Document:

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                                                                    EXHIBIT 10.1

                               ADVISORY AGREEMENT

         THIS ADVISORY AGREEMENT (this "Agreement") is made as of ________, 2004
(the "Effective Date"), by and between (i) Bull Street Real Estate Investment
Trust, Inc., a Maryland corporation (the "Company"), and (ii) Burton Management
Company, Ltd., a Nevada corporation (the "Advisor").

         THE PARTIES ENTER THIS AGREEMENT on the basis of the following facts,
understandings and intentions:

         A. The Company intends to use the net proceeds of borrowings and
security offerings and the net returns on its investments which are not
otherwise distributed to stockholders in Mortgage Assets (defined herein) in a
manner which allows the Company to qualify as a "real estate investment trust"
under the Internal Revenue Code of 1986, as amended (the "Code") and to qualify
for an exemption from being an "investment company" under the Investment Company
Act of 1940, as amended (the "Investment Company Act").

         B. The Company desires that the Advisor undertake, on the Company's
behalf, the duties and responsibilities set forth in this Agreement, subject to
the direction and oversight of the Board of Directors of the Company (the "Board
of Directors"), on the terms and conditions set forth in this Agreement.

         C. The Advisor desires to undertake, on the Company's behalf, the
duties and responsibilities set forth in this Agreement, subject to the
direction and oversight of the Board of Directors, on the terms and conditions
set forth in this Agreement.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties hereto, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

1. Definitions. Capitalized terms used in this Agreement shall have the
respective meanings assigned to them below:

         1.1 "Advisor" has the meaning set forth in the Introductory Paragraph
of this Agreement, and shall include any successor thereto.

         1.2 "Advisor Obligations" has the meaning set forth in Section 2.4.2 of
this Agreement.

         1.3 "Advisor Refund" has the meaning set forth in Section 6.2.1(2) of
this Agreement.

         1.4 "Affiliate" means, when used with reference to a specified person,
any person that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the specified
person. For purposes of this definition, the term "person" means and includes
individuals, corporations, general and limited partnerships, stock companies,
land trusts, business trusts and other entities and governments and agencies and
political

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subdivisions thereof. For purposes of this definition, "control" (including the
correlative meanings of the terms "controlled by" and "under common control
with"), as used with respect to any person, shall mean the possession, directly,
or indirectly through one or more intermediaries, of the power to direct or
cause the direction of the management and policies of such person, whether by
contract, through the ownership of voting securities, partnership interests or
other equity interests or otherwise.

         1.5 "Annual Incentive Amount" shall have the meaning set forth in
Section 6.2.1(2) of this Agreement.

         1.6 "Agreement" means this Advisory Agreement dated as of the Effective
Date, by and between the Company and the Advisor, as it is amended from time to
time in accordance with the terms of this Agreement.

         1.7 "Average Net Invested Assets" means for any period the difference
between (i) the aggregate book value of the consolidated assets of the Company
and its subsidiaries, before reserves for depreciation or bad debts or other
similar non-cash market value adjustments and reserves, and (ii) the book value
of average debt associated with the Company's ownership of Mortgage Assets,
computed by taking the average of such net values at the end of each month
during such period.

         1.8 "Average Net Worth" means for any period the average of the net
worth of the Company at the end of each week during the period. For purposes of
determining the Average Net Worth, the "net worth" means the difference between
(i) the aggregate book value of the consolidated assets of the Company and its
subsidiaries, before reserves for depreciation, bad debts or other similar
non-cash items, and (ii) the aggregate book value of debt of the Company and its
subsidiaries.

         1.9 "Base Management Compensation" has the meaning set forth in Section
6.1 of this Agreement.

         1.10 "Board of Directors" has the meaning set forth in Recital B of
this Agreement.

         1.11 "Cause" means a reasonable good faith determination of the Board
of Directors based on findings of fact which are disclosed to the Advisor that
the Advisor was grossly negligent, acted with reckless disregard or engaged in
willful misconduct or active fraud while discharging its material duties under
this Agreement.

         1.12 "Change of Control" means in any transaction or series of
transactions (i) any sale, lease, assignment, transfer or other conveyance of
all or substantially all of the Company's assets, or (ii) any consolidation or
merger involving the Company in which all of the stockholders of the Company
immediately prior to the consummation of such transaction, considered
collectively, do not immediately following the transaction own shares of the
surviving entity constituting at least a majority of the voting power of the
surviving entity, (iii) any reclassification or other exchange of capital stock,
or any other recapitalization of the Company in which any person or group, as
those terms are used in Rule 13d-1 promulgated under the Securities Exchange Act
of 1934, as amended, that owned 30% of the voting power of

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the Company immediately prior to the consummation of such transaction do not
immediately following the transaction own at least 30% of the voting power of
the Company or in which any person or group that owned less than 30% of the
voting power of the Company immediately prior to the consummation of the
transaction do not immediately following the transaction own more than 30% of
the voting power of the Company, (iv) any liquidation, dissolution or winding up
of the Company, or (v) any time fewer than two members of the Board of Directors
are individuals which were selected by the Advisor. In instances where a natural
person selected by the Advisor and immediately thereafter appointed to the Board
of Directors either resigns or dies, then a Change of Control under clause (v)
of the preceding sentence shall not be triggered if (i) the Board of Directors
does not elect to terminate the Advisor within 30 days after the first director
resigns or dies, or (ii) the qualified individual next selected by the Advisor
is appointed as soon as possible after such selection and the Board of Directors
does not take any action from the time the Advisor selects the next individual
until the time the next Advisor-selected director is appointed.

         1.13 "Code" has the meaning set forth in Recital A of this Agreement.

         1.14 "Company" has the meaning set forth in the Introductory Paragraph
of this Agreement, and shall include any successor thereto.

         1.15 "Effective Date" has the meaning set forth in the Introductory
Paragraph of this Agreement.

         1.16 "Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.

         1.17 "GAAP" means generally accepted accounting principles, as applied
in the United States.

         1.18 "Governing Instruments" means the articles of incorporation or
charter, as the case may be, and the bylaws of the Company and its subsidiaries,
as those documents may be amended from time to time.

         1.19 "Incentive Management Compensation" has the meaning set forth in
Section 6.2 of this Agreement.

         1.20 "Independent Directors" are those who are not associated and have
not been associated within the last two years, directly or indirectly, with the
Company or the Advisor.

         1.21 "Investment Company Act" has the meaning set forth in Recital A of
this Agreement.

         1.22 "Last Auditor" has the meaning set forth in Section 6.3 of this
Agreement.

         1.23 "Mortgage Assets" means the following:

         (i)      mortgage securities (or interests therein), including (a)
                  pass-through certificates (including GNMA certificates, FNMA
                  certificates and FHLMC certificates),

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                  (b) collateralized mortgage obligations, (c) securities
                  representing interests in, or secured by, mortgages on real
                  property other than pass-through certificates and CMOs, (d)
                  certificates and other securities collateralized by loans,
                  mortgage derivative securities, subordinated interests and
                  other mortgage-backed and mortgage-collateralized obligations,
                  (e) mortgage derivative securities and (f) subordinated
                  interests;

         (ii)     mortgage loans, including (a) conforming mortgage loans (i.e.,
                  mortgage loans which comply with requirements for inclusion in
                  credit support programs sponsored by FHLMC, FNMA or GNMA or
                  are FHA or VA Loans, all of which are secured by first
                  mortgages or deeds of trust on single-family (one to four
                  units) residences, multifamily residences or commercial
                  properties) and (b) non-conforming mortgage loans; and

         (iii)    short-term investments, including short-term bank certificates
                  of deposit, short-term U.S. Treasury securities, short-term
                  U.S. government agency securities, commercial paper,
                  repurchase agreements, short-term CMOs, short-term
                  asset-backed securities and other similar types of short-term
                  investment instruments, all of which will have maturities or
                  average lives of less than one year.

         1.24 "Net Income" means for any period the taxable income of the
Company and its subsidiaries (including net capital gains, if any, but excluding
net capital losses, if any) before deducting (i) the Incentive Management
Compensation, (ii) any net operating loss deductions arising from losses in
prior periods and (iii) any items which the Code permits to be deducted when
calculating taxable income for a REIT.

         1.25 "Quarterly Incentive Amount" has the meaning set forth in Section
6.2.1(1) of this Agreement.

         1.26 "Reconciliation Notice" has the meaning set forth in Section 6.3
of this Agreement.

         1.27 "REIT" means a "real estate investment trust" as defined under the
Code.

         1.28 "REIT Provisions of the Code" means Sections 856 through 860 of
the Code.

         1.29 "Remaining Amount" has the meaning set forth in Section 6.2.1(2)
of this Agreement.

