<PAGE>

                                                      Dated as of March 31, 1998


                                 WAIVER AND AMENDMENT

Principal Life Insurance Company, f/k/a
     Principal Mutual Life Insurance Company
Northern Life Insurance Company
Modern Woodmen of America
Royal Neighbors of America
ReliaStar Life Insurance Company of New York
ReliaStar United Services Life Insurance Company

Ladies and Gentlemen:

     Reference is made to (i) the Note Agreement dated as of December 2, 1994 
(as amended by that certain Letter Amendment dated as of February 15, 1996, 
that certain Letter Amendment dated as of December 30, 1996, that certain 
Waiver and Amendment dated as of March 31, 1997, and that certain Waiver and 
Amendment dated as of December 31, 1997, the "1994 Agreement") among 
Principal Mutual Life Insurance Company, n/k/a Principal Life Insurance 
Company ("Principal"), Northern Life Insurance Company ("Northern"), Modern 
Woodmen of America ("MWA") and Royal Neighbors of America ("RNA", and 
together with Principal, Northern and MWA, collectively the "1994 
Purchasers") and The Rottlund Company, Inc., a Minnesota corporation (the 
"Company"), pursuant to which the 1994 Purchasers purchased promissory notes 
of the Company in the aggregate original principal amount of $25,000,000 
(collectively, the "1994 Notes") and (ii) the Note Agreement dated as of 
February 15, 1996 (as amended by that certain Letter Amendment dated as of 
December 30, 1996, that certain Waiver and Amendment dated as of March 31, 
1997, and that certain Waiver and Amendment dated as of December 31, 1997, 
the "1996 Agreement", and together with the 1994 Agreement, collectively the 
"Agreements" and each individually an "Agreement") among Principal, Bankers 
Security Life Insurance Society, n/k/a ReliaStar Life Insurance Company of 
New York ("Bankers") and United Services Life Insurance Company, n/k/a 
ReliaStar United Services Life Insurance Company ("United", and together with 
Principal and Bankers, collectively the "1996 Purchasers", and, together with 
the 1994 Purchasers, collectively the "Purchasers"), pursuant to which the 
1996 Purchasers purchased promissory notes of the Company in the aggregate 
original principal amount of $10,000,000 (collectively, the "1996 Notes", and 
together with the 1994 Notes, collectively the "Notes" and each individually 
a "Note").  Capitalized terms used and not otherwise defined herein shall 
have the meanings ascribed thereto in each Agreement.

     Reference is further made to the Waiver and Amendment dated as of March 
31, 1997 (the "March 1997 Amendment") among the Purchasers and the Company 
pursuant to which, among other things, the Company agreed that, under certain 
circumstances, the 1994 Notes would bear interest at a rate of 12.61% per 
annum and the 1996 Notes would bear interest at the rate of 9.92% per annum 
(such interest rate with respect to each Note being herein referred to as the 
"Amended Interest Rate" for such Note).  The Company acknowledges that each 
Note currently bears interest at the Amended Interest Rate applicable to such 
Note, and that the references to "12.11%" and "14.11%" in the second 
paragraph of Section 1.1 of the 1994 Agreement and in the 1994 Notes are 
currently deemed to be "12.61%" and "14.61%", respectively, and the 
references to "9.42%" and "11.42%" in the second paragraph of Section 1.1 of 
the 1996 Agreement and in the 1996 Notes are currently deemed to be "9.92" 
and "11.92%", respectively.

                                    WAIVER

          The Company has advised the Purchasers that the Company is at 
present in default under Section 5.16 of each of the Agreements, which 
defaults the Company hereby acknowledges.  The Company hereby requests that 
the Purchasers waive such defaults.  The Purchasers each hereby waive the 
defaults existing as of the date hereof under Section 5.16 of each of the 
Agreements, and each Event of 

<PAGE>

Default arising directly therefrom.  The foregoing waiver shall not extend to 
any obligation of the Company not expressly so waived or impair any right of 
the Purchasers consequent thereon.

