Exhibit 10.1
AMENDED AND RESTATED
ADVISORY AGREEMENT
 
This AMENDED AND RESTATED ADVISORY AGREEMENT (this “Agreement”) is entered into
on this 1st day of October, 2010, by and between COLE CREDIT PROPERTY TRUST III,
INC., a Maryland corporation (the “Company”), and COLE REIT ADVISORS III, LLC, a
Delaware limited liability company (the “Advisor”).
 
W I T N E S S E T H
 
WHEREAS, the Company and the Advisor are parties to that certain Advisory
Agreement dated October 8, 2008 (the “Original Agreement”); and
 
WHEREAS, the Company and the Advisor wish to amend and restate the Original
Agreement;
 
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
 
ARTICLE I
 

 
DEFINITIONS
 
The following defined terms used in this Agreement shall have the meanings
specified below:
 
Acquisition Expenses.  Any and all expenses incurred by the Company, the
Advisor, or any Affiliate of either in connection with the selection,
acquisition or development of any Asset, whether or not acquired, including,
without limitation, legal fees and expenses, travel and communications expenses,
costs of appraisals, nonrefundable option payments on property not acquired,
accounting fees and expenses, and title insurance premiums.
 
Acquisition Fees.  Any and all fees and commissions, exclusive of Acquisition
Expenses but including the Acquisition and Advisory Fees, 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 making or investing in
Mortgages or the purchase, development or construction of an Asset, including,
without limitation, real estate commissions, selection fees, Development Fees,
Construction Fees, non-recurring 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 affiliated with the Sponsor in connection with the
actual development and construction of any Property.
 
Acquisition and Advisory Fees.  The fees payable to the Advisor pursuant to
Section 3.01(b) of this Agreement.
 
Advisor.  Cole REIT Advisors III, LLC, a Delaware limited liability company, any
successor advisor to the Company, or any Person to which Cole REIT Advisors III,
LLC, or any successor advisor subcontracts all or substantially all of its
functions.

 
 

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Affiliate or Affiliated.  As to any Person, (i) any Person directly or
indirectly owning, controlling, or holding, with the power to vote, 10% or more
of the outstanding voting securities of such Person; (ii) any Person 10% or more
of whose outstanding voting securities are directly or indirectly owned,
controlled, or held, with power to vote, by such other Person; (iii) any Person,
directly or indirectly, controlling, controlled by, or under common control with
such Person; (iv) any executive officer, director, trustee or general partner of
such Person; and (v) any legal entity for which such Person acts as an executive
officer, director, trustee or general partner.
 
Appraised Value.  Value according to an appraisal made by an Independent
Appraiser.
 
Articles of Incorporation.  The Articles of Incorporation of the Company filed
with the Maryland State Department of Assessments and Taxation in accordance
with the Maryland General Corporation Law, as amended from time to time.
 
Assets.  Properties, Mortgages and other direct or indirect investments in
equity interests in, or loans secured by, Real Property (other than investments
in bank accounts, money market funds or other current assets, whether of the
proceeds from an Offering or the sale of an Asset or otherwise) owned by the
Company, directly or indirectly through one or more of its Affiliates.
 
Asset Management Fee.  The fee payable to the Advisor for day-to-day
professional management services in connection with the Company and its
investments in Assets pursuant to this Agreement.
 
Average Invested Assets.  For a specified period, the average of the aggregate
book value of the Assets, before deducting depreciation, amortization, bad debts
or other similar non-cash reserves, computed by taking the average of such
values at the end of each month during such period; provided, however, that
after the Board is determining on a regular basis an estimated per share value
of the Shares, “Average Invested Assets” will be based upon the aggregate
valuation of the Assets as reasonably established by the Board.
 
Board.  The Board of Directors of the Company.
 
Bylaws.  The bylaws of the Company, as the same are in effect as amended from
time to time.
 
Change of Control.  Any event (including, without limitation, issue, transfer or
other disposition of Shares of capital stock of the Company or equity interests
in the Partnership, merger, share exchange or consolidation) after which any
“person” (as that term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) is or becomes the “beneficial owner” (as
defined in Rule 13d-j of the Securities Exchange Act of 1934, as amended),
directly or indirectly, of securities of the Company or the Partnership
representing greater than 50% or more of the combined voting power of the
Company’s or the Partnership’s then outstanding securities, respectively;
provided, that, a Change of Control shall not be deemed to occur as a result of
any widely distributed public offering of the Shares.
 
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.
 
Company.  Cole Credit Property Trust III, Inc., a corporation organized under
the laws of the State of Maryland.

 

 
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Competitive Real Estate Commission.  A real estate or brokerage commission paid
or, if no such commission is paid, the amount that customarily would be paid,
for the purchase or sale of a Property which is reasonable, customary, and
competitive in light of the size, type and location of the Property.
 
Construction Fee.  A fee or other remuneration for acting as general contractor
and/or construction manager to construct improvements, supervise and coordinate
projects or to provide major repairs or rehabilitations on a Property.
 
Contract Purchase Price.  The amount actually paid or allocated in respect of
the purchase, development, construction or improvement of an Asset, or the
amount of funds advanced with respect to a Mortgage, exclusive of Acquisition
Fees and Acquisition Expenses.
 
Contract Sales Price.  The total consideration provided for in the sales
contract for the sale of a Property.
 
Dealer Manager.  Cole Capital Corporation, an Affiliate of the Advisor, or such
Person selected by the Board to act as the dealer manager for an Offering.
 
Development Fee.  A fee for the packaging of a Property or Mortgage, including
the negotiation and approval of plans, and any assistance in obtaining zoning
and necessary variances and financing for a specific Property, either initially
or at a later date.
 
Director.  A member of the Board of Directors.
 
Distributions.  Any dividends or other 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.
 
Financing Coordination Fee.    The fees payable to the Advisor pursuant to
Section 3.01(g) of this Agreement.
 
Gross Proceeds.  The aggregate purchase price of all Shares sold for the account
of the Company through an Offering, without deduction for Selling Commissions,
volume discounts, dealer manager fees, or Organization and Offering
Expenses.  For the purpose of computing Gross Proceeds, the purchase price of
any Share for which reduced Selling Commissions or dealer manager fees are paid
to the Dealer Manager or a Soliciting Dealer (where net proceeds to the Company
are not reduced) shall be deemed to be the full amount of the Offering price per
Share pursuant to the Prospectus for such Offering without reduction.
 
Independent Appraiser.  A Person with no material current or prior business or
personal relationship with the Advisor or the Directors and who is a qualified
appraiser of Real Property of the type held by the Company or of other Assets as
determined by the Board.  Membership in a nationally recognized appraisal
society such as the American Institute of Real Estate Appraisers or the Society
of Real Estate Appraisers shall be conclusive evidence of such qualification as
to Real Property.

