exv10w5






EXHIBIT 10.5









AMENDED AND RESTATED ESCROW AGREEMENT




LegacyTexas Bank

100 Throckmorton Suite 1510

Fort Worth, Texas 76102




     Re: United Development Funding IV


Ladies and Gentlemen:




     United Development Funding IV, a Maryland real estate investment trust (the “Trust”),
will issue in a public offering (the “Offering”) common shares of beneficial interest (the
“Shares”) pursuant to a Registration Statement on Form S-11 filed by the Trust with the
Securities and Exchange Commission and a Prospectus included therein, as may be amended or
supplemented from time to time (the “Prospectus”). The Shares will be offered by select
members of the Financial Industry Regulatory Authority (FINRA) on a “best efforts” basis (each
being referred to herein as a “Dealer” and collectively as the “Dealers”). The
Trust is entering into this Amended and Restated Escrow Agreement (the “Agreement”) to set
forth the terms on which LegacyTexas Bank (the “Escrow Agent”), will hold and disburse the
proceeds from subscriptions for the purchase of the Shares in the Offering until such time as
(i) in the case of subscriptions received from all nonaffiliates of the Trust, the Trust has
received and accepted subscriptions for Shares resulting in total minimum capital raised of
$1,000,000 (the “Required Capital”) and, thereafter, until otherwise directed by the Trust;
(ii) in the case of subscriptions received from residents of Pennsylvania (“Pennsylvania
Subscribers”), the Trust has received subscriptions for Shares from nonaffiliates of the Trust
resulting in total minimum capital raised of $35,000,000 (the “Pennsylvania Required
Capital”); (iii) in the case of subscriptions received from residents of Nebraska
(“Nebraska Subscribers”), the Trust has received subscriptions for Shares from
nonaffiliates of the Trust resulting in total minimum capital raised of $5,000,000 (the
“Nebraska Required Capital”); and (iv) in the case of subscriptions received from residents
of New York (“New York Subscribers”), the Trust has received subscriptions for Shares from
nonaffiliates of the Trust resulting in total minimum capital raised of $2,500,000 (the “New
York Required Capital”).



     This Agreement amends and replaces in full that certain Escrow Agreement, dated as of
September 9, 2008, by and between the Trust and the Escrow Agent. The Trust hereby appoints
LegacyTexas Bank as Escrow Agent for purposes of holding the proceeds from the subscriptions for
the Shares, on the terms and conditions hereinafter set forth:



     1. Until such time as the Trust has received subscriptions for Shares resulting in total
minimum capital raised equal to the Required Capital and such funds are disbursed from the Escrow
Account, as hereinafter defined, in accordance with paragraph 3(a) hereof, persons subscribing to
purchase the Shares (the “Subscribers”) will be instructed by the Dealers to remit the
purchase price in the form of checks, drafts, wires, Automated Clearing House (ACH) or money orders
(hereinafter referred to as “Instruments of Payment”) payable to the order of “United
Development Funding IV Escrow Account.” After subscriptions are received resulting in total
minimum capital raised equal to the Required Capital and such funds are disbursed from the Escrow
Account in accordance with paragraph 3(a) hereof, subscriptions shall continue to be so submitted
unless otherwise instructed by the Trust. Any Instruments of Payment made payable to a party other
than the Escrow Agent shall be returned to the Dealer who submitted such Instrument of Payment.
After receipt of any Instruments of Payment, a Dealer will send to the Trust such Instruments of
Payment along with all other subscription



 









 







