EX-10.3 PROPERTY MANAGEMENT AND LEASING AGREEMENT






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
8th day
of October,
2008, by and among COLE CREDIT PROPERTY TRUST III, INC., a
Maryland corporation (“CCPT III”), COLE REIT III OPERATING PARTNERSHIP, LP, a Delaware limited partnership
(“CCPT III OP”), and COLE REALTY ADVISORS, INC., an Arizona corporation (the “Manager”).



     WHEREAS,
CCPT III OP was organized to acquire, own, operate, lease and manage real estate
properties on behalf of CCPT III;



     WHEREAS,
CCPT III 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 CCPT III; 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 CCPT III, CCPT III OP and any joint venture, limited liability company or other Affiliate
of CCPT III or CCPT III OP that owns, in whole or in part, on behalf of CCPT III, 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, CCPT III OP or CCPT III. 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 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 maintenance, minor
alterations, and utility services, including, but not limited to, electricity, gas, fuel, water,
telephone, window washing, scavenger service, landscaping, snow removal, pest exterminating,
decorating and legal services in connection with the Leases and service agreements relating to the
Property, and other services or such of them as Manager may consider appropriate; and




          (d) to purchase supplies and pay all bills.



Manager shall use its best efforts to obtain the foregoing services and utilities for the Property
under terms that are as cost-effective and otherwise favorable to Manager as possible for the
quality of services and utilities required. Owner hereby appoints Manager as Owner’s authorized
Manager for the purpose of executing, as Manager for said Owner, all such contracts. In addition,
Owner agrees to specifically assume in writing all obligations under all such contracts so entered
into by Manager, on behalf of Owner of the Property, upon the termination of this Manager
Agreement, and Owner shall indemnify, protect, save, defend and hold Manager and the other
Indemnified Parties harmless from and against any and all Losses resulting from, arising out of or
in any way related to such contracts and that relate to or concern matters occurring after
termination of this Management Agreement, but excluding matters arising out of Manager’s willful
misconduct, gross negligence and/or unlawful acts. Manager shall secure the written approval of
appropriate contracts by Owner for any non-budgeted and non-emergency/contingency capital items,
alterations or other expenditures in excess of $10,000 for any one item, securing for each item at
least three written bids, if practicable, or providing evidence satisfactory to Owner, including
such reasonable actions taken by the Manager, that the contract amount is lower than industry
standard pricing, from responsible contractors. Manager shall have the right from time to time
during the term hereof, to contract with and make purchases from Affiliates of Manager, provided
that contract rates and prices are competitive with other available sources. Manager may, at any
time and from time to time, request and




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receive prior written authorization from Owner for any one or more purchases or other expenditures,
notwithstanding that Manager may otherwise be authorized hereunder to make such purchases or
expenditures.



3.3 Rent and Other Collections. Owner agrees and does hereby give Manager the 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) to collect rents and/or assessments and other
items, including but not limited to tenant payments for real estate taxes, property liability and
other insurance, damages and repairs, common area maintenance, tax reduction fees and all other
tenant reimbursements, administrative charges, proceeds of rental interruption insurance, parking
fees, income from coin operated machines and other miscellaneous income, due or to become due and
give receipts therefor and to deposit all such Gross Revenue collected hereunder in the Account.
Manager may endorse any and all checks received in connection with the operation of any Property
and drawn to the order of Owner, and Owner shall, upon request, furnish Manager’s depository with
an appropriate authorization for Manager to make such endorsement. Manager shall also have the
exclusive authority to collect and handle tenants’ security deposits, including the right to apply
such security deposits to unpaid rent, and to comply, on behalf of Owner of the Property, with
applicable state or local laws concerning security deposits and interest thereon, if any. Manager
shall not be required to advance any monies for the care or management of any Property. Owner
agrees to advance all monies necessary therefor. If Manager shall elect to advance any money in
connection with a Property, as permitted by applicable law, Owner agrees to reimburse Manager
forthwith and hereby authorizes Manager to deduct such advances from any monies due Owner. In
connection with any insured losses or damages relating to any Property, Manager shall have the
exclusive authority to handle all steps necessary regarding any such claim; provided that Manager
will not make any adjustments or settlements in excess of $10,000 without Owner’s prior written
consent.