 

 
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Independent Director.  A Director who is not, and within the last two years has
not been, directly or indirectly associated with the Sponsor, the Company or the
Advisor by virtue of (i) ownership of an interest in the Sponsor, the Advisor or
any of their Affiliates, (ii) employment by the Company, the Sponsor, the
Advisor or any of their Affiliates, (iii) service as an officer or director of
the Sponsor, the Advisor or any of their Affiliates, (iv) performance of
services, other than as a Director, for the Company, (v) service as a director
or trustee of more than three real estate investment trusts organized by the
Sponsor or advised by the Advisor or (vi) maintenance of a material business or
professional relationship with the Sponsor, the Advisor or any of their
Affiliates.  A business or professional relationship is considered “material”
per se if the aggregate gross revenue derived by the prospective Independent
Director from the Sponsor, the Advisor and their Affiliates exceeds 5.0% of
either the Director’s annual gross revenue during either of the last two years
or the Director’s net worth on a fair market value basis.  An indirect
association with the Sponsor or the Advisor shall include circumstances in which
a Director’s spouse, parent, child, sibling, mother- or father-in-law, son- or
daughter-in-law, or brother- or sister-in-law is or has been associated with the
Sponsor, the Advisor, any of their Affiliates or the Company.
 
Invested Capital.  The amount calculated by multiplying the total number of
Shares purchased by Stockholders by the issue price at the time of such
purchase, reduced by the portion of any Distribution that is attributable to Net
Sales Proceeds and by any amounts paid by the Company to repurchase Shares
pursuant to the Company’s plan for repurchase of Shares.
 
Joint Ventures.  The joint venture or partnership arrangements in which the
Company or the Partnership is a co-venturer or general partner which are
established to acquire or hold Assets.
 
Listing or Listed.  The approval of the Company’s application to list the Shares
by a national securities exchange and the commencement of trading in the Shares
on the respective national securities exchange.  Upon such Listing, the Shares
shall be deemed Listed.
 
Market Value.  Upon Listing, the market value of the outstanding Shares,
measured by taking the average closing price for a single Share over a period of
30 consecutive trading days, with such period beginning 180 days after Listing,
multiplying that number by the number of Shares outstanding on the date of
measurement.
 
Mortgages.  In connection with mortgage financing provided, invested in or
purchased by the Company, all of the notes, deeds of trust, security interests
or other evidences of indebtedness or obligations, which are secured or
collateralized by Real Property owned by the borrowers under such notes, deeds
of trust, security interests or other evidences of indebtedness or obligations.
 
NASAA Guidelines.  The Statement of Policy Regarding Real Estate Investment
Trusts published by the North American Securities Administrators Association,
Inc. on May 7, 2007, and in effect on the date hereof.
 
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 Assets.  If the Advisor is paid a
Subordinated Incentive Listing Fee, “Net Income” for purposes of calculating
Total Operating Expenses, shall exclude the gain from the Sale of any Assets.

 

 
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Net Sales Proceeds.  In the case of a transaction described in clause (A) of the
definition of Sale, the proceeds of any such transaction less the amount of
selling expenses incurred by or on behalf of the Company, including all real
estate commissions, closing costs and legal fees and expenses. In the case of a
transaction described in clause (B) of such definition, Net Sales Proceeds means
the proceeds of any such transaction less the amount of selling expenses
incurred by or on behalf of the Company, including any legal fees and expenses
and other selling expenses incurred in connection with such transaction. In the
case of a transaction described in clause (C) of such definition, Net Sales
Proceeds means the proceeds of any such transaction actually distributed to the
Company from the Joint Venture less the amount of any selling expenses,
including legal fees and expenses incurred by or on behalf of the Company (other
than those paid by the Joint Venture).  In the case of a transaction or series
of transactions described in clause (D) of the definition of Sale, Net Sales
Proceeds means the proceeds of any such transaction (including the aggregate of
all payments under a Mortgage or in satisfaction thereof other than regularly
scheduled interest payments) less the amount of selling expenses incurred by or
on behalf of the Company, including all commissions, closing costs and legal
fees and expenses.  In the case of a transaction described in clause (E) of such
definition, Net Sales Proceeds means the proceeds of any such transaction less
the amount of selling expenses incurred by or on behalf of the Company,
including any legal fees and expenses and other selling expenses incurred in
connection with such transaction. In the case of a transaction described in the
last sentence of the definition of Sale, Net Sales Proceeds means the proceeds
of such transaction or series of transactions less all amounts generated thereby
which are reinvested in one or more Assets within 180 days thereafter and less
the amount of any real estate commissions, closing costs, and legal fees and
expenses and other selling expenses incurred by or allocated to the Company in
connection with such transaction or series of transactions.  Net Sales Proceeds
shall also include any consideration (including non-cash consideration such as
stock, notes, or other property or securities) that the Company determines, in
its discretion, to be economically equivalent to proceeds of a Sale, valued in
the reasonable determination of the Company. Net Sales Proceeds shall not
include any reserves established by the Company in its sole discretion.
 
Offering.  Any public offering and sale of Shares pursuant to an effective
registration statement filed under the Securities Act, other than a public
offering of Shares under a distribution reinvestment plan and Shares offered
under any employee benefit plan.
 
Operating Expenses.  All costs and expenses paid or incurred by the Company, as
determined under generally accepted accounting principles, which are in any way
related to the operation of the Company or to Company business, including the
Asset Management Fee, but excluding (i) the expenses of 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 Listing of the Shares, (ii) interest payments, (iii)
taxes, (iv) non-cash expenditures such as depreciation, amortization and bad
debt reserves, (v) the Subordinated Share of Net Sales Proceeds, (vi) the
Performance Fee, (vii) the Subordinated Incentive Listing Fee,
(viii) Acquisition Fees and Acquisition Expenses, (ix) real estate commissions
on the Sale of Property, and (x) other fees and expenses connected with the
acquisition, disposition, management and ownership of real estate interests,
mortgage loans or other property (including the costs of foreclosure, insurance
premiums, legal services, maintenance, repair and improvement of property).

 

 
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Organization and Offering Expenses.  All expenses incurred by, and to be paid
from, the assets of the Company in connection with and in preparing the Company
for registration of and subsequently offering and distributing its Shares to the
public, which may include, but are not limited to, total underwriting and
brokerage discounts and commissions (including fees of the underwriters’
attorneys); expenses for printing, engraving and mailing; salaries of employees
while engaged in sales activities; charges of transfer agents, registrars,
trustees, escrow holders, depositaries and experts; and expenses of
qualification of the sale of the securities under federal and state laws,
including taxes and fees; and accountants’ and attorneys’ fees.
 
