ex10_1.htm


    
      

    

    
      ADVISORY
AGREEMENT

      


      This
ADVISORY AGREEMENT (this “Agreement”) is entered into on
this the 12th day
of November, 2009; by and between UNITED DEVELOPMENT FUNDING IV, a Maryland real
estate investment trust (the “Trust”), and UMTH GENERAL
SERVICES, L.P., a Delaware limited partnership (the “Advisor”).

      


      W
I T N E S S E T H

      


      WHEREAS, the Trust intends to
issue common shares of beneficial interest, par value $.01, to the public, upon
registration of such shares with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended and may subsequently issue additional
securities;

      


      WHEREAS, the Trust has been
formed to originate, acquire, hold, manage, administer and operate a portfolio
of loans secured by real estate and interests in entities that own real estate,
as well as direct investments in real estate and other real estate-related
assets;

      


      WHEREAS, the Trust intends to
qualify as a real estate investment trust and to invest its funds in investments
permitted by the terms of the Trust’s Declaration of Trust and Sections 856
through 860 of the Internal Revenue Code;

      


      WHEREAS, the Trust desires to
avail itself of the experience, sources of information, advice, assistance and
certain facilities available to the Advisor and to have the Advisor undertake
the duties and responsibilities hereinafter set forth, on behalf of, and subject
to the supervision of, the Board of Trustees (the “Board”) of the Trust, all as
provided herein; and

      


      WHEREAS, the Advisor is
willing to undertake to render such services, subject to the supervision of the
Board, 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 are hereby acknowledged, the parties hereto agree as
follows:

      


      ARTICLE
I

      


      DEFINITIONS

      


      The
following defined terms used in this Agreement shall have the meanings specified
below:

      


      Acquisition
Expenses.  Any and all expenses incurred by the Trust, the
Advisor, or any Affiliate of either in connection with the selection,
acquisition or development of any Asset, whether or not acquired, including,
without limitation, legal fees and expenses, travel and communications expenses,
costs of appraisals, nonrefundable option payments on property not acquired,
accounting fees and expenses, title insurance premiums and other closing
costs.

      


      Acquisition
and Origination Fees.  Any and all fees and commissions,
exclusive of Acquisition Expenses, paid by any Person to any other duly
qualified and licensed Person (including any fees or commissions paid by or to
any duly qualified and licensed Affiliate of the Trust or the Advisor) in
connection with origination, making or investing in Secured Loans or the
purchase, development or construction of an Asset, including, without
limitation, real estate commissions, selection fees, non-recurring management
fees, loan fees, points or any other fees of a similar nature.


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      


      Advisor.  UMTH
General Services, L.P., a Delaware limited partnership, any successor advisor to
the Trust, or any Person to which UMTH General Services, L.P. or any successor
advisor subcontracts all or substantially all of its functions.

      


      
      

      Advisory
Fees.  The fees payable to the Advisor for day-to-day
professional management services in connection with the Trust and its investment
in Assets as set forth in Section 3.01(b) of this Agreement.

      


      Affiliate or Affiliated.  As
to any Person, (i) any Person directly or indirectly owning, controlling, or
holding, with the power to vote, 10% or more of the outstanding voting
securities of such Person; (ii) any Person 10% or more of whose outstanding
voting securities are directly or indirectly owned, controlled, or held, with
power to vote, by such other Person; (iii) any Person, directly or indirectly,
controlling, controlled by, or under common control with such Person; (iv) any
executive officer, director, trustee or general partner of such Person; and (v)
any legal entity for which such Person acts as an executive officer, director,
trustee or general partner.

      


      Appraised
Value.  Value according to an appraisal made by an Independent
Appraiser.

      


      Assets.  Properties,
Secured Loans and other direct or indirect investments in securities or equity
interests in Real Property (other than investments in bank accounts, money
market funds or other current assets, whether of the proceeds from an Offering
or the sale of an Asset or otherwise) owned by the Trust, directly or indirectly
through one or more of its Affiliates or Joint Ventures or through other
investment interests.

      


      Average
Invested Assets.  For a specified period, the average of the
aggregate book value of the Assets, before deducting depreciation, bad debts or
other similar non-cash reserves, computed by taking the average of such values
at the end of each month during such period; provided, however, that during such
periods in which the Board is determining on a regular basis the current value
of the Trust’s net assets for purposes of enabling fiduciaries of employee
benefit plan shareholders to comply with applicable Department of Labor
reporting requirements, “Average Invested Assets” will equal the greater of (i)
the amount determined pursuant to the foregoing or (ii) the most recent Assets’
aggregate valuation established by the Board without reduction for depreciation,
bad debts or other non-cash reserves and without reduction for any debt secured
by or relating to the Assets.

      


      Board.  The
Board of Trustees of the Trust.

      


      Bylaws.  The
bylaws of the Trust, as the same are in effect as amended from time to
time.

      


      Change of
Control.  Any (i) event (including, without limitation, issue,
transfer or other disposition of Shares of beneficial interest of the Trust or
equity interests in the Partnership, merger, share exchange or consolidation)
after which any “person” (as that term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) is or becomes the “beneficial
owner” (as defined in Rule 13d-j of the Securities Exchange Act of 1934, as
amended), directly or indirectly, of securities of the Trust or the Partnership
representing greater than 50% of the combined voting power of the Trust’s or the
Partnership’s then outstanding securities, respectively; provided, that, a
Change of Control shall not be deemed to occur as a result of any widely
distributed public offering of the Shares or (ii) direct or indirect sale,
transfer, conveyance or other disposition (other than pursuant to clause (i)) in
one or a series of related transactions, of all or substantially all of the
assets of the Company or the Partnership, taken as a whole, to any “person” (as
that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended).


      
        
           


        

        
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      Code.  Internal
Revenue Code of 1986, as amended from time to time, or any successor statute
thereto. Reference to any provision of the Code shall mean such provision as in
effect from time to time, as the same may be amended, and any successor
provision thereto, as interpreted by any applicable regulations as in effect
from time to time.

      


      Contract
Purchase Price.  The amount (i) actually paid and/or budgeted
in respect of the purchase, development, construction or improvement of a
Property, (ii) of funds advanced with respect to a Secured Loan or (iii)
actually paid and/or budgeted in respect to the purchase of other Assets, in
each case exclusive of Acquisition and Origination Fees and Acquisition Expenses
but including any debt attributable to such acquired Assets.

      


      Contract
Sales Price.  The total consideration provided for in the sales
contract for the Sale of a Property.

      


      Debt
Financing Fee.  The fees payable to the Advisor pursuant to
Section 3.01(c) of this Agreement.

      


      Declaration
of Trust.  The Declaration of Trust of the Trust filed with the
Maryland State Department of Assessments and Taxation in accordance with the
Maryland REIT Law, as amended from time to time.

