exv10w94



 





Exhibit 10.94



ADVISORY AGREEMENT




Among




HINES REIT PROPERTIES, L.P.,




HINES ADVISORS LIMITED PARTNERSHIP,




and




HINES REAL ESTATE INVESTMENT TRUST, INC.




                
       , 2008




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	ARTICLE 1   DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2   APPOINTMENT
	 	 	5	 
	 
	 	 	 	 
	ARTICLE 3   DUTIES OF THE ADVISOR
	 	 	5	 
	 
	 	 	 	 
	3.01 Offering Services
	 	 	5	 
	3.02 Acquisition Services
	 	 	6	 
	3.03 Asset Management Services
	 	 	7	 
	3.04 Shareholder Services
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 4   AUTHORITY OF THE ADVISOR
	 	 	11	 
	 
	 	 	 	 
	4.01 General
	 	 	11	 
	4.02 Powers of the Advisor
	 	 	11	 
	4.03 Approval by Directors
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 5   BANK ACCOUNTS
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 6   RECORDS AND FINANCIAL STATEMENTS
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 7   LIMITATION ON ACTIVITIES
	 	 	13	 
	 
	 	 	 	 
	ARTICLE 8   RELATIONSHIP WITH DIRECTORS AND OFFICERS
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 9   FEES
	 	 	15	 
	 
	 	 	 	 
	9.01 Acquisition Fees
	 	 	15	 
	9.02 Asset Management Fees
	 	 	15	 
	9.03 Debt Financing Fees
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 10   EXPENSES
	 	 	16	 
	 
	 	 	 	 
	10.01 General
	 	 	16	 
	10.02 Reimbursement to Advisor
	 	 	18	 
	10.03 Reimbursement to Company
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 11   OTHER SERVICES
	 	 	19	 






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	 	 	Page
	ARTICLE 12   RELATIONSHIP OF THE ADVISOR AND COMPANY; OTHER ACTIVITIES OF THE ADVISOR
	 	 	20	 
	 
	 	 	 	 
	12.01 Relationship
	 	 	20	 
	12.02 Time Commitment
	 	 	20	 
	12.03 Investment Opportunities and Allocation
	 	 	21	 
	 
	 	 	 	 
	ARTICLE 13   THE HINES NAME
	 	 	21	 
	 
	 	 	 	 
	ARTICLE 14   TERM AND TERMINATION OF THE AGREEMENT
	 	 	22	 
	 
	 	 	 	 
	14.01 Term
	 	 	22	 
	14.02 Termination by Either Party
	 	 	22	 
	14.03 Termination by the Company
	 	 	22	 
	14.04 Termination by the Advisor
	 	 	23	 
	14.05 Payments on Termination and Survival of Certain Rights and Obligations
	 	 	23	 
	14.06 Repurchase of Units
	 	 	24	 
	 
	 	 	 	 
	ARTICLE 15   ASSIGNMENT
	 	 	25	 
	 
	 	 	 	 
	ARTICLE 16   INDEMNIFICATION AND LIMITATION OF LIABILITY
	 	 	25	 
	 
	 	 	 	 
	16.01 Indemnification by the Company
	 	 	25	 
	16.02 Indemnification by the Advisor
	 	 	26	 
	16.03 The Advisor’s Liability
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 17   MISCELLANEOUS
	 	 	29	 
	 
	 	 	 	 
	17.01 Notices
	 	 	29	 
	17.02 Modification
	 	 	29	 
	17.03 Severability
	 	 	30	 
	17.04 Construction
	 	 	30	 
	17.05 Entire Agreement
	 	 	30	 
	17.06 Waiver
	 	 	30	 
	17.07 Gender
	 	 	31	 
	17.08 Titles Not to Affect Interpretation
	 	 	31	 
	17.09 Counterparts
	 	 	31	 







ii









 








ADVISORY AGREEMENT




     This
Advisory Agreement (this “Agreement”), dated as of
          
        , 2008, is among
Hines REIT Properties, L.P., a Delaware limited partnership, Hines Advisors Limited Partnership, a
Texas limited partnership, and Hines Real Estate Investment Trust, Inc., a Maryland corporation.



W I T N E S S E T H




     WHEREAS, the Company (as hereinafter defined) desires to avail itself of the knowledge,
experience, sources of information, advice, assistance and certain facilities available to the
Advisor (hereinafter defined) and to have the Advisor undertake the duties and responsibilities
hereinafter set forth herein on the terms set forth in this Agreement; and



     WHEREAS, the Advisor is willing to undertake to render such services 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:



ARTICLE 1




DEFINITIONS




     The
following defined terms used in this Agreement shall have the
meanings specified below:

     “Acquisition Expenses” has the meaning set forth in the Articles of Incorporation.



     “Advisor” means (i) Hines Advisors Limited Partnership, a Texas limited partnership,
or (ii) any successor advisor to the Company.



 









 





     “Affiliate” has the meaning set forth in the Articles of Incorporation. For the
purposes of this Agreement, the Advisor shall not be deemed to be an Affiliate of the Company, and
vice versa.



     “Articles of Incorporation” means the Second Amended and Restated Articles of
Incorporation of the General Partner, as amended from time to time.



     “Asset” or “Assets” means any and all real estate investments (real, personal
or otherwise), tangible or intangible, owned or held by, or for the account of, the Company,
whether directly or indirectly through another entity or entities, including interests in any
Person or in joint ventures which directly or indirectly own real estate investments.



     “Board of Directors” means the Board Directors of the General Partner.



     “Bylaws” means the Amended and Restated Bylaws of the General Partner, as amended from
time to time.



     “Cash Amount” has the meaning set forth in the Limited Partnership Agreement.