Partnership.  Cole REIT III Operating Partnership, LP, a Delaware limited
partnership, through which the Company may own Assets.
 
Performance Fee.  The fee payable to the Advisor upon termination of this
Agreement under certain circumstances if certain performance standards have been
met pursuant to Section 4.03(b) or (c) of this Agreement.
 
Person.  An individual, corporation, business trust, estate, trust, partnership,
limited liability company or other legal entity.
 
Property or Properties.  As the context requires, any, or all, respectively, of
the Real Property acquired by the Company, either directly or indirectly
(whether through joint venture arrangements or other partnership or investment
interests).
 
Prospectus.  Prospectus has the meaning set forth in Section 2(10) of the
Securities Act, including a preliminary prospectus, an offering circular as
described in Rule 253 of the General Rules and Regulations under the Securities
Act or, in the case of an intrastate offering, any document by whatever name
known, utilized for the purpose of offering and selling securities of the
Company to the public.
 
Real Estate Commission.  The fee payable to the Advisor for services provided in
connection with the Sale of one or more Properties pursuant to Section 3.01(c).
 
Real Property.  Land, rights in land (including leasehold interests), and any
buildings, structures, improvements, furnishings, fixtures and equipment located
on or used in connection with land and rights or interests in land.
 
REIT.  A corporation, trust, association or other legal entity (other than a
real estate syndication) that is engaged primarily in investing in equity
interests in real estate (including fee ownership and leasehold interests) or in
loans secured by real estate or both in accordance with Sections 856 through 860
of the Code.
 
Sale or Sales.  Any transaction or series of transactions whereby: (A) the
Company or the Partnership directly or indirectly (except as described in other
subsections of this definition) sells, grants, transfers, conveys, or
relinquishes its ownership of any Property or portion thereof, including the
lease of any Property consisting of a building only, and including any event
with respect to any Property which gives rise to a significant amount of
insurance proceeds or condemnation awards; (B) the Company or the 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 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 Partnership as a co-venturer or partner
sells, grants, transfers, conveys, or relinquishes its ownership of any Property
or portion thereof, including any event with respect to any Property which gives
rise to insurance claims or condemnation awards;

 

 
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(D) the Company or the Partnership directly or indirectly (except as described
in other subsections of this definition) sells, grants, conveys or relinquishes
its interest in any Mortgage or portion thereof (including with respect to any
Mortgage, all repayments thereunder or in satisfaction thereof other than
regularly scheduled interest payments) and any event with respect to a Mortgage
which gives rise to a significant amount of insurance proceeds or similar
awards; or (E) the Company or the 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.  Notwithstanding the
foregoing, “Sale” or “Sales” shall not include any transaction or series of
transactions specified in clause (A) through (E) above in which the proceeds of
such transaction or series of transactions are reinvested in one or more Assets
within 180 days thereafter.
 
Securities Act.  The Securities Act of 1933, as amended from time to time, or
any successor statute thereto.  Reference to any provision of the Securities Act
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.
 
Selling Commissions.  Any and all commissions payable to underwriters, dealer
managers or other broker-dealers in connection with the sale of the Shares,
including, without limitation, commissions payable to Cole Capital Corporation.
 
Shares.  Any Shares of the Company’s common stock, par value $.01 per share.
 
Soliciting Dealers.  Broker-dealers who are members of the Financial Industry
Regulatory Authority, Inc., or that are exempt from broker-dealer registration,
and who, in either case, have executed participating broker or other agreements
with the Dealer Manager to sell Shares.
 
Sponsor.  Cole Holdings Corporation.
 
Stockholders.  The record holders of the Shares as maintained in the books and
records of the Company or its transfer agent.
 
Stockholders’ 8.0% Return.  As of any date, an aggregate amount equal to an 8.0%
cumulative, noncompounded, annual return on Invested Capital.
 
Subordinated Incentive Listing Fee.  The fee payable to the Advisor under
certain circumstances if the Shares are Listed pursuant to Section 3.01(e).
 
Subordinated Share of Net Sales Proceeds.  The fee payable to the Advisor under
certain circumstances following receipt of Net Sales Proceeds pursuant to
Section 3.01(d).
 
Termination Date.  The date of termination of this Agreement.
 
2%/25% Guidelines.  The requirement pursuant to the NASAA Guidelines that, in
any four consecutive fiscal quarters, total Operating Expenses not exceed the
greater of 2% of Average Invested Assets during such period or 25% of Net Income
over the same period.
 

 

 
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ARTICLE II
 

 
THE ADVISOR
 
2.01 Appointment.  The Company hereby appoints the Advisor to serve as its
advisor on the terms and conditions set forth in this Agreement, and the Advisor
hereby accepts such appointment.  By accepting such appointment, the Advisor
acknowledges that it has contractual and fiduciary responsibility to the Company
and the Stockholders.
 
2.02 Duties of the Advisor.  Subject to Section 2.07, the Advisor undertakes to
use its commercially reasonable best efforts to present to the Company potential
investment opportunities consistent with the investment objectives and policies
of the Company as determined and adopted from time to time by the Board.  In
performance of this undertaking, subject to the supervision of the Board and
consistent with the provisions of the Company’s most recent Prospectus for
Shares, Articles of Incorporation and Bylaws, the Advisor shall, either directly
or by engaging a duly qualified and licensed Affiliate of the Advisor or other
duly qualified and licensed Person:
 
(a) serve as the Company’s investment and financial advisor and provide research
and economic and statistical data in connection with the Assets and the
Company’s investment policies;
 
(b) provide the daily management of the Company and perform and supervise the
various administrative functions reasonably necessary for the management and
operations of the Company;
 
(c) maintain and preserve the books and records of the Company, including stock
books and records reflecting a record of the Stockholders and their ownership of
the Company’s Shares;
 
(d) investigate, select, and, on behalf of the Company, engage and conduct
business with such Persons as the Advisor deems necessary to the proper
performance of its obligations hereunder, including but not limited to
consultants, accountants, correspondents, lenders, technical advisors,
attorneys, brokers, underwriters, corporate fiduciaries, escrow agents,
depositaries, custodians, agents for collection, insurers, insurance agents,
banks, builders, developers, property owners, mortgagors, property management
companies, transfer agents and any and all agents for any of the foregoing,
including Affiliates of the Advisor, and Persons acting in any other capacity
deemed by the Advisor necessary or desirable for the performance of any of the
foregoing services, including but not limited to entering into contracts in the
name of the Company with any of the foregoing;
 
