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EXHIBIT 10.4




MARKETING SUPPORT AGREEMENT




     This MARKETING SUPPORT AGREEMENT (this “Agreement”) is entered into on this the ___day of
                    , 2006, by and between UNITED DEVELOPMENT FUNDING III, L.P., a Delaware limited partnership
(the “Partnership”), and UMTH Funding Services, LP, a Delaware limited partnership (“UMTH
Funding”).



W I T N E S S E T H




     WHEREAS, the Partnership will offer units of limited partnership interest to the public in an
offering to be registered with the Securities and Exchange Commission and the securities
commissions of certain identified states (the “Offering”);



     WHEREAS, the Partnership desires to avail itself of the experience, sources of information,
advice and assistance of UMTH Funding and to have UMTH Funding undertake the duties and
responsibilities hereinafter set forth, subject to the supervision of the general partner of the
Partnership (the “General Partner”); and



     WHEREAS, UMTH Funding is willing to undertake to render such services, subject to the
supervision of the General Partner, on the terms and conditions hereinafter set forth.



     NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:



ARTICLE I




MARKETING SUPPORT SERVICES



1.01 Appointment. The Partnership hereby appoints UMTH Funding to provide to the
Partnership marketing support services on the terms and conditions set forth in this Agreement, and
UMTH Funding hereby accepts such appointment.



1.02 Duties of UMTH Funding. UMTH Funding undertakes to use its best efforts to provide
the Partnership, its wholesalers and selected dealers with such services as may be reasonably
requested by the General Partner to support the Partnership’s offering of limited partnership
interest. In performance of this undertaking, subject to the supervision of the General Partner
and consistent with the provisions of the Partnership’s most recent prospectus relating to the
Offering (the “Prospectus”) and agreement of limited partnership (the “Partnership Agreement”),
UMTH Funding shall, either directly or by engaging a third party approved by the General Partner:





(a) advise the Partnership with respect to marketing its units of limited partnership
interest;




(b) oversee the selection of selected dealers and direct proper documentation and
recordkeeping relating to such selected dealers;




(c) coordinate the due diligence process conducted by the various selected dealers including
coordinating the gathering of requested information and preparation of due diligence
response



 









 






packages and correspondence, as well as serving as liaison among the respective due
diligence officers, the Partnership and other constituencies, such as outside auditors and
attorneys, from whom information relating to the Partnership is required; and




(d) investigate, select, and, on behalf of the Partnership, engage such vendors or other
persons UMTH Funding deems necessary to the proper performance of its obligations hereunder,
including but not limited to creative design and printing firms.


1.03 Prohibited Activities of UMTH Funding. UMTH Funding hereby represents that it is not
associated with (i) a broker as defined in Section 3(a)(4) of the Securities Exchange Act of 1934,
as amended or (ii) an investment adviser as defined in Section 202(a)(11) of the Investment
Advisers Act of 1940, and does not engage in the sale of securities. As such, UMTH Funding agrees
that it will not negotiate with or make any recommendations, render any investment advice, provide
any opinion or make representations to any potential investor or any of such potential investor’s
directors, officers, employees, agents or other representatives, regarding a potential investment
in the Partnership.



1.04 Other Activities of UMTH Funding. Nothing herein contained shall prevent UMTH Funding
or its affiliates from engaging in other activities, including, without limitation, the rendering
of services to other persons (including affiliates of the Partnership); nor shall this Agreement
limit or restrict the right of the general partner of UMTH Funding or any director, officer,
employee or affiliate of UMTH Funding to engage in any other business or to render services of any
kind to any other person.




ARTICLE II




COMPENSATION



2.01 Marketing Support Fee. The Partnership shall pay UMTH Funding a monthly Marketing
Support Fee in an amount equal to 0.8% of the gross proceeds received by the Partnership in
connection with the Offering during the preceding month, provided however, that no Marketing
Support Fee will be paid with respect to proceeds to the Partnership from the sale of units of
limited partnership interest under the Partnership’s distribution reinvestment plan as described in
the Prospectus. The Marketing Support Fee may or may not be taken, in whole or in part as to any
given month, in the sole discretion of UMTH Funding. All or any portion of the Marketing Support
Fee not taken as to any given month shall be deferred without interest and may be taken in such
other month as UMTH Funding shall determine.



2.02 Expenses.





(a) In addition to the compensation paid to UMTH Funding pursuant to Section 2.01 hereof,
the Partnership shall pay directly or reimburse UMTH Funding for all of the expenses paid or
incurred by UMTH Funding in connection with the services it provides to the Partnership
pursuant to this Agreement.




(b) Expenses incurred by UMTH Funding on behalf of the Partnership and payable pursuant to
this Section 2.02 shall be reimbursed no less than quarterly to UMTH Funding within 60 days
after the end of each quarter. UMTH Funding shall prepare a statement documenting the
expenses of the Partnership during each quarter, and shall deliver such statement to the
Partnership within 45 days after the end of each quarter.


