Document:

exv10w8

 

Exhibit 10.8

ADVISORY AGREEMENT

Among

HINES REIT PROPERTIES, L.P.,

HINES ADVISORS LIMITED PARTNERSHIP,

and

HINES REAL ESTATE INVESTMENT TRUST, INC.

June 26, 2006

 

 

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
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 4 AUTHORITY OF ADVISOR
	 	 	10	 
	 
	 	 	 	 
	4.01 General
	 	 	10	 
	4.02 Powers of the Advisor
	 	 	11	 
	4.03 Approval by Directors
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 6 RECORDS AND FINANCIAL STATEMENTS
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 7 LIMITATION ON ACTIVITIES
	 	 	13	 
	 
	 	 	 	 
	ARTICLE 8 RELATIONSHIP WITH DIRECTORS AND OFFICERS
	 	 	14	 
	 
	 	 	 	 
	ARTICLE 9 FEES
	 	 	14	 
	 
	 	 	 	 
	9.01 Acquisition Fees
	 	 	14	 
	9.02 Asset Management Fees
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 10 EXPENSES
	 	 	15	 
	 
	 	 	 	 
	10.01 General
	 	 	15	 
	10.02 Reimbursement to Advisor
	 	 	18	 
	10.03 Reimbursement to Company
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 11 OTHER SERVICES
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 12 RELATIONSHIP OF ADVISOR AND COMPANY; OTHER ACTIVITIES OF THE ADVISOR
	 	 	19	 
	 
	 	 	 	 
	12.01 Relationship
	 	 	19	 
	12.02 Time Commitment
	 	 	20	 
	12.03 Investment Opportunities and Allocation
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 13 THE HINES NAME
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 14 TERM AND TERMINATION OF THE AGREEMENT
	 	 	21	 
	 
	 	 	 	 
	14.01 Term
	 	 	21	 
	14.02 Termination by Either Party
	 	 	21	 
	14.03 Termination by the Company
	 	 	22	 
	14.04 Termination by the Advisor
	 	 	22	 
	14.05 Payments on Termination and Survival of Certain Rights and Obligations
	 	 	22	 

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	 	 	 	Page	 
	14.06 Repurchase of Units
	 	 	23	 
	 
	 	 	 	 
	ARTICLE 15 ASSIGNMENT
	 	 	24	 
	 
	 	 	 	 
	ARTICLE 16 INDEMNIFICATION AND LIMITATION OF LIABILITY
	 	 	24	 
	 
	 	 	 	 
	16.01 Indemnification by the Company
	 	 	24	 
	16.02 Indemnification by the Advisor
	 	 	25	 
	16.03 Advisor’s Liability
	 	 	26	 
	 
	 	 	 	 
	ARTICLE 17 MISCELLANEOUS
	 	 	28	 
	 
	 	 	 	 
	17.01 Notices
	 	 	28	 
	17.02 Modification
	 	 	28	 
	17.03 Severability
	 	 	29	 
	17.04 Construction
	 	 	29	 
	17.05 Entire Agreement
	 	 	29	 
	17.06 Waiver
	 	 	29	 
	17.07 Gender
	 	 	30	 
	17.08 Titles Not to Affect Interpretation
	 	 	30	 
	17.09 Counterparts
	 	 	30	 

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ADVISORY AGREEMENT

     This Advisory Agreement, dated as of June 26, 2006 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 (the “Agreement”).

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 Advisory 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 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 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.

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

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     “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 mortgage loan,
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
mortgage loan, the total amount of the funds advanced.

     “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.

     “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.

3

 

     “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.

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

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

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

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

4

 

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 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;

5

 

     (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 hereof and the investment objectives and policies of the
Company: (a) locate, analyze and select potential 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 related to
acquisitions of Assets;

     (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;

6

 

     (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 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;

          (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

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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;

          (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;

8

 

          (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;

          (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;

9

 

          (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;

          (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.

     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 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.

10

 

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.

     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

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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

     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 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.
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 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. Advisor shall maintain necessary liaison with the Company’s
independent accountants and shall provide such accountants with such reports and other information
as the Company shall request.