      


      Disposition
Fees.  The fees payable to the Advisor for services provided in
connection with the Sale of one or more Assets pursuant to Section 3.01(f) of
this Agreement.

      


      Distributions.  Any
dividends or other distributions of money or other property by the Trust to
owners of Shares, including distributions that may constitute a return of
capital for federal income tax purposes.

      


      Gross
Proceeds.  The aggregate purchase price of all Shares sold for
the account of the Trust through an Offering, without deduction for Selling
Commissions, wholesaling fees, marketing support fees, marketing reallowances,
due diligence expense reimbursement, volume discounts, or Organization and
Offering Expenses.  For the purpose of computing Gross Proceeds, the
purchase price of any Share for which reduced Selling Commissions are paid to a
Soliciting Dealer (where net proceeds to the Trust are not reduced) shall be
deemed to be the full amount of the Offering price per Share pursuant to the
Prospectus for such Offering without reduction.

      


      Independent
Appraiser.  A Person with no material current or prior business
or personal relationship with the Advisor or the Trustees and who is a qualified
appraiser of Real Property of the type held by the Trust or of other Assets as
determined by the Board.  Membership in a nationally recognized
appraisal society such as the American Institute of Real Estate Appraisers or
the Society of Real Estate Appraisers shall be conclusive evidence of such
qualification as to Real Property.

      


      Independent
Trustee.  A Trustee who is not,
on the date of determination and within the last two years from the date of
determination has not been, directly or indirectly associated with the Sponsor,
or the Advisor by virtue of (i) ownership of an interest in the Sponsor, the
Advisor or any of their Affiliates, other than the Trust, (ii) employment by the
Sponsor, the Advisor or any of their Affiliates, (iii) service as an officer or
director of the Sponsor, the Advisor or any of their Affiliates, other than as a
Trustee of the Trust or of any other real estate investment trust organized by
the Sponsor or advised by the Advisor, (iv) performance of services, other than
as a Trustee, for the Trust, (v) service as a director or trustee of more than
three real estate investment trusts organized by the Sponsor or advised by the
Advisor, or (vi) maintenance of a material business or professional relationship with the Sponsor,
the Advisor or any of their Affiliates.  A business or professional
relationship is considered “material” per se if the aggregate gross revenue derived by the Trustee
from the Sponsor, the Advisor and their Affiliates exceeds 5.0% of either the
Trustee’s annual gross revenue during either of the last two years or the
Trustee’s net worth on a fair market value basis.  An indirect
association with the Sponsor or the Advisor shall include circumstances in which
a Trustee’s spouse, parent, child, sibling, mother- or father-in-law, son- or
daughter-in-law, or brother- or sister-in-law is or has been associated with the
Sponsor, the Advisor, any of their Affiliates or the
Trust.


      
        
           


        

        
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      Invested
Capital.  The amount calculated by multiplying the total number
of Shares purchased by Shareholders by the issue price at the time of such
purchase, reduced by the portion of any Distribution that is attributable to Net
Sales Proceeds and by any amounts paid by the Trust to repurchase Shares
pursuant to the Trust’s plan for repurchase of Shares.

      


      Joint
Ventures.  The joint venture or partnership arrangements in
which the Trust or the Partnership is a co-venturer or general partner which are
established to acquire or hold Assets.

      


      Listing or Listed.  The
approval of the Trust’s application to list the Shares by a national securities
exchange and the commencement of trading in the Shares on the respective
national securities exchange.

      


      Market
Value.  Upon Listing, the market value of the outstanding
Shares, measured by taking the average closing price for a single Share, over a
period of 30 consecutive trading days, with such period beginning 180 days after
Listing, and multiplying that number by the number of Shares outstanding on the
date of measurement.

      


      NASAA
Guidelines.  The Statement of Policy Regarding Real Estate
Investment Trusts published by the North American Securities Administrators
Association, Inc. on May 7, 2007, and in effect on the date hereof.

      


      Net
Income.  For any period, the Trust’s total revenues applicable
to such period, less the total expenses applicable to such period other than
additions to reserves for depreciation, bad debts or other similar non-cash
reserves and excluding any gain from the sale of the Assets.  If the
Advisor is paid a Subordinated Incentive Fee or a Subordinated Incentive Listing
Fee, “Net Income,” for purposes of calculating Total Operating Expenses shall
exclude the gain from the Sale of any Assets.

      


      Net Sales
Proceeds.  In the case of a transaction described in clause
(i)(A) of the definition of Sale, the proceeds of any such transaction less the
amount of selling expenses incurred by or on behalf of the Trust, including all
real estate commissions, closing costs and legal fees and
expenses.  In the case of a transaction described in clause (i)(B) of
such definition, Net Sales Proceeds means the proceeds of any such transaction
less the amount of selling expenses incurred by or on behalf of the Trust,
including any legal fees and expenses and other selling expenses incurred in
connection with such transaction.  In the case of a transaction
described in clause (i)(C) of such definition, Net Sales Proceeds means the
proceeds of any such transaction actually distributed to the Trust or the
Operating Partnership from the Joint Venture less the amount of any selling
expenses, including legal fees and expenses incurred by or on behalf of the
Trust (other than those paid by the Joint Venture).  In the case of a
transaction or series of transactions described in clause (i)(D) of the
definition of Sale, Net Sales Proceeds means the proceeds of any such
transaction (including the aggregate of all payments under a Secured Loan on or
in satisfaction thereof other than regularly scheduled interest payments) less
the amount of selling expenses incurred by or on behalf of the Trust, including
all commissions, closing costs and legal fees and expenses.  In the
case of a transaction described in clause (i)(E) of such definition, Net Sales
Proceeds means the proceeds of any such transaction less the amount of selling
expenses incurred by or on behalf of the Trust, including any legal fees and
expenses and other selling expenses incurred in connection with such
transaction.  In the case of a transaction described in clause (ii) of
the definition of Sale, Net Sales Proceeds means the proceeds of such
transaction or series of transactions less all amounts generated thereby which
are reinvested in one or more Assets within 180 days thereafter and less the
amount of any real estate commissions, closing costs, and legal fees and
expenses and other selling expenses incurred by or allocated to the Trust or the
Operating Partnership in connection with such transaction or series of
transactions.  Net Sales Proceeds shall also include any amounts that
the Trust determines, in its discretion, to be economically equivalent to
proceeds of a Sale.  Net Sales Proceeds shall not include any reserves
established by the Trust in its sole discretion.


      
        
           


        

        
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      Offering.  Any
public offering and sale of Shares pursuant to an effective registration
statement filed under the Securities Act, other than a public offering of shares
under a distribution reinvestment plan.

