AMENDED AND RESTATED PROPERTY MANAGEMENT AND LEASING AGREEMENT

 

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                                                                    EXHIBIT 10.1

 

 

         AMENDED AND RESTATED PROPERTY MANAGEMENT AND LEASING AGREEMENT

 

         This AMENDED AND RESTATED PROPERTY MANAGEMENT AND LEASING AGREEMENT

(this "Management Agreement") is made and entered into as of the 16th day of

September, 2005, by and among COLE CREDIT PROPERTY TRUST II, INC., a Maryland

corporation ("Cole REIT"), COLE OPERATING PARTNERSHIP II, LP, a Delaware limited

partnership ("Cole OP"), and FUND REALTY ADVISORS, INC., an Arizona corporation

(the "Manager").

 

         WHEREAS, COLE OP was organized to acquire, own, operate, lease and

manage real estate properties on behalf of COLE REIT;

 

         WHEREAS, COLE REIT 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 COLE REIT; 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.

 

 

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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 Cole REIT, Cole OP and any joint venture, limited liability

company or other Affiliate of Cole REIT or Cole OP that owns, in whole or in

part, on behalf of Cole REIT, 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

 

 

 

 

 

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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, Cole OP or Cole REIT. 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.

 

 

 

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                  (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 15th 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.

 

 

 

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                  (b) Monthly Reports. On or before the 15th 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.

 

 

 

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                  (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

 

 

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                      (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 or 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 o