EXHIBIT 1.1



                             DISTRIBUTION AGREEMENT

               $20,000,000 SERIES C SECURED INVESTOR CERTIFICATES

                AMERICAN CHURCH MORTGAGE COMPANY (THE "COMPANY")

               AMERICAN INVESTORS GROUP, INC. (THE "UNDERWRITER")

                             ___________ ____, 2009

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                    Page
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<S>                <C>                                                                <C>
ARTICLE I. DEFINITIONS .........................................................       1
   Section 1.01.   Defined Terms ...............................................       1
   Section 1.02.   Accounting Terms ............................................       3

ARTICLE II. APPOINTMENT OF UNDERWRITER AND RELATED AGREEMENTS ..................       3
   Section 2.01.   Appointment; Exclusivity ....................................       3
   Section 2.02.   Compensation to Underwriter .................................       3
   Section 2.03.   Brokers and Dealers .........................................       4
   Section 2.04.   Underwriter's Unrelated Activities ..........................       4
   Section 2.05.   Best Efforts; Independent Contractor ........................       4

ARTICLE III. SERVICES; STANDARD OF CARE ........................................       5
   Section 3.01.   Services ....................................................       5
   Section 3.02.   Reports to the Company ......................................       5

ARTICLE IV. REPRESENTATIONS AND COVENANTS OF THE COMPANY .......................       6
   Section 4.01.   Representations, Warranties and Agreements of the Company ...       6
   Section 4.02.   Covenants of the Company ....................................      11

ARTICLE V. REPRESENTATIONS AND COVENANTS OF UNDERWRITER; CONDITIONS ............      13
   Section 5.01.   Representations and Warranties of Underwriter ...............      13
   Section 5.02.   Covenants of Underwriter ....................................      14

ARTICLE VI. CONDITIONS .........................................................      15
   Section 6.01.   Conditions of the Underwriter's Obligations .................      15

ARTICLE VII. INDEMNIFICATION AND CONTRIBUTION ..................................      16
   Section 7.01.   Company's Indemnification of Underwriter ....................      16
   Section 7.02.   Underwriter's Indemnification of the Company ................      17
   Section 7.03.   Notice of Indemnification Claim .............................      18
   Section 7.04.   Contribution ................................................      18
   Section 7.05.   Notice of Contribution Claim ................................      19
   Section 7.06.   Reimbursement ...............................................      20
   Section 7.07.   Arbitration .................................................      20

ARTICLE VIII. TERM AND TERMINATION .............................................      20
   Section 8.01.   Effective Date of this Agreement ............................      20
   Section 8.02.   Termination Prior to Effective Date .........................      20
   Section 8.03.   Notice of Termination .......................................      21
   Section 8.04.   Termination After Effective Date ............................      21
</TABLE>

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<TABLE>
<S>                <C>                                                                <C>
ARTICLE IX. MISCELLANEOUS ......................................................      22
   Section 9.01.   Survival ....................................................      22
   Section 9.02.   Notices .....................................................      22
   Section 9.03.   Successors and Assigns; Transfer ............................      22
   Section 9.04.   Cumulative Remedies .........................................      23
   Section 9.05.   Attorneys' Fees .............................................      23
   Section 9.06.   Entire Agreement ............................................      23
   Section 9.07.   Choice of Law ...............................................      23
   Section 9.08.   Confidentiality .............................................      23
   Section 9.09.   Rights to Investor Lists ....................................      23
   Section 9.10.   Waiver: Subsequent Modification .............................      23
   Section 9.11.   Severability ................................................      23
   Section 9.12.   Joint Preparation ...........................................      24
   Section 9.13.   Captions ....................................................      24
   Section 9.14.   Counterparts ................................................      24
</TABLE>

                                     - ii -

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                             DISTRIBUTION AGREEMENT

      THIS  DISTRIBUTION  AGREEMENT  is  entered  into as of this  _____  day of
___________,  2009, by and between American Church Mortgage Company, a Minnesota
corporation (the  "Company"),  and American  Investors Group,  Inc., a Minnesota
corporation, as underwriter (the "Underwriter").

                                    RECITALS

      WHEREAS,  the Company  proposes to register and publicly offer and sell up
to  $20,000,000   aggregate  principal  amount  of  Series  C  Secured  Investor
Certificates of the Company (the "Certificates");

      WHEREAS,  the  Company  desires to appoint the  Underwriter  to act as the
Company's exclusive selling agent in connection with the offer, sale and renewal
of the  Certificates  on a best efforts basis,  and the  Underwriter  desires to
accept such appointment, all as provided for by the terms of this Agreement.

      NOW,  THEREFORE,  in  consideration  of the above  and for other  good and
valuable consideration,  receipt of which is acknowledged,  and in consideration
of the mutual promises,  covenants,  representations and warranties  hereinafter
set forth, the parties hereto agree as follows:

                                   ARTICLE I.

                                   DEFINITIONS

     Section 1.01. Defined Terms. Whenever used in this Agreement, the following
terms have the  respective  meanings set forth below.  The  definitions  of such
terms are  applicable  to the  singular  as well as to the plural  forms of such
terms.

      (a)   Advisor. Church Loan Advisors,  Inc., or any successor or subsequent
            advisor of the Company's business activities.

      (b)   Agreement.  This Distribution  Agreement,  including any exhibits or
            attachments  hereto,  as  originally  executed,  and as  amended  or
            supplemented from time to time in accordance with the terms hereof.

      (c)   Blue Sky laws.  State  laws and  regulations  governing  the sale of
            securities.

      (d)   Blue Sky Memorandum. Memorandum compiling the results of a review of
            Blue Sky laws and the  application  of such laws in connection  with
            the Offering.

      (e)   Certificate   Holder.  The  purchaser  of  any  Certificate  or  any
            subsequent transferee or other holder thereof.

      (f)   Certificates. Up to $20,000,000 aggregate principal amount of Series
            C Secured  Investor  Certificates of the Company with  substantially
            the same terms as are

<PAGE>

            described in the Prospectus,  and any additional principal amount of
            Certificates  as may be registered from time to time pursuant to the
            Registration Statement.

      (g)   Commission or SEC. The Securities and Exchange Commission.

      (h)   Company.  American  Church  Mortgage  Company,  or its successors in
            interest.

      (i)   Effective Date. The date and time the  Registration  Statement is or
            was declared effective by the Commission.

      (j)   Exchange Act. The Securities Exchange Act of 1934, as amended.

      (k)   FINRA. The Financial Industry Regulatory Agency.

      (l)   Governmental  Rule. Any law,  rule,  regulation,  ordinance,  order,
            code,   interpretation,   judgment,   decree,  policy,  decision  or
            guideline by any governmental authority.

      (m)   Indenture.  That  certain  Indenture  dated on or about  _______ __,
            2009, by and between the Company and the Trustee with respect to the
            Certificates.

      (n)   Offering.  The offer and sale of the Certificates in accordance with
            the  terms  and  subject  to  the   conditions   set  forth  in  the
            Registration Statement.

      (o)   Preliminary  Prospectus.  Any preliminary prospectus included in the
            Registration  Statement  prior  to the  time it  becomes  or  became
            effective under the Securities Act,  including the respective copies
            thereof filed with the Commission.

      (p)   Prospectus. The prospectus included in the Registration Statement at
            the time it is or was declared  effective by the Commission,  except
            that if any  prospectus  provided to the  Underwriter by the Company
            for use in connection with the offering of the Certificates  differs
            from  the  prospectus  as  filed  with  the  Commission,   the  term
            "Prospectus" shall refer to such differing prospectus from and after
            the time such prospectus is first provided to the Underwriter by the
            Company for such use,  including the respective copies thereof filed
            with the Commission.

      (q)   Registration Statement.  That certain Registration Statement on Form
            S-11 (File No.  333-154831)  of  the  Company  with  respect  to the
            Certificates filed with the Securities and Exchange Commission under
            the Securities Act of 1933, as amended and declared effective on the
            date hereof,  including the respective copies thereof filed with the
            Commission.

      (r)   Rules  and  Regulations.   The  rules  and  regulations   under  the
            Securities Act.

      (s)   Securities Act. The Securities Act of 1933, as amended.

      (t)   Trustee. Herring Bank, or its successors or assigns.

                                      - 2 -

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      (u)   Underwriter.   American   Investors   Group,   Inc.,   a   Minnesota
            corporation, or its successors in interest.

      Section  1.02.  Accounting  Terms.  Unless  otherwise  specified  in  this
Agreement, all accounting terms used in this Agreement shall be interpreted, all
accounting  determinations under this Agreement shall be made, and all financial
statements  required to be  delivered by any person  pursuant to this  Agreement
shall be prepared,  in accordance with generally accepted accounting  principles
as in effect  from time to time  applied on a  consistent  basis.  To the extent
generally  accepted  accounting  practices  do not apply to  certain  reports or
accounting practices of the Underwriter,  the parties will mutually agree on the
accounting practices and assumptions.