     “Code” means the 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” means Hines REIT Properties, L.P., a Delaware limited partnership. Within
the context of discussions of the operations, business and administration of the Company, the term
“Company” shall mean, collectively, Hines REIT Properties, L. P. and the General Partner for the
purposes of this Agreement.



     “Director” means a member of the Board of Directors of the General Partner.



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     “General Partner” means Hines Real Estate Investment Trust, Inc., a Maryland
corporation and general partner of the Company.



     “Gross Proceeds” has the meaning set forth in the Articles of Incorporation.



     “Hines” means Hines Interests Limited Partnership and its Affiliates.



     “Independent Director” has the meaning set forth in the Articles of Incorporation.



     “Initial Asset Value” means (i) in the case of an Asset other than a loan or other
financing, the gross purchase price of real estate investments acquired directly by the Company,
including any debt attributable to such investments, or the pro rata share of the gross asset value
of real estate investments held by entities in which the Company invests, and (ii) in the case of a
loan or other financing, the total amount of the funds advanced.



     “Initial Investment” means a real estate investment made by the Company after the
commencement of the Third Offering up to an aggregate of $2,000,000,000 in real estate investments.



     “Limited Partnership Agreement” means the Amended and Restated Limited Partnership
Agreement of Hines REIT Properties, L.P., as the same may be amended and restated from time to
time.



     “Managing Dealer” means Hines Real Estate Securities, Inc., a Delaware corporation, or
such other entity selected by the Board of Directors to act as the managing dealer for the
Offering.



     “Offering”
means a public offering of Shares pursuant to any Prospectus.

     “Operating Expenses” has the meaning set forth in the Articles of Incorporation.



     “Organizational and Offering Expenses” has the meaning set forth in the Articles of
Incorporation.



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     “Participation Interest” has the meaning set forth in the Limited Partnership
Agreement.



     “Person” means an individual, corporation, partnership, estate, trust, 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.



     “Property Manager” means Hines Interests Limited Partnership, a Texas limited
partnership, or an Affiliate thereof.



     “Property Management and Leasing Agreement” means any Property Management and Leasing
Agreement between the Company and the Property Manager.



     “Prospectus” means the General Partner’s final prospectus for any public offering
within the meaning of Section 2(10) of the Securities Act of 1933, as amended.



     “REIT” means a “real estate investment trust” under Sections 856 through 860 of the
Code.



     “REIT Shares Amount” has the meaning set forth in the Limited Partnership Agreement.



     “Securities” means any class or series of units or shares of the Company or the
General Partner, including common shares or preferred units or shares and any other evidences of
equity or beneficial or other interests, voting trust certificates, bonds, debentures, notes or
other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as “securities” or any certificates of interest, shares
or participations in, temporary or interim certificates for, receipts for, guarantees of, or
warrants, options or rights to subscribe to, purchase or acquire, any of the foregoing.



     “Shares” means shares of common stock of the General Partner, par value $.001 per
share.



4









 





     “Shareholders” means the registered holders of the outstanding Shares.



     “Subsequent Investment” means a real estate investment made by the Company after it
has acquired $2,000,000,000 in Initial Investments.



     “Termination Date” means the date of termination of this Agreement.



     “Third Offering” means the offering by the General Partner on Form S-11 (Reg. No.
___) of up to $3,500,000,000 Shares, including $500,000,000 Shares offered pursuant to the
General Partner’s dividend reinvestment plan.



     “2%/25% Guidelines” has the meaning set forth in the Articles of Incorporation.



     “Units” has the meaning set forth in the Limited Partnership Agreement.



ARTICLE 2




APPOINTMENT




     The Company hereby appoints the Advisor to serve as its advisor on the terms and conditions
set forth in this Agreement, and the Advisor hereby accepts such appointment.



ARTICLE 3




DUTIES OF THE ADVISOR




     The Advisor is responsible for managing, operating, directing and supervising the operations
and administration of the Company and its Assets to the fullest extent allowed by law. The Advisor
shall, either directly or by engaging an Affiliate or third party, perform the following duties:



     3.01 Offering Services.
The Advisor shall manage and supervise:




     (i) Development of the product offering, including the determination of the specific
terms of the Securities to be offered by the General Partner and/or the



5









 







Company, preparation of all offering and related documents, and obtaining all required
regulatory approvals of such documents;




     (ii) Along with the Managing Dealer, approval of the participating broker dealers and
negotiation of the related selling agreements;




     (iii) Coordination of the due diligence process relating to participating broker
dealers and their review of any Prospectus and other Offering and Company documents;




     (iv) Preparation and approval of all marketing materials contemplated to be used by the
Managing Dealer or others in the Offering of the General Partner’s Securities;




     (v) Along with the Managing Dealer, negotiation and coordination with the transfer
agent for the receipt, collection, processing and acceptance of subscription agreements,
commissions, and other administrative support functions;




     (vi) Creation and implementation of various technology and electronic communications
related to the Offering of the General Partner’s Securities; and




     (vii) All other services related to organization of the Company or the Offering,
whether performed and incurred by the Advisor or its Affiliates.



     3.02 Acquisition Services.




     (i) Serve as the Company’s investment and financial advisor and provide relevant market
research and economic and statistical data in connection with the Company’s Assets and
investment objectives and policies;




     (ii) Subject to Section 4.03 and Article 7 hereof and the investment objectives and
policies of the Company: (a) locate, analyze and select potential



6









 







investments; (b) structure and negotiate the terms and conditions of transactions
pursuant to which investments in Assets will be made; (c) acquire Assets on behalf of the
Company; and (d) arrange for financing on behalf of the Company;




     (iii) Perform due diligence on prospective investments and create due diligence reports
summarizing the results of such work;




     (iv) Prepare reports regarding prospective investments which include recommendations
and supporting documentation necessary for the Directors to evaluate the proposed
investments;




     (v) Obtain reports (which may be prepared by the Advisor or its Affiliates), where
appropriate, concerning the value of contemplated investments of the Company; and




     (vi) Negotiate and execute approved investments, loans, debt financing and other
transactions.