12

 

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 an action that would violate (i) through (iv) of the
preceding sentence but such action 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 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

13

 

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.

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 0.50% of the Initial Asset Value of each Asset
acquired by the Advisor as well as
reimburse the Company for all out-of-pocket

14

 

third-party expenses incurred by the Advisor in
connection with such services as required by Article 10. The amount of such acquisition fees 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 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.

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 all of the 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:

15

 

     (i) all Organizational and Offering Expenses; provided, however, that the Company shall
at no time reimburse the Advisor for any Organizational and Offering Expenses reimbursements
pursuant to this Article 10 to the extent that such reimbursement would violate Section 9.6
of the Articles of Incorporation. Additionally, the Advisor will provide the Independent
Directors upon request a summary of Organizational and Offering Expenses incurred prior to
the date of such request. The Company shall not reimburse the Advisor for any
Organizational and Offering Expenses a majority of the Independent Directors decide are not
fair and commercially reasonable to the Company.

     (ii) 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;

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

     (iv) 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;

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

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

16

 

     (vii) personnel and related employment direct costs incurred by the Advisor or
Affiliates (a) in performing the services described in Sections 3.01 and 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;

     (viii) 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;

     (ix) 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;

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

     (xi) 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 (i) and (vii) related to Organization and
Offering Expenses, shareholder services expenses and other 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.
The Company shall also reimburse the Advisor or Affiliates of the Advisor for all expenses incurred
on behalf of the Company or the General Partner prior to the execution of this Agreement.

17

 

     10.02 Reimbursement to Advisor. Expenses incurred by the Advisor on behalf of the Company and payable pursuant to this Section
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 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

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(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.

ARTICLE 12

RELATIONSHIP OF 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.

19

 

     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.

     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

20

 

or an Affiliate
thereof to perform the services of 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 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.

21

 

     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.

     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;

22

 

     (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

     (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

23

 

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.

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

24

 

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 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

25

 

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, 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 Advisor’s Liability

     (i) Notwithstanding any other provisions of this Agreement, in no event shall the
Company make any claim against Advisor, or its Affiliates, on account of any good faith
interpretation by 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 Advisor or the performance of any advisory or
technical services provided by or arranged by the Advisor. The provisions of this Section
16.3(a) shall not be deemed to release 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

26

 

expenditure is
specifically prohibited by this Agreement. The provisions of this Section 16.03(b) shall
not be deemed to release 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 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 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

27

 

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.

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.

28

 

     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.

29

 

     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.]

30

 

     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:
	 	/s/ Charlie M. Baughn
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Charlie M. Baughn
	 

	 	 	 	Title:
	 	Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	Hines Advisors Limited Partnership
	 
	 	 	 	 	 	 
	 	 	By:	 	Hines Advisors GP LLC
	 	 	Its:	 	General Partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Sherri W. Schugart
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Sherri W. Schugart
	 

	 	 	 	Title:
	 	Chief Financial Officer
	 
	 	 	 	 	 	 
	 	 	Hines Real Estate Investment Trust, Inc.
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Charlie M. Baughn
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Charlie M. Baughn
	 

	 	 	 	Title:
	 	Chief Executive Officer

31exv10w12

 

Exhibit 10.12

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (this “Employment Agreement”), dated as of March 1, 2006 (the
“Commencement Date”), by and between Chindex International, Inc., a Delaware corporation (the
“Company” or “Chindex”), and Roberta Lipson (“Employee”).

     WHEREAS, the Company desires that Employee enter into this Employment Agreement, and Employee
desires to enter into this Employment Agreement, on the terms and conditions set forth herein,

     NOW THEREFORE, the parties hereto agree as follows:

     Section 1. Duties; Term.