      


      Organization
and Offering Expenses.  Any and all costs and expenses incurred
by and to be paid from the assets of the Trust in connection with the formation
of the Trust and the qualification and registration of an Offering, and the
marketing and distribution of Shares, including, without limitation, total
underwriting and brokerage discounts and commissions (including fees of the
underwriters’ attorneys); expenses for printing, engraving and amending
registration statements or supplementing prospectuses; mailing and distribution
costs; salaries of employees while engaged in sales activity; telephone and
other telecommunications costs; all advertising and marketing expenses
(including the costs related to investor and broker-dealer sales meetings);
charges of transfer agents, registrars, trustees, escrow holders, depositaries
and experts; and fees, expenses and taxes related to the filing, registration
and qualification of the sale of the Shares under federal and state laws; and
accountants’ and attorneys’ fees.

      


      Partnership.  United
Development Funding IV Operating Partnership, L.P., a Delaware limited
partnership, through which the Trust may own Assets.

      


      Person.  An
individual, corporation, business trust, estate, trust, partnership, limited
liability company or other legal entity.

      


      Property or Properties.  As
the context requires, any, or all, respectively, of the Real Property acquired
by the Trust, either directly or indirectly (whether through joint venture
arrangements or other partnership or investment interests).

      


      Prospectus.  Prospectus has the meaning set forth in
Section 2(10) of the Securities Act, including a preliminary prospectus, an
offering circular as described in Rule 253 of the General Rules and Regulations
under the Securities Act or, in the case of an intrastate offering, any document
by whatever name known, utilized for the purpose of offering and selling
securities of the Trust to the public.

      


      Real
Property.  Land, rights in land (including leasehold
interests), land under development, developed lots, and any buildings,
structures, improvements, furnishings, fixtures and equipment located on or used
in connection with land and rights or interests in land.

      


      REIT.  A
corporation, trust, association or other legal entity (other than a real estate
syndication) that is engaged primarily in investing in equity interests in real
estate (including fee ownership and leasehold interests) or in loans secured by
real estate or both in accordance with Sections 856 through 860 of the
Code.

      


      Sale or Sales.  (i)
Any transaction or series of transactions whereby:  (A) the Trust or
the Partnership directly or indirectly (except as described in other subsections
of this definition) sells, grants, transfers, conveys, or relinquishes its
ownership of any Property or portion thereof, including the lease of any
Property consisting of a building only, and including any event with respect to
any Property which gives rise to a significant amount of insurance proceeds or
condemnation awards; (B) the Trust or the Partnership directly or indirectly
(except as described in other subsections of this definition) sells, grants,
transfers, conveys, or relinquishes its ownership of all or substantially all of
the interest of the Trust or the Partnership in any Joint Venture in which it is
a co-venturer or partner; (C) any Joint Venture directly or indirectly (except
as described in other subsections of this definition) in which the Trust or the
Partnership as a co-venturer or partner sells, grants, transfers, conveys, or
relinquishes its ownership of any Property or portion thereof, including any
event with respect to any Property which gives rise to insurance claims or
condemnation awards; (D) the Trust or the Partnership directly or indirectly
(except as described in other subsections of this definition) sells, grants,
conveys or relinquishes its interest in any Secured Loan or portion thereof
(including with respect to any Secured Loan, all repayments thereunder or in
satisfaction thereof other than regularly scheduled interest payments) and any
event with respect to a Secured Loan which gives rise to a significant amount of
insurance proceeds or similar awards; or (E) the Trust or the Partnership
directly or indirectly (except as described in other subsections of this
definition) sells, grants, transfers, conveys, or relinquishes its ownership of
any other Asset not previously described in this definition or any portion
thereof.  (ii) Notwithstanding the foregoing, “Sale” or “Sales” shall
not include any transaction or series of transactions specified in clause (i)(A)
through (E) above in which the proceeds of such transaction or series of
transactions are reinvested in one or more Assets within 180 days
thereafter.


      
        
           


        

        
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      Secured
Loans.  In connection with financing provided, invested in,
participated in or purchased by the Trust, all of the notes, deeds of trust,
security interests or other evidences of indebtedness or obligations, which are
secured or collateralized by Real Property owned by the borrowers under such
notes, deeds of trust, security interests or other evidences of indebtedness or
obligations or pledges of equity interests in entities owning Real
Property.

      


      Securities
Act.  The Securities Act of 1933, as amended from time to time,
or any successor statute thereto.  Reference to any provision of the
Securities Act shall mean such provision as in effect from time to time, as the
same may be amended, and any successor provision thereto, as interpreted by any
applicable regulations as in effect from time to time.

      


      Selling
Commissions.  Any and all commissions payable to underwriters
or other broker-dealers in connection with the sale of the Shares, including,
without limitation, commissions payable to the Soliciting Dealers.

      


      Shareholders.  The
record holders of the Shares as maintained in the books and records of the Trust
or its transfer agent.

      


      Shareholders’
10.0% Return.  As of any date, an aggregate amount equal to a
10.0% cumulative, non-compounded, annual return on Invested
Capital.

      


      Shares.  Any
Shares of the Trust’s common shares of beneficial interest, par value $.01 per
share.

      


      Soliciting
Dealers.  Broker-dealers who are members of the Financial
Industry Regulatory Authority, or that are exempt from broker-dealer
registration, and who, in either case, have executed participating broker or
other agreements with the Trust to sell Shares.

      


      Sponsor.  UMT
Holdings, L.P.

      


      Subordinated
Incentive Fee.  The fee payable to the Advisor under certain
circumstances if certain performance standards have been met pursuant to Section
3.01(d) of this Agreement.

      


      Subordinated
Incentive Listing Fee.  The fee payable to the Advisor under
certain circumstances if the Shares are Listed pursuant to Section
3.01(g).


      
        
           


        

        
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      Termination
Date.  The date of termination of this Agreement.

      


      Total
Operating Expenses.  All costs and expenses paid or incurred by
the Trust, as determined under generally accepted accounting principles, which
are in any way related to the operation of the Trust or to Trust business,
including Advisory Fees, but excluding (i) the expenses of raising capital such
as Organization and Offering Expenses, legal, audit, accounting, underwriting,
brokerage, listing, registration, and other fees, printing and other such
expenses and tax incurred in connection with the issuance, distribution,
transfer, registration and Listing of the Shares, (ii) interest payments, (iii)
taxes, (iv) non-cash expenditures such as depreciation, amortization and bad
debt reserves, (v) the Subordinated Incentive Fee, (vi) the Subordinated
Incentive Listing Fee, (vii) Acquisition and Origination Fees and Acquisition
Expenses, (viii) Debt Financing Fees, (ix) real estate commissions on the Sale
of Assets (including Disposition Fees and Securitized Loan Pool Placement Fees),
and (x) other fees and expenses connected with the acquisition, disposition,
management and ownership of real estate interests, mortgage loans or other
property (including the costs of foreclosure, insurance premiums, legal
services, maintenance, repair and improvement of property).

      


      Trust.  United
Development Funding IV, a real estate investment trust organized under the laws
of the State of Maryland.

      


      Trustee.  A
member of the Board.

