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Exhibit
10.2
AMENDED AND RESTATED
ADVISORY AGREEMENT
THIS AMENDED AND RESTATED
ADVISORY AGREEMENT (this “AGREEMENT”), dated as of
July 11, 2008 and effective as of July 11, 2008 (the
“EFFECTIVE DATE”), is by and among WELLS TIMBERLAND
REIT, INC., a Maryland corporation (the “COMPANY”),
WELLS TIMBERLAND OPERATING PARTNERSHIP, L.P., a Delaware limited
partnership (the “PARTNERSHIP”), and WELLS TIMBERLAND
MANAGEMENT ORGANIZATION, LLC, a Georgia limited liability company
(the “ADVISOR”).
WITNESSETH
WHEREAS, the Company has
filed with the Securities and Exchange Commission (the
“SEC”) a Registration Statement on Form S-11 (the
“REGISTRATION STATEMENT”) covering the initial public
offering of its common stock, par value $0.01 per share, and the
SEC declared the Registration Statement effective on
August 11, 2006;
WHEREAS, the Company intends
to qualify as a REIT (as defined below), and intends to invest its
funds in investments permitted by the terms of the Company’s
Articles of Incorporation and Sections 856 through 860 of the Code
(as defined below);
WHEREAS, the Company is the
general partner of the Partnership and intends to conduct all of
its business and make all of its investments in Properties through
the Partnership;
WHEREAS, the Company and the
Partnership desire to avail themselves of the experience, sources
of information, advice, assistance and certain facilities available
to the Advisor and to have the Advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of, and subject
to the supervision of, the Board of Directors of the Company all as
provided herein; and
WHEREAS, the Advisor is
willing to undertake to render such services, subject to the
supervision of the Board of Directors, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in
consideration of the foregoing and of the mutual covenants and
agreements contained herein, the parties hereto agree as
follows:
1. DEFINITIONS. As used in
this Agreement, the following terms have the definitions
hereinafter indicated:
ACQUISITION EXPENSES. Any and
all expenses incurred by the Company, the Partnership, the Advisor,
or any Affiliate of either in connection with the selection,
acquisition or development of any Property, whether or not
acquired, including, without limitation, legal fees and expenses,
travel and communications expenses, costs of appraisals,
nonrefundable option payments on property not acquired, accounting
fees and expenses, and title insurance premiums.
ADVISOR. Wells Timberland
Management Organization, LLC, a Georgia limited liability company,
any successor advisor to the Company, the Partnership or any
Person(s) to which Wells Timberland Management Organization, LLC,
or any successor advisor, subcontracts substantially all of its
functions.
AFFILIATE OR AFFILIATED. An
Affiliate of another Person includes only the following:
(i) any Person directly or indirectly controlling, controlled
by, or under common control with such other Person; (ii) 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; (iii) any legal entity for which such
Person acts as an executive officer, director, trustee, or general
partner, (iv) any Person 10% or more of whose outstanding
voting securities are directly or indirectly owned, controlled, or
held, with power to vote, by such other Person; and (v) any
executive officer, director, trustee, or general partner of such
other Person. An entity shall not be deemed to control or be under
common control with an Advisor-sponsored program unless
(i) the entity owns 10% or more of the voting equity interests
of such program or (ii) a majority of the board (or equivalent
governing body) of such program is comprised of Affiliates of the
entity.
APPRAISED VALUE. Value
according to an appraisal made by an Independent
Appraiser.
ARTICLES OF INCORPORATION.
The Articles of Incorporation of the Company under Title 2 of the
Corporations and Associations Article of the Annotated Code of
Maryland, as amended from time to time.
