Document:

COMPANY AGREEMENT

                                       OF

                             Dutch Fork Capital LLC

                        A TEXAS LIMITED LIABILITY COMPANY

                        EFFECTIVE AS OF DECEMBER 27, 2006

THE MEMBERSHIP  INTERESTS HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF
1933, AS AMENDED,  OR ANY APPLICABLE  STATE  SECURITIES ACTS. SUCH INTERESTS ARE
BEING ACQUIRED FOR INVESTMENT ONLY, AND MAY NOT BE SOLD, PLEDGED,  HYPOTHECATED,
DONATED OR OTHERWISE  TRANSFERRED  IN THE ABSENCE OF AN  EFFECTIVE  REGISTRATION
UNDER SUCH ACTS OR AN OPINION OF COUNSEL  SATISFACTORY  TO THE COMPANY THAT SUCH
REGISTRATION  IS NOT REQUIRED WITH RESPECT TO THE PROPOSED  DISPOSITION  THEREOF
AND THAT SUCH  DISPOSITION  WILL NOT CAUSE THE LOSS OF THE EXEMPTION  UPON WHICH
THE  ISSUER  RELIED  IN  SELLING  THESE  MEMBERSHIP  INTERESTS  TO THE  ORIGINAL
PURCHASER THEREOF.

THE MEMBERSHIP INTERESTS AND THE TRANSFER THEREOF ARE SUBJECT TO QUALIFICATIONS,
LIMITATIONS  AND  RESTRICTIONS  SET  FORTH IN THIS  COMPANY  AGREEMENT,  AND THE
MEMBERSHIP  INTERESTS  SHALL NOT BE  TRANSFERRED  UPON THE BOOKS OF THE  COMPANY
UNTIL THE TERMS AND CONDITIONS OF THIS AGREEMENT HAVE BEEN FULLY COMPLIED WITH.

Company Agreement Dutch Fork Capital LLC

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                                TABLE OF CONTENTS

ARTICLE I.  FORMATION..........................................................1

   1.1.    FORMATION...........................................................1
   1.2.    PRINCIPAL PLACE OF BUSINESS.........................................1
   1.3.    REGISTERED AGENT OFFICE.............................................1
   1.4.    TERM................................................................1
   1.5.    PURPOSE.............................................................1

ARTICLE II.  RIGHTS AND DUTIES OF MANAGERS.....................................1

   2.1.    MANAGEMENT OF COMPANY VESTED IN THE MANAGERS........................1
   2.2.    CERTAIN POWERS OF MANAGERS..........................................2
   2.3.    LIABILITY FOR CERTAIN ACTS..........................................2
   2.4.    MEMBERS AND MANAGERS HAVE NO EXCLUSIVE DUTY TO COMPANY..............2
   2.5.    AUTHORITY OF MANAGERS TO DEAL WITH AFFILIATES.......................3
   2.6.    NUMBER OF MANAGERS..................................................3
   2.7.    COMPENSATION AND FEES...............................................3

ARTICLE III.  RIGHTS AND OBLIGATIONS OF MEMBERS................................3

   3.1.    LIMITATION OF MEMBERS' LIABILITIES..................................3
   3.2.    NO CONTROL OF BUSINESS OR RIGHT TO ACT FOR COMPANY..................3
   3.3.    PRIORITY AND RETURN OF CAPITAL......................................3
   3.4.    MEETINGS OF THE COMPANY; VOTING RIGHTS..............................4
   3.5.    POWERS RESERVED TO THE MEMBERS......................................4

ARTICLE IV.  COMPANY BOOKS AND RECORDS; AMENDMENT OF AGREEMENT;
             POWER OF ATTORNEY.................................................5

   4.1.    AMENDMENT OF AGREEMENT..............................................5
   4.2.    BOOKS AND RECORDS, ACCOUNTING, REPORTS, TAX ELECTIONS...............5

ARTICLE V.  CONTRIBUTIONS TO THE COMPANY; CAPITAL ACCOUNTS;
            SECURITIES MATTERS.................................................7

   5.1.    INITIAL CAPITAL CONTRIBUTIONS.......................................7
   5.2.    ADDITIONAL CONTRIBUTIONS; ADDITIONAL UNITS; PREEMPTIVE RIGHTS.......7
   5.3.    FAILURE TO CONTRIBUTE ADDITIONAL CONTRIBUTIONS......................7
   5.4.    CAPITAL ACCOUNTS....................................................7
   5.5.    SECURITIES MATTERS..................................................8

ARTICLE VI.  ALLOCATIONS, DISTRIBUTIONS........................................8

   6.1.    ALLOCATIONS OF PROFITS AND LOSSES...................................8
   6.2.    SPECIAL ALLOCATIONS.................................................8
   6.3.    DISTRIBUTIONS......................................................10

ARTICLE VII.  TRANSFERABILITY.................................................11

   7.1.    GENERAL............................................................11
   7.2.    TRANSFERS NOT REQUIRING PRIOR CONSENT..............................11
   7.3.    VOLUNTARY TRANSFER PROCEDURE.......................................11
   7.4.    PURCHASE PRICE.....................................................12
   7.5.    REMEDIES...........................................................13
   7.6.    EFFECT OF TRANSFER OF INTEREST.....................................13

ARTICLE VIII.  ADMISSION AND WITHDRAWAL OF MEMBERS............................13

   8.1.    ADMISSION OF MEMBERS...............................................13
   8.2.    WITHDRAWAL OF MEMBERS..............................................14

ARTICLE IX.  WINDING UP AND TERMINATION.......................................14

   9.1.    EVENTS REQUIRING WINDING UP........................................14
   9.2.    WINDING UP, LIQUIDATION AND DISTRIBUTION OF ASSETS.................14
   9.3     RETURN OF CONTRIBUTION NONRECOURSE TO MEMBERS......................15

ARTICLE X.  MISCELLANEOUS.....................................................15

  10.1.    NOTICE.............................................................15

  10.2.    WAIVER OF NOTICE...................................................15

  10.3.    AUTHORITY TO BIND THE   COMPANY....................................15

  10.4.    WAIVER OF ACTION FOR   PARTITION...................................15

  10.5.    INDEMNIFICATION BY   COMPANY.......................................15

  10.6.    CONSTRUCTION.......................................................16

  10.7.    ARTICLES AND OTHER HEADINGS........................................16
  10.8.    SEVERABILITY.......................................................16

  10.9.    APPLICATION OF TEXAS   LAW.........................................16

  10.10.    DISREGARDED ENTITY TAX TREATMENT INTENDED IF ONE   MEMBER.........16

  10.11.   PARTNERSHIP TAX TREATMENT INTENDED IF MORE THAN ONE MEMBER;
           TAX ADMINISTRATIVE MATTERS.........................................16

  10.12.   NO PARTNERSHIP INTENDED FOR NON-TAX PURPOSES.......................16

  10.13.   EXPENSES...........................................................17

CERTIFICATION.................................................................18

EXHIBIT A         MEMBER CAPITAL CONTRIBUTIONS................................21
---------         ----------------------------

EXHIBIT B        SERVICING CONTRACT...........................................23
---------        ------------------

Company Agreement Dutch Fork Capital LLC

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     This Company Agreement of DUTCH FORK CAPITAL LLC is adopted by the Managers
and the undersigned Members, for the purpose of forming and operating DUTCH FORK
CAPITAL LLC as a Texas limited liability company,  and the undersigned  Managers
and Members do each mutually acknowledge and agree as follows:

                                   DEFINITIONS

     The following terms used in this Company Agreement shall have the following
meanings unless otherwise expressly provided herein:

     (i) "Agreement" shall mean this Company Agreement,  as originally executed,
and as  amended  from  time to time  in  writing,  including  all  exhibits  and
schedules hereto, which concerns the conduct of the business of the Company.

     (ii) "Capital  Account" shall mean the Capital Account  maintained for each
Member in accordance with Section 5.4.

     (iii) "Capital  Contribution" shall mean any contribution to the capital of
the Company in cash or property by a Member whenever made.

     (iv)  "Certificate  of Formation"  shall mean the  Certificate of Formation
filed  with the Texas  Secretary  of State for the  purpose  of  organizing  the
Company, as the same may be amended or restated from time to time.

     (v) "Code" shall mean the Internal  Revenue  Code of 1986,  as amended,  or
corresponding provisions of subsequent superseding federal revenue laws.

     (vi)  "Company"  shall mean Dutch Fork Capital  LLC, the Company  organized
pursuant to the Certificate of Formation and this Agreement.

     (vii) "Deficit Capital Account" shall mean with respect to any Member,  the
deficit  balance,  if any, in such Member's Capital Account as of the end of the
taxable year, after giving effect to the following adjustments:

          (a) credit to such  Capital  Account  any amount  which such Member is
     obligated to restore  under  Section  1.704-1(b)(2)(ii)(c)  of the Treasury
     Regulations,  as well as any addition  thereto pursuant to the next to last
     sentence of Sections  1.704-2(g)(1) and (i)(5) of the Treasury Regulations,
     after  taking  into  account  thereunder  any  changes  during such year in
     company minimum gain (as determined in accordance  with Section  1.704-2(d)
     of the Treasury  Regulations)  and in the minimum gain  attributable to any
     member  nonrecourse debt (as determined under Section  1.704-2(i)(3) of the
     Treasury Regulations); and

          (b) debit to such  Capital  Account  the items  described  in Sections
     1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.

Company Agreement Dutch Fork Capital LLC

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This  definition  of Deficit  Capital  Account is  intended  to comply  with the
provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and 1.704-2, and
will be interpreted consistently with those provisions.

     (viii)  "Distributable  Cash"  shall  mean all  cash,  revenues  and  funds
received by the Company from Company operations,  including from the sale of any
asset to the extent not  reinvested in replacement  assets,  less the sum of the
following to the extent paid or set aside by the Company:  (a) all principal and
interest  payments  on  indebtedness  of the  Company and all other sums paid to
lenders; (b) all cash expenditures  incurred incident to the purchase or sale of
any asset and the normal operation of the Company's business;  (c) reimbursement
of expenses and payment of compensation to any Manager; and (d) such Reserves as
the Managers deem reasonably  necessary to the proper operation of the Company's
business.

     (ix)  "Entity"  shall mean any general  partnership,  limited  partnership,
limited liability company,  corporation,  joint venture,  trust, business trust,
cooperative or association.

     (x) "Fair Market  Value" shall mean,  on the date such Fair Market Value is
to be determined,  the excess of the value of all of the Company's  assets minus
all of the Company's liabilities. For purposes of determining Fair Market Value,
(a) no value  shall be  placed on the  goodwill  or name of the  Company  or the
office records, files,  statistical data or any similar intangible assets of the
Company not normally reflected in the Company's  accounting  records,  (b) there
shall be taken into  consideration  any related  items of income  earned but not
received,  expenses incurred but not yet paid,  liabilities fixed or contingent,
prepaid expenses to the extent not otherwise  reflected in the books of account,
and the value of options or  commitments  to  purchase  securities  pursuant  to
agreements  entered into on or prior to the valuation date, (c) determination of
value of any publicly-traded  security or bond, shall be the most recent closing
sale price quoted for such  security on the exchange on which it is traded,  (d)
determination  of the value of other  securities  shall be based on all relevant
factors,  including  without  limitation,   type  of  security,   marketability,
restrictions  on  disposition,  and current  financial  position  and  operating
results, (e) the value of real estate shall be deemed to be the most recent fair
market  value of such  real  estate as  determined  by a real  estate  appraiser
selected by the Managers;  and (f) as to the liabilities and any other assets of
the Company,  the book value  carried on the books of the Company in  accordance
with Generally  Accepted  Accounting  Principles,  consistent with the Company's
past practice.

     (xi) "Fiscal Year" shall mean the Company's fiscal year, which shall end on
December 31, of each year.

     (xii) "Initial Capital Contribution" shall mean the initial contribution to
the capital of the Company pursuant to this Agreement.

     (xiii) "Invested  Capital" means, at any point in time, for any Member, the
excess of (i) the aggregate amount of cash Capital Contributions  contributed to
the Company by such Member over (ii) the aggregate amount distributed (or deemed
distributed) to such Member pursuant to Section 6.3(a)(2).

Company Agreement Dutch Fork Capital LLC
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     (xiv) "Investor  Group" shall mean,  collectively,  FAX/Dutch Fork, L.P., a
Texas Limited (or their respective assigns).

     (xv) "Manager" and "Managers". As used in this Agreement the term "Manager"
shall mean each individual  Manager of the Company.  The term  "Managers"  shall
refer, collectively, to all of the Managers of the Company. The Company shall at
all times have three (3)  Managers.  The Members and the Company  shall take all
action within their respective power, including,  without limitation, the voting
of Units,  required to cause the election of: (a) at all times during the period
in which the  Servicing  Contract is in force and effect,  (i) two (2)  Managers
designated by Mortgage Assistance Corp., a Texas corporation  ("MAC"), who shall
initially be Dan Barnett and Fred Brown, and (ii) one (1) Manager  designated by
the Investor  Group,  who shall  initially be William Payne; or (b) at all times
after the date that the Servicing  Contract expires or is otherwise  terminated,
(i) two (2) Managers  designated  by the Investor  Group which are William Payne
and Rod Jones, and (ii) one (1) Manager  designated by MAC which is Dan Barnett.
The Members of the Company hereby elect and appoint Dan Barnett,  Fred Brown and
William  Payne as  Managers  of the  Company,  each to serve as such  until  his
successor is elected or  appointed  in  accordance  with this  Agreement  or, if
earlier, until his death, resignation, or removal from office in accordance with
this  Agreement.  In the  event  that  any  Manager  (a  "Withdrawing  Manager")
designated  by MAC or the  Investor  Group is unable to  serve,  or once  having
commenced  to serve,  is removed or  withdraws  as a Manager,  such  Withdrawing
Manager's  replacement (the "Substitute  Manager") shall be designated by MAC or
the Investor Group, as applicable.  The Company and each of the Members agree to
take all action  within  their  respective  power to cause the  election of such
designated Substitute Manager,  including,  without limitation (A) the voting of
Units to cause the election of such  Substitute  Manager as soon as  practicable
following his  designation,  and (B) the  instructing  of the  Manager(s) it had
previously  designated to serve as a Manager,  as the first order of business at
the first meeting thereof after such Substitute  Manager has been so designated,
to vote to seat such designated  Substitute Manager as a Manager in place of the
Withdrawing Manager. In the event MAC or the Investor Group fails to designate a
Manager as permitted in this definition, such Manager seat shall remain vacant.

     (xvi)  "Member"  shall  mean  any  person  that  signs in  person  or by an
attorney-in-fact,  or otherwise is a party to the Agreement at the time that the
Company is formed and is  identified as a Member in the Agreement and any Person
who is  subsequently  admitted as a Member in the Company in accordance with the
Texas Act and the  Agreement,  until  such  time as such  Person  withdraws,  is
removed, or is otherwise no longer a Member of the Company.

     (xvii)  "Membership  Interest" shall mean a Member's entire interest in the
Company,  including  such Member's  right to participate in the decisions of the
Members,  as reflected by the ratio of such  Member's  Units to the aggregate of
the Units of all Members.

     (xviii) "Net Profits" and "Net Losses" shall mean the income,  gain,  loss,
deductions and credits of the Company in the aggregate or separately  stated, as
appropriate,  determined under the Company's adopted method of accounting at the
close of each Fiscal Year.

     (xix) "Offer"  shall have the meaning  ascribed to such term in Section 7.3
hereof.

Company Agreement Dutch Fork Capital LLC
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     (xx)  "Offered  Interest"  shall have the meaning  ascribed to such term in
Section 7.3 hereof.