      


      ARTICLE
II

      


      THE
ADVISOR

      


      2.01        
Appointment.  The
Trust hereby appoints the Advisor to serve as its advisor on the terms and
conditions set forth in this Agreement, and the Advisor hereby accepts such
appointment.  The Advisor shall be deemed to be in a fiduciary
relationship to the Trust and its Shareholders.

      


      2.02        
Duties of
the Advisor.  Subject to Section 2.07, the Advisor undertakes
to use its commercially reasonable best efforts to present to the Trust
potential investment opportunities consistent with the investment objectives and
policies of the Trust as determined and adopted from time to time by the
Board.  In performance of this undertaking, subject to the supervision
of the Board and consistent with the provisions of the Trust’s most recent
Prospectus for Shares, Declaration of Trust and Bylaws, the Advisor shall,
either directly or by engaging a duly qualified and licensed Affiliate of the
Advisor or other duly qualified and licensed Person:

      


      (a)          
manage the formation of the Trust and the Partnership, including the preparation
and filing of all necessary documentation and ancillary agreements;

      


      (b)          
structure, qualify and register the initial Offering;

      


      (c)          
coordinate marketing and distribution of the Trust’s Shares in connection with
the initial Offering;

      


      (d)          
structure, qualify, register and oversee the distribution of Shares pursuant to
the Trust’s distribution reinvestment plan;

      


      (e)          
structure, qualify and administer the repurchase of Shares pursuant to the
Trust’s redemption program;


      
        
           


        

        
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      (f)           
serve as the Trust’s investment and financial advisor and provide research and
economic and statistical data in connection with the Assets and the Trust’s
investment policies;

      


      (g)          
provide the daily management of the Trust and perform and supervise the various
administrative functions reasonably necessary for the management and operations
of the Trust;

      


      (h)        
  maintain and preserve the books and records of the Trust, including
share books and records reflecting a record of the Shareholders and their
ownership of the Trust’s Shares;

      


      (i)       
    investigate, select, and, on behalf of the Trust, engage
and conduct business with such Persons as the Advisor deems necessary to the
proper performance of its obligations hereunder, including but not limited to
consultants, accountants, correspondents, lenders, technical advisors,
attorneys, brokers, underwriters, corporate fiduciaries, escrow agents,
depositaries, custodians, agents for collection, insurers, insurance agents,
banks, builders, developers, property owners, mortgagors, asset managers;
property management companies, transfer agents and any and all agents for any of
the foregoing, including Affiliates of the Advisor, and Persons acting in any
other capacity deemed by the Advisor necessary or desirable for the performance
of any of the foregoing services, including but not limited to entering into
contracts in the name of the Trust with any of the foregoing;

      


      (j)         
  consult with the officers and the Board and assist the Board in the
formulation and implementation of the Trust’s financial policies and, as
necessary, furnish the Board with advice and recommendations with respect to the
making of investments consistent with the investment objectives and policies of
the Trust and in connection with any borrowings proposed to be undertaken by the
Trust;

      


      (k)         
 subject to the provisions of Sections 2.02(i) and 2.03 hereof, (i) locate,
analyze and select potential investments in Assets; (ii) structure and negotiate
the terms and conditions of transactions pursuant to which investment in Assets
will be made; (iii) make investments in Assets on behalf of the Trust or the
Partnership in compliance with the investment objectives and policies of the
Trust; (iv) arrange for financing and refinancing and make other changes in the
asset or capital structure of, and dispose of, reinvest the proceeds from the
sale of, or otherwise deal with the investments in, Assets; and (v) enter into
leases of Property and service contracts for Assets and, to the extent
necessary, perform all other operational functions for the maintenance and
administration of such Assets, including the servicing of Secured
Loans;

      


      (l)            provide
the Board with periodic reports regarding prospective investments in
Assets;

      


      (m)          if
a transaction requires approval by the Board, deliver to the Board all documents
required by them to properly evaluate the proposed transaction;

      


      (n)          obtain
the prior approval of the Board (including a majority of all Independent
Trustees) for any and all investments in Assets;

      


      (o)          obtain
the prior approval of a majority of the Independent Trustees and a majority of
the Board not otherwise interested in any transaction with the Advisor or its
Affiliates;

      


      (p)          negotiate
on behalf of the Trust with banks or lenders for loans to be made to the Trust,
negotiate on behalf of the Trust with investment banking firms and
broker-dealers, and negotiate private sales of Shares and other securities of
the Trust or obtain loans for the Trust, as and when appropriate, but in no
event in such a way so that the Advisor shall be acting as broker-dealer or
underwriter; and provided further that any fees and costs payable to third
parties incurred by the Advisor in connection with the foregoing shall be the
responsibility of the Trust;


      
        
           


        

        
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      (q)         
 obtain reports (which may be prepared by or for the Advisor or its
Affiliates), where appropriate, concerning the value of investments or
contemplated investments of the Trust in Assets;

      


      (r)           
from time to time, or at any time reasonably requested by the Board, make
reports to the Board of its performance of services to the Trust under this
Agreement;

      


      (s)           
provide the Trust with, or assist the Trust in arranging for, all necessary cash
management services;

      


      (t)           
deliver to or maintain on behalf of the Trust copies of all appraisals obtained
in connection with the investments in Assets;

      


      (u)          
upon request of the Trust, act, or obtain the services of others to act, as
attorney-in-fact or agent of the Trust in making, acquiring and disposing of
Assets, disbursing, and collecting the funds, paying the debts and fulfilling
the obligations of the Trust and handling, prosecuting and settling any claims
of the Trust, including foreclosing and otherwise enforcing mortgage and other
liens and security interests comprising any of the Assets;

      


      (v)          
supervise the preparation and filing and distribution of returns and reports to
governmental agencies and to Shareholders and other investors and act on behalf
of the Trust in connection with investor relations;

      


      (w)         
provide office space, equipment and personnel as required for the performance of
the foregoing services as Advisor;

      


      (x)          
assist the Trust in preparing all reports and returns required by the Securities
and Exchange Commission, Internal Revenue Service and other state or federal
governmental agencies; and

      


      (y)        
 do all things necessary to assure its ability to render the services
described in this Agreement.

      


      2.03       
 Authority
of Advisor.  Pursuant to the terms of this Agreement (including
the duties set forth in Section 2.02, and the restrictions included in this
Section 2.03 and in Section 2.06), and subject to the continuing and exclusive
authority of the Board over the management of the Trust, the Board hereby
delegates to the Advisor the authority to (i) locate, analyze and select
investment opportunities, (ii) structure the terms and conditions of
transactions pursuant to which investments will be made or acquired for the
Trust or the Partnership, (iii) make and acquire Secured Loans, acquire
Properties and invest in other Assets in compliance with the investment
objectives and policies of the Trust, (iv) arrange for financing or refinancing
of Assets, (v) enter into leases for the Properties and service contracts for
the Assets with duly qualified and licensed non-affiliated and Affiliated
Persons, including oversight of non-affiliated and Affiliated Persons that
perform management, acquisition, advisory, disposition or other services for the
Trust, and (vi) arrange for, or provide, accounting and other record-keeping
functions at the Asset level.

