EX-10.4 ADVISORY AGREEMENT






Exhibit 10.4



ADVISORY AGREEMENT




     This
ADVISORY AGREEMENT (this “Agreement”) is entered
into on this the
8th day
of October,
2008, 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 intends to issue shares of its common stock, par value $.01, to the
public, upon registration of such shares with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended;



     WHEREAS, the Company intends to qualify as a real estate investment trust and to invest its
funds in investments permitted by the terms of the Company’s Articles of Incorporation and Sections
856 through 860 of the Internal Revenue Code;



     WHEREAS, the Company desires to avail itself of the experience, sources of information,
advice, assistance and certain facilities available to the Advisor and to have the Advisor
undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the
supervision of, the Board of Directors (the “Board”) of the Company, all as provided herein; and



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



     NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements
contained herein, 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.



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.



Aggregate Assets Value. The aggregate book value of the Assets at the time of measurement
before deducting depreciation, bad debts or other similar non-cash reserves and without reduction
for any debt secured by or relating to such assets; provided, however, that during such periods in
which the Board is determining on a regular basis the current value of the Company’s net assets for
purposes of enabling fiduciaries of employee benefit plan stockholders to comply with applicable
Department of Labor reporting requirements, “Aggregate Assets Value” will equal the greater of (i)
the amount determined pursuant to the foregoing or (ii) the most recent Assets’ aggregate valuation
established by the Board without reduction for depreciation, bad debts or other non-cash reserves
and without reduction for any debt secured by or relating to such assets.



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, 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 during such periods in which the Board is determining on a regular basis
the current value of the Company’s net assets for purposes of enabling fiduciaries of employee
benefit plan stockholders to comply with applicable Department of Labor reporting requirements,
and solely for such purpose, “Average Invested Assets” will equal the greater of (i) the amount determined pursuant to the
foregoing or (ii) the most recent Assets’ aggregate valuation established by the Board without
reduction for depreciation, bad debts or other non-cash reserves.



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.



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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.



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.



Dividends. 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



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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.



Independent Director. A Director who is not; on the date of determination and within the
last two years from the date of determination has not been, directly or indirectly associated with
the Sponsor or the Advisor by virtue of (i) ownership of an
interest in the Sponsor, the Advisor or any of their Affiliates, other than the
Company, (ii) employment by 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, other than as a
Director of the Company or as a director of any other real estate investment trust organized by the
Sponsor or advised by the Advisor, (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 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, reduced by the portion of any Dividend 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.



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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 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.



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).



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



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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; (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



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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.



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.



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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 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 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 the investments in, Assets; and (v) enter into leases of Property and service contracts
for Assets and, to the extent necessary, perform all other operational functions for the
maintenance and administration of such Assets, including the servicing of Mortgages;



     (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;



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     (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) 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;



     (r) provide office space, equipment and personnel as required for the performance of the
foregoing services as Advisor;



     (s) 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



     (t) 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
its own name for the account of the Company or in the name of the Company and may collect and
deposit into any such account or accounts, and disburse from any such account or accounts, any
money on behalf of



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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.



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.



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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 Aggregate Asset Value, 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.



     (c) Real Estate Commission. If the Advisor or an Affiliate 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 Dividends 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, including any interest
payable in connection with any promissory note issued by the Company in payment of the
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 Dividends
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 promissory note, or any combination of the foregoing.
If the Company pays such fee with a promissory note, payment in full shall be made from the Net
Sales Proceeds of the first Sale completed by the Company after Listing, and interest will accrue
at a rate deemed fair and reasonable by the Board from and after the date of Listing. If the Net
Sales Proceeds from the first Sale after Listing are insufficient to pay the promissory note in
full, including accrued interest, 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



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its successors or assigns, may elect to convert the unpaid balance, including accrued but
unpaid interest, 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.



     (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.



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 a 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, Listing and registration
fees;




(x) expenses connected with payments of Dividends 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).



     (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 Dividends 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



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from inception through the Termination Date. The Company shall pay such Performance Fee,
with interest, 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. Interest will accrue beginning on
the Termination Date at a rate deemed fair and reasonable by the Board on the Termination Date.
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. If the Net Sales Proceeds from the first Sale after the
Termination Date are insufficient to pay the Performance Fee in full, plus accrued interest, 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, with
interest. 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,
including accrued but unpaid interest, 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, including accrued
but unpaid interest, 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 Dividends 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



-16-









 







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.



     (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:




	 	 	 
	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: Chief Executive Officer and President






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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.



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




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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 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/ Christopher H. Cole 	 
	 	 	Christopher H. Cole 	 
	 	 	Chief Executive Officer and President 	 
	 




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