ASSET MANAGEMENT FEE. A
monthly fee in an amount equal to one-twelfth of 1.0% of the sum of
(a) the actual amount invested on behalf of the Company in the
Properties (including any incurred or assumed indebtedness related
to the Properties and any capital improvements made subsequent to
the initial investment) plus (b) with respect to Joint
Ventures, the actual amount invested on behalf of the Company in
the Joint Ventures plus the Company’s allocable share of
capital improvements made by the Joint Venture from cash flows
generated by the Joint Venture, until such time as Advisor may
estimate the value of all interests the Company holds in Properties
or Joint Ventures for ERISA reporting purposes; and after such
time, ASSET MANAGEMENT FEE means a monthly fee in an amount equal
to one-twelfth of 1.0% of the greater of (1) the sum of
(x) the actual amount invested on behalf of the Company in the
Properties (including any incurred or assumed indebtedness related
to the Properties and any capital improvements made subsequent to
the initial investment) plus (y) with respect to Joint
Ventures, the actual amount invested on behalf of the Company in
the Joint Ventures plus the Company’s allocable share of
capital improvements made by the Joint Venture from cash flows
generated by the Joint Venture, or (2) the aggregate value of
the Company’s interest in the Properties and Joint Ventures
as established in connection with the most recent estimated
valuation to assist ERISA fiduciaries in fulfilling their annual
valuation and reporting responsibilities.
AVERAGE INVESTED ASSETS. For
a specified period, the average of the aggregate book value of the
assets of the Company invested, directly or indirectly, in
Properties and Loans secured by real estate before reserves for
depreciation, depletion, bad debts or other similar non-cash
reserves, computed by taking the average of such values at the end
of each month during such period.
BOARD OF DIRECTORS OR BOARD.
The persons holding such office, as of any particular time, under
the Articles of Incorporation of the Company, whether they be the
Directors named therein or additional or successor
Directors.
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BYLAWS. The bylaws of the
Company, as the same are in effect from time to time.
CAPPED O&O EXPENSES. All
Organizational and Offering Expenses other than (i) with
respect to any Offering of Shares registered with the SEC, the
selling commissions and the dealer manager fee described under the
heading “Plan of Distribution” in the prospectus that
forms part of the registration statement with respect to such
Offering, and (ii) with respect to any Offering of Shares that
is not registered with the SEC, any expenses in connection with
such un-registered Offering.
CAUSE. With respect to the
termination of this Agreement, fraud, criminal conduct, willful
misconduct or willful or grossly negligent breach of fiduciary duty
by the Advisor, or a material breach of this Agreement by the
Advisor, provided that (i) the Advisor does not cure any such
material breach within 60 days of receiving notice of such material
breach from the Company or the Partnership, or (ii) such
material breach is not of a nature that can be remedied within such
period.
CODE. Internal Revenue Code
of 1986, as amended from time to time, or any successor statute
thereto. Reference to any provision of the Code shall mean such
provision as in effect from time to time, as the same may be
amended, and any successor provision thereto, as interpreted by any
applicable regulations as in effect from time to time.
COMPANY. Wells Timberland
REIT, Inc., a corporation organized under the laws of the State of
Maryland.
COMPETITIVE REAL ESTATE
COMMISSION. A real estate or brokerage commission for the purchase
or sale of property which is reasonable, customary, and competitive
in light of the size, type, and location of the
property.
CONTRACT SALES PRICE. The
total consideration received by the Company for the sale of a
Property.
DIRECTOR. A member of the
Board of Directors of the Company.
DISTRIBUTIONS. Any
distributions of money or other property by the Company to owners
of Shares, including distributions that may constitute a return of
capital for federal income tax purposes.
GOOD REASON. With respect to
the termination of this Agreement, (i) any failure to obtain a
satisfactory agreement from any successor to the Company and the
Partnership to assume and agree to perform the Company’s and
the Partnership’s obligations under this Agreement; or
(ii) any material breach of this Agreement by the Company,
provided that (x) the Company does not cure such material
breach within 60 days of receiving notice of such material breach
from the Advisor, or (y) such material breach is not of a
nature that can be remedied within such period.
GROSS PROCEEDS. The aggregate
cash purchase price of all Shares sold for the account of the
Company through an Offering, without deduction for Organization and
Offering Expenses.
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INDEPENDENT APPRAISER. A
person or entity with no material current or prior business or
personal relationship with the Advisor or the Directors, who is
engaged to a substantial extent in the business of rendering
opinions regarding the value of assets of the type held by the
Company, and who is a qualified appraiser of real estate as
determined by the Board. Membership in a nationally recognized
appraisal society such as the American Institute of Real Estate
Appraisers or the Society of Real Estate Appraisers shall be
conclusive evidence of such qualification.
