Exhibit 10.1

THIRD AMENDED AND RESTATED ADVISORY AGREEMENT

THIS ADVISORY AGREEMENT (the “Agreement”), dated effective as of January 1, 2014
(the “Effective Date”), is among INREIT Real Estate Investment Trust, an
unincorporated North Dakota business trust (the “Company”), INREIT Properties,
LLLP, a North Dakota limited liability limited partnership (“Operating
Partnership”) and INREIT Management, LLC, a North Dakota limited liability
company (the “Advisor”).

W I T N E S S E T H

WHEREAS, the Company qualifies as a real estate investment trust (a “REIT”), as
defined in Sections 856 through 860 of the Code and intends to continue to make
investments of the type permitted by qualified REITs and consistent with the
governing documents of the Company;

WHEREAS, the Company is the general partner of the Operating Partnership and
intends to conduct all of its business and make substantially all Investments
through the Operating Partnership;

WHEREAS, the Company and the Operating Partnership desire to retain the Advisor
to perform the duties and undertake the responsibilities hereinafter set forth,
on behalf of, and subject to the supervision, of the Board, all as provided
herein; and

WHEREAS, the Advisor is willing to render such services and undertake such
responsibilities, subject to the supervision of the Board, on the terms and
conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the parties hereto agree as follows:

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

Acquisition Expenses. Any and all expenses incurred by the Company, the
Operating Partnership, the Advisor or any of their Affiliates in connection with
the selection, acquisition, origination, making or development of any
Investments, whether or not acquired, including, without limitation, legal fees
and expenses, travel and communications expenses, costs of appraisals,
nonrefundable option payments on assets not acquired, accounting fees and
expenses, title insurance premiums and the costs of performing due diligence.

Acquisition Fees. Any and all fees and commissions, exclusive of Acquisition
Expenses, paid by any Person to any other Person (including any fees or
commissions paid by or to any Affiliate of the Company or the Advisor) in
connection with acquiring Investments, including but not limited to the
development or construction of a property, including real estate commissions,
selection fees, development fees, construction fees, nonrecurring management
fees, loan fees, points or any other fees of a similar nature. Excluded shall be
development fees and construction fees paid to any Person not an Affiliate of
the Advisor in connection with the actual development and construction of a
property.

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

Average Invested Assets. For a specified period, the average of the aggregate
book value of the assets of the Company invested, directly or indirectly by the
Operating Partnership, in Investments before deducting depreciation, bad debts
or other non-cash reserves, computed by taking the average of such values at the
end of each month during such period.

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Board. The board of trustees of the Company, as of any particular time.

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

Cause. With respect to the termination of this Agreement, fraud, criminal
conduct, willful misconduct or willful or negligent breach of fiduciary duty by
the Advisor in connection with performing its duties hereunder.

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

Distributions. Any distributions of money or other property by the Company to
owners of Shares, including distributions that may constitute a return of
capital for federal income tax purposes. In connection with the Operating
Partnership, any distributions of money or other property of an Operating
Partner to owners of its partnership interests, including distributions that may
constitute a return of capital for federal income tax purposes.

Excess Amount. Excess Amount shall have the meaning set forth in Section 13.

Expense Year. Expense Year shall have the meaning set forth in Section 13.

GAAP. Generally accepted accounting principles as in effect in the United States
of America from time to time.

Governing Instruments. The Articles of Organization, Declaration of Trust and
Bylaws of the Company, as amended from time to time.

Indemnitee. Indemnitee and Indemnitees shall have the meaning set forth in
Section 20 herein.

Independent Trustee. Independent Trustee shall have the meaning set forth in the
Governing Instruments and the Operating Partnership Agreement.

Investment Company Act. The Investment Company Act of 1940, as amended.

Investments. Any investments by the Company or an Operating Partnership in Real
Estate Assets and Other Real Estate Related Investments.

Joint Ventures. The joint venture or partnership arrangements (other than with
an Operating Partnership) in which the Company or any of its subsidiaries is a
co-venturer or general partner which are established to acquire Investments.

Listing. The listing of the Shares on a national securities exchange or the
receipt by the Shareholders of securities that are listed on a national
securities exchange in exchange for the Company’s common stock. Upon such
Listing, the Shares shall be deemed Listed.

Loans. Any indebtedness or obligations in respect of borrowed money or evidenced
by bonds, notes, debentures, deeds of trust, letters of credit or similar
instruments, including mortgages and mezzanine loans.

Management Fee. The fee payable to the Advisor pursuant to Section 10.

NASAA REIT Guidelines. The Statement of Policy Regarding Real Estate Investment
Trusts published by the North American Securities Administrators Association on
May 7, 2007, as may be amended from time to time.

 

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Net Income. For any period, the Company’s total revenues applicable to such
period, less the total expenses applicable to such period other than additions
to reserves for depreciation, bad debts or other similar non-cash reserves and
excluding any gain from the Sale of the Company’s assets.

Operating Partnership Agreement. The Limited Partnership Agreement of the
Operating Partnership as may be amended from time to time.