                                   ARTICLE II.

                APPOINTMENT OF UNDERWRITER AND RELATED AGREEMENTS

      Section  2.01.  Appointment;   Exclusivity.   Subject  to  the  terms  and
conditions  set forth  herein,  the  Company  appoints  the  Underwriter  as its
exclusive agent to sell the Certificates upon the terms and conditions set forth
herein.  The Underwriter agrees to use its best efforts as such agent to procure
purchasers  for the  Certificates  until  the  later of the  termination  of the
Offering or the sale of all offered  Certificates.  It is understood  and agreed
that there is no firm  commitment on the part of the Underwriter to purchase any
of the  Certificates.  The  Company  agrees  to direct  to the  Underwriter  all
inquiries it receives with respect to the Certificates.

      Section 2.02. Compensation to Underwriter.

      (a)   Underwriter's Commissions.  In consideration of the agreement of the
            Underwriter to provide its services of the  Underwriter as set forth
            in this Agreement, the Company will pay the Underwriter a commission
            based  on   the  gross  proceeds  received   on  the  sale  of  each
            Certificate,  both in  accordance  with the  schedule  set  forth as
            Exhibit A hereto.

      (b)   Underwriter's  Expenses.  Whether  or  not  this  Agreement  becomes
            effective  or  is  terminated  or  cancelled  or  the  sale  of  the
            Certificates hereunder is consummated,  and regardless of the reason
            for or cause of any such  termination,  cancellation,  or failure to
            consummate, the Company will pay or cause to be paid:

            (i)   all expenses of the  Underwriter  incurred in connection  with
                  the offer  and sale of the  Certificates,  including,  but not
                  limited to,  designing,  printing and mailing all offering and
                  advertising  materials;  advertisements in newspapers,  on the
                  radio,  on the internet and through direct mail; and operating
                  a toll-free telephone number;

            (ii)  all fees and expenses (including, without limitation, fees and
                  expenses  of the  Company's  auditors  and legal  counsel)  in
                  connection  with  the  preparation,   printing,   filing,  and
                  delivery  of  the   Registration   Statement   (including  the
                  financial  statements  therein and all amendments,  schedules,
                  and  exhibits  thereto),  each  Preliminary  Prospectus,   the
                  Prospectus, and any amendment thereof or supplement thereto;

                                      - 3 -

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            (iii) all  fees  and  expenses   incurred  in  connection  with  the
                  qualification  of the  Securities for offer and sale under the
                  securities   or  Blue  Sky  laws  of  the   states  and  other
                  jurisdictions which the Underwriter may designate;

            (iv)  all expenses in  connection  with the  preparation,  printing,
                  filing,  and delivery of  materials to be sent to  Certificate
                  Holders;

            (v)   all fees and  expenses of the Trustee in  connection  with the
                  Certificates; and

            (vi)  all costs and  expenses  incident  to the  performance  of the
                  Company's  obligations  hereunder with respect to the Offering
                  that are not otherwise specifically described herein.

      (c)   Non-Accountable  Expenses.  To compensate  the  Underwriter  for its
            other expenses incurred in connection with the Offering, the Company
            agrees to pay the Underwriter a non-accountable expense allowance of
            up to $120,000, payable as follows:

            (i)   $10,000  is  payable  upon  the  sale  of each  $1,000,000  of
                  Certificates  up to the sale of $10,000,000  of  Certificates;
                  and

            (ii)  $2,000 is payable upon the sale of each additional  $1,000,000
                  of   Certificates   up  to  completion  of  the  sale  of  all
                  Certificates or the termination of this offering, whichever is
                  first.

      Section  2.03.  Brokers  and  Dealers.  The  Underwriter  may, in its sole
discretion and at no additional  obligation to the Company,  use the services of
other brokers or dealers who are members of FINRA in  connection  with the offer
and sale of the Certificates. The Underwriter may enter into agreements with any
such broker or dealers to act as sub-agents for the sale of the Certificates and
pay any portion of the Underwriter's  compensation  hereunder to such brokers or
dealers.

      Section 2.04. Underwriter's Unrelated Activities. The Underwriter may sell
other  securities in offerings  similar to the Offering for other issuers during
the course of the Offering. The Underwriter shall have the right to advertise or
otherwise disclose to unrelated  prospective  issuers,  at its own expense,  its
relationship  with the Company,  the services it provides in connection with the
Certificates and the amount of money that it raised through the Offering.

      Section  2.05.  Best  Efforts;  Independent  Contractor.  Anything in this
Agreement  to the  contrary  notwithstanding,  the  Underwriter  shall  have  no
obligation to sell any minimum  principal  amount of Certificates or to purchase
Certificates  for its own  account,  for  resale or for any other  purpose.  All
actions  taken by the  Underwriter  pursuant to this  Agreement  shall be in the
capacity of an independent  contractor,  all sales of Certificates  conducted by
the Underwriter  shall be solely for the account and at the risk of the Company,
and in no event shall the  Underwriter  have any  obligations  with regard to or
under the Certificates.

                                      - 4 -

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                                  ARTICLE III.

                           SERVICES; STANDARD OF CARE

      Section 3.01. Services.  The services to be provided to the Company by the
Underwriter pursuant to this Agreement shall include the following:

      (a)   Corporate   Finance.   The  Underwriter  shall  advise  the  Company
            regarding  the  structure  of the  Certificates  and provide  sample
            document  forms.  Throughout  the Offering,  the  Underwriter  shall
            assist the Company in determining  appropriate  Certificate interest
            rates based on current market  conditions and the Company's  capital
            goals.

      (b)   Marketing.  The  Underwriter  shall  develop  and  execute  a direct
            response  marketing  strategy for the Certificates  designed to meet
            the Company's  capital  goals in a timely  manner.  The  Underwriter
            shall  manage the  process of  creating,  producing  and placing any
            newspaper,  radio,  Internet  and direct  mail  advertisements.  The
            Underwriter  shall also oversee designing and printing all marketing
            materials,  in accordance  with  applicable  SEC and FINRA rules and
            regulations.

      (c)   Company Logo, Etc. During the term of this Agreement,  Company shall
            allow the Underwriter to use the Company's logo,  corporate  colors,
            trademarks,  tradenames,  fonts,  and  other  aspects  of  corporate
            identity in  advertisements  and marketing  materials related to the
            Certificates.

      (d)   Securities  Issuance;  Registrar; Transfer Agent.  Upon delivery of
            each  completed  subscription  agreement  for  Certificates  to  the
            Underwriter,   the  Underwriter   shall  deliver  such  subscription
            agreement  to  the  Advisor  for   acceptance  or   rejection.   The
            Underwriter   shall  return   funds   accompanying   each   rejected
            subscription  to  the  person  submitting  the   subscription.   The
            Underwriter shall pay funds, net of commissions and expenses, to the
            Company in  connection  with  accepted  subscriptions  as  received.
            Certificates  shall be issued by the Trustee on the Company's behalf
            in book-entry  form only and the Trustee shall deliver  written book
            entry receipts with respect to all accepted subscription agreements.

      (e)   Investor Relations.  The Underwriter shall handle all inquiries from
            prospective  investors,  mail investment kits, meet with prospective
            investors,  process  subscription  agreements  and  respond  to  all
            written or telephonic questions by prospective investors relating to
            the Certificates.

      Section 3.02.  Reports to the Company.  From time to time as requested by
the Company, the Underwriter shall provide the Company with reports and analysis
regarding  the status of the offering,  the marketing  efforts and the principal
amount of  Certificates  remaining  available  for sale  under the  Registration
Statement.

                                      - 5 -

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                                   ARTICLE IV.

                  REPRESENTATIONS AND COVENANTS OF THE COMPANY

      Section 4.01.  Representations,  Warranties and Agreements of the Company.
The  Company  represents  and  warrants to and agrees  with the  Underwriter  as
follows,  which  representations  and  warranties  shall  be  deemed  to be made
continuously throughout the term of this Agreement:

      (a)   The  Registration  Statement on Form S-11 (File N  333-154831)  with
            respect to the  Certificates,  including the  Prospectus  subject to
            completion,  has been prepared by the Company in conformity with the
            requirements of the Securities Act, and the Rules and Regulations of
            the  Commission  thereunder  and has been filed with the  Commission
            under the Securities Act.