     (xxi)  "Percentage  of  Interest"  means,  for  a  Member,  the  percentage
equivalent of a fraction, the numerator of which is the number of Units owned by
such Member and the  denominator  of which is the total number of Units owned by
all Members.

     (xxii)  "Persons"  shall  mean  any  individuals,   partnerships,   limited
liability  companies,   corporations,   trusts,  business  trusts,  real  estate
investment trusts, estates and other associations or business entities.

     (xxiii) "Priority Return" means, at any point in time, for any Member, that
amount which, when considered  together with all amounts previously  distributed
(or deemed  distributed)  to such  Member  pursuant to Section  6.3(a)(1),  will
result in such Member  having  received a cumulative  return,  calculated at the
rate of interest equal to nine percent (9%) per annum,  compounded annually,  on
such Member's weighted average Invested Capital.

     (xxiv) "Reserves" shall mean, with respect to any fiscal period,  funds set
aside or  amounts  allocated  during  such  period to  reserves  which  shall be
maintained in amounts deemed  sufficient by the Managers for working capital and
to pay taxes, insurance, debt service or other costs or expenses incident to the
ownership or operation of the Company's business.

     (xxv)  "Securities Acts" shall mean the Securities Act of 1933 or any other
applicable state securities laws.

     (xxvi)  "Selling  Member"  shall mean any Member  who  sells,  assigns,  or
otherwise  transfers  for  consideration,  all or any  portion  of a  Membership
Interest.

     (xxvii)  "Servicing  Contract" shall mean that certain  Servicing  Contract
between  the  Company  and MAC in the form of  Exhibit  B,  attached  hereto and
incorporated herein by this reference.

     (xxviii)  "Texas Act" shall mean the Texas Limited  Liability  Company Law,
part of the Texas Business Organizations Code, as amended.

     (xxix) A "Transfer" of all or any part of a Membership  Interest  means any
type  of  disposition  of any  right,  title  or  interest  whatsoever  in  such
Membership  Interest,  voluntarily  or  involuntarily,  directly or  indirectly,
including without limitation any sale, exchange, assignment,  encumbrance, grant
of security interest, pledge,  hypothecation,  gift, transfer by trust, transfer
by will or intestate succession, or other disposition whatsoever.

     (xxx) "Transferring Person" shall have the meaning ascribed to such term in
Section 7.3.

Company Agreement Dutch Fork Capital LLC
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     (xxxi) "Treasury Regulations" shall mean the proposed,  temporary and final
regulations  promulgated  under the Code in effect as of the date of filing  the
Certificate  of  Formation  and the  corresponding  sections of any  regulations
subsequently issued that amend or supersede such regulations.

     (xxxii) "Units" shall mean equity  ownership in the Company  represented by
membership units ("Units").  The Company may issue such total number of Units as
the Managers shall determine, and may issue partial Units.

                              ARTICLE I. FORMATION

     1.1. Formation. On September 13, 2006, the Company was organized as a Texas
limited  liability company by execution and delivery of Certificate of Formation
to the Texas Secretary of State in accordance with the Texas Act.

     1.2.  Principal  Place Of Business.  The principal place of business of the
Company shall be located at 2614 Main Street,  Dallas,  Texas 75226. The Company
at any time may change the location of such  principal  office and may have such
other offices,  either within or without the State of Texas, as the Managers may
designate or as the business of the Company may require.

     1.3.  Registered Agent Office.  The initial registered agent of the Company
is MAC and the address of the initial  registered agent office of the Company is
2614 Main Street,  Dallas,  Texas  75226.  The  registered  agent office and the
registered  agent may be changed from time to time by the Managers by filing the
prescribed form with the Texas Secretary of State.

     1.4.  Term.  The  existence  of the  Company  shall  be  perpetual,  unless
terminated or dissolved as set forth herein.

     1.5.  Purpose.  The Company may conduct or promote any lawful businesses or
purposes for which limited liability  companies may be organized under the Texas
Act. The Company  shall  possess and may exercise all the powers and  privileges
necessary  or  convenient  to  the  conduct,  promotion,  or  attainment  of the
businesses or purposes of the Company.

                    ARTICLE II. RIGHTS AND DUTIES OF MANAGERS

     2.1. Management of Company Vested in the Managers. The business and affairs
of the Company  shall be managed by the  Managers.  The consent of a majority in
number  of the  Managers  then-serving  shall  be the act of the  Managers.  The
Managers  shall  direct,  manage and control the  business of the Company to the
best of their  ability.  Except  for  situations  in which the  approval  of the
Members is expressly  required  herein and as  specifically  provided in Section
3.5, the Managers shall have full and complete  authority,  power and discretion
to: (i) manage and control the  business,  affairs and  property of the Company;
(ii) make all  decisions  regarding  the  business,  affairs and property of the
Company;  and (iii) perform any and all other acts incident to the management of

Company Agreement Dutch Fork Capital LLC

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the Company's  business subject to the provisions of this Agreement.  Subject to
the limitations in the preceding  sentence,  the right,  power, and authority of
the  Managers  pursuant  to this  Agreement  shall  be  liberally  construed  to
encompass all acts and  activities in which a Company may engage under the Texas
Act.  Notwithstanding  the foregoing or any other provision of this Agreement to
the contrary,  the  Manager(s) of the Company who are designated by the Investor
Group shall have the sole and  exclusive  right and duty to act on behalf of the
Company  in  connection  with any matter  relating  to the  Servicing  Contract,
including,  without  limitation,  exercising  any right  (including the right to
terminate  the  Servicing  Contract  in  accordance  with its  terms)  or remedy
accruing to the Company under the Servicing Contract.

     2.2.  Certain  Powers of Managers.  Without  limiting the generality of the
provisions set forth in Section 2.1 above,  the Managers shall have the power to
act on behalf of the Company:

          (a)  To  enter  into  and  execute,  on  behalf  of the  Company,  all
     agreements, contracts, instruments and related documents in connection with
     the Company's business,  on such terms as the Managers, in their reasonable
     discretion, deem to be in the best interests of the Company.

          (b) To carry out the business of the Company.

          (c) To acquire and enter into, on behalf of the Company,  any contract
     of insurance,  which the Managers  reasonably deem necessary and proper for
     the protection of the Company, for the conservation of its property, or for
     any purpose beneficial to the Company.

          (d) To employ persons (including affiliates of any Manager, subject to
     the  restrictions  on  compensation  to such  affiliates  set forth in this
     Agreement)  in the  operation  of the  Company,  on such terms and for such
     compensation as the Managers shall reasonably determine.

          (e) To employ attorneys, accountants,  consultants, brokers, and other
     outside  entities or  individuals  (including  affiliates  of any  Manager,
     subject to the restrictions on compensation to such affiliates set forth in
     this Agreement) on behalf of the Company.

          (f) To pay, collect, compromise, arbitrate, resort to legal action for
     or otherwise adjust claims or demands of or against the Company.

          (g) To sell assets to another  investor as well as maintain  servicing
     and/or  obtain  other  incentives  as  deemed in the best  interest  of the
     company.

     2.3. Liability for Certain Acts. Each Manager shall perform his duties as a
Manager  in good  faith,  in a  manner  reasonably  believed  to be in the  best
interest of the Company, and with such care as an ordinarily prudent person in a
like position would use under similar circumstances.  If any Manager so performs
the duties as a Manager,  he shall not have any  liability by reason of being or
having  been a  Manager.  No  Manager  shall be liable to the  Company or to any
Member for any loss or damage sustained by the Company or any Member, unless the

Company Agreement Dutch Fork Capital LLC

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<PAGE>

loss or damage shall have been the result of fraud,  deceit,  gross  negligence,
willful misconduct or a wrongful taking by such Manager.

     2.4. Members and Managers Have No Exclusive Duty to Company.  The Managers,
and  affiliates of the Managers,  shall not be required to manage the Company as
their  sole and  exclusive  function  and each  Member  and  Manager  and  their
affiliates may have other business  interests and may engage in other activities
in addition to those relating to the Company,  including  business  interests or
other activities that directly compete with the business of the Company.

     2.5.  Authority of Managers to Deal with  Affiliates.  The Managers may, on
behalf of the Company, contract with any person, firm or corporation, including,
without limitation,  any of the Members,  any entity in which any of the Members
or any Manager has a direct or indirect  interest and any  affiliated or related
corporation or other entity,  for the  performance of any and all services which
may at any time be  necessary,  proper,  convenient or advisable to carry on the
business of the Company;  provided that any such  transaction  shall be effected
only on terms  competitive  with those that may be  obtained  from  unaffiliated
persons.  Any goods or services  provided by  affiliates to the Company shall be
pursuant  to a written  contract  which sets forth the goods and  services to be
provided and the compensation to be paid.

     2.6.  Number of  Managers.  The Members by  unanimous  vote may increase or
decrease (but not below one (1)) the number of Managers  constituting all of the
Managers of the Company.

     2.7. Compensation and Fees. Each Manager shall be reimbursed by the Company
for all approved out of pocket expenses  incurred by such Manager in furtherance
of performing his obligations to the Company as Manager.  Except as specifically
provided in the Servicing  Contract,  no Manager shall receive any  compensation
other than  reimbursement of out-of-pocket  expenses incurred by such Manager in
furtherance  of the  business  of the  Company.  No Manager  shall  receive  any
additional compensation except as the Members shall decide.

                 ARTICLE III. RIGHTS AND OBLIGATIONS OF MEMBERS

     3.1. Limitation of Members'  Liabilities.  Based on the Texas Act, a Member
shall not be bound by, or be personally liable for, the expenses, liabilities or
obligations of the Company or the Managers, and such Member's liability shall be
limited  solely  to the  amount of its  Capital  Contributions,  whether  or not
returned to such Member, together with the undistributed share of the profits of
the Company from time to time credited to such Member's  Capital Account and any
money or other property wrongfully paid or conveyed to such Member on account of
its  Capital  Contributions,  including  but not limited to money or property to
which creditors were legally entitled,  paid or conveyed to a Member, and, under
certain circumstances, interest on returned capital.

     3.2. No Control of Business or Right to Act for  Company.  No Member  shall
have any right or authority to act for or bind the Company or to vote on matters
other  than the  matters  set forth in this  Agreement,  except as  specifically
required by applicable law.

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<PAGE>

     3.3.  Priority and Return of Capital.  Except as provided herein, no Member
shall  have  priority  over  any  other  Member,  as to the  return  of  Capital
Contributions, Net Profits, Net Losses or distributions.

     3.4. Meetings of the Members; Voting Rights.

          (a) Meetings of the Members may be called by the Managers and shall be
     called  by the  Managers  upon the  written  request  of  Members  with the
     authority to vote an aggregate of not less than 49% Percentage of Interest.
     Upon receipt of such a written request, stating the purpose of the proposed
     meeting,  the Managers  shall provide each Member,  within ten (10) days of
     such  request,  with written  notification  of a meeting and the purpose of
     such meeting.  Such meetings  shall be held not less than fifteen (15) days
     or more than sixty (60) days after the receipt of such request and shall be
     held at the principal  place of business or principal  executive  office of
     the Company or such other place as the Members shall unanimously decide.

          (b) At all  meetings  of the  Members,  any  decision,  determination,
     consent,  approval or action by or of the Members  shall be effected by the
     favorable  vote of all of the Members of the Company,  unless the vote of a
     greater  or lesser  number is  otherwise  required  by the Texas  Act,  the
     Certificate of Formation or this Agreement.

          (c) At all  meetings  of the  Members,  a  Member  may  vote by  proxy
     executed in writing by the Member or by a duly authorized attorney-in-fact.
     Such proxy  shall be filed with the Company at least one (1) day before the
     meeting.  Unless  otherwise  provided  in the  proxy,  no  proxy  shall  be
     effective after eleven (11) months after the date of its execution.

          (d) Action  required or  permitted to be taken at a meeting of Members
     may be taken  without a meeting if the action is  evidenced  by one or more
     written  consents  describing  the  action  taken,  signed  by each  Member
     entitled to vote,  and  delivered to a Manager for inclusion in the minutes
     or for filing with the Company records.  Action taken under this section is
     effective when all Members  entitled to vote have signed a consent,  unless
     the consent specifies a different effective date.

          (e) When any notice is required to be given to any Member, a waiver of
     the notice in writing signed by the person entitled to the notice,  whether
     before,  at, or after the time stated  therein,  shall be equivalent to the
     giving of the notice.

     3.5.  Powers  Reserved to the  Members.  At all times  while the  Servicing
Contract is in full force and effect (but not from and after the  expiration  or
other termination of the Servicing  Contract),  each of the following actions on
behalf of the Company shall require the unanimous approval of the Members:

          (a) the  acquisition  of any real  property in excess of $100,000  per
     parcel of real estate;

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          (b) the  acquisition  of any asset or portfolio of assets in excess of
     $100,000 per asset;

          (c)  the  execution,  on  behalf  of the  Company,  of  the  Servicing
     Contract,  or any amendment thereto, to service the REOs referenced therein
     and any additional portfolio of assets owned by the Company;

          (d) the sale,  exchange or other  disposition of substantially  all of
     the assets of the Company;

          (e) the filing by the Company of any voluntary  petition in bankruptcy
     or delivery of any assignment for the benefit of creditors;

          (f) the lending of Company  funds to any Person  (except as  otherwise
     set forth  herein),  or  obligating  the  Company as surety,  guarantor  or
     accommodation  party,  except that the Company  shall be able to  guarantee
     credit accounts with suppliers in the ordinary course of business;

          (g) the  incurrence  of any debt on behalf of the Company,  other than
     trade debt incurred in the ordinary course of the Company's business;

          (h) the  investment  or  participation  by the  Company  in any  other
     entity;

          (i) the merger or consolidation of the Company;

          (j)  the   admission  of  new  Members  of  the  Company,   except  as
     specifically provided in Section 8.1;

          (k) the  establishment  of Reserves to help meet  anticipated  Company
     expenses and the investment of such Reserves pending utilization; or

          (l) The opening of any bank or investment account;

ARTICLE IV. COMPANY BOOKS AND RECORDS; AMENDMENT OF AGREEMENT; POWER OF ATTORNEY

     4.1. Amendment of Agreement.

          (a)  Amendment.  Any amendment to this  Agreement  must be approved in
     writing by all of the Members and by the Managers.

          (b) Recording of Amendment.  In making any amendments,  there shall be
     prepared and filed for  recordation  by the  Managers  such  documents  and
     certificates,  if any, as shall be required to be prepared  and filed under

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     the Texas Act and  under the laws of the other  jurisdictions  in which the
     Company is then formed or qualified.

     4.2. Books and Records, Accounting, Reports, Tax Elections.

          (a)  Availability.  At all times during the  existence of the Company,
     the Managers shall keep or cause to be kept full and true books and records
     of account.  Such books and records of account  shall be  maintained at the
     principal place of business of the Company or such other place or places as
     may be  determined  by the Managers  from time to time.  In  addition,  the
     Company shall  maintain at its  principal  office (i) a current list of the
     full name and last  known  business  address  of each  Member  set forth in
     alphabetical  order,  (ii) a copy of  this  Agreement  and  all  amendments
     thereto,  together with executed copies of any powers of attorney  pursuant
     to which this Agreement or any amendment has been executed, (iii) copies of
     the Company's federal, state and local tax returns and reports, if any, for
     the  three  (3) most  recent  years,  and (iv)  accounting  records  of the
     Company.  The Company shall keep all original titles to real property owned
     by the Company at a title  company to be designated by the Managers as soon
     as  commercially  practical.  Any Member or his, her or its duly authorized
     representative  shall  have the  right to  inspect  and copy the  books and
     records of the Company upon reasonable notice during business hours.