Organizational and Offering Expenses. Organizational and Offering Expenses means
all expenses incurred by or on behalf of the Company and the Operating
Partnership in connection with their formation and preparing the Company and
Operating Partnership for any private offering of their securities, any
registration of the Company’s Shares, Listing of the Shares and any subsequent
public offering of the Company’s Shares, whether incurred before or after the
date of this Agreement, which may include but are not limited to: total
underwriting and brokerage discounts and commissions (including fees of the
underwriters’ or brokers’ attorneys); any expense allowance of an underwriter or
broker; any reimbursement of expenses of an underwriter or broker; expenses for
printing, engraving and mailing offering documents; telephone and other
telecommunications costs; all advertising and marketing expenses (including the
costs related to investor and broker-dealer sales meetings); charges of transfer
agents, registrars, trustees, escrow agents, depositaries and experts; expenses
regarding the registration or compliance with exemption requirements in
connection with any sale of the Company’s or the Operating Partnership’s
securities under federal and applicable state securities laws; and related taxes
and fees and accountants’ and attorneys’ fees.

Other Real Estate Related Investments. Any investments by the Company or the
Operating Partnership in debt and equity interests backed by real estate,
including (i) real estate securities such as common stocks, preferred stocks and
options to acquire stock in REITs and other real estate companies and
(ii) debt-related investments such as (a) mortgage, mezzanine, bridge and other
loans and (b) debt and derivative securities related to real estate assets
including mortgage-backed securities, collateralized debt obligations, debt
securities issued by real estate companies and credit default swaps.

Partnership Interests. The partnership interests of the Operating Partnership.

Partners. The holders of the Partnership Interests.

Person. An individual, corporation, partnership, trust, joint venture, limited
liability company or other entity.

Real Estate Assets. Any investments by the Company or the Operating Partnership
in unimproved and improved Real Property (including, without limitation, fee or
leasehold interests, options and leases) either directly or through a Joint
Venture.

Real Property. Real property owned from time to time by the Company or the
Operating Partnership, either directly or through Joint Ventures, which consists
of (i) land only, (ii) land, including the buildings located thereon,
(iii) buildings only or (iv) such investments the Board and the Advisor mutually
designate as Real Property to the extent such investments could be classified as
Real Property.

REIT. A “real estate investment trust” under Sections 856 through 860 of the
Code or as may be amended.

Related Party. With respect to any Person, any other Person whose ownership of
Shares would be attributed to the first such Person under Code Section 544 (as
modified by Code Section 856(h)(1)(B)).

 

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Sale or Sales. Any transaction or series of transactions whereby: (A) the
Company or the Operating Partnership directly or indirectly (except as described
in other subsections of this definition) sells, grants, transfers, conveys or
relinquishes its ownership of any Real Property or portion thereof, including
the lease of any Real Property consisting of a building only, and including any
event with respect to any Real Property which gives rise to a significant amount
of insurance proceeds or condemnation awards; (B) the Company or the Operating
Partnership directly or indirectly (except as described in other subsections of
this definition) sells, grants, transfers, conveys or relinquishes its ownership
of all or substantially all of the interest of the Company or the Operating
Partnership in any Joint Venture in which it is a co-venturer or partner;
(C) any Joint Venture directly or indirectly (except as described in other
subsections of this definition) in which the Company or the Operating
Partnership as a co-venturer or partner sells, grants, transfers, conveys or
relinquishes its ownership of any Real Property or portion thereof, including
any event with respect to any Real Property which gives rise to insurance claims
or condemnation awards; (D) the Company or the Operating Partnership directly or
indirectly (except as described in other subsections of this definition) sells,
grants, conveys or relinquishes its interest in any Other Real Estate Related
Investment or portion thereof (including with respect to any Loan, all payments
thereunder or in satisfaction thereof other than regularly scheduled interest
payments) and any event which gives rise to a significant amount of insurance
proceeds or similar awards; or (E) the Company or the Operating Partnership
directly or indirectly (except as described in other subsections of this
definition) sells, grants, transfers, conveys or relinquishes its ownership of
any other asset not previously described in this definition or any portion
thereof, but not including any transaction or series of transactions specified
in clauses (A) through (E) above in which the proceeds of such transaction or
series of transactions are reinvested by the Company or the Operating
Partnership in one or more assets within 180 days thereafter.

Securities Act. The Securities Act of 1933, as amended.

Shares. The shares of Common Shares of Beneficial Interest of the Company.

Shareholders. The holders of the Shares.

Termination Date. The date of termination of this Agreement or expiration of
this Agreement in the event this Agreement is not renewed for an additional
term.

Total Assets. The gross assets of the Company as reflected on its Consolidated
Financial Statements (before depreciation and amortization), taken as of the end
of the fiscal quarter of the Company last preceding the date of computation.

Total Operating Expenses. All costs and expenses paid or incurred by the Company
and the Operating Partnership, as determined under GAAP, that are in any way
related to the operation of the Company and the Operating Partnership or their
business, including the Management Fees paid to the Advisor, but excluding
(i) the expenses of raising capital including Organization and Offering
Expenses, (ii) interest payments, (iii) taxes, (iv) non-cash expenditures such
as depreciation, amortization and bad debt reserves, (v) incentive fees paid
under the Operating Partnership Agreement; (vi) Acquisition Expenses, (vii) real
estate commissions on the Sale of Real Property, and (viii) other fees and
expenses connected with the acquisition, disposition, management and ownership
of Investments (including the costs of foreclosure, insurance premiums, legal
services, maintenance, repair and improvement of property). The definition of
“Total Operating Expenses” set forth above is intended to encompass only those
expenses which are required to be treated as Total Operating Expenses under the
NASAA REIT Guidelines. As a result, and notwithstanding the definition set forth
above, any expense of the Company which is not part of Total Operating Expenses
under the NASAA REIT Guidelines shall not be treated as part of Total Operating
Expenses for purposes hereof.

