Document:

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                                                                    EXHIBIT 10.1

                         SHOPOFF PROPERTIES TRUST, INC.

                           2007 EQUITY INCENTIVE PLAN

                         (EFFECTIVE _____________, 2007)

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                         SHOPOFF PROPERTIES TRUST, INC.

                           2007 EQUITY INCENTIVE PLAN

                        (EFFECTIVE [_____________], 2007)

            Shopoff Properties Trust, Inc. hereby adopts in its entirety the
Shopoff Properties Trust, Inc. 2007 Equity Incentive ("Plan"), as of
[___________], 2007 ("Plan Adoption Date"). Unless otherwise defined, terms with
initial capital letters are defined in Section 2 below.

                                    SECTION 1
                             BACKGROUND AND PURPOSE

1.1 Background The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights (SARs), Performance Shares
and Restricted Stock.

1.2 Purpose of the Plan The Plan is intended to attract, motivate and retain the
following individuals: (a) employees of the Company or its Affiliates; (b)
consultants who provide significant services to the Company or its Affiliates
and (c) directors of the Company or any of its Affiliates who are employees of
neither the Company nor any Affiliate. The Plan is also designed to encourage
stock ownership by such individuals, thereby aligning their interests with those
of the Company's shareholder.

                                    SECTION 2
                                   DEFINITIONS

         The following words and phrases shall have the following meanings
unless a different meaning is plainly required by the context:

2.1 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
Reference to a specific section of the Exchange Act shall include such section,
any valid rules or regulations promulgated under such section, and any
comparable provisions of any future legislation, rules or regulations amending,
supplementing or superseding any such section, rule or regulation.

2.2 "Administrator" means, collectively the Board, and/or one or more
Committees, and/or one or more executive officers of the Company designated by
the Board to administer the Plan or specific portions thereof; provided,
however, that Awards may not be made by executive officers.

2.3 "Affiliate" means any corporation or any other entity (including, but not
limited to, Subsidiaries, partnerships and joint ventures) controlling,
controlled by, or under common control with the Company.

2.4 "Applicable Law" means the legal requirements relating to the administration
of Options, SARs, Performance Shares and Restricted Stock and similar incentive
plans under any

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applicable laws, including but not limited to federal and state employment,
labor, privacy and securities laws, the Code, and applicable rules and
regulations promulgated by the NASDAQ, New York Stock Exchange, American Stock
Exchange or the requirements of any other stock exchange or quotation system
upon which the Shares may then be listed or quoted.

2.5 "Award" means, individually or collectively, a grant under the Plan of
Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted Stock
and/or Performance Shares.

2.6 "Award Agreement" means the written agreement setting forth the terms and
provisions applicable to each Award granted under the Plan, including the Grant
Date.

2.7 "Board" or "Board of Directors" means the Board of Directors of the Company.

2.8 "Change in Control" means the occurrence of any of the following events:

      (a) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) becomes the "beneficial owner" (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the total voting power represented by the
Company's then outstanding voting securities;

      (b) The consummation of the sale or disposition by the Company of all or
substantially all of the Company's assets;

      (c) The consummation of a liquidation or dissolution of the Company;

      (d) A change in the composition of the Board occurring within a two-year
period, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" means directors who either (A) are
Directors as of the Plan Effective Date, or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of the
Directors at the time of such election or nomination (but will not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of Directors);

      (e) The consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity or its parent outstanding immediately after
such merger or consolidation; or

      (f) Other events specified by the Administrator in the Participant's Award
Agreement.

2.9 "Code" means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code or regulation thereunder shall include such section
or regulation, any valid

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regulation promulgated under such section, and any comparable provision of any
future legislation or regulation amending, supplementing or superseding such
section or regulation.

2.10 "Committee" means any committee appointed by the Board of Directors to
administer the Plan.

2.11 "Company" means Shopoff Properties Trust, Inc., a Maryland corporation, or
any successor thereto.

2.12 "Consultant" means any consultant, independent contractor or other person
who provides significant services to the Company or its Affiliates or any
employee or affiliate of any of the foregoing, but who is neither an Employee
nor a Director.

2.13 "Continuous Status" as an Employee or Consultant means that a Participant's
employment or service relationship with the Company or any Affiliate is not
interrupted or terminated. "Continuous Status" shall not be considered
interrupted in the following cases: (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company and any Subsidiary or successor. A leave of absence approved by the
Company shall include sick leave, military leave or any other personal leave
approved by an authorized representative of the Company. For purposes of
Incentive Stock Options, no leave of absence may exceed ninety (90) days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract.
If such reemployment is not so guaranteed, then on the one hundred eighty-first
(181st) day of such leave any Incentive Stock Option held by the Participant
shall cease to be treated as an Incentive Stock Option and shall be treated for
tax purposes as a Nonqualified Stock Option.

2.14 "Director" means any individual who is a member of the Board of Directors
of the Company or an Affiliate of the Company.

2.15 "Disability" means a permanent and total disability within the meaning of
Section 22(e)(3) of the Code, provided that in the case of Awards other than
Incentive Stock Options, the Administrator in its discretion may determine
whether a permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Administrator from time to time.

2.16 "Employee" means any individual who is a common-law employee of the Company
or of an Affiliate.

2.16 "Exercise Price" means the price at which a Share may be purchased by a
Participant pursuant to the exercise of an Option, and the price used to
determine the number of Shares payable to a Participant upon the exercise of a
SAR.

2.17 "Fair Market Value" means the price of a Share on the relevant date,
determined by the Committee in good faith on such basis as it deems appropriate.
Notwithstanding the foregoing, in the case of a sale of the Company or
disposition by the Company of all or substantially all of the Company's assets,
Fair Market Value shall immediately, for all purposes of this Plan, be

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determined by the sale price of the Company's common stock or the sale price of
its assets less any remaining liabilities.

2.18 "Exit Event" means a sale of the Company that constitutes a Change in
Control or an initial public offering of no less than 20% of the then current
common shares outstanding.

2.19 "Fiscal Year" means a fiscal year of the Company.

2.20 "Grant Date" means with respect to an Award, the effective date an Award is
granted.

2.21 "Incentive Stock Option" means an Option to purchase Shares, which is
designated as an Incentive Stock Option and is intended to meet the requirements
of Section 422 of the Code.

2.17 "Independent Director" means a Nonemployee Director who is (i) a
"nonemployee director" within the meaning of Section 16b-3 of the 1934 Act, (ii)
"independent" as determined under the applicable rules of the NASDAQ, and (iii)
an "outside director" under Treasury Regulation Section 1.162-27(e)(3), as any
of these definitions may be modified or supplemented from time to time.

2.22 "Individual Objectives" means as to a Participant, the objective and
measurable goals set by a "management by objectives" process and approved by the
Administrator in its discretion.

2.23 "Misconduct" shall include commission of any act in competition with any
activity of the Company (or any Affiliate) or any act contrary or harmful to the
interests of the Company (or any Affiliate) and shall include, without
limitation: (a) conviction of a felony or crime involving moral turpitude or
dishonesty, (b) violation of Company (or any Affiliate) policies, with or acting
against the interests of the Company (or any Affiliate), including employing or
recruiting any present, former or future employee of the Company (or any
Affiliate), (c) misuse of any confidential, secret, privileged or non-public
information relating to the Company's (or any Affiliate's) business, or (e)
participating in a hostile takeover attempt of the Company or an Affiliate. The
foregoing definition shall not be deemed to be inclusive of all acts or
omissions that the Company (or any Affiliate) may consider as Misconduct for
purposes of the Plan.

2.18 "NASDAQ" means The NASDAQ Stock Market, Inc.

2.24 "Nonemployee Director" means a Director who is not employed by the Company
or an Affiliate.

2.25 "Nonqualified Stock Option" means an option to purchase Shares that is not
intended to be an Incentive Stock Option.

2.26 "Option" means an Incentive Stock Option or a Nonqualified Stock Option.

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2.27 "Participant" means an Employee, Consultant or Nonemployee Director who has
an outstanding Award.

2.28 "Performance Goals" means the goal(s) (or combined goal(s)) determined by
the Administrator (in its discretion) to be applicable to a Participant with
respect to an Award. As determined by the Administrator, the Performance Goals
applicable to an Award may provide for a targeted level or levels of
achievement, including without limitation goals tied to Individual Objectives
and/or the Company's (or a business unit's) return on assets, return on
shareholders' equity, efficiency ratio, earnings per share, net income, or other
financial measures determined in accordance with U.S. generally accepted
accounting principles ("GAAP"), with or without adjustments determined by the
Administrator. The foregoing definition shall not be deemed to be inclusive of
all Performance Goals for purposes of this Plan. The Performance Goals may
differ from Participant to Participant and from Award to Award.

2.29 "Performance Shares" mean an Award granted to a Participant pursuant to
Section 9 of the Plan that entitles the Participant to receive a prescribed
number of Shares, or the equivalent value in cash, upon achievement of
performance objectives associated with such Award. The Notice of Grant shall
specify whether the Performance Shares will be settled in Shares or cash.

2.30 "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock are subject to restrictions that subject the Shares
to a substantial risk of forfeiture. As provided in Section 7, such restrictions
may be based on the passage of time, the achievement of Performance Goals, or
the occurrence of other events as determined by the Administrator, in its
discretion.

2.31 "Plan" means this Shopoff Properties Trust, Inc. 2007 Equity Incentive
Plan, as set forth in this instrument and as hereafter amended from time to
time.

2.32 "Restricted Stock" means an Award granted to a Participant pursuant to
Section 7. An Award of Restricted Stock constitutes a transfer of ownership of
Shares to a Participant from the Company subject to restrictions against
transferability, assignment, and hypothecation. Under the terms of the Award,
the restrictions against transferability are removed when the Participant has
met the specified vesting requirement. Vesting can be based on continued
employment or service over a stated service period, or on the attainment of
specified Performance Goals. If employment or service is terminated prior to
vesting, the unvested restricted stock reverts back to the Company.

2.33 "Shares" means shares of common stock of the Company.

2.34 "Stock Appreciation Right" or "SAR" means an Award granted to a Participant
pursuant to Section 6. Upon exercise, a SAR gives a Participant a right to
receive a payment in cash, or the equivalent value in Shares, equal to the
difference between the Fair Market Value of the Shares on the exercise date and
the Exercise Price. Both the number of SARs and the Exercise Price are
determined on the Grant Date. For example, assume a Participant is granted 100
SARs at an Exercise Price of $10 and the notice of grant specifies that the SARs
will be settled in Shares. Also assume that the SARs are exercised when the
underlying Shares have a

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Fair Market Value of $40 per Share. Upon exercise of the SAR, the Participant is
entitled to receive 50 Shares [(($20-$10)*100)/$20].

2.35 "Subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain then owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

                                    SECTION 3
                                 ADMINISTRATION

3.1 The Administrator. The Administrator shall be appointed by the Board of
Directors from time to time.

3.2 Authority of the Administrator. It shall be the duty of the Administrator to
administer the Plan in accordance with the Plan's provisions and in accordance
with Applicable Law. The Administrator shall have all powers and discretion
necessary or appropriate to administer the Plan and to control its operation,
including, but not limited to, the power to make recommendations to the Board
regarding the following: (a) which Employees, Consultants and Directors shall be
granted Awards; (b) the terms and conditions of the Awards, (c) interpretation
of the Plan, (d) adoption of rules for the administration, interpretation and
application of the Plan as are consistent therewith and (e) interpretation,
amendment or revocation of any such rules.

3.3 Delegation by the Administrator. The Administrator, in its discretion and on
such terms and conditions as it may provide, may delegate all or any part of its
authority and powers under the Plan to one or more Directors.

3.4 Decisions Binding. All determinations and decisions made by the
Administrator, the Board and any delegate of the Administrator pursuant to the
provisions of the Plan shall be final, conclusive and binding on all persons,
and shall be given the maximum deference permitted by Applicable Law.

                                    SECTION 4
                           SHARES SUBJECT TO THE PLAN

4.1 Number of Shares. Subject to adjustment, as provided in Section 4.3, the
total combined number of Shares and Performance Shares initially available for
grant under the Plan shall be One Million Six Hundred Fifty-Five Thousand
(1,655,000). Shares granted under the Plan may be authorized but unissued Shares
or reacquired Shares bought on the market or otherwise.

4.2 Lapsed Awards. If any Award made under the Plan expires, or is forfeited or
cancelled, or otherwise exercised without delivery of Shares, such undelivered
Shares shall become available for future Awards under the Plan.

4.3 Adjustments in Awards and Authorized Shares. Except as provided under
Section 4.3.1, subject to any required action by the stockholders of the
Company, the number of Shares covered

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by each outstanding Award, and the per Share exercise price of each such Award,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of common stock resulting from a stock split, reverse stock split,
recapitalization, combination, reclassification, the payment of a stock dividend
on the common stock or any other increase or decrease in the number of such
Shares of common stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issue by the Company of Shares of stock of any class, or securities convertible
into Shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of common
stock subject to an Option.

      4.3.1 Incentive Stock Options. Except as provided in Sections 4.3.2, any
adjustment to the maximum aggregate number of Shares to be issued through the
exercise of Incentive Stock Options must be approved by shareholders of the
Company within 12 months before or after the date a resolution is adopted by the
Board of Directors to adjust the maximum aggregate number of Shares to be issued
through the exercise of Incentive Stock Options.