3.4 Payment of Expenses. Owner agrees and does hereby give Manager the exclusive authority
and power (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) to pay all expenses of the Property from the Gross
Revenue collected in accordance with Section 3.3 above, from the Account. It is understood that
the Gross Revenue will be used first to pay the compensation to Manager as contained in Article 5
below, then operational expenses and then any mortgage indebtedness, including real estate tax and
insurance impounds, but only as directed by Owner in writing and only if sufficient Gross Revenue
is available for such payments. Nothing in this Management Agreement shall be interpreted in such
a manner as to obligate Manager to pay from Gross Revenue, any expenses incurred by Owner prior to
the commencement of this Management Agreement, except to the extent Owner advances additional funds
to pay such expenses.



3.5 Certain Owner Indemnification Obligations.




          (a) On Termination. Subject to the requirements of Section 6.5 hereof, in the event
this Management Agreement is terminated for any reason prior to the expiration of its original term
or any renewal term, Owner shall indemnify, protect, defend, save and hold Manager and all of the
other Indemnified Parties harmless from and against any and all claims, causes of action, demands,
suits, proceedings, loss, judgments, damage, awards, liens, fines, costs, attorney’s fees and
expenses, of every kind and nature whatsoever (collectively, “Losses”), that may be imposed on or
incurred by Manager by reason of the willful misconduct, gross negligence and/or unlawful acts
(such unlawfulness having been adjudicated by a court of proper jurisdiction) of Owner.




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          (b) Property Damage, Etc. Subject to the requirements of Section 6.5 hereof, Owner
agrees to indemnify, defend, protect, save and hold Manager and all of the other Indemnified
Parties harmless from any and all Losses in connection with or in any way related to the Property
and from liability for damage to the Property and injuries to or death of any person whomsoever,
and damage to property; provided, however, that such indemnification shall not extend to any such
Losses arising out of the misconduct, negligence or unlawful acts (such unlawfulness having been
adjudicated by a court of proper jurisdiction) of Manager or any of the other Indemnified Parties.
Manager shall not be liable for any error of judgment or for any mistake of fact or law, or for any
thing that it may do or refrain from doing, except in cases of misconduct, negligence or unlawful
acts (such unlawfulness having been adjudicated by a court of proper jurisdiction).



3.6 Environmental Matters. Owner hereby warrants and represents to Manager that to the
best of Owner’s knowledge, no Property, upon acquisition by Owner, nor any part thereof, will be
used to treat, deposit, store, dispose of or place any hazardous substance that may subject Manager
to liability or claims under the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C.A. Section 9607), or any successor statute thereof, or any constitutional
provision, statute, ordinance, law, or regulation of any governmental body or of any order or
ruling of any public authority or official thereof, having or claiming to have jurisdiction
thereover. Furthermore, Owner agrees to indemnify, protect, defend, save and hold Manager and all
of the other Indemnified Parties from any and all Losses involving, concerning or in any way
related to any past, current or future allegations regarding treatment, depositing, storage,
disposal or placement by any party other than Manager of hazardous substances on the Property.



3.7 Legal Status of Properties. Owner represents that to the best of its knowledge each
Property and any equipment thereon, when acquired by Owner, will comply with all legal requirements
and authorizes Manager to disclose the identity of the Owner of the Property to any such officials
and agrees to indemnify, protect, defend, save and hold Manager and the other Indemnified Parties
harmless of and from any and all Losses that may be imposed on them or any 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. In the
event it is alleged or charged that any Improvement or any equipment on a Property or any act or
failure to act by Owner with respect to the Property or the sale, rental, or other disposition
thereof fails to comply with, or is in violation of, any of the requirements of any constitutional
provision, statute, ordinance, law, or regulation of any governmental body or any order or ruling
of any public authority or official thereof having or claiming to have jurisdiction thereover, and
Manager, in its sole and absolute discretion, considers that the action or position of Owner, with
respect thereto may result in damage or liability to Manager, Manager shall have the right to
cancel this Management Agreement at any time by written notice to Owner of its election so to do,
which cancellation shall be effective upon the service of such notice. Such cancellation shall not
release the indemnities of Owner set forth in this Management Agreement and shall not terminate any
liability or obligation of Owner to Manager for any payment, reimbursement, or other sum of money
then due and payable to Manager hereunder.