Trustee. A member of the Board.

2%/25% Guidelines. 2%/25% Guidelines shall have the meaning set forth in
Section 13.

Valuation Guidelines. The valuation guidelines adopted by the Board, as amended
from time to time.

2. APPOINTMENT. The Company and the Operating Partnership hereby appoint the
Advisor to serve as their advisor on the terms and conditions set forth in this
Agreement, and the Advisor hereby accepts such appointment.

 

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3. DUTIES OF THE ADVISOR. The Advisor undertakes to use its best efforts to
present to the Company and the Operating Partnership potential investment
opportunities and to provide the Company and the Operating Partnership with a
continuing and suitable investment program consistent with the investment
objectives and policies of the Company as determined and adopted from time to
time by the Board. In performing this undertaking, subject to the supervision of
the Board and consistent with the provisions of the Governing Instruments and
the Operating Partnership Agreement, the Advisor shall, either directly or by
engaging an Affiliate or a third party:

(a) serve as the Company’s and the Operating Partnership’s investment and
financial advisor and provide research and economic and statistical data in
connection with the Company’s and the Operating Partnership’s assets and
investment policies;

(b) provide day-to-day management for the Company and the Operating Partnership
and perform and supervise the various administrative functions reasonably
necessary for the management of the Company and the Operating Partnership,
including: the collection of revenues and the payment of the Company’s and the
Operating Partnership’s debts and obligations, maintaining appropriate computer
services to perform such administrative functions, maintaining the Company’s and
the Operating Partnership’s books and records and organizing meetings of the
Board;

(c) determine the proper allocation of the Company’s and the Operating
Partnership’s Investments between (i) Real Estate Assets, (ii) Other Real Estate
Related Investments and (iii) cash and cash equivalents and other short-term
investments;

(d) consult with the officers and Trustees of the Company and assist the
Trustees in the formulation and implementation of the Company’s financial,
valuation and other policies and, as necessary, furnish the Trustees with advice
and recommendations with respect to the making of investments and dispositions
consistent with the investment objectives and policies of the Company and in
connection with any borrowings proposed to be undertaken by the Company or the
Operating Partnership;

(e) subject to the provisions of Section 4 hereof, (i) locate, analyze and
select potential Investments; (ii) structure and negotiate the terms and
conditions of transactions pursuant to which acquisitions and dispositions of
Investments will be made; (iii) research, identify, review and recommend
acquisitions and dispositions of Investments to the Board; (iv) acquire and
dispose of the Investments on behalf of the Company and the Operating
Partnership in compliance with the investment objectives and policies of the
Company; (v) arrange for financing and refinancing and make other changes in the
asset or capital structure of, and dispose of, reinvest the proceeds from the
Sale of, or otherwise deal with, Investments; (vi) enter into leases and service
contracts for Investments and, to the extent necessary, perform all other
operational functions for the maintenance and administration of such
Investments; (vii) actively oversee and manage Investments for purposes of
meeting the Company’s investment objectives; (viii) select Joint Venture
partners, structure corresponding agreements and oversee and monitor these
relationships; (ix) oversee Affiliated and non-Affiliated property managers who
perform services for the Company or the Operating Partnership; (x) oversee
Affiliated and non-Affiliated Persons with whom the Advisor contracts to perform
other services required to be performed under this Agreement; and (xi) manage
accounting and other record-keeping functions for the Company and the Operating
Partnership;

(f) negotiate on behalf of the Company and the Operating Partnership with banks
or lenders for Loans to be made to the Company and the Operating Partnership and
obtain Loans for the Company and the Operating Partnership;

(g) negotiate on behalf of the Company and the Operating Partnership with
investment banking firms and broker-dealers or negotiate private and public
sales of Shares, Partnership Interests or other securities of the Company or the
Operating Partnership, but in no event in such a way so that the Advisor shall
be acting as broker-dealer or underwriter;

(h) monitor the operating performance of the Investments and provide periodic
reports with respect thereto to the Board, including comparative information
with respect to such operating performance and budgeted or projected operating
results;

 

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(i) from time to time, or at any time reasonably requested by the Trustees, make
reports to the Trustees of its performance of services to the Company and the
Operating Partnership under this Agreement, including reports with respect to
potential conflicts of interest involving the Advisor or any of its Affiliates;

(j) assist in calculating the net asset value and Average Invested Assets as
provided in the Valuation Guidelines, and in connection therewith, (i) obtain
and maintain on behalf of the Company appraisals and reports (which may, but are
not required to, be prepared by the Advisor or its Affiliates), where required
or appropriate, concerning the value of Investments, and (ii) engage such
independent valuation experts, third-party appraisal managers and appraisers as
the Advisor deems appropriate to perform valuations and other services, provided
that any independent valuation expert shall be approved in advance of engagement
by the Board;