documentation by noon of the next business day following
receipt of the Instruments of Payment and other subscription documentation. The Trust then undertakes to (i) send each Subscriber’s
name, address, executed IRS Form W-9, number of Shares purchased and purchase price remitted (the
“Subscription Materials”) and the Instrument of Payment to the Escrow Agent on the same day
it is received by the Trust from the Dealer and (ii) provide in writing to Escrow Agent,
concurrently with the Subscription Materials and the Instrument of Payment, instructions regarding
the escrow account (i.e., the Escrow Account, Pennsylvania Escrow Account, Nebraska Escrow Account
or New York Escrow Account, as such terms are defined below) in which to deposit the proceeds of
each Instrument of Payment (it being understood that absent any written directions to the contrary,
Escrow Agent shall deposit such proceeds in the Escrow Account) and notification whether the
applicable Subscriber is an affiliate of the Trust (it being understood that absent any written
notification to the contrary, Escrow Agent shall presume that each Subscriber is not an affiliate
of the Trust). The Dealer shall insure that any such submissions of Subscription Materials and
Instruments of Payment by the Trust to the Escrow Agent occur in accordance with the provisions of
the previous sentence. The Escrow Agent shall notify the Trust from time to time during the term
of this Agreement of the names of any Subscribers for whom the Escrow Agent has not received a
properly executed IRS Form W-9, to the extent Escrow Agent is able to make such determination. The
Escrow Agent will deposit the Instruments of Payment from such Subscribers into an interest-bearing
deposit account entitled “Escrow Account for the Benefit of Subscribers for Shares of United
Development Funding IV” or such similar designation as the parties may agree (the “Escrow
Account”) until such Escrow Account has closed pursuant to paragraph 3(a) hereof. Instruments
of Payment received from Pennsylvania Subscribers (as identified as such by the Trust) shall be
accounted for separately in a subaccount entitled “Escrow Account for the Benefit of Pennsylvania
Subscribers” (the “Pennsylvania Escrow Account”), until such Pennsylvania Escrow Account
has closed pursuant to paragraph 3(a) hereof. Instruments of Payment received from Nebraska
Subscribers (as identified as such by the Trust) shall be accounted for separately in a subaccount
entitled “Escrow Account for the Benefit of Nebraska Subscribers” (the “Nebraska Escrow
Account”), until such Nebraska Escrow Account has closed pursuant to paragraph 3(a) hereof.
Instruments of Payment received from New York Subscribers (as identified as such by the Trust)
shall be accounted for separately in a subaccount entitled “Escrow Account for the Benefit of New
York Subscribers” (the “New York Escrow Account”), until such New York Escrow Account has
closed pursuant to paragraph 3(a) hereof. Each of the Escrow Account, the Pennsylvania Escrow
Account, the Nebraska Escrow Account and the New York Escrow Account will be established and
maintained in such a way as to permit the interest income calculations described in paragraph 6.



     2. The Escrow Agent will promptly process for collection the Instruments of Payment upon
deposit into the Escrow Account, Pennsylvania Escrow Account, Nebraska Escrow Account or New York
Escrow Account, as applicable. Deposits will be held in the Escrow Account, the Pennsylvania
Escrow Account, the Nebraska Escrow Account and the New York Escrow Account until such funds are
disbursed in accordance with paragraph 3 hereof. It is the intention of the Trust and the Escrow
Agent that, except as set forth herein, prior to disbursement of the funds deposited in the Escrow
Account, the Pennsylvania Escrow Account, the Nebraska Escrow Account or the New York Escrow
Account, such funds will not be subject to claims by creditors of the Trust, any Dealer or any of
their affiliates; provided however, that such intention does not constitute any representation by
either the Trust or the Escrow Agent that the funds will not be subject to such claims. If any of
the Instruments of Payment are returned to the Escrow Agent for nonpayment prior to Escrow Agent’s
receipt of collected funds from Instruments of Payment in an aggregate amount which is less than
the Required Capital or, in connection with subscriptions from Pennsylvania Subscribers, the
Pennsylvania Required Capital or, in connection with subscriptions from Nebraska Subscribers, the
Nebraska Required Capital or, in connection with subscriptions from New York Subscribers, the New
York Required Capital, the Escrow Agent shall promptly notify the Trust in writing via mail, email
or facsimile of such nonpayment, and is authorized to debit the Escrow Account, the Pennsylvania
Escrow Account, the Nebraska Escrow Account or the New York Escrow Account, as applicable, in the
amount of such returned payment as well as any interest earned on the amount of such payment.



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     3. (a) Subject to the provisions of paragraphs 3(b)-3(i) below:




               (i) Once collected funds from Instruments of Payment in the Escrow Account are an
amount equal to or greater than the Required Capital, the Escrow Agent shall promptly notify
the Trust and, upon receiving written instruction from the Trust, (A) disburse to the Trust,
by check, ACH or wire transfer, the funds in the Escrow Account representing the gross
purchase price for the Shares in an amount directed by the Trust in such written notice, and
(B) disburse to the Subscribers or the Trust, as applicable, any interest thereon pursuant
to the provisions of paragraph 3(f). For purposes of this Agreement, the term “collected
funds” shall mean all funds received by the Escrow Agent that have cleared normal banking
channels and are in the form of cash or a cash equivalent. After such time, the Escrow
Account shall remain open and the Trust shall continue to cause subscriptions for the Shares
that are not to be deposited in the Pennsylvania Escrow Account, the Nebraska Escrow Account
or the New York Escrow Account to be deposited therein until the Trust informs the Escrow
Agent in writing to close the Escrow Account, and thereafter any Subscription Materials and
Instruments of Payment received by the Escrow Agent from Subscribers other than Pennsylvania
Subscribers, Nebraska Subscribers and New York Subscribers shall be forwarded directly to
the Trust.