          (b)  Financial  Reports.  The Managers  shall cause to be prepared and
     delivered to each Member,  at the expense of the  Company,  such  financial
     reports as shall be decided by the Managers.

          (c)  Income Tax  Information.  The  Managers  shall  cause  income tax
     returns  for the Company to be prepared  by the  Company's  accountant  and
     filed with the  appropriate  authorities  and shall  furnish to each Member
     within ninety (90) days after the close of the taxable year of the Company,
     all tax information  with respect to the Company as may be required by each
     Member for the preparation of his, her or its individual  federal and state
     tax returns, at the expense of the Company.

          (d) Accounting Principles.  The Company's books shall be maintained in
     accordance with generally accepted accounting  principles determined by the
     Company's  accountants,  which accounting  principles shall be consistently
     applied.

          (e) Bank  Accounts.  The Managers are  authorized  to open one or more
     bank or investment accounts for and in the name of the Company and withdraw
     funds or sign checks  withdrawing  funds from each such bank or  investment
     account for the sole purpose of paying all ordinary and  necessary  charges
     and expenses incident to or arising out of the operations of the Company in
     the  ordinary  course of business  (including  expenses  arising out of the
     Servicing  Contract provided that the Servicing  Contract has been approved
     by  the  Members  as  required   herein)  or  to  make   distributions   of
     Distributable  Cash to the  Members,  and that such  banks  and  investment
     companies  be, and hereby are,  authorized  and directed to honor,  pay and
     charge to the  account of the Company all checks and orders for the payment
     of money so drawn when so signed; provided,  however, that the signature of
     at least one  Manager  designated  by the  Investor  Group and one  Manager
     designated  by MAC shall be required to withdraw  funds  (whether by check,

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<PAGE>

     wire  transfer or  otherwise)  from any such account in any amount  greater
     than $2,000.  The Managers are  authorized  to certify to any bank or other
     investment  company  a copy of  this  Section  4.2(e)  and  the  names  and
     signatures of the Company's  Managers  authorized  and/or  required to sign
     checks  as  provided  in this  Section  4.2(e),  and  such  bank  or  other
     investment company is hereby authorized to rely upon such certificate until
     formally advised of any changes therein.

 ARTICLE V. CONTRIBUTIONS TO THE COMPANY; CAPITAL ACCOUNTS; SECURITIES MATTERS

     5.1. Initial Capital  Contributions.  Each Member shall contribute the cash
amount set forth  opposite such Member's name on Exhibit A, attached  hereto and
incorporated herein, as his, her or its Initial Capital Contribution.  Exhibit A
shall  be  revised  from  time  to time  as  necessary  to  record  all  Capital
Contributions  and all  changes in the  Company  and  ownership  of the  Company
effected in accordance with this Agreement, and Exhibit A as so revised shall be
furnished to each Member.

     5.2. Additional Contributions; Additional Units; Preemptive Rights.

          (a) Unless  approved  by all of the  Members,  no  additional  Capital
     Contributions shall be required from any Members.  Upon such approval,  the
     Managers  shall  give  written  notice to each  Member of the amount of any
     required additional Capital Contributions, and each Member shall deliver to
     the Company his, her or its pro rata share thereof based upon such Member's
     Percentage of Interest no later than ten (10) days  following the date such
     notice is given.

          (b) Unless approved by all of the Members, the Company shall not offer
     additional  Units or any other  interest  in the  Company for sale to third
     parties.  If  authorized  by the  Members,  the  purchase  price  for which
     additional  Units shall be offered  shall be  determined  by the  Managers.
     Purchasers  of  additional  Units  pursuant to this  paragraph  who are not
     already  Members  shall be admitted to the Company as Members in accordance
     with  Section  8.1  hereof.  The  Managers  are  authorized  to adjust  the
     Percentages  of  Interest  of the  Members as  appropriate  to reflect  the
     issuance of additional Units.  Exhibit A shall be revised from time to time
     as necessary to record all changes in the ownership of the Company effected
     in  accordance  with this  section,  and  Exhibit A as so revised  shall be
     furnished to each Member.

     5.3. Failure to Contribute  Additional  Contributions.  In the event that a
Member does not  contribute  his, her or its portion of the  additional  Capital
Contribution  provided  for in  Section  5.2(a)  when due,  then  such  Member's
Membership  Interest  shall be reduced  pro-rata by the proportion of the unpaid
additional  Capital  Contribution of such Member to the aggregate of all Capital
Contributions actually made by such Member pursuant to Sections 5.1 and 5.2.

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<PAGE>

     5.4. Capital Accounts.

          (a) A Capital Account will be maintained for each Member in accordance
     with Section  1.704-1(b)(2)(iv) of the Treasury Regulations.  Each Member's
     Capital  Account will be increased  by: (i) the amount of money or the fair
     market value of property  contributed  by such Member to the Company;  (ii)
     allocations  to each Member of Net Profits;  and (iii)  allocations to each
     Member of income  described in Code  Section  705(a)(1)(B).  Each  Member's
     Capital  Account will be decreased by: (a) the amount of money  distributed
     to each  Member  by the  Company;  (b) the Fair  Market  Value of  property
     distributed to each Member by the Company,  net of  liabilities  secured by
     such distributed  property that such Member is considered to assume or take
     subject to, pursuant to Code Section 752; (c) allocations to the Member for
     expenditures  described in Code Section  705(a)(2)(B);  (d)  allocations to
     each  Member of Net  Losses;  and (e)  allocations  to the  account of such
     Member of other Company  losses and deductions as set forth in the Treasury
     Regulations.

          (b) In the  event of a  permitted  sale or  exchange  of a  Membership
     Interest in the Company, the Capital Account of the transferor shall become
     the  Capital  Account  of the  transferee  to the  extent it relates to the
     transferred  Membership  Interest in accordance  with Treasury  Regulations
     Section 1.704-1(b)(2)(iv).

          (c) A Member shall not receive out of the Company's  property any part
     of its Capital  Contribution  until all liabilities of the Company,  except
     liabilities to Members on account of their Capital Contributions, have been
     paid or there remains property of the Company sufficient to pay them.

     5.5. Securities Matters.  The undersigned Members understand:  (i) that the
Membership Interests evidenced by this Agreement have not been, and will not be,
registered  under the  Securities  Acts  because  the  Company is issuing  these
Membership  Interests  in reliance  upon the  exemptions  from the  registration
requirements  of the Securities  Acts; (ii) that the Company has relied upon the
fact that the Membership Interests are to be held by each Member for investment;
and (iii) that exemption from registrations  under the Securities Acts would not
be available if the  Membership  Interests were acquired by a Member with a view
to distribution.

                     ARTICLE VI. ALLOCATIONS, DISTRIBUTIONS

     6.1. Allocations of Profits and Losses.

          (a) Except as provided in Section  6.2, Net Profits of the Company for
     each Fiscal Year shall be allocated to each Member in  proportion  to their
     Percentage of Interests.

          (b) Except as provided in Section  6.2,  Net Losses of the Company for
     each Fiscal Year shall be allocated to the Members in  proportion  to their
     Percentage of Interests.

     6.2. Special Allocations.

     Notwithstanding any other provisions of this Agreement to the contrary:

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<PAGE>

          (a) No allocation of loss, deduction, and/or expenditures described in
     Code Section  705(a)(2)(B)  shall be charged to the Capital  Account of any
     Member if such allocation would cause such Member to have a Deficit Capital
     Account.  The amount of the loss,  deduction and/or expenditure which would
     have caused a Member to have a Deficit  Capital  Account  shall  instead be
     charged to the Capital  Account of each Member who would not have a Deficit
     Capital  Account  as a  result  of the  allocation,  in  proportion  to its
     respective Capital Contributions.

          (b) In the event any Member  unexpectedly  receives  any  adjustments,
     allocations,  or  distributions  described in Treasury  Regulation  Section
     1.704-1(b)(2)(ii)(d)(4),(5),  or (6),  which  create or  increase a Deficit
     Capital  Account of such  Member,  then  items of  Company  income and gain
     (consisting of a pro rata portion of each item of Company income, including
     gross  income,  and gain for such year and, if  necessary,  for  subsequent
     years) shall be specially credited to the Capital Account of such Member in
     an amount and manner sufficient to eliminate, to the extent required by the
     Treasury Regulations,  the Deficit Capital Account so created as quickly as
     possible.  This  provision is intended to  constitute  a "qualified  income
     offset"    within   the    meaning   of   Treasury    Regulation    Section
     l.704-1(b)(2)(ii)(d)(3)  and shall be applied  and  interpreted  consistent
     therewith.

          (c) In the event any Member  would have a Deficit  Capital  Account at
     the end of any Fiscal Year which is in excess of the sum of any amount that
     such  Member  is  obligated  to  restore  to  the  Company  under  Treasury
     Regulations Section 1.704-l(b)(2)(ii)(c) and such Member's share of minimum
     gain as defined in Treasury Regulation Section  1.704-2(g)(1),  the Capital
     Account of such Member  shall be specially  credited  with items of Company
     income  (including  gross  income) and gain in the amount of such excess as
     quickly as possible.

          (d)  Notwithstanding  any other  provision  of this Section 6.2 to the
     contrary,  if there is a net  decrease  in the  Company's  minimum  gain as
     defined in Treasury  Regulation Section 1.704-2(d) during a taxable year of
     the Company, then each Member shall be allocated items of income (including
     gross  income)  and gain for such year  (and if  necessary  for  subsequent
     years) equal to that Member's share of the net decrease in Company  minimum
     gain.  This  Section  6.2(d) is intended  to comply  with the minimum  gain
     chargeback  requirement of Treasury Regulation Section 1.704-2(f) and shall
     be  interpreted  consistently  therewith.  If in any taxable  year that the
     Company has a net decrease in the Company's  minimum gain, the minimum gain
     chargeback requirement would cause a distortion in the economic arrangement
     among  the  Members  and it is not  expected  that the  Company  will  have
     sufficient  other  income to correct that  distortion,  the Managers may in
     their  discretion  (and shall,  if  requested to do so by a Member) seek to
     have the  Internal  Revenue  Service  waive  the  minimum  gain  chargeback
     requirements in accordance with Treasury Regulation Section 1.704-2(f)(4).

          (e) Items of Company  loss,  deduction and  expenditures  described in
     Code Section 705(a)(2)(B) which are attributable to any nonrecourse debt of
     the Company and are  characterized as member  nonrecourse  deductions under
     Treasury  Regulation  Section 1.704-2(i) shall be allocated to the Members'
     Capital Accounts in accordance with Treasury Regulation Section 1.704-2(i).

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<PAGE>

          (f) Beginning in the first taxable year in which there are allocations
     of "nonrecourse  deductions," as described in Treasury  Regulation  Section
     1.704-2(b), such deductions shall be allocated to the Members in accordance
     with,  and as a part of, the  allocations of Company Net Profit or Net Loss
     for such period.

          (g) In  connection  with a Capital  Contribution  by a new or existing
     Member as  consideration  for one or more Units,  or in connection with the
     liquidation  of the Company or a  distribution  of money or other  property
     (other  than a de minimis  amount) by the  Company to a retiring  Member as
     consideration  for one or more Units,  the Capital  Accounts of the Members
     shall be adjusted to reflect a revaluation  of Company  property  including
     intangible   assets  in  accordance   with  Treasury   Regulation   Section
     1.704-1(b)(2)(iv)(f).     If    under    Treasury     Regulation    Section
     1.704-1(b)(2)(iv)(f)  Company  property  that has been revalued is properly
     reflected in the Capital Accounts and on the books of the Company at a book
     value that  differs  from the  adjusted  tax basis of such  property,  then
     depreciation, depletion, amortization and gain or loss with respect to such
     property  shall be shared among the Members in a manner that takes  account
     of the  variation  between the adjusted tax basis of such  property and its
     book value, in the same manner as variations between the adjusted tax basis
     and Fair Market Value of property contributed to the Company are taken into
     account in determining  the Members' shares of tax items under Code Section
     704(c).

          (h) All  recapture  of income tax  deductions  resulting  from sale or
     disposition  of Company  property shall be allocated to the Members to whom
     the deduction that gave rise to such  recapture was allocated  hereunder to
     the extent  that such Member is  allocated  any gain from the sale or other
     disposition of such Company property.

          (i) Any credit or charge to the Capital  Accounts of the Members under
     this  section  6.2 shall be taken  into  account  in  computing  subsequent
     allocations  of  profits  and  losses,  so that the net amount of any items
     charged or  credited to Capital  Accounts  shall be equal to the net amount
     that would  have been  allocated  to the  Capital  Account  of each  Member
     pursuant  to the  provisions  of this  Article if the  special  allocations
     required by this Section 6.2 had not occurred.

          (j)  In  accordance  with  Code  Section   704(c)(1)(A)  and  Treasury
     Regulation Section 1.704-3,  if a Member  contributes  property with a fair
     market  value  that  differs  from  its  adjusted  basis  at  the  time  of
     contribution,  income,  gain,  loss  and  deductions  with  respect  to the
     property shall, solely for federal income tax purposes,  be allocated among
     the Members so as to take  account of any  variation  between the  adjusted
     basis of such property to the Company and its fair market value at the time
     of contribution.

     6.3. Distributions.

          (a)  Notwithstanding  anything  herein to the contrary,  Distributable
     Cash of the Company may be distributed to the Members, at such times and in
     such  amounts as the Managers may in their sole  discretion  determine,  as
     follows:

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<PAGE>

                    1)  First,  100%  to all  Members  in  proportion  to  their
               respective  amounts  of  Invested  Capital,  until they each have
               received their unpaid Priority Return;

                    2)  Second,  100% to all  Members  in  proportion  to  their
               respective amounts of Invested Capital,  until they have received
               cumulative   distributions  equal  to  their  aggregate  Invested
               Capital; and

                    3) Third, to the Members in accordance with their respective
               Percentages of Interest.

                          ARTICLE VII. TRANSFERABILITY

     7.1.  General.  Except as provided  herein or as otherwise  consented to in
writing  by the  Members,  a  Member  shall  not  Transfer  all or any part of a
Membership Interest. Any purported or attempted Transfer of all or any part of a
Membership  Interest in violation of this Article VII shall be null and void and
the purported  transferee of such invalid Transfer shall not be entitled to have
any interest in the Company  transferred  to such  purported  transferee  on the
books of the Company.

     7.2.  Transfers Not Requiring  Prior Consent.  A Member may,  without first
obtaining the written consents  required in Section 7.1 above,  Transfer by sale
or gift all or any undivided share of its Membership Interest to any one or more
of the following: (i) a partnership, limited liability company or corporation in
which fifty  percent  (50%) or more of the capital and profit  interests (in the
case of a partnership or a limited liability  company) or in which fifty percent
(50%) or more of the capital stock (in the case of a corporation) is owned by or
for the benefit of the Member;  (ii) the  Member's  partners (if the Member is a
partnership),  the  Member's  members  (if the  Member  is a  limited  liability
company) or the Member's  shareholders  (if the Member is a corporation);  (iii)
the Company;  and (iv) a Member or Members;  provided any such transferee  shall
agree in writing to be bound by the terms and  conditions  of this  Agreement as
they  applied  to the  transferring  Member  on the  date of  execution  of this
Agreement  in  the  same  manner  as if the  transferring  Member  had  retained
ownership of its Membership  Interest (upon meeting the foregoing  requirements,
such transferee shall be referred to as a "Permitted Transferee").

