The Management Agreement

The following description of the Management Agreement is only a summary of its material provisions:

The Trust has entered into a Management Agreement with FCA Corp, a Texas corporation (the “Manager”), to manage the Trust and serve as administrator of the Trust's day-to-day affairs, subject to the direction of the Trust Managers.

Duties Delegated to Manager 

Subject to their duty of overall supervision, the Trust Managers have delegated to the Manager the power and duty to:

  1. oversee the day-to-day operations of the Trust and perform the administrative functions necessary in the management of the Trust including the coordination of the collection of revenues, the payment of expenses and coordinate and contract for the use and maintenance of appropriate computer programs to perform such administrative functions;
  2. represent the Trust's interests  in the origination, purchase or servicing of Mortgage Loans and furnishing reports on the Trust's performance; 
  3. investigate, select, and contract with  attorneys, accountants, real estate brokers, investors, builders, developers, banks and other lenders, and others as necessary in connection with the Assets of the Trust; 
  4. maintain bank, brokerage and mutual fund accounts for the Trust; 
  5. maintain and keep appropriate business records of the Trust; 
  6. contract for audits and prepare or cause to be prepared such reports as may be required by any governmental authority in connection with the ordinary conduct of the Trust's business; 
  7. contract for reports that may be required by any governmental authority, including but not limited to tax return preparation and other reporting requirements; 
  8. counsel the Trust in connection with the policy decisions made by the Trust Managers; 
  9. maintain appropriate general liability and property insurance for the Assets of the Trust and handle, prosecute and settle any claims of the Trust; 
  10. contract for such services as may be required for property management, loan origination, servicing or collecting and other activities relating to the Trust Assets; 
  11. advise, if appropriate, in connection with negotiations with real estate brokerage firms, investment banking firms, asset brokers or dealers, transfer agents and other institutions or investors in connection with: 
    1. the sale of securities by the Trust (to the extent such activities do not require the Manager to register as a broker-dealer) and 
    2. the purchase and the securing of loans for the Trust; 
  12. provide all actions necessary to enable the Trust to make the required federal, state and local tax filings and reports and generally enable the Trust to maintain its status as a REIT; 
  13. communicate on behalf of the Trust with the equity owners of the Trust as required to satisfy any reporting requirements and maintain effective relations with such persons; and 
  14. perform such other services as may be required from time to time for the management of the Trust’s Assets as the Trust Managers shall reasonably request or the Manager shall deem appropriate under the circumstances. 

The Management Agreement provides that the Manager may call upon and utilize various facilities, personnel and support services of one or more affiliates of the Manager. Also, the Manager may engage in other activities, including the management of other entities, including other REITs and the management of other investments, including individuals and entities advised, sponsored, or organized by the Manager or by any affiliate of the Manager.

The Manager currently acts as manager in a similar capacity to Holly Mortgage Trust and Ivy Realty Trust. There is no limit on the right of any director, officer, employee or shareholder of the Manager or any affiliate of the Manager to engage in any other business or to render services of any kind to any other partnership, corporation, firm, individual, trust or association.

The Managers agree to keep the Trust Managers informed concerning the investment, financial and operating policies of the Trust.

Compensation to the Manager

The Manager’s compensation consists of an annual base fee equal to 1.4 % (one and fourth tenths of one percent) of the assets of the Trust based upon the unaudited balance sheet for the end of the prior calendar year, and is adjusted, if necessary, when the final audited balance sheet for the prior calendar year is available. One-fourth (1/4th) of the annual base fee is paid, in advance, on the first day of each calendar quarter. Fees shall be reduced by amount of any fees paid to employees of the Manager for serving as a Trust Manager. Further, if the Trust requests the Manager or any affiliate, to render services to the Trust other than those required to be rendered by the Manager under the Management Agreement, such additional services will be compensated at the then hourly rate charged to clients of the Manager for similar services.  

The Manager is required to bear all expenses necessary or appropriate for the performance of its duties as Manager, except that the Trust pays directly or shall reimburse the Manager for expenses incurred for activities directly related to Trust activity including but not limited to travel and business entertainment expenses; attorneys' fees; mailing charges, printing expenses, and overnight delivery charges; audit, tax return preparation and IRS information return fees; website maintenance, computer program license fees and third party services; direct supplies, such as letterhead, third party photocopy charges; any off-site facilities that are appropriate for the Trust, including but not limited to, offsite record storage and back-up system facilities; transfer agent fees and expenses; third-party loan participation and servicing costs; and third party property management, leasing, brokerage, appraisal and consulting fees.

Termination

The Management Agreement is in force until May 31, 2013, and thereafter may be extended from year to year by the affirmative vote of a majority of the unaffiliated Trust Managers. The Management Agreement may be terminated (i) by a majority of the Unaffiliated Trust Managers upon 120 days' prior written notice to the Manager, and (ii) by the Manager upon 120 days’ prior written notice to the Trust. Also, the Management Agreement may be terminated, among other things, if the Manager violates any provision of the Management Agreement, and after written notice of violation, the violation is not cured within 60 days.

NOTE: The foregoing is only a summary of the Management Agreement. Reference is made to the Management Agreement itself for a complete statement of its provisions and definitions of certain defined terms. A copy of the Management Agreement is available for inspection at the offices of the Trust.