               (ii) Regardless of any release of funds from the Escrow Account, the Trust shall
continue to forward Instruments of Payment and Subscription Materials received from New York
Subscribers for deposit into the New York Escrow Account to the Escrow Agent until such time
as the Trust notifies the Escrow Agent in writing that total subscription proceeds
(including the amount then in the New York Escrow Account) equal or exceed the New York
Required Capital. Upon the receipt of such written instruction from the Trust, the Escrow
Agent shall (A) disburse to the Trust, by check, ACH or wire transfer, the funds then in the
New York Escrow Account representing the gross purchase price for the Shares in an amount
directed by the Trust in such written notice, and (B) disburse to the New York Subscribers
or the Trust, as applicable, any interest thereon pursuant to the provisions of
paragraph 3(f). Following such disbursements, the Escrow Agent shall close the New York
Escrow Account, and thereafter any Subscription Materials and Instruments of Payment
received by the Escrow Agent from New York Subscribers shall be deposited directly to the
Escrow Account (or to the Trust, if it has closed the Escrow Account, as instructed in
writing by the Trust).




               (iii) Regardless of any release of funds from the Escrow Account or the New York Escrow
Account, the Trust shall continue to forward Instruments of Payment and Subscription
Materials received from Nebraska Subscribers for deposit into the Nebraska Escrow Account to
the Escrow Agent until such time as the Trust notifies the Escrow Agent in writing that
total subscription proceeds (including the amount then in the Nebraska Escrow Account) equal
or exceed the Nebraska Required Capital. Upon the receipt of such written instruction from
the Trust, the Escrow Agent shall (A) provide to the Trust for delivery to the Director of
Banking and Finance of the State of Nebraska an affidavit in substantially the form attached
hereto as Exhibit A which states that all of the conditions of this Agreement relating to
the Escrow Account which are capable of being satisfied as of the date of such affidavit
have been met (it being understood that Escrow Agent shall provide such affidavit only in
the event that in Escrow Agent’s sole discretion all such conditions of this Agreement have
been met), (B) disburse to the Trust, by check, ACH or wire transfer, the funds then in the
Nebraska Escrow Account representing the gross purchase price for the Shares in an amount
directed by the Trust in such written notice, and (C) disburse to the Nebraska Subscribers
or the Trust, as applicable, any interest thereon pursuant to the provisions of
paragraph 3(f). Following such disbursements, the Escrow Agent shall close the Nebraska
Escrow Account, and thereafter any Subscription Materials and Instruments of Payment
received by the Escrow Agent from Nebraska Subscribers shall be deposited directly to the
Escrow Account (or to the Trust, if it has closed the Escrow Account, as instructed in
writing by the Trust).



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               (iv) Regardless of any release of funds from the Escrow Account, the New York Escrow
Account or the Nebraska Escrow Account, the Trust shall continue to forward Instruments of
Payment and Subscription Materials received from Pennsylvania Subscribers for deposit into
the Pennsylvania Escrow Account to the Escrow Agent until such time as the Trust notifies
the Escrow Agent in writing that total subscription proceeds (including the amount then in
the Pennsylvania Escrow Account) equal or exceed the Pennsylvania Required Capital. Upon
the receipt of such written instruction from the Trust, the Escrow Agent shall (A) disburse
to the Trust, by check, ACH or wire transfer, the funds then in the Pennsylvania Escrow
Account representing the gross purchase price for the Shares in an amount directed by the
Trust in such written notice, and (B) disburse to the Pennsylvania Subscribers or the Trust,
as applicable, any interest thereon pursuant to the provisions of paragraph 3(f). Following
such disbursements, the Escrow Agent shall close the Pennsylvania Escrow Account, and
thereafter any Subscription Materials and Instruments of Payment received by the Escrow
Agent from Pennsylvania Subscribers shall be deposited directly to the Escrow Account (or to
the Trust, if it has closed the Escrow Account, as instructed in writing by the Trust).



          (b) At the close of business on the date that is one year following commencement of the
Offering (the “Expiration Date”) (such commencement date shall be promptly provided to the
Escrow Agent by the Trust after the commencement of the Offering), the Escrow Agent shall promptly
notify the Trust (the “Expiration Notice”) if it is not in receipt of Subscription
Materials received on or before the Expiration Date and Instruments of Payment dated not later than
the Expiration Date in the aggregate amount that equals or exceeds the Required Capital (from all
sources but exclusive of any funds received from subscriptions for Shares from entities for which
the Trust has notified the Escrow Agent are affiliated with the Trust). Following the tenth
calendar day after the date of the Expiration Notice, the Escrow Agent shall promptly return
directly to each Subscriber the collected funds deposited in the Escrow Account, the Pennsylvania
Escrow Account, the Nebraska Escrow Account and the New York Escrow Account on behalf of such
Subscriber, or shall return the Instruments of Payment delivered, but not yet processed for
collection prior to such time, together with interest in the amounts calculated pursuant to
paragraph 6 for each Subscriber at the address provided in the Subscription Materials. However,
the Escrow Agent shall not be required to remit any payments until funds represented by such
payments have been collected.




