AMENDED AND RESTATED

                                U.S. $40,000,000

                          CREDIT AND SECURITY AGREEMENT

                                     Between

                           SOURCE CAPITAL CORPORATION

                                  as Borrower;

             BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
                               d/b/a SEAFIRST BANK

                                    as Agent

                                       and

             BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
                               d/b/a SEAFIRST BANK

                                       and

                             WASHINGTON MUTUAL BANK
                               d/b/a WESTERN BANK

                                    as Banks

                                dated May 1, 1999


<PAGE>
                              AMENDED AND RESTATED
                          CREDIT AND SECURITY AGREEMENT

         THIS AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT ("Agreement")
is made between Source Capital Corporation, a Washington corporation
("Borrower"), Bank of America National Trust and Savings Association, a national
banking association, doing business as Seafirst Bank, successor by merger to
Bank of America NW, N.A., as Agent ("Agent"), Bank of America National Trust and
Savings Association, a national banking association, doing business as Seafirst
Bank, successor by merger to Bank of America NW, N.A. (in its individual
capacity as lender referred to herein as "Seafirst Bank") and Washington Mutual
Bank, a Washington corporation, doing business as Western Bank ("Western Bank").
Seafirst Bank and Western Bank are each individually referred to as a "Bank" and
collectively as "Banks," including their respective successors and/or assigns.
This Agreement renews, restates, and replaces the Credit and Security Agreement
between Borrower and Seafirst Bank dated May 1, 1998, as amended.

                                    RECITALS
                                    --------

         Borrower has requested that Banks make loans from time to time to
Borrower in an aggregate principal amount of up to Forty Million Dollars
($40,000,000).

         Advances (as such term and other terms used in these Recitals without
definition are defined below), may be either Floating Rate Loans or LIBOR Rate
Loans (as such terms are defined in the Notes), in an amount not to exceed the
Available Amount.

         Banks are willing to provide their respective Pro Rata Shares of such
Advances on the terms and conditions set forth in this Agreement.

NOW THEREFORE, the parties agree as follows:

                                    ARTICLE 1
                                   Definitions

         All terms defined below shall have the meaning indicated. All
references in this Agreement to:

                  (a)      "dollars" or "$" shall mean U.S. dollars;

                  (b) "Article," "Section," or "Subsection" shall mean articles,
         sections, and subsections of this Agreement, unless otherwise
         indicated; and

                  (c) an accounting term not otherwise defined in this Agreement
         shall have the meaning assigned to it under GAAP.

         1.1 Advances shall mean the disbursement of loan proceeds under the
Credit Line for the purpose of funding Eligible Loans.

         1.2 Agent's Related Parties shall mean Agent, its affiliates, and all
officers, directors and employees of Agent and such affiliates.

         1.3      Available Amount shall mean:

                  (a)      the lesser of

                           (1) $40,000,000 or

                           (2) the sum of:

                                       1

<PAGE>
                                    (i) 90% of the outstanding balance of all
                           Eligible Loans which are secured by real property
                           collateral, which are not construction loans, which
                           are less than 31 days past due and which:

                                    1. have outstanding balances less than 
                           $750,000 in amount; or

                                    2. have outstanding balances of $750,000 or
                           more in amount, are supported by FIRREA Conforming
                           Appraisals, and are satisfactory to Banks in their
                           sole discretion, except that the maximum Advance
                           amount shall not exceed 67.5% of the appraised value
                           of the related real estate collateral, as established
                           in the FIRREA Conforming Appraisal.

                                    (ii) 75% of the outstanding balance of all
                           other Eligible Loans, except that the maximum Advance
                           amount against any construction loan shall not exceed
                           56.25% of project valuation, as agreed by Banks.

                  (b)      minus, the outstanding principal balance of the 
                           Notes.

         1.4 Business Day shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks in Seattle, Washington, are authorized or
required by law to close.

         1.5 Collateral Loan Package shall have the meaning given in Section 2.5

         1.6 Debt shall mean all consolidated obligations, on a GAAP basis,
included in the liability section of a balance sheet of Borrower.

         1.7 Credit Line shall mean the lending facility described in 
Section 2.1

         1.8 Eligible Loans shall mean loans by Borrower to its customers except
those loans which:

                  (a)      are more than 90 days past due;

                  (b)      are on non-accrual status;

                  (c)      have matured, and have not been renewed or extended
         within 30 days of the loan's maturity date;

                  (d)      constitute unearned discounts, participations sold,
         or dealer flooring lines; or

                  (e) are loans (i) in an amount of $1,500,000 or more, or (ii)
         secured by real property outside the states of Washington, Oregon,
         Idaho, Montana, Utah, Alaska, Arizona, New Mexico, California and
         Nevada; as to which eligibility shall be determined by the unanimous
         consent of Banks, as communicated to Borrower by Agent, at Banks' sole
         discretion.

In no case shall loans be "Eligible Loans" until Agent actually receives the
applicable Collateral Loan Package.

         1.9 ERISA shall mean the Employee Retirement Income Security Act of
1974, as amended.

         1.10 FIRREA shall mean the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, as amended, including all regulations promulgated
pursuant to such act.

         1.11 FIRREA Conforming Appraisal shall mean an appraisal complying with
FIRREA, ordered by Agent and confirmed to Agent's satisfaction by Agent's
internal appraisal review department, the cost of which has been reimbursed to
Agent by Borrower.

                                       2
<PAGE>
         1.12 GAAP shall mean generally accepted accounting principles as in
effect from time to time in the United States and as consistently applied by
Borrower.

         1.13 Liquid Assets shall mean all cash, cash equivalents, and
marketable securities of Borrower, not subject to any encumbrance (other than
that of Banks) and not held in a fiduciary capacity.

         1.14 Loan Documents shall mean collectively this Agreement, the Notes,
and all other deeds of trust, security agreements, financing statements,
documents, instruments, and agreements now or later executed in connection with
this Agreement.

         1.15 Loan Summary shall mean each of the summaries required under
Section 2.4 to accompany a request for approval for inclusion as an "Eligible
Loan" to consist of: a written summary of the loan being funded, including a
listing of collateral value, property description, location, borrower,
guarantor(s), underwriting standards and borrower and guarantor(s) financial
statements; and such other information as Agent shall reasonably request.

         1.16 Obligations shall mean the Notes, and all fees, costs, expenses,
and indemnifications agreed upon by Borrower to be due to Banks under this
Agreement.

         1.17 Person shall mean any individual, partnership, corporation,
business trust, unincorporated organization, joint venture, or any governmental
entity, department, agency, or political subdivision.

         1.18 Plan shall mean any employee benefit plan or other plan maintained
for Borrower's employees and covered by Title IV of ERISA, excluding any plan
created or operated by or for any labor union.

         1.19 Pro Rata Share(s) shall mean the following percentages as to the
Bank indicated:

                           Seafirst Bank    62.5%
                           Western Bank     37.5%

         1.20 Reference Rate shall mean the rate of interest publicly announced
from time to time by Agent in San Francisco, California, as its "Reference
Rate." The Reference Rate is set based on various factors, including Agent's
costs and desired return, general economic conditions, and other factors, and is
used as a reference point for pricing some loans. Agent may price loans to its
customers at, above, or below the Reference Rate. Any change in the Reference
Rate shall take effect at the opening of business on the day specified in the
public announcement of a change in the Reference Rate.