(e) consult with, and provide information to, the officers and the Board and
assist the Board in the formulation and implementation of the Company’s
financial policies, and, as necessary, furnish the Board with advice and
recommendations with respect to the making of investments consistent with the
investment objectives and policies of the Company and in connection with any
borrowings proposed to be undertaken by the Company;
 
(f) subject to the provisions of Sections 2.02(i) and 2.03 hereof, (i) locate,
analyze and select potential investments in Assets, (ii) structure and negotiate
the terms and conditions of transactions pursuant to which investment in Assets
will be made; (iii) make investments in Assets on behalf of the Company or the
Partnership in compliance with the investment objectives and policies of the
Company; (iv) arrange, structure and negotiate 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 the investments
in, Assets; (v) enter into leases of Property and service contracts for Assets;
and (vi) review and analyze each Property’s operating and capital budget; and,
to the extent necessary, perform all other operational functions for the
maintenance and administration of such Assets, including the servicing of
Mortgages;

 

 
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(g) provide the Board with periodic reports regarding prospective investments in
Assets;
 
(h) if a transaction requires approval by the Board, deliver to the Board all
documents required by them to properly evaluate the proposed transaction;
 
(i) obtain the prior approval of the Board (including a majority of all
Independent Directors) for any and all investments in Assets;
 
(j) obtain the prior approval of a majority of the Independent Directors and a
majority of the Board not otherwise interested in any transaction with the
Advisor or its Affiliates;
 
(k) negotiate on behalf of the Company with banks or lenders for loans to be
made to the Company, negotiate on behalf of the Company with investment banking
firms and broker-dealers, and negotiate private sales of Shares and other
securities of the Company or obtain loans for the Company, as and when
appropriate, but in no event in such a way so that the Advisor shall be acting
as broker-dealer or underwriter; and provided, further, that any fees and costs
payable to third parties incurred by the Advisor in connection with the
foregoing shall be the responsibility of the Company;
 
(l) obtain reports (which may be prepared by or for the Advisor or its
Affiliates), where appropriate, concerning the value of investments or
contemplated investments of the Company in Assets;
 
(m) from time to time, or at any time reasonably requested by the Board, make
reports to the Board of its performance of services to the Company under this
Agreement;
 
(n) provide the Company with, or assist the Company in arranging for, all
necessary cash management services;
 
(o) deliver to or maintain on behalf of the Company copies of all appraisals
obtained in connection with the investments in Assets;
 
(p) upon request of the Company, act, or obtain the services of others to act,
as attorney-in-fact or agent of the Company in making, requiring and disposing
of Assets, disbursing, and collecting the funds, paying the debts and fulfilling
the obligations of the Company and handling, prosecuting and settling any claims
of the Company, including foreclosing and otherwise enforcing mortgage and other
liens and security interests comprising any of the Assets;
 
(q) arrange for the disposal of Properties on the Company’s behalf in compliance
with the Company’s investment objectives and policies as stated in the Company’s
most recent Prospectus for Shares and advise the Board in connection with an
exit strategy;
 
(r) supervise the preparation and filing and distribution of returns and reports
to governmental agencies and to Stockholders and other investors and act on
behalf of the Company in connection with investor relations;
 
(s) provide office space, equipment and personnel as required for the
performance of the foregoing services as Advisor;

 

 
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(t) assist the Company in preparing all reports and returns required by the
Securities and Exchange Commission, Internal Revenue Service and other state or
federal governmental agencies; and
 
(u) do all things necessary to assure its ability to render the services
described in this Agreement.
 
2.03 Authority of Advisor.  Pursuant to the terms of this Agreement Including
the duties set forth in Section 2.02 and the restrictions included in this
Section 2.03 and in Section 2.06), and subject to the continuing  and exclusive
authority of the Board over the management of the Company, the Board hereby
delegates to the Advisor the authority to (i) locate, analyze and select
investment opportunities for the Company and the Partnership, (ii) structure the
terms and conditions of transactions pursuant to which investments will be made
or acquired for the Company or the Partnership, (iii) acquire Properties, make
and acquire Mortgages and other loans and invest in other Assets in compliance
with the investment objectives and policies of the Company, (iv) arrange for
financing and refinancing of Assets, (v) enter into leases for the Properties
and service contracts for the Assets with duly qualified and licensed
non-affiliated and Affiliated Persons, including oversight of non-affiliated and
Affiliated Persons that perform property management, acquisition, advisory,
disposition or other services for the Company, and (vi) arrange for, or provide,
accounting and other record-keeping functions at the Asset level.
 
The Board may, at any time upon the giving of notice to the Advisor, modify or
revoke the authority set forth in this Section 2.03, provided however, that such
modification or revocation shall be effective upon receipt by the Advisor or
such later date as is specified by the Board and included in the notice provided
to the Company and such modification or revocation shall not be applicable to
investment transactions to which the Advisor has committed the Company prior to
the date of receipt by the Advisor of such notification, or, if later, the
effective date of such modification or revocation specified by the Board.
 
2.04 Bank Accounts.  The Advisor may establish and maintain one or more bank
accounts in the name of the Company and may collect and deposit into any such
account or accounts, and disburse from any such account or accounts, any money
on behalf of the Company, under such terms and conditions as the Board may
approve, provided that no funds of the Company or the Partnership shall be
commingled with the funds of the Advisor; and the Advisor shall from time to
time, upon request by the Board, its Audit Committee or the auditors of the
Company, render appropriate accountings of such collections and payments to the
Board, its Audit Committee and the auditors of the Company.
 
2.05 Records; Access.  The Advisor shall maintain appropriate records of all its
activities hereunder and make such records available for inspection by the Board
and by counsel, auditors and authorized agents of the Company, at any time or
from time to time, upon reasonable request, during normal business hours.  The
Advisor shall at all reasonable times have access to the books and records of
the Company.
 
2.06 Limitations on Activities.  Anything else in this Agreement to the contrary
notwithstanding, the Advisor shall refrain from taking any action which, in its
sole judgment made in good faith, would (a) adversely affect the status of the
Company as a REIT, (b) subject the Company to regulation under the Investment
Company Act of 1940, as amended, (c) violate any law, rule, regulation or
statement of policy of any governmental body or agency having jurisdiction over
the Company, the Shares or its other securities, or (d) not be permitted by the
Articles of Incorporation or Bylaws, except if such action shall be ordered by
the Board, in which case the Advisor shall notify promptly the Board of the
Advisor’s judgment of the potential impact of such action and shall refrain from
taking such action until it receives further clarification or instructions from
the Board.  In such event the Advisor shall have no liability for acting in
accordance with the specific instructions of the Board so
given.  Notwithstanding the foregoing, the Advisor, its directors, officers,
employees and stockholders, and the directors, officers, employees and
stockholders of the Advisor’s Affiliates shall not be liable to the Company or
to the Board or Stockholders for any act or omission by the Advisor, its
directors, officers, employees or stockholders, or for any act or omission of
any Affiliate of the Advisor, its directors, officers, employees or
stockholders, except as provided in Section 5.02 of this Agreement.