          (c) Notwithstanding subparagraphs 3(a) and 3(b) above, if on or before the close of business
on such date that is 120 days after commencement of the Offering (the “Initial Escrow
Period”) (such commencement date shall be promptly provided to the Escrow Agent by the Trust
after the commencement of the Offering), Escrow Agent is not in receipt of Instruments of Payment
dated not later than that date from nonaffiliated sources in an amount that equals or exceeds the
Pennsylvania Required Capital, the Escrow Agent shall promptly notify the Trust. Thereafter, the
Trust shall send to each Pennsylvania Subscriber by certified mail within ten (10) calendar days
after the end of the Initial Escrow period a notification in the form of Exhibit B. If, pursuant
to such notification, a Pennsylvania Subscriber requests the return of his or her subscription
funds within ten (10) calendar days after receipt of the notification (the “Request
Period”), the Escrow Agent shall, within fifteen (15) calendar days after receipt of such
request from the Investor, deliver directly to each such Pennsylvania Subscriber the collected
funds from Instruments of Payment deposited in the Pennsylvania Escrow Account on behalf of such
Pennsylvania Subscriber or shall return the Instruments of Payment delivered, but not yet processed
for collection prior to such time, to the address provided by the Trust, together with interest
income in the amounts calculated pursuant to paragraph 6. However, the Escrow Agent shall not be
required to remit such payments until the Escrow Agent has collected funds represented by such
payments.




          (d) The subscription funds of Pennsylvania Subscribers who do not request the return of their
subscription funds within the Request Period shall remain in the Pennsylvania Escrow Account for
successive 120-day escrow periods (a “Successive Escrow Period”), each commencing
automatically upon the termination of the Initial Escrow Period or prior Successive Escrow Period,
as




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applicable, and the Trust and Escrow Agent shall follow the notification and payment procedure
set forth in paragraph 3(c) above with respect to the Initial Escrow Period for each Successive
Escrow Period until the occurrence of the earliest of (i) the Expiration Date, (ii) such time as
the Trust notifies the Escrow Agent in writing pursuant to paragraph 3(a)(iv) that total
subscription proceeds (including the amount then in the Pennsylvania Escrow Account) equal or
exceed the Pennsylvania Required Capital and the disbursement of the Pennsylvania Escrow Account on
the terms specified herein, or (iii) all funds held in the Pennsylvania Escrow Account having been
returned to the Pennsylvania Subscribers in accordance with the provisions hereof.




          (e) If the Trust notifies the Escrow Agent in writing that it rejects any subscription for
which the Escrow Agent has collected funds, the Escrow Agent shall promptly disburse out of the
Escrow Account, Pennsylvania Escrow Account, Nebraska Escrow Account or New York Escrow Account, as
applicable, the amount set forth in such notification to the Subscriber also set forth in such
notification. If the Trust rejects any subscription for which the Escrow Agent has not yet
collected funds but has submitted the Subscriber’s Instrument of Payment for collection, the Escrow
Agent shall promptly return the funds in the amount of the Subscriber’s Instrument of Payment to
the rejected Subscriber after such funds have been collected. If the Escrow Agent has not yet
submitted a rejected Subscriber’s Instrument of Payment for collection, the Escrow Agent shall
promptly remit the Subscriber’s Instrument of Payment directly to the Subscriber. The Trust
acknowledges and agrees that Escrow Agent has no responsibility for accepting, rejecting or
approving subscriptions.




          (f) At any time after funds are disbursed upon the Trust’s instructions pursuant to
paragraph 3(a) above, on the tenth day following the date of receipt of such instruction, the
Escrow Agent shall promptly disburse directly to each Subscriber out of the Escrow Account,
Pennsylvania Escrow Account, Nebraska Escrow Account or New York Escrow Account, as applicable, the
amount of the interest payable to such Subscriber. However, the Escrow Agent shall not be required
to remit any payments until the Escrow Agent has collected funds represented by such payments. The
forgoing notwithstanding, interest, if any, earned on accepted subscription proceeds will be
payable to a Subscriber only if the Subscriber’s funds have been held in escrow by the Escrow Agent
for at least 35 days. Interest, if any, earned on accepted subscription proceeds of Subscribers’
funds held less than 35 days will be paid to the Trust. The Escrow Agent may use such reasonable
allocation methods as it determines to be equitable in allocating interest income among Subscribers
and as between the Subscribers and the Trust if the funds bear interest at multiple rates during
the escrow period. The Trust agrees to accept Escrow Agent’s calculation of any interest hereunder
absent manifest mathematical error. As used in this Agreement, “subscription proceeds” shall mean
the proceeds from the applicable Instruments of Payment.