      4.3.2 Increase to Reflect Outstanding Shares. Any adjustment described in
Section 4.3 which merely reflects a change in the outstanding Shares, such as a
stock dividend or stock split, will be effective without shareholder approval.

4.4 Legal Compliance. Awards and Shares shall not be issued pursuant to the
making or exercise of an Award unless the exercise of Options and rights and the
issuance and delivery of Shares shall comply with the California Corporations
Code, as amended, and other Applicable Law, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. Any Award
made in violation hereof shall be null and void.

4.5 Investment Representations. As a condition to the exercise of an Option or
other right, the Company may require the person exercising such Option or right
to represent and warrant at the time of exercise that the Shares are being
acquired only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.

                                    SECTION 5
                                  STOCK OPTIONS

      The provisions of this Section 5 are applicable to Options granted to
Employees, Directors, Nonemployee Directors and Consultants. Such Participants
shall also be eligible to receive other types of Awards as set forth in the
Plan.

5.1 Grant of Options. Subject to the terms and provisions of the Plan, Options
may be granted at any time and from time to time as determined by the
Administrator in its discretion. The Administrator may grant Incentive Stock
Options, Nonqualified Stock Options, or a

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combination thereof, and the Administrator, in its discretion and subject to
Sections 4.1, shall determine the number of Shares subject to each Option.

5.2 Award Agreement. Each Option shall be evidenced by an Award Agreement that
shall specify the Exercise Price, the expiration date of the Option, the number
of Shares to which the Option pertains, any conditions to exercise the Option,
and such other terms and conditions as the Administrator, in its discretion,
shall determine. The Award Agreement shall also specify whether the Option is
intended to be an Incentive Stock Option or a Nonqualified Stock Option.

5.3 Exercise Price. The Administrator shall determine the Exercise Price for
each Option subject to the provisions of this Section 5.3.

      5.3.1 Nonqualified Stock Options. Unless otherwise specified in the Award
Agreement, in the case of a Nonqualified Stock Option, the per Share exercise
price shall not be less than one hundred percent (100%) of the Fair Market Value
of a Share on the Grant Date, as determined by the Administrator.

      5.3.2 Incentive Stock Options. The grant of Incentive Stock Options shall
be subject to the following limitations:

            (a) The Exercise Price of an Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of a Share on the
Grant Date; provided, however, that if on the Grant Date, the Employee (together
with persons whose stock ownership is attributed to the Employee pursuant to
Section 424(d) of the Code) owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any of its
Subsidiaries, the Exercise Price shall be not less than one hundred and ten
percent (110%) of the Fair Market Value of a Share on the Grant Date;

            (b) Incentive Stock Options may be granted only to persons who are,
as of the Grant Date, Employees of the Company or a Subsidiary, and may not be
granted to Nonemployee Directors or Consultants. In the event the Company fails
to obtain shareholder approval of the Plan within twelve (12) months from the
Plan Adoption Date, all Options granted under this Plan designated as Incentive
Stock Options shall become Nonqualified Stock Options and shall be subject to
the applicable provisions of this Section 5.

            (c) To the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first time
by the Participant during any calendar year (under all plans of the Company and
any parent or Subsidiary) exceeds $100,000, such Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5.3.2(c), Incentive
Stock Options shall be taken into account in the order in which they were
granted. The Fair Market Value of the Shares shall be determined as of the time
the Option with respect to such Shares is granted; and

            (d) In the event of a Participant's change of status from Employee
to Consultant or Director, an Incentive Stock Option held by the Participant
shall cease to be treated as an Incentive Stock Option and shall be treated for
tax purposes as a Nonqualified Stock Option three (3) months and one (1) day
following such change of status.

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      5.3.3 Substitute Options. Notwithstanding the provisions of Sections 5.3.1
and 5.3.2, in the event that the Company or an Affiliate consummates a
transaction described in Section 424(a) of the Code (e.g., the acquisition of
property or stock from an unrelated corporation), persons who become Employees,
Directors or Consultants on account of such transaction may be granted Options
in substitution for options granted by their former employer. If such substitute
Options are granted, the Administrator, in its discretion and consistent with
Section 424(a) of the Code, may determine that such substitute Options shall
have an exercise price of no less than eighty-five percent (85%) of the Fair
Market Value of the Shares on the Grant Date.

5.4 Expiration of Options

      5.4.1 Expiration Dates. Unless otherwise specified in the Award Agreement,
but in no event no later than ten (10) years from the Grant Date, each Option
shall terminate no later than the first to occur of the following events:

            (a) Date in Award Agreement. The date for termination of the Option
set forth in the written Award Agreement; or

            (b) Termination of Continuous Status as Employee or Consultant. The
last day of the three (3)-month period following the date the Participant ceases
his/her/its Continuous Status as an Employee or Consultant (other than
termination for a reason described in subsections (c), (d), (e), (f) or (g)
below); or

            (c) Misconduct. In the event a Participant's Continuous Status as an
Employee or Consultant terminates because the Participant has performed an act
of Misconduct as determined by the Administrator, all unexercised Options held
by such Participant shall expire five (5) business days following written notice
from the Company to the Participant;

            (d) Disability. In the event that a Participant's Continuous Status
as an Employee or Consultant terminates as a result of the Participant's
Disability, the Participant may exercise his or her Option at any time within
twelve (12) months from the date of such termination, but only to the extent
that the Participant was entitled to exercise it at the date of such termination
(but in no event later than the expiration of the term of such Option as set
forth in the Award Agreement). If, at the date of termination, the Participant
is not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Participant does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan; or

            (e) Death. In the event of the death of a Participant, the Option
may be exercised at any time within twelve (12) months following the date of
death (but in no event later than the expiration of the term of such Option as
set forth in the Award Agreement), by the Participant's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Participant was entitled to exercise the Option at
the date of death. If, at the time of death, the Participant was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert

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to the Plan. If, after death, the Participant's estate or a person who acquired
the right to exercise the Option by bequest or inheritance does not exercise the
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan; or

      (f) 10 Years from Grant. Unless otherwise specified above, an Option shall
expire no more than ten (10) years from the Grant Date; provided, however, that
if an Incentive Stock Option is granted to an Employee who, together with
persons whose stock ownership is attributed to the Employee pursuant to Section
424(d) of the Code, owns stock possessing more than 10% of the total combined
voting power of all classes of the stock of the Company or any of its
Subsidiaries, such Incentive Stock Option may not be exercised after the
expiration of five (5) years from the Grant Date.

      (g) Change in Status. In the event a Participant's status has changed from
Consultant to Employee, or vice versa, a Participant's Continuous Status as an
Employee or Consultant shall not automatically terminate solely as a result of
such change in status.

      5.4.2 Administrator Discretion. Not withstanding the foregoing the
Administrator may, after an Option is granted, extend the maximum term of the
Option (subject to limitations applicable to Incentive Stock Options).

5.5 Exercisability of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Administrator shall determine in its discretion. After an Option is granted,
the Administrator, in its discretion, may accelerate the exercisability of the
Option.

5.6 Exercise and Payment. Options shall be exercised by the Participant's
delivery of a written notice of exercise to the Secretary of the Company (or its
designee), setting forth the number of Shares with respect to which the Option
is to be exercised, accompanied by full payment for the Shares.

      5.6.1 Form of Consideration. Upon the exercise of any Option, the Exercise
Price shall be payable to the Company in full in cash or its equivalent. The
Administrator, in its discretion, also may permit the same-day exercise and sale
of Options and related Shares, or exercise by tendering previously acquired
Shares having an aggregate Fair Market Value at the time of exercise equal to
the total Exercise Price (such previously acquired Shares must have been held
for the requisite period necessary to avoid a charge to the Company's earnings
for financial reporting purposes, unless otherwise determined by the
Administrator), or by any other means which the Administrator, in its
discretion, determines to provide legal consideration for the Shares, and to be
consistent with the purposes of the Plan.

      5.6.2 Delivery of Shares. Unless otherwise specified in the Award
Agreement, shares acquired by Participant pursuant to the exercise of an Option
shall be held by the Company as escrow agent.

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                                    SECTION 6
                            STOCK APPRECIATION RIGHTS

      6.1 Grant of SARs. Subject to the terms of the Plan, a SAR may be granted
to Employees, Directors, Nonemployee Directors and Consultants at any time and
from time to time as shall be determined by the Administrator.

      6.1.1 Number of Shares. The Administrator shall have complete discretion
to determine the number of SARs granted to any Participant.

      6.1.2 Exercise Price and Other Terms. The Administrator, subject to the
provisions of the Plan, shall have discretion to determine the terms and
conditions of SARs granted under the Plan, including whether upon exercise the
SARs will be settled in Shares or cash. However, the Exercise Price of a SAR
shall be not less than one hundred percent (100%) of the Fair Market Value of a
Share on the Grant Date.

6.2 Exercise of SARs. SARs shall be exercisable on such terms and conditions as
the Administrator, in its discretion, shall determine.

6.3 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement that
shall specify the Exercise Price, the term of the SAR, the conditions of
exercise and such other terms and conditions as the Administrator shall
determine.

6.4 Expiration of SARs. A SAR granted under the Plan shall expire upon the date
determined by the Administrator in its discretion as set forth in the Award
Agreement, or otherwise pursuant to the provisions relating to the expiration of
Options as set forth in Sections 5.4.

6.5 Payment of SAR Amount. Upon exercise of a SAR, a Participant shall be
entitled to Shares, or the equivalent value in cash, from the Company in an
amount determined by dividing the Fair Market Value of a Share on the exercise
date by the following: (a) the difference between the Fair Market Value of a
Share on the date of exercise over the SAR Exercise Price, times (b) the number
of Shares with respect to which the SAR is exercised. If the Administrator
designates in the Award Agreement that the SAR will be settled in cash, upon
Participant's exercise of the SAR the Company shall make a cash payment to
Participant as soon as reasonably practical.

                                    SECTION 7
                                RESTRICTED STOCK

7.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan,
the Administrator, at any time and from time to time, may grant Shares of
Restricted Stock to Employees, Directors, Nonemployee Directors and Consultants
in such amounts as the Administrator, in its discretion, shall determine. The
Administrator shall determine the number of Shares to be granted to each
Participant.

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7.2 Restricted Stock Agreement. Each Award of Restricted Stock shall be
evidenced by an Award Agreement that shall specify the Period of Restriction,
the number of Shares granted, and such other terms and conditions as the
Administrator, in its discretion, shall determine. Unless the Administrator
determines otherwise, Shares of Restricted Stock shall be held by the Company as
escrow agent until the restrictions on such Shares have lapsed.

7.3 Other Restrictions. The Administrator, in its discretion, may impose such
other restrictions on Shares of Restricted Stock as it may deem advisable or
appropriate, in accordance with this Section 7.4, including, without limitation,
provisions relating to expiration of restrictions equivalent to the provisions
relating to expiration of Options as set forth in Section 5.4.

      7.3.1 General Restrictions. The Administrator may set restrictions based
upon the achievement of specific Performance Goals (Company-wide, business unit,
or individual), or any other basis determined by the Administrator in its
discretion.

      7.3.2 Legend on Certificates. The Administrator, in its discretion, may
legend the certificates representing Restricted Stock to give appropriate notice
of such restrictions.

7.4 Removal of Restrictions. The Administrator, in its discretion, may
accelerate the time at which any restrictions shall lapse or be removed. Upon
satisfaction of the conditions applicable to the Period of Restriction, the
Shares shall no longer be subject to forfeiture. However, unless otherwise
specified in the Award Agreement, the Participant's rights to transfer the
Shares are restricted prior to an Exit Event.

7.5 Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock shall be entitled to receive all
dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award Agreement. If any such dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.

7.6 Return of Restricted Stock to Company. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed shall
revert to the Company and again shall become available for grant under the Plan.

                                    SECTION 8
                               PERFORMANCE SHARES

8.1 Grant of Performance Shares. Subject to the terms and conditions of the
Plan, Performance Shares may be granted to Employees, Directors, Nonemployee
Directors and Consultants at any time and from time to time, as shall be
determined by the Administrator in its discretion.

                                       12

<PAGE>

      8.1.1 Number of Performance Shares. The Administrator will have complete
discretion in determining the number of Performance Shares granted to any
Participant, subject to the limitations in Sections 4.1.

      8.1.2 Value of Performance Shares. Each Performance Share will have an
value equal to the Fair Market Value of a Share.

8.2 Performance Objectives and Other Terms. The Administrator will set
performance objectives or other vesting provisions, including, without
limitation, time-based vesting provisions, in its discretion which, depending on
the extent to which they are met, will determine the number or value of
Performance Shares that will be paid out to Participants. The time period during
which the Performance Goals or other vesting provisions must be met will be
called the "Performance Period." Each Award of Performance Shares will be
evidenced by an Award Agreement that will specify the Performance Period, and
such other terms and conditions as the Administrator, in its discretion, will
determine. The Administrator may set Performance Goals based upon the
achievement of Company-wide or Individual Objectives or any other basis
determined by the Administrator in its discretion.

