Exhibit 10.3
PROPERTY MANAGEMENT AND LEASING AGREEMENT
This PROPERTY MANAGEMENT AND LEASING
AGREEMENT (this “Management Agreement”) is made and
entered into as of the ___day of
, 2008, by and among COLE RETAIL INCOME TRUST, INC., a Maryland
corporation (“CRIT”), CRIT OPERATING PARTNERSHIP, LP, a
Delaware limited partnership (“CRIT OP”), and COLE
REALTY ADVISORS, INC., an Arizona corporation (the
“Manager”).
WHEREAS, CRIT OP was organized to
acquire, own, operate, lease and manage real estate properties on
behalf of CRIT;
WHEREAS, CRIT intends to raise money
from the sale of its common stock to be used, net of payment of
certain offering costs and expenses, for investment in the
acquisition or construction of income-producing real estate and
other real estate-related investments (including the making or
purchase of mortgage loans), some or all of which are to be
acquired and held by Owner (as hereinafter defined) on behalf of
CRIT; and
WHEREAS, Owner intends to retain
Manager to manage and coordinate the leasing of certain of the real
estate properties acquired by Owner under the terms and conditions
set forth in this Management Agreement.
NOW, THEREFORE, in consideration of
the premises and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, do hereby agree, as
follows:
ARTICLE I
DEFINITIONS
Except as otherwise specified or as
the context may otherwise require, the following terms have the
respective meanings set forth below for all purposes of this
Management Agreement, and the definitions of such terms are equally
applicable both to the singular and plural forms thereof:
1.1
“Affiliate” means, with respect 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 other Person; (ii) any Person 10% or
more of whose outstanding voting securities are directly or
indirectly owned, controlled or held, with the power to vote, by
such other Person; (iii) any Person directly or indirectly
controlling, controlled by or under common control with such other
Person; (iv) any executive officer, director, trustee or
general partner of such other Person; and (v) any legal entity
for which such Person acts as an executive officer, director,
trustee or general partner.
1.2
“Gross Revenues” means all amounts actually collected
as rents or other charges for the use and occupancy of the
Properties, but shall exclude interest and other investment income
of Owner and proceeds received by Owner for a sale, exchange,
condemnation, eminent domain taking, casualty or other disposition
of assets of Owner.
1.3
“Improvements” means buildings, structures, equipment
from time to time located on the Properties and all parking and
common areas located on the Properties.
1.4
“Intellectual Property Rights” means all rights, titles
and interests, whether foreign or domestic, in and to any and all
trade secrets, confidential information rights, patents, invention
rights, copyrights, service marks, trademarks, know-how, or similar
intellectual property rights and all applications and rights to
apply for such rights, as well as any and all moral rights, rights
of privacy, publicity and similar rights and license rights of any
type under the laws or regulations of any governmental, regulatory,
or judicial authority, foreign or domestic and all renewals and
extensions thereof.
1.5
“Lease” means, unless the context otherwise requires,
any lease or sublease made by Owner as landlord or by its
predecessor.
1.6
“Management Fees” has the meaning set forth in
Section 5.1 hereof.
1.7
“Owner” means CRIT, CRIT OP and any joint venture,
limited liability company or other Affiliate of CRIT or CRIT OP
that owns, in whole or in part, on behalf of CRIT, any
Properties.
1.8
“Person” means an individual, corporation, association,
business trust, estate, trust, partnership, limited liability
company or other legal entity.
1.9
“Properties” means all real estate properties owned by
Owner and all tracts as yet unspecified but to be acquired by Owner
containing income-producing improvements or on which Owner will
construct income-producing improvements.
1.10
“Proprietary Properties” means all modeling algorithms,
tools, computer programs, know-how, methodologies, processes,
technologies, ideas, concepts, skills, routines, subroutines,
operating instructions and other materials and aides used in
performing the duties set forth in Article 2 that relate to
management advice, services and techniques regarding current and
potential Properties, and all modifications, enhancements and
derivative works of the foregoing.
ARTICLE II
APPOINTMENT OF MANAGER; SERVICES TO BE PERFORMED
2.1
Appointment of Manager . Owner hereby engages and retains
Manager as the manager and as tenant coordinating agent of the
Properties, and Manager hereby accepts such appointment on the
terms and conditions hereinafter set forth; it being understood
that this Management Agreement shall cause Manager to be, at law,
Owner’s agent upon the terms contained herein.
2.2
General Duties . Manager shall devote its best efforts to
performing its duties hereunder to manage, operate, maintain and
lease the Properties in a diligent, careful and vigilant manner.