         1.21 Stockholders' Equity shall mean Borrower's Tangible Net Worth plus
Subordinated Debt.

         1.22 Subordinated Debt shall mean $6,000,000 in subordinated
convertible debentures issued February 11, 1998, by Borrower, provided that the
terms, conditions, and documentation of such debt shall not be amended without
the prior written consent of Banks, which consent may be withheld in Banks' sole
discretion.

         1.23 Tangible Net Worth shall mean stockholder equity as determined in
accordance with GAAP, less net book value of intangible assets.

         1.24 Termination Date shall mean April 30, 2000, or such earlier date
upon which Bank's commitment to lend is terminated pursuant to Section 9.2.

                                       3
<PAGE>
                                    ARTICLE 2
                                 Credit Facility

         2.1 Credit Facility. Subject to the terms and conditions of this
Agreement, each Bank, to the extent of its respective Pro Rata Share, through
Agent, shall make Advances to Borrower from time to time for the purpose of
funding Eligible Loans, until the Termination Date, up to the Available Amount.
Borrower may use the Credit Line by borrowing, repaying, and reborrowing
Advances.

         2.2 Notes. The obligation of Borrower to repay the Advances shall be
evidenced by promissory notes (including all renewals, modifications, and
extensions thereof, the "Notes") made by Borrower to the order of Banks.
Interest shall accrue under the Notes as set forth therein. The Notes shall be
secured as provided in Article 3.

         2.3 Procedure for Advances. Borrower may borrow under the Credit Line
on any Business Day. Borrower shall give Agent irrevocable notice (in writing or
orally followed by written confirmation) specifying the amount to be borrowed,
the requested borrowing date and other information required in the Notes. Bank
must receive such notice on or before noon, Pacific time, on the day borrowing
is requested. All Advances shall be discretionary to the extent notification by
Borrower is given subsequent to that time.

         2.4 Prior Approval Procedures. If Banks' prior approval is required for
a Loan to be included as an "Eligible Loan," Banks shall be required to indicate
such approval, through Agent, within a reasonable period of time, not to exceed
72 hours after Bank's receipt, through Agent, of a faxed Loan Summary from
Borrower; provided, that Agent shall not be required to include such Loan as an
"Eligible Loan" if and only if Banks specifically decline such approval request,
through Agent, before the end of such 72-hour period. If the 72 hours ends on a
day which is not a Business Day, the time period for declining or approving will
end at the same time on the next Business Day.

         2.5 Collateral Loan Packages. Borrower shall deliver to Agent a loan
package (each a "Collateral Loan Package") consisting of the following
documents, for each Eligible Loan:

                  (a) Original note, endorsed to Banks or in blank;

                  (b) Copy of the original, recorded deed of trust which
         indicates on its face that it is to be returned by the recorder's
         office to Borrower after recording; and, if any, original security
         agreement (if on a separate document);

                  (c) An unrecorded assignment of the deed of trust/security
         agreement and executed UCC assignment statements as to any UCC filings;
         and

                  (d) Any other loan documents that Banks, through Agent, may
         reasonably request from time to time, including but not limited to
         title insurance policies and environmental reports.

Agent shall not normally record the assignments. However, Agent shall have the
right, at any time, in its sole discretion, to: (i) record any assignments held
by it, and (ii) order FIRREA conforming appraisals, Level One environmental
reports, and extended coverage lender's title insurance policies, all at
Borrower's expense.

         2.6 Repayment. Accrued interest under the Notes shall be payable in
arrears on the first day of each month. All outstanding Advances shall be due
and payable on the Termination Date.

         2.7 Fees. Borrower shall pay to Agent for the account of each Bank, to
be paid to each Bank in accordance with its respective Pro Rata Share:

                                       4
<PAGE>

                  (a) a facility fee of 0.25% of $40,000,000 per annum payable
         quarterly in advance beginning May 1, 1999; and

                  (b) on the last Business Day of each quarter beginning June
         30, 1999, and on the Termination Date, a commitment fee equal to 0.125%
         per annum (calculated on the basis of actual number of days elapsed
         over a year of 360 days) of the difference between (a) $40,000,000, and
         (b) the daily outstanding principal balance of the Notes, with such fee
         to accrue from May 1, 1999.


                                    ARTICLE 3
                               Collateral Security

         3.1 Collateral. As security for the prompt payment and performance of
all Obligations, Borrower hereby grants to Agent, as agent for Banks, a first
lien security interest in the following collateral, whether now or hereafter
acquired, and all proceeds thereof (the "Collateral"):

                  (a) All of Borrower's accounts, inventory, equipment, general
         intangibles, chattel paper, documents, instruments, deposit accounts,
         investment property, cash, cash equivalents, marketable securities, and
         all other tangible or intangible personal property of Borrower, of any
         kind and type, and all proceeds and products of all of the foregoing.

                  (b) The Collateral Loan Packages and all other papers,
         documents, contracts and agreements taken by Borrower in connection
         with the Eligible Loans; including, but not limited to, title insurance
         policies and preliminary commitments therefor, credit reports,
         appraisals, insurance policies or commitments therefor, servicing
         agreements, escrow agreements, credit reports, and custodial
         agreements, and all of Borrower's right, title, and interest therein
         and thereunder.

                  (c) All rights of Borrower vis-a-vis each secondary market
         investor including, without limitation, Borrower's right to receive the
         purchase proceeds of any mortgage-backed securities which may be issued
         by such investor or of any mortgage loans sold to such investor,
         including without limitation any commitment fees, collateral deposits,
         or other refundable deposits which Borrower has made with such
         investor, and any other rights accruing to Borrower under any purchase
         agreement or contract executed by Borrower and such investor with
         respect to mortgage loans or mortgage-backed securities, but only if
         said loans or securities were funded by Advances from Banks.

         3.2 Transfer of Collateral in Trust. Banks and Borrower acknowledge
that from time to time Agent, as agent for Banks, may be asked to deliver to
Borrower or to parties designated by Borrower some of the Collateral above
described for the purpose of permitting Borrower to sell Eligible Loans to
permanent investors or to issuers of mortgage-backed securities (the "Loan
Purchasers"). Borrower shall hold any Collateral so delivered to it in trust and
shall not use or dispose of same for any other purpose. Borrower specifically
acknowledges that all of the proceeds from any such sale shall be fully subject
to this Agreement and shall not be commingled with other funds of Borrower,
shall be held in trust for Banks and shall be remitted to Agent herewith for
application to the outstanding Advances. Borrower shall immediately identify to
Agent any Loan Purchaser to whom the Collateral may be delivered by Borrower.
Agent may notify any Loan Purchaser of Banks' security interest in such
Collateral provided such notification describes when the security interest in
each Collateral Loan Package will be terminated. At Banks' option, Agent may
deliver the Collateral directly to Loan Purchasers pursuant to a written
agreement wherein the Loan Purchaser acknowledges the security interest of Banks
and agrees to deliver the proceeds of the sale directly to Agent for application
to the Obligations. Until Banks' security interest is terminated as provided in
this Agreement, such delivery to or at the direction of Borrower shall not in
any respect release, terminate, or otherwise affect Banks' security interest
created under this Article.