8.3 Earning of Performance Shares. After the applicable Performance Period has
ended, the holder of Performance Shares will be entitled to receive a payout of
the number of Performance Shares earned by the Participant over the Performance
Period, to be determined as a function of the extent to which the corresponding
performance objectives or other vesting provisions have been achieved. After the
grant of a Performance Share, the Administrator, in its discretion, may reduce
or waive any performance objectives or other vesting provisions for such
Performance Share.

8.4 Form and Timing of Payment of Performance Shares. The Administrator shall
specify in the Award Agreement whether the Performance shares shall be settled
in Shares or cash. If the Administrator designates in the Award Agreement that
the Performance Share will be settled in cash, payment of earned Performance
Shares will be made in cash as soon as reasonably practical aft the expiration
of the applicable Performance Period.

8.5 Cancellation of Performance Shares. On the date set forth in the Award
Agreement, all unearned or unvested Performance Shares will be forfeited to the
Company, and again will be available for grant under the Plan.

                                    SECTION 9
                                  MISCELLANEOUS

9.1 Right of First Refusal. Unless otherwise provided in the Award Agreement, in
the event that the Participant proposes to sell, pledge or otherwise transfer to
a third party any Shares acquired under the Plan, or any interest in such
Shares, the Company shall have the Right of First Refusal with respect to all
(and not less than all) of such Shares as provided in this Section 9.1. In such
event, (i) if the Participant desires to transfer Shares acquired under this
Plan, the Participant shall give a written Transfer Notice to the Company
describing fully the proposed transfer, including the number of Shares proposed
to be transferred, the proposed transfer price,

                                       13

<PAGE>

the name and address of the proposed Transferee and proof satisfactory to the
Company that the proposed sale or transfer will not violate any applicable
federal or state securities laws, (ii) the Transfer Notice shall be signed both
by the Participant and by the proposed Transferee and must constitute a binding
commitment of both parties to the transfer of the Shares, and (iii) the Company
shall have the right to purchase all, and not less than all, of the Shares on
the terms of the proposal described in the Transfer Notice (subject, however, to
any change in such terms permitted under Section 9.1.1) by delivery of a notice
of exercise of the Right of First Refusal within thirty (30) days aft the date
the Transfer Notice was received by the Company.

      9.1.1 Transfer of Shares. If the Company fails to exercise its Right of
First Refusal within 30 days following receipt of the Transfer Notice by the
Company, the Participant may, not later than 90 days following receipt of the
Transfer Notice by the Company, conclude a transfer of the Shares subject to the
Transfer Notice on the terms and conditions described in the Transfer Notice,
provided that any such sale is made in compliance with applicable federal and
state securities laws and not in violation of any other contractual restrictions
to which the Participant is bound. Any proposed transfer on terms and conditions
different from those described in the Transfer Notice, as well as any subsequent
proposed transfer by the Participant, shall again be subject the Right of First
Refusal and shall require compliance with the procedure described in Section
9.1. If the Company exercises its Right of First Refusal, the parties shall
consummate the sale of the Shares on the terms set forth in the Transfer Notice
within 60 days after the date when the Company received the Transfer Notice (or
within such longer period as may have been specified in the Transfer Notice);
provided, however, that in the event the Transfer Notice provided that payment
for the Shares was to be made in a form other than cash or cash equivalents paid
at the time of transfer, the Company shall have the option of paying for the
Shares with cash or cash equivalents equal to the present value of the
consideration described in the Transfer Notice.

      9.1.2 Additional or Exchanged Securities and Property. In the event of a
merger or consolidation of the Company with or into another entity, any other
corporate reorganization, a stock split, the declaration of a stock dividend,
the declaration of an extraordinary dividend payable in a form other than stock,
a spin-off, an adjustment in conversion ratio, a recapitalization or a similar
transaction affecting the Company's outstanding securities, any securities or
other property (including cash or cash equivalents) that are by reason of such
transaction exchanged for, or distributed with respect to, any Shares subject to
Section 9.1 shall immediately be subject to the Right of First Refusal.
Appropriate adjustments to reflect the exchange or distribution of such
securities or property shall be made to the number and/or class of the Shares
subject to Section 9.1, provided that any such adjustment is made in accordance
with applicable law.

      9.1.3 Termination of Right of First Refusal. Notwithstanding the
foregoing, in the event that the Shares become readily tradable on an
established securities market when the Participant desires to transfer Shares,
the Company shall have no Right of First Refusal, and the Participant shall have
no obligation to comply with the procedures prescribed by Sections 9.1.1 and
9.1.2 above.

                                       14

<PAGE>

      9.1.4 Permitted Transfers. Section 9.1 shall not apply to (i) a transfer
by beneficiary designation, will or intestate succession or (ii) a transfer to
one or more members of the Participant's immediate family or to a trust
established by the Participant for the benefit of the Participant and/or one or
more members of the Participant's immediate family, provided in either case that
the Transferee agrees in writing on a form prescribed by the Company to be bound
by all provisions of this Agreement. If the Participant transfers any Shares
acquired under this Plan, either under this Section 9.1.4 or after the Company
has failed to exercise the Right of First Refusal, then this Agreement shall
apply to the Transferee to the same extent as to the Participant.

      9.1.5 Termination of Rights as Shareholder. If the Company makes
available, at the time and place and in the amount and form provided in Section
9.1, the consideration for the Shares to be purchased in accordance with this
Section 9.1, then after such time the person from whom such Shares are to be
purchased shall no longer have any rights as a holder of such Shares (other than
the right to receive payment of such consideration in accordance with Section
9.1). Such Shares shall be deemed to have been purchased in accordance with the
applicable provisions hereof, whether or not the certificate(s) therefore have
been delivered.

      9.1.6 Assignment of Right of First Refusal. The Board of Directors may
freely assign the Company's Right of First Refusal, in whole or in part. Any
person who accepts an assignment of the Right of First Refusal from the Company
shall assume all of the Company's rights and obligations under this Section 9.1.

9.2 Change In Control. Unless otherwise provided in the Award Agreement, in the
event of a Change in Control, unless an Award is assumed or substituted by the
successor corporation, then (i) such Awards shall become fully exercisable as of
the date of the Change in Control, whether or not then exercisable and (ii) all
restrictions and conditions on any Award then outstanding shall lapse as of the
date of the Change in Control.

9.3 Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Participant as
soon as practicable prior to the effective date of such proposed transaction.
Notwithstanding anything to the contrary contained in this Plan or in any Award
Agreement, the Participant shall have the right to exercise his or her Award
until ten (10) days prior to such dissolution or transaction as to all of the
Shares covered thereby, including Shares as to which the Award would not
otherwise be exercisable.

9.4 No Effect on Employment or Service. Nothing in the Plan shall interfere with
or limit in any way the right of the Company or an Affiliate to terminate any
Participant's employment or service at any time, with or without cause. Unless
otherwise provided by written contract, employment or service with the Company
or any of its Affiliates is on an at-will basis only. Additionally, the Plan
shall not confer upon any Nonemployee Director any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which such Nonemployee Director or
the Company may have to terminate his or her directorship at any time.

                                       15

<PAGE>

9.5 Participation. No Employee or Consultant shall have the right to be selected
to receive an Award under this Plan, or, having been so selected, to be selected
to receive a future Award.

9.6 Limitations on Awards. No Participant shall be granted an Award in any
Fiscal Year for where the underlying Shares of such Award represents more than
the lesser of: (i) Two percent (2%) of the Company's total number of outstanding
Shares immediately prior to the issuance of such Award, or (ii) Four Hundred
Thousand (400,000) Shares; provided, however, that such limitation shall be
adjusted proportionately in connection with any change in the Company's
capitalization as described in Section 4.3.

9.7 Successors. All obligations of the Company under the Plan, with respect to
Awards granted hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation or, otherwise, sale or disposition of all or
substantially all of the business or assets of the Company.

9.8 Beneficiary Designations. If permitted by the Administrator, a Participant
under the Plan may name a beneficiary or beneficiaries to whom any vested but
unpaid Award shall be paid in the event of the Participant's death. Each such
designation shall revoke all prior designations by the Participant and shall be
effective only if given in a form and manner acceptable to the Administrator. In
the absence of any such designation, any vested benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate and, subject to
the terms of the Plan and of the applicable Award Agreement, any unexercised
vested Award may be exercised by the administrator or executor of the
Participant's estate.

9.9 Limited Transferability of Awards. No Award granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. All rights with
respect to an Award granted to a Participant shall be available during his or
her lifetime only to the Participant. Notwithstanding the foregoing, the
Participant may, in a manner specified by the Administrator, (a) transfer a
Nonqualified Stock Option to a Participant's spouse, former spouse or dependent
pursuant to a court-approved domestic relations order which relates to the
provision of child support, alimony payments or marital property rights and (b)
transfer a Nonqualified Stock Option by bona fide gift and not for any
consideration to (i) a member or members of the Participant's immediate family,
(ii) a trust established for the exclusive benefit of the Participant and/or
member(s) of the Participant's immediate family, (iii) a partnership, limited
liability company of other entity whose only partners or members are the
Participant and/or member(s) of the Participant's immediate family or (iv) a
foundation in which the Participant an/or member(s) of the Participant's
immediate family control the management of the foundation's assets.

9.10 Restrictions on Share Transferability. The Administrator may impose such
restrictions on any Shares acquired pursuant to the exercise of an Award as it
may deem advisable, including, but not limited to, restrictions related to
applicable federal securities laws, the requirements of any national securities
exchange or system upon which Shares are then listed or traded or any blue sky
or state securities laws.

                                       16

<PAGE>

9.11 Buyout Provisions. The Administrator may at any time offer to buy out for a
payment in cash or Shares, an Award previously granted based on such terms and
conditions as the Administrator shall establish and communicate to the
Participant at the time that such offer is made.

9.12 Transfers Upon a Change in Control. In the sole and absolute discretion of
the Administrator, an Award Agreement may provide that in the event of certain
Change in Control events, which may include any or all of the Change in Control
events described in Section 2.7, Shares obtained pursuant to this Plan shall be
subject to certain rights and obligations, which include but are not limited to
the following: (i) the obligation to vote all such Shares in favor of such
Change in Control transaction, whether by vote at a meeting of the Company's
shareholders or by written consent of such shareholders; (ii) the obligation to
sell or exchange all such Shares and all rights to acquire Shares, under this
Plan pursuant to the terms and conditions of such Change in Control transaction;
(iii) the right to transfer less than all but not all of such Shares pursuant to
the terms and conditions of such Change in Control transaction, and (iv) the
obligation to execute all documents and take any other action reasonably
requested by the Company to facilitate the consummation of such Change in
Control transaction.

9.13 Performance-Based Awards. Each agreement for the grant of Performance
Shares or other performance-based awards shall specify the number of Shares
underlying the Award, the Performance Period and the Performance Objectives
(each as defined below), and each agreement for the grant of any other award
that the Program Administrators determine to make subject to a Performance
Objective similarly shall specify the applicable number of shares of Common
Stock, the period for measuring performance and the Performance Objective. As
used herein, "Performance Objectives" means a performance objectives specified
in the agreement for a Performance Share, or for any other award which the
Program Administrators determine to make subject to Performance Objectives, upon
which the vesting or settlement of such award is conditioned and "Performance
Period" means the period of time specified in an agreement over which
Performance Shares, or another award which the Program Administrators determine
to make subject to a Performance Objective, are to be earned. Each agreement for
a performance-based award shall specify in respect of a Performance Objective
the minimum level of performance below which no payment will be made, shall
describe the method of determining the amount of any payment to be made if
performance is at or above the minimum acceptable level, but falls short of full
achievement of the Performance Objective, and shall specify the maximum
percentage payout under the agreement. Such maximum percentage in no event shall
exceed two hundred percent (200%) of the Shares underlying the Award.

      9.13.1 Performance Metrics. The Program Administrators shall determine and
specify, in their discretion, the Performance Objectives in the agreement for a
Performance Share or for any other performance-based award, which Performance
Objective shall consist of: (i) one or more business criteria, including (except
as limited under subparagraph (c) below for awards to Covered Employees (as
defined below)) financial, service level and individual performance criteria;
and (ii) a targeted level or levels of performance with respect to such
criteria. Performance Objectives may differ between Plan Participants and
between types of awards from year to year.

