Exhibit
99.3
TRANSITION SERVICES
AGREEMENT
THIS TRANSITION SERVICES
AGREEMENT (this “
Agreement ”) is made and entered into as of the 16th
of April, 2007, by and between Wells Real Estate Advisory Services,
Inc., a Georgia corporation (the “ Company ”),
and Wells Real Estate Funds, Inc., a Georgia corporation (“
Service Provider ”).
RECITALS
:
WHEREAS , Wells Real Estate Investment Trust, Inc.
(together with its subsidiaries, the “ REIT ”),
WRT Acquisition Company, LLC (“ REIT Sub ”), WGS
Acquisition Company, LLC, Wells Real Estate Funds, Inc., Wells
Capital, Inc., Wells Management Company, Inc., Wells Government
Services, Inc. and Wells Advisory Services I, LLC, the sole
shareholder of the Company (“ Parent ”) have
entered into that certain Agreement and Plan of Merger, dated as of
the 2nd day of February, 2007 (the “ Merger Agreement
”) pursuant to which, inter alia, the Company will be merged
with and in to REIT Sub (the “ Internalization
”);
WHEREAS , Service Provider and certain of its affiliates
have, prior to the consummation of the transactions contemplated by
the Merger Agreement provided certain services to the REIT and the
Company;
WHEREAS , the parties have agreed that after the
consummation of the transactions contemplated in the Merger
Agreement, Service Provider will continue to provide the services
described and set forth on Exhibit A attached hereto
and made a part hereof (collectively, the “ Services
”) all on the terms and conditions set forth
herein;
NOW, THEREFORE
, in consideration of the mutual
covenants hereinafter set forth, the compensation to be paid by the
Company to Service Provider as herein provided, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as
follows:
1. Performance of Services
. Service Provider shall, subject to the terms and provisions
of this Agreement, provide the Services to the REIT. Service
Provider agrees that all Services shall be provided in the manner
and at a relative level of service consistent in all material
respects with (i) that provided to the REIT prior to the date
of this Agreement and (ii) that provided by Service Provider
to its affiliates or to other third parties. In providing the
Services, the Service Provider, as it deems necessary or
appropriate in its reasonable discretion, may use its personnel
and/or employ the services of third parties to the extent such
third-party services are reasonably necessary for the efficient
performance of any of the Services (provided, that the costs and
expenses of any third parties employed by Service Provider in the
ordinary course of fulfilling its obligations under this Agreement
(except as provided in Section 20 with respect to additional
Services and Sections 3(c), 3(f) and 5(c) in connection with the
termination of this Agreement) shall be paid by Service Provider
and that such third parties agree to be bound by the
confidentiality provisions of this Agreement).
2. Term . The initial
term of this Agreement shall commence as of the date hereof, and,
unless terminated earlier as provided in Section 3 below,
shall continue for the lesser of one year or the period ending
ninety (90) days after the listing of the shares of common
stock of the Company on a national securities exchange or over the
counter market (the “ Initial Term ”) and shall
be renewable at the option of the REIT for an additional one
(1) year period (the “ First Renewal Term
”) and shall be automatically renewed thereafter for
successive one hundred and eighty (180) day periods (each a
“ Subsequent Renewal Term ”) unless either party
provides notice of termination of the Agreement at least sixty
(60) days prior to the expiration of the First Renewal Term or
any Subsequent Renewal Term, as the case may be.
3. Termination
.
(a) This agreement shall terminate
in accordance with Section 2 but may be terminated
earlier:
(i) upon the mutual written
agreement of the parties;
(ii) by the Company for cause (
i.e. , a material default by Service Provider hereunder)
upon thirty (30) days prior written notice to Service
Provider; provided, however, that prior to exercising its rights
under this Section 3(a)(iii), the Company shall provide
written notice to Service Provider of the alleged default,
including a reasonable description of such default, and Service
Provider shall have ten (10) days after receipt of such notice
to cure the default to the Company’s reasonable satisfaction.
The Company shall, as full compensation to which Service Provider
be entitled, promptly make payment to Service Provider as provided
in Section 5 below for the Services performed prior to the
effective date of termination in compliance with the terms of this
Agreement;
(iii) by Service Provider, as to all
of this Agreement or with respect to the applicable Service or
Services if the Company fails, in the absence of a bona fide
dispute with respect to such payment, to make payment for Services
within thirty (30) days after the relevant due date; provided
however, that the Company may cure such breach by making payment
within ten (10) days of the Company’s receipt of written
notice that it failed to make such payment when due.
(b) After the Initial Term, Service
Provider may terminate this Agreement with respect to any Service
upon one-hundred and twenty (120) days written notice to the
Company if Service Provider is no longer providing such Services to
itself or any of its affiliates.
(c) The Company may, from time to
time, upon at least thirty (30) days prior written notice,
specify any Services it no longer requires (such notice a “
Partial Termination Notice ” and such Services “
Terminated Services ”). Service Provider shall
discontinue the Terminated Services as of the effective date
specified in the Partial Termination Notice (the “
Termination Effective Date ”). Service Provider will
reasonably cooperate with the Company during the period from the
date of the Partial Termination Notice to the Termination Effective
Date specified in the Partial Termination Notice in the transition
of such Services to the Company or its third party provider. The
Company shall, as full compensation to which Service Provider is
entitled, promptly make payment to Service Provider as provided in
Section 5 below for the Terminated Services performed in
compliance with the terms of this Section 3(b) and for
reasonable additional costs incurred to transfer such Services to
the Company or its third party provider and any training and
support services provided pursuant to Section 3(f). In the
event that, after a Termination Effective Date, Service Provider is
no longer providing any services to the Company, this Agreement
shall terminate.