         1.30 "Return on Equity" means for any period an amount calculated by
dividing the Net Income for such period by the Average Net Invested Assets for
such period.

         1.31 "Short-Term Investments" means short-term bank certificates of
deposit, short-term U.S. Treasury securities, short-term U.S. government agency
securities, commercial paper, repurchase agreements, short-term CMOs, short-term
asset-backed securities and other similar types of short-term investment
instruments, all of which will have maturities or average lives of less than one
year.

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         1.32 "Sub-Advisor" means any third party (other than the Advisor) which
has been selected by the Advisor and approved by the Board of Directors to
manage all or a portion of the day-to-day operations of the Company and perform
the services and other activities described in Section 2.1 of this Agreement.
Any approval of a Sub-Advisor by the Board of Directors may be conditioned or
limited in any manner determined by the Board of Directors, including, without
limitation, the terms and conditions of any such agreement with a Sub-Advisor.

         1.33 "Ten-Year U.S. Treasury Rate" means for any period the average of
the weekly average yields to maturity for actively traded current coupon U.S.
Treasury fixed interest rate securities (adjusted to a constant maturity of ten
years) published by the Federal Reserve Board for each week during such period,
or, if such rate is not published by the Federal Reserve Board, any Federal
Reserve Bank or agency or department of the federal government selected by the
Company. If the Company determines in good faith that the Ten-Year U.S. Treasury
Rate cannot be calculated as provided above, then the rate shall be the
arithmetic average of the per annum average yields to maturities, based upon
closing asked prices on each business day during such period, for each actively
traded marketable U.S. Treasury fixed interest rate security with a final
maturity date not less than eight nor more than 12 years from the date of the
closing asked prices as chosen and quoted for each business day in each such
period in New York City by at least three recognized dealers in U.S. government
securities selected by the Company.

         1.34 "Threshold Return" has the meaning set forth in Section 6.2.3 of
this Agreement.

         1.35 "Tiered Percentage" has the meaning set forth in Section 6.2.2 of
this Agreement.

         1.36 "Total Operating Expenses" means the aggregate expenses of every
character paid or incurred by the Company as determined under GAAP, including
the Advisor's fees, but excluding (i) the expenses or raising capital such as
organization and offering expenses, legal audit, accounting underwriting,
brokerage, listing registration and other fees, printing and other such
expenses, and tax incurred in connection with the issuance, distribution,
transfer, registration, and stock exchange listing of the Company's shares; (ii)
interest payments; (iii) taxes; (iv) non-cash expenditures such as depreciation,
amortization and bad debt reserves; (v) incentive fees paid to the Advisor in
connection with the gain from the sale of the Company's assets; and (vi)
acquisition fees, acquisition expenses, real estate commissions on resale of
property and other expenses connected with the acquisition, disposition, 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).

         1.37 "Unaffiliated Director" means a natural person serving as a
director of the Company who is not affiliated, directly or indirectly, with the
Advisor or any of its Affiliates in any material respect, whether by ownership
of, ownership interest in, employment by, any material business or professional
relationship with, or serving as an officer or director of the Advisor or any of
its Affiliates.

2. General Duties of the Advisor.

         2.1 Services. Subject at all times to the direction and oversight of
the Board of Directors, the Advisor shall (i) generally manage the day-to-day
operations of the Company and

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perform the services and other activities described below, and (ii) to the
extent directed by the Board of Directors, perform similar management and
services for any subsidiary of the Company. The Advisor, in its sole discretion
with the approval of the Board of Directors, may elect to cause the duties of
the Advisor under this Agreement to be provided by a Sub-Advisor. The Advisor
shall perform the following services from time to time as may be required for
the management of the Company and its assets:

                  2.1.1 serving as the Company's consultant with respect to the
         formulation of investment criteria and the preparation of policy
         guidelines by the Board of Directors;

                  2.1.2 assisting the Company in developing criteria for
         Mortgage Asset purchase commitments that are consistent with the
         Company's long-term investment objectives and making available to the
         Company its knowledge and experience with respect to Mortgage Assets;

                  2.1.3 representing the Company in connection with the
         purchase, sale and commitment to purchase or sell Mortgage Assets that
         meet in all material respects the Company's investment criteria;

                  2.1.4 managing the Company's portfolio of Mortgage Assets;

                  2.1.5 advising the Company and negotiating the Company's
         agreements with third-party lenders for borrowings by the Company;

                  2.1.6 making available to the Company statistical and economic
         research and analysis regarding the Company's activities and the
         services performed for the Company by the Advisor;

                  2.1.7 monitoring and providing to the Board of Directors from
         time to time price information and other data obtained from certain
         nationally-recognized dealers that maintain markets in Mortgage Assets
         identified by the Board of Directors from time to time, and providing
         data and advice to the Board of Directors in connection with the
         identification of such dealers;

                  2.1.8 investing or reinvesting any money of the Company in
         accordance with the Company's policies and procedures;

                  2.1.9 providing the executive and administrative personnel,
         office space and services required in rendering services to the
         Company, in accordance with and subject to the terms of this Agreement;

                  2.1.10 administering the day-to-day operations of the Company
         and performing and supervising the performance of such other
         administrative functions necessary to the management of the Company as
         may be agreed upon by the Advisor and the Board of Directors, including
         the collection of revenues and the payment of the Company's debts and
         obligations from the Company's accounts, and the maintenance of
         appropriate computer systems to perform such administrative functions;

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         2.1.11 advising the Board of Directors in connection with policy
decisions;

         2.1.12 evaluating and recommending hedging strategies to the Board of
Directors and, upon approval by the Board of Directors, engaging in hedging
activities on behalf of the Company consistent with the Company's status as a
REIT;

         2.1.13 supervising compliance by the Company with the REIT Provisions
of the Code and maintenance of its status as a REIT;

         2.1.14 qualifying and causing the Company to qualify to do business in
all applicable jurisdictions and obtaining and maintaining all appropriate
licenses;

         2.1.15 assisting the Company in any executive search for executive
officers.

         2.1.16 assisting the Company to retain qualified accountants and tax
experts to assist in developing and monitoring appropriate accounting procedures
and testing systems and to conduct quarterly compliance reviews as the Board of
Directors may deem necessary or advisable;

         2.1.17 assisting the Company in its compliance with all federal
(including the Sarbanes-Oxley Act of 2002), state and local regulatory
requirements applicable to the Company in respect of its business activities,
including preparing or causing to be prepared all financial statements required
under applicable regulations and contractual undertakings and all reports,
documents and filings, if any, required under the Securities Exchange Act of
1934, as amended, or other federal or state laws;

         2.1.18 assisting the Company in its compliance with federal, state and
local tax filings and reports and generally enabling the Company to maintain its
status as a REIT, including soliciting stockholders, as defined below, for
required information to the extent provided in the REIT Provisions of the Code;

         2.1.19 assisting the Company in its maintenance of an exemption from
the Investment Company Act and monitoring compliance with the requirements for
maintaining an exemption from the Investment Company Act;

         2.1.20 coordinating and managing the operations of any joint venture or
co-investment interests held by the Company and conducting all matters with the
joint venture or co-investment collaborators;

         2.1.21 advising the Company as to its capital structure and capital
raising activities;

         2.1.22 handling and resolving all claims, disputes or controversies
(including all litigation, arbitration, settlement or other proceedings or
negotiations) in which the Company may be involved or to which the Company may
be subject arising out of the Company's day-to-day operations, subject to the
approval of the Board of Directors;

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         2.1.23 engaging and supervising, on behalf of the Company and at the
Company's expense, the following, without limitation: independent contractors to
provide investment banking services, leasing services, mortgage brokerage
services, securities brokerage services, other financial services and such other
services as may be deemed by the Advisor and the Board of Directors to be
necessary or advisable from time to time; and

         2.1.24 so long as the Advisor does not incur additional costs or
expenses, performing such other services as may be required from time to time
for management and other activities relating to the assets of the Company as the
Board of Directors shall reasonably request or the Advisor shall deem
appropriate under the particular circumstances.

2.2 Obligations of the Advisor.

         2.2.1 Verify Conformity with Investment Criteria. Subject to the
direction of the Board of Directors, the Advisor shall use commercially
reasonable efforts to provide that each Mortgage Asset acquired by the Company
conforms in all material respects to the investment criteria of the Company and
shall seek to cause each seller or transferor of Mortgage Assets to the Company
to make such representations and warranties regarding such Mortgage Assets as
may, in the reasonable judgment of the Advisor, be necessary and appropriate,
subject to market custom. In addition, the Advisor shall take such other action
as it deems reasonably necessary or appropriate in seeking to protect the
Company's investments to the extent consistent with its duties under this
Agreement.