     3.03 Asset Management Services.




     (i) Real Estate Services:




     (a) Investigate, select, and, on behalf of the Company, 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,
lenders, technical advisors, attorneys, brokers, underwriters, corporate
fiduciaries, escrow agents, depositaries, custodians, agents for collection,
insurers, insurance agents, developers, construction companies and any and all
Persons acting in any other capacity deemed by the Advisor necessary or desirable
for the performance of any of the foregoing services;



7









 






     (b) Negotiate and service the Company’s debt facilities and other financings;




     (c) Monitor applicable markets and obtain reports (which may be prepared by the
Advisor or its Affiliates) where appropriate, concerning the value of investments of
the Company;




     (d) Monitor and evaluate the performance of investments of the Company; provide
daily management services to the Company and perform and supervise the various
management and operational functions related to the Company’s investments;




     (e) Coordinate with the Property Manager on its duties under any Property
Management and Leasing Agreement and assist in obtaining all necessary approvals of
major property transactions as governed by the applicable Property Management and
Leasing Agreement;




     (f) Coordinate and manage relationships between the Company and any joint
venture partners;




     (g) Consult with the officers and Directors of the General Partner and provide
assistance with the evaluation and approval of potential property dispositions,
sales or refinancings;




     (ii) Accounting and Other Administrative Services:




     (a) Manage and perform the various administrative functions necessary for the
management of the day-to-day operations of the Company;



8









 






     (b) From time-to-time, or at any time reasonably requested by the Directors,
make reports to the Directors on the Advisor’s performance of services to the
Company under this Agreement;




     (c) Coordinate with the Company’s independent accountants and auditors to
prepare and deliver to the General Partner’s audit committee an annual report
covering the Advisor’s compliance with certain material aspects of this Advisory
Agreement;




     (d) Provide or arrange for administrative services and items, legal and other
services, office space, office furnishings, personnel and other overhead items
necessary and incidental to the Company’s business and operations;




     (e) Provide financial and operational planning services and portfolio
management functions;




     (f) Maintain accounting data and any other information requested concerning the
activities of the Company as shall be required to prepare and to file all periodic
financial reports and returns required to be filed with the Securities and Exchange
Commission and any other regulatory agency, including annual financial statements;




     (g) Maintain all appropriate books and records of the Company;




     (h) Provide tax and compliance services and coordinate with appropriate third
parties, including independent accountants and other consultants, on related tax
matters;



9









 






     (i) Supervise the performance of such ministerial and administrative functions
as may be necessary in connection with the daily operations of the Assets;




     (j) Provide the Company with all necessary cash management services;




     (k) Manage and coordinate with the transfer agent the quarterly dividend
process and payments to shareholders;




     (l) Consult with the officers and Directors of the General Partner and assist
the Directors in evaluating and obtaining adequate insurance coverage based upon
risk management determinations;




     (m) Provide the officers and Directors of the General Partner with timely
updates related to the overall regulatory environment affecting the Company, as well
as managing compliance with such matters, including but not limited to compliance
with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”);




     (n) Consult with the officers and Directors of the General Partner and the
Board of Directors relating to the corporate governance structure and appropriate
policies and procedures related thereto; and




     (o) Perform all reporting, record keeping, internal controls and similar
matters in a manner to allow the General Partner to comply with applicable law,
including the Sarbanes-Oxley Act.



10









 





     3.04 Shareholder Services.




     (i) Manage communications with shareholders, including answering phone calls, preparing
and sending written and electronic reports and other communications; and




     (ii) Establish technology infrastructure to assist in providing shareholder support and
service.



ARTICLE 4




AUTHORITY OF THE ADVISOR




     4.01 General. All rights and powers to manage and control the day-to-day business and affairs of the
Company shall be vested in the Advisor to the fullest extent allowed by law. The Advisor shall
have the power to delegate all or any part of its rights and powers to manage and control the
business and affairs of the Company to such officers, employees, Affiliates, agents and
representatives of the Advisor or the Company as it may from time to time deem appropriate. Any
authority delegated by the Advisor to any other Person shall be subject to applicable law and the
limitations on the rights and powers of the Advisor specifically set forth in this Agreement or the
Articles of Incorporation.



     4.02 Powers of the Advisor. Subject to the express limitations set forth in this Agreement, the power to direct the
management, operation and policies of the Company shall to the fullest extent allowed by law be
vested in the Advisor, which shall have the power by itself and shall be authorized and empowered
on behalf and in the name of the Company to carry out any and all of the objectives and purposes of
the Company and to perform all acts and enter into and perform all
contracts and other undertakings that it may in its sole discretion deem necessary, advisable or incidental
thereto to perform its obligations under this Agreement.




11









 







     4.03 Approval by Directors. 




     (i) Notwithstanding the foregoing, any investment in Assets, including any acquisition
of an Asset by the Company or any investment by the Company in a joint venture, limited
partnership or similar entity owning real properties, will require the prior approval of the
Board of Directors. The Advisor will deliver to the Board of Directors all documents
required by it to properly evaluate the proposed investment.




     (ii) If the Articles of Incorporation require that a transaction be approved by the
Independent Directors, the Advisor will deliver to the Independent Directors all documents
required by them to properly evaluate the proposed investment in the Asset. The prior
approval of a majority of the Independent Directors will be required for each transaction
between the Company and the Advisor or its Affiliates.