The services of Manager are to be of scope and quality not less
than those generally performed by professional property managers of
other similar properties in the area. Manager shall make available
to Owner the full benefit of the judgment, experience and advice of
the members of Manager’s organization and staff with respect
to the policies to be pursued by Owner relating to the operation
and leasing of the Properties.
2.3
Specific Duties . Manager’s duties include the
following:
(a)
Lease Obligations . Manager shall perform all duties of the
landlord under all Leases insofar as such duties relate to
operation, maintenance, and day-to-day management. Manager shall
also provide or cause to be provided, at Owner’s expense, all
services normally provided to tenants of like premises, including
where applicable and without limitation, gas, electricity or other
utilities required to be furnished to tenants under Leases, normal
repairs and maintenance, and cleaning, and
-2-
janitorial service. Manager shall arrange for and supervise the
performance of all installations and improvements in space leased
to any tenant that are either expressly required under the terms of
the lease of such space or that are customarily provided to
tenants.
(b)
Maintenance . Manager shall cause the Properties to be
maintained in the same manner as similar properties in the area.
Manager’s duties and supervision in this respect shall
include, without limitation, cleaning of the interior and the
exterior of the Improvements and the public common areas on the
Properties and the making and supervision of repair, alterations,
and decoration of the Improvements, subject to and in strict
compliance with this Management Agreement and the Leases.
Construction activities undertaken by Manager, if any, will be
limited to activities related to the management, operation,
maintenance, and leasing of the Property (e.g., repairs,
renovations, and leasehold improvements).
(c)
Leasing Functions . Manager shall coordinate the leasing of
the Properties and shall negotiate and use its best efforts to
secure executed Leases from qualified tenants, and to execute same
on behalf of Owner, if requested, for available space in the
Properties, such Leases to be in form and on terms approved by
Owner and Manager, and to bring about complete leasing of the
Properties. Manager shall be responsible for the hiring of all
leasing agents, as necessary for the leasing of the Properties, and
to otherwise oversee and manage the leasing process on behalf of
Owner.
(d)
Notice of Violations . Manager shall forward to Owner
promptly upon receipt all notices of violation or other notices
from any governmental authority, and board of fire underwriters or
any insurance company, and shall make such recommendations
regarding compliance with such notice as shall be
appropriate.
(e)
Personnel . Any personnel hired by Manager to maintain,
operate and lease the Property shall be the employees or
independent contractors of Manager and not of Owner of such
Property, CRIT OP or CRIT. Manager shall use due care in the
selection and supervision of such employees or independent
contractors. Manager shall be responsible for the preparation of
and shall timely file all payroll tax reports and timely make
payments of all withholding and other payroll taxes with respect to
each employee.
(f)
Utilities and Supplies . Manager shall enter into or renew
contracts for electricity, gas, steam, landscaping, fuel, oil,
maintenance and other services as are customarily furnished or
rendered in connection with the operation of similar rental
property in the area.
(g)
Expenses . Manager shall analyze all bills received for
services, work and supplies in connection with maintaining and
operating the Properties, pay all such bills when due, and, if
requested by Owner, pay, when due, utility and water charges, sewer
rent and assessments, and any other amount payable in respect to
the Properties. All bills shall be paid by Manager within the time
required to obtain discounts, if any. Owner may from time to time
request that Manager forward certain bills to Owner promptly after
receipt, and Manager shall comply with any such request. Manager
shall pay all bills, assessments, real property taxes, insurance
premiums and any other amount payable in respect to the Properties
out of the Account (as hereinafter defined). All expenses shall be
billed at net cost (i.e., less all rebates, commissions, discounts
and allowances, however designed).
(h)
Monies Collected . Manager shall timely collect all rent and
other monies, in the form of a check or money order, from tenants
and any sums otherwise due Owner with respect to the Properties in
the ordinary course of business. Owner authorizes Manager to
request, demand, collect and provide receipts for all such rent and
other monies and to institute legal proceedings in the name of
Owner for the collection thereof and for the dispossession of any
tenant in default under its Lease.
-3-
(i)
Banking Accommodations . Manager shall establish and
maintain a separate checking account in the Owner’s name and
controlled by Manager subject to the provisions of this Management
Agreement (the “Account”) for funds relating to the
Properties. All monies deposited from time to time in the Account
shall be and remain the property of Owner and shall be withdrawn
and disbursed by Manager for the account of Owner only as expressly
permitted by this Management Agreement for the purposes of
performing the obligations of Manager hereunder. No monies
collected by Manager on Owner’s behalf shall be commingled
with funds of Manager. The Account shall be maintained, and monies
shall be deposited therein and withdrawn therefrom, in accordance
with the following:
(i) All
sums received from rents and other income from the Properties shall
be promptly deposited by Manager in the Account. Manager shall have
the right to designate two or more persons who shall be authorized
to draw against the Account, but only for purposes authorized by
this Management Agreement.