         2.2.2 Conduct Activities in Conformity with REIT Status and All
Applicable Restrictions. Subject to the direction of the Board of Directors, the
Advisor shall refrain from any action which, in its sole judgment made in good
faith, would adversely affect the status of the Company or, if applicable, any
subsidiary of the Company as a REIT or (i) which, in its sole judgment made in
good faith, would violate any material law, rule or regulation of any
governmental body or agency having jurisdiction over the Company or any such
subsidiary or (ii) which would otherwise not be permitted by the Company's or
such subsidiary's Governing Instruments, any material operating policies adopted
by the Company, or any agreements actually known by the Advisor, except in each
of clauses (i) and (ii) as could not reasonably be expected to have a material
adverse effect on the Company. If the Advisor is directed to take any such
action by the Board of Directors, the Advisor shall promptly notify the Board of
Directors of the Advisor's judgment that such action would adversely affect such
status or cause such violation or not be permitted as aforesaid.

         2.2.3 Reports. Upon the request of the Board of Directors and at the
sole cost and expense of the Company, the Advisor shall cause an annual
compliance report of the Company to be prepared by a firm independent of the
Advisor and its Affiliates and having the proper expertise to determine
compliance with the REIT Provisions of the Code and related matters. In
addition, the Advisor shall prepare regular reports for the Board of Directors
that will review the Company's investments in Mortgage Assets, portfolio
composition and characteristics, credit quality (if applicable), performance

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         and compliance with the Company's investment policies and policies that
         enable the Company to maintain its qualification as a REIT and to
         maintain its exemption from being deemed an "investment company" under
         the Investment Company Act.

                  2.2.4 Portfolio Transactions. In placing portfolio
         transactions and selecting brokers or dealers, the Advisor shall seek
         to obtain on behalf of the Company commercially reasonable terms. In
         assessing commercially reasonable terms for any transaction, the
         Advisor shall consider all factors it deems relevant, including the
         breadth of the market for the security, the price of the security, the
         financial condition and execution capability of the broker or dealer,
         and the reasonableness of the commission, if any, both for the specific
         transaction and on a continuing basis.

         2.3 Cooperation of the Company. The Company (including the Board of
Directors) agrees to take all actions reasonably required to permit and enable
the Advisor to carry out its duties and obligations under this Agreement,
including, without limitation, all steps reasonably necessary to allow the
Advisor to file any registration statement on behalf of the Company in a timely
manner. The Company further agrees to use commercially reasonable efforts to
make available to the Advisor all resources, information and materials
reasonably requested by the Advisor to enable the Advisor to satisfy its
obligations hereunder, including its obligations to deliver financial statements
and any other information or reports with respect to the Company. If the Advisor
is not able to provide a service, or in the reasonable judgment of the Advisor
it is not prudent to provide a service, without the approval of the Board of
Directors or the Unaffiliated Directors, as applicable, then the Advisor shall
be excused from providing such service (and shall not be in breach of this
Agreement) until the applicable approval has been obtained.

         2.4 Engagement of Third Parties.

                  2.4.1 Securities Dealers. The Advisor is authorized, for and
         on behalf, and at the sole cost and expense of the Company, to employ
         such securities dealers (including Affiliates of the Advisor) for the
         purchase and sale of Mortgage Assets as may, in the judgment of the
         Advisor, be necessary to obtain the best commercially available net
         results taking into account such factors as the policies of the
         Company, price, dealer spread, the size, type and difficulty of the
         transaction involved, the firm's general execution and operational
         facilities and the firm's risk in positioning the securities involved.
         Consistent with this policy, the Advisor is authorized to direct the
         execution of the Company's portfolio transactions to dealers and
         brokers furnishing statistical information or research deemed by the
         Advisor to be useful or valuable to the performance of its investment
         advisory functions for the Company.

                  2.4.2 Other Third Parties. The Advisor is authorized to
         retain, for and on behalf of the Company, the services of third parties
         (including Affiliates of the Advisor), including, without limitation,
         accountants, legal counsel, appraisers, insurers, brokers, dealers,
         transfer agents, registrars, developers, investment banks, financial
         advisors, banks and other lenders and others as the Advisor deems
         reasonably necessary or advisable in connection with the management and
         operations of the Company. The costs and expenses related to the
         retention of third parties shall be the sole cost and expense of the
         Company except to the extent the third party is retained to make
         decisions to invest in

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         and dispose of Mortgage Assets, provide administrative, data processing
         or clerical services, prepare the financial records of the Company or
         prepare a report summarizing the Company's acquisitions of Mortgage
         Assets, portfolio compensation and characteristics, credit quality (if
         applicable) or performance of the portfolio, in which case it shall be
         at the sole cost and expense of the Advisor unless otherwise approved
         by the Board of Directors (collectively, "Advisor Obligations").

                  2.4.3 Affiliates. Notwithstanding anything contained in this
         Agreement to the contrary, the Advisor shall have the right to cause
         any services under this Agreement to be rendered by the Advisor's
         employees or Affiliates of the Advisor. The Company shall pay or
         reimburse the Advisor or its Affiliates for the cost and expense of
         performing services by the Affiliate if (i) the costs and expenses of
         such Affiliate would have been reimbursable under this Agreement if
         such Affiliate were an unaffiliated third party, and (ii) the costs and
         expenses of such Affiliate have been approved by a majority of the
         Unaffiliated Directors or incurred in accordance with a policy adopted
         by a majority of the Unaffiliated Directors.

3. Additional Activities of the Advisor and its Affiliates.

         3.1 Other Activities of the Advisor. Except as provided in the last
sentence of this Section 3.1, nothing in this Agreement shall (i) prevent the
Advisor, any Sub-Advisor or any of their respective Affiliates, officers,
directors or employees, from engaging in other businesses or from rendering
services of any kind to any other person or entity, including, without
limitation, investing in, or rendering advisory service to others investing in,
any type of Mortgage Assets or other real estate investments (including, without
limitation, investments that meet the principal investment objectives of the
Company), whether or not the investment objectives or policies of any such other
person or entity are similar to those of the Company, or (ii) in any way bind or
restrict the Advisor, any Sub-Advisor or any of their respective Affiliates,
officers, directors or employees from buying, selling or trading any securities
or commodities for their own accounts or for the account of others for whom the
Advisor, the Sub-Advisor or any of their respective Affiliates, officers,
directors or employees may be acting. The Company acknowledges that the Advisor
will base allocation decisions on the procedures the Advisor reasonably and in
good faith considers fair and equitable, including, without limitation, such
considerations as investment objectives, restrictions and time horizon,
availability of cash and the amount of existing holdings. While information and
recommendations supplied to the Company shall, in the Advisor's reasonable and
good faith judgment, be appropriate under the circumstances and in light of the
investment objectives and policies of the Company, they may be different from
the information and recommendations supplied by the Advisor, any Sub-Advisor,
any Affiliate of the Advisor or any Sub-Advisor to other investment companies,
funds and advisory accounts. The Company shall be entitled to equitable
treatment under the circumstances in receiving information, recommendations and
any other services, but the Company recognizes that it is not entitled to
receive preferential treatment as compared with the treatment given by the
Advisor, any Sub-Advisor, any Affiliate of the Advisor or any Sub-Advisor to any
investment company, fund or advisory account other than any fund or advisory
account which contains only funds invested by the Advisor (and not of any of its
clients or customers) or its officers and directors. Notwithstanding anything to
the contrary in this Section 3.1, for so long as the Advisor is the exclusive
advisor of the Company (unless the Advisor is not the exclusive advisor of the

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Company because the Company has engaged a Sub-Advisor) pursuant to this
Agreement, the Advisor shall not sponsor any other residential mortgage REIT
that invests primarily in mortgages for the acquisition of, development of and
construction on real estate in the Las Vegas, Nevada area unless otherwise
approved by a majority of the Unaffiliated Directors.

         3.2 Service to the Company; Execution of Documents. Directors,
officers, employees and agents of the Advisor and its Affiliates may serve as
trustees, directors, officers, employees, agents, nominees or signatories for
the Company or any subsidiary of the Company, to the extent permitted by the
Governing Instruments, as from time to time amended, or by any resolutions duly
adopted by the Board of Directors pursuant to the Governing Instruments. When
executing documents or otherwise acting in such capacities for the Company, such
persons shall use their respective titles in the Company.

4. Bank Accounts. At the direction of the Board of Directors, the Advisor may
establish and maintain one or more bank accounts in the name of the Company or
any subsidiary of the Company, and may collect and deposit into any such account
or accounts, and disburse funds from any such account or accounts in a manner
consistent with this Agreement, including, without limitation, the following:
(a) the payment of the Base Management Compensation and the Incentive Management
Compensation, (b) the payment (or advance) of reimbursable costs and expenses,
and (c) such other amounts authorized by the Board of Directors. The Advisor
shall from time to time render appropriate accountings of such collections and
payments to the Board of Directors and, upon request, to the auditors of the
Company or any subsidiary of the Company.