          (a) The Company agrees to employ Employee, and Employee agrees to be so employed, in the
position of Chief Executive Officer (CEO) of the Company, reporting to the Board of Directors of
the Company. Employee agrees to perform such duties, functions and responsibilities as are
generally incident to such position, for a period commencing on March 1, 2006 and ending on
December 31, 2010, unless sooner terminated in accordance with Section 4 hereof (the “Term”).
Employee agrees to faithfully perform the lawful duties assigned to Employee pursuant to this
Employment Agreement to the best of Employee’s abilities and to devote all of Employee’s business
time and attention to the Company’s business. Employee shall be subject to all laws, rules,
regulations and policies as are from time to time applicable to employees of the Company and, in
the case of rules or policies adopted by the Company, communicated to Employee in writing.

          (b) Notwithstanding the foregoing, Employee may (i) serve on civic or charitable boards or
not-for-profit industry related organizations, (ii) engage in charitable, civic, educational,
professional, community and/or industry activities without remuneration therefor and (iii) manage
personal and family investments, so long as such activities do not interfere with performance of
Employee’s duties under the Employment Agreement. Employee also may serve on the board of
directors or advisory committee of other for-profit enterprises subject to the consent of the
Board, which shall not unreasonably be withheld; provided, however, that Employee shall not serve
on more than two such boards at the same time.

          (c) Employee shall devote substantially all Employee’s working time, attention, best efforts
and ability during regular business hours exclusively to the service of the Company, its affiliates
and its subsidiaries during the term of this Agreement.

     Section 2. Compensation.

          (a) Annual Salary. As compensation for Employee’s services hereunder, during the Term
the Company shall pay to Employee a salary of Two Hundred Twenty Thousand Dollars ($220,000) per
annum, payable in accordance with the Company’s standard

 

 

payroll policies, and less all applicable federal, state and local withholding taxes (the
“Annual Salary”). The Annual Salary shall be reviewed by the Compensation Committee of the Board
of Directors of the Company at least annually during the Term, and may be increased in the sole
discretion of the Company in accordance with the policies of the Board of Directors, taking into
consideration both the Company’s and Employee’s performance during the preceding year.

          (b) Bonus. The Company shall also pay Employee annual bonus compensation (“Bonus
Compensation”) based on the success of business operations and the pre-tax profits of the Company
and upon the performance of the Employee as recommended by the Compensation Committee and approved
by the Board in accordance with the then-existing management incentive program of the Company or as
may otherwise be determined by the Committee.

          (c) Long-term Equity Incentive Compensation. In addition to stock options previously
granted pursuant to the terms of any of the Company’s stock option or stock incentive plans and
option agreements (collectively, the “Option Agreements”), the Company may also grant to Employee
stock options under any new plans adopted by the Company and/or other long-term equity incentive
compensation in such form and having such terms as the Committee may determine.

     Section 3. Benefits; Expense Reimbursement.

          During the Term, Employee shall participate in any group, accident, sickness, life and/or
hospitalization insurance, and any other employee benefit plans of the Company in effect during the
Term and generally available to the Company’s executive officers. Employee shall have the right to
reimbursement, upon proper accounting, of reasonable expenses and disbursements incurred by
Employee in the course of Employee’s duties hereunder. In addition, during each year of the Term,
Employee shall be entitled to paid vacation of such duration and at such times as does not, in the
opinion of the Board of Directors, interfere with Employee’s performance or Employee’s duties
hereunder. In addition, in each year Employee shall be paid an amount equal to the Compensation
Committee’s reasonably approved allowance for tuition costs paid by Employee for Employee’s minor
children, if any, who attend primary or secondary schools. Employee shall be entitled to the use
of a Company-owned automobile or an allowance to reimburse Employee for Employee’s costs associated
with the use of a personal automobile. The Company may pay to Employee a housing or other
allowance or allowances as reasonably determined from time to time by the Compensation Committee.
Employee acknowledges that some or all of these benefits may be deemed compensation to Employee and
that the Company may withhold from any benefits payable to Employee all federal, state, local
and/or other taxes and amounts as shall be required pursuant to law, rule or regulation.

     Section 4. Employment Termination.