INDEPENDENT DIRECTOR. A
Director who is not and within the last two years has not been
directly or indirectly associated with the Advisor by virtue of
(i) ownership of an interest in the Advisor or its Affiliates,
(ii) employment by the Advisor or its Affiliates,
(iii) service as an officer or director of the Advisor or its
Affiliates, (iv) performance of services, other than as a
Director, for the Company, (v) service as a director or
trustee of more than three real estate investment trusts advised by
the Advisor, or (vi) maintenance of a material business or
professional relationship with the Advisor or any of its
Affiliates. A business or professional relationship is considered
material if the gross revenue derived by the Director from the
Advisor and Affiliates exceeds 5% of either the Director’s
annual gross revenue during either of the last two years or the
Director’s net worth on a fair market value basis. An
indirect relationship shall include circumstances in which a
Director’s spouse, parents, children, siblings, mothers or
fathers-in-law, sons or daughters-in-law, or brothers or
sisters-in-law is or has been associated with the Advisor, any of
its Affiliates, or the Company.
JOINT VENTURE. Any joint
venture, limited liability company or other Affiliate of the
Company (other than the Partnership) that owns, in whole or in part
on behalf of the Company, any Properties.
LISTING. The term
“LISTING” shall mean that the Shares have been approved
for trading on a national securities exchange. Upon such Listing,
the Shares shall be deemed Listed.
NASAA GUIDELINES. The NASAA
Statement of Policy Regarding Real Estate Investment Trusts as in
effect on the date hereof.
NET ASSETS. The total assets
of the Company (other than intangibles) at cost, before deducting
depreciation, reserves for bad debt or other non-cash reserves,
less total liabilities, calculated quarterly by the Company of a
basis consistently applied.
NET INCOME. For any period,
the total revenues applicable to such period, less the total
expenses applicable to such period excluding additions to reserves
for depreciation, depletion, bad debts or other similar non-cash
reserves; provided, however, Net Income for purposes of calculating
total allowable Operating Expenses (as defined herein) shall
exclude the gain from the sale of the Company’s
assets.
OFFERING. Any offering of
Shares, whether or not such offering is registered with the SEC,
but excluding Shares offered under any employee benefit
plan.
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OFFERING STAGE. The period
from the commencement of the Company’s initial public equity
offering through the termination of the Company’s last public
equity offering prior to Listing. For purposes of this definition,
“public equity offering” does not include offerings on
behalf of selling stockholders or offerings related to a dividend
reinvestment plan, employee benefit plan or the redemption of
interests in the Partnership.
OPERATING EXPENSES. All costs
and expenses incurred by the Company, as determined under generally
accepted accounting principles, which in any way are related to the
operation of the Company or to Company business, including fees
paid to the Advisor, but excluding (i) the expenses of raising
capital such as Organization and Offering Expenses, legal, audit,
accounting, underwriting, brokerage, listing, registration, and
other fees, printing and other such expenses and tax incurred in
connection with the issuance, distribution, transfer, registration
and Listing of the Shares, (ii) interest payments,
(iii) taxes, (iv) non-cash expenditures such as
depreciation, amortization and bad loan reserves,
(v) incentive fees paid in compliance with Section IV.F of the
NASAA Guidelines and (vi) Acquisition Expenses, real estate
commissions on resale of property, and other expenses connected
with the acquisition, disposition, and ownership of real estate
interests, mortgage loans or other property (such as the costs of
foreclosure, insurance premiums, legal services, maintenance,
repair and improvement of property).
ORGANIZATION AND OFFERING
EXPENSES. All expenses incurred by and to be paid from the assets
of the Company in connection with and in preparing the Company for
(i) registration of and subsequently offering and distributing
its Shares to the public, which may include but are not limited to,
total underwriting and brokerage discounts and commissions
(including fees of the underwriters’ attorneys);
(ii) offering and distributing its Shares in private
placements or any other Offerings that are not registered with the
SEC, which may include but are not limited to, total placement
agent fees and commissions (including fees of the placement
agents’ attorneys) and initial compliance and reporting
set-up fees; (iii) expenses for printing, engraving and
mailing; (iv) salaries of employees while engaged in sales,
education and marketing activities; (v) charges of transfer
agents, registrars, trustees, escrow holders, depositaries and
experts; and (vi) expenses of registration and qualification
of the sale of the securities, including taxes and fees,
accountants’ and attorneys’ fees.