      (b)   As of the Effective Date, and at all times subsequent  thereto until
            the  termination  of the Offering,  the  Registration  Statement and
            Prospectus, and all amendments thereof and supplements thereto, will
            comply or  complied  with the  provisions  and  requirements  of the
            Securities Act and the Rules and Regulations. Neither the Commission
            nor any state  securities  authority has issued any order preventing
            or suspending the use of any Preliminary Prospectus or requiring the
            recirculation  of a Preliminary  Prospectus,  or issued a stop order
            with   respect  to  the  offering  of  the   Certificates   (if  the
            Registration  Statement has been declared effective),  or instituted
            or, to the  Company's  knowledge,  threatened  the  institution  of,
            proceedings  for  any  of  such  purposes.   When  the  Registration
            Statement  shall  become  effective  and  when  any   post-effective
            amendment thereto shall become effective, the Registration Statement
            will not or did not contain any untrue  statement of a material fact
            or omit to state a material  fact  required to be stated  therein or
            necessary  to  make  the  statements   therein,   in  light  of  the
            circumstances  in which they were  made,  not  misleading.  When the
            Registration   Statement  is  or  was  declared   effective  by  the
            Commission and at all times subsequent thereto until the termination
            of the offering, the Prospectus (as amended or supplemented,  if the
            Company shall have filed with the Commission  any amendment  thereof
            or  supplement  thereto)  will  not or did not  contain  any  untrue
            statement  of a  material  fact  or omit to  state a  material  fact
            required  to be stated  therein  or  necessary  in order to make the
            statements therein, in light of the circumstances in which they were
            made, not misleading.

      (c)   The Company has been duly  incorporated and is validly existing as a
            corporation  in  good  standing  under  the  laws  of the  State  of
            Minnesota,  with full power and authority to own,  lease and operate
            its  properties  and  conduct  its  business  as  described  in  the
            Registration Statement and Prospectus. The Company is duly qualified
            to do business and is in good standing in each jurisdiction in which
            the  ownership  or lease of its  properties  or the  conduct  of its
            business requires such  qualification and in which the failure to be
            qualified or in good standing  would have a material  adverse effect
            on the condition (financial or otherwise),  earnings,  operations or
            business of the Company,  and no proceeding  has been  instituted in

                                      - 6 -

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            any such jurisdiction revoking,  limiting or curtailing,  or seeking
            to  revoke,   limit  or  curtail,   such  power  and   authority  or
            qualification.

      (d)   The Company has operated  and is  operating  in material  compliance
            with all authorizations,  licenses, certificates, consents, permits,
            approvals  and  orders  of and from all  state,  federal  and  other
            governmental  regulatory  officials and bodies  necessary to own its
            properties   and  to  conduct  its  business  as  described  in  the
            Registration  Statement  and  Prospectus,  all of which are,  to the
            Company's knowledge, valid and in full force and effect. The Company
            is  conducting  its  business  in  substantial  compliance  with all
            applicable laws, rules and regulations of the jurisdictions in which
            it is  conducting  business,  and  the  Company  is not in  material
            violation of any applicable  law,  order,  rule,  regulation,  writ,
            injunction,   judgment  or  decree  of  any  court,   government  or
            governmental   agency  or  body,   domestic   or   foreign,   having
            jurisdiction over the Company or over its properties.

      (e)   The Company is not in violation of its articles of  incorporation or
            bylaws  or in  default  in  the  performance  or  observance  of any
            obligation,  agreement, covenant or condition contained in any bond,
            debenture,  note  or  other  evidence  of  indebtedness  or  in  any
            contract, lease, indenture,  mortgage, loan agreement, joint venture
            or other  agreement or instrument to which it is a party or by which
            it or its properties are bound.

      (f)   The Company has full  requisite  power and  authority  to enter into
            this  Agreement and perform the  transactions  contemplated  hereby.
            This Agreement has been duly  authorized,  executed and delivered by
            the Company and is a valid and binding  agreement on the part of the
            Company,  enforceable  against  the Company in  accordance  with its
            terms. The performance of this Agreement and the consummation of the
            transactions  herein  contemplated  will not  result  in a breach or
            violation  of any of the terms and  provisions  of, or  constitute a
            default under:

            (i)   any indenture,  mortgage, deed of trust loan agreement,  bond,
                  debenture,  note, agreement or other evidence of indebtedness,
                  any  lease,  contract,  joint  venture or other  agreement  or
                  instrument  to which  the  Company  is a party or by which the
                  Company or its properties may be bound;

            (ii)  the articles of incorporation or bylaws of the Company: or

            (iii) any applicable law, order, rule, regulation, writ, injunction,
                  judgment or decree of any court,  government  or  governmental
                  agency or body, domestic or foreign,  having jurisdiction over
                  the Company or over its properties.

      (g)   No consent,  approval,  authorization  or order of or  qualification
            with any court,  governmental  agency or body,  domestic or foreign,
            having  jurisdiction  over the  Company  or over its  properties  is
            required for the  execution  and delivery of this  Agreement and the
            consummation by the Company of the transactions herein contemplated,
            except  such  as may be  required  under  the  Securities  Act,  the

                                      - 7 -

<PAGE>

            Exchange  Act, or under state or other  securities or Blue Sky laws,
            all of which requirements have been satisfied.

      (h)   Except  as is  otherwise  expressly  described  in the  Registration
            Statement or Prospectus,  there is neither  pending nor, to the best
            of the Company's knowledge,  threatened,  any action, suit, claim or
            proceeding  against the Company or any of its officers or any of its
            properties,  assets  or  rights  before  any  court,  government  or
            governmental   agency  or  body,   domestic   or   foreign,   having
            jurisdiction  over the Company or over its officers or properties or
            otherwise  which (A) might result in any material  adverse change in
            the condition  (financial  or  otherwise),  earnings,  operations or
            business of the Company or might materially and adversely affect its
            properties,  assets or rights, or (B) might prevent  consummation of
            the transactions contemplated hereby.

      (i)   The  Certificates to be sold hereunder by the Company have been duly
            authorized  for issuance and sale  pursuant to this  Agreement  and,
            when issued and  delivered  against  payment  therefor in accordance
            with the terms of this  Agreement,  will be duly and validly  issued
            and fully paid and non-assessable and will be sold free and clear of
            any pledge, lien, security interest, encumbrance, claim or equitable
            interest;  and no  preemptive  right,  co-sale  right,  registration
            right,  right of first  refusal or other  similar  right exists with
            respect  to any of the  Certificates  to be  sold  hereunder  by the
            Company or the issuance and sale  thereof.  The  Indenture  has been
            duly  authorized,  executed  and  delivered  by the  Company and the
            Trustee  and is a valid  and  binding  agreement  on the part of the
            Company,  enforceable  against  the Company in  accordance  with its
            terms. The  Certificates  will comply as to form with all applicable
            laws.

      (j)   Boulay, Heutmaker,  Zibell and Company, P.L.L.P. which has expressed
            its  opinion  with  respect to certain of the  financial  statements
            included as a part (whether filed or  incorporated  by reference) of
            the  Registration  Statement,  is an independent  registered  public
            accounting firm within the meaning of the Securities Act, the Public
            Company  Accounting  Oversight  Board  (PCAOB),  and the  Rules  and
            Regulations.  The  financial  statements of the Company set forth in
            the Registration  Statement and Prospectus (or incorporated  therein
            by reference)  comply in all material respects with the requirements
            of the Securities Act and fairly present the financial  position and
            the results of operations of the Company at the respective dates and
            for the  respective  periods to which they apply in accordance  with
            generally  accepted  accounting   principles   consistently  applied
            throughout  the  periods  involved;  and  the  supporting  schedules
            included  in  the   Registration   Statement   present   fairly  the
            information  required to be stated therein. The selected and summary
            financial  included in the  Registration  Statement (or incorporated
            therein by reference)  present fairly the information  shown therein
            and have  been  compiled  on a basis  consistent  with  the  audited
            financial   statements   presented   therein.   No  other  financial
            statements  or schedules are required by the  Securities  Act or the
            Rules and Regulations to be included in the Registration Statement.

                                      - 8 -

<PAGE>

      (k)   Subsequent to the respective dates as of which  information is given
            in the Registration Statement and Prospectus, except as is otherwise
            disclosed in the Registration Statement or Prospectus, there has not
            been:

            (i)   any change in the capital  stock or long term debt  (including
                  any capitalized  lease obligation) or material increase in the
                  short-term debt of the Company;

            (ii)  any material  adverse change,  or any development  involving a
                  material  adverse  change,   in  or  affecting  the  condition
                  (financial or otherwise),  earnings,  operations,  business or
                  business    prospects,    management,    financial   position,
                  shareholders'   equity,   results  of  operations  or  general
                  condition of the Company;

            (iii) any  transaction  entered into by the Company that is material
                  to the Company;

            (iv)  any obligation, direct or contingent, incurred by the Company,
                  except obligations incurred in the ordinary course of business
                  that, in the aggregate, are not material; or

            (v)   any loss or damage (whether or not insured) to the property of
                  the  Company  which  reasonably  could be  expected  to have a
                  material  adverse  effect  on  the  condition   (financial  or
                  otherwise), earnings, operations or business of the Company.

