In Sundance Investments capacity as a mortgage loan broker, it arranges loan transactions (Trust Deed Investments) secured by real property which may be funded by financial institutions, licensed lenders, private trust deed investors, and/or by pension plans. As you know, pension plans, IRAs, & Keoghs are governed by the Employee Retirement Income Security Act of 1974 (ERISA). The United States Department of Labor regulates pension plans subject to ERISA.

To comply with Federal Law pertaining to ERISA plans, the decisions required to make, administer, and service Plan investments must be made by the Plan Trustee(s) with the independent investment advice of qualified professional advisors upon which the Plan relies. When exercising discretion as the trustee(s) of the Plan, you are acting under Federal Law as "fiduciaries" of the Plan. When Sundance Mortgage provides services to the Plan, it is defined under Federal Law as "a party in interest". It is also important that the Plan understand what transactions are, under Federal Law, "prohibited" for Plan investment. Sundance Investments trusts that the following definitions will assist the Plan and its legal counsel in analyzing the foregoing issues:

1. FIDUCIARY. "Any person who (a) exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (b) renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (c) has any discretionary authority or discretionary responsibility in the administration of such plan. Such term includes any person designated under section 405(c)(1)(B) of the Employee Retirement Income Security Act of 1974."

2. PARTY IN INTEREST. "The definition of ‘party in interest' includes individuals and organizations with various links to employee benefit plans, including a person ‘providing services to such plan' and a fiduciary with respect to such plan. ERISA § 3(14), 29 U.S.C. § 1002(14). A party in interest can provide services to the plan for a fee as long as the fee is reasonable and customary. As a servicing broker of the plan's Trust Deed Investments, the party in interest relationship cannot extend to that of a fiduciary."

3. PROHIBITED TRANSACTION. "Under § 406(a) of ERISA, a plan fiduciary is prohibited from causing a plan to engage in a transaction, if he knows or should know that such transaction constitutes a direct or indirect (1) sale or exchange of any property between the plan and a party in interest; (2) the lending of money or other extension of credit between the plan and a party-in-interest; (3) the furnishing of goods, services, or facilities between the plan and a party-in-interest; (4) transfer to or use by, or for the benefit of, a party-in-interest of any assets of the plan."

Sundance Investments legal counsel has advised that, under acceptable standards, mortgage loan brokers may service loans for pension plans and that Sundance Investments may arrange, for compensation, loan transactions (Trust Deed Investments) between borrowers and pension plans. Sundance Investments has been further advised that ERISA regulations require the Plan's Trustee(s) to make decisions and to exercise discretion when engaging in or servicing pension plan investments. Accordingly, the Pension Plan Trustee(s) and their independent, qualified professional advisors must perform as "fiduciaries" of the pension plan, as defined under Federal Law. Additionally, Sundance Investments may not serve as pension plan "fiduciaries", as defined under Federal Law, may not make decisions, and may not exercise discretion regarding the origination or servicing of any loan transaction (Trust Deed Investment) funded in whole or in part by the pension plan.

Illustrations of the discretionary decisions that must be made by Pension Plan Trustee(s) and their independent, qualified professional advisors include, but are not limited to: 1) what underwriting guidelines should be applied for loan transactions (Trust Deed Investments) to be considered for Plan investments, 2) whether the Plan should proceed to invest in any particular loan transaction (Trust Deed Investment), 3) how and in what manner the loan should be serviced, 4) how and when to foreclose in the event of default by the borrower, 5) how credit bidding is to proceed at a sale conducted by a foreclosure trustee pursuant to the "power of sale", 6) what actions should be taken in the event of a petition in bankruptcy is filed by the borrower, 7) whether the loan transaction (Trust Deed Investment) should be renegotiated, compromised, extended or settled in a manner distinguishable from the loan terms described in the Promissory Note and Deed of Trust, and 8) when and who should be engaged as legal counsel to represent the Plan as may be required to carry out any of the foregoing.

Sundance Investments has made available forms prepared for the Plan's review and completion by you as Trustee(s) of the Plan which we believe will assist you in carrying out your responsibilities as Plan "fiduciaries". Further, the forms are intended to assist Sundance Investments when submitting proposed loan transactions (Trust Deed Investments) to the Plan, to be considered for Plan investment. The forms entitled, "Checklist of Plan Underwriting Guidelines" and "Plan Trustee Questionnaire and Certification" will be executed by the Plan Trustee(s) and will be maintained in Sundance Investments general files and will guide us on the types of loan transactions (Trust Deed Investments) which may be considered for Plan investment and whether Sundance Mortgage will recommend that the trustee(s) not proceed with any loan transaction (Trust Deed Investment) without independent investment advice from qualified professionals.

The additional forms outlined below are used for the Plan's review so that the Plan Trustee(s), the Plan's independent professional advisors, and the Plan's legal counsel, will each be aware (in advance) of the type of information Sundance Investments will be providing regarding each loan transaction (Trust Deed Investment) submitted for Plan investment consideration. Also, the forms illustrate what documents, instruments, and instructions PCF will request the Plan Trustee(s) to execute and what documents the Plan Trustee(s) will be asked to approve for use. The forms include the following:

1. CHECKLIST OF PLAN UNDERWRITING GUIDELINES. Sundance Investments will attempt to provide Trust Deed Investment opportunities generally conforming to these guidelines. However, each Trust Deed Investment opportunity should be individually reviewed to establish that the loan transaction (Trust Deed Investment) described therein is generally consistent with the Plan's underwriting guidelines and is suitable for the Plan's investment objectives.

2. PLAN TRUSTEE QUESTIONNAIRE AND CERTIFICATION. The Plan may be required to complete a similar form for a particular Trust Deed Investment as the Plan elects to consider each of them. This questionnaire is intended to describe the background, knowledge, experience, training, and general level of sophistication possessed by the Trustee(s) and will assist Sundance Investments in determining whether it may submit Trust Deed Investments to the Trustee(s) only or whether independent investment advice from qualified professionals will be required.

3. ENCLOSURE LETTER WITH TRUST DEED INVESTMENT PACKAGE. This form will accompany each proposed loan transaction (Trust Deed Investment). A completed Trust Deed Investment Package will be provided for the Plan's review and consideration when deciding to proceed with a Plan investment in a particular loan transaction (Trust Deed Investment). This sample letter is provided to illustrate the type of information, documents, instruments, and disclosures the Plan will receive.

4. LOAN SERVICING AGREEMENT. This form describes and establishes the relationship between the Plan and Sundance Investments to service loan transactions (Trust Deed Investments) in which the Plan invests. The servicing agreement outlines the limited authority delegated to Sundance Investments and describes the Plan trustee(s) authority and responsibilities and how Sundance Investments is to act to carry out the instructions of the Plan trustee(s). When deciding to purchase a proposed loan, this agreement will accompany each Trust Deed Investment Package provided for the Plan's review.

5. PLAN DIRECTION LETTER. This letter from the Plan to Sundance Investments represents the Plan's written authority to proceed with a specific loan transaction (Trust Deed Investment). This letter will accompany each Trust Deed Investment Package provided for Plan review and consideration.