          (h) Any disbursement of funds by the Escrow Agent to Subscribers shall be made to the persons
named in the Subscription Materials at the address stated therein by cashiers’ check mailed by
United States mail.




          (i) If at the time of any required disbursement of interest to a Subscriber, the Escrow Agent
has not received a properly executed IRS Form W-9, the Escrow Agent shall withhold from any
interest distribution such amount as may be required to be withheld by law and remit such withheld
amounts to the Internal Revenue Service in timely fashion.




     4. Prior to the disbursement of funds deposited in the Escrow Account, the Pennsylvania Escrow
Account, the Nebraska Escrow Account, or the New York Escrow Account in accordance with the
provisions of paragraph 3 hereof, the Escrow Agent shall invest all of the funds deposited as well
as earnings and interest derived therefrom in the Escrow Account, the Pennsylvania Escrow Account,
the Nebraska Escrow Account, or the New York Escrow Account, as applicable, in bank money market
accounts maintained with the Escrow Agent.



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     It is hereby expressly agreed and stipulated by the parties hereto that the Escrow Agent shall
not be required to exercise any discretion hereunder and shall have no investment or management
responsibility and, accordingly, shall have no duty to, or liability for its failure to, provide
investment recommendations or investment advice to the parties hereto. It is the intention of the
parties hereto that the Escrow Agent will never be required to use, advance or risk its own funds
or otherwise incur financial liability in the performance of any of its duties or the exercise of
any of its rights and powers hereunder.



     5. The Escrow Agent is entitled to rely upon written instructions received from the Trust,
unless the Escrow Agent has actual knowledge that such instructions are not valid or genuine;
provided that, if in the Escrow Agent’s opinion, any instructions from the Trust are unclear, the
Escrow Agent may request clarification from the Trust prior to taking any action, and if such
instructions continue to be unclear, the Escrow Agent may rely upon written instructions from the
Trust’s legal counsel in distributing or continuing to hold any funds or may take any other action
authorized hereunder. However, the Escrow Agent shall not be required to disburse any funds
attributable to Instruments of Payment that have not been processed for collection, until such
funds are collected, and then shall disburse such funds in compliance with the disbursement
instructions from the Trust.



     6. If the Offering terminates prior to receipt of the Required Capital (such termination date
shall be promptly provided to the Escrow Agent by the Trust), or one or more Pennsylvania
Subscribers elects to have his or her subscription proceeds returned in accordance with paragraph
3, interest income earned on subscription proceeds deposited in the Escrow Account (the “Escrow
Income”), the Pennsylvania Escrow Account (the “Pennsylvania Escrow Income”), the
Nebraska Escrow Account (the “Nebraska Escrow Income”) and the New York Escrow Account (the
“New York Escrow Income”), as applicable, shall be remitted to Subscribers, or to the Trust
if the applicable Subscriber’s funds have been held in escrow by the Escrow Agent for less than 35
days in accordance with paragraph 3 and without any deductions for escrow expenses. For each
Subscriber who has deposited funds that have been held in escrow by the Escrow Agent for at least
35 days, such Subscriber’s pro rata portion of Escrow Income shall be determined as follows: the
total amount of Escrow Income minus interest earned on accepted subscription proceeds held by the
Escrow Agent for less than 35 days shall be multiplied by a fraction, (a) the numerator of which is
determined by multiplying the number of Shares purchased by the Subscriber times the number of days
the Subscriber’s proceeds were held in the Escrow Account prior to the date of disbursement, and
(b) the denominator of which is the total of the numerators for all Subscribers in such account who
have deposited funds that have been held in escrow by the Escrow Agent for at least 35 days. The
Escrow Agent shall remit all such Escrow Income, Pennsylvania Escrow Income, Nebraska Escrow Income
and New York Escrow Income in accordance with paragraph 3. If the Trust chooses to leave the
Escrow Account open after receiving the Required Capital, then it shall make regular acceptances of
subscriptions therein, but no less frequently than monthly, and the Escrow Income from the last
such acceptance shall be calculated and remitted to the Subscribers or the Trust, as applicable,
pursuant to the provisions of paragraph 3(f). The Trust agrees to accept Escrow Agent’s
calculation of the Escrow Income, Pennsylvania Escrow Income, Nebraska Escrow Income, New York
Escrow Income, and any pro rata portion thereof, absent manifest mathematical error.