(k) provide the Company and the Operating Partnership with all necessary cash
management services;

(l) arrange, negotiate, coordinate and manage operations of any Joint Venture
interests held by the Company or the Operating Partnership and conduct all
matters with any Joint Venture partners;

(m) communicate on the Company’s or the Operating Partnership’s behalf with the
respective holders of any of the Company’s or the Operating Partnership’s equity
or debt securities as required to satisfy the reporting and other requirements
of any governmental bodies or agencies and to maintain effective relations with
such holders;

(n) evaluate and recommend to the Board modifications to the hedging strategies
in effect and cause the Company to engage in overall hedging strategies
consistent with the Company’s status as a REIT and with the Company’s investment
policies approved by the Board;

(o) advise the Company regarding the maintenance of the Company’s exclusion from
the status of an investment company required to be registered under the
Investment Company Act and monitor compliance with the requirements for
maintaining such exclusion under the Investment Company Act;

(p) advise the Company regarding achieving and maintaining the Company’s
qualification for taxation as a REIT and monitor compliance with the various
REIT qualification tests and other rules set out in the Code and the regulations
promulgated thereunder;

(q) invest or reinvest any money of the Company or the Operating Partnership
(including investing in short-term Investments pending investment in long-term
Investments, payment of fees, costs and expenses, or payments of Distributions),
and advise the Company and the Operating Partnership as to the Company’s or the
Operating Partnership’s respective capital structure and capital raising;

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

(s) cause the Company and the Operating Partnership to retain qualified
accountants and legal counsel, as applicable, to assist in developing
appropriate accounting procedures, compliance procedures and testing systems
with respect to financial reporting obligations and compliance with the REIT
provisions of the Code and to conduct compliance reviews thereto, as required;

 

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(t) cause the Company and the Operating Partnership to qualify to do business in
all applicable jurisdictions and to obtain and maintain all appropriate
licenses;

(u) if the Company decides to register the Shares under the Securities Act,
assist the Company in obtaining and maintaining the registration of the Shares
under federal and state securities laws, in the Listing of the Shares and in
complying with all federal, state and local regulatory requirements applicable
to the Company in respect of the Shares being registered and the Company’s
business activities (including the Sarbanes-Oxley Act of 2002), including
preparing or causing to be prepared the registration statement, prospectus,
supplements to the prospectus, pre-effective and post-effective amendments to
the registration statement, financial statements required under applicable
regulations and contractual undertakings and all reports and documents, if any,
required under the Securities Act and the Securities Exchange Act of 1934, as
amended;

(v) take all necessary actions to enable the Company and the Operating
Partnership to make required tax filings and reports, including soliciting
stockholders for required information to the extent provided by the REIT
provisions of the Code;

(w) handle and resolve all claims, disputes or controversies (including all
litigation, arbitration, settlement or other proceedings or negotiations) in
which the Company and the Operating Partnership may be involved or to which the
Company and the Operating Partnership may be subject, arising out of the
Company’s or the Operating Partnership’s day-to-day operations, subject to such
limitations or parameters as may be imposed from time to time by the Board;

(x) use commercially reasonable efforts to cause expenses incurred by or on
behalf of the Company and the Operating Partnership to be reasonable or
customary and within any budgeted parameters or expense guidelines set by the
Board from time to time;

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

(z) perform such other services as may be required from time to time for the
management and other activities relating to the Company’s and the Operating
Partnership’s respective business and assets as the Board shall reasonably
request or the Advisor shall deem appropriate under the particular
circumstances; and

(aa) use commercially reasonable efforts to cause the Company and the Operating
Partnership to comply with all applicable laws.

4. AUTHORITY OF ADVISOR.

(a) Pursuant to the terms of this Agreement (including the restrictions included
in this Section 4 and in Section 8), and subject to the continuing and exclusive
authority of the Board over the management of the Company, the Board (by virtue
of its approval of this Agreement and authorization of the execution hereof by
the officers of the Company) hereby designates and appoints the Advisor as the
agent and attorney-in-fact of the Company and the Operating Partnership, with
full power and authority and without further approval of the Company and the
Operating Partnership, to take, or cause to be taken, any and all actions and to
execute and deliver in the name of and on behalf of the Company and the
Operating Partnership any and all agreements, certificates, assignments,
instruments or other documents and to do any and all things that, in the
judgment of the Advisor, may be necessary or advisable in connection with the
Advisor’s duties described in Section 3.

 

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(b) Notwithstanding the foregoing, any investment in an Investment that does not
fit within the Company’s investment objectives, strategy, guidelines, policies
and limitations as approved by the Board and within the discretionary limits and
authority as granted from time to time by the Board, will require the prior
approval of the Board, any particular Trustees specified by the Board or any
committee of the Board, as the case may be.

(c) If a transaction requires approval by the Independent Trustees by the
Governing Instruments or the Operating Partnership Agreement, the Advisor will
deliver to the Independent Trustees all documents and other information required
by them to properly evaluate the proposed transaction.

(d) The prior approval of the Board, as required by the Governing Instruments or
the Operating Partnership Agreement, will be required for each transaction to
which the Advisor or its Affiliates is a party.