          (a) At any time during the Term, and except as otherwise provided in this Section, the Company
shall only have the right to terminate this Employment Agreement and Employee’s employment with the
Company hereunder, upon written notice to Employee, in the event Employee engages in conduct which
constitutes “Cause.” For purposes of this Employment Agreement, Cause shall mean (i) Employee’s
willful misconduct in the

-2-

 

performance of Employee’s obligations under this Employment Agreement or gross negligence in
the performance of Employee’s obligations under this Employment Agreement, (ii) dishonesty or
misappropriation by Employee relating to the Company or any of its funds, properties, or other
assets, (iii) inexcusable repeated or prolonged absence from work by Employee (other than as a
result of, or in connection with, a disability), (iv) any unauthorized disclosure by Employee of
confidential or proprietary information of the Company which is reasonably likely to result in
material harm to the Company, (v) a conviction of Employee (including entry of a guilty or nolo
contendere plea) involving fraud, dishonesty, or moral turpitude, or involving a violation of
federal or state securities laws, or (vi) the failure by Employee to attempt to perform faithfully
Employee’s duties hereunder, or other material breach by Employee of this Employment Agreement, and
such failure or breach is not cured, to the extent cure is possible, by Employee within thirty (30)
days after written notice thereof from the Company to Employee; provided, however,
that no event or condition described in clauses (i), (ii), (iii), (iv) or (vi) shall constitute
Cause unless (x) the Company first gives Employee written notice of its intention to terminate
Employee’s employment for Cause and the grounds for such termination no fewer than twenty (20) days
prior to the date of termination; and (y) Employee is provided the opportunity to appear before the
Board, with or without legal representation at Employee’s election to present arguments on
Employee’s own behalf; provided further, however, that notwithstanding anything to the contrary in
this Agreement and subject to the other terms of this proviso, the Company may take any and all
actions, including without limitation suspension (but not without pay), it deems appropriate with
respect to Employee and Employee’s duties at the Company pending such appearance. No act or
failure to act on Employee’s part will be considered “willful” unless done, or omitted to be done,
by Employee not in good faith and without reasonable belief that Employee’s action or omission was
in the best interests of the Company. If this Employment Agreement and Employee’s employment with
the Company hereunder is terminated for Cause, or if Employee voluntarily resigns (which Employee
may do at any time) from the Company without Good Reason during the Term, the Company shall pay
Employee a lump sum amount within thirty (30) days of such termination equal to the sum of (A) all
earned but unpaid portions of the Annual Salary, (B) any earned but unpaid Bonus Compensation for a
previously completed fiscal year of the Company, (C) reimbursement for any unreimbursed business
expenses incurred by Employee prior to the date of termination or resignation (the “Termination
Date”) subject to reimbursement pursuant to Section 3, (D) payment for any unused vacation days
through the Termination Date, and (E) any other amounts or benefits (other than severance,
termination or similar pay) required to be paid or provided by law or under any plan, program or
policy of the Company ((A)-(E) collectively, the “Accrued Amounts”), and following any such
termination, Employee shall not be entitled to receive any other compensation or benefits from the
Company hereunder, including, without limitation, any portion of the Annual Bonus for the year in
which Employee is terminated.

          (b) This Employment Agreement and Employee’s employment with the Company hereunder may also be
terminated by the Company at any time without Cause, or by Employee upon the occurrence of an event
constituting Good Reason. For purposes of this Employment Agreement, “Good Reason” shall mean in
connection with and following the occurrence of a Change of Control, (i) there is without
Employee’s written consent a reduction of Employee’s authority, duties or responsibilities relative
to Employee’s authority, duties or responsibilities in effect immediately prior to such reduction;
provided, however, that the foregoing provision shall not include a
reduction in duties or responsibilities solely by virtue of