5. Records; Confidentiality. The Advisor shall maintain appropriate and accurate
books of account and records relating to services performed under this
Agreement, and such books of account and records shall be accessible for
inspection by representatives (including the auditors) of the Company or any
subsidiary of the Company at any time during normal business hours. Except in
the ordinary course of business of the Company, the Advisor shall, and shall use
commercially reasonable efforts to cause each of its Affiliates to, keep
confidential any and all information they (or such Affiliates) may obtain from
time to time in connection with the services they (or such Affiliates) render
under this Agreement.

6. Compensation of the Advisor.

         6.1 Base Management Compensation. For services rendered under this
Agreement, the Company shall pay to the Advisor quarterly in arrears commencing
on the Effective Date annual base management compensation equal to 1% of the
first $200,000,000 of Average Net Invested Assets during each fiscal year, plus
0.8% of the Average Net Invested Assets during such year in excess of
$200,000,000 (the "Base Management Compensation"). The portion of the Base
Management Compensation payable each fiscal quarter shall be calculated by the
Advisor within 15 days after the end of such quarter, and a written statement
documenting such calculation in reasonable detail shall be promptly delivered to
the Company thereafter. The Company shall pay any amount payable pursuant to
this Section 6.1 for such quarter within 15 days after the receipt of the
written statement setting forth the computation of the Base Management
Compensation, or, at the Advisor's election, the Advisor may deduct such amount

                                      -11-
<PAGE>

from the Company's account or accounts, in any case without demand, deduction,
offset or delay (other than any deduction or offset for the liquidated sum of
any Advisor Refund).

         6.2 Calculation of Incentive Management Compensation. In addition to
the Base Management Compensation, the Advisor shall receive incentive management
compensation for each fiscal quarter (the "Incentive Management Compensation").

                  6.2.1 The Incentive Management Compensation shall be
         calculated by the Advisor and paid or refunded (as applicable) as
         follows:

                           (1) At the end of each of the first three fiscal
                  quarters during each fiscal year, the Advisor shall calculate
                  the Tiered Percentage of the difference of (i) the Net Income
                  for such quarter (or lesser portion thereof), minus (ii) the
                  Threshold Return for such quarter (or lesser portion thereof)
                  (the "Quarterly Incentive Amount"). If the Quarterly Incentive
                  Amount is a positive number, then at the end of each such
                  quarter the Company shall pay the Advisor the Quarterly
                  Incentive Amount.

                           (2) At the end of each fiscal year and upon any
                  termination of this Agreement, the Advisor shall calculate the
                  Tiered Percentage of the difference of (i) the Net Income for
                  such year (or lesser portion thereof), minus (ii) the
                  Threshold Return for such year (or lesser portion thereof)
                  (the "Annual Incentive Amount"). If the aggregate of the
                  Quarterly Incentive Amounts received by the Advisor for such
                  year (but not taking into account any prior years) is less
                  than the Annual Incentive Amount, then the Company shall pay
                  the Advisor such shortfall (the "Remaining Amount"). On the
                  other hand, if the aggregate of the Quarterly Incentive
                  Amounts received by the Advisor during such year (but not
                  taking into account any prior years) exceeds the Annual
                  Incentive Amount, then the Advisor shall pay the Company such
                  excess (the "Advisor Refund"). The Advisor Refund for any
                  particular year shall not exceed the aggregate of the
                  Quarterly Incentive Amounts received by the Advisor during
                  such year.

                  6.2.2 The "Tiered Percentage" shall mean for any period the
         weighted average of the following percentage rates (weighting to be
         based on Average Net Invested Assets attributable to each percentage
         rate): (i) 20% for the first $200,000,000 of Average Net Invested
         Assets; and (ii) 10% for the Average Net Invested Assets in excess of
         $200,000,000.

                  6.2.3 The "Threshold Return" shall mean for any period the
         amount of Net Income for such period that would produce an annualized
         Return on Equity equal to the sum of (i) the Ten-Year U.S. Treasury
         Rate for such period plus (ii) 1.0%.

                  6.2.4 Payment Procedure. The Advisor shall calculate the
         Incentive Management Compensation, the Quarterly Incentive Amount, any
         Remaining Amount and any Advisor Refund and deliver to the Company a
         written statement setting forth such computation in reasonable detail
         within 15 days after the end of each fiscal quarter, fiscal year and
         after the date of any termination of this Agreement, as applicable. The

                                      -12-
<PAGE>

         Company shall pay to the Advisor all Quarterly Incentive Amounts and
         all Remaining Amounts (or, at the Advisor's election, the Advisor may
         deduct such amount from the Company's account or accounts) with respect
         to each fiscal quarter or year (or lesser portion thereof) within 15
         days following the delivery to the Company of the written statement
         setting forth the computation of the Incentive Management Compensation
         for such quarter or year (or lesser portion thereof), as applicable,
         without demand, deduction, offset or delay (other than any deduction or
         offset for the liquidated sum of any Advisor Refund). The Advisor shall
         pay the Advisor Refund, if any, with respect to a particular fiscal
         year within 15 days following the delivery to the Company of the
         written statement setting forth the computation of the Incentive
         Management Compensation for such year (or lesser portion thereof),
         without demand or delay. In connection with the Company's annual audit
         (or any audit upon termination of this Agreement), the Advisor shall
         determine any year-end adjustments to the Incentive Management
         Compensation and Advisor Refund payable under this Section 6.2 and
         deliver to the Company a written statement setting forth such
         computation within 45 days after the end of each fiscal year. Any
         required adjustments to the Incentive Management Compensation or the
         Advisor Refund shall be paid by the Company to the Advisor or by the
         Advisor to the Company, respectively, within 15 days after delivery of
         such computation to the Company by the Advisor, without demand,
         deduction, offset or delay (other than any deduction or offset for the
         liquidated sum of any Advisor Refund).

                  6.2.5 Compensation Limitation. Notwithstanding any other
         provision of this Section 6, the Total Operating Expenses of the
         Company shall (in the absence of a satisfactory showing to the
         contrary) be deemed to be excessive if they exceed in any fiscal year
         the greater of 2% of its Average Net Invested Assets or 25% of its Net
         Income for such year. In the event the Independent Directors do not
         determine such excess expenses are justified, the Advisor agrees to
         reimburse the Company at the end of the twelve month period the amount
         by which the aggregate annual expenses paid or incurred by the Company
         exceed the limitations herein provided.

                  6.2.6 Payment in Cash. All Incentive Management Compensation
         shall be paid by the Company in cash. Any Advisor Refund shall also be
         paid in cash.

         6.3 Annual Reconciliation. The calculation of the Base Management
Compensation and the Incentive Management Compensation shall be subject to audit
and reconciliation at the end of each fiscal year and upon any termination of
this Agreement. If at any time the Advisor disagrees with such audit and
reconciliation and the dispute cannot be resolved between the Unaffiliated
Directors and the Advisor within 10 business days after the Advisor's receipt of
such audit and reconciliation and provides written notice to the Company of the
dispute (the "Reconciliation Notice"), then the matter shall be resolved by an
independent auditor of recognized standing selected jointly by the Unaffiliated
Directors and the Advisor within not more than 20 days after the Reconciliation
Notice. In the event the Unaffiliated Directors and the Advisor cannot agree
with respect to such selection within the aforesaid 20 day time-frame, the
Unaffiliated Directors shall select one such independent auditor and the Advisor
shall each select one independent auditor within five business days after the
expiration of the 20 day period, with one additional such auditor (the "Last
Auditor") to be selected by the auditors so designated within five business days
after their selection. Any decision made by the auditors shall be

                                      -13-
<PAGE>

deemed final and binding upon the Board of Directors and the Advisor and shall
be delivered to the Advisor and the Company within not more than 15 days after
the selection of the Last Auditor. The expenses of the auditors shall be paid by
the party with the estimate which deviated the furthest from the final valuation
decision made by the auditors.

7. Expenses of the Advisor and the Company.

         7.1 Expenses of the Advisor. The Advisor shall be responsible for the
following expenses:

                  7.1.1 employment expenses of the personnel employed by the
         Advisor (including the officers of the Company which are also employed
         by the Advisor), including, without limitation, salaries, wages,
         payroll taxes and the cost of employee benefit plans of such personnel;

                  7.1.2 rent, telephone, utilities, office furniture, equipment,
         machinery and other office, internal and overhead expenses of the
         Advisor required for the Company's day-to-day operations, including
         bookkeeping, clerical and back-office services provided by the Advisor,
         provided, however, that the Company shall reimburse the Advisor for the
         Company's pro rata portion of such rent, telephone, utilities, office
         furniture, equipment, machinery and other office, internal and overhead
         expenses to the extent that the Company's employees, officers,
         representatives and/or agents (who are not also employed by the
         Advisor) use such facilities or incur such expenses; and

                  7.1.3 unless otherwise approved by the Board of Directors, the
         cost and expense of the Sub-Advisor, if any.