         3.3 Handling of Collateral. Agent shall not be required, except at its
option after a Default, to realize upon any Collateral, collect the principal or
interest thereon, exercise any rights or options of Borrower pertaining thereto,

                                       5
<PAGE>

make presentment, demand, protest, or give notice of protest, upon acceptance or
nonpayment, or keep the Collateral insured, nor to do any other things for the
protection, enforcement, or collection of such collateral rights of other
parties; and under no circumstances shall Agent or Banks be in any way
responsible for failure to act in such behalf; nor shall they be in any way
responsible for any negligent act or default of any of their collecting agents
or correspondents. It is further agreed that Agent, at its option after a
Default, may extend or consent to the extension of the time of payment or
maturity of any Collateral. Agent is authorized to transfer to itself or to any
other Person all or any part of said Collateral, and may fill in blanks in any
transfers of collateral, powers of attorney, assignments, or other documents
delivered to it. Conversion of Collateral to cash shall be applied by Agent to
the Obligations. Upon request, Borrower will execute all such instruments,
including financing statements, as may be reasonably required to carry out the
provisions of this Agreement.

         3.4 Agreement as to Release of Collateral. Obligations of Borrower
under this Agreement shall not be affected by the release or substitution of any
Collateral or by the release of or any renewal or extensions of time to, any
party to any instrument, obligation, or liability secured by this Agreement or
to which Borrower is a party. Agent shall not be bound to resort to or exhaust
its recourse or to take any action against other parties or other Collateral.
Borrower hereby waives presentment, demand, protest, notice of protest, notice
of nonacceptance or nonpayment with respect to any obligation secured by this
Agreement.

         3.5 Appointment of Agent; Delivery of Further Documents. Borrower does
hereby designate and appoint Agent its true and lawful attorney or attorneys
with power irrevocable, for it and in its name, place, and stead, after a
Default, to ask, demand, receive, receipt, and give witness for any and all
amounts which may be or become due or payable to Borrower pursuant to the
Collateral or any amendments or supplements thereto, and in its discretion to
file any claim or take any action or proceeding, or either, in its own name or
in the name of Borrower, or otherwise, which to Agent may deem necessary or
desirable in order to collect or enforce payment of any and all amounts which
may become due or owing pursuant to the Collateral, or any amendment or
supplement thereto. All payments received on behalf of Borrower shall be applied
to the Obligations. The acceptance of this appointment by Agent shall not
obligate it to perform any duties, covenant, or obligation required to be
performed by Borrower under or by virtue of said Collateral or any amendments or
supplements thereto. Borrower shall execute on request, and Agent may also
execute, on behalf of Borrower, any financing statement or other instruments,
documents, or agreements which, in the opinion of Agent, may be desirable to
perfect or protect its position under and within the Collateral.

         3.6 Expenses Incurred by Agent. Agent is not required to, but may at
its option after a Default pay any tax or other charge or expense payable by
Borrower and any filing or recording fees, and any amount so paid shall be
payable by Borrower to Agent upon demand.

         3.7 Negative Pledge. Borrower shall not create, incur, or assume, or
agree to create, incur, or assume any lien or encumbrance, whether consensual or
nonconsensual, on any of the Collateral, other than to Banks, so long as Banks
are committed to make Advances under this Agreement or any Obligations remain
outstanding.

         3.8 OREO Property. If Borrower's foreclosure of any deed of trust,
mortgage, or other security interest securing an Eligible Loan results in
Borrower becoming the owner of the underlying real property, Borrower shall
execute and deliver to Agent such deeds of trust, mortgages, and assignments of
rents as Banks, through Agent, may require to provide them with a security
interest in such property to secure the Obligations.

                                       6
<PAGE>
                                    ARTICLE 4
                              Conditions of Lending

         In addition to the requirements of Section 2.3, Banks' obligation to
make the initial Advance is subject to the conditions precedent listed in
Sections 4.1 through 4.3, and to make subsequent Advances is subject to the
conditions precedent listed in Sections 4.4 and 4.5, unless waived by the
unanimous consent of Banks, as communicated to Borrower by Agent, in writing:

         4.1 Authorization. Borrower shall have delivered to Agent copies of its
articles of incorporation and bylaws, a certified copy of the resolution of
Borrower's board of directors authorizing the transactions contemplated by this
Agreement and the execution, delivery, and performance of all Loan Documents,
and appropriate certificates of incumbency for parties executing any of the Loan
Documents.

         4.2 Documentation. Borrower shall have executed and delivered to Agent
all documents to reflect the existence of the Obligations and the security
interests granted to Banks under this Agreement.

         4.3 Proof of Insurance.  Proof of insurance as required by Section 6.11
has been provided to Agent.

         4.4 Representations and Warranties. The representations and warranties
made by Borrower in the Loan Documents and in any certificate, document, or
financial statement furnished at any time shall continue to be true and correct,
except to the extent that such representations and warranties expressly relate
to an earlier date.

         4.5 Compliance. No Default or other event which, upon notice or lapse
of time or both would constitute a Default, shall have occurred and be
continuing, or shall exist after giving effect to the advance of credit to be
made.

                                    ARTICLE 5
                         Representations and Warranties

         To induce Banks to enter into this Agreement, Borrower represents,
warrants, and covenants to Banks as follows:

         5.1 Existence. Borrower is in good standing as a corporation under the
laws of the state of its incorporation, has the power, authority, and legal
right to own and operate its property or lease the property it operates and to
conduct its current business; and is qualified to do business and is in good
standing in all other jurisdictions where the ownership, lease, or operation of
its property or the conduct of its business requires such qualification.

         5.2 Enforceability. The Loan Documents, when executed and delivered by
Borrower, shall be enforceable against Borrower in accordance with their
respective terms.

         5.3 No Legal Bar. The execution, delivery, and performance by Borrower
of the Loan Documents, and the use of the loan proceeds, shall not violate any
existing law or regulation applicable to Borrower; any ruling applicable to
Borrower of any court, arbitrator, or governmental agency or body of any kind;
Borrower's articles of incorporation or bylaws; any security issued by Borrower;
or any mortgage, indenture, lease, contract, undertaking, or other agreement to
which Borrower is a party or by which Borrower or any of its property may be
bound.

         5.4 Financial Information. By submitting each of the financial
statements required by Subsections 6.5(a) and 6.5(b), Borrower is deemed to
represent and warrant that: (a) such statement is complete and correct and
fairly presents the financial condition of Borrower as of the date of such
statement; (b) such statement discloses all liabilities of Borrower that are
required to be reflected or reserved against under GAAP, whether liquidated or

                                       7
<PAGE>

unliquidated, fixed or contingent; and (c) such statement has been prepared in
accordance with GAAP. As of this date, there has been no adverse change in
Borrower's financial condition since preparation of the financial statements for
fiscal year ending December 31, 1998, which would materially impair Borrower's
ability to repay the Obligations.

         5.5 Liens and Encumbrances. As of this date, Borrower has good and
marketable title to its property free and clear of all security interests,
liens, encumbrances, or rights of others, except as disclosed in writing to
Agent, and except for taxes which are not yet delinquent and for conditions,
restrictions, easements, and rights of way of record which do not materially
affect the use of any of Borrower's property.