 

 
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2.07 Other Activities of the Advisor.  Nothing herein contained shall prevent
the Advisor or its Affiliates from engaging in 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 stockholder of the Advisor or its
Affiliates to engage in any other business or to render services of any kind to
any other Person.  The Advisor may, with respect to any investment in which the
Company is a participant, also render advice and service to each and every other
participant therein.  The Advisor shall report to the Board the existence of any
condition or circumstance, existing or anticipated, of which it has knowledge,
which creates or could create a conflict of interest between the Advisor’s
obligations to the Company and its obligations to or its interest in any other
Person.  The Advisor or its Affiliates shall promptly disclose to the Board
knowledge of such condition or circumstance.  The Advisor shall inform the Board
at least quarterly of the investment opportunities that were offered to other
programs sponsored by the Sponsor, Advisor or any Director or their Affiliates
with similar investment objectives as the Company’s.  If the Sponsor, Advisor,
any Director or Affiliates thereof have sponsored other investment programs with
similar investment objectives which have investment funds available at the same
time as the Company, it shall be the duty of the Board (including the
Independent Directors) to adopt the method set forth in the Company’s most
recent Prospectus for its Shares or another reasonable method by which
investments are to be allocated to the competing investment entities and to use
their best efforts to apply such method fairly to the Company.
 
ARTICLE III
 

 
COMPENSATION
 
3.01 Fees.
 
(a) Asset Management Fee.  On the last day of each month, the Company shall pay
to the Advisor a monthly Asset Management Fee equal to 0.0417%, which is one
twelfth of 0.50%, of the Average Invested Assets, plus costs and expenses
incurred by the Advisor in providing asset management services.
 
(b) Acquisition and Advisory Fees.  The Company shall pay the Advisor, or an
Affiliate of the Advisor, a fee in the amount of 2.0% of the Contract Purchase
Price of each Asset as Acquisition and Advisory Fees.  The total of all
Acquisition Fees and any Acquisition Expenses shall be limited in accordance
with the Articles of Incorporation.  Acquisition and Advisory Fees shall be paid
as follows: (1) for real property (including properties where
development/redevelopment is expected), at the time of acquisition, (2) for
development/redevelopment projects (other than the initial acquisition of the
real property), at the time a final budget is approved, and (3) for loans and
similar assets (including without limitation mezzanine loans), quarterly based
on the value of loans made or acquired.  In the case of a
development/redevelopment project subject to clause (2) above, upon completion
of the development/redevelopment project, the Advisor shall determine the actual
amounts paid.  To the extent the amounts actually paid vary from the budgeted
amounts on which the Acquisition and Advisory Fee was initially based, the
Advisor will pay or invoice the Company for 2.0% of the budget variance such
that the Acquisition and Advisory Fee is ultimately 2.0% of amounts expended on
such development/redevelopment project.  Any portion of the Acquisition and
Advisory Fee may be deferred and paid in a subsequent year upon the mutual
agreement of the parties hereto.

 

 
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(c) Real Estate Commission.  If the Advisor or an Affiliate of the Advisor
provides a substantial amount of the services (as determined by a majority of
the Independent Directors) in connection with the Sale of one or more
Properties, the Advisor or such Affiliate shall receive a Real Estate Commission
up to one-half of the brokerage commission paid, but in no event an amount to
exceed 3% of the Contact Sales Price of such Property or Properties; provided,
however, that no Real Estate Commissions shall be payable to the Advisor for the
Sale of Properties if such Sale involves the Company selling all or
substantially all of its Properties in one or more transactions designed to
effectuate a business combination transaction (as opposed to a Company
liquidation, in which case the Real Estate Commissions would be payable if the
Advisor or an Affiliate of the Advisor provides a substantial amount of services
as provided above).  The Real Estate Commission may be paid in addition to real
estate commissions paid to non-Affiliates, provided that the total real estate
commissions paid to all Persons by the Company (including the Real Estate
Commission) shall not exceed an amount equal to the lesser of (i) the
Competitive Real Estate Commission or (ii) 6.0% of the Contract Sales Price of a
Property.
 
(d) Subordinated Share of Net Sales Proceeds.  The Subordinated Share of Net
Sales Proceeds shall be payable to the Advisor in an amount equal to 15.0% of
Net Sales Proceeds remaining after the Stockholders have received Distributions
equal to the sum of the Stockholders’ 8.0% Return and 100% of Invested
Capital.  The Company shall have the option to pay such fee in the form of cash,
Shares, a promissory note, or any combination of the foregoing.  In no event
will the Company pay a Subordinated Share of Net Sales Proceeds in excess of the
amount that would be presumptively reasonable under Section 9.7 of the Articles
of Incorporation.
 
(e) Subordinated Incentive Listing Fee.  Upon Listing, the Advisor shall be
entitled to the Subordinated Incentive Listing Fee in an amount equal to 15.0%
of the amount by which (i) the Market Value of the Company’s outstanding Shares
plus distributions paid by the Company prior to Listing, exceeds (ii) the sum of
(A) 100% of Invested Capital and (B) the total Distributions required to be paid
to the Stockholders in order to pay the Stockholders’ 8.0% Return from inception
through the date that Market Value is determined.  The Company shall have the
option to pay such fee in the form of cash, Shares, a non-interest bearing
promissory note, or any combination of the foregoing.  If the Company pays such
fee with a non-interest bearing promissory note, payment in full shall be made
from the Net Sales Proceeds of the first Sale completed by the Company after
Listing.  If the Net Sales Proceeds from the first Sale after Listing are
insufficient to pay the promissory note in full then the promissory note shall
be paid in part with such Net Sales Proceeds, and in part from the Net Sales
Proceeds from the next successive Sales until the amount owing pursuant to such
promissory note is paid in full.  If the promissory note has not been paid in
full within five years from the date of Listing, then the Advisor, or its
successors or assigns, may elect to convert the unpaid balance into Shares at a
price per Share equal to the average closing price of the Shares over the ten
trading days immediately preceding the date of such election.  If the Shares are
no longer Listed at such time as the promissory note becomes convertible into
Shares as provided by this paragraph, then the price per Share, for purposes of
conversion, shall equal the fair market value for the Shares as determined by
the Board based upon the Appraised Value of the Assets as of the date of
election.
 