                                       17

<PAGE>

      9.13.2 Performance Objectives. The Performance Objectives for Performance
Shares and any other performance-based award granted to a Covered Employee, if
deemed appropriate by the Program Administrators, shall be objective and shall
otherwise meet the requirements of Section 162(m)(4)(C) of the Code, and shall
be based upon one or more of the following performance-based business criteria,
either on a business unit or Company-specific basis or in comparison with peer
group performance: net sales; gross sales; return on net assets; return on
assets; return on equity; return on capital; return on revenues; asset turnover;
economic value added; total stockholder return; net income; pre-tax income;
operating profit margin; net income margin; sales margin; market share;
inventory turnover; days sales outstanding; sales growth; capacity utilization;
increase in customer base; cash flow; book value; share price performance
(including options and stock appreciation rights tied solely to appreciation in
the fair market value of the shares); earnings per share; stock price earnings
ratio; earnings before interest, taxes, depreciation and amortization expenses
("EBITDA"); earnings before interest and taxes ("EBIT"); or EBITDA, EBIT or
earnings before taxes and unusual or nonrecurring items as measured either
against the annual budget or as a ratio to revenue. Achievement of any such
Performance Objective shall be measured over a period of years not to exceed ten
(10) as specified by the Program Administrators in the agreement for the
performance-based award. No business criterion other than those named above in
this Section 9.14.2 may be used in establishing the Performance Objective for an
award to a Covered Employee under this Section 9.14. For each such award
relating to a Covered Employee, the Program Administrators shall establish the
targeted level or levels of performance for each such business criterion. The
Program Administrators may, in their discretion, reduce the amount of a payout
otherwise to be made in connection with an award under this Section 9.14, but
may not exercise discretion to increase such amount, and the Program
Administrators may consider other performance criteria in exercising such
discretion. All determinations by the Program Administrators as to the
achievement of Performance Objectives under this Section 9.14 shall be made in
writing. The Program Administrators may not delegate any responsibility under
this Section 9.14. As used herein, "Covered Employee" shall mean, with respect
to any grant of an award, an executive of the Company or any subsidiary who is a
member of the executive compensation group under the Company's compensation
practices (not necessarily an executive officer) whom the Program Administrators
deem may be or become a covered employee as defined in Section 162(m)(3) of the
Code for any year that such award may result in remuneration over $1 million
which would not be deductible under Section 162(m) of the Code but for the
provisions of the Program and any other "qualified performance-based
compensation" plan (as defined under Section 162(m) of the Code) of the Company;
provided, however, that the Program Administrators may determine that a Plan
Participant has ceased to be a Covered Employee prior to the settlement of any
award.

      9.13.3 Mandatory Deferral of Income. The Program Administrators, in their
sole discretion, may require that one or more award agreements contain
provisions which provide that, in the event Section 162(m) of the Code, or any
successor provision relating to excessive employee remuneration, would operate
to disallow a deduction by the Company with respect to all or part of any award
under the Program, a Plan Participant's receipt of the benefit relating to such
award that would not be deductible by the Company shall be deferred until the
next succeeding year or years in which the Plan Participant's remuneration does
not exceed the limit set forth in such provisions of the Code; provided,
however, that such deferral does not violate Code Section 409A.

                                       18

<PAGE>

                                   SECTION 10
                     AMENDMENT, SUSPENSION, AND TERMINATION

10.1 Amendment, Suspension, or Termination. Except as provided in Section 10.2,
the Board, in its sole discretion, may amend, suspend or terminate the Plan, or
any part thereof, at any time and for any reason. The amendment, suspension or
termination of the Plan shall not, without the consent of the Participant, alter
or impair any rights or obligations under any Award theretofore granted to such
Participant. No Award may be granted during any period of suspension or after
termination of the Plan.

10.2 No Amendment without Shareholder Approval. The Company shall obtain
shareholder approval of any material Plan amendment (including but not limited
to any provision to reduce the exercise or purchase price of any outstanding
Options or other Awards after the Grant Date (other than for adjustments made
pursuant Section 4.3), or to cancel and re-grant Options or other rights at a
lower exercise price), to the extent necessary or desirable to comply with the
rules of the NASDAQ, the Exchange Act, Section 422 of the Code, or other
Applicable Law.

10.3 Plan Effective Date and Duration of Awards. The Plan shall be effective as
of the Plan Adoption Date subject to the shareholders of the Company approving
the Plan by the required vote), subject to Sections 11.1 and 11.2 (regarding the
Board's right to amend or terminate the Plan), and shall remain in effect
thereafter. However, without further shareholder approval, no Award may be
granted under the Plan more than ten (10) years after the Plan Adoption Date.

                                   SECTION 11
                                 TAX WITHHOLDING

11.1 Withholding Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company shall have the power and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, and local taxes
(including the Participant's FICA obligation) required to be withheld with
respect to such Award (or exercise thereof).

11.2 Withholding Arrangements. The Administrator, in its discretion and pursuant
to such procedures as it may specify from time to time, may permit a Participant
to satisfy such tax withholding obligation, in whole or in part by (a) electing
to have the Company withhold otherwise deliverable Shares or (b) delivering to
the Company already-owned Shares having a Fair Market Value equal to the minimum
amount required to be withheld. The amount of the withholding requirement shall
be deemed to include any amount which the Administrator agrees may be withheld
at the time the election is made, not to exceed the amount determined by using
the statutory minimum federal, state or local income tax rates applicable to the
Participant with respect to the Award on the date that the amount of tax to be
withheld is to be determined. The Fair Market Value of the Shares to be withheld
or delivered shall be determined as of the date taxes are required to be
withheld.

                                   SECTION 12
                               LEGAL CONSTRUCTION

<PAGE>

12.1 Liability of Company. The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful grant or any Award or the
issuance and sale of any Shares hereunder, shall relieve the Company, its
officers, Directors and Employees of any liability in respect of the failure to
grant such Award or to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

12.2 Grants Exceeding Allotted Shares. If the Shares covered by an Award exceed,
as of the date of grant, the number of Shares, which may be issued under the
Plan without additional shareholder approval, such Award shall be void with
respect to such excess Shares, unless shareholder approval of an amendment
sufficiently increasing the number of Shares subject to the Plan is timely
obtained.

12.3 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

12.4 Severability. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

12.5 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.

12.6 Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of California

12.7 Captions. Captions are provided herein for convenience only, and shall not
serve as a basis for interpretation or construction of the Plan.

                                       20
<PAGE>

                                   SECTION 13
                                    EXECUTION

         IN WITNESS WHEREOF, the Company, by its duly authorized officer, has
executed this Plan on the date indicated below.

                                      SHOPOFF PROPERTIES TRUST, INC.

Dated: ________________, 2007         By:  ____________________________________<PAGE>
                                                                    Exhibit 10.2

                               ADVISORY AGREEMENT

     THIS ADVISORY AGREEMENT (this "Agreement"), dated as of, ____________ 2007,
is entered into between Shopoff Properties Trust, Inc., a Maryland corporation
(the "Company"), Shopoff Partners, L.P., a Delaware limited partnership (the
"Operating Partnership"), and Shopoff Advisors, L.P., a Delaware limited
partnership (the "Advisor").

                              W I T N E S S E T H:

     WHEREAS, the Company has filed a registration statement with the U. S.
Securities and Exchange Commission relating to its proposed offering of shares
of its common stock, par value $.01 per share ("Common Stock"), to the public
(the "Offering");

     WHEREAS, the Company intends to qualify as a REIT (as defined below), and
to invest, directly and indirectly, in investments in accordance with investment
guidelines adopted by its Board of Directors (the "Board") and Sections 856
through 860 of the Code (as defined below);

     WHEREAS, the Company and the Operating Partnership desire to avail
themselves of the experience, sources of information, advice and assistance of,
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, 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, the parties hereto agree as follows:

     1.   Definitions. As used in this Agreement, the following terms have the
definitions hereinafter indicated:

     Acquisition Expenses means any and all expenses incurred by the Company,
the Advisor, the Operating Partnership, or any Affiliate thereof in connection
with the sourcing, selection, evaluation and acquisition of, and investment in,
any Real Estate Asset, whether or not acquired or made, including but not
limited to legal fees and expenses, travel and communications expenses, cost of
appraisals, nonrefundable option payments on Real Estate Assets not acquired,
accounting fees and expenses, title insurance, and other closing and
miscellaneous expenses related to the selection and acquisition of Real Estate
Assets.

     Acquisition Fee means any and all fees and commissions, exclusive of
Acquisition Expenses, paid by any Person to any other Person (including any fees
or commissions paid by or to any Affiliate of the Company or the Advisor) in
connection with the making or investing in mortgage loans or the purchase,
development or construction of any property or other Real Estate Asset,
including, without limitation, real estate commissions, selection fees.

     Advisor means Shopoff Advisors, L.P., a Delaware limited partnership, any
successor advisor to the Company, or any person or entity to which Shopoff
Advisors, L.P. or any successor advisor subcontracts substantially all of its
functions.

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                              PAGE

<S>                                                                                                           <C>
1.   DEFINITIONS............................................................................................    1

2.   APPOINTMENT............................................................................................    9

3.   AUTHORITY OF THE ADVISOR...............................................................................    9

     (a)  General...........................................................................................    9

     (b)  Powers of the Advisor.............................................................................    9

     (c)  Approval by Directors.............................................................................    9

     (d)  Modification or Revocation of Authority of Advisor................................................    9

4.   DUTIES AND AUTHORITY OF THE ADVISOR....................................................................   10

     (a)  Organizational and Offering Services..............................................................   10

     (b)  Real Estate Asset Acquisition and Disposition, Asset Management and Operational Services..........   10

5.   BANK ACCOUNTS..........................................................................................   15

6.   RECORDS; ACCESS........................................................................................   15

7.   LIMITATIONS ON ACTIVITIES..............................................................................   15

8.   RELATIONSHIP WITH DIRECTORS............................................................................   15

9.   FEES...................................................................................................   16

     (a)  Acquisition and Advisory Fees.....................................................................   16

     (b)  Asset Management Fee..............................................................................   16

     (c)  Disposition Fee...................................................................................   16

     (d)  Subordinated Participation in Net Sale Proceeds...................................................   16

     (e)  Subordinated Incentive Fee Due Upon Listing.......................................................   17

     (f)  Debt Financing Fee................................................................................   17

     (g)  Subordinated Performance Fee Due Upon Termination.................................................   17

     (h)  Changes to Fee Structure..........................................................................   17

10.  EXPENSES...............................................................................................   17

     (a)  Reimbursable Expenses.............................................................................   17

     (b)  Other Services....................................................................................   19

     (c)  Timing of and Limitations on Reimbursements.......................................................   19

11.  OTHER ACTIVITIES OF THE ADVISOR........................................................................   20

     (a)  General...........................................................................................   20
</TABLE>

                                      -i-
<PAGE>

                               TABLE OF CONTENTS
                                  (continued)

<TABLE>
<CAPTION>
                                                                                                              PAGE
<S>                                                                                                           <C>

12.  RELATIONSHIP OF ADVISOR AND COMPANY....................................................................   20

13.  REPRESENTATIONS AND WARRANTIES.........................................................................   20

     (a)  Of the Company....................................................................................   21

     (b)  Of the Advisor....................................................................................   21

14.  TERM; TERMINATION OF AGREEMENT.........................................................................   22

15.  TERMINATION............................................................................................   22

     (a)  Termination by Either Party.......................................................................   22

     (b)  Termination by the Advisor........................................................................   22

16.  PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION.....................................................   22

17.  ASSIGNMENT TO AN AFFILIATE.............................................................................   23

18.  INDEMNIFICATION BY THE COMPANY.........................................................................   23

19.  INDEMNIFICATION BY ADVISOR.............................................................................   24

20.  ADVISOR'S LIABILITY....................................................................................   24

21.  NOTICES................................................................................................   24

22.  MODIFICATION...........................................................................................   25

23.  SEVERABILITY...........................................................................................   25

24.  CONSTRUCTION...........................................................................................   25

25.  ENTIRE AGREEMENT.......................................................................................   25

26.  INDULGENCES, NOT WAIVERS...............................................................................   25

27.  GENDER.................................................................................................   26

28.  TITLES NOT TO AFFECT INTERPRETATION....................................................................   26

29.  EXECUTION IN COUNTERPARTS..............................................................................   26
</TABLE>

                                      -ii-
<PAGE>

     Affiliate or Affiliated means, (A) any Person directly or indirectly
owning, controlling, or holding, with power to vote, ten percent or more of the
outstanding voting securities of such other Person, (B) any ten percent or more
of whose outstanding voting securities are directly or indirectly owned,
controlled, or held, with the power to vote, by such other Person, (C) any
Person, directly or indirectly, controlling, controlled by, or under common
control with such other Person, (D) any executive officer, director, trustee,
general partner or manager of such other person, or (E) any legal entity for
which such Person acts as an executive officer, director, trustee, general
partner or manager.

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

     Average Invested Assets means, for a specified period, the average of the
aggregate book value of the assets of the Company invested, directly or
indirectly, in equity interests in and loans secured by real estate before
reserves for depreciation or 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.

     Asset Management Fee means the fee paid to the Advisor for directing or
performing the day-to-day business affairs of the Company in the amount
established pursuant to Section 9(b).

     Board of Directors or Board means the individuals holding such office, as
of any particular time, under the Charter of the Company, whether they be the
Directors named therein or additional or successor Directors.

     Broker-Dealer means Shopoff Securities, Inc., an Affiliate of the Advisor,
or such other Person or entity selected by the Board to act as the broker-dealer
for the Offering. Shopoff Securities, Inc. is a member of the National
Association of Securities Dealers.

     Bylaws means the Bylaws of the Company, as the same may be amended from
time to time.

     Charter means the charter of the Company, including the Articles of
Incorporation and all Articles of Amendment, Articles Supplementary and other
modifications thereto as filed with the SDAT.

     Code means the 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.

     Common Stock means the Common Stock as defined in the Recitals to this
Agreement.

     Company means Shopoff Properties Trust, Inc., a corporation organized under
the laws of the State of Maryland.

                                       2
<PAGE>

     Competitive Real Estate Commission means a real estate or brokerage
commission paid for the purchase or sale of a Real Estate Asset that is
reasonable, customary and competitive in light of the size, type and location of
the Real Estate Asset.