ARTICLE 5




BANK ACCOUNTS




     The Advisor will maintain one or more bank accounts in the name of the Company and will
collect and deposit into any such account or accounts, and disburse from any such account or
accounts, any money on behalf of the Company. Notwithstanding the foregoing, no funds shall be
commingled with the funds of the Advisor.



ARTICLE 6




RECORDS AND FINANCIAL STATEMENTS




     The Advisor, in the conduct of its responsibilities to the Company, shall maintain adequate
and separate books and records for the Company’s operations in accordance with
United States generally accepted accounting principles (“GAAP”), which shall be
supported by sufficient documentation to ascertain that such books and records are properly and
accurately



12









 







recorded. Such books and records shall be the property of the Company. Such books and
records shall include all information necessary to calculate and audit the fees or reimbursements
paid under this Agreement. The Advisor shall utilize procedures to attempt to ensure such control
over accounting and financial transactions as is reasonably required to protect the Company’s
assets from theft, error or fraudulent activity. All financial statements that the Advisor
delivers to the Company shall be prepared on an accrual basis in accordance with GAAP, except for
special financial reports which by their nature require a deviation from GAAP. The Advisor shall
maintain the necessary liaison with the Company’s independent accountants and shall provide such
accountants with such reports and other information as the Company shall request.



ARTICLE 7




LIMITATION ON ACTIVITIES




     Notwithstanding any provision in this Agreement to the contrary, the Advisor shall not take
any action which, in its sole judgment made in good faith, would (i) adversely affect the ability
of the General Partner to qualify or continue to qualify to be taxed as a REIT, (ii) subject the
Company or the General Partner to regulation under the Investment Company Act of 1940, as amended,
(iii) violate any law, rule or regulation of any governmental body or agency having jurisdiction
over the Company, the General Partner or their Securities, or (iv) violate the Articles of
Incorporation or Bylaws. In the event that an action that would violate (i) through (iv) of the
preceding sentence has been ordered by the Board of Directors acting on behalf of the General
Partner, the Advisor shall notify the Board of Directors of the Advisor’s judgment of the
potential impact of such action and shall refrain from taking such action until it receives
further clarification or instructions from the Board of Directors. In such event the Advisor
shall, to the



13









 







fullest extent allowed by law, have no liability for acting in accordance with the
specific instructions of the Board of Directors so given. Notwithstanding the foregoing, none of
the Advisor, its Affiliates and none of their managers, directors, officers, employees and
equityholders, shall be liable to the Company, the General Partner, the Board of Directors or the
Shareholders for any act or omission by such Persons or individuals, except as provided in this
Agreement. THE PARTIES HERETO INTEND THAT THE LIMITATION OF LIABILITY SET FORTH IN THIS SECTION BE
CONSTRUED AND APPLIED AS WRITTEN NOTWITHSTANDING ANY RULE OF CONSTRUCTION TO THE CONTRARY. WITHOUT
LIMITING THE FOREGOING, THE LIMITATION OF LIABILITY SHALL, TO THE FULLEST EXTENT ALLOWED BY LAW,
APPLY NOTWITHSTANDING ANY STATE’S “EXPRESS NEGLIGENCE RULE” OR SIMILAR RULE THAT WOULD DENY
COVERAGE BASED ON A PERSON’S SOLE, CONCURRENT OR CONTRIBUTORY ACTIVE OR PASSIVE NEGLIGENCE, GROSS
NEGLIGENCE OR STRICT LIABILITY. IT IS THE INTENT OF THE PARTIES THAT, TO THE EXTENT PROVIDED IN
THIS SECTION, THE LIMITATION OF LIABILITY SET FORTH HEREIN SHALL, TO THE FULLEST EXTENT ALLOWED BY
LAW, APPLY TO A PERSON’S SOLE, CONCURRENT OR CONTRIBUTORY ACTIVE OR PASSIVE NEGLIGENCE, GROSS
NEGLIGENCE OR STRICT LIABILITY. THE PARTIES AGREE THAT THIS PROVISION IS “CONSPICUOUS” FOR
PURPOSES OF ALL STATE LAWS.



14









 





ARTICLE 8




RELATIONSHIP WITH DIRECTORS AND OFFICERS




     Managers, Directors, officers and employees of the Advisor or any direct or indirect Affiliate
of the Advisor may serve as a Director and as officers of the General Partner, except that no
manager, director, officer or employee of the Advisor or any of its Affiliates who also is a
Director or officer of the General Partner shall receive any compensation from the Company or
General Partner for serving as a Director or officer other than reasonable reimbursement for travel
and related expenses incurred in attending meetings of the Board of Directors.



ARTICLE 9




FEES




     9.01 Acquisition Fees.
The Company will pay the Advisor in cash as compensation for services described in Section
3.02 an acquisition fee of (i) 2.50% of the Initial Asset Value of each Initial Investment; and
(ii) 0.50% of the Initial Asset Value of each Subsequent Investment. The Company shall also
reimburse the Advisor for all out of pocket third party expenses incurred by the Advisor in
connection with such services as required by Article 10. The amount of such acquisition fees and
expenses shall be subject to any limitations contained in the Articles of Incorporation. The
Advisor shall submit an invoice to the Company following the closing or closings of each
acquisition, accompanied by a computation of the fee. The fee shall be payable within ten business
days after receipt of the invoice by the Company.