(f) Changes to Fee Structure.  In the event of Listing, the Company and the
Advisor shall negotiate in good faith to establish a fee structure appropriate
for a perpetual-life entity.

 

 
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(g) Financing Coordination Fee.  In the event of the origination or refinancing
of any debt financing obtained by the Company, including the assumption
(directly or indirectly) of existing debt, that is used to acquire properties,
to make other permitted investments or is assumed (directly or indirectly) in
connection with the acquisition of properties, and if the Advisor provides a
substantial amount of services, as determined by the Independent Directors in
connection therewith, the Company will pay to the Advisor a Financing
Coordination Fee equal to 1% of the amount available to the Company and/or
outstanding under such financing; provided, however, that the Advisor shall not
be entitled to a Financing Coordination Fee in connection with the refinancing
of any loan secured by any particular property that was previously subject to a
refinancing in which the Advisor received a Financing Coordination
Fee.  Financing Coordination Fees payable from loan proceeds from permanent
financing will be paid to the Advisor as the Company acquires such permanent
financing, however, no Financing Coordination Fees will be paid from loan
proceeds from any line of credit unless all net offering proceeds received as of
the date proceeds from the line of credit are drawn for the purpose of acquiring
Properties or other permitted investments (other than reasonable working capital
reserves) have been invested by the Company.  In addition, with respect to any
revolving line of credit, our Advisor will receive a Financing Coordination Fee
only in connection with amounts being drawn for the first time and not upon
any  re-drawing of amounts that previously were repaid by us.
 
(h) Development Fee.  If the Advisor or an Affiliate of the Advisor provides
development/ redevelopment related services, the Company shall pay the Advisor
or the Affiliate of the Advisor, as the case may be, a Development Fee that is
usual and customary for comparable services rendered for similar projects in the
geographic market where services are provided; provided, however, that the
Company shall not pay a Development Fee to the Advisor or an Affiliate of the
Advisor if the Advisor elects to receive an Acquisition and Advisory Fee in
connection with the respective development/redevelopment project.
 
3.02 Expenses.
 
(a) In addition to the compensation paid to the Advisor pursuant to Section 3.01
hereof, the Company shall pay directly or reimburse the Advisor, as applicable,
for all of the expenses paid or incurred by the Advisor in connection with the
services it provides to the Company pursuant to this Agreement, including, but
not limited to:
 
(i) 
Organization and Offering Expenses; provided, however, that within 60 days after
the end of the month in which an Offering terminates, the Advisor shall
reimburse the Company for any Organization and Offering Expenses reimbursed by
the Company to the Advisor to the extent that such reimbursements exceed 1.5% of
the Gross Proceeds raised in the completed Offering.  The Advisor shall be
responsible for the payment of Organization and Offering Expenses in excess of
1.5% of the Gross Proceeds;
   
(ii) 
Acquisition Expenses incurred in connection with the selection and acquisition
of Assets in an amount estimated to be up to 0.5% of the Contract Purchase
Price;
     
(iii) 
the actual cost of goods, services and materials used by the Company and
obtained from Persons not affiliated with the Advisor, other than Acquisition
Expenses, including brokerage fees paid in connection with the purchase and sale
of Shares;

   
(iv) 
interest and other costs for borrowed money, including discounts, points and
other similar fees;
   
(v) 
taxes and assessments on income or property and taxes as an expense of doing
business;
   

 

 
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(vi) 
costs associated with insurance required in connection with the business of the
Company or by the Board;
   
(vii) 
expenses of managing and operating Assets owned by the Company, whether payable
to an Affiliate of the Company or a non-affiliated Person;
   
(viii) 
all expenses in connection with payments to the Board for attendance at meetings
of the Board and Stockholders;
   
(ix) 
expenses associated with Listing or with the issuance and distribution of Shares
and other securities of the Company, such as Selling Commissions and fees,
advertising expenses, taxes, legal and accounting fees, and Listing and
registration fees;
   
(x) 
expenses connected with payments of Distributions in cash or otherwise made or
caused to be made by the Company to the Stockholders;
   
(xi) 
expenses of organizing, reorganizing, liquidating or dissolving the Company or
amending the Articles of Incorporation or the Bylaws;
   
(xii) 
expenses of any third party transfer agent for the Shares and of maintaining
communications with Stockholders, including the cost of preparation, printing,
and mailing annual reports and other Stockholder reports, proxy statements and
other reports required by governmental entities;
   
(xiii) 
administrative service expenses, including all costs and expenses incurred by
Advisor in fulfilling its duties hereunder.  Such costs and expenses may include
reasonable wages and salaries and other employee-related expenses of all
employees of Advisor who are engage in the management, administration,
operations, and marketing of the Company, including taxes, insurance and
benefits relating to such employees, and legal, travel and other out-of-pocket
expenses which are directly related to their services provided hereunder; and
   
(xiv) 
audit, accounting and legal fees.

     
No reimbursement shall be made for costs of personnel of the Advisor or its
Affiliates to the extent that such personnel perform services in connection with
services for which the Advisor receives the Acquisition and Advisory Fee or the
Real Estate Commission.
 
(b) Expenses incurred by the Advisor on behalf of the Company and payable
pursuant to this Section 3.02 shall be reimbursed no less than quarterly to the
Advisor within 60 days after the end of each quarter.  The Advisor shall prepare
a statement documenting the expenses of the Company during each quarter, and
shall deliver such statement to the Company within 45 days after the end of each
quarter.
 
3.03 Other Services.  Should the Board request that the Advisor or any director,
officer or employee thereof render services for the Company other than set forth
in Section 2.02, such services shall be separately compensated at such rates and
in such amounts as are agreed by the Advisor and the Board, subject to the
limitations contained in the Articles of Incorporation, and shall not be deemed
to be services pursuant to the terms of this Agreement.

 

 
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3.04 Reimbursement to the Advisor.  The Company shall not reimburse the Advisor,
at the end of any fiscal quarter, for any Operating Expenses to the extent that,
in the four consecutive fiscal quarters then ended (the “Expense Year”) the
Operating Expenses exceed (the “Excess Amount”) the greater of (i) 2% of Average
Invested Assets or (ii) 25% of Net Income (the “2%/25% Guidelines”) for that
period of four consecutive quarters unless the Independent Directors determine
that such excess was justified, based on unusual and nonrecurring factors which
the Independent Directors deem sufficient.  If the Independent Directors do not
approve such excess as being so justified, any Excess Amount paid to the Advisor
during a fiscal quarter shall be repaid to the Company.  If the Independent
Directors determine such excess was justified, then within 60 days after the end
of any fiscal quarter of the Company for which total reimbursed Operating
Expenses for the Expense Year exceed the 2%/25% Guidelines, the Advisor, at the
direction of the Independent Directors, shall cause such fact to be disclosed in
the next quarterly report of the Company or in a separate writing and sent to
the stockholders, together with an explanation of the factors the Independent
Directors considered in determining that such excess expenses were
justified.  The Company will ensure that such determination will be reflected in
the minutes of the meetings of the Board.  All figures used in the foregoing
computation shall be determined in accordance with generally accepted accounting
principles applied on a consistent basis.
 