      


      The Board
may, at any time upon the giving of notice to the Advisor, modify or revoke the
authority set forth in this Section 2.03, provided however, that such
modification or revocation shall be effective upon receipt by the Advisor or
such later date as is specified by the Board and included in the notice provided
to the Trust and such modification or revocation shall not be applicable to
investment transactions to which the Advisor has committed the Trust prior to
the date of receipt by the Advisor of such notification, or, if later, the
effective date of such modification or revocation specified by the
Board.


      
        
           


        

        
          -9-

          
            

          

        

        
           


        

      


      2.04        
Bank
Accounts.  The Advisor may establish and maintain one or more
bank accounts in its own name for the account of the Trust or in the name of the
Trust and may collect and deposit into any such account or accounts, and
disburse from any such account or accounts, any money on behalf of the Trust,
under such terms and conditions as the Board may approve, provided that no funds
of the Trust or the Partnership shall be commingled nor shall any such funds be
commingled with the funds of the Advisor; and the Advisor shall from time to
time, upon request by the Board, its Audit Committee or the auditors of the
Trust, render appropriate accountings of such collections and payments to the
Board, its Audit Committee and the auditors of the Trust.

      


      2.05        
Records;
Access.  The Advisor shall maintain appropriate records of all
its activities hereunder and make such records available for inspection by the
Board and by counsel, auditors and authorized agents of the Trust, at any time
or from time to time during normal business hours.  The Advisor shall
at all reasonable times have access to the books and records of the
Trust.

      


      2.06        
Limitations
on Activities.  Anything else in this Agreement to the contrary
notwithstanding, the Advisor shall refrain from taking any action which, in its
sole judgment made in good faith, would (a) adversely affect the status of the
Trust as a REIT, (b) subject the Trust to regulation under the Investment
Company Act of 1940, as amended, (c) violate any law, rule, regulation or
statement of policy of any governmental body or agency having jurisdiction over
the Trust, the Shares or its other securities, or (d) not be permitted by the
Declaration of Trust or Bylaws, except if such action shall be ordered by the
Board, in which case the Advisor shall notify promptly the Board of the
Advisor’s judgment of the potential impact of such action and shall refrain from
taking such action until it receives further clarification or instructions from
the Board.  In such event, the Advisor shall have no liability for
acting in accordance with the specific instructions of the Board so
given.  Notwithstanding the foregoing, the Advisor, its directors,
officers, general partners, trustees, employees, limited partners and
stockholders, and the directors, officers, general partners, trustees,
employees, limited partners and stockholders of the Advisor’s Affiliates shall
not be liable to the Trust or to the Board or Shareholders for any act or
omission by the Advisor, its directors, officers, general partners, trustees,
employees, limited partners, or stockholders, or for any act or omission of any
Affiliate of the Advisor, its directors, officers, general partners, trustees,
employees, limited partners, or stockholders, except as provided in Section 5.02
of this Agreement.

      


      2.07        
Other
Activities of the Advisor.  Nothing herein contained shall
prevent the Advisor or its Affiliates from engaging in other activities,
including, without limitation, the rendering of advice to other Persons
(including other REITs) and the management of other programs advised, sponsored
or organized by the Advisor or its Affiliates; nor shall this Agreement limit or
restrict the right of any director, officer, general partner, trustee, employee,
limited partner, or stockholder of the Advisor or its Affiliates to engage in
any other business or to render services of any kind to any other
Person.  The Advisor may, with respect to any investment in which the
Trust is a participant, also render advice and service to each and every other
participant therein.  The Advisor shall report to the Board the
existence of any condition or circumstance, existing or anticipated, of which it
has knowledge, which creates or could create a conflict of interest between the
Advisor’s obligations to the Trust and its obligations to or its interest in any
other Person.  The Advisor or its Affiliates shall promptly disclose
to the Board knowledge of such condition or circumstance.  The Advisor
shall inform the Board at least quarterly of the investment opportunities that
have been offered to other programs with similar investment objectives sponsored
by the Sponsor, Advisor, any Trustee or their Affiliates.  If the Sponsor, Advisor,
any Trustee or Affiliates thereof have sponsored other investment programs with
similar investment objectives which have investment funds available at the same
time as the Trust, it shall be the duty of the Board (including the Independent
Trustees) to adopt the method set forth in the Trust’s most recent Prospectus
for its Shares or another reasonable method by which investments are to be
allocated to the competing investment entities and to use their best efforts to
apply such method fairly to the Trust.


      
        
           


        

        
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      2.08         Payment
of Certain Organization and Offering Expenses.  The Trust shall
pay directly all Organization and Offering Expenses considered underwriting
compensation by the Financial Industry Regulatory Authority.  Such
payments, other than Selling Commissions, bona fide due diligence expense
reimbursements, wholesaling fees, marketing support fees and marketing
reallowances, shall apply toward the limit on Organization and Offering Expenses
reimbursable by the Trust to the Advisor pursuant to Section 3.02(a)(i)
below.

      


      ARTICLE
III

      


      COMPENSATION AND
REIMBURSEMENT OF SPECIFIED COSTS

      


      3.01        
Fees.

      


      (a)         
 Acquisition and
Origination Fees and Acquisition Expenses.  The Trust shall pay
to the Advisor or an Affiliate of the Advisor Acquisition and Origination Fees,
and will reimburse the Advisor for Acquisition Expenses, in an aggregate amount
of 3.0% of the net amount available for investment in Assets (after payment of
Selling Commissions, wholesaling fees, marketing support fees, marketing
reallowances and Organization and Offering Expenses).  The total of
all Acquisition and Origination Fees, including Debt Financing Fees, from any
source, and any Acquisition Expenses shall be limited in accordance with the
Declaration of Trust and the NASAA Guidelines.

      


      (b)          
Advisory
Fees.  The Trust shall pay the Advisor Advisory Fees in the
amount of 2.0% per annum of the Average Invested Assets, payable monthly in an
amount equal to one-twelfth of 2.0% of the Average Invested Assets on the last
day of the immediately preceding month.  The Advisor, in its sole
discretion, may waive, reduce or defer all or any portion of the Advisory Fees
to which it would otherwise be entitled.

      


      (c)          
 Debt Financing
Fee.   In the event of the origination of any debt
financing obtained by the Trust, including the assumption (directly or
indirectly) of existing debt, that is used to acquire properties, to make other
permitted investments or is assumed (directly or indirectly) in connection with
the acquisition of properties, and if the Advisor or an Affiliate of the Advisor
provides a substantial amount of services, as determined by the Independent
Trustees in connection therewith, the Trust will pay to the Advisor or an
Affiliate of the Advisor a Debt Financing Fee equal to 1% of the amount
available to the Trust under such financing.  On each anniversary date
of the origination of such debt financing, the Trust will pay to the Advisor or
an Affiliate of the Advisor an additional fee of 0.25% of the primary loan
amount if such financing continues to be outstanding on such date, or a pro
rated portion of such additional fee for the portion of such year that the
financing was outstanding.