     7. Escrow Agent shall be paid for its services to be rendered hereunder in accordance with
Exhibit C attached hereto.



     8. The Escrow Agent will be liable as a depository only and will not be responsible for the
sufficiency or accuracy of the form, execution or validity of any check or any other document
delivered to the Escrow Agent hereunder or any description of the property or other thing contained
therein or the identity, authority or rights of the persons executing or delivering or purporting
to execute or deliver any such document. The Escrow Agent’s duties hereunder are limited to the
safekeeping of the assets, instruments or other documents received and the delivery of the same in
accordance with this Agreement. The Escrow Agent will not be liable for any act or omission done
in good faith, or for any claim, demand, loss or damage made or suffered by any party to this
Agreement, excepting such as may arise through or be caused by the



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Escrow Agent’s misconduct or negligence. The Escrow Agent is authorized to rely on any
document believed by the Escrow Agent to be authentic in making any delivery of funds or property
hereunder. Escrow Agent shall not be required to comply with any direction or instruction other
than those specifically described herein.



     9. In accepting any funds or documents delivered hereunder, it is agreed and understood by the
undersigned that the Escrow Agent will not be called on to construe any contract or instrument
deposited herewith, and in the event of a dispute will be required to act in respect to the deposit
herein made only on the consent in writing of the undersigned. In the failure of such consent, the
Escrow Agent reserves the right to hold any money in its possession, and all papers in connection
with or concerning this escrow, until a mutual agreement in writing has been reached between all of
said parties and delivered to the Escrow Agent or until delivery is legally authorized and ordered
by final judgment or decree of a court of competent jurisdiction. If the Escrow Agent obeys or
complies with any judgment, order or decree of a court of competent jurisdiction, the Escrow Agent
will not be liable to any of the parties hereto nor to any other person, firm or corporation by
reason of such compliance, notwithstanding any such judgment, order or decree being subsequently
reversed, modified, annulled, set aside or vacated.



     10. In addition to Escrow Agent’s other rights herein, in the event any contest, dispute,
conflicting claim or litigation arises or exists in connection with this Agreement or Escrow Agent
is otherwise in doubt as to what action to take hereunder, then in such event, Escrow Agent may, in
its sole discretion, (i) continue to retain the funds as Escrow Agent during the pendency of any
such contest, dispute, conflicting claim or litigation or resolution of such matter creating doubt
as to what action Escrow Agent is to take hereunder, provided that the Trust consents to Escrow
Agent retaining such funds or (ii) interplead the funds held in the Escrow Account, Pennsylvania
Escrow Account, Nebraska Escrow Account and New York Escrow Account into the office of the court
clerk of Dallas County, State of Texas, in which event, Escrow Agent shall be entitled to be repaid
its expenses, including court costs and attorneys’ fees that it incurs as a result thereof, and in
which event this Agreement shall be deemed terminated. The Trust consents and agrees to the
jurisdiction of the District Court of Dallas County, Texas for such purpose.



     11. If at any time Escrow Agent is served with any judicial or administrative order, judgment,
decree, writ or other form of final judicial or administrative process which in any way affects the
property held in escrow hereunder (the “Escrow Property”) (including but not limited to
orders of attachment or garnishment or other forms of levies or injunctions or stays relating to
the transfer of Escrow Property), Escrow Agent is authorized to comply therewith in any manner as
it or its legal counsel of its own choosing deems appropriate; and if Escrow Agent complies with
any such judicial or administrative order, judgment, decree, writ or other form of judicial or
administrative process, Escrow Agent shall not be liable to any of the parties hereto or to any
other person or entity even though such order, judgment, decree, writ or process may be
subsequently modified or vacated or otherwise determined to have been without legal force or
effect.



     12. (a) Escrow Agent shall not be liable for any action taken or omitted or for any loss or
injury resulting from its actions or its performance or lack of performance of its duties hereunder
in the absence of negligence or misconduct on its part. In no event shall Escrow Agent be liable
(i) for acting in accordance with or relying upon any instruction, notice, demand, certificate or
document from the Trust pursuant to paragraph 5 hereof (ii) for any consequential, punitive or
special damages, (iii) for the acts or omissions of its nominees, correspondents, designees,
subagents or custodians, or (iv) for an amount in excess of the value of the collected funds in the
Escrow Account, the New York Escrow Account, the Nebraska Escrow Account and the Pennsylvania
Escrow Account, valued as of the date of deposit.



          (b) Escrow Agent shall not incur any liability for not performing any act or fulfilling any
duty, obligation or responsibility hereunder by reason of any occurrence beyond the control of
Escrow Agent (including but not limited to any act or provision of any present or future law or
regulation



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or governmental authority, any act of God or war, or the unavailability of the Federal Reserve
Bank wire or telex or other wire or communication facility).