3.8 Extraordinary Payments. Owner agrees to give adequate advance written notice to
Manager if Owner desires that Manager make any extraordinary payment, out of Gross Revenue, to the
extent funds are available after the payment of Manager’s compensation as provided for herein and
all operational expenses, of mortgage indebtedness, general taxes, special assessments, or fire,
boiler or any other insurance premiums.




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ARTICLE IV


EXPENSES

4.1 Owner’s Expenses. Except as otherwise specifically provided, all costs and expenses
incurred hereunder by Manager in fulfilling its duties to Owner shall be for the account of and on
behalf of Owner. Such costs and expenses shall include the wages and salaries and other
employee-related expenses, unless otherwise waived, in whole or in part, by the Manager in its sole
discretion, of all on-site and off-site employees of Manager who are engaged in the operation,
management, maintenance and leasing or access control of the Properties, including taxes, insurance
and benefits relating to such employees, and legal, travel and other out-of-pocket expenses that
are directly related to the management of specific Properties. All costs and expenses for which
Owner is responsible under this Management Agreement shall be paid by Manager out of the Account.
In the event the Account does not contain sufficient funds to pay all said expenses, Owner shall
fund all sums necessary to meet such additional costs and expenses.


4.2 Manager’s Expenses. Manager shall, out of its own funds, pay all of its general
overhead and administrative expenses.


ARTICLE V


MANAGER’S COMPENSATION

5.1 Management Fees.


          (a) Owner shall pay Manager property management and leasing fees in an amount equal to (i) two
percent (2.0%) of Gross Revenues of single-tenant properties and (ii) four percent (4.0%) of Gross
Revenues of multi-tenant properties, plus reimbursement of Manager’s cost of maintaining the
property, less all payments to third-party property management subcontractors (the “Management
Fees”) on a monthly basis from the rental income received from the Properties over the term of this
Management Agreement. In addition, in the event that the Owner contracts, directly, with a
third-party property manager in respect of a property, the Owner, in it sole discretion, may pay
Manager an oversight fee in an aggregate amount of up to one percent (1%) of the Gross Revenues of
the property managed (the “Oversight Fee”); provided however that in no event shall the Owner pay
both Management Fees and an Oversight Fee to Manager with respect to the same property.


          (b) Manager’s compensation under this Section 5.1 shall apply to all renewals, extensions or
expansions of Leases that Manager has originally negotiated. In the event Manager assists with
planning and coordinating the construction of any tenant improvements or capital improvements,
Manager shall be entitled to receive from the Owner for any such tenant improvement an amount equal
to not greater than five percent (5.0%) of the cost of such improvements.


5.2 Leasing Fees. In addition to the compensation paid to Manager under Section 5.1 above,
Manager shall be entitled to receive a separate fee for the Leases of new tenants and renewals of
Leases with existing tenants in an amount not to exceed the fee customarily charged in arm’s length
transactions by others rendering similar services in the same geographic area for similar
properties as determined by a survey of brokers and agents in such area (“Leasing Fees”).


5.3 Audit Adjustment. If any audit of the records, books or accounts relating to the
Properties discloses an overpayment or underpayment of Management Fees, Owner or Manager shall
promptly pay to the other party the amount of such overpayment or underpayment, as the case may be.
If such audit


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discloses an overpayment of Management Fees for any fiscal year of more than the correct Management
Fees for such fiscal year, Manager shall bear the cost of such audit.