     7.3. Voluntary Transfer Procedure.

          (a) A  Member  who  desires  to  Transfer  all  or  any  portion  of a
     Membership Interest (the "Transferring Person") to a third party, except as
     permitted under Section 7.2, shall obtain from such third party a bona fide
     written   offer  to  purchase  such   Membership   Interest  (the  "Offered
     Interest"),  stating the terms and conditions upon which the purchase is to
     be  made  and  the  consideration  offered  therefor  (the  "Offer").   The
     Transferring  Person  shall give written  notification  to the Managers and
     each of the Members, by certified mail or personal delivery, of his, her or
     its intention to Transfer the Offered Interest,  furnishing to the Managers
     and each Member a copy of the Offer.

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          (b) Upon receipt of the written notice  required  under  paragraph (a)
     above,  the  Company  and the  Members  shall  comply  with  the  following
     procedure:

               (i) The  Company  shall  have  thirty  (30) days from the date of
          delivery of the notice  required by paragraph  (a) above to notify the
          Transferring Person in writing of the Company's election to redeem all
          or a part of the Offered  Interest at the purchase  price set forth in
          Section 7.4 of this Agreement,  which decision of the Company shall be
          made by an affirmative vote of all of the Members.

               (ii) If the  Company  does not elect to redeem all of the Offered
          Interest,  the other Members shall have the right,  within thirty (30)
          days of the  date of the  notice  of  nonelection  by the  Company  or
          election  as to less  than all of the  Offered  Interest,  to elect to
          purchase the remaining Offered Interest,  and the Transferring  Person
          shall sell such  interest to the other  Members at the purchase  price
          set forth in Section  7.4 of this  Agreement.  Any Member  desiring to
          acquire  any or  all of the  Offered  Interest  shall  deliver  to the
          Managers  and each of the Members a written  election to purchase  the
          Offered Interest.

               (iii) If two or more Members of the Company elect to exercise the
          option to purchase  the Offered  Interest  then,  in the absence of an
          agreement  between  them,  each Member shall have priority to purchase
          such   proportion  of  the  available   interest  that  such  Member's
          Percentage of Interest bears to the total Percentage of Interests held
          by all other Members electing to purchase.  The portion of the Offered
          Interest not purchased on such a priority  basis shall be allocated in
          one or more  successive  allocations  to  those  Members  electing  to
          purchase  more than the  proportion  of the  Percentage of Interest to
          which they have a priority  right, up to the proportion of the Offered
          Interest specified in their respective notices, in the proportion that
          the  Percentage  of Interests  held by each of them bears to the total
          Percentage of Interest held by all of them.

               (iv) If the Company and the Members do not exercise  their rights
          to redeem or purchase, as the case may be, all of the Offered Interest
          pursuant  to the terms  set forth in  Section  7.3(b)(i)  and  Section
          7.3(b)(ii)  above,  then  the  Transferring  Person  shall  be free to
          Transfer the remaining  part of the Offered  Interest to the bona fide
          purchaser set forth in the Offer under the terms of the Offer, subject
          to the  restrictions on such Transfer imposed by this Agreement or any
          other agreement or by law.

               (v) If the Company exercises its right to redeem all or a part of
          the Offered  Interest in accordance with Section  7.3(b)(i) above, the
          Transferring  Person shall be obligated to sell such Offered  Interest
          to the Company.  If any or all of the Members exercise their rights to
          purchase  all or a part of the  Offered  Interest in  accordance  with
          Section  7.3(b)(ii) above, the Transferring  Person shall be obligated
          to sell such Offered Interest to such exercising Members.  The closing
          of the Transfer of the Offered Interest from the  Transferring  Person
          to the Company or any Members  pursuant to this Section  shall be held
          at the  principal  offices of the  Company  not later than ninety (90)
          days after receipt of notice required by paragraph (a) above.

          (c) In the  event of the  Transfer  of all or any part of any  Offered
     Interest by a Transferring Person to any third party, and as a condition to

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<PAGE>

     recognizing the effectiveness and binding nature of any such Transfer,  the
     Company may require the Transferring  Person or Transferring Person and the
     third party, as the case may be, to execute, acknowledge and deliver to the
     Members or Managers such instruments of transfer, assignment and assumption
     and such other certificates,  representations and documents, and to perform
     all such other acts which the Managers deem necessary or desirable.

     7.4. Purchase Price. The purchase price to be paid to a Transferring Person
for all or any part of such Transferring  Person's  Membership Interest redeemed
by the Company or purchased by a Member under Section  7.3(b) shall be the lower
of (i) the purchase price set forth in the Offer for such  Membership  Interest,
or (ii) the product of (A) the Percentage of Interest represented by the Offered
Interest  multiplied  by (B) the Fair Market Value of the Company as of the date
of such redemption or purchase.

     7.5.  Remedies.  The Members  agree that a violation by any of them of this
Article VII will cause such  damage to the  Company and to the other  Members as
will be  irreparable  and the  exact  amount  of  which  will be  impossible  to
ascertain. For this reason, the Members agree that the Company shall be entitled
as a matter of right to a decree of  specific  performance  of the terms of this
Article VII or for  temporary or permanent  injunctive  relief from any court of
competent  jurisdiction  restraining  any  attempted  or  purported  Transfer of
interest in the Company in  violation  of this  Article  VII. In  addition,  any
Member  attempting  or  purporting  to  Transfer  an  interest in the Company in
violation of this Article VII and the purported transferee  participating in the
attempted  or  purported  Transfer,  shall be jointly  and  severally  liable to
reimburse and pay the Company for any and all costs, fees and expenses including
without limitation any attorneys', accountants', and other professional fees and
expenses  actually  expended or incurred by the Company in  connection  with any
such violation, whether or not litigation ensues. The remedies set forth in this
Section 7.5 shall be  cumulative  and in addition to whatever  other  rights and
remedies the Company and the Members may have to protect their respective rights
in the event of a violation of the  provisions  of this  Article VII,  including
without limitation the right to recover damages including actual,  compensatory,
consequential, incidental and punitive damages.

     7.6.  Effect of Transfer of Interest.  Upon the Transfer of any interest in
the  Company  in  accordance  with  the  provisions  of this  Article  VII,  the
transferee of such interest shall own and hold such interest in the Company as a
transferee,  subject  to all the  terms,  conditions,  and  limitations  of this
Agreement,  including without limitation  restriction on any further Transfer of
such interest as provided in this Article VII.  Consent to such  Transfer  shall
not  constitute  consent to the  admission of the  transferee as a Member of the
Company. A transferee may become a Member only in accordance with the provisions
of Section 8.1.  Unless a  transferee  is admitted to the Company as a Member in
accordance  with the  provisions  of Section 8.1, such  transferee  shall not be
entitled to any of the rights or benefits of a Member hereunder except the right
to the share of  profits  and losses and  distributions  of assets  based on the
transferee's  Percentage  of Interest.  Without  limiting the  generality of the
preceding  sentence,  such  transferee  shall  have no right  (i) to vote  upon,
approve,  or consent to, any matter  requiring the vote,  approval or consent of
the Members,  or (ii) to receive any information from the Company of the kind to
which Members are entitled, or any other information.

Company Agreement Dutch Fork Capital LLC

                                       13
<PAGE>

                ARTICLE VIII. ADMISSION AND WITHDRAWAL OF MEMBERS

     8.1.  Admission  of Members.  No  additional  Member may be admitted to the
Company,  except upon the prior  written  consent of all of the Members and upon
such additional Member signing, in person or by  attorney-in-fact,  or otherwise
becoming a party to this Agreement;  provided,  however, each Permitted Assignee
(as defined in Section 7.2) shall  automatically be deemed to be a Member of the
Company regardless of whether or not the Members consented to said transfer.  No
Member shall have the power to grant a transferee, and no transferee shall have,
the right to become a Member of the Company except as  specifically  provided in
the  preceding  sentence.  If a Member who is an  individual  dies or a court of
competent jurisdiction adjudges him or her to be incompetent to manage person or
property, the Member's executor, administrator,  guardian, conservator, or other
legal  representative may exercise all of the Member's rights for the purpose of
settling his estate or  administering  his property and shall have any power the
Member had to give his or her assignee a  Percentage  of Interest in Net Profits
and Net  Losses.  Said  assignee  may not be admitted as a Member of the Company
except upon the prior written consent of the Members.

     8.2.  Withdrawal of Members.  No Member shall have any right to withdraw or
resign as a Member of the Company prior to the dissolution and winding up of the
Company,  except  upon a  Transfer  of all of his,  her or its  interest  in the
Company in accordance with the terms and conditions of Article VII. A Member who
resigns or whose  Membership  Interest is otherwise  terminated  for any reason,
shall not be entitled to receive any  distributions  to which such Member  would
have been entitled had such Member remained a Member. Damages for breach of this
section 8.2 shall be monetary  damages  only and not specific  performance,  and
such damages may be offset  against  distributions  by the Company to which such
Member would otherwise be entitled.

                     ARTICLE IX. WINDING UP AND TERMINATION

     9.1.  Events  Requiring  Winding Up. The Company shall be wound up upon the
occurrence of any of the following events:

          (a) Unanimous written consent of the Members; or

          (b) The  consent of a majority in number of the  remaining  Members to
     wind up the Company  within  ninety (90) days after the Company is wound up
     in accordance with the Texas Act.

     9.2.  Winding  Up,  Liquidation  and  Distribution  of Assets.  If an event
requiring the winding up of the Company  occurs,  the Managers shall wind up the
business of the Company and shall apply or distribute the assets of the Company,
or shall  sell the  assets  of the  Company  and  apply or  distribute  proceeds
thereof, as promptly as practicable and in the following order of priority:

Company Agreement Dutch Fork Capital LLC

                                       14
<PAGE>

          (a) First, if there are sufficient  assets  therefor,  to creditors of
     the Company,  including Members who are creditors,  to the extent permitted
     by law, in satisfaction  of liabilities of the Company  (whether by payment
     or the making of  reasonable  provision  for  payment  thereof)  other than
     liabilities for  distributions  to Members;  and if there are  insufficient
     assets, such claims and obligations shall be paid or provided for according
     to their  priority and,  among claims and  obligations  of equal  priority,
     ratably to the  extent of assets  available  therefor;  and if there is any
     contingent, conditional, or unmatured debt, claim, obligation, or liability
     known to the Company,  a reserve shall be established  for it in accordance
     with law, in an amount  determined  by the Managers to be  appropriate  for
     such purpose; and

          (b) Second,  any remaining  assets,  to the Members in accordance with
     the priorities set forth in Section 6.3(a).  The Company may offset damages
     for breach of this  Agreement  by a Member  against  the  amount  otherwise
     distributable to such Member hereunder.

          At  the  time  final  distributions,  exclusive  of any  reserves  for
     contingent,  conditional or unmatured  items,  are made in accordance  with
     clause  (c)  above,  the  Company  shall  terminate,  but,  if at any  time
     thereafter, any reserve is released because the Managers determine the need
     for such  reserve  is ended,  then such  reserve  shall be  distributed  in
     accordance with clause (c) above.

     9.3. Return of Contribution  Nonrecourse to Members.  Except as provided by
law or as  expressly  provided in this  Agreement,  upon winding up, each Member
shall look solely to the assets of the Company for the return of his, her or its
Capital  Contribution.  If the Company  property  remaining after the payment or
discharge of the debts and  liabilities of the Company is insufficient to return
the Capital  Contribution  of one or more Members,  such Member or Members shall
have no recourse against any other Member or any Manager.

                            ARTICLE X. MISCELLANEOUS

     10.1.  Notice. Any notice required or permitted to be given pursuant to the
provisions of the Texas Act or this Agreement  shall be effective as of the date
personally delivered,  delivered via facsimile with electronic confirmation,  or
delivered via  overnight  express  mail,  or if sent by certified  mail,  return
receipt  requested,  three (3) days after being deposited with the United States
Postal  Service,  prepaid and  addressed to the  intended  recipient at the last
known address as shown in the Company's records.

     10.2.  Waiver of Notice.  Whenever any notice is required to be given under
the provisions of the Texas Act or this Agreement, a waiver thereof, in writing,
signed by the person  entitled to such notice shall be deemed  equivalent to the
giving of such notice.

     10.3.  Authority to Bind the Company.  Unless  authorized  to do so by this
Agreement or by the Managers,  no  attorney-in-fact,  employee or other agent of
the Company shall have any power or authority to bind the Company in any way, to
pledge its credit or to render it liable  pecuniary  for any purpose.  No Member

Company Agreement Dutch Fork Capital LLC

                                       15
<PAGE>

shall have any power or authority to bind the Company unless the Member has been
authorized by the Managers to act as an agent of the Company.

     10.4. Waiver of Action For Partition.  Each Member  irrevocably  waives any
right to maintain an action for  partition  with  respect to the property of the
Company during the term of the Company.

     10.5.  Indemnification By Company. The Company may indemnify any person who
was or is a party defendant or is threatened to be made a party defendant to any
threatened,  pending or completed  action,  suit or  proceeding,  whether civil,
criminal,  administrative,  or investigative  (other than an action by or in the
right of the Company) by reason of the fact that he is or was a Manager, Member,
employee  or agent of the  Company,  or is or was  serving at the request of the
Company,  against  expenses,  including  attorney's fees,  judgments,  fines and
amounts paid in settlement  actually and reasonably  incurred in connection with
such action,  suit or  proceeding if the Managers  determine  that he, she or it
acted  in good  faith  and in a  manner  reasonably  believed  to be in the best
interest of the Company,  and with respect to any criminal action or proceeding,
had no reasonable cause to believe the conduct was unlawful.  The termination of
any action, suit, or proceeding by judgment,  order, settlement,  conviction, or
upon a plea of nolo contendere or its  equivalent,  shall not in itself create a
presumption  that the  Person  did or did not act in good  faith and in a manner
which was  reasonably  believed to be in the best interest of the Company,  and,
with respect to any  criminal  action or  proceeding,  had  reasonable  cause to
believe the conduct was unlawful.

     10.6.  Construction.  Whenever  the  context  requires,  as  used  in  this
Agreement,  the singular shall include the plural and the masculine gender shall
include the feminine and neuter genders, and vice versa.

     10.7.  Articles  and Other  Headings.  The  Articles  and  headings in this
Agreement  are for  reference  purposes only and shall not affect the meaning or
interpretation thereof.

     10.8.  Severability.  If any  provision  of  this  Agreement  is held to be
invalid, illegal or unenforceable,  the remainder of this Agreement shall not be
affected.

     10.9. Application of Texas Law. This Agreement will be governed by the laws
of the  State  of  Texas,  without  giving  effect  to  its  conflicts  of  laws
provisions.

     10.10. Disregarded Entity Tax Treatment Intended If One Member. At any time
when the Company has only one (1) Member, the parties intend that the provisions
of this Agreement  will qualify the Company to be taxed as a disregarded  entity
under the Code and not as a corporation,  and the Managers and each Member shall
take such action from time to time as may be necessary or desirable to carry out
such intention.  The Managers may make any tax elections for the Company allowed
under the Code or the tax laws of any state or other jurisdiction  having taxing
jurisdiction over the Company.

     10.11.  Partnership  Tax  Treatment  Intended If More Than One Member;  Tax
Administrative  Matters.  At any time when  there is more than one Member of the

Company Agreement Dutch Fork Capital LLC

                                       16
<PAGE>

Company,  the parties  intend that the provisions of this Agreement will qualify
the  Company  to  be  taxed  as a  partnership  under  the  Code  and  not  as a
corporation,  and the Managers  and Members  shall take such action from time to
time as may be necessary or desirable to carry out such intention.  The Managers
may make any tax  elections  for the Company  allowed  under the Code or the tax
laws of any state or other  jurisdiction  having  taxing  jurisdiction  over the
Company.  The Members  hereby  designate  MAC as the tax matters  partner of the
Company  pursuant to Section  6231(a)(7) of the Code. The person  designated tax
matters  partner shall not take any action  contemplated by Section 6222 through
6232 of the Code without the approval of the Members.