     13. Escrow Agent shall not be responsible in any respect for the form, execution, validity,
value or genuineness of documents or securities deposited hereunder, or for any description
therein, or for the identity, authority or rights of persons executing or delivering or purporting
to execute or deliver any such document, security or endorsement.



     14. THE TRUST SHALL BE LIABLE FOR AND SHALL REIMBURSE AND INDEMNIFY ESCROW AGENT, ITS
OFFICERS, DIRECTORS, PARTNERS, EMPLOYEES AND AGENTS (EACH HEREIN CALLED AN “INDEMNIFIED
PARTY”) AND HOLD THE INDEMNIFIED PARTIES HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES,
LIABILITIES, COSTS, DAMAGES OR EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES)
(COLLECTIVELY, “LOSSES”) ARISING FROM OR IN CONNECTION WITH OR RELATED TO THIS AGREEMENT OR
BEING ESCROW AGENT HEREUNDER (INCLUDING BUT NOT LIMITED TO LOSSES INCURRED BY THE INDEMNIFIED
PARTIES IN CONNECTION WITH THE SUBMISSION OF THE AFFIDAVIT ATTACHED HERETO AS EXHIBIT A TO THE
DIRECTOR OF BANKING AND FINANCE OF THE STATE OF NEBRASKA), PROVIDED, HOWEVER, THAT NOTHING
CONTAINED HEREIN SHALL REQUIRE THE INDEMNIFIED PARTIES TO BE INDEMNIFIED FOR LOSSES CAUSED BY THE
INDEMNIFIED PARTIES’ NEGLIGENCE OR MISCONDUCT.



     15. All communications and notices required or permitted by this Agreement shall be in writing
and shall be deemed to have been given when delivered personally or by messenger or by overnight
delivery service or when received via telecopy or other electronic transmission, in all cases
addressed to the person for whom it is intended at such person’s address set forth below or to such
other address as a party shall have designated by notice in writing to the other party in the
manner provided by this paragraph:


(a) if to the Trust:



United Development Funding IV

The United Development Funding Building

Suite 100

1301 Municipal Way

Grapevine, Texas 76051

Attention: Cara Obert



(b) if to the Escrow Agent:



LegacyTexas Bank

100 Throckmorton Suite 1510

Fort Worth, Texas 76102

Attention: Corporate Services



Each party hereto may, from time to time, change the address to which notices to it are to be
delivered or mailed hereunder by notice in accordance herewith to the other parties.




     16. This Agreement shall be governed by the laws of the State of Texas as to both
interpretation and performance without regard to the conflict of laws rules thereof.



     17. The provisions of this Agreement shall be binding upon the legal representatives,
successors, and assigns of the parties hereto.



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     18. The Trust hereby acknowledges that LegacyTexas Bank is serving as Escrow Agent only for
the limited purposes herein set forth, and hereby agrees that it will not represent or imply that,
by serving as Escrow Agent hereunder or otherwise, it has investigated the desirability or
advisability of investment in the Trust or has approved, endorsed or passed upon the merits of the
Shares or the Trust or has in any way reviewed or endorsed any disclosures made by the Trust
relating thereto, nor shall the Trust use the name of the Escrow Agent in any manner whatsoever in
connection with the offer or sale of the Shares other than by acknowledgment that it has agreed to
serve as Escrow Agent for the limited purposes herein set forth.



     19. This Agreement and any amendment hereto may be executed by the parties hereto in one or
more counterparts, each of which shall be deemed to be an original.



     20. The Escrow Agent shall be bound only by the terms of this Agreement and shall not be bound
by or incur any liability with respect to any other agreements or understanding between any other
parties, whether or not the Escrow Agent has knowledge of any such agreements or understandings.



     21. The Escrow Agent represents and warrants that it is a “bank,” as such term is defined in
Section 3(a)(6) of the Securities Exchange Act of 1934, as amended.



     22. The provisions set forth in paragraphs 7-14, 18 and 20 herein shall survive the
termination of this Agreement and/or the resignation or removal of the Escrow Agent.



     23. In the event that any part of this Agreement is declared by any court or other judicial or
administrative body to be null, void, or unenforceable, said provision shall survive to the extent
it is not so declared, and all of the other provisions of this Agreement shall remain in full force
and effect.



     24. Unless otherwise provided in this Agreement, final termination of this Agreement shall
occur on the date that all funds held in the Escrow Account, the Pennsylvania Escrow Account, the
Nebraska Escrow Account and the New York Escrow Account are distributed either (a) to the Trust or
to Subscribers and the Trust has informed the Escrow Agent in writing to close the Escrow Account,
the Pennsylvania Escrow Account, the Nebraska Escrow Account and the New York Escrow Account
pursuant to paragraph 3 hereof or (b) to a successor escrow agent upon written instructions from
the Trust.