     9.02 Asset Management Fees. The Company will pay the Advisor in cash as compensation
for services described in Section
3.03 an asset management fee in accordance with this Section 9.02 as well as reimburse
the Advisor for all out of pocket third party expenses incurred by the Advisor in connection
with such services as required by Article 10. Subject to



15









 







any limitations contained in the Articles
of Incorporation, this asset management fee shall be earned monthly and the amount of this asset
management fee payable by the Company to the Advisor shall equal 0.0625% multiplied by the net
equity invested in real estate investments as of the end of the applicable month. The Advisor shall
submit a monthly invoice to the Company, accompanied by a computation of the asset management fee
for the applicable period. The asset management fee shall be payable within ten business days after
receipt of the invoice by the Company.



     9.03 Debt Financing Fees
.. The Company will pay the Advisor in cash as compensation for services described in Section
3.02 a debt financing fee equal to 1.0% of the amount obtained under any property loan or made
available to us under any other debt financing. In no event will the debt financing fee be paid
more than once in respect of the same debt.



ARTICLE 10




EXPENSES




     10.01 General.
In addition to the compensation paid to the Advisor pursuant to Article 9 hereof, the
Company shall pay directly or reimburse the Advisor for the following expenses paid or incurred by
the Advisor or Affiliates in connection with the services provided to the Company pursuant to this
Agreement, including, but not limited to:




     (i) Acquisition Expenses incurred in connection with the selection and acquisition of
Assets including such expenses incurred related to assets pursued or considered but not
ultimately acquired by the Company;




     (ii) the actual out-of-pocket cost of goods and services used by the Company or the
General Partner and obtained from entities not Affiliated with the



16









 







Advisor, including
brokerage fees paid in connection with the purchase and sale of Assets;




     (iii) taxes and assessments on income or Assets and taxes as an expense of doing
business and any other taxes otherwise imposed on the Company and its business or income;




     (iv) out-of-pocket costs associated with insurance required in connection with the
business of the Company or by its officers and Directors;




     (v) all out-of-pocket expenses in connection with payments to the Board of Directors
and meetings of the Board of Directors and Shareholders;




     (vi) personnel and related employment direct costs incurred by the Advisor or
Affiliates (a) in performing the services described in Section 3.04 or (b) as otherwise
approved by Independent Directors, including but not limited to salary, benefits, burdens
and overhead of all employees directly involved in the performance of such services, plus
all out-of-pocket costs incurred;




     (vii) out-of-pocket expenses of maintaining communications with Shareholders, including
the cost of preparation, printing, and mailing annual reports and other Shareholder reports,
proxy statements and other reports required by governmental entities;




     (viii) audit, accounting and legal fees, and other fees for professional services
relating to the operations of the Company and all such fees incurred at the
request, or on behalf of, the Independent Directors or any committee of the Board of
Directors;



17









 






     (ix) out-of-pocket costs for the Company to comply with all applicable laws,
regulations and ordinances; and




     (x) all other out-of-pocket costs necessary for the operation of the Company and its
Assets incurred by the Advisor in performing its duties hereunder.



     Except as specifically provided for above in (vi) related to shareholder services expenses or
as contemplated by Article 11, the expenses and payments subject to reimbursement by the Company in
this Section 10.01 do not include personnel and related direct employment or overhead costs of the
Advisor or Affiliates. Further, the General Partner shall have no liability with respect to
Organizational and Offering Expenses incurred on its behalf or on behalf of the Company in
connection with the Third Offering. An affiliate of the Advisor shall pay for all such
Organizational and Offering Expenses.



     10.02 Reimbursement to Advisor.
Expenses incurred by the Advisor on behalf of the Company and payable pursuant to this
Article 10 shall be reimbursed to the Advisor within 10 days after the Advisor provides the Company
with an invoice and supporting documentation relating to such reimbursement.



     10.03 Reimbursement to Company.
The Company shall not reimburse the Advisor during any fiscal quarter for Operating
Expenses that, in the four consecutive fiscal quarters then ended (the “Expense Year”), exceed the
2%/25% Guidelines for such year (the “Excess Amount”), unless the Independent Directors determine
that such excess was justified, based on unusual and non-recurring factors which they deem
sufficient, in which case the Excess Amount may be reimbursed. Any Excess Amount
paid to the Advisor during a fiscal quarter without the Independent Directors determining that
such expenses were justified shall be repaid to the Company. Within 60 days after the end of any
fiscal quarter of the Company for which total



18









 







Operating Expenses for the Expense Year exceed the
2%/25% Guidelines and the Independent Directors determined that such expenses were justified, there
shall be sent to the Shareholders a written disclosure of such fact, together with an explanation
of the factors the Independent Directors considered in determining that such excess expenses were
justified. Such determination shall be reflected in the minutes of the meetings of the Board of
Directors. The Company will not reimburse the Advisor or its Affiliates for services for which the
Advisor or its Affiliates are entitled to compensation in the form of a separate fee.



ARTICLE 11




OTHER SERVICES




     Should (i) the General Partner request that the Advisor or any manager, officer or employee
thereof render services for the Company other than as set forth in this Agreement or (ii) there are
changes to the regulatory environment in which the Advisor or Company operates that would increase
significantly the level of services performed such that the costs and expenses borne by the Advisor
for which the Advisor is not entitled to separate reimbursement for personnel and related
employment direct costs and overhead under Article 10 of this Agreement would increase
significantly, , such services shall be separately compensated at such rates and in such amounts as
are agreed by the Advisor and the Independent Directors, subject to the limitations contained in
the Articles of Incorporation, and shall not be deemed to be services pursuant to the terms of this
Agreement.