PARTNERSHIP. Wells Timberland
Operating Partnership, L.P., a Delaware limited partnership formed
to own and operate properties on behalf of the Company.
PARTNERSHIP AGREEMENT. The
Agreement of Limited Partnership of the Partnership, as amended
from time to time, between the Company, as General Partner and the
Advisor, as the initial Limited Partner.
PERSON. An individual,
corporation, partnership, estate, trust (including a trust
qualified under Section 401(a) or 501(c) (17) of the
Code), a portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of
the Code, association, private foundation within the meaning of
Section 509(a) of the Code, joint stock company or other
entity, or any government or any agency or political subdivision
thereof, and also includes a group as that term is used for
purposes of Section 13(d) (3) of the Securities Exchange
Act of 1934, as amended.
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PROPERTY OR PROPERTIES. Any
real property or properties, or any portion thereof, transferred or
conveyed to the Company or the Partnership, either directly or
indirectly.
REIT. A real estate
investment trust under Sections 856 through 860 of the
Code.
REAL ESTATE DISPOSITION FEE.
The fee payable to the Advisor under certain circumstances in
connection with the Sale of one or more Properties pursuant to
Section 8 (b).
SALE OR SALES. (i) Any
transaction or series of transactions whereby: (A) the Company
or the Partnership sells, grants, transfers, conveys, or
relinquishes its ownership of any Property or portion thereof,
including the lease of any Property consisting of the building
only, and including any event with respect to any Property which
gives rise to a significant amount of insurance proceeds or
condemnation awards; (B) the Company or the Partnership sells,
puts, transfers, conveys, or relinquishes its ownership of all or
substantially all of the interest of the Company or the Partnership
in any joint venture in which it is a co-venturer or partner; or
(C) any joint venture in which the Company or the Partnership
as a co-venturer or partner sells, grants, transfers, conveys, or
relinquishes its ownership of any Property or portion thereof,
including any event with respect to any Property which gives rise
to insurance claims or condemnation awards, but (ii) not
including any transaction or series of transactions specified in
clause (i) (A), (i) (B), or (i) (C) above in
which the proceeds of such transaction or series of transactions
are reinvested in one or more Properties within 180 days
thereafter.
SHARES. Shares of the
Company’s common stock, par value $0.01 per share.
SPECIAL UNITS. The separate
series of limited partnership interests issued to Wells Capital,
Inc. pursuant to the Partnership Agreement as referenced in
Section 8(c), which Wells Capital, Inc. subsequently
transferred to Wells Timberland Management Organization,
LLC.
STOCKHOLDERS. The registered
holders of the Shares.
TERMINATION DATE. The date of
termination of the Agreement.
TERMINATION EVENT. The
termination or nonrenewal of this Agreement (i) in connection
with a merger, sale of assets or other corporate transaction
involving the Company, (ii) by the Advisor for Good Reason or
(iii) by the Company and the Operating Partnership other than
for Cause.
TIMBER MANAGER. Any entity
that has been retained to perform and carry out property management
services at one or more of the Properties, excluding persons,
entities or independent contractors retained or hired to perform
facility management or other services or tasks at a particular
Property.
2%/25% GUIDELINES. The
requirement pursuant to the NASAA Guidelines that, in any 12-month
period, total Operating Expenses not exceed the greater of 2% of
the Company’s Average Invested Assets during such 12-month
period or 25% of the Company’s Net Income over the same
12-month period.
2. APPOINTMENT. The Company
and the Partnership appoints the Advisor to serve as its advisor
and asset manager as of the Effective Date, on the terms and
conditions set forth in this Agreement, and the Advisor accepts
such appointment as of the Effective Date.