      (l)   Except  as is  otherwise  expressly  disclosed  in the  Registration
            Statement or Prospectus:

            (i)   the  Company  has  good  and  marketable  title  to all of the
                  property,  real and  personal,  and  assets  described  in the
                  Registration  Statement  or  Prospectus  as being owned by it,
                  free  and  clear  of any  and  all  pledges,  liens,  security
                  interests,  encumbrances,  equities,  charges or claims, other
                  than such as would not have a material  adverse  effect on the
                  condition  (financial or otherwise),  earnings,  operations or
                  business of the Company;

            (ii)  the  agreements  to which the Company is a party  described in
                  the   Registration   Statement   and   Prospectus   are  valid
                  agreements,   enforceable   by  the  Company   except  as  the
                  enforcement  thereof may be limited by applicable  bankruptcy,
                  insolvency,  reorganization,  moratorium or other similar laws
                  relating to or  affecting  creditors'  rights  generally or by
                  judicial limitations on the right of specific performance; and

            (iii) the  Company  has  valid  and   enforceable   leases  for  all
                  properties   described  in  the  Registration   Statement  and
                  Prospectus as leased by it, except as the enforcement  thereof
                  may  be  limited   by   applicable   bankruptcy,   insolvency,
                  reorganization,  moratorium  or other similar laws relating to
                  or  affecting  creditors'  rights  generally  or  by  judicial
                  limitations  on the right of specific

                                      - 9 -

<PAGE>

                  performance. Except as set forth in the Registration Statement
                  and Prospectus, the Company owns or leases all such properties
                  as are necessary to its operations as now conducted.

      (m)   The Company was organized and has been operated to qualify as a real
            estate  investment  trust under Section 856 of the Internal  Revenue
            Code and, to the  knowledge  of the  Company,  no event has occurred
            that would cause the Company to fail to so qualify.

      (n)   The Company has timely  filed (or has timely  requested an extension
            of  time to  file)  all  necessary  federal  and  state  income  and
            franchise  tax returns and has paid all taxes shown  thereon as due;
            there is no tax  deficiency  that  has  been or,  to the best of the
            Company's  knowledge,  could be asserted  against  the Company  that
            might have a material adverse effect on the condition  (financial or
            otherwise),  earnings,  operations,  business or  properties  of the
            Company,  and all tax liabilities are adequately provided for in the
            books of the Company.

      (o)   The Company owns, or possesses  adequate rights to use, all patents,
            patent  rights,  inventions,  trade secrets,  know-how,  technology,
            service marks, trade names,  copyrights,  trademarks and proprietary
            rights or  information  which are  necessary  for the conduct of its
            present  or  intended  business  as  described  in the  Registration
            Statement or  Prospectus.  The  expiration  of any  patents,  patent
            rights,  trade secrets,  trademarks,  service marks,  trade names or
            copyrights would not have a material adverse effect on the condition
            (financial or  otherwise),  earnings,  operations or business of the
            Company and the Company has not  received  any notice of, and has no
            knowledge  of, any  infringement  of or conflict  with the  asserted
            rights  of  others  with  respect  to  any  patent,  patent  rights,
            inventions, trade secrets, know-how, technology, trademarks, service
            marks,  trade names or copyrights that,  singly or in the aggregate,
            if the subject of an unfavorable decision,  ruling or finding, might
            have a  material  adverse  effect  on the  condition  (financial  or
            otherwise),  earnings, operations, business or business prospects of
            the Company.

      (p)   The Company has not taken and will not take, directly or indirectly,
            any  action  (and  does not  know of any  action  by its  directors,
            officers,  members or others) which has  constituted  or is designed
            to, or which might  reasonably  be expected  to,  cause or result in
            stabilization  or  manipulation,  as defined in the  Exchange Act or
            otherwise, of the price of any security of the Company to facilitate
            the  sale  or  resale  of the  Certificates.  The  Company  has  not
            distributed  and will not distribute  prior to the completion of the
            distribution  of  the   Certificates,   any  offering   material  in
            connection with the offering and sale of the Certificates other than
            any  Preliminary  Prospectus,   the  Prospectus,   the  Registration
            Statement and other materials,  if any,  permitted by the Securities
            Act.

      (q)   The  Company  maintains  a system of  internal  accounting  controls
            sufficient to provide  reasonable  assurance that  transactions  are
            executed  in  accordance  with  management's   general  or  specific
            authorizations  and transactions are recorded as

                                     - 10 -

<PAGE>

            necessary  to  permit   preparation   of  financial   statements  in
            conformity  with  generally  accepted  accounting   principles.   To
            maintain  accountability  for assets,  access to assets is permitted
            only  in   accordance   with   management's   general  or   specific
            authorization,   and  the  recorded  accountability  for  assets  is
            compared   with  existing   assets  at   reasonable   intervals  and
            appropriate action is taken with respect to any differences.

      (r)   Except as set forth in the Registration Statement and Prospectus:

            (i)   the  Company  and each  entity  that  owns or  possesses  real
                  property in which the Company holds a security  interest is in
                  material   compliance  with  all  material  rules,   laws  and
                  regulations  relating  to  the  use,  treatment,  storage  and
                  disposal of toxic  substances  and protection of health or the
                  environment (the "Environmental Laws") which are applicable to
                  its business;

            (ii)  the  Company  has  received  no notice  from any  governmental
                  authority   or  third  party  of  an   asserted   claim  under
                  Environmental Laws, which claim is required to be disclosed in
                  the Registration Statement and the Prospectus;

            (iii) the Company  will not be required to make any future  material
                  capital expenditures to comply with Environmental Laws; and

            (iv)  no property which is owned,  leased or occupied by the Company
                  or in which the  Company  holds a security  interest  has been
                  designated as a Superfund  site pursuant to the  Comprehensive
                  Response,  Compensation  and Liability Act of 1980, as amended
                  (42 U.S.C.  ss. 9601, et seq.),  or otherwise  designated as a
                  contaminated site under applicable state or local law.

      (s)   No person or entity  other than the  Underwriter  is entitled to any
            compensation  or other  payments  from  either  the  Company  or the
            Underwriter,  as a finder,  underwriter or agent in connection  with
            the Offering or any other proposed  transaction  between the Company
            and the  Underwriter.  The  Company  agrees to  promptly  notify the
            Underwriter of any such relationships, including consulting or prior
            agency  agreements  entitling other parties to compensation  for the
            transaction  described  herein and agrees to provide the Underwriter
            with a copy of such agreements.

      (t)   Any  certificate  signed by any officer of the Company and delivered
            to the Underwriter or to the Underwriter's Counsel shall be deemed a
            representation  and warranty by the Company to the Underwriter as to
            the matters covered thereby.

      Section 4.02.  Covenants of the Company.  The Company hereby covenants and
agrees with the Underwriter as follows:

      (a)   If  the  Registration   Statement  has  not  already  been  declared
            effective by the  Commission,  the Company will use its best efforts
            to  cause  the   Registration

                                     - 11 -

<PAGE>

            Statement  and  any  post-effective  amendments  thereto  to  become
            effective  as promptly  as  possible.  The  Company  will notify the
            Underwriter promptly of the time when the Registration  Statement or
            any  post-effective  amendment  to the  Registration  Statement  has
            become  effective or any supplement to the Prospectus has been filed
            and of any request by the Commission for any amendment or supplement
            to  the   Registration   Statement  or   Prospectus   or  additional
            information.  The Company will prepare and file with the Commission,
            promptly  upon  the   Underwriter's   request,   any  amendments  or
            supplements to the Registration Statement or Prospectus that, in the
            Underwriter's  opinion,  may be necessary or advisable in connection
            with the distribution of the  Certificates by the  Underwriter.  The
            Company  will  not  file  any   amendment  or   supplement   to  the
            Registration  Statement or Prospectus to which the Underwriter shall
            reasonably  object  by  notice  to the  Company  after  having  been
            furnished a copy a reasonable time prior to the filing.

      (b)   The Company  will advise the  Underwriter,  promptly  after it shall
            receive notice or obtain knowledge  thereof,  of the issuance by the
            Commission of any stop order  suspending  the  effectiveness  of the
            Registration  Statement,  of the suspension of the  qualification of
            the Certificates for offering or sale in any jurisdiction, or of the
            initiation or  threatening  of any  proceeding for any such purpose.
            The  Company  will  promptly  use its best  efforts to  prevent  the
            issuance  of any stop  order or to obtain its  withdrawal  if such a
            stop order should be issued.

      (c)   Within  the  time  during  which  a   prospectus   relating  to  the
            Certificates  is required to be delivered  under the Securities Act,
            the Company  will comply as far as it is able with all  requirements
            imposed upon it by the Securities Act, as now and hereafter amended,
            and by the Rules and Regulations,  as from time to time in force, so
            far as necessary to permit the  continuance  of sales of or dealings
            in the Certificates as contemplated by the provisions hereof and the
            Prospectus. If, during the longer of such period or the term of this
            Agreement,  any event or change  occurs  that  could  reasonably  be
            considered  material  to the  Offering  or  that  causes  any of the
            representations and warranties of the Company contained herein to be
            untrue,  or as a result of which the  Prospectus  would  include  an
            untrue statement of a material fact or omit to state a material fact
            necessary  to make  the  statements  therein,  in the  light  of the
            circumstances  then  existing,  not  misleading,  or if, during such
            period,  it is  necessary  to amend the  Registration  Statement  or
            supplement  the  Prospectus to comply with the  Securities  Act, the
            Company will  promptly  notify the  Underwriter,  and will amend the
            Registration  Statement or supplement the Prospectus (at the expense
            of the  Company)  so as to correct  such  statement  or  omission or
            effect such compliance.