         5.6 Litigation. Except as disclosed in writing to Agent, there is no
threatened (to Borrower's knowledge) or pending litigation, investigation,
arbitration, or administrative action which may materially adversely affect
Borrower's business, property, operations, or financial condition.

         5.7 Payment of Taxes. Borrower has filed or caused to be filed all tax
returns when required to be filed; and has paid all taxes, assessments, fees,
licenses, excise taxes, franchise taxes, governmental liens, penalties, and
other charges levied or assessed against Borrower or any of its property imposed
on it by any governmental authority, agency, or instrumentality that are due and
payable (other than those returns or payments of which the amount,
enforceability, or validity are contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP are
provided on Borrower's books).

         5.8 Employee Benefit Plan. Borrower is in compliance in all respects
with the provisions of ERISA and the regulations and published interpretations
thereunder, to the extent Borrower maintains any Plan governed by ERISA.

         5.9 Misrepresentations. No information, exhibits, data, or reports
furnished by Borrower or delivered to Agent in connection with Borrower's
application for credit misstates any material fact, or omits any fact necessary
to make such information, exhibits, data, or reports not misleading.

         5.10 No Default. Borrower is not in default in any Loan Document, or in
any contract, agreement, or instrument to which it is a party.

         5.11 No Burdensome Restrictions. No contract or other instrument to
which Borrower is a party, or order, award, or decree of any court, arbitrator,
or governmental agency, materially impairs Borrower's ability to repay the
Obligations.

         5.12     Year 2000 Compliance.

                  (a) Borrower has (i) conducted a comprehensive review and
         assessment of all areas of its business that could be adversely
         affected by the "year 2000 problem" (that is, the risk that computer
         applications may not be able to properly perform date-sensitive
         functions after December 31, 1999), (ii) developed a detailed plan and
         timeline for addressing the year 2000 problem on a timely basis, and
         (iii) to date, implemented that plan in accordance with that timetable.
         Borrower reasonably anticipates that all computer applications that are
         material to its business will on a timely basis be able to perform
         properly date-sensitive functions for all dates before and after
         January 1, 2000 (i.e., be "year 2000 compliant").

                  (b) Borrower has made inquiry of each of its key suppliers,
         vendors, and customers with respect to the year 2000 problem and, based
         on that inquiry, believes that each of them will on a timely basis be
         year 2000 compliant in all material respects. For the purposes of this
         paragraph, "key suppliers, vendors, and customers" refers to those
         suppliers, vendors and customers of Borrower the business failure of
         which would with reasonable probability result in a material adverse
         change in the Borrower's business condition (financial or otherwise),
         operations, properties or prospects, or ability to repay the credit.

                                       8
<PAGE>
                                    ARTICLE 6
                              Affirmative Covenants

         So long as this Agreement shall remain in effect, or any liability
exists under the Loan Documents, Borrower shall:

         6.1 Use of Proceeds. Use the proceeds of the Credit Line for funding
Eligible Loans.

         6.2 Stockholders' Equity. Maintain a minimum Stockholders' Equity
determined quarterly, of not less than $17,500,000.

         6.3 Leverage Ratio. Maintain a ratio of total Debt minus Subordinated
Debt to Stockholders' Equity, determined quarterly, of not more than 3.25 to 1.

         6.4 Liquidity. Maintain Liquid Assets, determined quarterly, of not
less than $400,000.

         6.5 Financial Information. Maintain a standard system of accounting in
accordance with GAAP and furnish to Agent the following:

                  (a) Monthly Financial Statements. As soon as available and, in
         any event, within 30 days after the end of each month, a copy of the
         consolidated statement of income and consolidated balance sheet of
         Borrower, for the month ended and year-to-date, prepared by the chief
         financial officer of Borrower, and in form and substance satisfactory
         to Agent;

                  (b) SEC Reporting. As soon as made available to the Securities
         and Exchange Commission or Borrower's shareholders, copies of all
         10-QSB and 10-KSB filings;

                  (c) Portfolio Report. Monthly, a summary of all of Borrower's
         loans outstanding;

                  (d) Budgets. By March 1 of each year, Borrower's annual
         operating budget and capital budget, and quarterly updates to the
         operating budget if requested by Agent;

                  (e) Quarterly Compliance Certificate. Within 15 days of each
         quarter end, a letter from Borrower demonstrating compliance with all
         financial covenants of this Agreement; and

                  (f) Additional Financial Information. As soon as available
         and, in any event, within ten days after request, reports on the status
         of loans in progress, aging of existing loan portfolio, and such other
         data, information, or documentation as Agent may reasonably request.

         6.6 Maintenance of Existence. Preserve and maintain its existence,
powers, and privileges in the jurisdiction of its incorporation, and qualify and
remain qualified in each jurisdiction in which its presence is necessary or
desirable in view of its business, operations, or ownership of its property.
Borrower shall also maintain and preserve all of its property which is necessary
or useful in the proper course of its business, in good working order and
condition, ordinary wear and tear excepted.

         6.7 Books and Records. Keep accurate and complete books, accounts, and
records in which complete entries shall be made in accordance with GAAP,
reflecting all financial transactions of Borrower.

         6.8 Access to Premises and Records. At all reasonable times and as
often as Agent or Banks may reasonably request, permit any authorized
representative designated by Agent or Banks to have access to the premises,
property, and financial records of Borrower, including all records relating to
the finances, operations, and procedures of Borrower, for purposes of auditing
Borrower's accounting, lending, and documentation policies, procedures, and

                                       9
<PAGE>

operations, and Borrower's loan portfolio, and to make copies of or abstracts
from such records at Borrower's expense.

         6.9 Notice of Events. Furnish Agent prompt written notice of:

                  (a) Proceedings. Any proceeding instituted by or against
         Borrower in any court or before any commission or regulatory body, or
         any proceeding threatened against it in writing by any governmental
         agency which if adversely determined would have a material adverse
         effect on Borrower's business, property, or financial condition, or
         where the amount involved is $100,000 or more and not covered by
         insurance;

                  (b) Material Development. Any material development in any such
         proceeding referred to in Subsection 6.9(a);

                  (c) Defaults. Any accident, event, or condition which is or,
         with notice or lapse of time or both, would constitute a Default, or a
         default under any other agreement to which Borrower is a party; and

                  (d) Adverse Effect. Any other action, event, or condition of
         any nature which could result in a material adverse effect on the
         business, property, or financial condition of Borrower.

         6.10 Payment of Debts and Taxes. Pay all Debt and perform all
obligations promptly and in accordance with their terms, and pay and discharge
promptly all taxes, assessments, and governmental charges or levies imposed upon
Borrower, its property, or revenues prior to the date on which penalties attach
thereto, as well as all lawful claims for labor, material, supplies, or
otherwise which, if unpaid, might become a lien or charge upon Borrower's
property. Borrower shall not, however, be required to pay or discharge any such
tax, assessment, charge, levy, or claim so long as its enforceability, amount,
or validity is contested in good faith by appropriate proceedings.

         6.11 Insurance. Maintain in force at all times insurance with
responsible insurance companies in such amounts and covering such risks as is
customary in Borrower's industry and reasonably satisfactory to Agent and Banks,
and upon request furnish to Agent certificates of insurance or duplicate
policies evidencing such coverage.