-3-

 

the Company being acquired and made part of a larger entity (as, for example, if Employee is
not given the same title in the acquiring corporation as Employee had in the Company, but continues
to have a substantially similar level of responsibility over the affairs of the Company following
such Change of Control), or (ii) Employee’s relocation by the Company or a successor thereto
without Employee’s written consent to a location other than that in which the Employee was residing
immediately prior to such change in control, provided that in the case of (i) and
(ii) above, the Company has failed to cure the event constituting Good Reason within thirty (30)
days following written notice thereof from Employee. In the event that Employee’s employment with
the Company shall terminate during the Term on account of termination by the Company without Cause,
or by Employee with Good Reason, then the Company shall pay or provide to Employee, as Employee’s
sole and exclusive remedy hereunder: (A) the Accrued Amounts, (B) a pro rata (based on the number
of days employed in the year of termination or resignation) bonus for the fiscal year in which such
termination or resignation occurs based on the greater of (1) the bonus paid to Employee for the
immediately preceding fiscal year or (2) the average of bonuses paid to Employee for the
immediately preceding three fiscal years. (C) (1) group or individual health insurance
substantially similar to that which Employee was receiving immediately prior to the Notice of
Termination, which obligation to provide insurance shall continue until Employee qualifies for
Medicare, reaches age 65, dies, or notifies the Company that such benefit should cease, whichever
occurs earliest, and (2) an annuity policy in an amount which will, at the time Employee qualifies
for Medicare, provide Employee with a monthly payment that Employee can use to purchase
supplemental health insurance, which annuity policy shall result in a monthly payment in an amount
estimated to be the cost of standard supplemental insurance, but in no event to exceed $300 per
month (collectively, the “Termination Benefits”), (D) 300% of the sum of 1) the Annual Salary to
the same extent to which Employee would have been entitled if Employee had continued working for
the Company for an additional twelve (12) month period following the Termination Date and 2) the
bonus paid to Employee for the Company’s fiscal year immediately prior to the fiscal year in which
change of control occurs, (E) all unvested equity incentive awards, including without limitation
stock options granted to Employee under the 2004 Plan that have been granted for more than six
months, which shall become immediately exercisable and Employee shall have a period of ninety (90)
days following the Date of Termination (but in no event past the expiration term of the option
grant) to exercise all options granted under the 2004 Plan then exercisable or which become
exercisable pursuant to this paragraph, and (F) the tuition and other allowances, if any, received
by Employee in the fiscal year immediately prior to the Termination Date, if any, shall be
continued for a period of three years to the extent that Employee continues to be eligible for such
benefit under the terms of the applicable benefit policy in effect immediately prior to the
Termination Date, provided that such benefits shall cease prior to the expiration of the three year
period when and if Employee has undertaken employment with a new employer. The payments provided
for in (A), (B) and (D) above (the “Termination Payments”) shall be made to Employee in a lump sum
payment within thirty (30) days following such termination or resignation; provided that the
payments provided for in (D) shall be contingent upon Employee’s continued compliance with Sections
5 and 6 hereof (except that Employee shall not be deemed for
 purposes of this Section 4(b) not to
have been in compliance with Section 6 solely as a result of an unintentional disclosure of
confidential information) and Employee shall be obligated to repay all such payments upon
determination by the Board that Employee has failed to comply as such with Sections 5 or 6 hereof;
and provided further that the benefits continuation provided for in (C)
above shall terminate upon Employee’s becoming eligible for corresponding benefits in
connection with new employment.

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          (c) Except as otherwise provided in this Agreement, Employee shall not be required to mitigate
the amount of any payment provided for in this Section 4 by seeking employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be reduced by any
compensation earned by Employee as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by Employee to the Company, or otherwise.

          (d) This Employment Agreement and Employee’s employment with the Company hereunder shall
terminate immediately and automatically upon the death or Disability (as defined below) of
Employee. For purposes of this Employment Agreement, “Disability” shall mean physical or mental
incapacity of a nature which prevents Employee, in the good faith judgment of the Company’s Board
of Directors, from performing Employee’s duties under this Employment Agreement for a period of 180
consecutive days or 270 days during any year with each year under this Employment Agreement
commencing on each anniversary of the date hereof. If this Employment Agreement and Employee’s
employment with the Company hereunder is terminated on account death or disability, then the
Company shall pay Employee, or Employee’s estate, conservator or designated beneficiary, as the
case may be, an amount equal to (A) the Accrued Amounts, (B) a Pro rated Bonus, and following any
such termination, neither Employee, nor Employee’s estate, conservator or designated beneficiary,
as the case may be, shall be entitled to receive any other compensation or benefits from the
Company hereunder.