5.4 Additional Services. Any services beyond those specified herein, such as sales,
brokerage, loan origination and servicing, property tax reduction and risk management services,
shall be performed by Manager and compensated by Owner only if the parties agree on the scope of
such work and provided that the compensation to be paid therefore will not exceed that which would
be paid to unrelated parties providing such services and provided further that all such
compensation must be approved by a majority of the directors, including a majority of the
independent directors (as defined in the charter of the Owner), not otherwise interested in the
transaction, of Owner.




ARTICLE VI




INSURANCE AND INDEMNIFICATION



6.1 Insurance to be Carried.




          (a) Manager shall obtain and keep in full force and effect insurance on the Properties against
such hazards as Owner and Manager shall deem appropriate, but in any event insurance sufficient to
comply with the Leases and Ownership Agreements shall be maintained. All liability policies shall
provide sufficient insurance satisfactory to both Owner and Manager and shall contain waivers of
subrogation for the benefit of Manager.




          (b) Manager shall obtain and keep in full force and effect, in accordance with the laws of the
state in which each Property is located, employer’s liability insurance applicable to and covering
all employees of Manager at the Properties and all persons engaged in the performance of any work
required hereunder, and Manager shall furnish Owner certificates of insurers naming Owner as a
co-insured and evidencing that such insurance is in effect. If any work under this Management
Agreement is subcontracted as permitted herein, Manager shall include in each subcontract a
provision that the subcontractor shall also furnish Owner with such a certificate.



6.2 Insurance Expenses. Premiums and other expenses of such insurance, as well as any
applicable payments in respect of deductibles shall be borne by Owner.



6.3 Cooperation with Insurers. Manager shall cooperate with and provide reasonable access
to the Properties to representatives of insurance companies and insurance brokers or agents with
respect to insurance that is in effect or for which application has been made. Manager shall use
its best efforts to comply with all requirements of insurers.



6.4 Accidents and Claims. Manager shall promptly investigate and shall report in detail to
Owner all accidents, claims for damage relating to Ownership, operation or maintenance of the
Properties, and any damage or destruction to the Properties and the estimated costs of repair
thereof, and shall prepare for approval by Owner all reports required by an insurance company in
connection with any such accident, claim, damage, or destruction. Such reports shall be given to
Owner promptly, and any report not so given within thirty (30) days after the occurrence of any
such accident, claim, damage or destruction shall be noted in the monthly operating statement
delivered to Owner pursuant to Section 2.5(b). Manager is authorized to settle any claim against
an insurance company arising out of any policy and, in connection with such claim, to execute
proofs of loss and adjustments of loss and to collect and receipt for loss proceeds.




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6.5 Indemnification. Manager shall hold Owner harmless from and indemnify and defend Owner
against any and all claims or liability for any injury or damage to any person or property
whatsoever for which Manager is responsible occurring in, on, or about the Properties, including,
without limitation, the Improvements when such injury or damage shall be caused by the negligence
of Manager, its agents, servants, or employees, except to the extent that Owner recovers insurance
proceeds with respect to such matter. Owner will indemnify and hold Manager harmless against all
liability for injury to persons and damage to property caused by Owner’s negligence and which did
not result from the negligence of misconduct of Manager, except to the extent Manager recovers
insurance proceeds with respect to such matter. Notwithstanding the foregoing, if the person
seeking indemnification under this Section 6.5 is an Affiliate, such person’s right to
indemnification is subject to any limitations set forth in the Company’s Articles of Incorporation
or any amendments thereto.




ARTICLE VII




TERM AND TERMINATION



7.1 Term. This Management Agreement shall commence on the date first above written and
shall continue until the first (1st) anniversary of such date. Thereafter, this Management
Agreement may be renewed for an unlimited number of successive one-year terms upon mutual consent
of the parties. Each such renewal shall be for a term of no more than one year. It is the duty of
the Board of Directors to evaluate the performance of the Manager annually before renewing this
Management Agreement. In addition, either party may terminate this Management Agreement
immediately upon the occurrence of any of the following:




          (a) A decree or order is rendered by a court having jurisdiction (i) adjudging Manager as
bankrupt or insolvent, or (ii) approving as properly filed a petition seeking reorganization,
readjustment, arrangement, composition or similar relief for Manager under the federal bankruptcy
laws or any similar applicable law or practice, or (iii) appointing a receiver or liquidator or
trustee or assignee in bankruptcy or insolvency of Manager or a substantial part of the property of
Manager, or for the winding up or liquidation of its affairs, or




          (b) Manager (i) institutes proceedings to be adjudicated a voluntary bankrupt or an insolvent,
(ii) consents to the filing of a bankruptcy proceeding against it, (iii) files a petition or answer
or consent seeking reorganization, readjustment, arrangement, composition or relief under any
similar applicable law or practice, (iv) consents to the filing of any such petition, or to the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency for it
or for a substantial part of its property, (v) makes an assignment for the benefit of creditors,
(vi) is unable to or admits in writing its inability to pay its debts generally as they become due
unless such inability shall be the fault of the other party, or (iv) takes corporate or other
action in furtherance of any of the aforesaid purposes.



Upon any termination pursuant to this Section 7.1, the provisions and obligations of this
Management Agreement shall be deemed terminated, except that the obligation of the parties for fees
due between one another and the obligations of indemnity set forth herein shall survive such
termination. Manager shall cooperate with Owner in transfers of management and accounting
functions hereunder.



7.2 Manager’s Obligations Upon Termination. Upon the termination of this Management
Agreement, Manager shall have the following duties:




          (a) Manager shall deliver to Owner or its designee, all books and records with respect to the
Properties.





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     (b) Manager shall transfer and assign to Owner, or its designee, all service contracts and
personal property relating to or used in the operation and maintenance of the Properties, except
personal property paid for and owned by Manager. Manager shall also, for a period of sixty (60)
days immediately following the date of such termination, make itself available to consult with and
advise Owner, or its designee, regarding the operation, maintenance and leasing of the Properties.



     (c) Manager shall render to Owner an accounting of all funds of Owner in its possession and
shall deliver to Owner a statement of all Management Fees claimed to be due to Manager and shall
cause funds of Owner held by Manager relating to the Properties to be paid to Owner or its
designee.



7.3 Owner’s Obligations Upon Termination. Owner shall pay or reimburse Manager for any
sums of money due it under this Management Agreement for services and expenses prior to termination
of this Management Agreement. All provisions of this Management Agreement that require Owner to
have insured, or to protect, defend, save, hold and indemnify or to reimburse Manager shall survive
any expiration or termination of this Management Agreement and, if Manager is or becomes involved
in any claim, proceeding or litigation by reason of having been Manager of Owner, such provisions
shall apply as if this Management Agreement were still in effect.



The parties understand and agree that Manager may withhold funds for sixty (60) days after the end
of the month in which this Management Agreement is terminated to pay bills previously incurred but
not yet invoiced and to close accounts. Should the funds withheld be insufficient to meet the
obligation of Manager to pay bills previously incurred, Owner will, upon demand, advance sufficient
funds to Manager to ensure fulfillment of Manager’s obligation to do so, within ten (10) days of
receipt of notice and an itemization of such unpaid bills.



ARTICLE VIII




MISCELLANEOUS




8.1 Notices. All notices, approvals, consents and other communications hereunder shall be
in writing, and, except when receipt is required to start the running of a period of time, shall be
deemed given when delivered in person or on the fifth day after its mailing by either party by
registered or certified United States mail, postage prepaid and return receipt requested, to the
other party, at the addresses set forth after their respect name below or at such different
addresses as either party shall have theretofore advised the other party in writing in accordance
with this Section 8.1.



	 	 	 	 	 
	 

	 	Owner:
	 	COLE REIT III OPERATING PARTNERSHIP, LP
	 

	 	 	 	c/o Cole Credit Property Trust III, Inc.
	 

	 	 	 	2555 E. Camelback Road, Suite 400
	 

	 	 	 	Phoenix, Arizona 85016
	 

	 	 	 	Attention: General Partner
	 
	 	 	 	 
	 

	 	Manager:
	 	COLE REALTY ADVISORS, INC.
	 