     10.12.  No  Partnership  Intended  For Non-Tax  Purposes.  The  undersigned
Members  have  formed the Company  under the Texas Act,  and as long as there is
more than one Member of the Company such parties  expressly do not intend hereby
to form a partnership  under either the Revised  Uniform  Partnership Act of the
State of Texas nor the Revised Uniform  Limited  Partnership Act of the State of
Texas.  The Members do not intend to be partners one to another,  or partners as
to any third party. To the extent any Member,  by word or action,  represents to
another  Person  that any other  Member is a partner  or that the  Company  is a
partnership,  the Member making such wrongful  representation shall be liable to
any other  Member  who  incurs  personal  liability  by reason of such  wrongful
representation.

     10.13 Expenses. Each party shall pay the fees and expenses of its advisors,
counsel, accountants and other experts, if any, and all other expenses, incurred
by such party incident to the negotiation,  preparation,  execution and delivery
of this Agreement;  provided,  however, that the Company shall pay a flat $5,000
to the Investor  Group to reimburse the Investor Group for the fees and expenses
(including  attorneys'  fees and  expenses)  incurred by the  Investor  Group in
connection  with its due  diligence  review of the Company and the  preparation,
negotiation, execution and delivery of this Agreement, which amount shall be due
and payable in cash promptly after the members of the Investor Group have funded
their Initial Capital Contributions.

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

Company Agreement Dutch Fork Capital LLC

                                       17
<PAGE>

                                  CERTIFICATION

     THE  UNDERSIGNED  hereby  evidence their adoption and  ratification  of the
foregoing  Company  Agreement of Dutch Fork Capital LLC as of the date indicated
below.

                                           Mortgage Assistance Corp., as Member

Date:  December __, 2006                   By:__________________________________
                                           Name:________________________________
                                           Its:_________________________________

                                           FAX/Dutch Fork, L.P., a Texas Limited
                                           Partnership, as Member

                                           By:__________________________________
                                           Name:________________________________
                                           Its: ________________________________

Company Agreement Dutch Fork Capital LLC

                                       18
<PAGE>
<TABLE>
<CAPTION>

                                    EXHIBIT A

                          MEMBER CAPITAL CONTRIBUTIONS

                             AS OF DECEMBER __, 2006

==================================================== ================================ ============ =================================
                      MEMBER                           INITIAL CAPITAL CONTRIBUTION      UNITS           PERCENTAGE OF INTEREST
---------------------------------------------------- -------------------------------- ------------ ---------------------------------
<S>                                                  <C>                              <C>          <C>

Mortgage Assistance Corp., a Texas Corporation
2614 Main Street                                                       None               50                    50%
Dallas, TX 75226
Attn:  Dan Barnett
Fax No.:  (214) 670-0001
---------------------------------------------------- -------------------------------- ------------ ---------------------------------
FAX/Dutch Fork, L.P., a Texas Limited Partnership               $2,530,959.02             50                    50%
100 Crescent Court
Suite 200
Dallas, Texas 75201
Attn: Rod Jones
Fax No.: 214-720-9561
---------------------------------------------------- -------------------------------- ------------ ---------------------------------
Total Contributions                                             $2,530,959.02             100                  100%
---------------------------------------------------- -------------------------------- ------------ ---------------------------------
==================================================== ================================ ============ =================================
</TABLE>

Company Agreement Dutch Fork Capital LLC

                                       19
<PAGE>

                                    EXHIBIT B
                               SERVICING CONTRACT

                        Mortgage Assistance Corporation
      2614 Main Street * Dallas Tx 75226 * 214-670-0005 * fax 214-670-0001
                  www.mac-tx.com       Trading Symbol: MTGC.OB

                               Servicing Contract

Owner:                     Dutch Fork Capital LLC
Owner's Address:           2614 Main Street, Dallas, TX 75226
Servicer:                  Mortgage Assistance Corporation
Servicer Address:          2614 Main Street, Dallas, TX  75226
Notes and/or REOs:         Attachment A
------------------

This  servicing  agreement was made and entered into this _____ day of December,
2006, between SERVICER and OWNER.

OWNER shall initial below where appropriate.

     Section 1. Servicing of Notes

Note Servicing:  OWNER hereby  authorizes and instructs  SERVICER,  and SERVICER
agrees to service the "NOTES" and in that connection, to do the following:

A.   To receive any and all payments due OWNER on the NOTES,  which includes but
     is not limited to all monthly  payments,  all late payments and all payoffs
     in full or in part. SERVICER is authorized to direct any payment to be made
     payable to SERVICER's Trust Account;

B.   To endorse to SERVICER's  Trust Account any checks or money orders  payable
     to OWNER and to immediately  deposit same in SERVICER's Trust Account which
     is to be  maintained  in  accordance  with such  laws and rules  applicable
     thereto and as to which SERVICER will not commingle its assets;

C.   To transmit  OWNER's  portion of such payments of principal and interest as
     required by laws,  rules and regulations  which are applicable.  There is a
     seven  day hold on all  checks to allow for  clearing  with the bank.  Good
     funds are  delivered to OWNER  without a hold at the address  shown herein.
     SERVICER will not use such payment for any other transaction other than the
     transaction for which the funds are received;

D.   To  provide  periodic  reporting  on the  OWNER's  NOTES that  SERVICER  is
     servicing per this contract;

E.   If the source of payment is not the maker of the NOTES, to so inform OWNER;

<PAGE>

F.   To cause  SERVICER's  Trust  Account  utilized for this  transaction  to be
     inspected as required by such laws, rules and regulations as are applicable
     thereto;

G.   To take any other action which  SERVICER  deems  necessary or convenient to
     the  collection  and  servicing of the NOTES  including  but not limited to
     instituting  foreclosure proceedings in the event of default or making such
     payments for OWNER's  account or taking such other action as SERVICER deems
     necessary or desirable to protect the security of the Security Agreement or
     the priority thereof;

H.   To execute and deliver on OWNER's  behalf and in OWNER's name any documents
     necessary  or  convenient  for the  exercise of any rights or duties  which
     OWNER may have under the NOTES,  including  but not  limited to Request for
     Reconveyance,  Payoff Demands,  Beneficiary  Statements,  Declarations  and
     Notices of Default,  bidding  authorizations  and other instructions to the
     Trustee of the NOTES;

I.   To receive Notices of Default of prior encumbrances and to promptly notifiy
     OWNER of any default upon the Notes and any prior encumbrances;

J.   To grant such extensions or loan modifications as SERVICER deems reasonably
     appropriate;

K.   THE FOLLOWING PROVISIONS (1) & (2) APPLY ONLY TO LOANS IN WHICH OWNER HOLDS
     AN UNDIVIDED FRACTIONAL INTEREST IN THE NOTES:

     1.   A default  upon any  interest in the NOTES shall  constitute a default
          upon all  interests.  A simple  majority  in  interest  of lenders may
          determine  and direct the actions to be taken on behalf of all lenders
          in the event of default or with respect to other matters requiring the
          direction or approval of lenders,  and such majority may designate the
          SERVICER to so act in their behalf.

     2.   SERVICER  shall  furnish to OWNER a list of names and addresses of all
          lenders  holding an interest  in the NOTES upon five (5) days  written
          notice.

Section 2 - Servicing of REOs
I. REO Servicing:  OWNER hereby authorizes and instructs SERVICER,  and SERVICER
agrees to service the "REOs" and in that connection, to do the following:

A.   Authorize SERVICER to act on behalf of OWNER as landlord to the REOs, where
     applicable;

B.   Authorize  SERVICER to manage,  operate,  control,  rent and lease  OWNER'S
     REOs.

C.   Authorize SERVICER to contract for or undertake the making of all necessary
     repairs and the  performance of all other necessary work for the benefit of
     the REOs  including  all required  alterations  to properly  carry out this
     agreement. SERVICER agrees to secure prior written approval of the OWNER on
     expenditures in excess of $1,000 except emergency  repairs in excess of the
     maximum if, in the opinion of  SERVICER,  such  repairs  are  necessary  to

                                       2
<PAGE>

     protect the property from damage, prevent damage to life or to the property
     of others;

D.   To collect  any and all  payments  due  OWNER,  which  includes  but is not
     limited to, all monthly RENT  payments and all LATE  payments.  SERVICER is
     authorized  to direct any payment to be made  payable to  SERVICER's  Trust
     Account. There is a seven day hold on all checks to allow for clearing with
     the bank.  Good funds are  delivered to OWNER without a hold at the address
     shown herein.  SERVICER will not use such payment for any other transaction
     other than the transaction for which the funds are received;

E.   Any trust  account  SERVICER  maintained  under  this  agreement  may be an
     interest-bearing or income producing account.

F.   To hold security deposits from tenants in escrow or trust account until the
     end of tenancy.

G.   To endorse to SERVICER's  Trust Account any checks or money orders  payable
     to OWNER and to immediately  deposit same in SERVICER's Trust Account which
     is to be  maintained  in  accordance  with such  laws and rules  applicable
     thereto and as to which SERVICER will not commingle its assets;

H.   To provide  weekly  sales  reports  and other  periodic  (but not less than
     monthly)  reports,  as  requested  from time to time by the  OWNER,  on the
     OWNER's REOs that SERVICER is servicing per this contract;

I.   To cause  SERVICER's  Trust  Account  utilized for this  transaction  to be
     inspected as required by such laws, rules and regulations as are applicable
     thereto;

J.   To take any other action which  SERVICER  deems  necessary or convenient to
     the  collection  and  servicing  of the REOs  including  but not limited to
     instituting  eviction proceedings in the event of default or selling of the
     REOs or making  such  payments  for  OWNER's  account or taking  such other
     action as SERVICER  deems  necessary  or  desirable  to protect the OWNER's
     interest in the  property.  To advertise  the  property  and display  signs
     thereon;  to rent and lease the property;  to sign, renew and cancel rental
     agreements  and  leases for the  property  or any part  thereof;  to sue or
     recover for rent and for loss or damage to any part of the property  and/or
     furnishings thereof; and, when expedient, to compromise, settle and release
     any such legal proceedings or lawsuits;

K.   To execute and deliver on OWNER's  behalf and in OWNER's name any documents
     necessary  or  convenient  for the  exercise of any rights or duties  which
     OWNER may have as to the REOs,  including  but not  limited  to  evictions,
     listing  the  property  for sale,  selling  the  property,  or renting  the
     property;

L.   To pay all operating  expenses and such other  expenses as requested by the
     OWNER from the rents  received.  This may  include the payment of taxes and
     insurance;

M.   OWNER hereby agrees to indemnify  and hold  SERVICER  harmless from any and
     all claims, charges, debts, demands and lawsuits, including attorney's fees

                                       3
<PAGE>

     related to SERVICER's  management  of OWNER's REOs,  and from any liability
     for injury on or about the properties which may be suffered by an employee,
     tenant or guest upon the properties;  provided,  however,  that OWNER shall
     have no such  indemnification  obligations  in respect of any such  claims,
     charges,  debts,  demands or lawsuits  resulting  primarily from SERVICER's
     gross negligence or willful misconduct.

Section 3 - General Provisions

FEES:  SERVICER  shall not be  entitled  to any fees or other  compensation  for
providing services hereunder,  and shall bear all costs and expenses incurred in
connection with providing services hereunder. Notwithstanding the foregoing, the
following  costs and expenses (See  Attachment B) incurred to third parties will
be paid by the OWNER directly or, if paid by SERVICER,  the OWNER will reimburse
the SERVICER without markup.

PERFORMANCE OF SERVICES: SERVICER shall, to the best of its ability, perform all
services required to be performed by it hereunder diligently, carefully and in a
good and workmanlike  manner as would a reasonable and prudent  person.  Without
limiting the  generality of the  foregoing,  SERVICER shall devote enough of its
time, attention and resources to providing services hereunder as is necessary to
adequately  perform its services  hereunder.  SERVICER shall, in connection with
the  performance  of the  services  hereunder,  obtain  all  permits,  licenses,
certificates  or other  administrative  or regulatory  authorizations  as may be
required by any governmental  authority from time to time or as may be necessary
or  incident  to  SERVICER's  performance  of its  obligations  in all  material
respects  under  this  agreement.  In  connection  with the  performance  of the
services,  SERVICER  shall comply with all applicable  material laws,  rules and
regulations,  and with all applicable material contracts and agreements that now
pertain,  or in the future may pertain, to the services.  In addition,  SERVICER
shall, in the performance of its obligations under this agreement,  abide by any
applicable restrictions contained in any indenture, loan agreement,  mortgage or
other  agreement to which OWNER or any of its  subsidiaries  or  affiliates is a
party and of which SERVICER has actual knowledge or receives notice.

TERM AND  TERMINATION:  Unless  terminated  earlier in accordance with the other
provisions of this paragraph, the term of this agreement shall begin on the date
of this agreement and shall end on the first anniversary of the date hereof, and
shall thereafter  automatically  renew for successive  three-month terms, unless
notice is given by either  party to the other at least 30 days before the end of
the then current term that this agreement  shall terminate as of the end of such
term.  Notwithstanding the foregoing,  this agreement may be terminated prior to
the  expiration  of the then current term (a) by the mutual  written  consent of
both parties,  or (b) by either party for  nonperformance  or material breach of
this  agreement by the other party after giving the  nonperforming  or breaching
party no less than 30 days  written  notice  (which  notice  shall  specify  the
nonperformance   and/or  material  breach)  and  an  opportunity  to  cure  such
nonperformance  or  material  breach  within  such  30  day  period.   Upon  any
termination of this agreement (including,  without limitation,  by expiration of
the term),  the  parties  shall have no further  rights,  duties or  obligations
hereunder, other than those accruing prior to the effective date of termination,
which shall survive any termination of this agreement. SERVICER acknowledges and
agrees that, in accordance with the Company  Agreement of OWNER,  the Manager(s)
of OWNER who are  designated  by the Investor  Group (as defined in such Company

                                       4
<PAGE>

Agreement)  have the sole and  exclusive  right  and  duty  under  such  Company
Agreement to act on behalf of OWNER in  connection  with any matter  relating to
this agreement,  including, without limitation,  exercising any right (including
the  right  to  terminate  this  agreement  in  accordance  with  the  foregoing
provisions of this paragraph) or remedy accruing to OWNER hereunder.

OWNER represents that all of the persons designated above are over the age of 18
and are competent.

         Make OWNER Check Payable To:  Dutch Fork Capital LLC

         Address:  2614 Main Street

         City, State, Zip Code:  Dallas, Texas  75226

         Tax ID Number:  38-3746589

ATTORNEY'S  FEES:  If OWNER  or  SERVICER  is a  prevailing  party in any  legal
proceeding  brought  as a  result  of a  dispute  under  this  agreement  or any
transaction  related to or contemplated  by this  agreement,  such party will be
entitled to recover from the  non-prevailing  party all costs of such proceeding
and reasonable attorney's fees.

SPECIAL  PROVISIONS:  This  Agreement  may be  amended  from time to time by the
parties  pursuant to a written  agreement or addendum signed by the SERVICER and
the OWNER.

ENTIRE AGREEMENT: This document contains the entire agreement of the parties and
may not be changed except by written agreement.

ASSIGNMENTS: Neither party may assign this agreement without the written consent
of the other party.