     Construction Fee means a fee or other remuneration for acting as general
contractor and/or construction manager to construct improvements, supervise and
coordinate projects or to provide major repairs or rehabilitation for a Real
Estate Asset.

     Contract Price means the amount actually paid for a Real Estate Asset or
allocated to the purchase, development, construction or improvement of a Real
Estate Asset, exclusive of Acquisition Fees and Acquisition Expenses.

     Development Fee means a fee for the packaging of a Real Estate Asset,
including negotiating and approving plans, and undertaking to assist in
obtaining zoning and necessary variances and financing for the specific Real
Estate Asset, either initially or at a later date.

     Director means an individual who is a member of the Board of Directors.

     Disposition Fee means the Disposition Fee as defined in Section 9(c) of
this Agreement.

     Dividends means any dividends or other distributions of money or other
property paid by the Company to the Stockholders, including dividends that may
constitute a return of capital for federal income tax purposes.

     Excess Expense Guidelines means the Excess Expense Guidelines as defined in
Section 10(c)(iii) of this Agreement.

     Excess Market Value means the amount by which (i) the Market Value, plus
the total of all Dividends paid to Stockholders from the Company's inception
until the date that Market Value is determined, exceeds (ii) an amount equal to
100% of the Invested Capital, plus a 10% cumulative, non-compounded per annum
return on the Invested Capital from the date of investment through the date
Market Value is determined.

     Excess Net Appraised Value means the amount by which the Net Appraised
Value exceeds the sum of 100% of Invested Capital, plus an amount equal to a 10%
cumulative, non-compounded per annum return on Invested Capital, calculated on a
weighted average daily basis, less all prior Dividends.

     Expense Year means the Expense Year as defined in Section 10(c)(iii)
hereof.

     GAAP means generally accepted accounting principles consistently applied as
used in the United States of America.

     Gross Proceeds means the aggregate purchase price of all Common Stock sold
for the account of the Company.

     Independent Appraiser means a person or entity, with no material current or
prior business or personal relationship with the Advisor or the Directors, who
is engaged to a

                                       3
<PAGE>

substantial extent in the business of rendering opinions regarding the value of
assets of the type intended to be acquired by the Company through the Operating
Partnership, and who is a qualified appraiser of real estate 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.

     Independent Director means a Director of the Company who is not, and within
the last two years has not been, directly or indirectly associated with the
Sponsor or Advisor by virtue of (i) ownership of an interest in the Sponsor,
Advisor or its Affiliates, (ii) employment by the Sponsor, Advisor or any of
their Affiliates, (iii) service as an officer or director of the Sponsor,
Advisor or any of their Affiliates, (iv) performance of services, other than as
a Director, for the Company, (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, Advisor or any of their Affiliates. A business or professional
relationship is considered material if the gross revenue derived by the Director
from the Advisor and Affiliates exceeds five percent of either the Director's
annual gross revenue derived from all sources during either of the last two
years, or the Director's net worth on a fair market value basis. An indirect
relationship shall include circumstances in which a Director's spouse, parents,
children, siblings, mothers- or fathers-in-law, sons- or daughters-in-law or
brothers- or sisters-in-law are or have been associated with the Sponsor,
Advisor, any of their Affiliates or the Company.

     Invested Capital means, with respect to the Stockholders, as of any
relevant date, an amount equal to the excess of (i) the aggregate amount of cash
contributed or deemed contributed by the Company to the Operating Partnership
from the gross proceeds of the issuance by the Company of Common Stock to the
Stockholders, over (ii) the cumulative Dividends made by the Operating
Partnership to the Company as of such date and distributed to the Stockholders.

     Joint Venture means any joint venture, limited liability company or other
Affiliate of the Company (other than the Operating Partnership and the
Subsidiary Limited Liability Companies).

     Listed means approved for trading on the NYSE, AMEX, Nasdaq or an
over-the-counter market, any successor to such entities or on any national
securities exchange that has listing standards that the U. S. Securities and
Exchange Commission determines by rule are substantially similar to the listing
standards of the NYSE, AMEX or Nasdaq. The term "Listing" shall have the
correlative meaning.

     Market Value means the market value of the outstanding stock of the
Company, measured by taking the average closing price or average of the bid and
asked price, as the case may be, during the consecutive 30-day period commencing
twelve (12) months following Listing and ending eighteen (18) months following
Listing during which the average closing price or average of the bid and asked
price of the stock is the highest.

     Nasdaq means The Nasdaq Stock Market.

     NASAA means the North American Securities Administrators Association, Inc.

                                       4
<PAGE>

     NASAA REIT Guidelines means the Statement of Policy Regarding Real Estate
Investment Trusts published by the North American Securities Administrators
Association.

     Net Appraised Value means the Appraised Value of the Company's assets at
the Termination Date, less amounts of all indebtedness secured by the Real
Estate Assets.

     Net Income means for any period, the total revenues applicable to such
period, less the total expenses applicable to such period excluding additions to
reserves for depreciation, bad debts or other similar non-cash reserves;
provided, however, Net Income for purposes of calculating total allowable
Operating Expenses shall exclude the gain from the sale of the Company's assets.

     Net Sale Proceeds means in the case of a transaction described in clause
(A) of the definition of Sale, the net proceeds of any such transaction less the
amount of all real estate commissions and closing costs paid by the Operating
Partnership. In the case of a transaction described in clause (B) of such
definition, Net Sale Proceeds means the net proceeds of any such transaction
less the amount of any legal and other selling expenses incurred by the
Operating Partnership in connection with such transaction. In the case of a
transaction described in clause (C) of such definition, Net Sale Proceeds means
the net proceeds of any such transaction actually distributed to the Operating
Partnership from the Joint Venture less any expenses incurred by the Operating
Partnership in connection with such transaction. In the case of a transaction or
series of transactions described in clause (D) of the definition of Sale, Net
Sale Proceeds means the net proceeds of any such transaction less the amount of
all commissions and closing costs paid by the Operating Partnership. In the case
of a transaction described in clause (E) of such definition, Net Sale Proceeds
means the net proceeds of any such transaction less the amount of all selling
costs and other expenses incurred by the Operating Partnership in connection
with such transaction. Net Sale Proceeds shall also include, in the case of any
lease of a Real Estate Asset consisting of a building only, any amounts from
received tenants, borrowers or lessees that the Company determines, in its
discretion, to be economically equivalent to the proceeds of a Sale. Net Sale
Proceeds shall not include any amounts used to repay outstanding indebtedness
secured by the asset disposed of in the sale.

     NYSE means the New York Stock Exchange.

     Market Value means the market value of the outstanding Common Stock,
measured by taking the average closing price or average of bid and asked price,
as the case may be, during the consecutive 30-day period commencing twelve (12)
months following Listing and ending eighteen (18) months following Listing,
during which the average closing price or average of bid and asked price of the
Common Stock is the highest.

     Offering means the Offering defined in the Recitals to this Agreement.

     Operating Expenses means all direct and indirect costs and expenses
incurred by the Company, the Operating Partnership, the Advisor, or any of their
respective Affiliates, as determined under GAAP, which in any way are related to
the operation of the Company or to Company business, including advisory fees,
but excluding (i) the expenses of raising capital such as Organizational and
Offering Expenses, legal, audit, accounting, underwriting, brokerage,

                                       5
<PAGE>

listing, registration, and other fees, printing and other such expenses and
taxes incurred in connection with the issuance, distribution, transfer,
registration and Listing of the Common Stock, (ii) interest payments, (iii)
taxes, (iv) non-cash expenditures such as depreciation, amortization and bad
debt reserves, (v) Acquisition Fees and Acquisition Expenses, (vi) real estate
commissions on the Sale of property, and other expenses connected with the
acquisition and ownership of real estate interests, mortgage loans, or other
property (such as the costs of foreclosure, insurance premiums, legal services,
maintenance, repair, and improvement of property) and (vii) any incentive fees
which may be paid in compliance with the NASAA REIT Guidelines. The definition
of "Operating Expenses" set forth above is intended to encompass only those
expenses which are required to be treated as Operating Expenses under the NASAA
REIT guidelines. As a result, and notwithstanding the definition set forth
above, any expense of the Company which is not an Operating Expense under the
NASAA REIT Guidelines shall not be treated as an Operating Expense for purposes
hereof.

     Operating Partnership means Shopoff Partners, L.P. , or any successor
thereof, which is the partnership through which the Company may own Real Estate
Assets. References herein to the Company's assets refers to the Real Estate
Assets held by the Operating Partnership.

     Operating Partnership Agreement means the limited partnership agreement of
the Operating Partnership, as amended and restated from time to time.

     Organizational and Offering Expenses means any and all costs and expenses,
other than selling commissions and fees, incurred by the Company, the Advisor or
any Affiliate of either in connection with and in preparing the Company for
registration of and subsequently offering and distributing its Common Stock to
the public, which may include but are not limited to legal, accounting and
escrow fees, expenses for printing, engraving, amending, supplementing and
mailing, distribution costs, compensation to employees while engaged in
registering, telephone costs, all advertising and marketing expenses, charges of
transfer agents, registrars, trustees, escrow holders, depositories, experts,
and fees, expenses and taxes related to the filing, registration and
qualification of the sale of the securities under federal and state laws,
including accountants' and attorneys' fees and other accountable offering
expenses. Organization and Offering Expenses may include, but are not limited
to: (i) amounts to reimburse the Advisor for all marketing related costs and
expenses such as compensation to and direct expenses of the Advisor's employees
or employees of the Advisor's Affiliates in connection with registering and
marketing the Common Stock; (ii) direct expenses of the employees of the
Broker-Dealer while preparing for the offering and marketing of the Common
Stock; (iii) travel and entertainment expenses related to the offering and
marketing of the Common Stock; (iv) facilities and technology costs and other
costs and expenses associated with the offering and to facilitate the marketing
of the Common Stock including web site design and management.

     Person means any natural person, partnership, corporation, association,
trust, limited liability company, or other legal entity.

     Prospectus means any document, notice, or other communication satisfying
the standards set forth in Section 10 of the Securities Act, and contained in a
currently effective registration statement filed by the Company with, and
declared effective by, the U. S. Securities and

                                       6
<PAGE>

Exchange Commission, or if no registration statement is currently effective,
then the Prospectus contained in the most recently effective registration
statement.

     Real Estate Assets means unimproved and improved real property and Real
Estate Related Investments or any direct and/or indirect interest therein
(including, without limitation, fee or leasehold interests, options, leases,
partnership and joint venture interests, equity and debt securities of entities
that own real property, first or second mortgages on real property, mezzanine
loans directly or indirectly secured by real property, and other contractual
rights in real estate).

     Real Estate Related Investments means mortgage loans secured by, or
preferred equity investments in entities that own, real property (including
first or second mortgages on real property and mezzanine loans directly or
indirectly secured by real property).

     REIT means a corporation, trust or association which is engaged in
investing in equity interests in real estate (including fee ownership and
leasehold interests and interests in limited liability companies, limited
liability companies, partnerships and joint ventures holding real estate) or in
loans secured by mortgages on real estate or both and that qualifies as a real
estate investment trust under the REIT Provisions of the Code.

     REIT Provisions of the Code means Sections 856 through 860 of the Code and
any successor or other provisions of the Code relating to real estate investment
trusts (including provisions as to the attribution of ownership of beneficial
interests therein) and the regulations promulgated thereunder.

     Sale or Sales means any transaction or series of transactions whereby: (A)
the Operating Partnership sells, grants, transfers, conveys or relinquishes its
ownership of any Real Estate Asset or portion thereof, including the lease of
any Real Estate Asset consisting of the building only, and including any event
with respect to any Real Estate Asset which gives rise to a significant amount
of insurance proceeds (to the extent such insurance proceeds are not used to
repair the damage for which the insurance proceeds were paid) or condemnation
awards; (B) the Operating Partnership sells, grants, transfers, conveys or
relinquishes its ownership of all or substantially all of the interest of the
Operating Partnership in any Joint Venture in which it is a co-venturer or
partner; (C) any Joint Venture in which the Operating Partnership is a
co-venturer or partner sells, grants, transfers, conveys or relinquishes its
ownership of any Real Estate Asset or portion thereof, including any event with
respect to any Real Estate Asset which gives rise to insurance claims or
condemnation awards; (D) the Operating Partnership sells or otherwise disposes
of its interests in the Subsidiary Limited Liability Companies; or (E) the
Operating Partnership sells or otherwise disposes of or distributes all of its
assets in liquidation of the Operating Partnership.

     SDAT means the State Department of Assessments and Taxation of the State of
Maryland.

     Securities Act means the Securities Act of 1933, as amended.

          (a) Sponsor means any Person directly or indirectly instrumental in
organizing, wholly or in part, the Company or any Person who will control,
manage or

                                       7
<PAGE>

participate in the management of the Company, and any Affiliate of such Person.
Not included is any Person whose only relationship with the Company is as that
of an independent property manager of the Company's assets and whose only
compensation is as such. Sponsor does not include wholly independent third
parties such as attorneys, accountants and underwriters whose only compensation
is for professional services.

     Stockholders means the registered holders of the Company's Common Stock.