      (d)   The  Company   will  use  its  best   efforts  to  arrange  for  the
            qualification  of the  Certificates  for offering and sale under the
            securities  laws  of  such  jurisdictions  as  the  Underwriter  may
            designate and to continue such  qualifications in effect for so long
            as  may  be  required  for  purposes  of  the  distribution  of  the
            Certificates.  In each jurisdiction in which the Certificates  shall
            have been  qualified as herein

                                     - 12 -

<PAGE>

            provided, the Company will make and file such statements and reports
            in each  year as are or may be  reasonably  required  by the laws of
            such jurisdiction.

      (e)   The  Company  will  furnish  to  the   Underwriter   copies  of  the
            Registration Statement, each Preliminary Prospectus, the Prospectus,
            and all amendments and supplements to such  documents,  in each case
            as soon as available and in such  quantities as the  Underwriter may
            from time to time reasonably request.

      (f)   At all times during the term of this  Agreement,  the Company  shall
            provide all information reasonably requested by the Underwriter in a
            timely  manner and shall use its best  efforts  to insure  that such
            information is complete and accurate.

      (g)   The  Company  will  apply  the net  proceeds  from  the  sale of the
            Certificates substantially in the manner set forth under the caption
            "Use of Proceeds" in the Prospectus.

                                   ARTICLE V.

            REPRESENTATIONS AND COVENANTS OF UNDERWRITER; CONDITIONS

      Section  5.01.   Representations   and  Warranties  of  Underwriter.   The
Underwriter  hereby  represents  and  warrants to the Company as follows,  which
representations   and  warranties  shall  be  deemed  to  be  made  continuously
throughout the term of this Agreement.

      (a)   The Underwriter (i) has been duly organized, is validly existing and
            in good standing as a Delaware corporation, (ii) has qualified to do
            business as a foreign  corporation  and is in good  standing in each
            jurisdiction  where the character of its properties or the nature of
            its activities  makes such  qualification  necessary,  and (iii) has
            full power,  authority and legal right to own its property, to carry
            on its  business  as  presently  conducted,  and to  enter  into and
            perform its obligations under this Agreement.

      (b)   The execution and delivery by the  Underwriter of this Agreement are
            within the power of the Underwriter and have been duly authorized by
            all  necessary  corporate  action  on the  part of the  Underwriter.
            Neither  the  execution  and  delivery  of  this  Agreement  nor the
            consummation of the transactions herein contemplated, nor compliance
            with the provisions hereof, will conflict with or result in a breach
            of, or  constitute a default  under,  any of the  provisions  of any
            Governmental Rule binding on the Underwriter, the charter or by-laws
            of the  Underwriter,  or any of  the  provisions  of any  indenture,
            mortgage, contract or other instrument to which the Underwriter is a
            party or by which it is bound;  nor will they result in the creation
            or imposition  of any lien,  charge or  encumbrance  upon any of the
            Underwriter's  property  pursuant  to the  terms  of any  indenture,
            mortgage, contract or other instrument.

      (c)   The Underwriter has all governmental consents,  licenses,  approvals
            and   authorizations,   registrations  and  declarations  which  are
            necessary for the

                                     - 13 -

<PAGE>

            execution, delivery, performance, validity and enforceability of the
            Underwriter's obligations under this Agreement.

      (d)   This   Agreement  has  been  duly  executed  and  delivered  by  the
            Underwriter and,  constitutes a legal,  valid and binding instrument
            enforceable against the Underwriter in accordance with its terms.

      (e)   There  are no  actions,  suits or  proceedings  pending  or,  to the
            knowledge of the  Underwriter,  threatened  against or affecting the
            Underwriter,   before  or  by  any  court,   administrative  agency,
            arbitrator  or  governmental   body  with  respect  to  any  of  the
            transactions  contemplated  by this  Agreement,  or which  will,  if
            determined  adversely to the  Underwriter,  materially and adversely
            affect  it  or  its  business,   assets,  operations  or  condition,
            financial  or  otherwise,  or  adversely  affect  the  Underwriter's
            ability  to  perform  its  obligations  under  this  Agreement.  The
            Underwriter  is not in  default  with  respect  to any  order of any
            court,  administrative agency, arbitrator or governmental body so as
            to materially and adversely affect the transactions  contemplated by
            this Agreement.

      Section 5.02.  Covenants of Underwriter.  The Underwriter hereby covenants
to the Company as follows,  which  covenants shall be deemed in force unless and
until this Agreement is terminated as provided herein:

      (a)   The Underwriter shall keep in full effect its existence,  rights and
            franchises as a corporation  under the laws of the State of Delaware
            and  retain  and  preserve  its  right to do  business  as a foreign
            corporation in each  jurisdiction in which such  qualification is or
            shall be necessary to protect the validity and enforceability of the
            Certificates  and this  Agreement and shall hold all licenses in all
            jurisdictions  which are necessary to perform its obligations  under
            this Agreement.

      (b)   The  Underwriter  shall  punctually  perform  and observe all of its
            obligations and agreements contained in this Agreement.

      (c)   Except as provided in this Agreement, the Underwriter shall not take
            any action, or permit any action to be taken by others,  which would
            excuse any person from any of its covenants or obligations under any
            of the  Certificates,  or under any other instrument  related to the
            Certificates, or which would result in the amendment, hypothecation,
            subordination,  termination  or discharge of, or impair the validity
            or effectiveness of, any of the Securities or any such instrument or
            any right in favor of the Company in any of the Certificates or such
            instrument, without the written consent of the Company.

      (d)   The  Underwriter  shall  not  assign  this  Agreement  or any of its
            rights,  powers, duties or obligations hereunder without the express
            prior   written   consent  of  the  Company,   which  shall  not  be
            unreasonably withheld;  provided that the Underwriter may assign its
            rights,  powers,  duties or obligations hereunder to an affiliate of
            the Underwriter or pursuant to a sale of all or substantially all of
            the  Underwriter's  assets without the prior written  consent of the
            Company.

                                     - 14 -

<PAGE>

      (e)   The Underwriter  shall take such additional  action as is reasonably
            requested  by the Company in order to carry out the purposes of this
            Agreement.

                                   ARTICLE VI.

                                   CONDITIONS

      Section 6.01. Conditions of the Underwriter's Obligations.  The obligation
of the Underwriter to sell the  Certificates on a best efforts basis as provided
herein shall be subject to the accuracy of the representations and warranties of
the Company, to the performance by the Company of its obligations hereunder, and
to the satisfaction of the following additional conditions:

      (a)   The  Registration  Statement  shall have become  effective not later
            than  4:00  p.m.  Minneapolis,  Minnesota  time on the  date of this
            Agreement,  or such later date or time as shall be  consented  to in
            writing by the Underwriter (the "Effective Date"), and no stop order
            suspending the  effectiveness  thereof shall have been issued and no
            proceedings  for that purpose  shall have been  initiated or, to the
            knowledge  of the Company,  or the  Underwriter,  threatened  by the
            Commission or any state securities  commission or similar regulatory
            body. Any request of the Commission for additional  information  (to
            be included  in the  Registration  Statement  or the  Prospectus  or
            otherwise)  shall have been complied with to the satisfaction of the
            Underwriter and the Underwriter's counsel.

      (b)   The  Underwriter  shall  not  have  advised  the  Company  that  the
            Registration  Statement or Prospectus,  or any amendment  thereof or
            supplement thereto, contains any untrue statement of a fact which is
            material or omits to state a fact which is material  and is required
            to be  stated  therein  or  is  necessary  to  make  the  statements
            contained  therein,  in light of the circumstances  under which they
            were made, not misleading.

      (c)   Subsequent to the  Effective  Date and prior to  termination  of the
            offering,   there  shall  not  have  occurred  any  change,  or  any
            development  involving a prospective  change,  which  materially and
            adversely affects the Company's condition  (financial or otherwise),
            earnings,  operations,  properties,  business or business  prospects
            from that set forth in the Registration Statement or Prospectus, and
            which, in the Underwriter's  sole judgment,  is material and adverse
            and that makes it, in the Underwriter's sole judgment, impracticable
            or inadvisable to proceed with the offering of the  Certificates  as
            contemplated by the Prospectus and this Agreement.