ARTICLE IV
 

 
TERM AND TERMINATION
 
4.01 Term; Renewal.  Subject to Section 4.02 hereof, this Agreement has a
one-year term and shall continue in force until the first anniversary of the
date hereof.  Thereafter, this Agreement may be renewed for an unlimited number
of successive one-year terms upon mutual consent of the parties.  It is the
Board’s Duty 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.
 
4.02 Termination.  This Agreement will automatically terminate upon
Listing.  This Agreement also may be terminated at the option of either party
(i) immediately upon a Change of Control or (ii) upon 60 days written notice
without cause or penalty (in either case, if termination is by the Company, then
such termination shall be upon the approval of a majority of the Independent
Directors).  Notwithstanding the foregoing, the provisions of this Agreement
which provide for payment to the Advisor of expenses, fees or other compensation
following the date of termination (i.e., Sections 3.01(e) and 4.03) shall
continue in full force and effect until all amounts payable thereunder to the
Advisor are paid in full.  The provisions of Sections 2.05, 2.06 and 4.03
through 6.11 shall survive the termination of this Agreement.
 
4.03 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 and
receive from the Company within 30 days after the effective date of such
termination all unpaid reimbursements of expenses, subject to the provisions of
Section 3.04 hereof, and all contingent liabilities related to fees payable to
the Advisor prior to termination of this Agreement, provided that the
Subordinated Incentive Listing Fee, if any, shall be paid in accordance with the
provisions of Section 3.01(e).

 

 
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(b) Upon termination, unless such termination is by the Company because of a
material breach of this Agreement by the Advisor or occurs upon a Change of
Control, the Advisor shall be entitled to receive a payment of the Performance
Fee equal to 15.0% of the amount, if any, by which (i) the Appraised Value of
the Assets on the Termination Date, less the amount of all indebtedness secured
by the Assets, plus the total Distributions paid to Stockholders from the
Company’s inception through the Termination Date, exceeds (ii) Invested Capital
plus an amount equal to the Stockholders’ 8.0% Return from inception through the
Termination Date.  The Company shall pay such Performance Fee at such time as
the Company completes the first Sale after the Termination Date.  Payment shall
be made from the Net Sales Proceeds of such Sale.  The Company shall have the
option to pay such fee in the form of cash, Shares, a non-interest bearing
promissory note, or any combination of the foregoing.  If the Net Sales Proceeds
from the first Sale after the Termination Date are insufficient to pay the
Performance Fee in full then the Performance Fee shall be paid in part with such
Net Sales Proceeds, and in part from the Net Sales Proceeds from the next
successive Sales until the Performance Fee is paid in full.  If the Performance
Fee has not been paid in full within five years from the Termination Date, then
the Advisor, its successors or assigns, may elect to convert the balance of the
fee into Shares at a price per Share equal to the average closing price of the
Shares over the ten trading days immediately preceding the date of such election
if the Shares are Listed at such time.  If the Shares are not Listed at such
time, the Advisor, its successors or assigns, may elect to convert the balance
of the fee into Shares at a price per Share equal to the fair market value for
the Shares as determined by the Board based upon the Appraised Value of the
Assets on the date of election.
 
(c) Notwithstanding the foregoing, if termination occurs upon a Change of
Control, the Advisor shall be entitled to payment of the Performance Fee equal
to 15.0% of the amount, if any, by which (i) the value of the Assets on the
Termination Date as determined in good faith by the Board, including a majority
of the Independent Directors, based upon such factors as the consideration paid
in connection with the Change of Control and the most recent Appraised Value,
less the amount of all indebtedness secured by the Assets, plus the total
Distributions paid to Stockholders from the Company’s inception through the
Termination Date, exceeds (ii) Invested Capital plus an amount equal to the
Stockholders’ 8.0% Return from inception through the Termination Date.  No
deferral of payment of the Performance Fee may be made under this Section
4.03(c).
 
(d) In the event that the Advisor disagrees with the valuation of Shares
pursuant to Section 4.03(b) where the Shares are not Listed for purposes of
determining the number of Shares to be issued to the Advisor following the
Advisor’s election to convert the balance of the Performance Fee owed to the
Advisor, then the fair market value of such Shares shall be determined by an
Independent Appraiser of equity value selected by the Advisor.
 
(e) Notwithstanding sections 4.03 (b) and (c), in the event the Subordinated
Incentive Listing Fee is paid to the Advisor following Listing, no Performance
Fee will be paid to the Advisor.
 
(f) The Advisor shall promptly upon termination:
 
(i) 
pay over to the Company all money collected and held for the account of the
Company pursuant to this Agreement, after deducting any accrued compensation and
reimbursement for its expenses to which it is then entitled;
   
(ii) 
deliver to the Board a full accounting, including a statement showing all
payments collected by it and a statement of all money held by it, covering the
period following the date of the last accounting furnished to the Board;
   

         

 

 
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(iii) 
deliver to the Board all assets, including the Assets, and documents of the
Company then in the custody of the Advisor; and
   
(iv) 
cooperate with, and take all reasonable actions requested by, the Company to
provide an orderly management transition.

 
    