(d) The Company may upon at least
ten (10) days prior written notice, specify any Services that
would cause the Company or Service Provider to (i) violate any
applicable law or the rules of any regulatory body with
jurisdiction or (ii) would subject the Company or Service
Provider to liability or material damages in civil litigation.
Service Provider shall discontinue such Services promptly after
receipt of such notice.
(e) The termination of this
Agreement shall be without prejudice to any rights and obligations
of the parties that have vested prior to the effective date of such
termination, including without limitation, the right to receive
payment for Services provided prior to termination.
(f) In connection with the
termination of this Agreement, either (i) by reason of the
non-renewal of the Initial Term, the First Renewal Term or any
Subsequent Renewal Term or (ii) pursuant to the provisions of
this Section 3, Service Provider shall use commercially
reasonable efforts to accomplish an orderly transition of the
Services to the Company or a third party service provider
designated by the Company without material interruption of the
Services and shall cooperate with the Company in effectuating such
transition both prior to and for a reasonable period of time after
such termination. In connection with such transition, Service
Provider shall transfer to the Company or a designated third party
provider all information, files, records, data, plans and recorded
knowledge (whether in hard copy or electronic form) relating to the
Company or REIT in Service Provider’s possession. The Company
shall reimburse Service Provider any reasonable additional costs
incurred by Service Provider to transfer such services to the
Company or its third party provider. If requested by the Company,
Service Provider shall provide training and support services
related to the Services to Company personnel at the rates provided
on Exhibit B for a period of up to sixty (60) days
after the termination of such Services.
2
(g) If the Company has requested
that Service Provider violate any applicable law or regulation in
connection with the performance of any of the Services, the Service
Provider shall not be required to comply with such request and
shall notify the Company and the parties shall use reasonable
efforts to modify such request such that it does not result in any
such violation.
4. Independent
Contractor . Service Provider’s status shall be that
of an independent contractor, and not that of an agent or employee
of the Company. Service Provider shall not hold itself out as an
employee or agent of the Company.
5. Payment
.
(a) The Company shall pay Service
Provider for the Services at the rates specified on Exhibit A
attached hereto, as supplemented and amended from time to time in
accordance with Section 5(b) and (c). Service Provider shall
invoice the Company monthly for any Services performed during the
immediately preceding calendar month. Payment shall be due 30 days
after the date of the Company’s receipt of the same and shall
be as provided in Exhibit A attached hereto. Service Provider
represents and warrants to Company that the rates set forth on
Exhibit A (i) do not exceed Service Provider’s good
faith estimate of its actual cost of providing the Services set
forth on Exhibit A and (ii) do not exceed the rates that
could reasonably be expected to be charged by a third party service
provider with comparable experience for such Services at a
comparable level of service and quality.
(b) During the First Renewal Term,
the Company shall pay Service Provider for the Services at 105% of
the rates specified on Exhibit A attached hereto;
provided , however , that if the First Renewal Term
commences prior to January 1, 2008, the rates specified on
Exhibit A hereto will not increase until January 1, 2008.
One Hundred Twenty (120) days before the expiration of the
First Renewal Term and sixty (60) days before the expiration
of any Subsequent Renewal Term, Service Provider shall submit to
the Company a revised Exhibit A to reflect rate adjustments
for the upcoming Subsequent Renewal Term, which rate adjustments
shall not result in rates that exceed 130% of the then current rate
and shall be subject to the reasonable approval of the Company;
provided , however , that if the rate adjustments are
not agreed to by the Company, then the Agreement shall terminate at
the end of the First Renewal Term or any Subsequent Renewal Term,
as applicable. Such revised Exhibit A shall become effective
as of the first day of such Subsequent Renewal Term.
(c) In addition to the fees
described in Section 5(a) and (b), the Company shall promptly
pay or reimburse Service Provider for any out-of-pocket expenses
(such as travel, meals and lodging) and reasonable third party
costs incurred in good faith associated with, or related to, the
termination of Services or transfer of such Services provided by
Service Provider hereunder.
(d) In the event of a Partial
Termination Notice, the rates to be paid by the Company for the
Services shall be reduced to reflect the reduction in the Services
to be provided hereunder.
6. Confidentiality .
During the term of this Agreement, the parties may communicate to
each other certain confidential information to enable Service
Provider to perform the services hereunder, or Service Provider may
develop confidential information for Company. Each party agrees
(i) to treat, and to cause its employees, agents,
subcontractors and representatives, if any, to treat as secret and
confidential, all such information, (ii) to transmit such
confidential information only to those of its employees, agents,
subcontractors and representatives, if any, which such party
determines needs to know such information to enable Service
Provider to perform the services hereunder, and (iii) except
as necessary in the performance of the Services, not to disclose
any such confidential information or make available any reports,
recommendations or conclusions which Service Provider may make for
the Company to any person, firm or corporation without first
obtaining the Company’s written approval. Service Provider
further agrees that except as required to perform the Services,
Service Provider and its affiliates (and their respective
employees, agents, subcontractors and representatives) shall not
directly or indirectly permit any other entity to use for its own
benefit or the benefit of any other entity any confidential
information of the Company or RE