      (d)   All corporate proceedings and other legal matters in connection with
            this  Agreement,   the  form  of  Registration   Statement  and  the
            Prospectus,  and the  registration,  authorization,  issue, sale and
            delivery of the Certificates shall have been reasonably satisfactory
            to the Underwriter's  counsel,  and the Underwriter's  counsel shall
            have been  furnished  with such  papers  and  information  as it may

                                     - 15 -

<PAGE>

            reasonably  have  requested  to enable  it to pass upon the  matters
            referred to in this Section.

      (e)   At the time of execution of this Agreement,  the  Underwriter  shall
            have received from Boulay, Heutmaker, Zibell and Company, P.L.L.P. a
            letter  dated  the date of such  execution,  in form  and  substance
            satisfactory  to  the  Underwriter,  to the  effect  that  they  are
            independent  registered  public  accountants  with  respect  to  the
            Company within the meaning of the Securities Act, the PCAOB, and the
            applicable  published  instructions,  and the Rules and  Regulations
            thereunder, and further stating in effect that in their opinion, the
            audited financial statements included (or incorporated by reference)
            in the Registration Statement and Prospectus covered by their report
            included therein comply as to form in all material respects with the
            applicable  requirements  of the  Securities  Act,  the  PCAOB,  the
            published instructions and the Rule and Regulations.

      (f)   Winthrop & Weinstine, P.A. shall have delivered to the Underwriter a
            Blue  Sky  Memorandum  reasonably  satisfactory  to the  Underwriter
            confirming that all requisite  actions for the offer and sale of the
            Certificates in all jurisdictions  requested by the Underwriter have
            been taken.

      (g)   The Company shall have furnished to the Underwriter  such additional
            certificates,  documents  and  evidence  as  the  Underwriter  shall
            reasonably request.

      All  such  opinions,  certificates,  letters  and  documents  will  be  in
compliance with the provisions  hereof only if they are reasonably  satisfactory
to the Underwriter and the Underwriter's  counsel.  All statements  contained in
any certificate,  letter or other document  delivered  pursuant hereto by, or on
behalf  of,  the  Company  shall be deemed  to  constitute  representations  and
warranties of the Company.

      The Underwriter may waive in writing the performance of any one or more of
the  conditions  specified  in  this  Section  or  extend  the  time  for  their
performance.

      If any of the  conditions  specified in this  Section  shall not have been
fulfilled  when and as required by this  Agreement  to be  fulfilled  and if the
fulfillment  of said  condition  has not been  waived by the  Underwriter,  this
Agreement and all obligations of the  Underwriter  hereunder may be canceled at,
or at any  time  prior  to,  the  Effective  Date by the  Underwriter.  Any such
cancellation  shall be without  liability of the  Underwriter to the Company and
shall not  relieve  the  Company of its  obligations  under  Article VII hereof.
Notice  of such  cancellation  shall be given to the  Company  as  specified  in
Section 8.03.

                                  ARTICLE VII.

                        INDEMNIFICATION AND CONTRIBUTION

      Section 7.01. Company's Indemnification of Underwriter. The Company hereby
agrees to indemnify and hold harmless the Underwriter,  and each person, if any,
who controls the Underwriter  within the meaning of Section 15 of the Securities
Act, against any losses,  claims,  damages or liabilities,  joint or several, to
which the Underwriter or each such controlling person

                                     - 16 -

<PAGE>

may become  subject under the  Securities  Act, the Exchange Act,  common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect  thereof)  arise  out of,  or are  based  upon,  (i) any  breach  of any
representation, warranty, agreement or covenant of the Company contained in this
Agreement;  (ii) any untrue  statement or alleged untrue statement of a material
fact  contained  in the  Registration  Statement  or any  amendment  thereof  or
supplement  thereto,  or the  omission  or  alleged  omission  to  state  in the
Registration Statement or any amendment thereof or supplement thereto a material
fact necessary to make the  statements  therein,  in light of the  circumstances
under  which they were made,  not  misleading;  (iii) any  untrue  statement  or
alleged  untrue  statement  of a  material  fact  contained  in any  Preliminary
Prospectus,  if used prior to the Effective Date of the Registration  Statement,
or in the Prospectus (as amended or as supplemented), or the omission or alleged
omission  to  state  therein  a  material  fact  necessary  in order to make the
statements  therein,  in light of the circumstances  under which they were made,
not misleading;  or (iv) any untrue  statement or alleged untrue  statement of a
material fact contained in any  application or other  statement  executed by the
Company or based upon written information  furnished by the Company filed in any
jurisdiction  in  order  to  qualify  the  Certificates  under,  or  exempt  the
Certificates or the sale thereof from  qualification  under, the securities laws
of such  jurisdiction,  or the  omission  or alleged  omission  to state in such
application  or  statement  a material  fact  required  to be stated  therein or
necessary to make the statements  therein,  in light of the circumstances  under
which they were made, not misleading. The Company will reimburse the Underwriter
and each such controlling person for any legal or other expenses incurred by the
Underwriter or controlling  person in connection with investigating or defending
against any such loss, claim, damage,  liability or action. However, the Company
will not be liable in any such case to the  extent  that any such  loss,  claim,
damage  or  liability  arises  out of or is based  upon an untrue  statement  or
alleged untrue  statement or omission or alleged  omission made in reliance upon
and in  conformity  with  written  information  furnished  to the Company by the
Underwriter  specifically  for  use  in  the  preparation  of  the  Registration
Statement or any such  post-effective  amendment  thereof,  any such Preliminary
Prospectus,  or the  Prospectus,  or any such  amendment  thereof or  supplement
thereto, or in any application or other statement executed by the Company or the
Underwriter  filed in any  jurisdiction  in order to  qualify  the  Certificates
under, or exempt the Certificates or the sale thereof from qualification  under,
the  securities  laws of  such  jurisdiction.  This  indemnity  agreement  is in
addition to any liability which the Company may otherwise have.

      Section  7.02.   Underwriter's   Indemnification   of  the  Company.   The
Underwriter  agrees to indemnify  and hold  harmless  the  Company,  each of its
directors,  each of its officers who has signed the Registration Statement,  and
each person who  controls  the  Company  within the meaning of Section 15 of the
Securities Act against any losses,  claims,  damages or liabilities to which the
Company or any such director,  officer or controlling  person may become subject
under the Securities Act, the Exchange Act, common law or otherwise,  insofar as
such losses,  claims,  damages or  liabilities  (or actions in respect  thereof)
arise out of, or are based  upon,  (i) any untrue  statement  or alleged  untrue
statement  of a material  fact  contained in the  Registration  Statement or any
amendment thereof or supplement  thereto, or the omission or alleged omission to
state in the  Registration  Statement  or any  amendment  thereof or  supplement
thereto,  a material fact required to be stated therein or necessary to make the
statements  therein not misleading;  (ii) any untrue statement or alleged untrue
statement of a material fact contained in any  Preliminary  Prospectus,  if used
prior to the Effective Date of the Registration  Statement, or in the Prospectus
(as amended or as supplemented), or the omission or alleged omission to

                                     - 17 -

<PAGE>

state  therein a material  fact  required to be stated  therein or  necessary in
order to make the statements  therein, in light of the circumstances under which
they were made, not misleading;  or (iii) any untrue statement or alleged untrue
statement of a material fact  contained in any  application  or other  statement
executed by the Company or by the Underwriter  and filed in any  jurisdiction in
order to qualify the Certificates  under, or exempt the Certificates or the sale
thereof from qualification  under, the securities laws of such jurisdiction,  or
the  omission or alleged  omission to state in such  application  or statement a
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading; in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue  statement or omission or alleged  omission was made
in reliance upon and in  conformity  with written  information  furnished to the
Company  by,  or on  behalf  of,  the  Underwriter  specifically  for use in the
preparation of the Registration  Statement or any such post-effective  amendment
thereof,  any  such  Preliminary  Prospectus,  or the  Prospectus  or  any  such
amendment  thereof  or  supplement  thereto,  or in  any  application  or  other
statement  executed  by the  Company  or by the  Underwriter  and  filed  in any
jurisdiction.  The  Underwriter  will  reimburse  any  legal or  other  expenses
reasonably incurred by the Company or any such director, officer, or controlling
person in  connection  with  investigating  or defending  against any such loss,
claim,  damage,  liability or action. This indemnity agreement is in addition to
any liability which the Underwriter may otherwise have.

