.      SEVERABILITY...........................................................................................87

29.      TIME OF THE ESSENCE....................................................................................87

30.      NO UNWRITTEN AGREEMENTS................................................................................88

31.      REPLACEMENT OF NOTES...................................................................................88

32.      RIGHTS OF THIRD PARTIES................................................................................88

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                             EXHIBITS AND SCHEDULES

EXHIBIT A - FORM OF NOTE
EXHIBIT B - FORM OF REQUEST FOR LOAN
EXHIBIT C - FORM OF COMPLIANCE CERTIFICATE
EXHIBIT D - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT E - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

SCHEDULE 1               -   BANKS AND COMMITMENTS
SCHEDULE 1.1             -   EXCLUDED MORTGAGE LOANS
SCHEDULE 1.2             -   INITIAL MORTGAGE LOANS
SCHEDULE 1.3             -   OREO AND NON-PERFORMING MORTGAGE LOANS
SCHEDULE 1.4             -   INITIAL INTERIM LOAN
SCHEDULE 6.14            -   AFFILIATE TRANSACTIONS
SCHEDULE 6.17            -   SUBSIDIARIES OF THE BORROWER




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