      


      (d)          
Subordinated Incentive
Fee.  The Trust shall pay to the Advisor a Subordinated
Incentive Fee equal to 15.0% of the amount by which the Trust’s Net Income for
the immediately preceding year exceeds the Shareholders’ 10.0% Return from
inception through the end of the immediately preceding year.  The
Subordinated Incentive Fee shall be paid annually and upon termination of this
Agreement in accordance with Section 4.02, unless such termination is by the
Trust because of a material breach of this Agreement by the
Advisor.  If the Subordinated Incentive Fee is being paid in
accordance with the termination of this Agreement, such fee will be payable with
respect to the period between the end of the immediately preceding year and the
Termination Date only if a Subordinated Incentive Fee was payable with respect
to such immediately preceding year.  If the Subordinated Incentive Fee
is payable with respect to such period between the end of the immediately
preceding year and the Termination Date, such fee will be based on the Trust’s
Net Income between the end of the immediately preceding year and the Termination
Date and the Shareholders’ 10.0% Return from inception through the Termination
Date.  Notwithstanding the foregoing, in the event the Subordinated
Incentive Listing Fee is paid to the Advisor following Listing, no Subordinated
Incentive Fee will be paid to the Advisor.  The Trust, in its sole
discretion, may pay the Subordinated Incentive Fee with an interest bearing
promissory note, cash, Shares, or any combination thereof.  In no
event will the Trust pay a Subordinated Incentive Fee, including any interest
payable in connection with any promissory note issued by the Trust in payment of
the Subordinated Incentive Fee, in excess of the amount that would be
presumptively reasonable under Section 9.7 of the Declaration of
Trust.


      
        
           


        

        
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      (e)          
Securitized Loan Pool
Placement Fees.  Upon the successful securitization and
placement of any Secured Loans (or any derivative thereof), the Trust shall pay
to the Advisor or an Affiliate of the Advisor a Securitized Loan Pool Placement
Fee equal to 2.0% of the net proceeds realized by the Trust in connection with
such securitization and placement, provided that the Advisor or an Affiliate of
the Advisor has provided a substantial amount of services in connection with
such securitization and placement as determined by a majority of the Independent
Trustees.  In no event will the amount of any Securitized Loan Pool
Placement Fees paid in connection with a securitization and placement of any
Secured Loans (or any derivative thereof) exceed the limits set forth in the
NASAA Guidelines and Section 9.6 of the Declaration of Trust.

      


      (f)          
Disposition
Fees.  If the Advisor or an Affiliate of the Advisor provides a
substantial amount of services, as determined by a majority of the Independent
Trustees, in connection with the Sale of one or more Properties, the Trust shall
pay the Advisor or an Affiliate of the Advisor a Disposition Fee in an amount
equal to 2.0% of the contract sales price of the Property or
Properties.  In no event will the amount of any Disposition Fees paid
in connection with a Sale exceed the limits set forth in the NASAA Guidelines
and Section 9.6 of the Declaration of Trust.

      


      (g)          
Subordinated Incentive
Listing Fee.  Upon Listing, the Advisor shall be entitled to
the Subordinated Incentive Listing Fee in an amount equal to 15.0% of the amount
by which (i) the Market Value of the Trust’s outstanding Shares plus
Distributions paid by the Trust prior to Listing, exceeds (ii) the sum of (A)
100% of Invested Capital and (B) the total Distributions required to be paid to
the Shareholders in order to pay the Shareholders’ 10.0% Return from inception
through the date that Market Value is determined.  The Trust shall
have the option to pay such fee in the form of cash, Shares, a promissory note,
or any combination thereof.  If the Trust pays such fee with a
promissory note, interest will accrue at a rate deemed fair and reasonable by
the Board from and after the date of Listing.  If the promissory note
has not been paid in full within five years from the date of Listing, then the
Advisor, or its successors or assigns, may elect to convert the unpaid balance,
including accrued but unpaid interest, into Shares at a price per Share equal to
the average closing price of the Shares over the ten trading days immediately
preceding the date of such election.  If the Shares are no longer
Listed at such time as the promissory note becomes convertible into Shares as
provided by this paragraph, then the price per Share, for purposes of
conversion, shall equal the fair market value for the Shares as determined by
the Board based upon the Appraised Value of the Assets as of the date of
election.

      


      3.02        
Expenses.

      


      (a)         
 In addition to the compensation paid to the Advisor pursuant to Section
3.01 hereof and except as noted in Section 2.08 above, the Trust shall pay
directly or reimburse the Advisor for all of the costs and expenses paid or
incurred by the Advisor that are in any way related to the operations of the
Trust or the business of the Trust or the services the Advisor provides to the
Trust pursuant to this Agreement, including, but not limited to:

       

      (i)            Organization
and Offering Expenses; provided, however, that within 60 days after the end of
the month in which an Offering terminates, the Advisor shall reimburse the Trust
for any Organization and Offering Expenses (other than Selling Commissions, bona
fide due diligence expense reimbursements, wholesaling fees, marketing support
fees and marketing reallowances) to the extent that such Organization and
Offering Expenses incurred by the Trust exceed 3.0% of the Gross Proceeds raised
in the completed Offering;


      
        
           


        

        
          -12-

          
            

          

        

        
           


        

      


      (ii)          
the actual cost of goods, services and materials used by the Trust and obtained
from Persons not affiliated with the Advisor, other than Acquisition Expenses,
including brokerage fees paid in connection with the purchase and sale of Shares
or other securities;

       

      (iii)          interest
and other costs for borrowed money, including discounts, points and other
similar fees;

       

      (iv)       
  taxes and assessments on income or property and taxes as an expense
of doing business;

       

      (v)          
costs associated with insurance required in connection with the business of the
Trust or by the Board;

       

      (vi)          expenses
of managing and operating Assets owned by the Trust, whether or not payable to
an Affiliate of the Advisor;

       

      (vii)         all
expenses in connection with payments to the Board for attendance at meetings of
the Board and Stockholders;

       

      (viii)     
  except as otherwise limited by the Declaration of Trust, expenses
associated with Listing or with the issuance and distribution of Shares and
other securities of the Trust, such as selling commissions and fees, advertising
expenses, taxes, legal and accounting fees and Listing and registration fees,
but excluding Organization and Offering Expenses;

       

      (ix)          
expenses connected with payments of Distributions in cash or otherwise made or
caused to be made by the Trust to the Stockholders;

       

      (x)           
expenses of organizing, reorganizing, liquidating or dissolving the Trust and
the expenses of filing or amending the Declaration of Trust;

       

      (xi)         
 expenses of any third party transfer agent for the Shares and of
maintaining communications with Stockholders, including the cost of preparation,
printing, and mailing annual reports and other Stockholder reports, proxy
statements and other reports required by governmental entities;

       

      (xii)        
 personnel and related employment costs incurred by the Advisor or its
Affiliates in performing the services described herein, including but not
limited to reasonable salaries and wages, benefits and overhead of all employees
directly involved in the performance of such services; provided, that no
reimbursement shall be made for costs of such employees of the Advisor or its
Affiliates to the extent that such employees perform services for which the
Advisor receives a separate fee; and

       

      (xiii)         audit,
accounting and legal fees.