ARTICLE V
 

 
INDEMNIFICATION
 
5.01 
      (a) The Company shall indemnify and hold harmless the Advisor and its
Affiliates, including their respective officers, directors, partners and
employees, from all liability, claims, damages or losses arising in the
performance of their duties hereunder, and related expenses, including
reasonable attorneys’ fees, to the extent such liability, claims, damages or
losses and related expenses are not fully reimbursed by insurance, subject to
any limitations imposed by the laws of the State of Maryland, the Articles of
Incorporation and the NASAA Guidelines under the Articles of Incorporation. The
Company shall not indemnify or hold harmless the Advisor or its Affiliates,
including their respective officers, directors, partners and employees, for any
liability or loss suffered by the Advisor or its Affiliates, including their
respective officers, directors, partners and employees, nor shall it provide
that the Advisor or its Affiliates, including their respective officers,
directors, partners and employees, be held harmless for any loss or liability
suffered by the Company, unless all of the following conditions are met: (i) the
Advisor or its Affiliates, including their respective officers, directors,
partners and employees, have determined, in good faith, that the course of
conduct which caused the loss or liability was in the best interests of the
Company; (ii) the Advisor or its Affiliates, including their respective
officers, directors, partners and employees, were acting on behalf of or
performing services of the Company; (iii) such liability or loss was not the
result of negligence or misconduct by the Advisor or its Affiliates, including
their respective officers, directors, partners and employees; and (iv) such
indemnification or agreement to hold harmless is recoverable only out of the
Company’s net assets and not from Stockholders.  Notwithstanding the foregoing,
the Advisor and its Affiliates, including their respective officers, directors,
partners and employees, shall not be indemnified by the Company for any losses,
liability or expenses arising from or out of an alleged violation of federal or
state securities laws by such party unless one or more of the following
conditions are met: (i) there has been a successful adjudication on the merits
of each count involving alleged securities law violations as to the particular
indemnitee; (ii) such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction as to the particular indemnitee; and (iii) a
court of competent jurisdiction approves a settlement of the claims against a
particular indemnitee and finds that indemnification of the settlement and the
related costs should be made, and the court considering the request for
indemnification has been advised of the position of the Securities and Exchange
Commission and of the published position of any state securities regulatory
authority in which securities of the Company were offered or sold as to
indemnification for violations of securities laws.
 
(b) The Articles of Incorporation provide that the advancement of Company funds
to the Advisor or its Affiliates, including their respective officers,
directors, partners and employees, for legal expenses and other costs incurred
as a result of any legal action for which indemnification is being sought is
permissible only if all of the following conditions are satisfied: (i) the legal
action relates to acts or omissions with respect to the performance of duties or
services on behalf of the Company; (ii) the legal action is initiated by a
third-party who is not a Stockholder or the legal action is initiated by a
Stockholder acting in his or her capacity as such and a court of competent
jurisdiction specifically approves such advancement; (iii) the Advisor or its
Affiliates, including their respective officers, directors, partners and
employees, undertake to repay the advanced funds to the Company together with
the applicable legal rate of interest thereon, in cases in which such Advisor or
its Affiliates, including their respective officers, directors, partners and
employees, are found not to be entitled to indemnification.

 

 
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(c) Notwithstanding the provisions of this Section 5.01, the Advisor shall not
be entitled to indemnification or be held harmless pursuant to this Section 5.01
for any activity which the Advisor shall be required to indemnify or hold
harmless the Company pursuant to Section 5.02.
 
5.02 Indemnification by Advisor.  The Advisor shall indemnify and hold harmless
the Company from contract or other liability, claims, damages, taxes or losses
and related expenses including attorneys’ fees, to the extent that (i) such
liability, claims, damages, taxes or losses and related expenses are not fully
reimbursed by insurance and (ii) are incurred by reason of the Advisor’s bad
faith, fraud, misfeasance, misconduct, negligence or reckless disregard of its
duties.  The Advisor shall not be held responsible for any action of the Board
in following or declining to follow any advice or recommendation given by the
Advisor.
 
ARTICLE VI
 

 
MISCELLANEOUS
 
6.01 Assignment to an Affiliate.  This Agreement may be assigned by the Advisor
to an Affiliate of the Advisor with the approval of a majority of the Board
(including a majority of the Independent Directors).  The Advisor may assign any
rights to receive fees or other payments under this Agreement without obtaining
the approval of the Board.  This Agreement shall not be assigned by the Company
without the consent of the Advisor, except in the case of an assignment by the
Company to a corporation or other organization which is a successor to all of
the assets, rights and obligations of the Company, in which case such successor
organization shall be bound hereunder and by the terms of said assignment in the
same manner as the Company is bound by this Agreement.  This Agreement shall be
binding on successors to the Company resulting from a Change of Control or sale
of all or substantially all the assets of the Company or the Partnership, and
shall likewise be binding upon any successor to the Advisor.
 
6.02 Relationship of Advisor and Company.  The Company and the Advisor are not
partners or joint venturers with each other, and nothing in this Agreement shall
be construed to make them such partners or joint venturers or impose any
liability as such on either of them.
 
6.03 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 Articles of
Incorporation, the Bylaws, or accepted by the party to whom it is given, and
shall be given by being delivered by hand or by overnight mail or other
overnight delivery service to the addresses set forth herein:

 

 
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To the Directors and to the Company:
Cole Credit Property Trust III, Inc.
2555 E. Camelback Road, Suite 400
Phoenix, Arizona 85016
Attention: Chief Executive Officer and President
 
To the Advisor:
Cole REIT Advisors III, LLC
2555 E. Camelback Road, Suite 400
Phoenix, Arizona 85016
Attention: President

 
Either party shall, as soon as reasonably practicable, give notice in writing to
the other party of a change in its address for the purposes of this Section
6.03.
 
6.04 Modification.  This Agreement shall not be changed, modified, or amended,
in whole or in part, except by an instrument in writing signed by both parties
hereto, or their respective successors or assignees.
 
6.05 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.
 
6.06 Choice of Law; Venue.  The provisions of this Agreement shall be construed
and interpreted in accordance with the laws of the State of Arizona, and venue
for any action brought with respect to any claims arising out of this Agreement
shall be brought exclusively in Maricopa County, Arizona.
 
6.07 Entire Agreement.  This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof.  The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. This Agreement may not be modified or
amended other than by an agreement in writing signed by each of the parties
hereto.
 
6.08 Waiver.  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.
 
6.09 Gender; Number.  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.
 
6.10 Headings.  The titles and 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.

 

 
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6.11 Execution in Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument.  This Agreement shall become binding
when the counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
 
6.12 Initial Investment. The Advisor or one of its Affiliates has contributed
$200,000 (the “Initial Investment”) in exchange for the initial issuance of
Shares of the Company.  The Advisor or its Affiliates may not sell any of the
Shares purchased with the Initial Investment while the Advisor acts in an
advisory capacity to the Company.  The restrictions included above shall not
apply to any Shares acquired by the Advisor or its Affiliates other than the
Shares acquired through the Initial Investment.  Neither the Advisor nor its
Affiliates shall vote any Shares they now own, or hereafter acquires, in any
vote for the election of Directors or any vote regarding the approval or
termination of any contract with the Advisor or any of its Affiliates.

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

 
COLE CREDIT PROPERTY TRUST III, INC.
 
 
 
By:
 
/s/ Christopher H. Cole
 
Christopher H. Cole
 
Chief Executive Officer and President

 
COLE REIT ADVISORS III, LLC
 
 
 
By:
 
/s/ Marc T. Nemer
 
Marc T. Nemer
 
President

 

 
 

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