(e) The Board may, at any time upon the giving of notice to the Advisor, modify
or revoke the authority set forth in this Section 4; provided, however, that
such modification or revocation shall be effective upon receipt by the Advisor
and shall not be applicable to Investment transactions to which the Advisor has
committed the Company or the Operating Partnership prior to the date of receipt
by the Advisor of such notification.

5. SUBCONTRACT OF SERVICES. The Company and the Operating Partnership
acknowledge and agree that any services to be performed by the Advisor under
this Agreement may be provided pursuant to subcontracts with third party
providers or pursuant to arraignments with Affiliates of the Advisor. The
Advisor shall disclose to the Board upon its request the terms of any such
sub-contracting arraignment entered into by the Advisor with third parties or
Affiliates of the Advisor.

6. BANK ACCOUNTS. At the direction of the Board, the Advisor may establish and
maintain, as an agent and signatory on behalf of the Company and the Operating
Partnership, one or more bank accounts in the name of the Company or the
Operating Partnership (any such account, a “Company Account”), collect and
deposit funds into any Company Account, and disburse funds from any Company
Accounts, under such terms and conditions as the Board may approve. The Advisor
shall from time to time render appropriate accountings of such collections and
payments to the Board and to the auditors of the Company, as applicable.

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

8. LIMITATIONS ON ACTIVITIES. Notwithstanding any provision of this Agreement,
the Advisor shall refrain from taking any action which, in its sole judgment
made in good faith, would (a) adversely affect the status of the Company as a
REIT, (b) subject the Company to regulation under the Investment Company Act, or
(c) violate any law, rule, regulation or statement of policy of any governmental
body or agency having jurisdiction over the Company, the Operating Partnership
or their securities, or otherwise not permitted by the Governing Instruments of
the Company or the Operating Partnership Agreement, except if such action shall
be ordered by the Board, in which case the Advisor shall notify promptly the
Trustee’s of the Advisor’s judgment of the potential impact of such action and
shall refrain from taking such action until it receives further clarification or
instructions from the Board. In such event, the Advisor shall have no liability
for acting in accordance with the specific instructions of the Board so given.
Notwithstanding the foregoing, the governors, officers, employees and members of
the Advisor or an Affiliate of the Advisor shall not be liable to the Company,
Operating Partnership or holders of their securities for any act or omission by
the Advisor taken or omitted to be taken in the performance of Advisor’s duties
under this Agreement except as provided in Section 21 of this Agreement.

9. RELATIONSHIP WITH BOARD. Subject to Section 8 of this Agreement and to
restrictions advisable with respect to the qualification of the Company as a
REIT, governors, officers and employees of the Advisor or an Affiliate of the
Advisor, may serve as a Trustee and as officers of the Company, except that no
governor, officer or employee of the Advisor or an Affiliate of the Advisor who
also is a Trustee or officer of the Company shall receive any compensation from
the Company for serving as an officer other than reasonable reimbursement for
travel and related expenses incurred in attending meetings of the Board,
Shareholders and Partners, and shall not be deemed an Independent Trustee for
purposes of satisfying the director independence requirement set forth in the
Governing Instruments or the Operating Partnership Agreement.

 

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10. FEES.

(a) Management. The Advisor shall receive a management fee equal to .35% of
Total Assets (before depreciation and amortization). The fee shall be paid
monthly and be calculated by multiplying Total Assets (before depreciation and
amortization) (on the last day of the immediately preceding month) by .35% and
dividing the result by twelve (12). At the option of the Advisor, the Management
Fee shall be payable either in cash or Shares.

(b) Acquisition. The Advisor shall receive an Acquisition Fee equal to 2.5% of
the purchase price on each Investment acquisition. The Acquisition Fee shall be
capped at 2.5% of $15,000,000 ($375,000) per acquisition. Unless approved by the
Board, Acquisition Fees and Acquisition Expenses shall not, in the aggregate,
exceed 6% of an Investment’s purchase price.

(c) Disposition. The Advisor shall receive a disposition fee equal to 2.5% of
the sales price on each disposition of Real Property. The disposition fee shall
be capped at 2.5% of $15,000,000 ($375,000) per disposition.

(d) Finance. The Advisor shall receive a finance fee equal to .25% of all
amounts made available to the Company or Operating Partnership under any loan,
refinance (excluding rate and/or term modifications of an existing loan with the
same lender), line of credit, or other credit facility.

(e) Development. The Advisor shall receive a fee for development services
requested by the Company. The development fee shall be calculated in accordance
with the following schedule, unless otherwise agreed by the parties:

 

Total Cost

  

Fee

  

Range of Fee

  

Formula

  0 - 10M

   5.0%    0 - .5 M    0M + 5.0% x (TC -   0M)

10M - 20M

   4.5%    .5 M - .95M    .50M + 4.5% x (TC - 10M)

20M - 30M

   4.0%    .95M - 1.35M    .95M + 4.0% x (TC - 20M)

30M - 40M

   3.5%    1.35M - 1.70M    1.35M + 3.5% x (TC - 30M)

40M - 50M

   3.0%    1.70M - 2.00M    1.70M + 3.0% x (TC - 40M)

Total Project Cost shall be defined as the total of all hard and soft costs
(excluding the cost of the subject land) on the Company authorized development
project.