                                    ARTICLE 7
                               Negative Covenants

         So long as this Agreement shall remain in effect, or any liability
shall exist under the Loan Documents, Borrower shall not, without prior
unanimous written consent of Banks:

         7.1      Portfolio Concentration.  Permit:

                  (a) Land or Land Under Development Loans. more than 25% of the
         sum of (i) Borrower's direct lending portfolio (including commercial,
         residential, and installment loans), plus (ii) Liquid Assets, to
         finance loans secured by raw land or land under development;

                  (b) Second Mortgages. more than 35% of the sum of (i)
         Borrower's direct lending portfolio (including commercial, residential,
         and installment loans), plus (ii) Liquid Assets to finance loans
         secured by second liens on real property;

                  (c) Construction Loans. more than 25% of the sum of (i)
         Borrower's direct lending portfolio (including commercial, residential,
         and installment loans), plus (ii) Liquid Assets to finance construction
         loans; or

                                       10
<PAGE>

                  (d) Long-Term Loans. more than 30% of the sum of (i)
         Borrower's direct lending portfolio (including commercial, residential,
         and installment loans), plus (ii) Liquid Assets to finance loans having
         maturities in excess of 24 months;

provided that the consent of Banks shall not be unreasonably withheld. Should
Borrower exceed any of these portfolio concentration limits due to a paydown
from its existing loan portfolio Borrower shall have 90 days (and such event
shall not be a Default until the end of such 90 day period) to return to
compliance with each of the above limits.

         7.2 Debt. Create, incur, assume, permit to exist, or otherwise become
committed for any Debt except any:

                  (a) Unsecured Trade Credit. Unsecured, short-term Debt arising
         from current operations by purchasing on credit goods, services,
         supplies, or merchandise and not constituting borrowings;

                  (b) Subordinated Debt. Subordinated Debt;

                  (c) Debt to Banks. Debt owing to Banks under this Agreement,
         and all renewals, modifications, and extensions thereof; and

                  (d) Ordinary Course. Debt incurred in the ordinary course of
         business and appearing on the liability section of the balance sheet of
         Borrower, prepared in accordance with GAAP, including, without
         limitation, accrued liabilities and taxes payable.

         7.3 Liens and Encumbrances. Create, incur, or assume, or agree to
create, incur, or assume any lien, whether consensual or nonconsensual, on any
of its property, or to enter into any lease with respect to any of its property
except:

                  (a) Liens of Banks. Liens in favor of Banks;

                  (b) Tax Liens. Liens for taxes not yet due or which are being
         contested in good faith by appropriate proceedings; and

                  (c) Incidental Liens. Other liens incidental to the conduct of
         its business or the ownership of its property which are not incurred in
         connection with the borrowing of money or the obtaining of credit, and
         which do not in the aggregate materially impair the value or use of
         property.

         7.4 Guaranties. Assume, guaranty, endorse, become a surety for,
indemnify, or otherwise in any fashion become responsible for, directly or
indirectly, any obligation of any Person, except:

                  (a) Negotiable Instruments. Endorsements on negotiable
         instruments for deposit or collection in the ordinary course of
         business;

                  (b) Source Capital Leasing, Inc. Obligations of Source Capital
         Leasing, Inc. to Banks up to a maximum amount of $22,000,000; and

                  (c) Source Capital Finance, Inc. Obligations of Source Capital
         Finance, Inc. to Western Bank up to a maximum amount of $1,000,000.

         7.5 Change of Management. Permit a change of management such that D.
Michael Jones shall cease to be actively involved in the management of
Borrower's operations, other than resulting from his death or disability.

                                       11
<PAGE>

         7.6 Disposition of Assets. Sell, transfer, lease, or otherwise assign
or dispose of the majority of its property to any Person, outside the ordinary
course of business.

         7.7 Mergers. Become a party to any merger, consolidation, or like
corporate change, or make any substantial transfer or contribution to, or
material investment in, stock, shares, or licenses of any Person.

         7.8 ERISA. Engage in any act or omission which would make Borrower
liable under ERISA to the Plan, to any of its participants, or to the Internal
Revenue Service.

         7.9 Dissolution. Adopt any agreement or resolution for dissolving,
terminating, or substantially altering Borrower's present business activities.

         7.10 Business Activities. Engage or enter into any activity which is
unusual to Borrower's existing business.

                                    ARTICLE 8
                                     Agency

         8.1 Appointment. Banks irrevocably designate and appoint Agent as their
agent under this Agreement, and irrevocably authorize Agent, as their agent, to
take such action on their behalf under the provisions of this Agreement and to
exercise all such powers as are expressly delegated to Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. No implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or otherwise exist against
Agent. Notwithstanding any provision to the contrary in this Agreement, Agent
shall have no implied duties or responsibilities to take any action, except such
action as it is expressly required to take under the express terms of this
Agreement, and shall have no fiduciary relationship with any of the Banks as to
any matter not expressly provided for by the Loan Documents including, without
limitation, enforcement or collection of the Notes. Agent shall not be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting upon the unanimous consent and instructions of Banks. Any
company into which Agent may be merged or converted or with which it may be
consolidated or any company resulting from any merger, conversion or
consolidation to which it shall be a party, or any company to which Agent may
sell or transfer all or substantially all of its agency relationships, shall be
the successor to Agent without any further action by Banks or Borrower and
without the execution or filing of any paper.

         8.2 Successor Agent. Agent may, and upon the unanimous consent of Banks
shall, resign as Agent upon 30 days' notice to Banks. Upon Agent's resignation
as agent under this Agreement, Banks, upon unanimous consent, shall appoint from
among the Banks a successor agent for the Banks. If no successor agent is
appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with Banks, a successor agent from among the Banks,
and the appointed successor shall accept its appointment. Upon the acceptance of
its appointment as successor agent hereunder, (a) such successor agent shall
succeed to all the rights, powers, and duties of the retiring Agent, (b) the
term "Agent" shall mean such successor agent, and (c) the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Agreement shall
inure to such retiring Agent's benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.

         8.3 Duties of Agent. Agent shall service the Loans in accordance with
its usual practice in connection with similar credits. Except as otherwise
instructed by the unanimous consent of Banks in accordance with this Agreement,
Agent may manage and enforce the terms of the Loan Documents, and exercise and
enforce all privileges and rights exercisable and enforceable by it, for the
joint benefit of Banks, in accordance with Agent's discretion and exercise of
its business judgment. In servicing and collecting the Notes and in carrying out
the terms and provisions of the Loan Documents, Agent shall not be liable to any
of the Banks for any error of judgment, or for any action taken or omitted to be
taken by it, except for gross negligence or willful misconduct.

                                       12
<PAGE>

         8.4 Delegation of Duties. Agent may execute any of its duties under
this Agreement by or through agents or attorneys-in-fact; provided that Agent
shall not delegate servicing to a Person other than Agent's Related Parties,
without the unanimous consent of Banks. Agent shall be entitled to rely upon
advice of counsel concerning all matters pertaining to such duties. Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact selected by it with reasonable care or any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel.