(ii) All
sums due to Manager hereunder, whether for compensation,
reimbursement for expenditures, or otherwise, as herein provided,
shall be a charge against the operating revenues of the Properties
and shall be paid and/or withdrawn by Manager from the Account
prior to the making of any other disbursements therefrom.
(iii) By
the 15 th day after the
end of each month, Manager shall forward to Owner all monies
contained in the Account other than a reasonable minimum balance
(to be determined jointly by Manager and Owner from time to time)
and any other amounts otherwise provided in the budget, which shall
remain in the Account.
(j)
Ownership Agreements . Manager has received copies of (and
will be provided with copies of future) articles of incorporation,
agreements of limited partnership, joint venture partnership
agreements and operating agreements, each as may be amended from
time to time, of Owner, as applicable (the “Ownership
Agreements”) and is familiar with the terms thereof. Manager
shall use reasonable care to avoid any act or omission that, in the
performance of its duties hereunder, shall in any way conflict with
the terms of Ownership Agreements.
(k)
Signs . Manager shall place and remove, or cause to be
placed and removed, such signs upon the Properties as Manager deems
appropriate, subject, however, to the terms and conditions of the
Leases and to any applicable ordinances and regulations.
2.4
Approval of Leases, Contracts, Etc . In fulfilling its
duties to Owner, Manager may and hereby is authorized to enter into
any leases, contracts or agreements on behalf of Owner in the
ordinary course of the management, operation, maintenance and
leasing of the Property.
2.5
Accounting, Records and Reports .
(a)
Records . Manager shall maintain all office records and
books of account and shall record therein, and keep copies of, each
invoice received from services, work and supplies ordered in
connection with the maintenance and operation of the Properties.
Such records shall be maintained on a double entry basis. Owner and
persons designated by Owner shall at all reasonable times have
access to and the right to audit and make independent examinations
of such records, books and accounts and all vouchers, files and all
other material pertaining to the Properties and this Management
Agreement, all of which Manager agrees to keep safe, available and
separate from any records not pertaining to the Properties, at a
place recommended by Manager and approved by Owner.
-4-
(b)
Monthly Reports . On or before the 15 th day after the
end of each month during the term of this Management Agreement,
Manager shall prepare and submit to Owner the following reports and
statements:
(i) rental
collection record;
(ii) monthly
operating statement;
(iii) copy
of cash disbursements ledger entries for such period, if
requested;
(iv) copy
of cash receipts ledger entries for such period, if
requested;
(v) the
original copies of all contracts entered into by Manager on behalf
of Owner during such period, if requested; and
(vi) copy
of ledger entries for such period relating to security deposits
maintained by Manager, if requested.
(c)
Budgets and Leasing Plans . Not later than November 15
of each calendar year, Manager shall prepare and submit to Owner
for its approval an operating budget and a marketing and leasing
plan on each Property for the calendar year immediately following
such submission. In connection with any acquisition of a Property
by Owner, Manager shall prepare a budget and marketing and leasing
plan for the remainder of the calendar year. The budget and
marketing and leasing plan shall be in the form of the budget and
plan approved by Owner prior to the date thereof. As often as
reasonably necessary during the period covered by any such budget,
Manager may submit to Owner for its approval an updated budget or
plan incorporating such changes as shall be necessary to reflect
cost over-runs and the like during such period. If Owner does not
disapprove any such budget within 30 days after receipt
thereof by Owner, such budget shall be deemed approved. If Owner
shall disapprove any such budget or plan, it shall so notify
Manager within said 30-day period and explain the reasons therefor.
If Owner disapproves of any budget or plan, Manager shall submit a
revised budget or plan, as applicable, within 10 (ten) days of
receipt of the notice of disapproval, and Owner shall have 10
(ten) days to provide notice to Manager if it disapproves of
any such revised budget or plan. Manager will not incur any costs
other than those estimated in any budget except for:
(i) tenant
improvements and real estate commissions required under a
Lease;
(ii) maintenance
or repair costs under $10,000 per Property;
(iii) costs
incurred in emergency situations in which action is immediately
necessary for the preservation or safety of the Property, or for
the safety of occupants or other persons (or to avoid the
suspension of any necessary service of the Property);
(iv) expenditures
for real estate taxes and assessment; and
(v) maintenance
supplies calling for an aggregate purchase price less than $25,000
per annum for all Properties.
Budgets prepared by Manager shall be
for planning and informational purposes only, and Manager shall
have no liability to Owner for any failure to meet any such budget.