         7.2 Expenses of the Company. The Company shall pay all of the costs and
expenses of the Company and the Advisor incurred on behalf of the Company or any
subsidiary or in connection with this Agreement, excepting only those expenses
that are specifically the responsibility of the Advisor pursuant to Section 7.1
of this Agreement. Without limiting the generality of the foregoing, it is
specifically agreed that the following costs and expenses of the Company or any
subsidiary of the Company shall be paid by the Company and shall not be paid by
the Advisor or the Affiliates of the Advisor:

                  7.2.1 all costs and expenses associated with the formation and
         capital raising activities of the Company and its subsidiaries,
         including, without limitation, the costs and expenses of the
         preparation of the Company's registration statements, and any and all
         costs and expenses of an initial public offering of the Company, any
         subsequent offerings and any filing fees and costs of being a public
         company, including, without limitation, filings with the Securities and
         Exchange Commission, the National Association of Securities Dealers,
         and any exchange or over-the-counter market, among other such entities;

                  7.2.2 all costs and expenses in connection with the
         acquisition, disposition, financing, hedging, administration and
         ownership of the Company's or any subsidiary's investment assets
         (including,

                                      -14-
<PAGE>

         without limitation, the Mortgage Assets) and, including, without
         limitation, costs and expenses incurred in contracting with third
         parties, including Affiliates of the Advisor, to provide such services,
         such as legal fees, accounting fees, consulting fees, trustee fees,
         appraisal fees, insurance premiums, commitment fees, brokerage fees,
         guaranty fees, ad valorem taxes, costs of foreclosure, maintenance,
         repair and improvement of property and premiums for insurance on
         property owned by the Company or any subsidiary of the Company;

                  7.2.3 all costs and expenses relating to the acquisition of,
         and maintenance and upgrades to, the Company's portfolio accounting
         systems;

                  7.2.4 all costs and expenses of money borrowed by the Company
         or its subsidiaries, including, without limitation, principal, interest
         and the costs associated with the establishment and maintenance of any
         credit facilities, warehouse loans and other indebtedness of the
         Company and its subsidiaries (including commitment fees, legal fees,
         closing and other costs);

                  7.2.5 all taxes and license fees applicable to the Company or
         any subsidiary of the Company, including interest and penalties
         thereon;

                  7.2.6 all legal, audit, accounting, underwriting, brokerage,
         listing, filing, rating agency, registration and other fees, printing,
         engraving, clerical, personnel and other expenses and taxes incurred in
         connection with the issuance, distribution, transfer, registration and
         stock exchange listing of the Company's or any subsidiary's equity
         securities or debt securities;

                  7.2.7 other than for the Advisor Obligations, all fees paid to
         and expenses of third-party advisors and independent contractors,
         consultants, advisors and other agents (other than the Advisor or any
         Sub-Advisor) engaged by the Company or any subsidiary of the Company or
         by the Advisor for the account of the Company or any subsidiary of the
         Company (other than the Advisor or Sub-Advisor) and all employment
         expenses of the personnel employed by the Company or any subsidiary of
         the Company (including, without limitation, a chief financial officer
         of the Company, but excluding any personnel which are also employed by
         the Advisor or Sub-Advisor), including, without limitation, the
         salaries, wages, equity based compensation of such personnel, payroll
         taxes and the incremental cost for administering employee benefit plans
         of the Advisor which are used by such personnel;

                  7.2.8 all insurance costs incurred by the Company or any
         subsidiary of the Company, including, without limitation, any costs to
         obtain liability or other insurance to indemnify the Advisor and
         underwriters of any securities of the Company;

                  7.2.9 all custodian, transfer agent and registrar fees and
         charges;

                  7.2.10 all compensation and fees paid to directors of the
         Company or any subsidiary of the Company (excluding those directors who
         are also employees of the Advisor), all expenses of directors of the
         Company or any subsidiary of the Company (including those directors who
         are also employees of the Advisor), the cost of directors

                                      -15-
<PAGE>

         and officers liability insurance and premiums for errors and omissions
         insurance, and any other insurance deemed necessary or advisable by the
         Board of Directors for the benefit of the Company and its directors and
         officers (including those directors who are also employees of the
         Advisor);

                  7.2.11 all third-party legal, accounting and auditing fees and
         expenses and other similar services relating to the Company's or any
         subsidiary's operations (including, without limitation, all quarterly
         and annual audit or tax fees and expenses);

                  7.2.12 all legal, expert and other fees and expenses relating
         to any actions, proceedings, lawsuits, demands, causes of action and
         claims, whether actual or threatened, made by or against the Company,
         or which the Company is authorized or obligated to pay under applicable
         law or its Governing Instruments or by the Board of Directors;

                  7.2.13 any judgment or settlement of pending or threatened
         proceedings (whether civil, criminal or otherwise) against the Company
         or any subsidiary of the Company, or against any trustee, director or
         officer of the Company or any subsidiary of the Company in his capacity
         as such for which the Company or any subsidiary of the Company is
         required to indemnify such trustee, director or officer by any court or
         governmental agency, or settlement of pending or threatened
         proceedings;

                  7.2.14 all travel and related expenses of directors, officers
         and employees of the Company and the Advisor, incurred in connection
         with attending meetings of the Board of Directors or holders of
         securities of the Company or any subsidiary of the Company or
         performing other business activities that relate to the Company or any
         subsidiary of the Company, including, without limitations, travel and
         expenses incurred in connection with the purchase, financing,
         refinancing, sale or other disposition of Mortgage Assets or other
         investments of the Company; provided, however, that the Company shall
         only be responsible for a proportionate share of such expenses, as
         determined by the Advisor in good faith, where such expenses were not
         incurred solely for the benefit of the Company;

                  7.2.15 all expenses of organizing, modifying or dissolving the
         Company or any subsidiary of the Company and costs preparatory to
         entering into a business or activity, costs of winding up or disposing
         of a business of activity of the Company or its subsidiaries;

                  7.2.16 all expenses relating to payments of dividends or
         interest or distributions in cash or any other form made or caused to
         be made by the Board of Directors to or on account of holders of the
         securities of the Company or any subsidiary of the Company, including,
         without limitation, in connection with and dividend reinvestment plan;

                  7.2.17 all expenses of third parties relating to
         communications to holders of equity securities or debt securities
         issued by the Company or any subsidiary of the Company and the other
         bookkeeping and clerical work necessary in maintaining relations with
         holders of such securities and in complying with the continuous
         reporting and other requirements of governmental bodies or agencies,
         including any costs of computer

                                      -16-
<PAGE>

         services in connection with this function, the cost of printing and
         mailing certificates for such securities and proxy solicitation
         materials and reports to holders of the Company's or any subsidiary's
         securities and reports to third parties required under any indenture to
         which the Company or any subsidiary of the Company is a party;

                  7.2.18 subject to Section 7.1, all expenses relating to any
         office or office facilities maintained by the Company or any subsidiary
         of the Company exclusive of the office of the Advisor and/or Affiliates
         of the Advisor, including, without limitation, rent, telephone,
         utilities, office furniture, equipment, machinery and other office
         expenses for the Company's chief financial officer and any other
         persons the Board of Directors authorizes the Company to hire;

                  7.2.19 all costs and expenses related to the design and
         maintenance of the Company's web site or sites and associated with any
         computer software or hardware that is used solely for the Company;

                  7.2.20 other than for the Advisor Obligations, all other costs
         and expenses relating to the Company's business and investment
         operations, including, without limitation, the costs and expenses of
         acquiring, owning, protecting, maintaining, developing and disposing of
         Mortgage Assets, including, without limitation, appraisal, reporting,
         audit and legal fees;

                  7.2.21 other than for the Advisor Obligations, all other
         expenses actually incurred by the Advisor, its Affiliates or any
         Sub-Advisor or their respective officers, employees, representatives or
         agents, or any Affiliates thereof, which are reasonably necessary for
         the performance by the Advisor of its duties and functions under this
         Agreement (including, without limitation, any fees or expenses relating
         to the Company's compliance with all governmental and regulatory
         matters); and

                  7.2.22 all other expenses of the Company or any subsidiary of
         the Company that are not the responsibility of the Advisor under
         Section 7.1 of this Agreement.