         8.5 Exculpatory Provisions. Agent's Related Parties shall not be
responsible or otherwise liable to any of the Banks in any manner for:

                  (a) Actions. Any action lawfully taken or omitted to be taken
         by it or by such other persons or entities under or in connection with
         this Agreement or any other Loan Document, except for its or their own
         gross negligence or willful misconduct;

                  (b) Borrower Statements. Any recital, statement,
         representation or warranty made by Borrower or any officer thereof
         contained in this Agreement or any other Loan Document, or in any
         certificate, report, statement or other document relating to this
         Agreement or any other Loan Document;

                  (c) Enforceability. The validity, effectiveness, genuineness,
         enforceability, or sufficiency of this Agreement or any other Loan
         Document, the financial condition of Borrower, or any failure of
         Borrower to perform its obligations under this Agreement or any other
         Loan Document;

                  (d) Failure to Perfect. Inability to perfect any Collateral to
         the extent required by this Agreement where such inability is due to
         Borrower's failure to act or take such steps as Agent may direct; or

                  (e) Investigation. Ascertaining or inquiring as to the
         observance of or Borrower's performance under any Loan Document, or
         inspecting the property, books, or records of Borrower.

         8.6 Reliance by Agent. Agent's Related Parties shall be entitled to
rely, and shall be fully protected in relying upon, any note, writing,
resolution, notice, consent, certificate, message, statement, order, or other
document or conversation believed to have been authorized, genuine or correct,
or signed, sent, or made by the proper Person, or upon advice and statements of
counsel (including, without limitation, legal counsel to Agent or Borrower, and
independent accountants and other experts selected by Agent).

         8.7 Instructions. Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan Document as Agent
deems appropriate, unless it shall first receive the unanimous consent of Banks
or shall first be indemnified to its satisfaction by all Banks, in accordance
with their respective Pro Rata Share, against all liabilities and expenses which
may be incurred by it or by reason of taking or continuing to take any such
action. Agent shall in all cases be fully protected in acting or in refraining
from acting under this Agreement or any other Loan Document in accordance with
the unanimous consent of Banks, where required, and such request and any action
taken or not taken to act pursuant thereto shall be binding upon all of the
Banks and all future holders of the Notes.

         8.8 Funding. Banks shall provide Agent with immediately available funds
in the amount of their respective Pro Rata Share of each Advance, on or before
1:00 p.m. on the date of requested borrowing. If Agent receives a payment from
Borrower before noon on any Business Day, Agent shall remit to Banks their
respective Pro Rata Share of such payment on the same Business Day. Agent shall
remit to Banks, Banks' Pro Rata Share of any payments received after noon on any
Business Day on the next succeeding Business Day.

                                       13
<PAGE>

         8.9 Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default unless Agent has actual knowledge or has
received notice from one or more of the Banks or Borrower referring to this
Agreement, describing such Default and stating in substance that such notice is
a "notice of default." In the event Agent receives such a notice or has actual
knowledge of any Default, Agent shall give notice thereof to all of the Banks.

         8.10 Representations. None of Agent's Related Parties have made any
representation or warranty to Banks, and no action taken by Agent after the date
of this Agreement, including any review of Borrower's affairs, shall be deemed
to constitute any representation or warranty by Agent to any of the Banks.

         8.11 Independent Credit Review. Each Bank represents to Agent that it
has, independently and without reliance upon Agent, and based upon such
financial statements, documents, and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, property,
operations, and financial condition of Borrower and made its own decision to
enter into this Agreement. Each of the Banks also represents that it shall,
independently and without reliance upon Agent, and based upon such financial
statements, documents, and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals, and decisions in taking or
not taking action under this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, property, operations, and
financial condition of Borrower. For purposes of determining compliance with the
conditions specified in Article 4 prior to the initial Advance, each Bank that
has executed this Agreement shall be deemed to have consented to, approved, or
accepted, or to be satisfied with, each document or other matter either sent by
Agent to such Bank for consent, approval, acceptance, or satisfaction, or
required under said Article to be consented to or approved by or acceptable or
satisfactory to such Bank, unless such Bank immediately provides Agent with
notice to the contrary.

         8.12 Information. Except for the financial statements, reports, and
notices delivered to Agent pursuant to and received by Agent pursuant to this
Agreement, Agent shall have no obligation, duty, or responsibility, either
initially or on a continuing basis, to provide Banks with any credit or other
information concerning the business, property, operations, or financial
condition which may come into possession of any of Agent's Related Parties.
Although Agent may furnish to Banks, upon request, copies of documents Agent has
received pursuant to this Agreement, Agent assumes no responsibility as to the
authenticity, validity, or enforceability of any such documents.

         8.13 Indemnity. Banks shall indemnify Agent, according to their
respective Pro Rata Share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, suits, judgments, costs,
expenses, taxes, and disbursements of any kind or nature whatsoever (except to
the extent they may result from Agent's gross negligence or willful misconduct)
which may at any time be imposed on, incurred by, or asserted against any of
Agent's Related Parties or in any way relating to or arising out of this
Agreement, any other Loan Document or any document contemplated by or referred
to therein, any transaction contemplated thereby, or any action taken or omitted
by Agent under or in connection with any of the foregoing. Without limiting the
foregoing, each Bank shall reimburse Agent, in accordance with such Bank's Pro
Rata Share, for any costs or expenses incurred by Agent, including outside or
in-house legal fees which (a) are required to be reimbursed to Agent by Borrower
under any of the Loan Documents, but are not so reimbursed, or (b) arise out of
action taken by Agent at the unanimous consent of Banks in accordance with this
Agreement. This subsection shall survive the final payment and cancellation of
the Notes and payment all other amounts due under this Agreement or the other
Loan Documents.

         8.14 Separation of Capacities. In its capacity as a lender that is one
of the Banks, Seafirst Bank shall have the same rights and powers hereunder as
the other Banks and may exercise the same as though it were not Agent. The term
"Bank(s)" shall include Seafirst Bank, in its individual capacity as a lender
and not as an agent, unless the context otherwise indicates.

                                       14
<PAGE>
                                    ARTICLE 9
                       Events and Consequences of Default

         9.1 Events of Default. Any of the following events shall, at the option
of Banks and at any time without regard to any previous knowledge on the part of
Agent or Banks, constitute a default by Borrower under the terms of this
Agreement, the Notes, and all other Loan Documents ("Default"):

                  (a) Nonpayment. Any payment or reimbursement due or demanded
         under this Agreement or any Loan Document is not made within 10 days of
         the date when due;

                  (b) Breach of Warranty. Any representation or warranty made in
         connection with this Agreement or any other Loan Document, or any
         certificate, notice, or report furnished pursuant hereto, is documented
         by any Bank to be false in any respect when made, and is relied upon by
         such Bank to its detriment;

                  (c) Failure to Perform. Any other term, covenant, or agreement
         contained in any Loan Document is not performed or satisfied, and, if
         remediable, such failure continues unremedied for 30 days (except as
         otherwise provided in Section 7.1) after written notice thereof has
         been given to Borrower by Agent;

                  (d) Defaults on Other Obligations. There exists a default in
         the performance of any other agreement or obligation (to Banks or any
         other Person) for the payment of borrowed money, for the deferred
         purchase price of property or services, or for the payment of rent
         under any lease, whether by acceleration or otherwise, which would
         permit such monetary obligation to be declared due and payable prior to
         its stated maturity; and such default continues for 30 days after
         Borrower receives written notice thereof from the creditor so affected;