          (e) Upon the termination of this Employment Agreement pursuant to Section 4 hereof, the
Company shall have no further obligations under this Employment Agreement; provided,
(except for amounts and benefits payable in Section 2 thru 4 above) however, that Sections
5 through 21 hereof shall survive and remain in full force and effect.

     Section 5. Non-Competition.

          (a) Employee hereby agrees that, during the period from the Commencement Date through the end
of the first twelve (12) months after the cessation of Employee’s employment with the Company,
Employee will not engage in “Competition” with the Company. For purposes of this Employment
Agreement, Competition by Employee shall mean Employee’s engaging in, or otherwise directly or
indirectly being employed by or acting as a consultant or lender to, or being a director, officer,
employee, principal, agent, stockholder, member, owner or partner of, or permitting Employee’s name
to be used in connection with the activities of any other business or organization anywhere in the
World which primarily engages in the business of providing health care services or selling health
care products in China (a “Competing Business”); provided, however, that,
notwithstanding the foregoing, it shall not be a violation of this Section 5(a) for Employee to (x)
become the registered or beneficial owner of up to three percent (3%) of any class of the capital
stock of a competing corporation registered under the Securities Exchange Act of 1934, as amended,
provided that Employee does not otherwise participate in the business of such corporation or (y)
work in a non-competitive business of a company which is carrying on a Competing Business, the
revenues of which represent less than 20% of the
consolidated revenues of that company, or, as a result thereof, owning compensatory equity in
that company.

-5-

 

          (b) Employee hereby agrees that, during the period from the Commencement Date through the end
of the first twelve (12) months after the cessation of Employee’s employment with the Company,
Employee will not solicit for employment or hire, in any business enterprise or activity, any
employee of the Company who was employed by the Company during the Term; provided, the foregoing
shall not be violated by general advertising not targeted at Company employees nor by serving as a
reference upon request.

     Section 6. Confidentiality; Intellectual Property.

          (a) Except as otherwise provided in this Employment Agreement, at all times during and after
the Term, Employee shall keep secret and retain in strictest confidence, any and all confidential
information relating to the Company, and shall use such confidential information only in
furtherance of the performance by Employee of Employee’s duties to the Company and not for personal
benefit or the benefit of any interest adverse to the Company’s interests. For purposes of this
Employment Agreement, “confidential information” shall mean any information including without
limitation plans, specifications, models, samples, data, customer lists and customer information,
computer programs and documentation, and other technical and/or business information, in whatever
form, tangible or intangible, that can be communicated by whatever means available at such time,
that relates to the Company’s current business or future business contemplated during the Term,
products, services and development, or information received from others that the Company is
obligated to treat as confidential or proprietary (provided that such confidential
information shall not include any information that (a) has become generally available to the public
or is generally known in the relevant trade or industry other than as a result of an improper
disclosure by Employee, or (b) was available to or became known to Employee prior to the disclosure
of such information on a non-confidential basis without breach of any duty of confidentiality to
the Company), and Employee shall not disclose such confidential information to any Person other
than the Company, except with the prior written consent of the Company, as may be required by law
or court or administrative order (in which event Employee shall so notify the Company as promptly
as practicable), or in performance of Employee’s duties hereunder. Further, this Section 6(a)
shall not prevent Employee from disclosing Confidential Information in connection with any
litigation, arbitration or mediation to enforce this Employment Agreement, provided that such
disclosure is necessary for Employee to assert any claim or defense in such proceeding.