                                  AMENDMENTS

          The parties have, in addition, agreed to amend certain other
provisions in each of the Agreements as follows:

1         The parties have agreed that in addition to each of the required
          monthly prepayments of the Notes currently required by Section
          2.1 of each of the Agreements, the Company shall, commencing with
          the required monthly prepayment payable August 1, 1998 and
          continuing with each such required monthly prepayment until
          payment in full of the Notes, prepay the principal amount of the
          Notes in an additional aggregate amount of $100,000 with each
          such required monthly prepayment, such additional prepayment
          amount to be applied pro rata to all Notes outstanding under both
          Agreements.  To facilitate the payment of such additional
          required monthly prepayment together with the payment of the
          required monthly prepayments currently required by Section 2.1 of
          each of the Agreements, a revised amortization schedule for each
          Agreement, attached as Exhibits A and B hereto, has been
          prepared, based on the aggregate oustanding principal amount of
          the 1994 Notes or the 1996 Notes, as the case may be, following
          receipt of the required monthly prepayments currently required by
          Section 2.1 of each of the Agreements through and including July
          1, 1998.  The parties agree that Exhibits A and B hereto are
          subject to review for accuracy and verification by the Consultant
          (as hereinafter defined) and to conversion by the Consultant for
          consistency to a format indicating amounts expressed therein as
          per $1,000,000 of original principal (as is the case with the
          original amortization schedule attached as Schedule III to each
          of the Agreements).  The parties further agree that following
          such review, verification, and conversion, new Exhibits A and B
          hereto shall be forwarded to each Purchaser and to the Company
          and thereby be deemed adopted in substitution for the Exhibits A
          and B attached hereto.  In addition, to further facilitate the
          foregoing arrangements, Section 2.1 of each of the Agreements is
          hereby amended and restated in its entirety as follows: 

               2.1  REQUIRED MONTHLY PREPAYMENT.  The Company agrees that
                      on the first day of each month, on the dates indicated
                      on the Revised Amortization Schedule, it will prepay
                      the principal indebtedness evidenced by the Notes in
                      the amount specified for such date in the Revised
                      Amortization Schedule, subject to adjustment as
                      provided in Sections 2.2, 2.4. 2.5 and 2.7 hereof.  No
                      premium shall be payable in connection with any
                      required prepayment made pursuant to this Section 2.1.
                      For purposes of this Section 2.1, any prepayment shall
                      be applied pro rata to all Notes then outstanding, and
                      any prepayment of less than all of the outstanding
                      principal amount of the Notes pursuant to Sections 2.2,
                      2.4, 2.5 or 2.7 hereof shall be deemed to be applied to
                      the amount of scheduled principal prepayments in
                      inverse order of their maturity.

1         Each of the Agreements is hereby amended to add thereto the following
          new Section 2.7:

               1.1  OTHER REQUIRED PREPAYMENTS.  In the event the Company shall
                      propose to make a payment to effect a permanent reduction
                      in the Bank Indebtedness or a reduction of the aggregate

<PAGE>

                      principal amount of loans, advances and other financial 
                      accommodations available to the Company under the Bank 
                      Indebtedness Documents, or in the event the Company 
                      shall propose to permit or suffer to occur a set off in 
                      payment or satisfaction of the Bank Indebtedness or any 
                      portion thereof, the Company shall, on the date of such 
                      payment or set off, effect a prepayment of the 
                      principal amount of the Notes then outstanding, such 
                      prepayment to be in an aggregate amount equal to such 
                      outstanding principal amount of the Notes multiplied by 
                      a fraction, the numerator of which shall be the amount 
                      of the payment or set off to be made with respect to 
                      the Bank Indebtedness and the denominator of which 
                      shall be the principal amount of the Bank Indebtedness 
                      outstanding immediately prior to the payment or set 
                      off, together with accrued interest on the principal 
                      amount to be so prepaid to the date of such prepayment, 
                      and the Make-Whole Premium, if any. Contemporaneously 
                      with such prepayment, the Company shall provide each 
                      Holder written notice by facsimile transmission stating 
                      whether any Make-Whole Premium is payable in connection 
                      with such prepayment, and containing a reasonably 
                      detailed computation of any such Make-Whole Premium or 
                      the basis for determining that no such Make-Whole 
                      Premium is payable.

1         Section 5.4 of each of the Agreements is hereby amended by adding the
          following new sentence as the second sentence thereof:

                      So long as the Notes bear interest at the Amended 
                      Interest Rate, neither the Company nor any Subsidiary 
                      will engage in business in any location or area other 
                      than a location or area in the States of Florida, 
                      Indiana, Iowa, Minnesota or New Jersey.