	 	 	 	2555 E. Camelback Road, Suite 400
	 

	 	 	 	Phoenix, Arizona 85016
	 

	 	 	 	Attention: Chief Executive Officer






8.2 Governing Law; Venue. This Management Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona, and any action brought to enforce the agreements
made



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hereunder or any action which arises out of the relationship created hereunder shall be brought
exclusively in Maricopa County, Arizona.



8.3 Assignment. Manager may delegate partially or in full its duties and rights under this
Management Agreement but only with the prior written consent of Owner. Owner acknowledges and
agrees that any or all of the duties of Manager as contained herein may be delegated by Manager and
performed by a person or entity (“Submanager”) with whom Manager contracts for the purpose of
performing such duties. Owner specifically grants Manager the authority to enter into such a
contract with a Submanager; provided that, unless Owner otherwise agrees in writing with such
Submanager, Owner shall have no liability or responsibility to any such Submanager for the payment
of the Submanager’s fee or for reimbursement to the Submanager of its expenses or to indemnify the
Submanager in any manner for any matter; and provided further that Manager shall require such
Submanager to agree, in the written agreement setting forth the duties and obligations of such
Submanager, to indemnify Owner for all Losses incurred by Owner as a result of the willful
misconduct or gross negligence of the Submanager, except that such indemnity shall not be required
to the extent that Owner recovers issuance proceeds with respect to such matter. Any contract
entered into between Manager and a Submanager pursuant to this Section 8.3 shall be consistent with
the provisions of this Management Agreement, except to the extent Owner otherwise specifically
agrees in writing. This Management Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns. Owner may assign its rights
under this Management Agreement as to any particular Property to a lender or lenders pursuant to
the terms of any loan or loans obtained related to the Properties. In connection therewith, any
Affiliate of Cole REIT or Cole OP that is an Owner is hereby authorized to execute and deliver any
and all documents required by a lender in order to carry out the intent of the immediately
foregoing sentence.



8.4 Third Party Leasing Services. Manager acknowledges that from time to time Owner may
determine that it is in the best interests of Owner to retain a third party to provide certain
leasing services with respect to certain Properties and to compensate such third party for such
leasing services. Upon the prior written consent of Manager, Owner shall have the authority to
enter into such a contract for leasing services with a third party (a “Third Party Leasing
Agreement”); provided that Manager shall have no liability or responsibility to Owner for any of
the duties and obligations undertaken by such party, and Owner agrees to indemnify Manager for all
Losses incurred by Manager as a result of acts of such third party pursuant to the Third Party
Leasing Agreement. To the extent that leasing services are specifically required to be performed
by a third party pursuant to such Third Party Leasing Agreement, Manager shall have no obligation
to perform such leasing services and Owner shall have no obligation to Manager for leasing fees
pursuant to Section 5.2 hereof. To the extent that both Manager and such Third Party Leasing
Agreement provides leasing services with respect to certain Properties, the Leasing fees payable to
Manager pursuant to Section 5.2 hereof shall be reduced by the amounts payable with respect to such
Properties to such Third Party Leasing Agreement.



8.5 Third Party Management Services. Manager acknowledges that, from time to time, Owner
may acquire interests in Properties in which Owner does not control the determination of the party
that is engaged to provide property management and other services to be provided by Manager with
respect to all Properties acquired by Owner hereunder. Upon the prior written consent of Manager,
Owner shall have the authority to acquire such non-controlling interests in Properties for which a
third party provides some or all of the services otherwise required to be performed by Manager
hereunder (a “Third Party Management Agreement”); provided that Manager shall have no liability or
responsibility to Owner for any of the duties and obligations undertaken by such third party, and
Owner agrees to indemnify Manager for all Losses incurred by Manager as a result of the acts of
such third party pursuant to the Third Party Management Agreement. To the extent that property
management and other services are specifically required to be performed by a third party pursuant
to such Third Party Management Agreement, Manager



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shall have no obligation to perform such services and Owner shall have no obligation to Manager for
compensation for such services pursuant to Article V hereof. To the extent that both Manager and
such Third Party Management Agreement provides management and leasing services with respect to certain Properties,
the management and leasing fees payable to Manager pursuant to
Section 5.1 hereof shall be reduced by the amounts
payable with respect to such Properties to such Third Party Management Agreement.