                  (e) Loss, Destruction, or Condemnation of Property. A portion
         of Borrower's property is affected by any uninsured loss, damage,
         destruction, theft, sale, or encumbrance other than created herein or
         is condemned, seized, or appropriated, the effect of which is to
         prevent Borrower from operating its business or paying its debts as
         they come due;

                  (f) Attachment Proceedings and Insolvency. Borrower or any of
         Borrower's property is affected by any:

                           (i) Judgment lien, execution, attachment,
                  garnishment, general assignment for the benefit of creditors,
                  sequestration, or forfeiture, to the extent Borrower is
                  prevented from operating its business or paying its debts as
                  they come due; or

                           (ii) Proceeding under the laws of any jurisdiction
                  relating to receivership, insolvency, or bankruptcy, whether
                  brought voluntarily or involuntarily by or against Borrower,
                  including, without limitation, any reorganization of assets,
                  deferment or arrangement of debts, or any similar proceeding,
                  and, if such proceeding is involuntarily brought against
                  Borrower, it is not dismissed within 60 days;

                  (g) Judgments. Final judgment on claims not covered by
         insurance which, together with other outstanding final judgments
         against Borrower, exceeds $100,000, is rendered against Borrower and is
         not discharged, vacated, or reversed, or its execution stayed pending
         appeal, within 60 days after entry, or is not discharged within 60 days
         after the expiration of such stay;

                  (h) Management. D. Michael Jones shall cease to be actively
         involved in the management of Borrower's operations, other than
         resulting from death or disability; or

                  (i) Government Approvals. Any governmental approval,
         registration, or filing with any governmental authority, now or later
         required in connection with the performance by Borrower of its
         obligations under the Loan Documents, is revoked, withdrawn, or
         withheld, or fails to remain in full force and effect, except Borrower

                                       15
<PAGE>

         shall have 90 days after notice of any such event to take whatever
         action is necessary to obtain all necessary approvals, registrations,
         and filings.

9.2 Remedies Upon Default. If any Default occurs, the Banks' commitment to make
Advances shall immediately and automatically terminate (but Agent shall have no
liability to any Bank for any Advances made by Agent prior to Agent receiving
actual notice of such occurrence, absent Agent's willful misconduct or gross
negligence), and, (i) if a Default occurs under Subsection 9.1(f), all
Obligations, including all accrued interest, shall immediately and automatically
become due and payable, without presentment, demand, protest, or notice of any
kind, all of which are hereby expressly waived by Borrower, and Agent may
immediately, upon receiving notice of such an occurrence, exercise any or all of
the following remedies for Default; and (ii) if any other Default occurs and is
continuing, Agent, upon the unanimous direction of all Banks, shall, by notice
from Agent to Borrower:

                  (a) Accelerate. Declare the Notes, together with all accrued
         interest, to be immediately due and payable without presentment,
         demand, protest, or notice of any kind, all of which are hereby
         expressly waived by Borrower;

                  (b) Setoff. Exercise its right of setoff against deposit
         accounts of Borrower with Agent (other than those held by Borrower in a
         fiduciary capacity); and/or

                  (c) All Remedies. Pursue all available legal and equitable
         remedies.

In addition, each Bank shall have the right to set off against deposit accounts
of Borrower at such Bank any amount owing under the Obligations, including
amounts in excess of such Bank's Pro Rata Share of the outstanding balance of
the Obligations. Any such amounts, and any other amounts received by any Bank on
account of the Obligations, other than from Agent, shall be delivered to Agent
to be distributed to each Bank in accordance with its respective Pro Rata Share;
provided, however, that if all or any portion of such payment turned over from a
Bank to Agent and distributed to each Bank is thereafter recovered by Borrower
from such Bank, each Bank shall, in accordance with its respective Pro Rata
Share, reimburse such other Bank for the amount so recovered. All of Banks' and
Agent's rights and remedies in all Loan Documents shall be cumulative and can be
exercised separately or concurrently. Borrower shall have no liability to any
Bank with respect to any sum that Agent receives in accordance with this
Agreement and fails to distribute to such Bank as required by this Agreement.

                                   ARTICLE 10
                                  Miscellaneous

         10.1     Manner of Payments.

                  (a) Payments on Nonbusiness Days. Whenever any event is to
         occur or any payment is to be made under any Loan Document on any day
         other than a Business Day, such event may occur or such payment may be
         made on the next succeeding Business Day and such extension of time
         shall be included in computation of interest in connection with any
         such payment.

                  (b) Payments. All payments and prepayments to be made by
         Borrower shall be made to Agent when due, at Agent's office as may be
         designated by Agent, without offsets or counterclaims for any amounts
         claimed by Borrower to be due from Banks, in U.S. dollars and in
         immediately available funds.

                  (c) Application of Payments. All payments made by Borrower, or
         by Agent on behalf of Borrower, shall be applied first against fees,
         expenses, and indemnities which Borrower has agreed to pay to Agent
         under this Agreement and which are due; second, against interest due;
         and third, against principal, with Agent having the right, after a
         Default which is continuing, to apply any payments or collections
         received against any one or more of the Obligations in any manner which
         Banks, by unanimous consent, may choose. Except for payments made by
         Borrower to Agent for fees and indemnities due Agent, all payments made

                                       16
<PAGE>

         by Borrower shall be deemed to be made to Agent, as agent for Banks in
         connection with each Bank's Pro Rata Share, and shall be distributed by
         Agent to Banks according to their respective Pro Rata Share.

                  (d) Recording of Payments. Agent is authorized to record on a
         schedule or computer-generated statement the date and amount of each
         Advance and all payments of principal and interest. All such schedules
         or statements shall constitute prima facie evidence of the accuracy of
         the information so recorded, unless contested by Borrower.

         10.2 Notices. All notices, demands, and other communications to be
given pursuant to any of the Loan Documents shall be in writing (which may be
provided by facsimile transmission), and shall be deemed received the earlier of
when actually received, or three days after being mailed, postage prepaid and
addressed as follows, or as later designated in writing:



         Agent:            SEAFIRST BANK
                           Seafirst Agency Services
                           701 Fifth Avenue, 16th Floor
                           Seattle, Washington  98104
                           Attention:  Ken Puro
                           FAX: (206) 358-0971

         Borrower:         SOURCE CAPITAL CORPORATION
                           1825 N. Hutchinson Rd.
                           Spokane, Washington  99212
                           Attention:  D. Michael Jones
                           FAX: (509) 928-0663

         Banks:            SEAFIRST BANK
                           Commercial Construction and
                           Builder Banking Department
                           West 601 Riverside Avenue, Floor 5
                           Spokane, Washington  99201
                           Attention:  Robert K. Stump
                           FAX: (509) 353-1492

                           WESTERN BANK
                           A division of Washington Mutual
                           1201 Third Avenue, Suite 1000
                           Seattle, Washington 98101
                           Attention:  Stella M. Dier
                           FAX: (206) 554-2696

         10.3 Documentation and Administration Expenses. Borrower shall pay,
reimburse, and indemnify Agent for all of Agent's reasonable costs and expenses,
excluding all attorneys' fees (including the reasonable value of the services of
staff counsel) and legal expenses, but including all recording or filing fees,
incurred in connection with the negotiation, preparation, execution, and
administration of this Agreement and all other Loan Documents, and all
amendments, supplements, or modifications thereto, and the perfection of all
security interests, liens, or encumbrances that may be granted to Banks.
Borrower acknowledges that any legal counsel retained or employed by Agent or
Banks acts solely on Agent's and Banks' behalf and not on Borrower's behalf, and
that Borrower has had sufficient opportunity to seek the advice of its own legal
counsel with regard to this Agreement.