     Subordinated Incentive Fee Due Upon Listing means the fee payable to the
Advisor under certain circumstances if the Common Stock is listed on a national
securities exchange, or traded on an over-the-counter market, in an amount equal
to 50% of the Excess Market Value if Stockholders have received cumulative
Dividends equal to 100% of the Invested Capital plus a 10% cumulative,
non-compounded per annum return on the Invested Capital, calculated on an
aggregate weighted average daily basis. The Company shall have the option to pay
such fee in the form of cash, Common Stock, a promissory note or any combination
of the foregoing. The form of payment shall be as approved by the Board of
Directors. In the event the Advisor Subordinated Incentive Fee Due Upon Listing
is paid to the Advisor, thereafter, the Advisor will not be entitled to receive
any payments of Subordinated Performance Fee Upon Termination or Subordinated
Participation in Net Sale Proceeds.

     Subordinated Performance Fee Due Upon Termination means, upon termination
of this Agreement, a performance fee equal to 50% of the Excess Market Value or
50% of the Excess Net Appraised Value, whichever is greater, if Stockholders
have received cumulative Dividends equal to 100% of the Invested Capital plus a
10% cumulative, non-compounded per annum return on the Invested Capital,
calculated on an aggregate weighted average daily basis.

     Subordinated Participation in Net Sale Proceeds means a fee equal to 50% of
the balance of Net Sale Proceeds, if any, remaining after Stockholders have
received cumulative Dividends equal to 100% of the Invested Capital, plus an
amount equal to a 10% cumulative, non-compounded per annum return on the
Invested Capital, calculated on an aggregate weighted average daily basis.

     Subsidiary Limited Liability Companies means the limited liability
companies formed from time to time by the Operating Partnership for the purpose
of holding title to one or more Real Estate Assets.

     Termination Date means the date of termination of this Agreement.

     2.   Appointment. The Company, through the powers vested in the Board of
Directors, including a majority of all Independent Directors, hereby appoints
the Advisor to serve as its advisor and asset manager on the terms and
conditions set forth in this Agreement, and the Advisor hereby accepts such
appointment.

     3.   Authority of the Advisor.

          (a)  General. All rights and powers to manage and control the
day-to-day business and affairs of the Company shall be vested in the Advisor.
The Advisor shall have the power to delegate all or any part of its rights and
powers to manage and control the business and

                                       8
<PAGE>

affairs of the Company to such officers, employees, Affiliates, agents and
representatives of the Advisor or the Company as it may from time to time deem
appropriate. Any authority delegated by the Advisor to any other Person shall be
subject to the limitations on the rights and powers of the Advisor specifically
set forth in this Agreement and the Charter.

          (b)  Powers of the Advisor. Subject to the express limitations set
forth in this Agreement and subject to the supervision of the Board, the power
to direct the management, operation and policies of the Company shall be vested
in the Advisor, which shall have the power by itself and shall be authorized and
empowered on behalf and in the name of the Company to carry out any and all of
the objectives and purposes of the Company and to perform all acts and enter
into and perform all contracts and other undertakings that it may in its sole
discretion deem necessary, advisable or incidental thereto to perform its
obligations under this Agreement.

          (c)  Approval by Directors. Notwithstanding the foregoing, any
investment in Real Estate Assets, including any acquisition of a Real Estate
Asset by the Company or any investment by the Company in a Joint Venture,
limited liability company, limited partnership or similar entity owning real
properties, will require the prior approval of the Board of Directors and the
Independent Directors. The Advisor will deliver to the Board of Directors all
documents required by it to properly evaluate the proposed investment.

          (d)  Modification or Revocation of Authority of Advisor. The Board
may, at any time upon the giving of notice to the Advisor, modify or revoke the
authority or approvals set forth in Sections 3 and 4, provided however, that
such modification or revocation shall be effective upon receipt by the Advisor
and shall not be applicable to investment transactions to which the Advisor has
committed the Company prior to the date of receipt by the Advisor of such
notification. For such previously committed investment transactions, the Advisor
shall have the full rights and authorizations under Section 3 and 4 as are
necessary to complete the previously committed investment transactions.

     4.   Duties and Authority of the Advisor.

          (a)  Organizational and Offering Services. The Advisor shall manage
and supervise:

               (i) development of the Offering, including the determination of
the specific terms of the Common Stock to be offered by the Company;

               (ii) the organization of the Company, preparation of all Offering
and related documents, and obtaining of all required regulatory approvals of
such documents;

               (iii) coordination of the due diligence process of the
Broker-Dealer and its review of the Prospectus and other Offering and Company
documents;

               (iv) preparation and approval of all marketing materials
contemplated to be used by the Broker-Dealer or others in the Offering;

                                       9
<PAGE>

               (v) along with the Broker-Dealer, negotiation and coordination
with the escrow agent for the receipt, collection, processing and acceptance of
subscription agreements, and other administrative support functions;

               (vi) creation and implementation of various technology and
electronic communications related to the Offering; and

               (vii) all other services related to organization of the Company
or the Offering, whether performed and incurred by the Advisor or its
Affiliates.

          (b)  Real Estate Asset Acquisition and Disposition, Asset Management
and Operational Services. The Advisor undertakes to use commercially reasonable
efforts to:

               (i) (1) present to the Company potential investment opportunities
to provide a continuing and suitable investment program consistent with the
investment objectives and policies of the Company as determined and adopted in
the Charter, and (2) to manage, administer, promote, maintain, and improve, when
applicable, the Real Estate Assets on an overall portfolio basis in a diligent
manner. The services of the Advisor are to be of scope and quality not less than
those generally performed by professional asset managers of other similar
property portfolios. The Advisor shall make available the full benefit of the
judgment, experience and advice of the members of the Advisor's organization and
staff with respect to the duties it will perform under this Agreement. The
Advisor shall also obtain the services of developers, contractors, property
managers and leasing agents, which may include the Advisor or its Affiliates, to
manage, promote, and lease the Real Estate Assets. To facilitate the Advisor's
performance of these undertakings, but subject to the restrictions included in
Sections 3 and 7 and to the continuing and exclusive authority of the Board over
the management of the Company and the Operating Partnership, the Company hereby
delegates to the Advisor the authority to, and the Advisor hereby agrees to,
either directly or by engaging an Affiliate of the Advisor or an unrelated third
party;

               (ii) manage, and perform and supervise the various administrative
functions reasonably necessary for the management of the day-to-day operations
of the Company;

               (iii) subject to the provisions of Section 3(c) and 4 hereof, (A)
locate, analyze and select potential investments in Real Estate Assets, (B)
structure and negotiate the terms and conditions of transactions pursuant to
which investment in Real Estate Assets will be made, (C) perform due diligence
on prospective investments and summarize the results of such work, (D) make
investments in Real Estate Assets on behalf of the Company or the Operating
Partnership in compliance with the investment objectives and policies of the
Company, (E) if necessary, arrange for financing and refinancing and make other
changes in the asset or capital structure of Real Estate Assets, (F) dispose of,
reinvest or distribute the proceeds from the sale of, or otherwise deal with the
investments in, Real Estate Assets; (G) obtain all entitlements for the Real
Estate Assets, (H) enter into construction contracts and other contracts for the
development of Real Estate Assets, (I) enter into leases and service contracts
for Real Estate Assets, including oversight of Affiliated companies that perform
property management services for the Company, if any, (J) oversee non-affiliated
property managers and other non-affiliated

                                       10
<PAGE>

Persons who perform services for the Company, and (K) to the extent necessary,
perform all other operational functions for the development, maintenance, and
administration of Real Estate Assets;

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

               (v) provide the Board of Directors with periodic reports
regarding prospective investments which include recommendations and supporting
documentation required by them to properly evaluate the proposed investment;

               (vi) obtain the prior approval of the Board of Directors
(including a majority of all Independent Directors) for any and all investments
in Real Estate Assets (as well as any financing acquired by the Company or the
Operating Partnership in connection with such investment);

               (vii) notify the Board of all proposed material transactions
before they are completed;

               (viii) serve as the Company's investment and financial advisor
and provide the Board with relevant market research and economic and statistical
data in connection with the Company's assets and investment objectives and
policies;

               (ix) obtain reports (which may be prepared by unrelated third
parties, the Advisor, or its Affiliates), where appropriate, concerning the
value of investments or contemplated investments of the Company in Real Estate
Assets;

               (x) formulate and oversee the implementation of strategies for
the administration, promotion, management, operation, maintenance, improvement,
financing and refinancing, marketing, leasing, and disposition of Real Estate
Assets on an overall portfolio basis;

               (xi) monitor applicable markets and obtain reports (which may be
prepared by unrelated third parties, the Advisor or Affiliates) where
appropriate, concerning the values of existing or prospective investments of the
Company and monitor and evaluate the performance of the investments of the
Company;

               (xii) conduct periodic on-site property visits to some or all (as
the Advisor deems reasonably necessary) of the Real Estate Assets to inspect the
physical condition of the Real Estate Assets and to evaluate the performance of
the related property managers and leasing agents of their duties;

                                       11
<PAGE>

               (xiii) oversee the performance by the property managers of their
duties, including collection and proper deposits of rental payments and payment
of Real Estate Asset expenses and maintenance;

               (xiv) review, analyze and comment upon the operating budgets,
capital budgets and leasing plans prepared and submitted by any property
managers and leasing agents and aggregate these property budgets into the
Company's overall budget and financial reports;

               (xv) review and analyze on-going financial information pertaining
to each Real Estate Asset and the overall portfolio of Real Estate Assets;

               (xvi) deliver to the Board or maintain on behalf of the Company
copies of all appraisals obtained in connection with the investments in Real
Estate Assets;

               (xvii) obtain and maintain, with respect to any Real Estate Asset
and to the extent available, title insurance or other assurance of title and
customary fire, casualty and public liability insurance;

               (xviii) consult with the officers and Directors and assist the
Directors in evaluating and obtaining adequate insurance coverage based upon
risk management determinations;

               (xix) perform and supervise the various management and
operational functions related to the Company's investments in Real Estate
Assets;

               (xx) coordinate and manage relationships between the Company and
any Joint Venture partners;

               (xxi) undertake and perform all services or other activities
necessary and proper to carry out the investment objectives of the Company;

               (xxii) as reasonably necessary, act, or obtain the services of
others to act, as attorney-in-fact or agent of the Company in making, acquiring
and disposing of investments, disbursing, and collecting the funds, paying the
debts and fulfilling the obligations of the Company and handling, prosecuting
and settling any claims of the Company, including foreclosing and otherwise
enforcing mortgage and other liens and security interests securing investments;

               (xxiii) assist in negotiations on behalf of the Company with
investment banking firms and other institutions or investors for public or
private sales of securities or for other financing on behalf of the Company, but
in no event in such a way that the Advisor shall be acting as a broker, dealer,
underwriter or investment advisor in securities of or for the Company;

               (xxiv) negotiate on behalf of the Company with banks or lenders
for loans to be made to the Company if necessary, and negotiate on behalf of the
Company with investment banking firms and broker-dealers or negotiate private
sales of securities or obtain loans for the Company if necessary, 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

                                       12
<PAGE>

third parties incurred by the Advisor in connection with the foregoing shall be
the responsibility of the Company;

               (xxv) provide the Company with all necessary cash management
services;

               (xxvi) upon request of the Board of Directors, invest and
reinvest any money of the Company;

               (xxvii) perform all reporting, record keeping, internal controls
and similar matters in a manner to allow the Company to comply with applicable
law, including the Sarbanes-Oxley Act of 2002, as applicable;

               (xxviii) from time to time, or at any time reasonably requested
by the Board, provide information or make reports to the Board related to its
performance of services to the Company under this Agreement;

               (xxix) coordinate with the Company's independent accountants and
auditors the preparation and delivery to the Board of Directors of a report not
less than annually concerning the Advisor's compliance with certain material
aspects of this Agreement and as otherwise requested by the Board of Directors;

               (xxx) provide the officers and Directors with timely updates
related to the overall regulatory environment affecting the Company, as well as
managing compliance with such matters, including but not limited to compliance
with the Sarbanes-Oxley Act of 2002;

               (xxxi) consult with the Board of Directors relating to the
corporate governance structure and appropriate policies and procedures related
thereto;

               (xxxii) supervise the preparation on behalf of the Company of all
reports and returns required by the U. S. Securities and Exchange Commission,
Internal Revenue Service and other state or federal governmental agencies;

               (xxxiii) maintain and preserve the books and records of the
Company and maintain the accounting and other record-keeping functions at the
Real Estate Asset, Company, and Operating Partnership levels;

               (xxxiv) undertake communications with Stockholders in accordance
with applicable law and the Charter, provided, however, that Affiliates of the
Advisor have no obligations to the Company other than as expressly stated
herein, and the Advisor and its Affiliates have no obligations to present to the
Company any specific investment opportunity except as set forth in the Charter
and described in the Prospectus;

               (xxxv) manage communications with Stockholders, including
answering phone calls, preparing and sending written and electronic reports and
other communications;

               (xxxvi) establish technology infrastructure to assist in
providing Stockholder support and service;

                                       13
<PAGE>

               (xxxvii) appoint and supervise the Company's transfer agent in
the maintenance of a stock ledger reflecting a record of the Stockholders and
their ownership of Common Stock;

               (xxxviii) manage and coordinate with the transfer agent the
periodic dividend process and the payments to Stockholders;

               (xxxix) investigate, select, and, on behalf of the Company,
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, lenders, technical advisors, attorneys, brokers,
underwriters, corporate fiduciaries, escrow agents, depositaries, custodians,
agents for collection, insurers, insurance agents, banks, builders, developers,
construction companies, property owners, mortgagors, 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 Company with any of the foregoing;
and

               (xl) do all things necessary to assure its ability to render the
services described in this Agreement. The Advisor has a fiduciary responsibility
to the Company and to the Stockholders in carrying out its duties under this
Agreement. In providing advice and services hereunder, the Advisor shall not (i)
engage in any activity which would require it to be registered as an "Investment
Advisor," as that term is defined in the Investment Advisors Act of 1940 or in
any state securities law or (ii) cause the Company to make such investments as
would cause the Company to become an "Investment Company," as that term is
defined in the Investment Company Act of 1940.