19









 





ARTICLE 12




RELATIONSHIP OF THE ADVISOR AND COMPANY;

OTHER ACTIVITIES OF THE ADVISOR




     12.01 Relationship.
To the fullest extent allowed by law, the Company and the Advisor are not partners or joint
venturers with each other, and nothing in this Agreement shall be construed to make them such
partners or joint venturers. Nothing herein contained shall prevent the Advisor from engaging in
other activities, including, without limitation, the rendering of advice to other Persons and the
management of other programs advised, sponsored or organized by the Advisor or its Affiliates. Nor
shall this Agreement limit or restrict the right of any manager, director, officer, employee, or
equityholder of the Advisor or its Affiliates to engage in any other business or to render services
of any kind to any other Person. The Advisor may, with respect to any investment in which the
Company is a participant, also render advice and service to each and every other participant
therein. The Advisor shall promptly disclose to the Board of Directors the existence of any
condition or circumstance, existing or anticipated, of which it has knowledge, which creates or
could create a conflict of interest between the Advisor’s obligations to the Company and its
obligations to or its interest in any other Person.



     12.02 Time Commitment.
The Advisor shall, and shall cause its Affiliates and their respective employees, officers
and agents to, devote to the Company such time as shall be reasonably necessary to conduct the
business and affairs of the Company in an appropriate manner consistent with the terms of this
Agreement. The Company acknowledges that the Advisor and other Affiliates of Hines and their
respective employees, officers and agents may also engage in activities unrelated to the
Company and may provide services to Persons other than the Company or any of its Affiliates.



20









 





     12.03 Investment Opportunities and Allocation.
The Advisor shall be required to use commercially reasonable efforts to present a
continuing and suitable investment program to the Company which is consistent with the investment
policies and objectives of the Company, but neither the Advisor nor any Affiliate of the Advisor
shall be obligated generally to present any particular investment opportunity to the Company even
if the opportunity is of character which, if presented to the Company, could be taken by the
Company. In the event an investment opportunity is located, the allocation procedure set forth
under the caption “Conflicts of Interest—Competitive Activities of Hines and its Affiliates” in any
Prospectus (as may be amended from time to time) shall govern the allocation of the opportunity
among the Company and Affiliates of the Advisor.



ARTICLE 13




THE HINES NAME




     The Advisor, Hines and their Affiliates have a proprietary interest in the name “Hines”. The
Advisor hereby grants to the Company a non-transferable, non-assignable, non-exclusive royalty-free
right and license to use the name “Hines” during the term of this Agreement. Accordingly, and in
recognition of this right, if at any time the Company ceases to retain Hines or an Affiliate
thereof to perform the services of the Advisor, the Company (including the General Partner) will,
promptly after receipt of written request from Hines, cease to conduct business under or use the
name “Hines” or any derivative thereof and the Company and the General Partner shall change the
name of the Company and the General Partner to a name that does not contain the name “Hines” or any
other word or words that might, in the reasonable
discretion of the Advisor, be susceptible of indication of some form of relationship between
the Company and the Advisor or any Affiliate thereof. At such time, the Company will also make



21









 







any changes to any trademarks, servicemarks or other marks necessary to remove any references to the
word “Hines”. Consistent with the foregoing, it is specifically recognized that the Advisor or one
or more of its Affiliates has in the past and may in the future organize, sponsor or otherwise
permit to exist other investment vehicles (including vehicles for investment in real estate) and
financial and service organizations having “Hines” as a part of their name, all without the need
for any consent (and without the right to object thereto) by the Company or the General Partner.



ARTICLE 14




TERM AND TERMINATION OF THE AGREEMENT




     14.01 Term. This Agreement shall have an initial term of one year from the date of the Agreement. This
Agreement may be renewed for an unlimited number of successive one-year terms upon mutual consent
of the parties. Any such renewal must be approved by a majority of the Independent Directors. The
General Partner (through the Independent Directors) will evaluate the performance of the Advisor
annually before renewing the Agreement, and each such renewal shall be for a term of no more than
one year.



     14.02 Termination by Either Party. This Agreement may be terminated upon 60 days’ written notice without cause or penalty by
either party.



     14.03 Termination by the Company. This Agreement may be terminated immediately by the Company upon (i) any fraudulent
conduct, criminal conduct, willful misconduct or the negligent breach of fiduciary duty of or by
the Advisor, (ii) a material breach of this Agreement by the Advisor not cured within 10 business
days after the Advisor receives written notice of such breach, or (iii) an event of the bankruptcy
of the Advisor or commencement of any bankruptcy or similar insolvency proceedings of the Advisor.



22









 





     14.04 Termination by the Advisor. This Agreement may be terminated immediately by the Advisor in the event of (i) the
bankruptcy of the Company or commencement of any bankruptcy or similar insolvency proceedings of
the Company, or (ii) any material breach of this Agreement by the Company not cured by the Company
within 10 days after written notice thereof.



     14.05 Payments on Termination and Survival of Certain Rights and Obligations
.. Payments to the Advisor pursuant to this Section 14.05 shall be subject to the 2%/25%
Guidelines to the extent applicable.




     (i) After the Termination Date, the Advisor shall not be entitled to compensation for
further services hereunder except it shall be entitled to receive from the Company within 30
days after the effective date of such termination all unpaid reimbursements of expenses and
all earned but unpaid fees payable to the Advisor prior to termination of this Agreement.




     (ii) The Advisor shall promptly upon termination:




     (a) pay over to the Company all money collected pursuant to this Agreement, if
any, after deducting any accrued compensation and reimbursement for its expenses to
which it is then entitled;




     (b) deliver to the Directors a full accounting, including a statement showing
all payments collected by it and a statement of all money held by it, covering the
period following the date of the last accounting furnished to the Directors;




     (c) deliver to the Directors all assets and documents of the Company then in
the custody of the Advisor; and



23









 






     (d) cooperate with the Company to provide an orderly transition of advisory
functions.