     25. This Agreement shall not be modified, revoked, released or terminated unless reduced to
writing and signed by all parties hereto, unless otherwise provided herein.



     26. The Escrow Agent may resign at any time from its obligations under this Agreement by
providing written notice to the Trust. Such resignation shall be effective on the date specified
in such notice, which shall be not less than thirty days after such written notice has been given.
The Escrow Agent shall have no responsibility for the appointment of a successor escrow agent.



     27. The Escrow Agent may be removed for cause by the Trust by written notice to the Escrow
Agent effective on the date specified in such written notice.



     28. The Trust will provide the Escrow Agent a copy of the final Prospectus and any amendments
or supplements thereto, in each case within 5 days of first use by the Trust.



[Signature page follows]




-9-









 





     Agreed to as of the 8th day of December, 2008.



	 	 	 	 	 	 	 
	 	 	UNITED DEVELOPMENT FUNDING IV	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Hollis M. Greenlaw
 

	 	 
	 

	 	Name:
	 	Hollis M. Greenlaw	 	 
	 

	 	Title:
	 	President	 	 





The terms and conditions contained above are hereby accepted and agreed to by:




	 	 	 	 	 
	LEGACYTEXAS BANK, as Escrow Agent	 	 
	 
	 	 	 	 
	By:

	 	/s/ Lea Ann Capel	 	 
	 

	 	 	 	 
	Name:

	 	Lea Ann Capel	 	 
	Title:

	 	Executive Vice President — Chief Operations Officer	 	 






[Signature Page to Escrow Agreement]





 









 








EXHIBIT A




FORM OF ESCROW AGENT AFFIDAVIT FOR NEBRASKA




	 	 	 	 	 
	STATE OF
	 	 	 	 
	 

	 	 

	 	 
	COUNTY OF
	 	 	 	 
	 

	 	 

	 	 






ESCROW AGENT AFFIDAVIT




                                             (the “Affiant”), being duly sworn, deposes and says:



     That the Affiant is a duly appointed and authorized representative of LegacyTexas Bank (the
“Escrow Agent”);



     That the Escrow Agent is the duly appointed and authorized escrow agent for the public
offering of the securities (the “Offering”) of United Development Funding IV (the “Trust”);



     That all of the conditions of that certain Amended and Restated Escrow Agreement entered into
by and between the Escrow Agent and the Trust in connection with the Offering and effective as of
the       day of                     , 200    (the “Agreement”) which are capable of being satisfied as of the date
hereof have been met.



     Affiant makes this Affidavit to the State of Nebraska Department of Banking and Finance
pursuant to Nebraska regulations Chapter 25, Section 003.01C1 promulgated under §8-1120(3) of the
Securities Act of Nebraska.



     IN WITNESS WHEREOF, the undersigned has duly executed this document this                      day of
                    , 20     .



	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Sworn to and subscribed before me

this                      day of                     , 20                    .




	 	 	 
	 
	 

Notary Public

	 	 





My commission expires:                                        




     (NOTARIAL SEAL)



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EXHIBIT B




FORM OF NOTICE TO PENNSYLVANIA SUBSCRIBERS




     You have tendered a subscription to purchase common shares of beneficial interest of United
Development Funding IV (the “Trust”). Your subscription is currently being held in escrow. The
guidelines of the Pennsylvania Securities Commission do not permit the Trust to accept
subscriptions from Pennsylvania residents until an aggregate of $35,000,000 of gross offering
proceeds have been received by the Trust. The Pennsylvania guidelines provide that until this
minimum amount of offering proceeds is received by the Trust, every 120 days during the offering
period Pennsylvania Subscribers may request that their subscription be returned.



     If you wish to continue your subscription in escrow until the Pennsylvania minimum
subscription amount is received, nothing further is required.



     If you wish to terminate your subscription for the Trust’s shares and have your subscription
returned, please so indicate below, sign, date, and return to the Escrow Agent at LegacyTexas Bank,
                                        , Attn:                                         
.



     I hereby terminate my prior subscription to purchase common shares of beneficial interest of
United Development Funding IV and request the return of my subscription funds. I certify to United
Development Funding IV that I am a resident of Pennsylvania.



	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	(please print)	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 





	 	 	 
	 

	 	 
	Please send the subscription refund to:
	 	 
	 
	 
	 	 
	 


	 	 
	 
	 	 
	 


	 	 
	 
	 	 
	 


	 	 
	 
	 	 
	 


	 	 






B-1









 






EXHIBIT C




ESCROW AGENT COMPENSATION



None.





C-1