     5.   Bank Accounts. The Advisor may establish and maintain one or more bank
accounts in its own name for the account of the Company or in the name of the
Company 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 Company,
under such terms and conditions as the Board may approve, provided that no funds
shall be commingled with the funds of the Advisor; and the Advisor shall from
time to time render appropriate accountings of such collections and payments to
the Board and to the auditors of the Company.

     6.   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 Company, at any time
or from time to time during normal business hours. The Advisor, in the conduct
of its responsibilities to the Company, shall maintain adequate and separate
books and records for the Company's operations in accordance with United States
GAAP, which shall be supported by sufficient documentation to ascertain that
such books and records are properly and accurately recorded. Such books and
records shall be the property of the Company. Such books and records shall
include all information necessary to calculate and audit the fees or
reimbursements paid under this Agreement. The Advisor shall utilize procedures
to attempt to ensure such control over accounting and financial transactions as
is reasonably required to protect the Company's assets from theft, error or
fraudulent activity. All financial statements that the Advisor delivers to the
Company shall be prepared on an accrual

                                       14
<PAGE>

basis in accordance with GAAP, except for special financial reports which by
their nature require a deviation from GAAP. The Advisor shall maintain necessary
liaison with the Company's independent accountants and shall provide such
accountants with such reports and other information as the Company shall
request. The Advisor shall at all reasonable times have access to the books and
records of the Company.

     7.   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 Company as a REIT, (b) subject the Company 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 Company, its Common Stock or its other securities, or (d)
violate the Charter 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, employees and stockholders,
and stockholders, directors and officers of the Advisor's Affiliates shall not
be liable to the Company or to the Board or Stockholders for any act or omission
by the Advisor, its directors, officers or employees, or stockholders, directors
or officers of the Advisor's Affiliates except as provided in this Agreement.

     8.   Relationship With Directors. Subject to Section 7 of this Agreement
and to restrictions set forth in the Charter or deemed advisable with respect to
the qualification of the Company as a REIT, directors, officers and employees of
the Advisor or an Affiliate of the Advisor or any corporate parents of an
Affiliate, or directors, officers or stockholders of any director, officer or
corporate parent of an Affiliate may serve as a Director and as officers of the
Company, except that no officer or employee of the Advisor or its Affiliates who
also is a Director or officer of the Company shall receive any compensation from
the Company for serving as a Director or officer other than reasonable
reimbursement for travel and related expenses incurred in attending meetings of
the Directors.

     9.   Fees.

          (a)  Acquisition and Advisory Fees. Subject to the following sentence,
the Company shall pay to the Advisor, as compensation for services rendered by
the Advisor in connection with the investigation, selection and acquisition (by
purchase, investment or exchange) of Real Estate Assets, a fee in an amount
equal to 3% of, (i) with respect to any Real Estate Asset acquired by the
Company directly or indirectly other than a Real Estate Related Investment, the
Contract Price of the underlying property, and (ii) with respect to any Real
Estate Related Investment acquired by the Company directly or indirectly, the
Appraised Value of the underlying property.

          (b)  Debt Financing Fee. The Company shall pay the Advisor 1% of the
amount available under any loan or line of credit made available to the Company
upon the Company's receipt of the proceeds from such loan or line of credit.

                                       15
<PAGE>

          (c)  Asset Management Fee. On the last day of each month, the Company
shall pay the Advisor an "Asset Management Fee" in an amount equal to
one-twelfth of 2% of (i) the aggregate assets value for operating assets and
(ii) the total Contract Price plus capitalized entitlement and project related
costs for Real Estate Assets held for less than or equal to one year by us,
directly or indirectly, as of the last day of the preceding month other than a
Real Estate-Related Investment and (iii) the Appraised Value as determined from
time to time for Real Estate Assets held for greater than one year by us,
directly or indirectly, as of the last day of the preceding month other than a
Real Estate-Related Investment and (iv) the Appraised Value of the underlying
property, for any Real Estate-Related Investment held by, us directly or
indirectly, as of the last day of the preceding month, in the case of subsection
(iv) not to exceed one-twelfth of 2% of the funds advanced by us for the
purchase of the Real Estate-Related Investment.

          (d)  Disposition Fee. If the Advisor or an Affiliate provides a
substantial amount of the services (as determined by a majority of the
Directors, including a majority of the Independent Directors), the Advisor shall
receive at the closing a Disposition Fee equal to, (1) in the case of the sale
of any Real Estate Asset, other than Real Estate-Related Investments, the lesser
of: (a) one-half of the Competitive Real Estate Commission paid up to 3% of the
Contract Price or, if none is paid, the amount that customarily would be paid,
or (b) 3% of the Contract Price of each Real Estate Asset sold, and (2) in the
case of the sale of any Real Estate-Related Investments, 3% of the sales price
of such Real Estate-Related Investments. Any Disposition Fee payable under this
section may be paid in addition to real estate commissions paid to
non-Affiliates, provided that the total real estate commissions (including such
Disposition Fee) paid to all Persons by the Company for each Real Estate Asset,
upon disposition thereof, shall not exceed an amount equal to the lesser of (i)
6% of the aggregate Contract Price of each Real Estate Asset or (ii) the
Competitive Real Estate Commission for each Real Estate Asset. The Company will
pay the Disposition Fees for a property at the time the property is sold.

          (e)  Subordinated Participation in Net Sale Proceeds. The Subordinated
Participation in Net Sale Proceeds shall be payable to the Advisor at the time
or times that the Company determines that the Subordinated Participation in Net
Sale Proceeds has been earned by the Advisor.

          (f)  Subordinated Incentive Fee Due Upon Listing. Upon Listing, the
Advisor shall be entitled to the Subordinated Incentive Fee Upon Listing. The
Subordinated Incentive Fee Due Upon Listing shall be payable to the Advisor
during the thirty (30) day period following twelve (12) months after Listing.
The Company shall have the option to pay such fee in the form of cash, Common
Stock, a promissory note with interest accrued as of the date of Listing, or any
combination of the foregoing, as determined by the Board of Directors. In the
event the Subordinated Incentive Fee Due Upon Listing is paid to the Advisor
following Listing, the Advisor will not be entitled to receive any payments of
Subordinated Performance Fee Upon Termination or Subordinated Participation in
Net Sale Proceeds following receipt of the Subordinated Incentive Fee Due Upon
Listing.

          (g)  Subordinated Performance Fee Due Upon Termination. Upon
termination of this Agreement, the Advisor shall be entitled to the Subordinated
Performance Fee Due Upon Termination as set forth in Section 16(a)(ii) of this
Agreement.

                                       16
<PAGE>

          (h)  Changes to Fee Structure. In the event of Listing, the Company
and the Advisor shall negotiate in good faith to establish a fee structure
appropriate for a perpetual-life entity. A majority of the Independent Directors
must approve the new fee structure negotiated with the Advisor. In negotiating a
new fee structure, the Independent Directors shall consider all of the factors
they deem relevant, including, but not limited to: (i) the amount of the
advisory fee in relation to the asset value, composition and profitability of
the Company's portfolio; (ii) the success of the Advisor in generating
opportunities that meet the investment objectives of the Company; (iii) the
rates charged to other REITs and to investors other than REITs by advisors
performing the same or similar services; (iv) additional revenues realized by
the Advisor and its Affiliates through their relationship with the Company,
including loan administration, underwriting or broker commissions, servicing,
engineering, inspection and other fees, whether paid by the REIT or by others
with whom the REIT does business; (v) the quality and extent of service and
advice furnished by the Advisor; (vi) the performance of the investment
portfolio of the REIT, including income, conversion or appreciation of capital,
and number and frequency of problem investments; and (vii) the quality of the
Real Estate Asset portfolio of the Company in relationship to the investments
generated by the Advisor for its own account. The new fee structure can be no
more favorable to the Advisor than the current fee structure.

     10.  Expenses.

          (a)  Reimbursable Expenses. In addition to the compensation paid to
the Advisor pursuant to Section 9 hereof, the Company shall pay directly or
reimburse the Advisor for all of the expenses paid or incurred by the Advisor
(to the extent not reimbursable by another party, such as the Broker-Dealer) in
connection with the services it provides to the Company pursuant to this
Agreement, including, but not limited to:

               (i) the 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 Company for any Organization and Offering
Expenses reimbursement received by the Advisor pursuant to this Section 10 to
the extent that such reimbursement of expenses associated with the Offering
exceeds 10.5% of the Gross Proceeds (including all reimbursements paid to other
Affiliates of the Company). The Advisor shall be responsible for the payment of
all such Organization and Offering Expenses in excess of 10.5% of the Gross
Proceeds;

               (ii) subject to Section 9(a), all Acquisition Expenses incurred
in connection with the investigation, selection and acquisition of a Real Estate
Asset in an amount equal to up to 0.5% of (A) for any Real Estate Asset acquired
by the Fund directly or through a Joint Venture, other than a Real Estate
Related Investment, the Contract Price of the underlying property, and (B) for
any Real Estate Related Investment acquired by the Fund directly or indirectly,
the Appraised Value of the underlying property, in the case of this subsection
(B), not to exceed 1.0% of the funds advanced by the Fund for the acquisition of
the Real Estate Asset; the actual out-of-pocket cost of goods and services used
by the Company and obtained from entities not affiliated with the Advisor
including brokerage and other fees paid in connection with the purchase,
operation and sale of Real Estate Assets;

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

                                       17
<PAGE>

               (iv) taxes and assessments on income or Real Estate Asset and
taxes as an expense of doing business and any taxes otherwise imposed on the
Company, the Operating Partnership, its business or income;

               (v) costs associated with insurance required in connection with
the business of the Company, the Operating Partnership, or by the Board;

               (vi) expenses of managing and operating Real Estate Assets owned
by the Company through the Operating Partnership, whether payable to an
Affiliate of the Company or a non-affiliated Person;

               (vii) all expenses in connection with payments to Directors and
meetings of the Directors and Stockholders;

               (viii) expenses associated with Listing or with the issuance and
distribution of securities other than the Common Stock issued in the Offering,
such as fees, advertising expenses, taxes, legal and accounting fees, listing
and registration fees;

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

               (x) expenses of organizing, converting, modifying, merging,
liquidating or dissolving the Company or of amending the Charter or the Bylaws;

               (xi) expenses 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) administrative service expenses, including all direct and
indirect costs and expenses incurred by Advisor in fulfilling its duties
hereunder and including personnel costs; provided, however, that no
reimbursement shall be made for costs of personnel to the extent that such
personnel perform services in transactions for which the Advisor receives the
Acquisition Fee or Disposition Fee. Such direct and indirect costs and expenses
may include reasonable wages and salaries and other employee-related expenses of
all employees of Advisor who are engaged in the management, administration,
operations, and marketing of the Company, including taxes, insurance and
benefits relating to such employees, and legal, travel and other out-of-pocket
expenses which are directly related to their services provided hereunder;

               (xiii) audit, accounting and legal fees, and other fees for
professional services relating to the operations of the Company and the
Operating Partnership and all such fees incurred at the request, or on behalf
of, the Independent Directors or any committee of the Board of Directors;

               (xiv) out-of-pocket expenses of maintaining communications with
Shareholders, including the cost of preparation, printing, and mailing annual
reports and other Shareholder reports, proxy statements and other reports
required by governmental entities;

                                       18
<PAGE>

               (xv) out-of-pocket costs for the Company and the Operating
Partnership to comply with all applicable laws, regulation and ordinances; and

               (xvi) all other out-of-pocket costs necessary for the operation
of the Company and the Operating Partnership and its Real Estate Assets incurred
by the Advisor in performing its duties hereunder. The Company shall also
reimburse the Advisor or Affiliates of the Advisor for all direct and indirect
costs and expenses incurred on behalf of the Company prior to the execution of
this Agreement. In the event the Company does not raise $19,000,000 in its
Offering, the Advisor will not be reimbursed for Organizational and Offering
Expenses. The total of all Acquisition Fees and Acquisition Expenses paid by the
Company in connection with the purchase of a Real Estate Asset by the Company
shall be reasonable, and shall in no event exceed an amount equal to 6% of the
Contract Price, or in the case of a mortgage loan, 6% of the funds advanced;
provided, however, that a majority of the Directors (including the majority of
the Independent Directors) not otherwise interested in the transaction may
approve fees and expenses in excess of these limits if they determine the
transaction to be commercially competitive, fair and reasonable to the Company.