      Section 7.03. Notice of Indemnification  Claim.  Promptly after receipt by
an indemnified party under Section 7.01 or 7.02 of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made  against any  indemnifying  party  under  Section  7.01 or 7.02,  notify in
writing the indemnifying party of the commencement thereof. Failure to so notify
the indemnifying  party will relieve it from any liability under Section 7.01 or
7.02 as to the particular item for which  indemnification  is then being sought,
but not from any other liability which it may have to any indemnified  party. In
case  any  such  action  is  brought  against  any  indemnified  party,  and the
indemnified  party notifies an indemnifying  party of the commencement  thereof,
the  indemnifying  party will be entitled  to  participate  therein  and, to the
extent that it may wish, to assume the defense  thereof,  with counsel who shall
be reasonably  satisfactory  to such  indemnified  party.  After notice from the
indemnifying  party  to  such  indemnified  party  of the  indemnifying  party's
election so to assume the defense thereof,  the  indemnifying  party will not be
liable to such  indemnified  party under  Section  7.01 or 7.02 for any legal or
other expenses  subsequently  incurred by such  indemnified  party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however,  that if the defendants in any such action include both the indemnified
party  and  the  indemnifying  party,  and  the  indemnified  party  shall  have
reasonably  concluded that there may be legal defenses  available to it or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select as  separate  counsel to assume  such  legal  defenses  and to  otherwise
participate in the defense of such action on behalf of such indemnified party or
parties,  in which event the fees and expenses of such separate counsel shall be
borne by the indemnifying party. Any such indemnifying party shall not be liable
to any such  indemnified  party on  account  of any  settlement  of any claim or
action effected without the consent of such indemnifying party.

      Section  7.04.  Contribution.  In order to provide for just and  equitable
contribution  in any  action in which the  Underwriter  or the  Company  (or any
person who controls the Underwriter or

                                     - 18 -

<PAGE>

the Company within the meaning of Section 15 of the Securities  Act) makes claim
for  indemnification   pursuant  to  Section  7.01  or  7.02  hereof,  but  such
indemnification  is unavailable or insufficient to hold harmless and indemnify a
party under Section 7.01 or 7.02, as applicable,  then each  indemnifying  party
shall  contribute to the amount paid or payable by such  indemnified  party as a
result of the losses, claims, damages or liabilities referred to in Section 7.01
or 7.02, as applicable,  (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriter on
the  other  from  the  offering  of the  Securities  hereunder  or  (ii)  if the
allocation  provided by the foregoing  clause (i) is not permitted by applicable
law, in such  proportion  as is  appropriate  to reflect  not only the  relative
benefits  referred  to in such  clause  (i) but also the  relative  fault of the
Company on the one hand and the  Underwriter on the other in connection with the
statements  or  omissions  that  resulted  in such  losses,  claims,  damages or
liabilities,  as  well  as any  other  relevant  equitable  considerations.  The
relative benefits received by the Company on the one hand and the Underwriter on
the other shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Securities (before deducting  expenses) received by the
Company bear to the total commissions received by the Underwriter.  The relative
fault shall be  determined  by  reference  to, among other  things,  whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the  Underwriter  and the  parties'  relative  intent,  knowledge,  access to
information  and  opportunity  to correct or prevent  such untrue  statement  or
omission.  The Company and the  Underwriter  agree that it would not be just and
equitable if  contributions  pursuant to this Section 7.04 were to be determined
by pro rata allocation or by any other method of allocation  which does not take
into account the equitable  considerations  referred to in the first sentence of
this Section 7.04.  The amount paid by an  indemnified  party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of this
Section 7.04 shall be deemed to include any legal or other  expenses  reasonably
incurred by such indemnified party in connection with investigating or defending
against  any  action  or  claim  which  is the  subject  of this  Section  7.04.
Notwithstanding  the provisions of this Section,  the  Underwriter  shall not be
required  to  contribute  any  amount in excess of the amount by which the total
price at which the  Securities  distributed  to the public  were  offered to the
public exceeds the amount of any damages that the Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.  No person guilty of fraudulent  misrepresentation  (within
the  meaning of  Section  11(f) of the  Securities  Act)  shall be  entitled  to
contribution   from  any   person   who  is  not   guilty  of  such   fraudulent
misrepresentation.

      Section 7.05.  Notice of Contribution  Claim.  Promptly after receipt by a
party to this  Agreement of notice of the  commencement  of any action,  suit or
proceeding,  such person will, if a claim for contribution in respect thereof is
to be  made  against  another  party  (the  "Contributing  Party"),  notify  the
Contributing Party of the commencement thereof, but the failure to so notify the
Contributing  Party will not relieve the  Contributing  Party from any liability
which it may have to any party other than under Section  7.04.  Any notice given
pursuant  to Section  7.03 hereof  shall be deemed to be like notice  under this
Section 7.05. In case any such action, suit or proceeding is brought against any
party,  and such  person  notifies  a  Contributing  Party  of the  commencement
thereof, the Contributing Party will be entitled to participate therein with the
notifying party and any other Contributing Party similarly notified.

                                     - 19 -

<PAGE>

      Section 7.06.  Reimbursement.  In addition to its other  obligations under
Section 7.01 and 7.04 hereof,  the Company  agrees that,  as an interim  measure
during  the  pendency  of any  claim,  action,  investigation,  inquiry or other
proceeding  described in Section 7.01, it will  reimburse the  Underwriter  on a
monthly  basis for all  legal or other  expenses  incurred  in  connection  with
investigating  or defending any such claim,  action,  investigation,  inquiry or
other proceeding,  notwithstanding the absence of a judicial determination as to
the propriety and  enforceability  of the Company's  obligation to reimburse the
Underwriter for such expenses and the possibility that such payments might later
be held to have  been  improper  by a court of  competent  jurisdiction.  To the
extent  that any such  interim  reimbursement  payment  is so held to have  been
improper, the Underwriter shall promptly return such payment to the Company.

      Section 7.07.  Arbitration.  It is agreed that any controversy arising out
of the operation of the interim reimbursement  arrangements set forth in Section
7.06 hereof,  including the amounts of any requested  reimbursement payments and
the  method  of  determining  such  amounts,  shall be  settled  by  arbitration
conducted  pursuant  to the Code of  Arbitration  Procedure  of FINRA.  Any such
arbitration  must be commenced by service of a written demand for arbitration or
a written  notice of intention to arbitrate,  therein  electing the  arbitration
tribunal.  If the party demanding  arbitration does not make such designation of
an arbitration  tribunal in such demand or notice,  then the party responding to
said  demand or notice is  authorized  to do so.  Any such  arbitration  will be
limited to the operation of the interim  reimbursement  provisions  contained in
Section   7.06  hereof  and  will  not  resolve  the   ultimate   propriety   or
enforceability  of the  obligation to indemnify for expenses which is created by
the  provisions of Section 7.01 and 7.02 hereof or the  obligation to contribute
to expenses which is created by the provisions of Section 7.04 hereof.

                                  ARTICLE VIII.

                              TERM AND TERMINATION

      Section 8.01.  Effective  Date of this  Agreement.  This  Agreement  shall
become effective on the Effective Date  immediately  after the time at which the
Registration Statement shall become effective under the Securities Act.

      Section 8.02.  Termination  Prior to Effective Date. This Agreement may be
terminated by the Underwriter,  at its option,  by giving notice to the Company,
if (i) the Company shall have failed,  refused,  or been unable,  at or prior to
the  Effective  Date,  to  perform  any  agreement  on its part to be  performed
hereunder;  (ii) any other condition of the Underwriter's  obligations hereunder
is not fulfilled or waived by the Underwriter;  (iii) a banking moratorium shall
have been  declared by federal,  New York or Minnesota  authorities;  (iv) there
shall have been such a serious, unusual and material change in general economic,
monetary,  political or  financial  conditions,  or the effect of  international
conditions  on the  financial  markets in the United States shall be such as, in
the  judgment  of the  Underwriter,  makes it  inadvisable  to proceed  with the
delivery of the Certificates;  (v) the enactment,  publication,  decree or other
promulgation of any federal or state statute,  regulation,  rule or order of any
court or other governmental authority which, in the judgment of the Underwriter,
materially and adversely  affects or will  materially  and adversely  affect the
business  or  operations  of the  Company;  or (vi)  there  shall be a  material
outbreak  of  hostilities  or  material  escalation  and  deterioration  in  the
political and military

                                     - 20 -

<PAGE>

situation  between  the  United  States  and  any  foreign  power,  or a  formal
declaration of war by the United States of America shall have occurred. Any such
termination shall be without  liability of any party to any other party,  except
as provided in Sections 7.01, 7.02 and 7.04 hereof; provided,  however, that the
Company shall remain  obligated to pay costs and expenses of the Company and the
Underwriter  (but  only  to  the  extent  of  actual  accountable  out-of-pocket
expenses) to the extent provided in Section 2.02 hereof.

      Section 8.03. Notice of Termination.  If the Underwriter elects to prevent
this  Agreement  from  becoming  effective  or to  terminate  this  Agreement as
provided in Section 8.02, it shall notify the Company and the Company's  counsel
promptly by telephone or transmitted by any standard form of  telecommunication,
confirmed by letter sent to the address specified in Section 9.02 hereof. If the
Company shall elect to prevent this Agreement from becoming effective,  it shall
notify the Underwriter promptly by telephone or transmitted by any standard form
of  telecommunication,  confirmed by letter sent to the  addresses  specified in
Section 9.02 hereof.