      
        
           


        

        
          -13-

          
            

          

        

        
           


        

      


      (b)          
Expenses incurred by the Advisor on behalf of the Trust and payable pursuant to
this Section 3.02 shall be reimbursed no less than quarterly to the Advisor
within 60 days after the end of each quarter. The Advisor shall prepare a
statement documenting the expenses of the Trust during each quarter, and shall
deliver the statement to the Trust within 45 days after the end of each
quarter.

      


      3.03        
Other
Services.  Should the Board request that the Advisor or any
director, officer, general partner, trustee, or employee thereof render services
for the Trust other than set forth in Section 2.02, such services shall be
separately compensated at such rates and in such amounts as are agreed by the
Advisor and the Board, subject to the limitations contained in the Declaration
of Trust, and shall not be deemed to be services pursuant to the terms of this
Agreement.

      


      3.04       
 Reimbursement
to the Advisor.  The Trust shall not reimburse the Advisor, at
the end of any fiscal quarter, for any Total Operating Expenses to the extent
that, in the four consecutive fiscal quarters then ended (the “Expense Year”)
the Total Operating Expenses exceed (the “Excess Amount”) the greater of (i) 2%
of Average Invested Assets or (ii) 25% of Net Income (the “2%/25% Guidelines”)
for that period of four consecutive quarters unless the Independent Trustees
determine that such excess was justified, based on unusual and nonrecurring
factors which the Independent Trustees deem sufficient.  If the
Independent Trustees do not approve such excess as being so justified, any
Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the
Trust.  If the Independent Trustees determine such excess was
justified, then within 60 days after the end of any fiscal quarter of the Trust
for which  reimbursed Total Operating Expenses for the Expense Year
exceed the 2%/25% Guidelines, the Advisor, at the direction of the Independent
Trustees, shall cause such fact to be disclosed in the next quarterly report of
the Trust or in a separate writing and sent to the shareholders, together with
an explanation of the factors the Independent Trustees considered in determining
that such excess expenses were justified.  The Trust will ensure that
such determination will be reflected in the minutes of the meetings of the
Board.  All figures used in the foregoing computation shall be
determined in accordance with generally accepted accounting principles applied
on a consistent basis.  In addition, the Trust shall not reimburse the
Advisor or its Affiliates for services for which the Advisor and/or its
Affiliates are entitled to compensation in the form of a separate
fee.

      


      ARTICLE
IV

      


      TERM AND
TERMINATION

      


      4.01        
Term;
Renewal.  Subject to Section 4.02 hereof, this Agreement has a
one-year term and shall continue in force until the first anniversary of the
date hereof.  Thereafter, this
Agreement may be renewed for an unlimited number of successive one-year terms
upon mutual consent of the parties.  It is the Board’s duty to
evaluate the performance of the Advisor annually before renewing the Agreement,
and each such renewal shall be for a term of no more than one year.

      


      4.02        
Termination.  This
Agreement will automatically terminate upon Listing.  This Agreement
also may be terminated at the option of either party (i) immediately upon a
Change of Control or (ii) upon 60 days written notice without cause or penalty
(in either case, if termination is by the Trust, then such termination shall be
upon the approval of a majority of the Independent
Trustees).  Notwithstanding the foregoing, the provisions of this
Agreement which provide for payment to the Advisor of expenses, fees or other
compensation following the Termination Date (i.e., Section 4.03) shall
continue in full force and effect until all amounts payable thereunder to the
Advisor are paid in full.  The provisions of Sections 4.03 through
5.02 shall survive the termination of this Agreement.


      
        
           


        

        
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      4.03        
Payments
to and Duties of Advisor upon Termination.

      


      (a)          
After the Termination Date, the Advisor shall not be entitled to compensation
for further services hereunder, except it shall be entitled to and receive from
the Trust within 30 days after the effective date of such termination all unpaid
reimbursements of expenses provided for herein, subject to the provisions of
Section 3.04 hereof, and all contingent liabilities related to fees payable to
the Advisor prior to termination of this Agreement, provided that the
Subordinated Incentive Fee, if any, shall be paid in accordance with the
provisions of Section 3.01(d) and the Subordinated Incentive Listing Fee, if
any, shall be paid in accordance with the provisions of Section
3.01(g).

      


      (b)           
The Advisor shall promptly upon termination:

      


      (i)           
pay over to the Trust all money collected and held for the account of the Trust
pursuant to this Agreement, after deducting any accrued compensation and
reimbursement for its expenses to which it is then entitled;

      


      (ii)          
deliver to the Board a full accounting, including a statement showing all
payments collected by it and a statement of all money held by it, covering the
period following the date of the last accounting furnished to the
Board;

      


      (iii)          deliver
to the Board all assets, including the Assets, and documents of the Trust then
in the custody of the Advisor; and

      


      (iv)          cooperate
with, and take all reasonable actions requested by, the Trust to provide an
orderly management transition.

      


      ARTICLE
V

      


      INDEMNIFICATION

      


      5.01         
(a)          The Trust shall
indemnify and hold harmless the Advisor and its Affiliates, including their
respective officers, directors, trustees, partners and employees, from all
liability, claims, damages or losses arising in the performance of their duties
hereunder, and related expenses, including reasonable attorneys’ fees, to the
extent such liability, claims, damages or losses and related expenses are not
fully reimbursed by insurance, subject to any limitations imposed by the laws of
the State of Maryland, the Declaration of Trust and the NASAA Guidelines under
the Declaration of Trust. The Trust shall not indemnify or hold harmless the
Advisor or its Affiliates, including their respective officers, directors,
trustees, partners and employees, for any liability or loss suffered by the
Advisor or its Affiliates, including their respective officers, directors,
trustees, partners and employees, nor shall it provide that the Advisor or its
Affiliates, including their respective officers, directors, trustees, partners
and employees, be held harmless for any loss or liability suffered by the Trust,
unless all of the following conditions are met: (i) the Advisor or its
Affiliates, including their respective officers, directors, trustees, partners
and employees, have determined, in good faith, that the course of conduct which
caused the loss or liability was in the best interests of the Trust; (ii) the
Advisor or its Affiliates, including their respective officers, directors,
trustees, partners and employees, were acting on behalf of or performing
services of the Trust; (iii) such liability or loss was not the result of
negligence or misconduct by the Advisor or its Affiliates, including their
respective officers, directors, trustees, partners and employees; and (iv) such
indemnification or agreement to hold harmless is recoverable only out of the
Trust’s net assets and not from Shareholders.  Notwithstanding the
foregoing, the Advisor and its Affiliates, including their respective officers,
directors, trustees, partners and employees, shall not be indemnified by the
Trust for any losses, liability or expenses arising from or out of an alleged
violation of federal or state securities laws by such party unless one or more
of the following conditions are met: (i) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular indemnitee; (ii) such claims have been dismissed
with prejudice on the merits by a court of competent jurisdiction as to the
particular indemnitee; and (iii) a court of competent jurisdiction approves a
settlement of the claims against a particular indemnitee and finds that
indemnification of the settlement and the related costs should be made, and the
court considering the request for indemnification has been advised of the
position of the Securities and Exchange Commission and of the published position
of any state securities regulatory authority in which securities of the Trust
were offered or sold as to indemnification for violations of securities
laws.