The development fee shall be calculated and paid when Advisor delivers a
certificate of occupancy for the structure which is the subject of the
authorized development project. If an authorized development project involves
multiple structures to be completed over a period of time, the development fee
shall be calculated and paid in increments upon delivery of each individual
structure’s certificate of occupancy.

Except in those limited circumstances where a target cap rate would not apply,
Company shall hold-back ten percent (10%) of each development fee payment until
such time as the authorized development project achieves financial performance
at a cap rate equal to or greater than the performance cap rate target agreed to
by Advisor and Company at the time of the original land acquisition.

(f) If this Agreement is terminated or its term expires without renewal, the
above fees will be calculated up to and including the Termination Date. If the
fees are payable with respect to any partial calendar month, those fees will be
prorated based on the number of days elapsed during any partial calendar month.

 

Adopted by the Board of Trustees

Effective 1.1.14

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11. EXPENSES.

(a) In addition to the Management Fee paid to the Advisor pursuant to Section 10
hereof, the Company or the Operating Partnership shall pay directly or reimburse
the Advisor for all of the expenses paid or incurred by the Advisor in
connection with the services it provides to the Company and the Operating
Partnership pursuant to this Agreement (collectively, the “Expenses”),
including, but not limited to:

(i) Organizational and Offering Expenses, subject to any limitations set forth
in the Governing Instruments;

(ii) Total Operating Expenses, subject to any limitations set forth in the
Governing Instruments;

(iii) Acquisition Expenses, subject to any limitations set forth in the
Governing Instruments or Section 13 hereof;

(iv) the actual cost of goods and services used by the Company or the Operating
Partnership and obtained from entities not affiliated with the Advisor (or if
the provider is an Affiliate of the Advisor, as such expenses have been approved
by the Board in the manner set forth in the Governing Instruments);

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

(vi) taxes and assessments on income of the Company, Operating Partnership or
Investments, taxes as an expense of doing business and any other taxes otherwise
imposed on the Company, Operating Partnership and their business, assets or
income;

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

(viii) expenses of managing, maintaining, repairing, improving, developing,
operating and selling the Investments, including the costs of foreclosure,
whether payable to an Affiliate of the Company or a non-affiliated Person;

(ix) all expenses in connection with payments to the Trustees for attending
Board and Shareholder meetings and meetings of the Partnership Interests;

(x) expenses connected with payments of Distributions made or caused to be made
by the Company and the Operating Partnership;

(xi) expenses of organizing, re-domesticating, merging, liquidating or
dissolving the Company or the Operating Partnership or of amending the Governing
Instruments;

(xii) expenses of providing services for and maintaining communications with
Shareholders and Partners, including the cost of preparation, printing, and
mailing annual reports and other reports required by governmental entities;

(xiii) administrative service expenses, including but not limited to personnel
and related employment costs incurred by the Advisor or its Affiliates in
performing the services described in Section 3 hereof, including but not limited
to reasonable salaries, bonuses and wages, benefits and overhead of all
employees directly involved in the performance of such services, provided that
no reimbursement shall be made for costs of such employees of the Advisor or its
Affiliates to the extent that such employees perform services for which the
Advisor receives a separate fee; and

 

Adopted by the Board of Trustees

Effective 1.1.14

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

(b) Expenses incurred by the Advisor on behalf of the Company and the Operating
Partnership and reimbursable pursuant to this Section 11 shall be reimbursed by
the Company or the Operating Partnership no less than monthly to the Advisor.
The Advisor shall prepare a statement documenting the Expenses during each
month, and the Company or the Operating Partnership shall reimburse the Advisor
for such the Expenses within forty-five (45) days after receipt of such
statement.

12. OTHER SERVICES. If the Board requests that the Advisor or any governor,
officer or employee of the Advisor render services for the Company and the
Operating Partnership other than set forth in Section 3, such services shall be
separately compensated at such rates and in such amounts as are agreed by the
Advisor and the Board, in the manner required under the Governing Instruments or
the Operating Partnership Agreement and subject to any limitations contained in
the Governing Instruments and Operating Partnership Agreement, and shall not be
deemed to be services pursuant to the terms of this Agreement.

13. REIMBURSEMENT TO THE ADVISOR.

(a) The Company and the Operating Partnership shall not reimburse the Advisor at
the end of any fiscal quarter for Total Operating Expenses that in the four
consecutive fiscal quarters then ended (the “Expense Year”) exceeded (the
“Excess Amount”) the greater of 2.0% of Average Invested Assets or 25.0% of Net
Income (the “2%/25% Guidelines”) for such year unless the Board determines, in
the manner required by the Governing Instruments, that such excess was
justified, based on unusual and nonrecurring factors that the Board deems
sufficient. If the Board does not approve such excess as being so justified, any
Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the
Company or the Operating Partnership. If the Board determines such excess was
justified, then, within sixty (60) days after the end of any fiscal quarter of
the Company for which total reimbursed Total Operating Expenses for the Expense
Year exceed the 2%/25% Guidelines, the Advisor, at the direction of the Board,
shall cause such fact to be disclosed to the Shareholders or Partners, as
appropriate, in writing, together with an explanation of the factors the Board
considered in determining that such Excess Amount was justified. The Company
will ensure that such determination will be reflected in the minutes of the
meetings of the Board. All figures used in the foregoing computations shall be
determined in accordance with GAAP applied on a consistent basis.