         7.3 Expense Reimbursement to the Advisor. Any individual cost or
expense exceeding $100,000 (or such other limit as may be approved by the Board
of Directors from time to time) shall be approved by the Board of Directors,
unless such item was previously reflected in the Company's budget approved by
the Board of Directors. Costs and expenses incurred by the Advisor on behalf of
the Company shall be reimbursed monthly to the Advisor or, at the Advisor's
election, offset against any funds of the Company in the Company's account or
accounts held by the Advisor or otherwise. The Advisor shall prepare a written
statement in reasonable detail documenting the costs and expenses of the Company
and those incurred by the Advisor on behalf of the Company during each month,
and shall deliver such written statement to the Company within 15 days after the
end of each month. Unless deducted directly by the Advisor as aforesaid, the
Company shall pay all amounts payable to the Advisor pursuant to this Section
7.3 within three days after the receipt of the written statement without demand,
deduction, offset or delay. Cost and expense reimbursement to the Advisor shall
be subject to adjustment at the end of each calendar year in connection with the
annual audit of the Company.

                                      -17-
<PAGE>

8. Limits of Advisor Responsibility; Indemnity.

         8.1 Limits of Advisor Responsibility. The Advisor shall have no
responsibility under this Agreement other than to render the services
specifically called for under this Agreement and shall not be responsible for
any action of the Board of Directors in following or declining to follow any
advice or recommendations of the Advisor, including, without limitation, as set
forth in Section 2.2.2 of this Agreement. The Advisor, any Sub-Advisor and their
respective Affiliates, directors, officers, stockholders, equity holders,
employees, representatives and agents, and any Affiliates thereof, shall not be
liable to the Company (including, without limitation, any stockholder thereof),
any issuer of mortgage securities, any subsidiary of the Company, its
subsidiary's stockholders, the Unaffiliated Directors, any credit-party, any
counter-party under any agreement or any other person whatsoever for any acts or
omissions, errors of judgment or mistakes of law by the Advisor, any
Sub-Advisor, or their respective Affiliates, directors, officers, employees,
representatives or agents, or any Affiliates thereof, under or in connection
with this Agreement, except to the extent that the Unaffiliated Directors shall
have made a reasonable good faith determination based upon findings of fact
which are disclosed to the Advisor that the Advisor was grossly negligent, acted
with reckless disregard or engaged in willful misconduct or active fraud while
discharging its material duties under this Agreement.

         8.2 Indemnification. The Company and its subsidiaries shall reimburse,
indemnify and hold harmless the Advisor, any Sub-Advisor, and their respective
Affiliates, directors, officers, stockholders, equity holders, employees,
representatives and agents, and any Affiliates thereof (each, an "indemnitee")
from and against any and all expenses, losses, costs, damages, liabilities,
demands, charges and claims of any nature whatsoever, actual or threatened
(including, without limitation, reasonable attorneys' fees), arising from or in
respect of any acts or omissions, errors of judgment or mistakes of law (or any
alleged acts or omissions, errors of judgment or mistakes of law) performed or
made while acting in any capacity contemplated under this Agreement or pursuant
to any underwriting agreement or similar agreement to which Advisor is a party
that is related to the Company's activities. Notwithstanding the foregoing, the
Company shall have no indemnification obligation under this Section 8.2 to the
extent that the Unaffiliated Directors shall have made a reasonable good faith
determination based upon findings of fact which are disclosed to the Advisor
that the Advisor was grossly negligent, acted with reckless disregard or engaged
in willful misconduct or active fraud while discharging its material duties
under this Agreement.

         9. No Joint Venture. 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 any of them. The Advisor is an independent contractor and, except as
expressly provided or authorized in this Agreement, shall have no authority to
act for or represent the Company.

10. Term; Termination; Termination Fee.

         10.1 Term. This Agreement shall commence on the Effective Date and
shall have an initial term of one year. Thereafter, this Agreement shall
automatically renew for an additional year, unless terminated in accordance with
the terms and conditions of this Agreement.

                                      -18-
<PAGE>

         10.2 Termination Without Cause. Notwithstanding any other provision of
this Agreement to the contrary, after the first anniversary of the Effective
Date, (i) the Company shall have the right to terminate this Agreement without
cause at any time after 60-days prior written notice to the Advisor and the
affirmative vote of a majority of the Unaffiliated Directors to do so and (ii)
the Advisor shall have the right to terminate this Agreement without cause at
any time after 60-days prior written notice to the Board of Directors. If the
Company terminates this Agreement without cause, the Company shall make the
following payments to the Advisor within 15 days after the effective date of
termination without demand, deduction, offset or delay or, at the Advisor's
election, the Advisor may deduct such payments from any account or accounts of
the Company all unpaid reimbursable costs and expenses permitted under the
Agreement and all earned and unpaid Base Management Compensation and Incentive
Management Compensation payments.

         10.3 Termination by Company for Cause. In the event that the
Unaffiliated Directors shall have made a reasonable good faith determination
based on findings of fact which are disclosed to the Advisor that cause exists,
then a majority of the Unaffiliated Directors shall have the right to terminate
this Agreement for cause at the following time: (i) immediately, if the
Unaffiliated Directors determined in good faith that its claims are based
primarily on criminal activity or active fraud or (ii) after not less than 60
days after written notice to the Advisor, if the Unaffiliated Directors
determined in good faith that its claims are based other than as described in
clause (i) above and the Unaffiliated Directors shall have determined that cause
still exists after written notice to the Advisor disclosing the findings of the
Unaffiliated Directors and a reasonable opportunity to cure. In the event that
the Agreement is terminated for "cause" in accordance with the provisions of
this Section 10.3, the Company shall pay the Advisor all unpaid reimbursable
costs and expenses and all earned and unpaid Base Management Compensation and
Incentive Management Compensation payments.

         10.4 Change of Control. In the event of a Change of Control of the
Company, the Advisor shall have the right to terminate this Agreement upon 60
days prior written notice, provided that the Advisor delivers such notice within
90 days after such Change of Control has occurred. In the event of a termination
of this Agreement in connection with a Change in Control, the Company shall pay
the Advisor all unpaid reimbursable costs and expenses permitted under the
Agreement and all earned and unpaid Base Management Compensation and Incentive
Management Compensation payments.

11. Action Upon Termination. From and after the effective date of termination of
this Agreement, except as specified in Section 10.2, 10.3 or 10.4 of this
Agreement, the Advisor shall not be entitled to any payment or compensation as
of the date of termination shall terminate and be cancelled without
consideration. Upon such termination, the Advisor shall promptly:

                  11.1.1 pay over to the Company or any subsidiary of the
         Company all money collected and held for the account of the Company or
         any subsidiary of the Company pursuant to this Agreement;

                  11.1.2 pay over to the Company any unpaid Advisor Refund;

                                      -19-
<PAGE>

                  11.1.3 deliver to the Board of Directors an 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 of Directors with
         respect to the Company or any subsidiary of the Company; and

                  11.1.4 deliver to the Board of Directors all property and
         documents of the Company or any subsidiary of the Company then in the
         custody of the Advisor.

12. Limited Right to Offset; Survival of Payments. Notwithstanding anything to
the contrary, the Company shall not have any right to offset any amount
whatsoever from any payments in Sections 6, 7, 10, 11 or otherwise and the
Company's obligation to make such payments shall survive the termination of this
Agreement, except that the Company shall have the right to offset against the
liquidated sum of any Advisor Refund.

13. Assignments.

         13.1 Assignment by the Advisor. Other than transfers and assignments by
operation of law (including transfers in connection with a change of control of
the Advisor), this Agreement shall terminate automatically in the event that the
Advisor assigns this Agreement, unless such assignment is consented to in
advance in writing by the Company with the consent of a majority of the
Unaffiliated Directors. In the event an assignment by the Advisor is consented
to by the Company in accordance with this Section 13.1, such assignment shall
bind the assignee under this Agreement in the same manner as the Advisor is
bound, and the Advisor shall be released from all of its obligations, duties and
responsibilities under this Agreement and all liability therefore and in respect
hereof. In addition, the assignee shall execute and deliver to the Company a
counterpart of this Agreement naming such assignee as Advisor.

         13.2 Assignment by the Company. This Agreement shall not be assigned by
the Company without the prior written consent of the Advisor.

14. Release of Money or Other Property Upon Written Request. The Advisor agrees
that any money or other property of the Company or any subsidiary of the Company
held by the Advisor under this Agreement shall be held by the Advisor as
custodian for the Company or such subsidiary, and the Advisor's records shall be
appropriately marked clearly to reflect the ownership of such money or other
property by the Company or such subsidiary.

         14.1 Procedures. Upon the receipt by the Advisor of a written request
signed by a duly authorized officer of the Company or an authorized member of
the Board of Directors requesting the Advisor to release to the Company or any
subsidiary of the Company any money or other property then held by the Advisor
for the account of the Company or any subsidiary of the Company under this
Agreement, the Advisor shall release such money or other property to the Company
or such subsidiary of the Company within a reasonable period of time, but in no
event later than 90 days following such request; provided, however, that the
Advisor shall have the right to offset any Base Management Compensation,
Incentive Management Compensation reimbursable costs or any other sums due and
owning to the Advisor under this Agreement against payment of any money or
property held by the Advisor for the account of the Company or any subsidiary of
the Company under this Agreement.