                                       17
<PAGE>

         10.4 Collection Expenses. The nonprevailing party shall, upon demand by
the prevailing party, reimburse the prevailing party for all of its costs,
expenses, and reasonable attorneys' fees (including the allocated cost of
in-house counsel) incurred in connection with any controversy or claim between
said parties relating to this Agreement or any of the other Loan Documents, or
to an alleged tort arising out of the transactions evidenced by this Agreement,
including those incurred in any action, bankruptcy proceeding, arbitration or
other alternative dispute resolution proceeding, or appeal, or in the course of
exercising any judicial or nonjudicial remedies.

         10.5 Waiver. No failure to exercise and no delay in exercising, on the
part of Agent or Bank, any right, power, or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power,
or privilege hereunder preclude any other or further exercise thereof, or the
exercise of any other right, power, or privilege. Further, no waiver or
indulgence by Agent or Banks of any Default shall constitute a waiver of Agent's
and Banks' right to declare a subsequent similar failure or event to be a
Default.

         10.6 Assignment. This Agreement is made expressly for the sole benefit
and protection of Borrower, Agent and Banks and their respective successors and
assigns. The rights of Borrower hereunder shall not be assignable by operation
of law or otherwise, without the prior written consent of Agent and Banks. Any
Bank may at any time sell, assign, grant participations in, or otherwise
transfer to any other financial institution (a "Participant") all or any part of
its rights under this Agreement and the Loan Documents, without notice to
Borrower. Each Bank acknowledges and agrees that any such disposition will not
alter or affect such Bank's direct obligations under this Agreement. Borrower
acknowledges that any such Participant will become an owner pro rata of the
Obligations, and Borrower waives any right it may have to setoff the Obligations
against any claims or counterclaims it may have against Banks.

         10.7 Merger. The rights and obligations set forth in this Agreement
shall not merge into or be extinguished by any of the Loan Documents, but shall
continue and remain valid and enforceable. This Agreement and the other Loan
Documents constitute Agent's and Banks' entire agreement with Borrower, and
supersede all prior writings and oral negotiations. No oral or written
representation, covenant, commitment, waiver, or promise of Agent, any Bank or
Borrower shall have any effect, whether made before or after the date of this
Agreement, unless contained in this Agreement or another Loan Document, or in an
amendment complying with Section 10.8. ORAL AGREEMENTS OR ORAL COMMITMENTS TO
LOAN MONEY, TO EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT
ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

         10.8 Amendments. Any amendment or waiver of, or consent to any
departure by Borrower from any provision of, this Agreement shall be in writing
signed by each party to be bound thereby, and shall be effective only in the
specific instance and for the specific purpose for which given.

         10.9 Jurisdiction and Venue. Borrower irrevocably consents to the
personal jurisdiction of the state and federal courts located in the State of
Washington in any action brought under this Agreement or any other Loan
Document, and any action based upon the transactions encompassed by this
Agreement, whether or not based in contract. Venue of any such action shall be
laid in King County, Washington, unless some other venue is required for Agent
to fully realize upon the assets of Borrower, or any collateral or guaranties.

         10.10    Mandatory Arbitration.

                  (a) At the request of Agent, any Bank or Borrower, any
         controversy or claim between Agent, Banks and Borrower, arising from or
         relating to this Agreement or any of the other Loan Documents, or
         arising from an alleged tort, shall be settled by arbitration in
         Seattle, Washington. The United States Arbitration Act shall apply even
         though this Agreement is otherwise governed by Washington law. The
         proceedings shall be administered by the American Arbitration
         Association under its commercial rules of arbitration. Any controversy
         over whether an issue is arbitrable shall be determined by the
         arbitrator(s). Judgment upon the arbitration award may be entered in
         any court having jurisdiction over the parties. The institution and

                                       18
<PAGE>

         maintenance of an action for judicial relief or pursuit of an ancillary
         or provisional remedy shall not constitute a waiver of the right of
         either party, including the plaintiff, to submit the controversy or
         claim to arbitration if such action for judicial relief is contested.
         For purposes of the application of the statute of limitations, the
         filing of an arbitration pursuant to this subsection is the equivalent
         of the filing of a lawsuit, and any claim or controversy which may be
         arbitrated under this subsection is subject to any applicable statute
         of limitations. The arbitrator(s) will have the authority to decide
         whether any such claim or controversy is barred by the statute of
         limitations and, if so, to dismiss the arbitration on that basis. The
         parties consent to the joinder of any guarantor, hypothecator, or other
         party having an interest relating to the claim or controversy being
         arbitrated in any proceedings under this Section.

                  (b) Notwithstanding the provisions of subsection 10.10(a), no
         controversy or claim shall be submitted to arbitration without the
         consent of all parties if at the time of the proposed submission, such
         controversy or claim arises from or relates to an obligation secured by
         real property.

                  (c) No provision of this subsection shall limit the right of
         Borrower or Agent or Banks to exercise self-help remedies such as
         set-off, foreclosure, retention or sale of any collateral, or obtaining
         any ancillary, provisional, or interim remedies from a court of
         competent jurisdiction before, after, or during the pendency of any
         arbitration proceeding. The exercise of any such remedy does not waive
         the right of either party to request arbitration.

         10.11 Construction. Each term of this Agreement and each Loan Document
shall be binding to the extent permitted by law and shall be governed by the
laws of the State of Washington, excluding its conflict of laws rules. If one or
more of the provisions of this Agreement should be invalid, illegal, or
unenforceable in any respect, the remaining provisions of this Agreement shall
remain effective and enforceable. If there is a conflict among the provisions of
any Loan Documents, the provisions of this Agreement shall be controlling. The
captions and organization of this Agreement are for convenience only, and shall
not be construed to affect any provision of this Agreement.
<TABLE>
<CAPTION>

         DATED as of May 1, 1999.

<S>                                          <C>  
Borrower:                                    Agent:                                     
                                                                                 
                                                                                 
SOURCE CAPITAL CORPORATION                   BANK OF AMERICA NATIONAL TRUST AND         
                                             SAVINGS ASSOCIATION, d/b/a SEAFIRST BANK   
                                      


By ______________________________________    By______________________________________                                               
         D. Michael Jones,                     Ken Puro,        
         President                             Vice President   

                                      
Banks:
 
BANK OF AMERICA NATIONAL TRUST AND           WASHINGTON MUTUAL BANK  
SAVINGS ASSOCIATION, d/b/a SEAFIRST BANK     d/b/a WESTERN BANK      
                                            

By ______________________________________    By _____________________________________                        
         Robert K. Stump                              Stella M. Dier                               
         Vice President                               Vice President    
                                             

</TABLE>

                                       19