2.03 Other Services. Should the General Partner request that UMTH Funding or any officer
or employee thereof render services for the Partnership other than set forth in Section 1.02, such
services




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shall be separately compensated at such rates and in such amounts as are agreed by UMTH Funding and
the General Partner, subject to the limitations contained in the Prospectus and the Partnership
Agreement, and shall not be deemed to be services pursuant to the terms of this Agreement.




ARTICLE III




TERM AND TERMINATION



3.01 Term; Renewal. This Agreement shall continue in force until the termination of the
Offering, unless terminated earlier at the option of either party upon 30 days written notice to
the other party without cause or penalty. This Agreement may be renewed for any period of time
mutually agreed upon by the parties in writing.



3.02 Payments to and Duties of UMTH Funding upon Termination. After the termination of
this Agreement, UMTH Funding shall not be entitled to compensation for further services hereunder
except it shall be entitled to receive from the Partnership within 30 days after the effective date
of such termination all earned but unpaid fees payable to UMTH Funding prior to termination of this
Agreement and all reimbursements of expenses incurred prior to the termination of this Agreement.




ARTICLE IV




INDEMNIFICATION



4.01 Indemnification by UMTH Funding. UMTH Funding shall indemnify and hold harmless the
Partnership from contract or other liability, claims, damages, taxes or losses and related
expenses, including attorneys’ fees, to the extent that such liability, claims, damages or losses
and related expenses are not fully reimbursed by insurance and are incurred by reason of UMTH
Funding’s bad faith, fraud, misfeasance, misconduct, negligence or reckless disregard of its
duties.




ARTICLE V




MISCELLANEOUS



5.01 Assignment to an Affiliate. This Agreement may be assigned by UMTH Funding to an
affiliate of UMTH Funding with the approval of the General Partner. UMTH Funding may assign any
rights to receive fees or other payments under this Agreement without obtaining the approval of the
General Partner. This Agreement shall not be assigned by the Partnership without the consent of
UMTH Funding, except in the case of an assignment by the Partnership to a corporation or other
organization which is a successor to all of the assets, rights and obligations of the Partnership,
in which case such successor organization shall be bound hereunder and by the terms of said
assignment in the same manner as the Partnership is bound by this Agreement. This Agreement shall
be binding on successors to the Partnership and shall likewise be binding upon any successor to
UMTH Funding.



5.02 Relationship of UMTH Funding and Partnership. The Partnership and UMTH Funding are
not partners or joint venturers with each other, and nothing in this Agreement shall be construed
to make them such partners or joint venturers or impose any liability as such on either of them.



5.03 Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing unless some other method of giving such notice or other communication
is accepted by the


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party to whom it is given, and shall be given by being delivered by hand or by overnight mail or
other overnight delivery service to the addresses set forth herein:




	 	 	 
	To the General Partner
	 	 
	   and to the Partnership:

	 	United Development Funding III, L.P.
	 

	 	1702 N. Collins Boulevard
	 

	 	Suite 100
	 

	 	Richardson, Texas 75080
	 
	 	 
	To UMTH Funding:

	 	UMTH Funding Services, LP
	 

	 	1702 N. Collins Boulevard
	 

	 	Suite 100
	 

	 	Richardson, Texas 75080





Either party shall, as soon as reasonably practicable, give notice to the other party of a change
in its address for the purposes of this Section 5.03.



5.04 Modification. This Agreement shall not be changed, modified, or amended, in whole or
in part, except by an instrument in writing signed by both parties hereto, or their respective
successors or assignees.



5.05 Severability. The provisions of this Agreement are independent of and severable from
each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of
the fact that for any reason any other or others of them may be invalid or unenforceable in whole
or in part.



5.06 Choice of Law; Venue. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of Texas, and venue for any action brought
with respect to any claims arising out of this Agreement shall be brought exclusively in Dallas
County, Texas.



5.07 Entire Agreement. This Agreement contains the entire agreement and understanding
among the parties hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof. The express terms
hereof control and supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof.



5.08 Waiver. Neither the failure nor any delay on the part of a party to exercise any
right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege, nor shall any
waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver
shall be effective unless it is in writing and is signed by the party asserted to have granted such
waiver.



5.09 Headings. The titles and headings of sections and subsections contained in this
Agreement are for convenience only, and they neither form a part of this Agreement nor are they to
be used in the construction or interpretation hereof.



5.10 Execution in Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original as against any party whose signature appears
thereon, and all of which shall together constitute one and the same instrument. This Agreement
shall become binding when


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one or more counterparts hereof, individually or taken together, shall bear the signatures of all
of the parties reflected hereon as the signatories.




     IN WITNESS WHEREOF, the parties hereto have executed this Marketing Support Agreement as of
the date and year first above written.



	 	 	 	 	 	 	 	 	 
	 	 	UNITED DEVELOPMENT FUNDING III, L.P.
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	UMTH Land Development, L.P.

     its General Partner
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	Hollis M. Greenlaw, Director
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	UMTH FUNDING SERVICES, LP
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	its General Partner
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Print Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Print Title:	 	 
	 

	 	 	 	 	 	 	 	 






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