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3. DUTIES AND AUTHORITY OF
THE ADVISOR. The Advisor undertakes to use its reasonable efforts
(1) to present to the Company and the Partnership potential
investment opportunities to provide a continuing and suitable
investment program consistent with (i) the investment
objectives and policies of the Company as determined and adopted
from time to time by the Board and (ii) the investment
allocation method described at Section 10(b) of this Agreement
and (2) to manage, administer, promote, maintain, and improve
the Properties on an overall portfolio basis in a diligent manner.
The services of the Advisor are to be of scope and quality not less
than those generally performed by professional asset managers of
other similar property portfolios. The Advisor shall make available
the full benefit of the judgment, experience and advice of the
members of the Advisor’s organization and staff with respect
to the duties it will perform under this Agreement. The Advisor may
engage one or more Timber Managers, which may include Affiliates of
the Advisor, to manage, promote, and lease the Properties. To
facilitate the Advisor’s performance of these undertakings,
but subject to the restrictions included in Sections 4 and 7 and to
the continuing and exclusive authority of the Board of the Company
and the general partner of the Partnership, the Company and the
Partnership hereby delegate to the Advisor the authority to, and
the Advisor hereby agrees to, either directly or by engaging an
Affiliate:
(A) serve as the
Company’s and the Partnership’s investment and
financial advisor and provide research and economic and statistical
data in connection with the Company’s assets and investment
policies;
(B) provide the daily
management of the Company and the Partnership and perform and
supervise the various administrative functions reasonably necessary
for the management of the Company and the Partnership;
(C) maintain and preserve the
books and records of the Company, including a stock ledger
reflecting a record of the Stockholders and their ownership of the
Company’s Shares and acting as transfer agent for the
Company’s Shares and maintaining the accounting and other
record-keeping functions at the Property and Company
levels;
(D) investigate, select, and,
on behalf of the Company and the Partnership, engage and conduct
business with such Persons as the Advisor deems necessary to the
proper performance of its obligations hereunder, including but not
limited to consultants, accountants, correspondents, lenders,
technical advisors, attorneys, brokers, underwriters, corporate
fiduciaries, escrow agents, depositaries, custodians, agents for
collection, insurers, insurance agents, banks, builders,
developers, property owners, mortgagors, and any and all agents for
any of the foregoing, including Affiliates of the Advisor, and
Persons acting in any other capacity deemed by the Advisor
necessary or desirable for the performance of any of the foregoing
services, including but not limited to entering into contracts in
the name of the Company and the Partnership with any of the
foregoing;
(E) consult with the officers
and Board and assist the Board in the formulation and
implementation of the Company’s financial policies, and, as
necessary, furnish the Board with
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advice and recommendations with respect
to the making of investments consistent with the investment
objectives and policies of the Company and in connection with any
borrowings proposed to be undertaken by the Company and the
Partnership;
(F) oversee the performance
by each Timber Manager of its duties, including collection of
payments due from sales of timber and third parties under contracts
related to use of the Property and other assets of the Company and
payment of Property expenses and maintenance;
(G) conduct periodic on-site
property visits to some or all (as the Advisor deems reasonably
necessary) of the Properties to inspect the physical condition of
the Properties and to evaluate the performance of the Timber
Manager of its duties;
(H) review, analyze and
comment upon the operating budgets, capital budgets, harvest
schedules and leasing plans prepared and submitted by the Timber
Manager and aggregate these property budgets into the
Company’s overall budget;
(I) review and analyze
on-going financial information pertaining to each Property and the
overall portfolio of Properties;
(J) if a transaction requires
approval by the Board of Directors, deliver to the Board of
Directors all documents requested by them in their evaluation of
the proposed investment in the Property;
(K) formulate and oversee the
implementation of strategies for the administration, promotion,
management, operation, maintenance, improvement, financing and
refinancing, marketing, leasing, and disposition of Properties on
an overall portfolio basis;
(L) subject to the provisions
of Sections 3(M) and 4 hereof, (i) locate, analyze and select
potential investments in Properties, (ii) structure and
negotiate the terms and conditions of transactions pursuant to
which investment in Properties will be made; (iii) make
investments in Properties on behalf of the Company or the
Partnership in compliance
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