1         Section 5.5 of each of the Agreements is amended and restated in its
          entirety as follows:

                    1.1  CONSOLIDATED TANGIBLE NET WORTH.  The Company shall 
                      at all times maintain Consolidated Tangible Net Worth in 
                      the amount not less than (i) the sum of $24,750,000 PLUS 
                      70% of the positive Consolidated Net Income, if any, for 
                      each Fiscal Quarter commencing on or after April 1, 1997, 
                      LESS (ii) the aggregate amount of net losses, net of 
                      applicable tax effect, realized in any sales of real 
                      property referred to in and permitted by Section 5.9(e) 
                      hereof, but only to the extent such net losses do not 
                      exceed $1,000,000 in the aggregate.

1         The proviso at the end of Section 5.6 of each of the Agreements is 
          hereby amended by adding the following new sentences at the end 
          thereof:

                      For purposes of determining whether the Company and its
                      Subsidiaries are in compliance with the foregoing
                      clause (i), with respect to determining the amount of
                      Consolidated Current Debt as of the last day of any
                      Fiscal Quarter, the aggregate amount of Bank
                      Indebtedness outstanding on the first Business Day of
                      the next Fiscal Quarter shall be deemed the aggregate
                      amount of Bank Indebtedness outstanding as of the last
                      day of such preceding Fiscal Quarter.  The Company
                      shall provide such documentation as any Holder may
                      reasonably request confirming the amount of Bank
                      Indebtedness which, in accordance with the foregoing
                      sentence, is deemed to be outstanding as of the last
                      day of any Fiscal Quarter.

<PAGE>

1         Section 5.9 of each of the Agreements is hereby amended (i) by 
          deleting the word "and" at the end of subsection (c), (ii) by adding 
          the word "and" at the end of subsection (d), and (iii) by adding 
          thereto the following new subsection (e):

                    a    the Company may sell all or any portion of the real
                         property it owns in Inver Grove Heights,
                         Minnesota, which real property is described in
                         Schedule V hereto and which the Company refers to
                         as "Arbor Pointe", for a purchase price of not
                         less than the appraised value of the portion
                         proposed to be sold, such purchase price to be
                         payable in connection with a sale consummated
                         pursuant to and in accordance with the terms of
                         that certain Purchase Agreement dated as of April
                         1, 1998 between the Company as the seller and Ryan
                         Companies US, Inc. as the purchaser.  

1

          Section 5.13(i) of each of the Agreements is hereby amended and 
          restated in its entirety as follows:

                    i    LEVERAGE RATIO CERTIFICATES.  As soon as available and
                         in any event within 15 days after the close of any
                         Fiscal Quarter, a Leverage Ratio Certificate,
                         correctly setting forth whether the Company and
                         the Subsidiary have met each of the Rate
                         Adjustment Financial Tests and setting forth
                         computations (in sufficient detail) required to
                         establish whether the Rate Adjustment Financial
                         Tests have been so met, all in reasonable detail
                         and certified as complete and correct by a
                         financial officer of the Company;

<PAGE>

     1    Section 5.13 of each of the Agreements is hereby amended (i) by
          changing the lettering of subsection (j) to (k), and (ii) by adding
          thereto the following new subsection (j):

               a    MEETINGS WITH HOLDERS. So long as the Notes bear
                    interest at the Amended Interest Rate, the Company, at
                    such times as any Holder may reasonably request (but no
                    more frequently than once each Fiscal Quarter with
                    respect to such Holder), will at its expense arrange
                    for a meeting of a representative of such Holder with
                    David Rotter, Bernard Rotter and such other members of
                    the Company's senior management as such Holder may
                    reasonably request to discuss the finances and affairs
                    of the Company and its Subsidiaries.  This covenant is
                    in addition to, and not in substitution for, other
                    covenants in the Sections 5.13 with respect to the
                    provision by the Company of information, visits and
                    inspections, and other similar matters.

     1    Section 5.16 of each of the Agreements is hereby amended and restated
          in its entirety as follows:

               5.16 FIXED CHARGES.  The Company shall maintain, as of the
                    close of each month, Net Income Available for Fixed
                    Charges for the immediately preceding twelve-month
                    period of at least the following percentages of Fixed
                    Charges for such twelve-month period:
                    
          75% as of the close of each month on and prior to June 30, 1998; 
                    
                    100% as of the close of each month on or prior to
                    September 30, 1998;
                    
                    150% as of the close of each month on and prior to
                    December 31, 1998; and
                    
                    200% as of the close of each month thereafter.