Upon the expiration or termination of this Agreement, neither party shall have any further rights
or obligations under this Agreement, except that Articles 13, 16 and 17 shall survive the
termination or expiration of this Agreement.




     14.06 Repurchase of Units.
In the event this Agreement expires without the consent of the Advisor, or is terminated
for any reason other than by the Advisor pursuant to Section 14.02 or Section 14.04, the Company
shall (to the fullest extent funds are legally available for such purpose) at the election of the
Advisor or any of its Affiliates and at any time (and from time to time) after the effective date
of such expiration or termination, purchase all or a portion of the Units or Participation Interest
(as applicable) held by the Advisor and its Affiliates. The purchase price shall be paid in cash
or, at the election of the seller, Shares, and shall be payable within 120 days after the Advisor
or its Affiliates (as applicable) gives the Company written notice of its desire to sell all or a
portion of the Units or Participation Interest held by such Person to the Company. The General
Partner agrees to keep a sufficient number of authorized but unissued Shares available for issuance
pursuant to this Section 14.06 and shall issue Shares as may be required hereunder.
The purchase price of each interest in the Company pursuant to this Section 14.06 shall be (i)
in the event the seller elects to receive cash, the Cash Amount the seller would receive under a
redemption of such interests under Section 3.2 of the Limited Partnership Agreement assuming the
Company paid cash for such redemption, or (ii) in the event the seller elects to receive Shares,
the REIT Shares Amount the seller would receive under a redemption of such interests under Section
3.2 of the Limited Partnership Agreement assuming the Company paid Shares for such redemption.



24









 





ARTICLE 15




ASSIGNMENT




     This Agreement may be assigned by the Advisor to an Affiliate with the consent of the General
Partner by approval of a majority of the Independent Directors. The Advisor may assign any rights
to receive fees or other payments under this Agreement without obtaining the approval of the Board
of Directors. This Agreement shall not be assigned by the Company without the consent of the
Advisor.



ARTICLE 16




INDEMNIFICATION AND LIMITATION OF LIABILITY




     16.01 Indemnification by the Company.
The Company shall indemnify and hold harmless the Advisor and its Affiliates, including
their respective managers, officers, directors, partners and employees, from all liability, claims,
damages or losses arising in the performance of their duties hereunder, and related expenses,
including reasonable attorneys’ fees, to the extent such liability, claims, damages or losses and
related expenses are not fully reimbursed by insurance, subject to any limitations imposed by the
laws of the State of Texas, the Articles of Incorporation or Agreement
of Limited Partnership of the Company, provided that: (i) the Advisor and its Affiliates have
determined that the course of conduct which caused the loss or liability was in the best interests
of the Company, (ii) the Advisor and its Affiliates were acting on behalf of or performing services
for the Company, (iii) the indemnified claim was not the result of negligence, misconduct, or fraud
of the indemnified person or resulted from a breach of the agreement by the Advisor, and (iv) in
the event the loss , liability or expense arises from or out of an alleged violation of federal or
state securities laws by the Advisor or its Affiliates, the conditions set forth in at least one
of clauses (X), (Y) or (Z) of Section 12.2(b) of the Articles of



25









 







Incorporation must be satisfied
(deeming, for purposes of this Agreement, that the Advisor or its Affiliates are each an
“Indemnitee” as such term is used in such clauses) for the Company to provide such indemnification.
Any indemnification of the Advisor may be made only out of the net assets of the Company and not
from the Shareholders.



     16.02 Indemnification by the Advisor.
The Advisor shall indemnify and hold harmless the Company from contract or other liability,
claims, damages, taxes or losses and related expenses, including attorneys’ fees, to the extent
that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed
by insurance and are incurred by reason of the Advisor’s bad faith, fraud, willful misconduct or
reckless disregard of its duties, but the Advisor shall not be held responsible for any action of
the Board of Directors in following or declining to follow any of the Advisor’s advice or
recommendation. THE PARTIES HERETO INTEND THAT THE INDEMNITIES SET FORTH IN THIS AGREEMENT BE
CONSTRUED AND APPLIED AS WRITTEN NOTWITHSTANDING ANY RULE OF CONSTRUCTION TO THE CONTRARY. WITHOUT
LIMITING THE FOREGOING, THE INDEMNITIES
SHALL, TO THE FULLEST EXTENT ALLOWED BY LAW, AND TO THE EXTENT PROVIDED IN THIS AGREEMENT,
APPLY NOTWITHSTANDING ANY STATE’S “EXPRESS NEGLIGENCE RULE” OR SIMILAR RULE THAT WOULD DENY
COVERAGE BASED ON AN INDEMNIFIED PERSON’S SOLE, CONCURRENT OR CONTRIBUTORY ACTIVE OR PASSIVE
NEGLIGENCE OR STRICT LIABILITY OR GROSS NEGLIGENCE. IT IS THE INTENT OF THE PARTIES THAT, TO THE
EXTENT PROVIDED IN THIS AGREEMENT, THE INDEMNITIES SET FORTH HEREIN SHALL, TO THE FULLEST EXTENT
ALLOWED BY LAW, APPLY TO AN INDEMNIFIED PERSON’S SOLE,



26









 







CONCURRENT OR CONTRIBUTORY ACTIVE OR PASSIVE
NEGLIGENCE OR STRICT LIABILITY OR GROSS NEGLIGENCE. THE PARTIES AGREE THAT THIS PROVISION IS
“CONSPICUOUS” FOR PURPOSES OF ALL STATE LAWS.