          (b) Upon termination of the Term for any reason, Employee shall return to the Company all
copies, reproductions and summaries of confidential information in Employee’s possession and erase
the same from all media in Employee’s possession, and, if the Company so requests, shall certify in
writing that Employee has done so. All confidential information is and shall remain the property of
the Company (or, in the case of information that the Company receives from a third party which it
is obligated to treat as confidential, then the property of such third party); provided
however, that Employee shall be entitled to retain copies of (i) information showing
Employee’s compensation or relating to reimbursement of expenses, (ii) information that is required
for the preparation of Employee’s personal income tax return, (iii) documents provided to Employee
in Employee’s capacity as a participant in any employee benefit plan,
policy or program of the Company and (iv) this Employment Agreement and any other agreement by
and between Employee and the Company with regard to Employee’s employment or termination thereof.

-6-

 

          (c) All Intellectual Property (as hereinafter defined) and Technology (as hereinafter defined)
created, developed, obtained or conceived of by Employee during the Term, and all business
opportunities presented to Employee during the Term, shall be owned by and belong exclusively to
the Company, provided that they reasonably relate to any of the business of the Company on the date
of such creation, development, obtaining or conception, and Employee shall (i) promptly disclose
any such Intellectual Property, Technology or business opportunity to the Company, and (ii) execute
and deliver to the Company, without additional compensation, such instruments as the Company may
require from time to time to evidence its ownership of any such Intellectual Property, Technology
or business opportunity. For purposes of this Employment Agreement, (x) the term “Intellectual
Property” means and includes any and all trademarks, trade names, service marks, service names,
patents, copyrights, and applications therefor, and (y) the term “Technology” means and includes
any and all trade secrets, proprietary information, invention, discoveries, know-how, formulae,
processes and procedures.

     Section 7. Covenants Reasonable.

          The parties acknowledge that the restrictions contained in Sections 5 and 6 hereof are a
reasonable and necessary protection of the immediate interests of the Company, and any violation of
these restrictions could cause substantial injury to the Company and that the Company would not
have entered into this Employment Agreement, without receiving the additional consideration offered
by Employee in binding Employee to any of these restrictions. In the event of a breach or
threatened breach by Employee of any of these restrictions, the Company shall be entitled to apply
to any court of competent jurisdiction for an injunction restraining Employee from such breach or
threatened breach; provided however, that the right to apply for an injunction
shall not be construed as prohibiting the Company from pursuing any other available remedies for
such breach or threatened breach.

     Section 8. No Third Party Beneficiary.

          This Employment Agreement is not intended and shall not be construed to confer any rights or
remedies hereunder upon any Person, other than the parties hereto or their permitted assigns
(including, without limitation, Employee’s estate following Employee’s death). “Person” shall mean
an individual, corporation, partnership, limited liability company, limited liability partnership,
association, trust or other unincorporated organization or entity.

     Section 9. Notices.

          Unless otherwise provided herein, any notice, exercise of rights or other communication
required or permitted to be given hereunder shall be in writing and shall be given by overnight
delivery service such as Federal Express, telecopy (or like transmission) or personal delivery
against receipt, or mailed by registered or certified mail (return receipt requested), to the party
to whom it is given at such party’s address set forth below such party’s name on the signature page
or such other address as such party may hereafter specify by notice to the other
party hereto. Any notice or other communication shall be deemed to have been given as of the date
so personally delivered or transmitted by telecopy or like transmission or on the next business day
when sent by overnight delivery service.

-7-

 

     Section 10. Representations.

          The Company hereby represents and warrants that the execution and delivery of this Employment
Agreement and the performance by the Company of its obligations hereunder have been duly authorized
by all necessary corporate action of the Company.

     Section 11. Amendment.

          This Employment Agreement may be amended only by a written agreement signed by the parties
hereto.

     Section 12. Binding Effect.

          The rights and duties under this Employment Agreement are not assignable by Employee other
than as a result of Employee’s death. None of Employee’s rights under this Employment Agreement
shall be subject to any encumbrances or the claims of Employee’s creditors. This Employment
Agreement shall be binding upon and inure to the benefit of the Company and any successor
organization which shall succeed to the Company by merger or consolidation or operation of law, or
by acquisition of all or substantially all of the assets of the Company (provided that a successor
by way of acquisition of assets shall have undertaken in writing to assume the obligations of the
Company hereunder).

     Section 13. Governing Law.