     1    Section 5.19 of each of the Agreements is hereby amended and restated
          in its entirety as follows:

                    5.19 BANK INDEBTEDNESS DOCUMENTS. In addition to the
                         financial covenants set forth in this Agreement,
                         the financial covenants set forth in the Bank
                         Indebtedness Documents (the "Incorporated
                         Covenants") are incorporated by reference into
                         this Agreement as if stated herein in full,
                         together with all defined terms used therein,
                         PROVIDED, however, that (i) such Incorporated
                         Covenants, as incorporated herein, shall run in
                         favor of the Holders, rather than to the parties
                         set forth in the Bank Indebtedness Documents, and
                         (ii) any amendments to, waivers as to, or
                         expiration or cancellation of (by cancellation,
                         amendment or termination of the Bank Indebtedness
                         Documents or otherwise) such Incorporated
                         Covenants and defined terms used therein shall be
                         deemed to amend, waive compliance with, or
                         terminate, as the case may be, such Incorporated
                         Covenants, as incorporated herein, only if
                         approved or consented to by the Holders; and
                         PROVIDED FURTHER that if the Bank Indebtedness
                         Documents are (i) amended to add additional
                         covenants or modify existing covenants providing
                         greater protection under the Bank Indebtedness
                         Documents, or (ii) renewed or replaced by
                         financing on terms that 

<PAGE>

                      contain covenants affording protection to the Holders 
                      substantially equivalent to, or greater than, the 
                      protection provided by the Incorporated Covenants, 
                      such new or amended covenants shall be deemed 
                      incorporated herein as Incorporated Covenants.  So 
                      long as the Notes bear interest at the Amended 
                      Interest Rate, the Company shall not pay any 
                      additional consideration (including, without 
                      limitation, any increase in interest rate or 
                      increase or imposition of any fee) under the Bank 
                      Indebtedness Documents in respect of any financial 
                      accommodation required to be made by any lender 
                      thereunder without making a proportionate payment to 
                      the Holders based upon the relative principal 
                      amounts of the Notes then outstanding (provided, 
                      however, that no such payment shall be required to 
                      be made to the Holders with respect to any fee 
                      payable in connection with the amendment, 
                      contemporaneously with the execution and delivery of 
                      the March 1998 Amendment, of the Existing Credit 
                      Agreement).  In addition, if the Company shall 
                      renew, extend, substitute, refinance or replace any 
                      Bank Indebtedness or if the Company shall modify any 
                      term or condition of any Bank Indebtedness 
                      Documents, the Company shall give written notice 
                      thereof, together with copies of the Bank 
                      Indebtedness Documents relevant thereto, to all 
                      Holders promptly, but in any event within five days 
                      of the date on which such renewal, extension, 
                      substitution, refinancing, replacement or 
                      modification is effected.

     1    Section 5.20 of each of the Agreements is hereby amended and restated
          in its entirety as follows:

               A.   GUARANTIES.  In addition to causing the existing
                    Subsidiaries to execute and deliver the Guaranty, the
                    Company (i) will promptly secure the execution and
                    delivery of a guaranty substantially in the form of the
                    Guaranty from each Subsidiary as may hereafter be
                    formed and organized, and (ii) will not permit the Bank
                    Indebtedness to be guaranteed by any other person or
                    entity unless the obligations of the Company under the
                    Notes and this Agreement shall be guaranteed by such
                    person or entity on substantially the same terms and
                    conditions.

     1    Section 6.1 of each of the Agreements is hereby amended (i) by
          changing the reference to "5.19" in the third line thereof to "5.20",
          and (ii) by changing the parenthetical statement "(individually or in
          the aggregate, and including without limitation the Existing Bank
          Indebtedness)" to "(individually or in the aggregate, and including
          without limitation the Bank Indebtedness)."