      
        
           


        

        
          -15-

          
            

          

        

        
           


        

      


      (b)          
The Declaration of Trust provides that the advancement of Trust funds to the
Advisor or its Affiliates, including their respective officers, directors,
trustees, partners and employees, for legal expenses and other costs incurred as
a result of any legal action for which indemnification is being sought is
permissible only if all of the following conditions are satisfied: (i) the legal
action relates to acts or omissions with respect to the performance of duties or
services on behalf of the Trust; (ii) the legal action is initiated by a
third-party who is not a Shareholder or the legal action is initiated by a
Shareholder acting in his or her capacity as such and a court of competent
jurisdiction specifically approves such advancement; (iii) the Advisor or its
Affiliates, including their respective officers, directors, trustees, partners
and employees, undertake to repay the advanced funds to the Trust together with
the applicable legal rate of interest thereon, in cases in which such Advisor or
its Affiliates, including their respective officers, directors, trustees,.
partners and employees, are found not to be entitled to
indemnification.

      


      (c)          
Notwithstanding the provisions of this Section 5.01, the Advisor shall not be
entitled to indemnification or be held harmless pursuant to this Section 5.01
for any activity which the Advisor shall be required to indemnify or hold
harmless the Trust pursuant to Section 5.02.

      


      5.02        
Indemnification
by Advisor.  The Advisor shall indemnify and hold harmless the
Trust from contract or other liability, claims, damages, taxes or losses and
related expenses including attorneys’ fees, to the extent that (i) such
liability, claims, damages, taxes or losses and related expenses are not fully
reimbursed by insurance and (ii) are incurred by reason of the Advisor’s bad
faith, fraud, misfeasance, misconduct, negligence or reckless disregard of its
duties.  The Advisor shall not be held responsible for any action of
the Board in following or declining to follow any advice or recommendation given
by the Advisor.

      


      ARTICLE
VI

      


      MISCELLANEOUS

      


      6.01       
 Assignment
to an Affiliate.  This Agreement and any rights, duties,
liabilities and obligations hereunder and the fees and compensation related
thereto may be assigned by the Advisor, in whole or in part, to a duly qualified
and licensed Affiliate of the Advisor without obtaining approval of the
Board.  The Advisor may assign any rights to receive fees or other
payments under this Agreement without obtaining the approval of the
Board.  Any other assignment shall be made only with the approval of a
majority of the Board (including a majority of the Independent
Trustees).  This Agreement shall not be assigned by the Trust without
the consent of the Advisor, except in the case of an assignment by the Trust to
a corporation or other organization which is a successor to all of the assets,
rights and obligations of the Trust, in which case such successor organization
shall be bound hereunder and by the terms of said assignment in the same manner
as the Trust is bound by this Agreement.  This Agreement shall be
binding on successors to the Trust resulting from a Change of Control or sale of
all or substantially all the assets of the Trust or the Partnership, and shall
likewise be binding upon any successor to the Advisor.


      
        
           


        

        
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      6.02        
 Relationship
of Advisor and Trust.  The Trust and the Advisor 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.

      


      6.03        
Notices.  Any
notice, report or other communication required or permitted to be given
hereunder shall be in writing unless some other method of giving such notice,
report or other communication is required by the Declaration of Trust, the
Bylaws, or accepted by the 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 Trustees and to the Trust:

              	 	
                United
      Development Funding IV

                The
      United Development Funding Building

                Suite
      100

                1301
      Municipal Way

                Grapevine,
      Texas  76051

                Attention:  Chief
      Executive Officer

                 

              
	
                To
      the Advisor:

              	 	
                UMTH
      General Services, L.P.

                The
      United Development Funding Building

                Suite
      100

                1301
      Municipal Way

                Grapevine,
      Texas  76051

                Attention:  President

              


      

      


      Either
party shall, as soon as reasonably practicable, give notice in writing to the
other party of a change in its address for the purposes of this Section
6.03.

      


      6.04       
 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.

      


      6.05       
 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.

      


      6.06       
 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.

      


      6.07        
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. This Agreement may not be
modified or amended other than by an agreement in writing signed by each of the
parties hereto.

      


      6.08       
 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.


      
        
           


        

        
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      6.09         
Gender;
Number.  Words used herein regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.

      


      6.10        
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.

      


      6.11        
Execution
in Counterparts.  This Agreement may be executed in any number
of 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 the counterparts hereof, individually or taken together, shall bear
the signatures of all of the parties reflected hereon as the
signatories.

      


      18.12      
Restrictions
on Voting.       The Sponsor has
contributed $200,000 (the “Initial Investment”) in exchange for the initial
issuance of Shares of the Trust.  The Sponsor or its Affiliates may
not sell any of the Shares purchased with the Initial Investment while the
Advisor acts in an advisory capacity to the Trust.  The restrictions
included above shall not apply to any Shares acquired by the Advisor or its
Affiliates other than the Shares acquired through the Initial
Investment.  Neither the Advisor nor its Affiliates shall vote any
Shares they now own, or hereafter acquires, in any vote for the election of
Trustees or any vote regarding the approval or termination of any contract with
the Advisor or any of its Affiliates.

      


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

      


      
        	 
      	
                UNITED
      DEVELOPMENT FUNDING IV

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By: 
      

              	
                /s/ Hollis M. Greenlaw

              
	 
      	
                Name: 
      

              	
                Hollis M. Greenlaw

              
	 
      	
                Title: 
      

              	
                Chief Executive Officer

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                UMTH
      GENERAL SERVICES, L.P.

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By: 
      

              	
                /s/ David Hanson

              
	 
      	
                Name: 
      

              	
                David Hanson

              
	 
      	
                Title: 
      

              	
                President

              


      

       

    

     

    
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