      Section  8.04.  Termination  After  Effective  Date.  The  Company  or the
Underwriter may terminate this Agreement at any time subsequent to the Effective
Date as provided below,  and in such case, the Underwriter will be paid fees and
commissions accrued up to the date of such termination plus its expenses accrued
as of such date within thirty (30) days of such termination:

      (a)   The Company  will have the ability to  terminate  this  Agreement by
            notice  to  the  Underwriter  upon  the  occurrence  of  any  of the
            following:

            (i)   any of the  circumstances  described in clauses  (iii) through
                  (vi) of Section 8.02;

            (ii)  the   Company  has  given  the   Underwriter   notice  of  the
                  Underwriter's  default in any material term of this Agreement,
                  or material non-compliance with any representation or warranty
                  of the  Underwriter  contained  herein,  and such  default  or
                  non-compliance is not cured within 30 days of such notice; or

            (iii) termination of the Offering by the Company.

      (b)   The Underwriter will have the ability to terminate this Agreement by
            notice to the Company upon the occurrence of any of the following:

            (i)   any of the  circumstances  described in clauses  (iii) through
                  (vi) of Section 8.02;

            (ii)  the  Underwriter has given the Company notice of the Company's
                  default in any material  term of this  Agreement,  or material
                  non-compliance  with any  representation  or  warranty  of the
                  Underwriter    contained   herein,   and   such   default   or
                  non-compliance  is not cured  within  thirty (30) days of such
                  notice; or

            (iii) termination of the Offering by the Company.

                                     - 21 -

<PAGE>

                                   ARTICLE IX.

                                  MISCELLANEOUS

      Section  9.01.   Survival.   The  respective  indemnity  and  contribution
agreements of the Company and the Underwriter  contained in the representations,
warranties,  covenants,  and  agreements  of the Company set forth in Article IV
hereof,  shall remain operative and in full force and effect,  regardless of any
investigation made by, or on behalf of, the Underwriter, the Company, any of its
officers and directors, or any controlling person referred to in Article VII and
shall  survive  the  sale  of the  Certificates.  The  aforesaid  indemnity  and
contribution  agreements  shall also survive any  termination or cancellation of
this Agreement. Any successor of any party or of any such controlling person, or
any legal  representative of such controlling  person, as the case may be, shall
be  entitled  to  the  benefit  of the  respective  indemnity  and  contribution
agreements.

      Section 9.02. Notices. All notices or communications hereunder,  except as
herein otherwise specifically provided, shall be in writing and shall be mailed,
delivered or transmitted by any standard form of telecommunication, as follows:

            If to the Underwriter, to:   American Investors Group, Inc.
                                         10237 Yellow Circle Drive
                                         Minnetonka, Minnesota 55343
                                         Attention: Philip Myers
                                         Tel. (952) 945-9455 x 126

            If to the Company, to:       American Church Mortgage Company
                                         10237 Yellow Circle Drive
                                         Minnetonka, Minnesota 55343
                                         Attention: Philip Myers
                                         Tel. (952) 945-9455 x 126

            In either case
            with a copy to:              Winthrop & Weinstine, P.A.
                                         225 South Sixth Street
                                         Suite 3500
                                         Minneapolis, Minnesota 55402
                                         Attention: Philip T. Colton
                                         Tel. (612) 604-6729

      Section 9.03. Successors and Assigns; Transfer. This Agreement shall inure
to the benefit of and be binding upon the  Underwriter and the Company and their
respective  successors and assigns, and the officers,  directors and controlling
persons  referred to in Article  VII.  Nothing  expressed  in this  Agreement is
intended or shall be construed to give any person or corporation, other than the
parties hereto,  their  respective  successors and assigns,  and the controlling
persons,  officers  and  directors  referred  to in  Article  VII,  any legal or
equitable right,  remedy or claim under, or in respect of, this Agreement or any
provision  herein  contained,  this  Agreement and all conditions and provisions
hereof being intended to be and being for the sole

                                     - 22 -

<PAGE>

and  exclusive  benefit of the parties  hereto and their  respective  executors,
administrators,  successors,  assigns and such controlling persons, officers and
directors,  and for the benefit of no other person or corporation.  No purchaser
of any  Certificates  shall be  construed a  successor,  assignee or third party
beneficiary  of this  Agreement  merely by reason  of such  purchase.  Except as
provided in Section 5.02(d), neither party may assign its rights and obligations
under this Agreement without the written consent of the other party.

      Section 9.04.  Cumulative  Remedies.  Unless otherwise  expressly provided
herein,  the remedies of the parties provided for herein shall be cumulative and
concurrent, and may be pursued singularly, successively or together, at the sole
discretion  of the party for whose  benefit such remedy is provided,  and may be
exercised as often as occasion therefor shall arise.

      Section  9.05.  Attorneys'  Fees. In the event of any action to enforce or
interpret  this  Agreement,  the  prevailing  party shall be entitled to recover
reasonable  attorneys'  fees and costs,  whether or not such action  proceeds to
judgment.

      Section 9.06. Entire  Agreement.  Except as otherwise  expressly  provided
herein,  this Agreement  constitutes the entire  agreement of the parties hereto
with  respect  to the  matters  addressed  herein  and  supersedes  all prior or
contemporaneous contracts, promises, representations, warranties and statements,
whether written or oral, with respect to such matters.

      Section  9.07.  Choice of Law.  This  Agreement  shall be  governed by and
construed in accordance with the laws of the State of Minnesota,  without regard
to conflict of law principles.

      Section 9.08. Confidentiality. The Company agrees to keep confidential all
non-public information  concerning the marketing,  selling and administration of
the  Certificates,  except as disclosure may be required by law. The Underwriter
agrees to keep  confidential  all non-public  information  supplied to it by the
Company,  including  without  limitation,  all non-public  information  obtained
during any due diligence investigation of the Company.

      Section 9.09.  Rights to Investor Lists.  The Offering will produce a list
of investors  that purchase  Certificates,  a list of prospects  that respond to
advertisements  but do not  purchase  any  Certificates  and a  list  of  former
investors whose  Certificates have been repaid by the Company.  Both the Company
and the  Underwriter  shall be able to use these  lists  for their own  business
purposes  as long as doing so does not  interfere  with the  marketing,  sale or
administration of the Certificates.

      Section  9.10.  Waiver:  Subsequent  Modification.   Except  as  expressly
provided herein,  no delay or omission by any party in insisting upon the strict
observance or performance of any provision of this  Agreement,  or in exercising
any right or remedy,  shall be construed as a waiver or  relinquishment  of such
provision,  nor shall it impair such right or remedy, and no waiver by any party
or any  failure  or refusal of the other  party to comply  with its  obligations
under this Agreement shall be deemed a waiver of any other or subsequent failure
or refusal to so comply by such other party.  No waiver or  modification  of the
terms  hereof  shall be valid  unless in  writing  and signed by the party to be
charged, and then only to the extent therein set forth.

      Section 9.11. Severability.  If any term or provision of this Agreement or
application thereof to any person or circumstance shall, to any extent, be found
by a court of competent

                                     - 23 -

<PAGE>

jurisdiction to be invalid or unenforceable, the remainder of this Agreement, or
the application of such term or provision to persons or circumstances other than
those as to which it is held  invalid or  unenforceable,  shall not be  affected
thereby  and each  term or  provision  of this  Agreement  shall  be  valid  and
enforceable to the fullest extent permitted by law.

      Section 9.12.  Joint  Preparation.  The  preparation of this Agreement has
been a joint effort of the parties and the resulting  document shall not, solely
as a matter of judicial construction,  be construed more severely against one of
the parties than the other.

      Section 9.13.  Captions.  The title of this  Agreement and the headings of
the various  articles,  section and subsections  have been inserted only for the
purpose of  convenience,  are not part of this Agreement and shall not be deemed
in any manner to modify,  explain,  expand or restrict any of the  provisions of
this Agreement.

      Section 9.14.  Counterparts.  This Agreement may be executed in any number
of  counterparts,  each of which shall be deemed an  original,  but all of which
together shall constitute one instrument.

                  [Remainder of page intentionally left blank]

                                     - 24 -

<PAGE>

      IN WITNESS WHEREOF, this Distribution  Agreement is hereby entered into by
the undersigned parties as of the date first set forth above.

THE COMPANY:                                 AMERICAN CHURCH MORTGAGE COMPANY

                                             By:
                                                --------------------------------
                                                Philip J. Myers, President

THE UNDERWRITER:                             AMERICAN INVESTORS GROUP, INC.

                                             By:
                                                --------------------------------
                                                Philip J. Myers, President

                                     - 25 -

<PAGE>

                                    EXHIBIT A

                         COMPENSATION TO THE UNDERWRITER

Compensation for Sale of  Certificates:  The Company shall pay the Underwriter a
commission and an  underwriter's  management fee upon each sale of a Certificate
based on the  principal  amount  of the  Certificates  sold in the  Offering  as
follows:

      o     upon an original  issuance,  the  commission  shall be 2.75% plus an
            additional 0.75% underwriter's management fee on the sale.