<PAGE>

     1    The definition of "Make-Whole Premium" in Section 8.1 of each of the
          Agreements is hereby amended and restated as follows:

               "Make-Whole Premium" shall mean, with respect to a
               prepayment of the Notes prior to maturity or an acceleration
               of the maturity thereof, the excess, if any, of (i) the
               Calculated Amount (as hereinafter defined), over (ii) the
               principal amount of the Notes to be prepaid or accelerated
               (the "Prepaid Principal").  In no event shall the Make-Whole
               Premium be less than zero.  For purposes hereof, the
               "Calculated Amount" shall mean an amount determined by (1)
               calculating, as of the date of determination, the present
               value of all payments of principal and interest, as
               scheduled on the Original Amortization Schedule and
               reflecting the Original Interest Rate, which would have been
               avoided by any such prepayment or acceleration if payments
               had theretofore been made in accordance with the Original
               Amortization Schedule and reflecting the Original Interest
               Rate (such payments, the present value of which are being
               determined, being herein referred to as the "Pro Forma
               Payments"), such present value to be determined by
               discounting the Pro Forma Payments from the scheduled
               payment date to the date of the prepayment or acceleration
               at a rate equal to the Formula Yield (such present value
               being herein referred to as the "Pro Forma Present Value
               Amount"), (2) calculating, as of the date of determination,
               the aggregate amount of principal payments included in such
               Pro Forma Payments (such amount being herein referred to as
               the "Pro Forma Principal Amount"), (3) dividing the Pro
               Forma Present Value Amount by the Pro Forma Principal
               Amount, rounding the resulting number to five decimal places
               (such resulting number being herein referred to as the
               "Price"), and (4) multiplying the amount of Prepaid
               Principal by the Price.

     1    Section 8.1 of each of the Agreements is hereby amended by adding
          thereto the following new definitions:

               "Amended Interest Rate" with respect to any Note shall mean
               the Amended Interest Rate with respect to such Note as
               defined in the March 1998 Amendment.
               
               "Bank Indebtedness" shall mean the Existing Bank
               Indebtedness and any renewal, extension, substitution,
               refinancing, or replacement thereof.
               
               "Bank Indebtedness Documents" shall mean all documents
               governing Bank Indebtedness and all other instruments and
               documents related thereto given to secure or evidence the
               Bank Indebtedness or otherwise executed in connection
               therewith, including without limitation the Existing Bank
               Indebtedness Documents.
               
               "March 1998 Amendment" shall mean that certain Waiver and
               Amendment dated as of March 31, 1998, by and among the
               Company and the Purchasers.
               
               "Original Amortization Schedule" shall mean the original
               amortization schedule attached to this Agreement as Schedule
               III.
               
               "Original Interest Rate" with respect to any Note shall mean
               the Original Interest Rate with respect to such Note as
               defined in the March 1998 Amendment.
               
               "Rate Adjustment Financial Tests" shall mean the Rate
               Adjustment Financial Tests as defined in the March 1998
               Amendment.
               
<PAGE>

               "Revised Amortization Schedule" shall mean the revised
               amortization schedule attached to this Agreement as Schedule
               IV.
               
     1    Exhibit A hereto is hereby adopted as "Schedule IV" to the 1994
          Agreement, and Exhibit B hereto is hereby adopted as "Schedule IV" to
          the 1996 Agreement.  Exhibit C hereto is hereby adopted as "Schedule
          V" to each of the Agreements.


                               OTHER AGREEMENTS

As an inducement to and in consideration of the agreement by the Purchasers to
waive the existing defaults under and to amend certain provisions of the
Agreements as set forth herein, the Company hereby agrees with the Purchasers as
follows:

     INTEREST RATES.  Notwithstanding anything in the Agreements, the Notes, or
the March 1997 Amendment to the contrary:

          i    if as of the close of any Fiscal Quarter commencing on or
               after April 1, 1998 the Company and its Subsidiaries shall
               fail to meet any of the financial tests set forth in
               Schedule I hereto (collectively, the "Rate Adjustment
               Financial Tests") as disclosed in the Leverage Ratio
               Certificate referred to in Section 5.13(i) of each of the
               Agreements (each a "Leverage Ratio Certificate") for such
               Fiscal Quarter, or if the Company fails to deliver the
               Leverage Ratio Certificate for such Fiscal Quarter to the
               Holders in accordance with Section 5.13(i) of each of the
               Agreements (and, in such event, in addition to any other
               rights the Holders may exercise under Section 6 of each
               Agreement), then, effective as of the first day of and
               during the Fiscal Quarter immediately following the Fiscal
               Quarter to which the Leverage Ratio Certificate applies
               (where the Company delivers such Leverage Ratio Certificate)
               or would apply (where the Company fails to do so), as the
               case may be, each Note shall bear interest at the Amended
               Interest Rate for such Note, and, in connection  therewith,
               the references to "12.11%" and "14.11%" in the second
               paragraph of Section 1.1 of the 1994 Agreement and in the
               1994 Notes shall accordingly be deemed to be "12.61% and
               "14.61%", respectively, and the references to "9.42%" and
               "11.42%" in the second paragraph of Section 1.1 of the 1996
               Agreement and in the 1996 Notes shall accordingly be deemed
               to be "9.92%" and "11.92%," respectively; and

          i    if as of the close of any Fiscal Quarter commencing on or
               after April 1, 1998, the Company and its Subsidiaries shall
               meet each of the Rate Adjustment Financial Tests as
               disclosed in the Leverage Ratio Certificate for such Fiscal
               Quarter, and if no Default or Event of Default then exists
               under the Agreement, then effective as of the first day of
               and during the Fiscal Quarter immediately following the
               Fiscal Quarter to which the Leverage Ratio Certificate
               applies, the 1994 Notes shall bear interest at the rate of
               12.11% per annum, and the 1996 Notes shall bear interest at
               the rate of 9.42% per annum (such interest rate with respect
               to each Note being herein referred to as the "Original
               Interest Rate" for 

<PAGE>

               such Note), and, in connection therewith, the references to 
               "12.11% and "14.11%" in the second paragraph of Section 1.1 of 
               the 1994 Agreement and in the 1994 Notes and the references to 
               "9.42%" and "11.42%" in the second paragraph of Section 1.1 of 
               the 1996 Agreement and in the 1996 Notes shall be deemed 
               unchanged.  

In connection therewith, the Company hereby confirms and agrees that the 
amount of each combined installment of principal and interest payable on the 
Notes has been (and, following any change in interest rates in accordance 
with the foregoing provisions, shall be) adjusted to reflect the foregoing 
arrangements, but the portion of each such combined installment allocable to 
principal shall remain unchanged, and that default in the payment of 
interest, as calculated in accordance with the foregoing arrangements, shall 
constitute an Event of Default under Section 6.1 of each of the Agreements.  
The Company further agrees to execute, at the request of the Holders or any 
of them, addenda to the Notes evidencing the foregoing arrangements. 

     CONSULTANT REVIEW.  The Company acknowledges that the Purchasers intend 
to retain a consultant (the "Consultant") to conduct an operational and 
management review and to review the Company's budget for the Fiscal Year 
ending March 31, 1999, as well as pro forma financial statements and 
projections prepared by the Company for the Fiscal Year ending March 31 of 
each 1999, 2000 and 2001 (the "Review"), such Review to be conducted solely 
for the benefit and at the sole discretion of the Purchasers.  The Purchasers 
shall choose and retain such Consultant, subject to such Consultant being 
reasonably acceptable to the Company (provided, however, that (i) unless the 
Purchasers shall have received notice from the Company of its rejection of 
such Consultant within five Business Days of the Company's receipt of notice 
of the intention of the Purchasers to retain such Consultant, such Consultant 
shall be deemed acceptable to the Company, and (ii)  if the Company shall 
reject the Consultant initially so chosen by the Purchasers, the Purchasers 
shall have the right, in their sole discretion and without submitting such 
choice to the Company for approval, to choose and retain another Consultant). 
 The Company shall pay any retainer required by such Consultant 
contemporaneously with the retention of such Consultant.  The Company shall 
pay promptly, and in any event within 30 days of receipt of an invoice 
therefor  or upon demand, all reasonable costs and expenses, not to exceed 
$50,000 in the aggregate, incurred or expended by the Purchasers with respect 
to the retention of and the services provided by such Consultant (it being 
understood and agreed, however, that such $50,000 limitation shall neither 
apply to nor affect the Company's obligation to so pay additional costs and 
expenses so incurred as a result of the Company's failure to cooperate with 
such Consultant as contemplated by this provision, the Company's failure to 
provide promptly any information reasonably requested by such Consultant, or 
the failure of such Consultant to complete its inquiries in one visit to the 
Company by the Consultant's representatives).  The Company shall cooperate 
with such Consultant in connection with the Review, and, without limiting the 
generality of the foregoing, shall make its management available for 
consultations with such Consultant and allow such Consultant free access to 
the Company's books and records, in each case at any reasonable time during 
regular business hours.   The Purchasers shall make available to the Company 
a report, to be prepared by the Consultant, of the results of the Review.