          This Employment Agreement shall be governed by and construed in accordance with the internal
laws of the State of Delaware applicable to contracts to be performed wholly within the state and
without regard to its conflict of laws provisions.

     Section 14. Severability.

          If any provision of this Employment Agreement, including those contained in Sections 5 and 6
hereof, shall for any reason be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof shall not be affected or impaired thereby.
Moreover, if any one or more of the provisions of this Employment Agreement, including those
contained in Sections 5 and 6 hereof, shall be held to be excessively broad as to duration,
activity or subject, such provisions shall be construed by limiting and reducing them so as to be
enforceable to the maximum extent allowable by applicable law. To the extent permitted by
applicable law, each party hereto waives any provision of law that renders any provision of this
Employment Agreement invalid, illegal or unenforceable in any way.

-8-

 

     Section 15. Execution in Counterparts.

          This Employment Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original and all of which shall constitute one and the same instrument.

     Section 16. Entire Agreement.

          This Employment Agreement sets forth the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, between the parties with respect to the subject matter
hereof and thereof.

     Section 17. Titles and Headings.

          Titles and headings to Sections herein are for purposes of reference only, and shall in no way
limit, define or otherwise affect the meaning or interpretation of any of the provisions of this
Employment Agreement.

     Section 18. Conflicts of Interest.

          Employee specifically covenants, warrants and represents to the Company that Employee has the
full, complete and entire right and authority to enter into this Employment Agreement, that
Employee has no agreement, duty, commitment or responsibility of any kind or nature whatsoever with
any corporation, partnership, firm, company, joint venture or other entity or other Person which
would conflict in any manner whatsoever with any of Employee’s duties, obligations or
responsibilities to the Company pursuant to this Employment Agreement, that Employee is not in
possession of any document or other tangible property of any other Person of a confidential or
proprietary nature which would conflict in any manner whatsoever with any of Employee’s duties,
obligations or responsibilities to the Company pursuant to Employee’s Employment Agreement, and
that Employee is fully ready, willing and able to perform each and all of Employee’s duties,
obligations and responsibilities to the Company pursuant to this Employment Agreement.

     Section 19. Consent to Jurisdiction.

          Employee hereby irrevocably submits to the jurisdiction of any Delaware State or Federal court
sitting in any action or proceeding to enforce the provisions of this Employment Agreement, and
waives the defense of inconvenient forum to the maintenance of any such action or proceeding.

     Section 20. No Duty to Mitigate.

          Employee shall have no duty to mitigate or offset any amounts payable by the Company to
Employee hereunder.

-9-

 

     Section 21. Stock Option Exercises.

          Notwithstanding anything to the contrary contained in this Agreement, in the event that this
Agreement terminates for any reason, the Company shall not, unless required by law or the express
terms of the applicable plan or stock option contract relating thereto, impede or delay the
exercise of any option to purchase shares of the Company’s common stock granted to Employee
pursuant to any plan approved by the Company’s stockholders

          IN WITNESS WHEREOF, the undersigned have executed this Employment Agreement as of the date
first written above.

	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/
Roberta Lipson	 	 
	 	 	 	 	 	 	 
	 	 	Employee	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CHINDEX INTERNATIONAL, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Julius Y. Oestreicher	 	 
	 	 	 	 	 
	 	 	Chairman of Compensation Committee	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	7201 Wisconsin Avenue, 7th Floor	 	 
	 

	 	 	 	 	 	Bethesda, Maryland 20814	 	 
	 	 	Telephone:	 	     (301) 215-7777	 	 
	 	 	Telefax	 	     (301) 215-7719	 	 

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Annex 1.

In accordance with Section 3 of this Employment Agreement, the Compensation Committee has
determined that Roberta Lipson shall receive the following annual allowances for the purposes
indicated:

	 	 	 	 	 
	 

	 	Housing
	 	$48,000 
	 
	 	 	 	 
	 

	 	Tuition Reimbursement
	 	Maximum of $38,300 
	 
	 	 	 	 
	 

	 	Automobile Benefits
	 	As Previously Allowed

-11-

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