                                      -20-
<PAGE>

         14.2 Limitations. The Advisor, any Sub-Advisor and their respective
Affiliates, directors, officers, stockholders, equity holders, employees,
representatives and agents, and any Affiliates thereof, shall not be liable to
the Company, any subsidiaries of the Company, the Unaffiliated Directors or the
Company's or its subsidiaries' stockholders for any acts performed or omissions
to act by the Company or any subsidiary of the Company in connection with the
money or other property released to the Company or any subsidiary of the Company
in accordance with this Section 14, except to the extent that the Board of
Directors shall have made a reasonable good faith determination based upon
findings of fact which are disclosed to the Advisor that the Advisor was grossly
negligent, acted with reckless disregard or engaged in willful misconduct or
active fraud while discharging its material duties under this Agreement.

         14.3 Indemnification. The Company and any subsidiary of the Company
shall indemnify the Advisor, any Sub-Advisor and their respective Affiliates,
directors, officers, stockholders, equity holders, employees, representatives
and agents, and any Affiliates thereof, against any and all expenses, costs,
losses, damages, liabilities, demands, charges and claims of any nature
whatsoever, which arise in connection with the Advisor's (or a Sub-Advisor's)
release of such money or other property to the Company or any subsidiary of the
Company in accordance with the terms of this Section 14, except to the extent
that the Board of Directors shall have made a reasonable good faith
determination based upon findings of fact which are disclosed to the Advisor
that the Advisor was grossly negligent, acted with reckless disregard or engaged
in willful misconduct or active fraud while discharging its material duties
under this Agreement. Indemnification pursuant to this provision shall be in
addition to any right of the Advisor, any Sub-Advisor and their respective
Affiliates, directors, officers, stockholders, equity holders, employees,
representatives and agents, and any Affiliates thereof, to indemnification under
Section 8 of this Agreement.

15. Representations, Warranties and Covenants.

         15.1 Company in Favor of the Advisor. The Company hereby represents and
warrants to the Advisor as follows:

                  15.1.1 Due Formation. The Company is duly organized, validly
         existing and in good standing under the laws of Maryland, has the power
         to own its assets and to transact the business in which it is now
         engaged and is duly qualified to do business and is in good standing
         under the laws of each jurisdiction where its ownership or lease of
         property or the conduct of its business requires such qualification,
         except for failures to be so qualified, authorized or licensed that
         could not in the aggregate have a material adverse effect on the
         business operations, assets or financial condition of the Company and
         its subsidiaries, taken as a whole. The Company does not do business
         under any fictitious business name.

                  15.1.2 Power and Authority. The Company has the power and
         authority to execute, deliver and perform this Agreement and all
         obligations required under this Agreement and has taken all necessary
         action to authorize this Agreement on the terms and conditions hereof
         and the execution, delivery and performance of this Agreement and all
         obligations required under this Agreement. Except as shall have been
         obtained, no consent of any other person, including, without
         limitation, stockholders and creditors of

                                      -21-
<PAGE>

         the Company, and no license, permit, approval or authorization of,
         exemption by, notice or report to, or registration, filing or
         declaration with, any governmental authority is required by the Company
         in connection with this Agreement or the execution, delivery,
         performance, validity or enforceability of this Agreement and all
         obligations required under this Agreement. This Agreement has been, and
         each instrument or document required under this Agreement will be,
         executed and delivered by a duly authorized officer of the Company, and
         this Agreement constitutes, and each instrument or document required
         under this Agreement when executed and delivered under this Agreement
         will constitute, the legally valid and binding obligation of the
         Company enforceable against the Company in accordance with its terms.

                  15.1.3 Execution, Delivery and Performance. The execution,
         delivery and performance of this Agreement and the documents or
         instruments required under this Agreement will not violate any
         provision of any existing law or regulation binding on the Company, or
         any order, judgment, award or decree of any court, arbitrator or
         governmental authority binding on the Company, or the Governing
         Instruments of, or any securities issued by, the Company or of any
         mortgage, indenture, lease, contract or other agreement, instrument or
         undertaking to which the Company is a party or by which the Company or
         any of its assets may be bound, the violation of which would have a
         material adverse effect on the business operations, assets or financial
         condition of the Company and its subsidiaries, taken as a whole, and
         will not result in, or require, the creation or imposition of any lien
         on any of its property, assets or revenues pursuant to the provisions
         of any such mortgage, indenture, lease, contract or other agreement,
         instrument or undertaking (other than the pledge of amounts payable to
         the Advisor under this Agreement to secure the Advisor's obligations to
         its lenders).

         15.2 Advisor in Favor of the Company. The Advisor hereby represents and
warrants to the Company as follows:

                  15.2.1 Due Formation. The Advisor is duly organized, validly
         existing and in good standing under the laws of Nevada, has the power
         to own its assets and to transact the business in which it is now
         engaged and is duly qualified to do business and is in good standing
         under the laws of each jurisdiction where its ownership or lease of
         property or the conduct of its business requires such qualification,
         except for failures to be so qualified, authorized or licensed that
         could not in the aggregate have a material adverse effect on the
         business operations, assets or financial condition of the Advisor and
         its subsidiaries, taken as a whole. The Advisor does not do business
         under any fictitious business name.

                  15.2.2 Power and Authority. The Advisor has the power and
         authority to execute, deliver and perform this Agreement and all
         obligations required under this Agreement and has taken all necessary
         corporate action to authorize this Agreement on the terms and
         conditions hereof and the execution, delivery and performance of this
         Agreement and all obligations required under this Agreement. Except as
         shall have been obtained, no consent of any other person including,
         without limitation, stockholders and creditors of the Advisor, and no
         license, permit, approval or authorization of, exemption by, notice or
         report to, or registration, filing or declaration with, any
         governmental

                                      -22-
<PAGE>

         authority is required by the Advisor in connection with this Agreement
         or the execution, delivery, performance, validity or enforceability of
         this Agreement and all obligations required under this Agreement. This
         Agreement has been and each instrument or document required under this
         Agreement will be executed and delivered by a duly authorized officer
         of the Advisor, and this Agreement constitutes, and each instrument or
         document required under this Agreement when executed and delivered
         under this Agreement will constitute, the legally valid and binding
         obligation of the Advisor enforceable against the Advisor in accordance
         with its terms.

                  15.2.3 Execution, Delivery and Performance. The execution,
         delivery and performance of this Agreement and the documents or
         instruments required under this Agreement will not violate any
         provision of any existing law or regulation binding on the Advisor, or
         any order, judgment, award or decree of any court, arbitrator or
         governmental authority binding on the Advisor, or the governing
         instruments of, or any securities issued by, the Advisor or of any
         mortgage, indenture, lease, contract or other agreement, instrument or
         undertaking to which the Advisor is a party or by which the Advisor or
         any of its assets may be bound, the violation of which would have a
         material adverse effect on the business operations, assets or financial
         condition of the Advisor and its subsidiaries, taken as a whole, and
         will not result in, or require, the creation or imposition of any lien
         on any of its property, assets or revenues pursuant to the provisions
         of any such mortgage indenture, lease, contract or other agreement,
         instrument or undertaking.

16. Notices. Unless expressly provided otherwise in this Agreement, all notices,
requests, demands and other communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been duly given, made
and received when (1) delivered by hand, (2) otherwise delivered against receipt
therefor, or (3) upon actual receipt of registered or certified mail, postage
prepaid, return receipt requested. The parties may deliver to each other notice
by electronically transmitted facsimile copies, provided that such facsimile
notice is followed within 24 hours by any type of notice otherwise provided for
in this Section 16. Any notice shall be duly addressed to the parties as
follows:

                     if to the Company:

                     Bull Street Real Estate Investment Trust, Inc.
                     2357 Renaissance Drive, Suite A
                     Las Vegas, Nevada  89119

                  with a copy given in the manner prescribed above (which shall
                  not constitute notice), to:

                     Locke, Liddell & Sapp LLP
                     2200 Ross Avenue
                     Suite 2200
                     Dallas, Texas 75201
                     Attn:  Kenneth L. Betts, Esq.

                     if to the Advisor:

                                      -23-
<PAGE>

                     Burton Management Company, Ltd.
                     2357 Renaissance Drive, Suite A
                     Las Vegas, Nevada  89119

Any party may alter the address to which communications or copies are to be sent
by giving notice of such change of address in conformity with the provisions of
this Section 16 for the giving of notice.

17. Binding Nature of Agreement; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns as provided in this
Agreement.

18. 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 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.