     16.03 The Advisor’s Liability.




     (i) Notwithstanding any other provisions of this Agreement, in no event shall the
Company make any claim against the Advisor, or its Affiliates, on account of any good faith
interpretation by the Advisor of the provisions of this Agreement (even if such
interpretation is later determined to be a breach of this Agreement) or any alleged errors
in judgment made in good faith and in accordance with this Agreement in connection with the
operation of the operations of the Company hereunder by the Advisor or the performance of
any advisory or technical services provided by or arranged by the Advisor. The provisions
of this Section 16.03(i) shall not be deemed to release the Advisor from liability for its
gross negligence.




     (ii) The Company shall not object to any expenditures made by the Advisor in good faith
in the course of its performance of its obligations under this Agreement or in settlement of
any claim arising out of the operation of the Company unless such expenditure is
specifically prohibited by this Agreement. The provisions of this Section 16.03(ii) shall
not be deemed to release the Advisor from liability for its gross negligence.




     (iii) IN NO EVENT WILL EITHER PARTY BE LIABLE FOR DAMAGES BASED ON LOSS OF INCOME,
PROFIT OR SAVINGS OR INDIRECT, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR SPECIAL
DAMAGES OF THE OTHER PARTY OR PERSON, INCLUDING



27









 







THIRD PARTIES, EVEN IF SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE, AND ALL SUCH DAMAGES ARE EXPRESSLY
DISCLAIMED. IN NO EVENT WILL THE ADVISOR’S AGGREGATE LIABILITY UNDER THIS AGREEMENT EVER
EXCEED THE TOTAL AMOUNT OF FEES IT ACTUALLY RECEIVES FROM THE COMPANY PURSUANT TO ARTICLE 9.




     (iv) THE PARTIES HERETO INTEND THAT THE RELEASE FROM LIABILITY SET FORTH IN SECTION
16.03 BE CONSTRUED AND APPLIED AS WRITTEN NOTWITHSTANDING ANY RULE OF CONSTRUCTION TO THE
CONTRARY. WITHOUT LIMITING THE FOREGOING, THE RELEASE FROM LIABILITY SHALL, TO THE FULLEST
EXTENT ALLOWED BY LAW, APPLY NOTWITHSTANDING ANY STATE’S “EXPRESS NEGLIGENCE RULE” OR
SIMILAR RULE THAT WOULD DENY
COVERAGE BASED ON A PERSON’S SOLE, CONCURRENT OR CONTRIBUTORY ACTIVE OR PASSIVE
NEGLIGENCE OR STRICT LIABILITY. IT IS THE INTENT OF THE PARTIES THAT, TO THE EXTENT
PROVIDED IN SECTION 16.03, THE RELEASE FROM LIABILITY SET FORTH HEREIN SHALL, TO THE FULLEST
EXTENT ALLOWED BY LAW, APPLY TO A RELEASED PERSON’S SOLE, CONCURRENT OR CONTRIBUTORY ACTIVE
OR PASSIVE NEGLIGENCE OR STRICT LIABILITY. THE PARTIES AGREE THAT THIS PROVISION IS
“CONSPICUOUS” FOR PURPOSES OF ALL STATE LAWS.



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ARTICLE 17




MISCELLANEOUS




     17.01
Notices. Any notice, report or other communication required or permitted to be given hereunder shall
be in writing unless some other method of giving such notice, report or other communication is
required by the Articles of Incorporation, the Bylaws, or accepted by the party to whom it is
given, and shall be given by being delivered by hand or by overnight mail or other overnight
delivery service to the addresses set forth herein:



          To the Company, the General Partner or the Directors:



Hines REIT Properties, L.P.

c/o Hines Real Estate Investment Trust, Inc.

2800 Post Oak Blvd., Suite 5000

Houston, Texas 77056




          To the Advisor:



Hines Advisors Limited Partnership

2800 Post Oak Blvd., Suite 5000

Houston, Texas 77056




     Either party may at any time give notice in writing to the other party of a change in its
address for the purposes of this Section 17.01.



     17.02 Modification. This Agreement shall not be changed, modified, terminated, or discharged, in whole or in
part, except by an instrument in writing signed by both parties hereto, or their respective
successors or assignees.



29









 





     17.03 Severability. The provisions of this Agreement are independent of and severable from each other, and no
provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole or in part.



     17.04 Construction. The provisions of this Agreement shall be construed and interpreted in accordance with the
laws of the State of Texas.



     17.05 Entire Agreement.
This Agreement contains the entire agreement and understanding among the parties hereto
with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with any of the terms
hereof. This Agreement may not be modified or amended other than by an agreement in writing.



     17.06 Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy,
power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or further exercise of
the same or of any other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a waiver of such right,
remedy, power or privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such waiver.



30









 





     17.07 Gender. Words used herein regardless of the number and gender specifically used, shall be deemed
and construed to include any other number, singular or plural, and any other gender, masculine,
feminine or neuter, as the context requires.



     17.08 Titles Not to Affect Interpretation. The titles of Articles and Sections contained in this Agreement are for convenience only,
and they neither form a part of this Agreement nor are they to be used in the construction or
interpretation hereof.



     17.09 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed
to be an original as against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become binding when one or
more counterparts hereof, individually or taken together, shall bear the signatures of all of the
parties reflected hereon as the signatories



[The remainder of this page is intentionally left blank. Signature page follows.]




31









 








     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.



	 	 	 	 	 	 	 	 	 
	 	 	Hines REIT Properties, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Hines Real Estate Investment Trust, Inc.	 	 
	 	 	Its:	 	General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Hines Advisors Limited Partnership	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Hines Advisors GP LLC	 	 
	 	 	Its:	 	General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Hines Real Estate Investment Trust, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 	 
	 	 	 	 	 	 	 






32