BINDING EFFECT:  OWNER's obligations to SERVICER under this agreement is binding
upon OWNER and OWNER's heirs, executors, successors, and permitted assignees.

JOINT AND SEVERAL:  Parties  executing  this agreement are jointly and severally
liable for the performance of all its terms. Any act or notice to, refund to, or
signature  of,  any  one or  more  of the  parties  regarding  any  term of this
agreement or its termination is binding on all parties executing this agreement.

GOVERNING LAW: Texas law governs the interpretation,  validity, performance, and
enforcement of this agreement.

SEVERABILITY:  If a  court  finds  any  clause  in  this  agreement  invalid  or
unenforceable,  the  remainder  of this  agreement  will not be affected and all
other provisions of this agreement will remain valid and enforceable.

CONTEXT:  When the context  requires,  singular  nouns and pronouns  include the
plural.

                                       5
<PAGE>

NOTICES:  Notices  between the parties must be in writing and are effective when
sent to the receiving party's address as stated in this agreement.

OWNER:  Dutch Fork Capital LLC
Signed: _______________________________              Date:  December __, 2006
Print Name: ___________________________
Title:  _______________________________

SERVICER: Mortgage Assistance Corporation
Signed: _______________________________              Date:  December __, 2006
Print Name: ___________________________
Title:  _______________________________

                                       6
<PAGE>

                                  Attachment A

----------------------------------- ---------------------- -------- ------------
Address                             City                   ST       ZIP
----------------------------------- ---------------------- -------- ------------
1025 Hoke Street                    Gadsden                AL       35903
----------------------------------- ---------------------- -------- ------------
10252 Nardin                        Detroit                MI       48204
----------------------------------- ---------------------- -------- ------------
1040 S Linden Av                    Alliance               OH       44601
----------------------------------- ---------------------- -------- ------------
1040 Winfield Av                    Cincinnati             OH       45213
----------------------------------- ---------------------- -------- ------------
1058 Simmons Avenue                 Cincinnati             OH       45215
----------------------------------- ---------------------- -------- ------------
1101 West 17th Street               Muncie                 IN       47302
----------------------------------- ---------------------- -------- ------------
1123 Mambrino                       Oregon                 OH       43616
----------------------------------- ---------------------- -------- ------------
1141 Simons St                      Lima                   OH       45804
----------------------------------- ---------------------- -------- ------------
11415 Mohawk Path                   Lakeview               OH       43331
----------------------------------- ---------------------- -------- ------------
11425 Continental Av                Cleveland              OH       44104
----------------------------------- ---------------------- -------- ------------
11520 Frankstown Road               Pittsburgh             PA       15235
----------------------------------- ---------------------- -------- ------------
1159 Selma Rd                       Springfield            OH       45505
----------------------------------- ---------------------- -------- ------------
117 Clara Street                    Pittsburgh             PA       15209
----------------------------------- ---------------------- -------- ------------
11755 Beech Daly                    Redford                MI       48239
----------------------------------- ---------------------- -------- ------------
11917 N Shore Rd                    Hillsboro              OH       45133
----------------------------------- ---------------------- -------- ------------
1205 Old Jefferson Hwy              Mansfield              LA       71052
----------------------------------- ---------------------- -------- ------------
127 West Broad Street Rear          Nanticoke              PA       18634
----------------------------------- ---------------------- -------- ------------
12780 Griggs Ave                    Detroit                MI       48227
----------------------------------- ---------------------- -------- ------------
129 Hetty Hill St                   Gaffney                SC       29340
----------------------------------- ---------------------- -------- ------------
1303 East 11th Street               Anniston               AL       36207
----------------------------------- ---------------------- -------- ------------
1320 Alcott Drive                   Dayton                 OH       45406
----------------------------------- ---------------------- -------- ------------
1337 Hillcrest Ave                  Martinville            VA       24112
----------------------------------- ---------------------- -------- ------------
1340 Clark St                       Des Moines             IA       50314
----------------------------------- ---------------------- -------- ------------
1340 N Kealing Ave                  Indianapolis           IN       46201
----------------------------------- ---------------------- -------- ------------
13820-13822 Rugby Rd                Cleveland              OH       44110
----------------------------------- ---------------------- -------- ------------
141 Hamilton                        Vandergrift            PA       15690
----------------------------------- ---------------------- -------- ------------
1412 Wheeler St                     Covington              KY       41011
----------------------------------- ---------------------- -------- ------------
1412-1414 E 110th St                Cleveland              OH       44106
----------------------------------- ---------------------- -------- ------------
1441 Harlow AKA 4360 E Livingston   Columbus               OH       43227
----------------------------------- ---------------------- -------- ------------
1448 W Philadelphia St              Detroit                MI       48206
----------------------------------- ---------------------- -------- ------------
1462 E 248 St                       Euclid                 OH       44117
----------------------------------- ---------------------- -------- ------------
1488 Bucksport Road                 Ellsworth              ME       4605
----------------------------------- ---------------------- -------- ------------
15 W Dalton St                      Akron                  OH       44310
----------------------------------- ---------------------- -------- ------------
1527 E 65th Street Unit 2           Chicago                IL       60637
----------------------------------- ---------------------- -------- ------------
15317 Lucknow Av                    Cleveland              OH       44110
----------------------------------- ---------------------- -------- ------------
157 Seibles Dr                      Winnboro               SC       29810
----------------------------------- ---------------------- -------- ------------
1644 30th St                        Des Moines             IA       50310
----------------------------------- ---------------------- -------- ------------
17 East Center Street               Leonardsville          NY       13364
----------------------------------- ---------------------- -------- ------------
1705 Pulte St                       Cincinnati             OH       45225
----------------------------------- ---------------------- -------- ------------
17225 Edinborough Rd                Detroit                MI       48219
----------------------------------- ---------------------- -------- ------------
1733 Cliffview                      Cleveland              OH       44112
----------------------------------- ---------------------- -------- ------------
18260 Grayfield St                  Detroit                MI       48219
----------------------------------- ---------------------- -------- ------------
1911 Charles St                     Burlington             IA       52601
----------------------------------- ---------------------- -------- ------------
1937 Emerson Avenue                 Cincinnati             OH       45239
----------------------------------- ---------------------- -------- ------------

                                       7
<PAGE>

19421 Gainsborough                  Detroit                MI       48223
----------------------------------- ---------------------- -------- ------------
199 Burton Av                       Akron                  OH       44302
----------------------------------- ---------------------- -------- ------------
20 North Street                     Leroy                  NY       14482
----------------------------------- ---------------------- -------- ------------
2011-2013 Westview Drive            Indianapolis           IN       46221
----------------------------------- ---------------------- -------- ------------
206 Ontario                         Houghton Lake          MI       48629
----------------------------------- ---------------------- -------- ------------
207 Davenport Street                Lawrencevil            VA       23868
----------------------------------- ---------------------- -------- ------------
212 Cherry St                       Belton                 SC       29627
----------------------------------- ---------------------- -------- ------------
2128 Grantwood Dr                   Parma                  OH       44134
----------------------------------- ---------------------- -------- ------------
215 & 215 1/2 Willow St             Meadville              PA       16335
----------------------------------- ---------------------- -------- ------------
2218 Keokuk                         St. Louis              MO       63118
----------------------------------- ---------------------- -------- ------------
2221s 9th Street                    Louisville             KY       40208
----------------------------------- ---------------------- -------- ------------
225 W Williams Ave                  Bellefontaine          OH       43311
----------------------------------- ---------------------- -------- ------------
230 Main Street                     Turbotville            PA       17772
----------------------------------- ---------------------- -------- ------------
23117 Tuscany                       Eastpointe             MI       48021
----------------------------------- ---------------------- -------- ------------
2318 East 11th Street               Indianapolis           IN       46201
----------------------------------- ---------------------- -------- ------------
232 Vine Av                         Warren                 OH       44483
----------------------------------- ---------------------- -------- ------------
23753 Dover                         Redford                MI       48239
----------------------------------- ---------------------- -------- ------------
24 Goodrich St                      Oregon                 OH       43616
----------------------------------- ---------------------- -------- ------------
2403 E. Tyger Bridge Rd,Greer       Greer                  SC       29651
----------------------------------- ---------------------- -------- ------------
2435 Crescent Rd Aka 2255 Cres      Greenwich              OH       44837
----------------------------------- ---------------------- -------- ------------
2520 110th                          Toledo                 OH       43611
----------------------------------- ---------------------- -------- ------------
255 Edna Circle                     Thomaston              GA       30286
----------------------------------- ---------------------- -------- ------------
261 N Pershing Av                   Indianapolis           IN       46222
----------------------------------- ---------------------- -------- ------------
2626 N.Sherman Drive                Indianapolis           IN       46218
----------------------------------- ---------------------- -------- ------------
2703 E Virgin St                    Tulsa                  OK       74110
----------------------------------- ---------------------- -------- ------------
2761 Selma Av                       Knoxville              TN       37914
----------------------------------- ---------------------- -------- ------------
2819 Park Av                        Cincinnati             OH       45206
----------------------------------- ---------------------- -------- ------------
2849 Mud Creek Road                 Millport               AL       35576
----------------------------------- ---------------------- -------- ------------
2958 Greer Road                     Goodlettsville         TN       37072
----------------------------------- ---------------------- -------- ------------
305 E First                         Ellinwood              KS       67526
----------------------------------- ---------------------- -------- ------------
307 James St                        Bay City               MI       48706
----------------------------------- ---------------------- -------- ------------
319 Crosby Av                       Akron                  OH       44303
----------------------------------- ---------------------- -------- ------------
3190 River Rd                       Cincinnati             OH       45204
----------------------------------- ---------------------- -------- ------------
3256 Rockport Drive                 Lithonia               GA       30038
----------------------------------- ---------------------- -------- ------------
326 East Lynn St                    Linneus                MO       64653
----------------------------------- ---------------------- -------- ------------
3267 Bellwick Rd Se                 Hubbard                OH       44425
----------------------------------- ---------------------- -------- ------------
331 Linwood                         Dayton                 OH       45405
----------------------------------- ---------------------- -------- ------------
331 Scoggins St                     Rock Hill              SC       29730
----------------------------------- ---------------------- -------- ------------
33419 Cherry Hill                   Westland               MI       48186
----------------------------------- ---------------------- -------- ------------
3418 Apple Orchard Rd               Clinton                SC       29325
----------------------------------- ---------------------- -------- ------------
3503 Washington                     Cairo                  IL       62914
----------------------------------- ---------------------- -------- ------------
3635 Ridgelawn Av                   Warren                 OH       44484
----------------------------------- ---------------------- -------- ------------
3663 E 52nd Street                  Cleveland              OH       44105
----------------------------------- ---------------------- -------- ------------
3714 E Market St                    Indianapolis           IN       46201
----------------------------------- ---------------------- -------- ------------
3779 W 32 Pl                        Cleveland              OH       44109
----------------------------------- ---------------------- -------- ------------
3820 Arnold Ct                      Cleveland              OH       44109
----------------------------------- ---------------------- -------- ------------
3915 Melville Av                    East Chicago           IN       46312
----------------------------------- ---------------------- -------- ------------
395 E. Voris                        Akron                  OH       44311
----------------------------------- ---------------------- -------- ------------
396 W Washington                    Muskegon               MI       49441
----------------------------------- ---------------------- -------- ------------

                                       8
<PAGE>

4 Rainbow Cir                       Pine Knot              KY       42635
----------------------------------- ---------------------- -------- ------------
400 Belmont Av                      Niles                  OH       44446
----------------------------------- ---------------------- -------- ------------
4026 E 67th Terr                    Kansas City            MO       64132
----------------------------------- ---------------------- -------- ------------
408 Charlotte Av                    Sanford                NC       27330
----------------------------------- ---------------------- -------- ------------
4108 Anderson Avenue                Kansas City            MO       64123
----------------------------------- ---------------------- -------- ------------
415 N Virginia St                   Rockville              IN       47872
----------------------------------- ---------------------- -------- ------------
4254 Burlingame                     Detroit                MI       48204
----------------------------------- ---------------------- -------- ------------
4673 E 174th Street                 Cleveland              OH       44128
----------------------------------- ---------------------- -------- ------------
4844-46 Roosevelt                   Detroit                MI       48208
----------------------------------- ---------------------- -------- ------------
506 Norton Aveue                    Jamestown              NY       14701
----------------------------------- ---------------------- -------- ------------
509 East 13th Street                Erie                   PA       16503
----------------------------------- ---------------------- -------- ------------
516 Magnolia St                     Jourdanton             TX       78026
----------------------------------- ---------------------- -------- ------------
526 South 4th Avenue                Stroud                 OK       74079
----------------------------------- ---------------------- -------- ------------
549 E Pacific St                    Charleston             WV       25302
----------------------------------- ---------------------- -------- ------------
550 Bethany Court                   Gosnell                AR       72315
----------------------------------- ---------------------- -------- ------------
552 East 14th Street                Erie                   PA       16503
----------------------------------- ---------------------- -------- ------------
5721 Bowser                         Fort Wayne             IN       46806
----------------------------------- ---------------------- -------- ------------
60 19th Avenue Sw                   Cedar Rapids           IA       52404
----------------------------------- ---------------------- -------- ------------
6000 Vivian St.                     Taylor                 MI       48180
----------------------------------- ---------------------- -------- ------------
607 Spruce Street                   Johnsonburg            PA       15845
----------------------------------- ---------------------- -------- ------------
614 1st Avenue Se                   Clarion                IA       50525
----------------------------------- ---------------------- -------- ------------
6163 Bertha Avenue                  Saint Louis            MO       63133
----------------------------------- ---------------------- -------- ------------
620 Herman Street                   Marion                 OH       43302
----------------------------------- ---------------------- -------- ------------
62235 County Highway E Mason        Mason                  WI       54856
----------------------------------- ---------------------- -------- ------------
629 Darlington Street               Calhoun Fal            SC       29628
----------------------------------- ---------------------- -------- ------------
645 Old Cut Rd East                 Munfordvill            KY       42765
----------------------------------- ---------------------- -------- ------------
6473 W St Rt 245                    West Liberty           OH       43357
----------------------------------- ---------------------- -------- ------------
668 Maple St                        Fostoria               OH       44803
----------------------------------- ---------------------- -------- ------------
68 Owendale Avenue                  Pittsburgh             PA       15227
----------------------------------- ---------------------- -------- ------------
70 22nd Street Nw                   Barberton              OH       44203
----------------------------------- ---------------------- -------- ------------
710 South Shephard Street           Winchester             TN       37398
----------------------------------- ---------------------- -------- ------------
7137 Indiana Avenue                 Kansas City            MO       64132
----------------------------------- ---------------------- -------- ------------
717 South Pershing Drive            Muncie                 IN       47302
----------------------------------- ---------------------- -------- ------------
717-717 1/2 Kentucky Av             Marion                 OH       43302
----------------------------------- ---------------------- -------- ------------
719 Belle Vista Avenue              Chattanooga            TN       37421
----------------------------------- ---------------------- -------- ------------
741 Kent Street                     Memphis                TN       38111
----------------------------------- ---------------------- -------- ------------
795 Skyline Dr                      Oneida                 TN       37841
----------------------------------- ---------------------- -------- ------------
8301 Connecticut Av                 Cleveland              OH       44105
----------------------------------- ---------------------- -------- ------------
8654 Pippin Road                    Cincinnati             OH       45251
----------------------------------- ---------------------- -------- ------------
8749 Arcadia                        Detroit                MI       48204
----------------------------------- ---------------------- -------- ------------
906 Wayside Rd                      Cleveland              OH       44110
----------------------------------- ---------------------- -------- ------------
907 Washington Av                   Kalamazoo              MI       49001
----------------------------------- ---------------------- -------- ------------
912-916 Riverview Av                Dayton                 OH       45407
----------------------------------- ---------------------- -------- ------------
917 Fulton Road Nw                  Canton                 OH       44703
----------------------------------- ---------------------- -------- ------------
9329 Memorial                       Detroit                MI       48228
----------------------------------- ---------------------- -------- ------------
9377 Abington                       Detroit                MI       48228
----------------------------------- ---------------------- -------- ------------
9509 E Jackson St                   Selma                  IN       47383
----------------------------------- ---------------------- -------- ------------
992 W Waterloo Rd                   Akron                  OH       44314
----------------------------------- ---------------------- -------- ------------
Rt 1 Box 32, 102 Winn St            Ward                   SC       29166
----------------------------------- ---------------------- -------- ------------

                                       9
<PAGE>

                                  Attachment B

o    Eviction fees and costs
o    Property   Preservation   (winterization,    lawn   maintenance,   property
     clean-outs,  board-up,  improvements  required by city to prevent fines and
     liens, re-key property, etc.)
o    Emergency Maintenance - flooding, break-ins, gas leak, etc.
o    Closing Costs from title company
o    Taxes and Insurance
o    Third-Party Management Fee to process listings and closings of REOs
o    Sales Commission
o    Seller  Concessions on behalf of Buyer (portion of Buyer's closing costs or
     credit for repairs, termite treatment, and/or inspections, etc.)
o    Title Work Costs
o    Recording fees and costs
o    Transfer Taxes
o    Cash for Keys to Occupants of REOs
o    Utilities and any liens on the property
o    Banking Service Fees
o    LLC formation costs
o    All other reasonable  expenses  approved by Investor Group,  which approval
     shall not be unreasonably withheld

                                       10
<PAGE>EXHIBIT 10.44
                                 [Face of Note]
-------------------------------------------------------------------------------
                                                           CUSIP/CINS 029169 AA7

                Variable Rate Senior Convertible Notes due 2013
No. ___                                                           $____________

                      AMERICAN REAL ESTATE PARTNERS, L.P.
                       AMERICAN REAL ESTATE FINANCE CORP.

promises to pay to ______________________________________or registered assigns,

the principal sum of ___________________________________________________DOLLARS

on August 15, 2013.