19. Controlling Law. This Agreement and all questions relating to its validity,
interpretation, performance and enforcement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of Maryland,
notwithstanding any Maryland or other conflict of law provisions to the
contrary.

20. No 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 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.

21. 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.

22. 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
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.

23. Provisions Severable. 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-
<PAGE>

24. 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.

25. Attorneys' Fees. Should any action or other proceeding be necessary to
enforce any of the provisions of this Agreement or the various transactions
contemplated hereby, the prevailing party will be entitled to recover its actual
reasonable attorneys' fees and expenses from the non-prevailing party.

26. Amendments. This Agreement may not be amended, modified or changed (in whole
or in part), except by a formal, definitive written agreement expressly
referring to this Agreement, which agreement is executed by all of the parties
hereto and, in the case of the Company, approved by a majority of the
Unaffiliated Directors. The parties hereto expressly acknowledge that no consent
or approval of the Company's stockholders is required in connection with any
amendment, modification or change to this Agreement.

27. Authority. Each signatory to this Agreement warrants and represents that he
is authorized to sign on behalf of and to bind the party on whose behalf he, she
or it is signing.

                            [Signature pages follow]

                                      -25-
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.

                                   "COMPANY"

                                   Bull Street Real Estate Investment Trust,
                                   Inc., a Maryland corporation

                                   By:
                                      -----------------------------------------
                                   Name:       Todd B. Parriott
                                   Title:      President

                                   "ADVISOR"

                                   BURTON MANAGEMENT COMPANY, LTD.,
                                   a Nevada corporation

                                   By:
                                      -----------------------------------------
                                   Name:       Todd B. Parriott
                                   Title:      President

                                      -26-<PAGE>

                                                                  Execution Copy

                                 AMENDMENT NO. 4
                                       TO
                          REGISTRATION RIGHTS AGREEMENT

         Amendment No. 4 to Registration Rights Agreement (this "Amendment"),
dated as of December 30, 2003, by and between Alfred I. DuPont Testamentary
Trust (the "Trust") and The St. Joe Company, a Florida corporation (the
"Company").

1.       Introduction. The Trust and the Company have entered into a
Registration Rights Agreement, dated as of December 16, 1997, Amendment No. 1
thereto, dated as of January 26, 1998, an Amendment No. 2 thereto, dated May 24,
2002, and an Amendment No. 3 thereto, dated September 5, 2003 (as amended, the
"Registration Rights Agreement"), which governs, among other things, certain
terms and conditions of the sale of Shares of the Company's Common Stock
Beneficially Owned by the Trust, from time to time, in registered public
offerings. As requested by the Trust, the Company intends to file a Registration
Statement on Form S-3 with the Securities and Exchange Commission (the
"Registration Statement") with respect to the sale by the Trust, from time to
time, of up to 6,000,000 Shares of the Company's Common Stock Beneficially Owned
by the Trust. In connection with such sales, the Trust and the Company believe
that it is in their best interests to effect certain amendments to the
Registration Rights Agreement, as prescribed below.

2.       Definitions. Capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed to them in the Registration Rights
Agreement.

3.       Provisions Applicable to the Registration Statement. The Company hereby
waives the six month requirement set forth in the penultimate paragraph of
Section 2.1 with respect to the Registration Statement. The Company shall have
all obligations applicable to a Demand Registration with respect to the
Registration Statement; provided, however, that in the event the Trust sells
Shares of Common Stock Beneficially Owned by the Trust and covered by the
Registration Statement, the Registration Statement (including all amendments
thereto and all supplemental prospectuses included therein) shall count as one
Demand Registration of the Trust and, with respect to any sale of such Shares
covered by the Registration Statement requiring a prospectus supplement after
the initial sale of shares covered by the Registration Statement (and the
exercise of any over-allotment option with respect thereto), the Trust shall
reimburse the Company for any incremental out-of-pocket expenses incurred by the
Company in connection with such sale, including, without limitation, all
printing expenses with respect to such sale.

4.       Provisions Applicable to Future Registration Statements. Upon the sale
of all or substantially all of the 6,000,000 Shares under the Registration
Statement and the receipt of a Demand Request, the Company will file a
registration statement on Form S-3 with the Securities and Exchange Commission
(the "Subsequent Registration Statement") with respect to the sale by the Trust,
from time to time, of up to 12,000,000 Shares plus any unsold shares under the
Registration Statement of the Company's Common Stock Beneficially Owned by the
Trust. If

<PAGE>
requested by the Trust, the Subsequent Registration Statement will be filed as a
shelf registration statement. The Company hereby waives the six month
requirement set forth in the penultimate paragraph of Section 2.1 with respect
to the Subsequent Registration Statement. The Company shall have all obligations
applicable to a Demand Registration with respect to the Subsequent Registration
Statement; provided, however, that in the event the Trust sells Shares of Common
Stock Beneficially Owned by the Trust and covered by the Subsequent Registration
Statement, the Subsequent Registration Statement (including all amendments
thereto and all supplemental prospectuses included therein) shall count as one
Demand Registration of the Trust and, with respect to any sale of such Shares
covered by the Subsequent Registration Statement requiring a prospectus
supplement after the initial sale of shares covered by the Subsequent
Registration Statement (and the exercise of any over-allotment option with
respect thereto), the Trust shall reimburse the Company for any incremental
out-of-pocket expenses incurred by the Company in connection with such sale,
including, without limitation, all printing expenses with respect to such sale.
Upon request of the Trust, members of management of the Company will participate
in one road show to facilitate an underwritten offering pursuant to the
Subsequent Registration Statement. In addition, the Subsequent Registration
Statement will include disclosure as to the Trust's then present intention to
hold substantially all of the shares remaining after the sale of the Shares
covered by the Subsequent Registration Statement for the future, subject to the
reevaluation of this intent as a result of changes in market or general economic
conditions or other considerations.

5.       Accounting Fees. Notwithstanding the foregoing, the Company will not be
obligated to file either the Registration Statement or the Subsequent
Registration Statement before March 15, 2004 if the estimated out of pocket
expenses relating to accountants' consents of any accountant other than KPMG
shall exceed $5,000, unless the Trust at its option elects to reimburse the
Company for such expenses in excess of $5,000.

6.       Demand Requests. The last sentence of the first paragraph of Section
2.1(a) of the Registration Rights Agreement is hereby amended to read in its
entirety as follows: Subject to the provisions of Section 2.1(d), the Trust
will have the right pursuant to this Section 2.1(a) to make an aggregate of six
Demand Requests, including the deemed Demand Request relating to the Initial
Sale referred to below in this Section 2.1(a).

7.       Expenses. Section 2.1(c) of the Registration Rights Agreement is hereby
amended to add the following sentence: Notwithstanding the foregoing, the Trust
shall pay all incremental out-of-pocket Registration Expenses reasonably
incurred in connection with the registration statement relating to the sixth
Demand Request pursuant to this Section 2.1.

8.       Lock-Ups. The failure of any member of the Company's management or of a
non-Trust director of the Company to execute a lock-up agreement in connection
with any offering shall not constitute a default under the Registration Rights
Agreement; provided the Company uses reasonable efforts to obtain lock-up
agreements reasonably required by underwriters in connection with such offering.

9.       Representation on Board of Directors. The Trust agrees that at the
February 2004 meeting of the Company's Board of Directors it and the four
Trustees who are directors of

                                       2

<PAGE>
the Company will support the election of 3 additional non-Trust directors to the
Board. Due to the expected retirements of two non-Trust directors, after the
upcoming Annual Meeting in May 2004 the Board will consist of ten members, four
of whom will be related to the Trust. As a result, the Trust's representation on
the Board will go from its current 44% to 40%. The Trust agrees that on the
fifth business day after the Trust's beneficial ownership of the Company's
common stock is less than 20% of the issued and outstanding shares, that number
of Trust directors will resign from the Board so that the number of Trust
directors will not exceed two.

10.      Effectiveness of this Amendment. This Amendment shall become effective
upon its execution by the Company and the Trust.

11.      Agreement in Full Force and Effect. Except as amended by the terms of
this amendment, the Registration Rights Agreement shall remain in full force and
effect in accordance with its terms.

12.      Counterparts. This Amendment may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all of
such counterparts shall together constitute one and the same instrument.

                  [Remainder of page intentionally left blank]

                                       3
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered by the respective officers thereunto duly authorized as
of the date first written above.

                                             ALFRED I. DUPONT TESTAMENTARY TRUST

                                             By: /s/ W. L. Thornton
                                                 -------------------------------
                                                 W. L. Thornton, Trustee

                                             THE ST. JOE COMPANY

                                             By: /s/ Peter S. Rummell
                                                 -------------------------------
                                                 Peter S. Rummell
                                                 Chairman and CEO

                                       4

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