14. OTHER ACTIVITIES OF THE ADVISOR.

(a) Relationship. Nothing herein contained shall prevent the Advisor or any of
its Affiliates from engaging in or earning fees from other activities,
including, without limitation, the rendering of advice to other Persons
(including other REITs) and the management of other programs advised, sponsored
or organized by the Advisor or its Affiliates; nor shall this Agreement limit or
restrict the right of any director, officer, employee, or security holder of the
Advisor or its Affiliates to engage in or earn fees from any other business or
to render services of any kind to any other partnership, corporation, firm,
individual, trust or association and earn fees for rendering such services. The
Advisor may, with respect to any Investment in which the Company or the
Operating Partnership is a participant, also render advice and service to other
participants therein, and earn fees for rendering such advice and service.

(b) Time Commitment. The Advisor shall, and shall cause its Affiliates and their
respective employees, officers and agents to, devote to the Company and the
Operating Partnership such time as shall be reasonably necessary to conduct the
business and affairs of the Company and Operating Partnership in an appropriate
manner consistent with the terms of this Agreement. The Company and the
Operating Partnership acknowledge that the Advisor and its Affiliates and their
respective employees, officers and agents may also engage in activities
unrelated to the Company and Operating Partnership and may provide services to
Persons other than the Company or the Operating Partnership.

 

Adopted by the Board of Trustees

Effective 1.1.14

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(c) Investment Opportunities. The Advisor shall use its best efforts to present
to the Company and the Operating Partnership a number of potential investment
opportunities appropriate for the portfolio of the Company and the Operating
Partnership. The Advisor shall allocate potential investment opportunities in
accordance with the Advisor’s or its Affiliate’s allocation policies, as such
allocation policies may be amended from time to time.

15. RELATIONSHIP OF THE PARTIES/NO PARTNERSHIP OR JOINT VENTURE. The Company and
the Operating Partnership, on the one hand, and the Advisor on the other, are
not partners or joint venturers with each other, and nothing in this Agreement
shall be construed to make them such partners or joint venturers or impose any
liability as such on either of them.

16. TERM OF AGREEMENT. This Agreement shall continue in force for a period of
one (1) year from the Effective Date, subject to an unlimited number of
successive one-year renewals upon mutual consent of the parties. It is the duty
of the Board to evaluate the performance of the Advisor annually before renewing
the Agreement, and each such renewal shall be for a term of no more than one
year.

17. TERMINATION BY THE PARTIES. This Agreement may be terminated (i) immediately
by the Company or the Operating Partnership for Cause or upon the bankruptcy of
the Advisor or upon a material breach of this Agreement by the Advisor;
provided, that such material breach is not capable of being cured or has not
been cured within thirty (30) days after the giving of notice thereof by the
Company or the Operating Partnership to the Advisor; (ii) upon sixty (60) days
written notice without Cause by a majority of the Independent Trustee of the
Board; or (iii) upon sixty (60) days written notice by the Advisor. The
provisions of Sections 19 through 23 survive termination of this Agreement.

18. ASSIGNMENT TO AN AFFILIATE. This Agreement may be assigned by the Advisor to
an Affiliate with the approval of the Board, in accordance with any requirements
of the Governing Instruments. The Advisor may assign any rights to receive fees
or other payments under this Agreement to any Person without obtaining the
approval of the Board. This Agreement shall not be assigned by the Company or
the Operating Partnership without the consent of the Advisor, except in the case
of an assignment by the Company or the Operating Partnership to a corporation,
limited partnership or other organization which is a successor to all of the
assets, rights and obligations of the Company or the Operating Partnership, in
which case such successor organization shall be bound hereunder and by the terms
of said assignment in the same manner as the Company and the Operating
Partnership are bound by this Agreement.

19. PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION.

(a) After the Termination Date, the Advisor shall not be entitled to
compensation for further services hereunder except it shall be entitled to
receive from the Company or the Operating Partnership within thirty (30) days
after the Termination Date all unpaid reimbursements of Expenses, subject to the
2%/25% Guidelines to the extent applicable, and all Management Fees earned but
unpaid prior to termination of this Agreement.

(b) The Advisor shall promptly upon termination:

(i) pay over to the Company and the Operating Partnership all money collected
and held for the account of the Company and the Operating Partnership pursuant
to this Agreement, after deducting any accrued compensation and reimbursement
for its Expenses to which it is then entitled under Section 19(a);

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

(iii) deliver to the Board all assets, including all Investments, and documents
of the Company and the Operating Partnership then in the custody of the Advisor;
and

 

Adopted by the Board of Trustees

Effective 1.1.14

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

20. INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP. To the extent
permitted by their governing documents, the Company and the Operating
Partnership shall indemnify and hold harmless the Advisor and its Affiliates,
including their respective officers, directors, partners and employees (the
“Indemnitees,” and each an “Indemnitee”), from all liability, claims, damages or
losses arising in the performance of their duties hereunder, and related
expenses, including reasonable hourly attorneys’ fees, to the extent such
liability, claims, damages or losses and related expenses are not fully
reimbursed by insurance, and to the extent that such indemnification would not
be inconsistent with the laws of the State of North Dakota or the Governing
Instruments.