Interest Payment Dates:  January 15, April 15, July 15 and October 15

Record Dates:  January 1, April 1, July 1 and October 1

Dated:

                     AMERICAN REAL ESTATE PARTNERS, L.P.

                     By: American Property Investors, Inc.,its general partner

                     By:_____________________________________________________
                     Name:
                     Title:

                     AMERICAN REAL ESTATE FINANCE CORP.

                     By:_____________________________________________________
                     Name:
                     Title:

This is one of the Notes referred to
in the within-mentioned Indenture:

WILMINGTON TRUST COMPANY,
  as Trustee

By: ______________________
   Authorized Signatory

<PAGE>

                                 [Back of Note]
                Variable Rate Senior Convertible Notes due 2013

THIS  GLOBAL  NOTE  IS HELD  BY THE  DEPOSITARY  (AS  DEFINED  IN THE  INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF,  AND IS NOT  TRANSFERABLE  TO ANY PERSON UNDER ANY  CIRCUMSTANCES
EXCEPT THAT (1) THE TRUSTEE  MAY MAKE SUCH  NOTATIONS  HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,  (3) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF AMERICAN REAL ESTATE PARTNERS, L.P.

UNLESS  AND UNTIL IT IS  EXCHANGED  IN WHOLE OR IN PART FOR NOTES IN  DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED  EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER  NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR  DEPOSITARY  OR A NOMINEE OF SUCH  SUCCESSOR  DEPOSITARY.  UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET,  NEW YORK,  NEW YORK)  ("DTC"),  TO THE COMPANY OR ITS
AGENT FOR  REGISTRATION  OF TRANSFER,  EXCHANGE OR PAYMENT,  AND ANY CERTIFICATE
ISSUED  IS  REGISTERED  IN THE NAME OF CEDE & CO. OR SUCH  OTHER  NAME AS MAY BE
REQUESTED  BY AN  AUTHORIZED  REPRESENTATIVE  OF DTC (AND ANY PAYMENT IS MADE TO
CEDE  & CO.  OR  SUCH  OTHER  ENTITY  AS  MAY  BE  REQUESTED  BY  AN  AUTHORIZED
REPRESENTATIVE  OF DTC),  ANY TRANSFER,  PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE  BY OR TO ANY PERSON IS  WRONGFUL  INASMUCH  AS THE  REGISTERED  OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THE SECURITY (OR ITS PREDECESSOR)  EVIDENCED  HEREBY WAS ORIGINALLY  ISSUED IN A
TRANSACTION  EXEMPT  FROM  REGISTRATION  UNDER  SECTION 5 OF THE  UNITED  STATES
SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES  ACT") AND THE  SECURITY
EVIDENCED  HEREBY AND THE DEPOSITARY  UNITS ISSUABLE UPON CONVERSION  HEREOF MAY
NOT  BE  OFFERED,   SOLD  OR  OTHERWISE  TRANSFERRED  IN  THE  ABSENCE  OF  SUCH
REGISTRATION  OR AN  APPLICABLE  EXEMPTION  THEREFROM.  EACH  PURCHASER  OF  THE
SECURITY  EVIDENCED  HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT. THE HOLDER
OF THE SECURITY  EVIDENCED HEREBY AGREES FOR THE BENEFIT OF AMERICAN REAL ESTATE
PARTNERS, L.P. AND AMERICAN REAL ESTATE FINANCE CORP. THAT (A) SUCH SECURITY AND
THE DEPOSITARY UNITS ISSUABLE UPON CONVERSION  HEREOF MAY BE RESOLD,  PLEDGED OR
OTHERWISE  TRANSFERRED  ONLY (1) (a) IN THE  UNITED  STATES TO A PERSON  WHO THE
SELLER  REASONABLY  BELIEVES IS A QUALIFIED  INSTITUTIONAL  BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE  144A,  (b)  OUTSIDE  THE  UNITED  STATES  IN AN  OFFSHORE  TRANSACTION  IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (c) IN A TRANSACTION  MEETING
THE  REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (d) TO AN  INSTITUTIONAL
"ACCREDITED  INVESTOR"  (AS DEFINED IN RULE 501 (a) (1),  (2), (3) OR (7) OF THE
SECURITIES  ACT) THAT,  PRIOR TO SUCH  TRANSFER,  FURNISHES THE TRUSTEE A SIGNED

<PAGE>

LETTER CONTAINING CERTAIN  REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN
BE  OBTAINED  FROM THE  TRUSTEE)  AND,  IF SUCH  TRANSFER  IS IN  RESPECT  OF AN
AGGREGATE  PRINCIPAL  AMOUNT OF NOTES LESS THAN $250,000,  AN OPINION OF COUNSEL
ACCEPTABLE  TO AMERICAN  REAL ESTATE  PARTNERS,  L.P.  THAT SUCH  TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE  WITH ANOTHER  EXEMPTION
FROM THE  REGISTRATION  REQUIREMENTS  OF THE  SECURITIES  ACT (AND BASED UPON AN
OPINION OF COUNSEL IF AMERICAN REAL ESTATE PARTNERS,  L.P. SO REQUESTS),  (2) TO
AMERICAN REAL ESTATE PARTNERS, L.P. OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE  WITH ANY APPLICABLE  SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER  APPLICABLE  JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE.  IF AT ANY TIME THE NEVADA GAMING  COMMISSION  FINDS THAT A HOLDER OF
THIS  SECURITY  OR THE  DEPOSITARY  UNITS  ISSUABLE  UPON  CONVERSION  HEREOF IS
UNSUITABLE  TO CONTINUE TO OWN THE SECURITY (OR THE  DEPOSITARY  UNITS  ISSUABLE
UPON  CONVERSION  HEREOF),  AMERICAN REAL ESTATE  PARTNERS,  L.P. SHALL HAVE THE
RIGHT TO REQUIRE SUCH HOLDER TO DISPOSE OF SUCH SECURITY OR DEPOSITARY UNITS, AS
APPLICABLE,  AS  PROVIDED  BY THE  GAMING  LAWS OF THE STATE OF  NEVADA  AND THE
REGULATIONS   PROMULGATED  THEREUNDER.   ALTERNATIVELY,   AMERICAN  REAL  ESTATE
PARTNERS,  L.P. SHALL HAVE THE RIGHT TO REDEEM THE SECURITY FROM THE HOLDER AT A
PRICE SPECIFIED IN THE INDENTURE GOVERNING THE SECURITY.  NEVADA GAMING LAWS AND
REGULATIONS  RESTRICT  THE  RIGHT  UNDER  CERTAIN  CIRCUMSTANCES:  (A) TO PAY OR
RECEIVE ANY INTEREST UPON SUCH  SECURITY;  (B) TO EXERCISE,  DIRECTLY OR THROUGH
ANY TRUSTEE OR NOMINEE,  ANY VOTING RIGHT CONFERRED BY SUCH SECURITY;  OR (C) TO
RECEIVE ANY REMUNERATION IN ANY FORM FROM AMERICAN REAL ESTATE  PARTNERS,  L.P.,
FOR SERVICES RENDERED OR OTHERWISE.

     Capitalized terms used herein have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.

          (1) INTEREST.  American Real Estate Partners, L.P., a Delaware limited
     partnership  ("AREP"),  and  American  Real  Estate  Finance  Corp.  ("AREP
     Finance",  together with AREP, the  "Company"),  promise to pay interest on
     the principal amount of this Note at the interest rate set forth below from
     April 5, 2007 until maturity and shall pay the Additional Interest, if any,
     payable pursuant to Section 2 of the Registration Rights Agreement referred
     to below.  The Company will pay interest and Additional  Interest,  if any,
     quarterly  in arrears on January  15,  April 15,  July 15 and October 15 of
     each year, or if any such day is not a Business Day, on the next succeeding
     Business Day (each, an "Interest Payment Date"). Interest on the Notes will
     accrue from the most recent date to which  interest has been paid or, if no
     interest has been paid,  from April 5, 2007;  provided  that if there is no
     existing  Default  in  the  payment  of  interest,  and  if  this  Note  is
     authenticated  between a record date referred to on the face hereof and the
     next succeeding Interest Payment Date, interest shall accrue from such next
     succeeding  Interest Payment Date; provided further that the first Interest
     Payment  Date shall be July 15,  2007 and the last  interest  payment  date
     shall be August 15, 2013 (the "Maturity Date").  Interest on the Notes (the
     "Interest  Rate")  shall  accrue at a rate equal to LIBOR minus one and one
     quarter percent (1.25%) per annum; provided that the Interest Rate shall at
     no time be less than four  percent  (4.0%) per annum nor greater  than five
     and one half percent  (5.5%) per annum.  The  applicable  Interest  Rate in
     respect of the Notes shall be determined by the Calculation  Agent for each
     quarterly  interest  period  on the  last  Trading  Day of the  immediately
     preceding  quarterly  period.  The  Company  will pay  interest  (including
     post-petition  interest  in any  proceeding  under any  Bankruptcy  Law) on
     overdue  principal  and premium,  if any,  from time to time on demand at a
     rate  that is 1% per  annum in  excess  of the rate  then in  effect to the
     extent lawful; it will pay interest  (including  post-petition  interest in
     any  proceeding  under  any  Bankruptcy  Law) on  overdue  installments  of
     interest and Additional Interest, if any, (without regard to any applicable
     grace  periods)  from time to time on demand at the same rate to the extent
     lawful.  Interest will be computed on the basis of a 360-day year of twelve
     30-day months.
<PAGE>

          (2)  METHOD  OF  PAYMENT.  The  Company  will  pay or cause to be paid
     interest on the Notes (except defaulted interest) and Additional  Interest,
     if any, to the Persons who are registered  Holders of Notes at the close of
     business on the January 1, April 1, July 1 and October 1 next preceding the
     Interest  Payment Date,  even if such Notes are canceled  after such record
     date and on or before such  Interest  Payment  Date,  except as provided in
     Section 2.12 of the Indenture with respect to defaulted interest. The Notes
     will be payable as to principal,  premium and Additional Interest,  if any,
     and  interest  at the office or agency of the Company  maintained  for such
     purpose within or without the City and State of New York, or, at the option
     of the Company, payment of interest and Additional Interest, if any, may be
     made by check  mailed to the  Holders at their  addresses  set forth in the
     register  of  Holders;  provided  that,  in respect  of any Holder  with an
     aggregate principal amount of Notes in excess of $2,000,000, at the request
     of such Holder in writing to the Company,  interest on such Holder's  Notes
     shall be paid by wire transfer in immediately available funds. Such payment
     will be in such coin or currency of the United  States of America as at the
     time of payment is legal tender for payment of public and private debts.

          (3) REGISTRAR,  PAYING AGENT,  CONVERSION AGENT AND CALCULATION AGENT.
     Initially,  Wilmington Trust Company, the Trustee under the Indenture, will
     act as Registrar, Paying Agent, Conversion Agent and Calculation Agent. The
     Company may change any Registrar, Paying Agent or Calculation Agent without
     notice to any Holder. The Company or any of its Subsidiaries may act in any
     such capacity.

          (4) INDENTURE.  The Company issued the Notes under an Indenture  dated
     as of April 5, 2007 (the "Indenture") among the Company,  the Guarantor and
     the Trustee.  The terms of the Notes  include those stated in the Indenture
     and those made part of the Indenture by reference to the TIA. The Notes are
     subject to all such terms,  and Holders are referred to the  Indenture  and
     such Act for a statement of such terms. To the extent any provision of this
     Note conflicts with the express provisions of the Indenture, the provisions
     of the Indenture shall govern and be  controlling.  The Notes are unsecured
     obligations of the Company.

          (5)  REDEMPTION  PURSUANT  TO GAMING  LAWS.  If any  Gaming  Authority
     requires that a Holder or Beneficial Owner of Notes be licensed,  qualified
     or found  suitable  under  any  applicable  Gaming  Law and such  Holder or
     Beneficial Owner:

               (a) fails to apply for a license,  qualification  or a finding of
          suitability  within 30 days (or such shorter period as may be required
          by the applicable  Gaming Authority) after being requested to do so by
          the Gaming Authority; or

               (b)  is  denied  such  license  or  qualification  or  not  found
          suitable;

     AREP shall then have the right, at its option:
<PAGE>

          (a) to require each such Holder or Beneficial  Owner to dispose of its
     Notes  within  30 days  (or such  earlier  date as may be  required  by the
     applicable  Gaming  Authority) of the occurrence of the event  described in
     clause (a) or (b) above, or

          (b) to redeem the Notes of each such Holder or  Beneficial  Owner,  in
     accordance  with  Rule  14e-1 of the  Exchange  Act,  if  applicable,  at a
     redemption price equal to the lowest of:

               (i) the  principal  amount  thereof,  together  with  accrued and
          unpaid interest and Additional Interest, if any, to the earlier of the
          date of  redemption,  the date 30 days after such Holder or Beneficial
          Owner is required to apply for a license,  qualification or finding of
          suitability  (or  such  shorter  period  that may be  required  by any
          applicable  Gaming Authority) if such Holder or Beneficial Owner fails
          to do so  ("Application  Date") or of the date of denial of license or
          qualification  or of the  finding  of  unsuitability  by  such  Gaming
          Authority;

               (ii) the price at which such Holder or Beneficial  Owner acquired
          the Notes,  together with accrued and unpaid  interest and  Additional
          Interest,  if any,  to the  earlier  of the  date of  redemption,  the
          Application Date or the date of the denial of license or qualification
          or of the finding of unsuitability by such Gaming Authority; and

               (iii) such other  lesser  amount as may be required by any Gaming
          Authority.