8.6 No Waiver. The failure of Owner to seek redress for violation or to insist upon the
strict performance of any covenant or condition of this Management Agreement shall not constitute a
waiver thereof for the future.



8.7 Amendments. This Management Agreement may be amended only by an instrument in writing
signed by the party against whom enforcement of the amendment is sought.



8.8 Headings. The headings of the various subdivisions of this Management Agreement are
for reference only and shall not define or limit any of the terms or provisions hereof.



8.9 Counterparts. This Management Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, and it shall not be necessary in making proof of this
Management Agreement to produce or account for more than one such counterpart.



8.10 Entire Agreement. This Management Agreement contains the entire understanding and all
agreements between Owner and Manager respecting the management of the Properties. There are no
representations, agreements, arrangements or understandings, oral or written, between Owner and
Manager relating to the management of the Properties that are not fully expressed herein.



8.11 Disputes. If there shall be a dispute between Owner and Manager relating to this
Management Agreement resulting in litigation, the prevailing party in such litigation shall be
entitled to recover from the other party to such litigation such amount as the court shall fix as
reasonable attorneys’ fees.



8.12 Activities of Manager. The obligations of Manager pursuant to the terms and
provisions of this Management Agreement shall not be construed to preclude Manager from engaging in
other activities or business ventures, whether or not such other activities or ventures are in
competition with Owner or the business of Owner.



8.13 Independent Contractor. Manager and Owner shall not be construed as joint venturers
or partners of each other pursuant to this Management Agreement, and neither shall have the power
to bind or obligate the other except as set forth herein. In all respects, the status of Manager
to Owner under this Management Agreement is that of an independent contractor.



8.14 No Third-Party Rights. Nothing expressed or referred to in this Management Agreement
will be construed to give any Person other than the parties to this Management Agreement any legal
or equitable right, remedy or claim under or with respect to this Management Agreement or any
provision of this Management Agreement, except such rights as shall inure to a successor or
permitted assignee pursuant to Section 8.3.



8.15 Ownership of Proprietary Property. The Manager retains ownership of and reserves all
Intellectual Property Rights in the Proprietary Property. To the extent that Owner has or obtains
any claim to any right, title or interest in the Proprietary Property, including without limitation
in any suggestions, enhancements or contributions that Owner may provide regarding the Proprietary
Property, Owner hereby assigns and transfers exclusively to the Manager all right, title and
interest, including without limitation all Intellectual Property Rights, free and clear of any
liens, encumbrances or licenses in



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favor of Owner or any other party, in and to the Proprietary Property. In addition, at the
Manager’s expense, Owner will perform any acts that may be deemed desirable by the Manager to
evidence more fully the transfer of ownership of right, title and interest in the Proprietary
Property to the Manager, including but not limited to the execution of any instruments or documents
now or hereafter requested by the Manager to perfect, defend or confirm the assignment described
herein, in a form determined by the Manager.



[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]




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     IN WITNESS WHEREOF, the parties have executed this Property Management and Leasing Agreement
as of the date first above written.



	 	 	 	 	 	 	 	 	 
	 	 	COLE CREDIT PROPERTY
TRUST III, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/  Christopher H. Cole	 
	 	 	 	 	 	 	 
	 	 	 	 	Christopher H. Cole
	 	 
	 	 	 	 	Chief Executive Officer and President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	COLE REIT III OPERATING PARTNERSHIP, LP	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Cole Credit Property Trust III, Inc.	 	 
	 	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/  Christopher H. Cole	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Christopher H. Cole	 	 
	 

	 	 	 	 	 	Chief Executive Officer and President	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	COLE REALTY ADVISORS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/  Christopher H. Cole	 
	 	 	 	 	 	 	 
	 	 	 	 	Christopher H. Cole	 	 
	 	 	 	 	Chief Executive Officer and President	 	 







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