21. INDEMNIFICATION BY ADVISOR. The Advisor shall indemnify and hold harmless
the Company and the Operating Partnership from contract or other liability,
claims, damages, taxes or losses and related expenses, including reasonable
hourly attorneys’ fees, to the extent that such liability, claims, damages,
taxes or losses and related expenses are not fully reimbursed by insurance and
are incurred by reason of the Advisor’s bad faith, fraud, willful misfeasance,
gross negligence or reckless disregard of its duties; provided, however, that
the Advisor shall not be held responsible for any action of the Board for which
the Board declined to follow any advice or recommendation given by the Advisor
to the Board prior to taking such action.

22. NON-SOLICITATION. During the period commencing on the Effective Date and
ending one year following the Termination Date, the Company and the Operating
Partnership shall not, without the Advisor’s prior written consent, directly or
indirectly, (i) solicit or encourage any person to leave the employment or other
service of the Advisor or its Affiliates, or (ii) hire, on behalf of the Company
or the Operating Partnership, any person who has left the employ of the Advisor
or its Affiliates within the one year period following the termination of that
person’s employment. During this same period, the Company and the Operating
Partnership will not, whether for their own account or for the account of any
other Person, intentionally interfere with the relationship of the Advisor or
its Affiliates with, or endeavor to entice away from the Advisor or its
Affiliates, any person who during the term of the Agreement is, or during the
preceding one-year period, was a tenant, co-investor, co-developer, joint
venturer or other customer of the Advisor or its Affiliates.

23. CONFIDENTIALITY. The Advisor shall keep confidential any nonpublic
information obtained in connection with the services rendered under this
Agreement and shall not disclose any such information (or use the same except in
furtherance of its duties under this Agreement), except (i) with the prior
written consent of the Board; (ii) to legal counsel, accountants and other
professional advisors; (iii) to appraisers, financing sources and others in the
ordinary course of the Company’s or Operating Partnership’s business; (iv) to
government officials having jurisdiction over the Company, Operating Partnership
or the Investments; (v) in connection with any governmental or regulatory
filings of the Company or Operating Partnership or disclosure or presentations
to the Company’s or Operating Partnership’s investors, Shareholders or Partners;
or (vi) as required by law or legal process . The foregoing shall not apply to
information which has previously become publicly available through the actions
of a Person other than the Advisor not resulting from Advisor’s violation of
this section. This section shall survive termination of this Agreement for a
period of two years.

24. NOTICES. Any notice, report or other communication required or permitted to
be given hereunder shall be in writing unless some other method of giving such
notice, report or other communication is required by the Governing Instruments,
the Operating Partnership Agreement or accepted by the party to whom it is
given, and shall be given either by being delivered by hand, by courier or
overnight carrier, by registered or certified mail to the addresses set forth
below or by fax or similar method with confirmation of receipt:

 

To the Company, Operating Partnership or the Board:

   INREIT Real Estate Investment Trust    1711 Gold Drive South, Suite 100   
Fargo, ND, 58103    Fax: (701) 353-2720    Attention: President

 

Adopted by the Board of Trustees

Effective 1.1.14

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To the Advisor:

   INREIT Management, LLC   

1711 Gold Drive South, Suite 100

Fargo, ND 58103

   Fax: (701) 478-8111    Attention: President

Any party may at any time give notice in writing to the other parties of a
change in its address or fax number for the purposes of this Section 24.

25. MODIFICATION. This Agreement shall not be changed, modified, terminated or
discharged, in whole or in part, except by an instrument in writing signed by
all the parties hereto, or their respective successors or assignees.

26. SEVERABILITY. The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

27. CONSTRUCTION. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of North Dakota without
regard to the conflicts-of-law principles that would require the application of
any other law.

28. 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.

29. WAIVERS. Neither the failure nor any delay on the part of a party to
exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power or privilege; nor shall any waiver of
any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.

30. PRONOUNS AND PLURALS. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns, pronouns and verbs shall include the
plural and vice versa.

31. HEADINGS. The headings of Sections and Subsections contained in this
Agreement are for convenience only, and they neither form a part of this
Agreement nor are they to be used in the construction or interpretation hereof.

32. 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.

33. FAX/ELECTRONIC SIGNATURES. Any signature page for this Agreement, amendment,
waiver or any other document or agreement requiring a signature under this
Agreement which is delivered by fax, electronic mail, PDF or by a similar means
shall be binding to the same extent as an original signature page.

 

Adopted by the Board of Trustees

Effective 1.1.14

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34. INITIAL INVESTMENT. The parties hereto hereby confirm that the Advisor or
one of its Affiliates made a capital contribution of $200,000 in cash to the
Company in exchange for Shares at formation of the Company (“Initial
Investment”). During the term of this Agreement, the Advisor or one of its
Affiliates shall at all times maintain such Initial Investment.

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

 

COMPANY:   INREIT REAL ESTATE INVESTMENT TRUST   By:       Name:       Title:  
  OPERATING PARTNERSHIP:   INREIT PROPERTIES, LLLP   By:       Name:      
Title:     ADVISOR:   INREIT MANAGEMENT, LLC   By:       Name:       Title:    

 

Adopted by the Board of Trustees

Effective 1.1.14