     AMENDMENT FEE.  The Company shall pay to the Purchasers an amendment fee 
in the aggregate amount of $226,020.00 (the "Amendment Fee") payable in six 
equal monthly installments of $37,670.00 each on the first day of each month 
commencing August 1, 1998 through and including January 1, 1999.  Each such 
installment of such Amendment Fee shall be paid to the Purchasers pro rata in 
accordance with the respective unpaid principal amounts of the Notes they 
hold.  Any default in the payment of any such installment of the Amendment 
Fee shall constitute an Event of Default under Section 6.1 of each of the 
Agreements.

<PAGE>

     EXPENSES.  The Company hereby confirms its obligations under Section 9.6 
of each of the Agreements to pay promptly, and in any event within 30 days of 
receipt of an invoice therefor or upon demand, all out-of-pocket expenses of 
the Holders in connection with this Waiver and Amendment and the matters 
covered hereby (including, without limitation, the reasonable fees and 
expenses of counsel to the Holders and travel expenses of representatives of 
the Holders incurred in connection with the negotiation of this Waiver and 
Amendment).

     SURVIVAL OF OBLIGATIONS, ETC..  The obligations of the Company to make 
the payments contemplated by the foregoing provisions shall survive payment 
of the Notes and the termination of the Agreements.  In addition to any 
payment default specifically referred to in the foregoing provisions, any 
default by the Company in the performance or observance or breach by the 
Company of any of the foregoing provisions shall constitute an Event of 
Default under Section 6.1 of each of the Agreements.

                       REPRESENTATIONS AND WARRANTIES

     The Company represents and warrants to the Purchasers that (i) except as 
disclosed herein, no Default or Event of Default has occurred and is 
continuing, (ii) this Waiver and Amendment has been duly authorized, executed 
and delivered by the Company and each of this Waiver and Amendment and each 
Agreement, as amended by this Waiver and Amendment, constitutes a legal, 
valid and binding obligation of the Company, and (iii) there is no provision 
in the Articles of Incorporation of the Company or in its bylaws or in any 
indenture, contract or agreement to which the Company is a party or by which 
it is bound nor any provision of law or any order of any court or 
governmental authority which prohibits the execution and delivery by the 
Company of this Waiver and Amendment, the performance or observance by the 
Company of the terms and conditions of this Waiver and Amendment, or the 
performance or observance by the Company of the terms and conditions of the 
Agreements, as modified by the amendments set forth in this Waiver and 
Amendment.  All representations and warranties contained herein or made in 
writing by the Company in connection herewith shall survive the execution and 
delivery hereof.  It shall be deemed to be an Event of Default under each 
Agreement if any of such representations or warranties proves to be false in 
any material respect as of the date hereof.

                                 MISCELLANEOUS

     Except as specifically amended hereby, all terms and conditions of each 
of the Agreements shall remain in full force and effect.  This Waiver and 
Agreement may be executed simultaneously in two or more counterparts, each of 
which shall be an original, but all of which constitute but one agreement.  
This Waiver and Amendment shall be governed by and enforced in accordance 
with Minnesota law.

     If you are in agreement with the foregoing, please so indicate by 
executing the form of acknowledgment set forth below, whereupon this Waiver 
and Amendment shall become a binding agreement among you and the Company. 

                                  Very truly yours

                                  THE ROTTLUND COMPANY, INC.


                                  By                                 
                                     -----------------------------------------
                                   Its                              
                                      ----------------------------------------

<PAGE>

Agreed to as of the date first above written.