However, Manager will use its best efforts to operate within the
approved budget.
-5-
(d)
Legal Requirements . Manager shall execute and file when due
all forms, reports, and returns required by law relating to the
employment of its personnel. Manager shall be responsible for
notifying Owner in the event it receives notice that any
Improvement on a Property or any equipment therein does not comply
with the requirements of any statute, ordinance, law or regulation
of any governmental body or of any public authority or official
thereof having or claiming to have jurisdiction thereover. Manager
shall promptly forward to Owner any complaints, warnings, notices
or summonses received by it relating to such matters. Owner
represents that to the best of its knowledge each of its Properties
and any equipment thereon will upon acquisition by Owner comply
with all such requirements. Owner authorizes Manager to disclose
the ownership of the Property by Owner to any such officials. Owner
agrees to indemnify, protect, defend, save and hold Manager and its
stockholders, officers, directors, employees, managers, successors
and assigns (collectively, the “Indemnified Parties”)
harmless of and from any and all Losses (as defined in
Section 3.5(a) hereof) that may be imposed on them or any or
all of them by reason of the failure of Owner to correct any
present or future violation or alleged violation of any and all
present or future laws, ordinances, statutes, or regulations of any
public authority or official thereof, having or claiming to have
jurisdiction thereover, of which it has actual notice.
ARTICLE III
AUTHORITY GRANTED TO MANAGER AND CERTAIN OWNER
OBLIGATIONS
3.1
Authority As To Tenants, Etc. Owner agrees and does hereby
give Manager the following exclusive authority and powers (all of
which shall be exercised either in the name of Manager, as Manager
for Owner, or in the name or Owner entered into by Manager as
Owner’s authorized agent, and Owner shall assume all expenses
in connection with such matters):
(a) to
advertise each Property or any part thereof and to display signs
thereon, as permitted by law;
(b) to
lease the Properties to tenants;
(c) to
pay all expenses of leasing such Property, including but not
limited to, newspaper and other advertising, signage, banners,
brochures, referral commissions, leasing commissions,
finder’s fees and salaries, bonuses and other compensation of
leasing personnel responsible for the leasing of the
Property;
(d) to
cause references of prospective tenants to be investigated, it
being understood and agreed by the parties hereto that Manager does
not guarantee the creditworthiness or collectibility of accounts
receivable from tenants, users or lessees; and to negotiate new
Leases and renewals and cancellations of existing Leases that shall
be subject to Manager obtaining Owner’s approval;
(e) to
collect from tenants all or any of the following: a late rent
administrative charge, a non-negotiable check charge, credit report
fee, a subleasing administrative charge and/or broker’s
commission; and Manager need not account for such charges and/or
commission to Owner;
(f) to
terminate tenancies and to sign and serve in the name of Owner of
each Property such notices as are deemed necessary by
Manager:
(i) to
institute and prosecute actions to evict tenants and to recover
possession of the Property or portions thereof; and
-6-
(ii) with
Owner’s authorization, to sue for and in the name of Owner
and recover rent and other sums due; and to settle, compromise, and
release such actions or suits, or reinstate such tenancies. All
expenses of litigation including, but not limited to,
attorneys’ fees, filing fees, and court costs that Manager
shall incur in connection with the collecting of rent and other
sums, or to recover possession of any Property or any portion
thereof, shall be deemed to be an operational expense of the
Property. Manager and Owner shall concur on the selection of the
attorneys to handle such litigation.
3.2
Operational Authority . Owner agrees and does hereby give
Manager the following exclusive authority and powers (all of which
shall be exercised either in the name of Manager, as Manager for
Owner, or in the name of Owner entered into by Manager as
Owner’s authorized agent, and Owner shall assume all expenses
in connection with such matters):
(a) to
hire, supervise, discharge, and pay all labor required for the
operation and maintenance of each Property including but not
limited to on-site personnel, managers, assistant managers, leasing
consultants, engineers, janitors, maintenance supervisors and other
employees required for the operation and maintenance of the
Property, including personnel spending a portion of their working
hours (to be charged on a pro rata basis) at the Property. All
expenses of such employment shall be deemed operational expenses of
the Property.
(b) to
make or cause to be made all ordinary repairs and replacements
necessary to preserve each Property in its present condition and
for the operating efficiency thereof and all alterations required
to comply with lease requirements, and to decorate the
Property;
(c) to
negotiate and enter into, as Manager of the Property, contracts for
all items on budgets that have been approved by Owner, any
emergency services or repairs for items not exceeding $10,000,
appropriate service agreements and labor agreements for normal
operation of the Property, which have terms not to exceed three
years, and agreements for all budgeted mai
|