     (b)  Other Services. Should the Directors request that the Advisor or any
director, officer or employee thereof render services for the Company other than
set forth in Section 4, such services shall be separately compensated at such
rates and in such amounts as are agreed by the Advisor and a majority of the
Independent Directors, subject to the limitations contained in the Charter, and
shall not be deemed to be services pursuant to the terms of this Agreement.

     (c)  Timing of and Limitations on Reimbursements.

          (i) Expenses incurred by the Advisor on behalf of the Company and
payable pursuant to this Section 10 shall be reimbursed no less frequently than
monthly to the Advisor. The Advisor shall prepare a statement documenting the
expenses of the Company and the Operating Partnership during each quarter, and
shall deliver such statement to the Company within 45 days after the end of each
quarter. Subject to the Excess Expense Guidelines, the Company may advance funds
to the Advisor for expenses the Advisor anticipates will be incurred by the
Advisor within the current month and any such advances shall be deducted from
the amounts reimbursed by the Company to the Advisor.

          (ii) Notwithstanding anything else in this Section 10 to the contrary,
the expenses enumerated in this Section 10 shall not become reimbursable to the
Advisor unless and until the Company has raised $19,000,000 in the Offering.

          (iii) The Company shall not reimburse the Advisor at the end of any
fiscal quarter Operating Expenses that, in the four consecutive fiscal quarters
then ended (the "Expense Year") exceed (the "Excess Amount") the greater of 2%
of Average Invested Assets or 25% of Net Income (the "Excess Expense
Guidelines") for such year unless a majority of the Independent Directors
determines that such excess was justified, based on unusual and nonrecurring
factors which they deem sufficient. If a majority of the Independent Directors
does not approve such excess as being so justified, any Excess Amount paid to
the Advisor during a fiscal quarter shall be repaid to the Company. If a
majority of the Independent Directors

                                       19
<PAGE>

determines such excess was justified, then within 60 days after the end of any
fiscal quarter of the Company for which total reimbursed Operating Expenses for
the Expense Year exceed the Excess Expense Guidelines, the Advisor, at the
direction of the a majority of the Independent Directors, shall send to the
stockholders a written disclosure of such fact, together with an explanation of
the factors the a majority of the Independent Directors considered in
determining that such excess expenses were justified. The Company will ensure
that such determination will be reflected in the minutes of the meetings of the
Board of Directors. All figures used in the foregoing computation shall be
determined in accordance with GAAP.

     11.  Other Activities of the Advisor.

          (a)  General. The Advisor shall not render advice to other Persons
(including other REITs) nor manage other programs advised, sponsored or
organized by the Advisor or its Affiliates. 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 Company and its obligations to or its
interest in any other partnership, corporation, firm, individual, trust or
association.

          (b)  Nothing contained herein shall limit or restrict the right of any
director, officer, employee, or stockholder of the Advisor or its Affiliates to
engage in any other business or to render services of any kind to any other
partnership, corporation, firm, individual, trust or association.

     12.  Relationship of Advisor and Company. The Company 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.

     13.  Representations and Warranties.

          (a)  Of the Company. To induce the Advisor to enter into this
Agreement, the Company hereby represents and warrants that:

               (i) The Company is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Maryland with all
requisite corporate power and authority and all material licenses, permits and
authorizations necessary to carry out the transactions contemplated by this
Agreement.

               (ii) The Company's execution, delivery and performance of this
Agreement has been duly authorized by the Board of Directors including a
majority of all Independent Directors of the Company. This Agreement constitutes
the valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms. The Company's execution and delivery of this
Agreement and its fulfillment of and compliance with the respective terms hereof
do not and will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) result in
the creation of any lien, security interest, charge or encumbrance upon the
assets of the Company pursuant to, (iv) give any third party the right to
modify, terminate or accelerate any obligation under, (v) result in a violation
of or (vi) require any authorization, consent, approval, exception or other
action by or notice to any court or administrative or governmental body pursuant
to, the Charter or Bylaws or

                                       20
<PAGE>

any law, statute, rule or regulation to which the Company is subject, or any
agreement, instrument, order, judgment or decree by which the Company is bound,
in any such case in a manner that would have a material adverse effect on the
ability of the Company to perform any of its obligations under this Agreement.

          (b)  Of the Advisor. To induce the Company to enter into this
Agreement, the Advisor represents and warrants that:

               (i) The Advisor is a limited liability company, duly organized,
validly existing and in good standing under the laws of the State of California
with all requisite corporate power and authority and all material licenses,
permits and authorizations necessary to carry out the transactions contemplated
by this Agreement.

               (ii) The Advisor's execution, delivery and performance of this
Agreement has been duly authorized by its general partner. This Agreement
constitutes a valid and binding obligation of the Advisor, enforceable against
the Advisor in accordance with its terms. The Advisor's execution and delivery
of this Agreement and its fulfillment of and compliance with the respective
terms hereof do not and will not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under, (iii)
result in the creation of any lien, security interest, charge or encumbrance
upon the Advisor's assets pursuant to, (iv) give any third party the right to
modify, terminate or accelerate any obligation under,

               (iii) result in a violation of or (vi) require any authorization,
consent, approval, exemption or other action by or notice to any court or
administrative or governmental body pursuant to, the Advisor's articles of
incorporation or bylaws, or any law, statute, rule or regulation to which the
Advisor is subject, or any agreement, instrument, order, judgment or decree by
which the Advisor is bound, in any such case in a manner that would have a
material adverse effect on the ability of the Advisor to perform any of its
obligations under this Agreement.

               (iv) The Advisor has received copies of the Charter, the Bylaws,
and the Registration Statement and of the Operating Partnership's limited
partnership agreement and is familiar with the terms thereof, including without
limitation the investment limitations included therein. The Advisor warrants
that it will use reasonable care to avoid any act or omission that would
conflict with the terms of the Charter, the Bylaws, the Registration Statement,
or the Operating Partnership's limited partnership agreement in the absence of
the express direction of a majority of the Independent Directors.

     14.  Term; Termination of Agreement. This Agreement shall continue in force
until the first anniversary of the date hereof, subject to an unlimited number
of successive one-year renewals upon mutual consent of the parties. The Company,
acting through the Board, will 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.

     15.  Termination.

          (a)  Termination by Either Party. This Agreement may be terminated
upon 60 days written notice without cause or penalty, by either party (by a
majority of the Independent

                                       21
<PAGE>

Directors or a majority of the board of directors of the Advisor or its managing
member, as the case may be).

          (b)  Termination by the Advisor. This Agreement may be terminated
immediately by the Advisor in the event of (i) the bankruptcy of the Company or
commencement of any bankruptcy or similar insolvency proceedings of the Company,
or (ii) any material breach of this Agreement by the Company not cured by the
Company within 30 days after written notice thereof.

     16.  Payments to and Duties of Advisor upon Termination. Payments to the
Advisor pursuant to this Section 16 shall be subject to the Excess Expenses
Guidelines to the extent applicable.

          (a)  After the Termination Date, the Advisor shall not be entitled to
compensation for further services hereunder except it shall be entitled to
receive from the Company within 30 days after the effective date of such
termination the following:

               (i)  all unpaid reimbursable expenses and all earned but unpaid
fees payable to the Advisor prior to termination of this Agreement; and

               (ii) the Subordinated Performance Fee Due Upon Termination,
provided that no Subordinated Performance Fee Due Upon Termination will be paid
if the Company has paid or is obligated to pay the Subordinated Incentive Fee
Due Upon Listing.

          (b)  In the event this Agreement expires without the consent of the
Advisor, or is terminated for any reason other than by the Advisor pursuant to
Section 15, the Company shall, at the election of the Advisor or any of its
Affiliates and at any time (and from time to time) after the effective date of
such expiration or termination, purchase all or a portion of the partnership
interests held by the Advisor and its Affiliates in the Operating Partnership,
subject to Board approval and applicable law. The purchase price shall be paid
in cash or, at the election of the seller, Common Stock, and shall be payable
within 120 days after the Advisor or its Affiliates (as applicable) gives the
Company written notice of its desire to sell all or a portion of the partnership
interests of the Operating Partnership held by such Person to the Company. The
Company agrees to keep a sufficient number of authorized but unissued shares of
Common Stock available for issuance pursuant to this Section 16(b) and shall
issue shares of Common Stock as may be required hereunder. The purchase price of
the partnership interests in the Operating Partnership sold to the Company
pursuant to this Section 16(b) shall be (i) in the event the seller elects to
receive cash, the amount the seller would receive under a redemption of such
interests under the Operating Partnership Agreement assuming the Company paid
cash for such redemption, or (ii) in the event the seller elects to receive
Common Stock, the amount of Common Stock the seller would receive under a
redemption of such interests under the Operating Partnership Agreement assuming
the Company paid Common Stock for such redemption.

          (c)  The Advisor shall promptly upon termination:

                                       22
<PAGE>

               (i) pay over to the Company all money collected and held for the
account of the Company 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 Real Estate
Assets, and documents of the Company then in the custody of the Advisor; and

               (iv) cooperate with the Company to provide an orderly management
transition.

     17.  Assignment to an Affiliate. This Agreement may be assigned by the
Advisor to an Affiliate with the approval of a majority of the Independent
Directors. The Advisor may assign any rights to receive fees or other payments
under this Agreement without obtaining the approval of the Directors. This
Agreement shall not be assigned by the Company without the consent of the
Advisor, except in the case of an assignment by the Company to a corporation or
other organization which is a successor to all of the assets, rights and
obligations of the Company, in which case such successor organization shall be
bound hereunder and by the terms of said assignment in the same manner as the
Company is bound by this Agreement.

     18.  Indemnification by the Company. The Company shall indemnify and hold
harmless the Advisor and its Affiliates, including their respective officers,
directors, 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 or the
Charter. Notwithstanding the foregoing, the Advisor shall not be entitled to
indemnification or be held harmless pursuant to this Section 19 for any activity
which the Advisor shall be required to indemnify or hold harmless the Company
pursuant to Section 19. Any indemnification of the Advisor may be made only out
of the net assets of the Company, including insurance proceeds, and not from
Stockholders.

     19.  Indemnification by Advisor. The Advisor shall indemnify and hold
harmless the Company from contract or other liability, claims, damages, taxes or
losses and related expenses including attorneys' fees, to the extent that such
liability, claims, damages, taxes or losses and related expenses are not fully
reimbursed by insurance and are incurred by reason of the Advisor's bad faith,
fraud, willful misfeasance, misconduct, or reckless disregard of its duties, but
Advisor shall not be held responsible for any action of the Directors in
declining to follow any advice or recommendation given by the Advisor.

     20.  Advisor's Liability.

          (a)  Notwithstanding any other provisions of this Agreement, in no
event shall the Company make any claim against the Advisor, or its Affiliates,
on account of any good faith interpretation by Advisor of the provisions of this
Agreement (even if such interpretation is later

                                       23
<PAGE>

determined to be legally incorrect) or any alleged errors in judgment made in
good faith and in accordance with this Agreement in connection with the
operations of the Company hereunder by the Advisor or the performance of any
advisory or technical services provided by or arranged by the Advisor. The
provisions of this Section 20(a) shall not be deemed to release the Advisor from
liability for its gross negligence or reckless disregard of its duties.

          (b)  The Company shall not object to any expenditures made by the
Advisor in good faith in the course of its performance of its obligations under
this Agreement or in settlement of any claim arising out of the operation of the
Company unless such expenditure is specifically prohibited by this Agreement or
the Charter. The provisions of this Section 20(b) shall not be deemed to release
the Advisor from liability for its gross negligence or reckless disregard of its
duties.

          (c)  In no event will either party be liable for damages based on loss
of income, profit or savings or indirect, incidental, consequential, exemplary,
punitive or special damages of the other party or person, including third
parties, even if such party has been advised of the possibility of such damages
in advance, and all such damages are expressly disclaimed. In no event will the
Advisor's aggregate liability under this Agreement ever exceed the total amount
of fees it actually receives from the Company pursuant to Section 9.

     21.  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 Charter,
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 Board and to the Company:              Shopoff Properties Trust, Inc.
                                              8951 Research Drive
                                              Irvine, California  92618
                                              Attention:  William A. Shopoff

To the Advisor:                               Shopoff Advisors, L.P.
                                              8951 Research Drive
                                              Irvine, California  92618
                                              Attention:  William A. Shopoff

To the Operating Partnership                  Shopoff Partners, L.P.
                                              8951 Research Drive
                                              Irvine, California  92618
                                              Attention: William A. Shopoff

Either party may at any time give notice in writing to the other party of a
change in its address for the purposes of this Section 21.

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

                                       24
<PAGE>

     23.  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.

     24.  Construction. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of California.

     25.  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.

     26.  Indulgences, Not Waivers. 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.

     27.  Gender. 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.

     28.  Titles Not to Affect Interpretation. The titles of paragraphs and
subparagraphs 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.

     29.  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, taken together, bear the signatures of all
of the parties reflected hereon as the signatories.

                                       25
<PAGE>

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

SHOPOFF PROPERTIES TRUST, INC.

By:
    ------------------------------------
Name:
      ----------------------------------
Title:
       ---------------------------------

SHOPOFF ADVISORS, L.P.

By:
    ------------------------------------
Name:
      ----------------------------------
Title:
       ---------------------------------

SHOPOFF PARTNERS, L.P.

By:
    ------------------------------------
Name:
      ----------------------------------
Title:
       ---------------------------------

                                       26

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