As to the 1994 Agreement and the 1996 Agreement:

PRINCIPAL LIFE INSURANCE COMPANY


By                            
   --------------------------------
  Its                               
      -----------------------------

And                                
   --------------------------------
   Its                                  
      -----------------------------


As to the 1994 Agreement:

NORTHERN LIFE INSURANCE COMPANY


By                                 
  ---------------------------------
  Its                              
     ------------------------------

MODERN WOODMEN OF AMERICA

By                                 
  ---------------------------------
  Its                              
     ------------------------------

And                                
   --------------------------------
   Its                                  
      -----------------------------

<PAGE>

ROYAL NEIGHBORS OF AMERICA

By                                 
  ---------------------------------
  Its                              
     ------------------------------

And                                
   --------------------------------
   Its                                  
       ----------------------------

As to the 1996 Agreement:

RELIASTAR LIFE INSURANCE COMPANY
OF NEW YORK, successor by merger to
ReliaStar Bankers Life Insurance Company, 
f/k/a Bankers Security Life Insurance Society


By                                 
  ---------------------------------
  Its                              
     ------------------------------


RELIASTAR UNITED SERVICES 
LIFE INSURANCE COMPANY

By                                 
   --------------------------------
  Its                              
     ------------------------------
 
<PAGE>

                                ACKNOWLEDGMENT

     Each of the undersigned, as a guarantor under the Guaranty (as defined 
in each of the Agreements), hereby acknowledges all modifications, amendments 
and waivers of provisions of the Agreements set forth in the foregoing Waiver 
and Amendment, and confirms and agrees that such modifications, amendments 
and waivers do not discharge, affect, reduce or impair its liability under 
the Guaranty, including its liability thereunder for payment of the Notes and 
the performance of all covenants contained in the Agreements.

Each of the undersigned represents that all such modifications, amendments 
and waivers, together with the foregoing Waiver and Amendment, have been duly 
executed by a duly authorized officer of the Company, and are valid 
obligations of the Company legally binding upon the Company in accordance 
with their respective terms.

                         NORTH COAST MORTGAGE, INC.

                         By: 
                             -----------------------------------
                             Lawrence B. Shapiro, 
                                   Chief Financial Officer

                         ROTTLUND HOMES OF FLORIDA, INC.

                         By: 
                             -----------------------------------
                             Lawrence B. Shapiro, Vice President

                         ROTTLUND HOMES OF INDIANA, INC.

                         By: 
                             -----------------------------------
                             Lawrence B. Shapiro, Vice President

                         ROTTLUND HOMES OF INDIANA
                              LIMITED PARTNERSHIP
                         By Rottlund Homes of Indiana, Inc., 
                         Its General Partner,

                         By: 
                             -----------------------------------
                             Lawrence B. Shapiro, Vice President

                         ROTTLUND HOMES OF IOWA, INC.

                         By: 
                             -----------------------------------
                              Lawrence B. Shapiro, 
                                   Chief Financial Officer

                         ROTTLAND HOMES OF NEW JERSEY, INC.

                         By: 
                             -----------------------------------
                              Lawrence B. Shapiro, 
                                   Executive Vice President

<PAGE>
 
                                                                      SCHEDULE I

                        RATE ADJUSTMENT FINANCIAL TESTS


     CONSOLIDATED TANGIBLE NET WORTH.  Consolidated Tangible Net Worth in an 
amount not less than $24,103,922 plus 70% of the positive Consolidated Net 
Income, if any, for each Fiscal Quarter commencing on or after January 1, 
1996.

     LEVERAGE RATIO.  Ratio of (i) the sum of Consolidated Current Debt and 
Consolidated Funded Debt to (ii) Consolidated Tangible Assets in excess of 
62% on and prior to December 31, 1998 and 57% thereafter.

     FIXED CHARGES.  Net Income Available for Fixed Charges for the 
immediately preceding twelve-month period of at least 200% of Fixed Charges 
for such twelve-month period.

<PAGE>
                                                                       EXHIBIT A
                       SCHEDULE IV TO 1994 AGREEMENT
                                          
  (Amounts expressed are aggregate amounts with respect to all 1994 Notes
                                outstanding)
                                          
                               [SEE ATTACHED]
                                          
<PAGE>

                                                                       EXHIBIT B
                                          
                        SCHEDULE IV TO 1996 AGREEMENT
                                          
   (Amounts expressed are aggregate amounts with respect to all 1996 Notes
                                 outstanding)

                                [SEE ATTACHED]

<PAGE>
                                                                       EXHIBIT C

                                 DESCRIPTIONS
                                      OF
                          ARBOR POINTE REAL PROPERTY
                                          
                               [SEE ATTACHED]