          Immediately  upon a determination  by a Gaming Authority that a Holder
     or Beneficial  Owner of the Notes will not be licensed,  qualified or found
     suitable  and must  dispose of the Notes,  the Holder or  Beneficial  Owner
     will,  to the extent  required by applicable  Gaming Laws,  have no further
     right:

          (a) to  exercise,  directly  or  indirectly,  through  any  trustee or
     nominee or any other  person or entity,  any right  conferred by the Notes,
     the Note Guarantee or the Indenture; or

          (b) to receive any interest,  Additional Interest,  dividend, economic
     interests or any other  distributions or payments with respect to the Notes
     and the Note Guarantee or any  remuneration in any form with respect to the
     Notes and the Note  Guarantee  from the Company,  any Note Guarantor or the
     Trustee, except the redemption price referred to above.

          AREP  shall  notify the  Trustee  in  writing  of any such  redemption
     pursuant to the provisions of the Indenture. Any Holder or Beneficial Owner
     that is  required  to apply for a  license,  qualification  or a finding of
     suitability  will be responsible for all fees and costs of applying for and
     obtaining the license,  qualification  or finding of suitability and of any
     investigation by the applicable Gaming  Authorities and the Company and any
     Note Guarantor  will not reimburse any Holder or Beneficial  Owner for such
     expense.

          (6) MANDATORY REDEMPTION.  Other than in connection with redemption in
     the event of a Fundamental  Transaction as described  below, the Company is
     not required to make  mandatory  redemption  or sinking fund  payments with
     respect to the Notes.

          (7) CONVERSION.  Subject to the terms and conditions of the Indenture,
     a Holder  may  convert  at any time  each of its Notes  into the  Company's
     Depositary Units at the Conversion Price. The Conversion Price in effect at
     any given time is subject to  adjustment.  A Holder may convert  fewer than
     all of such Holder's  Notes so long as the Notes  converted are an integral
     multiple of $1,000 principal  amount. If this Note shall be surrendered for
     conversion  during the period from the close of business on the Record Date
     to the opening of business on the day  immediately  following  the Interest
     Payment Date, it shall be  accompanied by payment,  in funds  acceptable to
     the Company,  of an amount equal to the interest  otherwise payable on such
     Interest Payment Date on the Principal  Amount being  converted;  provided,
     however, that no such payment need be made if there shall exist at the time
     of conversion a default in the payment of interest on the Notes.

<PAGE>

          (8) FORCED CONVERSION.  The Company may, at its option,  automatically
     convert all or a portion of the Notes at any time on or after April 5, 2009
     and prior to the  Maturity  Date if: (i) the VWAP per  Depositary  Unit has
     exceeded  150% of the  Conversion  Price  then in  effect  for at  least 20
     Trading Days within a period of 30 consecutive Trading Days ending within 5
     Trading  Days of the Forced  Conversion  Notice  Date;  and (ii) the Equity
     Conditions  shall  have  been  satisfied  as of  the  date  of  the  Forced
     Conversion  Notice.  The Holders  shall be entitled to receive a Make-Whole
     Premium  in  accordance  with  Article 15 of the  Indenture  for any Forced
     Conversion which occurs following the public  announcement of a Fundamental
     Change during the applicable  Fundamental  Change Repurchase  Period. If at
     any time during the Forced Conversion  Period, the Equity Conditions are no
     longer  satisfied,  the Company  shall  provide a notice to the Trustee and
     each  Holder of such  failure  and,  unless the  Holders of not less than a
     majority in aggregate  principal amount of the then outstanding Notes waive
     such  failure,  the  Company  shall be  required  to  withdraw  the  Forced
     Conversion Notice.

          (9) REPURCHASE AT THE OPTION OF HOLDER.  If prior to the Maturity Date
     there shall have occurred a Fundamental  Change, each Holder shall have the
     option to require all or a portion of its Notes to be  repurchased  in cash
     by the Company on the Fundamental  Change Settlement Date for the principal
     amount of the Notes to be  repurchased,  together  with  accrued and unpaid
     interest  and  Additional  Interest,   if  any,  to,  but  excluding,   the
     Fundamental  Change  Settlement  Date,  plus  a  Make-Whole   Premium,   if
     applicable.

          (10) DENOMINATIONS,  TRANSFER,  EXCHANGE.  The Notes are in registered
     form without coupons in denominations  of $1,000 and integral  multiples of
     $1,000.  The transfer of Notes may be registered and Notes may be exchanged
     as provided in the  Indenture.  The Registrar and the Trustee may require a
     Holder,  among  other  things,  to  furnish  appropriate  endorsements  and
     transfer  documents  and the  Company may require a Holder to pay any taxes
     and fees  required by law or permitted by the  Indenture.  The Company need
     not  exchange  or  register  the  transfer of any Note or portion of a Note
     selected for forced conversion,  except for the unconverted  portion of any
     Note being converted in part.

          (11) PERSONS  DEEMED OWNERS.  The  registered  Holder of a Note may be
     treated as its owner for all purposes.

          (12) AMENDMENT,  SUPPLEMENT AND WAIVER. Subject to certain exceptions,
     the  Indenture  or the  Notes  or the Note  Guarantees  may be  amended  or
     supplemented  with the  consent of the  Holders  of at least a majority  in
     aggregate   principal  amount  of  the  then  outstanding  Notes  including
     Additional  Notes,  if any,  voting  as a single  class,  and any  existing
     Default  or Event or  Default  or  compliance  with  any  provision  of the
     Indenture  or the  Notes  or the Note  Guarantees  may be  waived  with the
     consent of the Holders of a majority in aggregate  principal  amount of the
     then  outstanding  Notes  including  Additional  Notes, if any, voting as a
     single class. Without the consent of any Holder of a Note, the Indenture or
     the Notes or the Note Guarantees may be amended or supplemented to cure any
     ambiguity, defect or inconsistency,  to provide for uncertificated Notes in
     addition  to  or in  place  of  certificated  Notes,  to  provide  for  the
     assumption of the Company's or a Guarantor's  obligations to Holders of the
     Notes and Note Guarantees in case of a merger or consolidation, to make any
     change that would provide any additional  rights or benefits to the Holders
     of the Notes or that does not  adversely  affect the legal rights under the
     Indenture of any such Holder,  to comply with the  requirements of the SEC,
     to  decrease  the  Conversion  Price as set forth in the  Indenture,  or to
     provide  for the  issuance  of  Additional  Notes  in  accordance  with the
     limitations  set  forth in the  Indenture,  or to allow  any  Guarantor  to
     execute a supplemental  indenture to the Indenture  and/or a Note Guarantee
     with respect to the Notes,  or to amend,  modify,  revise or supplement the
     Indenture  to conform to certain  amendments,  modifications,  revisions or
     supplements  made to  substantially  identical  provisions of the Company's
     outstanding unsecured Indebtedness. Under certain circumstances,  including
     proportional  payment  of  consideration  in respect  of such  waiver,  the
     Holders  of the  Notes  will be  deemed to have  waived  compliance  by the
     Company of provisions of the Notes or the Indenture,  if the holders of the
     Company's outstanding unsecured Indebtedness waive compliance with the same
     requirements.

<PAGE>

          (13) DEFAULTS AND REMEDIES. Events of Default include: (i) default for
     30 days in the payment when due of interest on, or Additional Interest,  if
     any, with respect to the Notes; (ii) default in the payment when due of the
     principal of, or premium  (including any Make-Whole  Premium),  if any, on,
     the Notes when the same becomes due and payable at maturity,  or otherwise,
     (iii)  failure by the Company to comply with  Article 13 of the  Indenture;
     (iv)  failure by the  Company or any  Guarantor  for 60 days after  written
     notice to the  Company  by the  Trustee  or the  Holders of at least 25% in
     aggregate principal amount of the Notes including Additional Notes, if any,
     then  outstanding  voting as a single class to comply with any of the other
     agreements in the  Indenture or the Notes;  (v) default under certain other
     agreements  relating to  Indebtedness of the Company or any Guarantor which
     default results in the acceleration  thereof;  (vi) certain final judgments
     for the payment of money that remain  undischarged for a period of 60 days;
     (vii) failure to convert the Notes as required  pursuant to the  Indenture;
     (viii)  certain  events of  bankruptcy  or  insolvency  with respect to the
     Company or any Guarantor that is a Significant Subsidiary;  and (ix) except
     as permitted by the  Indenture,  any Note Guarantee is held in any judicial
     proceeding to be unenforceable or invalid or ceases for any reason to be in
     full force and effect or AREH or any other  Guarantor or any Person  acting
     on behalf of any Guarantor denies or disaffirms its obligations  under such
     Guarantor's  Note  Guarantee.   Under  certain   circumstances,   including
     proportional  payment  of  consideration  in respect  of such  waiver,  the
     Holders of the Notes will be deemed to have  waived  the  occurrence  of an
     Event  of  Default  by  the  Company,  if  the  holders  of  the  Company's
     outstanding  unsecured  Indebtedness  waive the same  event of  default  as
     provided  in  the   governing   documents  of  the   applicable   unsecured
     Indebtedness. If any Event of Default occurs and is continuing, and has not
     been  waived  or  deemed  waived  pursuant  to  the  immediately  preceding
     sentence, the Trustee or the Holders of at least 25% in aggregate principal
     amount of the then  outstanding  Notes may  declare all the Notes to be due
     and payable immediately.  Notwithstanding the foregoing,  in the case of an
     Event of Default  arising from certain  events of bankruptcy or insolvency,
     all  outstanding  Notes will  become due and  payable  immediately  without
     further  action or notice.  Holders may not enforce  the  Indenture  or the
     Notes except as provided in the Indenture.  Subject to certain limitations,
     Holders of a majority in aggregate principal amount of the then outstanding
     Notes may direct the  Trustee in its  exercise  of any trust or power.  The
     Trustee may withhold  from  Holders of the Notes  notice of any  continuing
     Default or Event of Default (except a Default or Event of Default  relating
     to the payment of principal or interest or premium or Additional  Interest,
     if any,) if it determines that withholding notice is in their interest. The
     Holders of a majority in aggregate principal amount of the then outstanding
     Notes by notice to the Trustee  may, on behalf of the Holders of all of the
     Notes,  rescind an acceleration  or waive any existing  Default or Event of
     Default  and its  consequences  under  the  Indenture  except a  continuing
     Default  or Event of  Default  in the  payment  of  interest  or premium or
     Additional  Interest,  if any,  on, or the  principal  of, the  Notes.  The
     Company  is  required  to  deliver  to the  Trustee  annually  a  statement
     regarding compliance with the Indenture,  and the Company is required, upon
     becoming  aware of any  Default  or Event of  Default,  to  deliver  to the
     Trustee a statement specifying such Default or Event of Default.

<PAGE>

          (14) TRUSTEE DEALINGS WITH COMPANY.  The Trustee, in its individual or
     any other  capacity,  may make loans to, accept  deposits from, and perform
     services for the Company or its Affiliates, and may otherwise deal with the
     Company or its Affiliates, as if it were not the Trustee.

          (15) NO RECOURSE  AGAINST  OTHERS.  A director,  officer,  manager (or
     managing   member),   direct  or  indirect   member,   partner,   employee,
     incorporator or stockholder of the Company,  API, or the general partner of
     the Company or any Guarantor,  as such, will not have any liability for any
     obligations  of the  Company or the  Guarantors  under the Notes,  the Note
     Guarantees or the Indenture or for any claim based on, in respect of, or by
     reason of, such  obligations or their creation.  Each Holder by accepting a
     Note waives and  releases  all such  liability.  The waiver and release are
     part of the consideration for the issuance of the Notes.

          (16)  AUTHENTICATION.  This Note will not be valid until authenticated
     by the manual signature of the Trustee or an authenticating agent.

          (17) ABBREVIATIONS. Customary abbreviations may be used in the name of
     a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
     tenants  by  the  entireties),  JT TEN  (=  joint  tenants  with  right  of
     survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
     (= Uniform Gifts to Minors Act).

          (18)  ADDITIONAL  RIGHTS OF HOLDERS  OF  RESTRICTED  GLOBAL  NOTES AND
     RESTRICTED  DEFINITIVE NOTES. In addition to the rights provided to Holders
     of Notes  under the  Indenture,  Holders  of  Restricted  Global  Notes and
     Restricted  Definitive  Notes  will  have all the  rights  set forth in the
     Registration Rights Agreement dated as of April 4, 2007, among the Company,
     the Guarantor  and the other  parties named on the signature  pages thereof
     or, in the case of Additional Notes, Holders of Restricted Global Notes and
     Restricted  Definitive  Notes will have the rights set forth in one or more
     registration  rights agreements,  if any, among the Company,  the Guarantor
     and the other parties thereto,  relating to rights given by the Company and
     the Guarantor to the purchasers of any Additional Notes (collectively,  the
     "Registration Rights Agreement").

          (19) CUSIP NUMBERS.  Pursuant to a  recommendation  promulgated by the
     Committee on Uniform Security  Identification  Procedures,  the Company has
     caused  CUSIP  numbers to be printed on the Notes,  and the Trustee may use
     CUSIP  numbers in notices of  redemption,  repurchase  or  conversion  as a
     convenience  to Holders.  No  representation  is made as to the accuracy of
     such  numbers  either as printed on the Notes or as contained in any notice
     of redemption, repurchase or conversion, and reliance may be placed only on
     the other  identification  numbers placed thereon.

          (20)  GOVERNING  LAW.  THE  INTERNAL LAW OF THE STATE OF NEW YORK WILL
     GOVERN  AND BE USED TO  CONSTRUE  THE  INDENTURE,  THIS  NOTE  AND THE NOTE
     GUARANTEES  WITHOUT GIVING EFFECT TO APPLICABLE  PRINCIPLES OF CONFLICTS OF
     LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER  JURISDICTION
     WOULD BE REQUIRED THEREBY.

<PAGE>

     The Company  will  furnish to any Holder upon  written  request and without
charge  a copy  of the  Indenture  and/or  the  Registration  Rights  Agreement.
Requests may be made to:

American Real Estate Partners,  L.P.
American Real Estate Finance Corp.
767 Fifth Avenue,  Suite 4700
New York, New York 10153
Facsimile No.: (646) 365-2833
Attention: Felicia P. Buebel, Esq.

<PAGE>

                                ASSIGNMENT FORM

        To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to: __________________________________
                                                (Insert assignee's legal name)
________________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
             (Print or type assignee's name, address and zip code)

and irrevocably appoint ________________________________________________________
to  transfer  this Note on the books of the  Company.  The agent may  substitute
another to act for him.

Date:  _______________

                Your Signature: _______________________________________________
                    (Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:  _________________________

* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).

<PAGE>

            SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE *

     The  following  exchanges  of a part of this Global Note for an interest in
another Global Note or for a Definitive  Note, or exchanges of a part of another
Global Note or  Definitive  Note for an interest in this Global Note,  have been
made:

<TABLE>
<S>     <C>    <C>    <C>    <C>
                                                                         Principal Amount
                      Amount of decrease in      Amount of increase in   at maturity of this
                        Principal Amount           Principal Amount     Global Note following        Signature of authorized
                        at maturity of             at maturity of         such decrease                officer of Trustee or
Date of Exchange      this Global Note           this Global Note         (or increase)                    Custodian
----------------     ------------------         ------------------        -------------                 ------------------

</TABLE>

* This schedule should be included only if the Note is issued in global form.

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