Document:

exv10w31

	 	 	 	 	 

Exhibit 10.31

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of March 3, 2009, by and between
EMMIS OPERATING COMPANY, an Indiana company (“Employer”), and GARY L. KASEFF, a California
resident (“Executive”).

RECITALS

     WHEREAS, Employer and its affiliates are engaged in the ownership and operation of certain
radio stations, magazines, and related operations (together, the “Emmis Group”); and

     WHEREAS, Executive serves as Executive Vice President and General Counsel of Employer pursuant
to the terms of his employment agreement dated March 1, 2008, as amended in December, 2008 (“2008
Employment Agreement”) and the Emmis Communications Corporation Change in Control Severance
Agreement effective January 1, 2008 (“Change in Control Agreement”); and

     WHEREAS, it has been the intention of the parties that Executive continue providing services
to Employer in a full-time capacity beyond the expiration of the term set forth in the 2008
Employment Agreement; and

     WHEREAS, Employer and Emmis Communications Corporation (“ECC”) have entered into an agreement
with their lenders which, among other things, excludes from consolidated operating cash flow up to
$10 million in contract termination expenses (“contract termination basket”); and

     WHEREAS, it is in the best interest of Employer to use the contract termination basket to buy
out future financial obligations; and

     WHEREAS, consistent with the foregoing, Executive is willing to resign from his position as
Executive Vice President and General Counsel and terminate the 2008 Employment Agreement and the
Change in Control Agreement in exchange for compensation relative to the mutual termination of
those agreements and the future services and obligations described therein and related thereto; and

     WHEREAS, in connection with the foregoing, Employer desires that Executive remain on the Board
of Directors of ECC (“Board”); and

     WHEREAS, the parties desire Executive to provide services to Employer on a part-time basis
pursuant to the terms and conditions of the 2008 Employment Agreement; and

     WHEREAS, the parties intend that the transition from full-time to part-time employment shall
constitute a “separation from service” within the meaning of Internal Revenue Code Section 409A so
that Executive shall not be subject to taxes imposed pursuant to Section 409A.

 

 

     NOW, THEREFORE, in consideration of the foregoing, the mutual promises and covenants set forth
in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

AGREEMENT

     1. Lump Sum Cash Payment; Termination of Agreements. On or before March 13, 2009,
Employer shall make a lump sum cash payment to Executive of $1.2 million, subject to applicable
taxes and withholdings as required by law (the “Cash Payment”). The Cash Payment shall be made
without offset of any kind. Effective upon Executive’s receipt of the Cash Payment (the “Effective
Date”), the Change in Control Agreement and the 2008 Employment Agreement shall terminate and be of
no further force and effect; except, however, Section 16.11 of the 2008 Employment
Agreement shall survive the termination of that agreement. Executive shall not receive any Base
Salary or Automobile Allowance (each as defined in the 2008 Employment Agreement) attributable to
the period from March 1, 2009 through March 12, 2009.

     2. Employment; Board.

     2.1 Employment. Upon the terms and subject to the conditions set forth in
this Agreement, Employer hereby employs Executive on a non-exclusive, part-time basis, and
Executive hereby accepts employment with Employer. During the Term (as defined herein),
Executive shall make himself available to Employer to complete such reasonable projects and
assignments as may be assigned to him by the Chief Executive Officer of Employer and/or ECC
or any successor in interest thereto. The parties intend that the transition from
full-time to part-time employment shall constitute a “separation from service” within the
meaning of Internal Revenue Code Section 409A. Therefore, notwithstanding anything to the
contrary contained herein, in no event will Executive be required or permitted to provide
more than twenty (20) hours of service during any calendar month pursuant to this
Section 2.1; provided, however, that the time spent by Executive serving as a
director of ECC or its subsidiaries or affiliates shall not be included within the twenty
(20) hours of service. Subject to the terms and conditions of this Section 2.1,
Employer shall have no obligation to pay Executive the Base Salary, as defined herein, for
any periods during which Executive fails or refuses to render services pursuant to this
Section 2.1.

     2.2 Board. Subject to the terms of this Section 2.2, Executive shall
remain a director of ECC through his current term as a director and thereafter Executive
shall be nominated and shall stand for election as a member of the Board when his current
term expires; provided, however, that if requested by Employer, Executive shall resign as a
director of ECC at the expiration of such three year term. Executive shall be
remunerated, as a director, in the same manner as directors of ECC who are not officers and
employees of ECC; such remuneration shall be in addition to the Base Salary. For calendar
year 2009, Executive shall be paid the full year’s director’s annual retainer in January,
2010,

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but shall be paid the fee for meetings based on meetings attended in person or by
telephone after the Effective Date. Executive shall be entitled to the benefit of
indemnification pursuant to the terms of Section 16.11. Subject to the foregoing,
Executive shall serve during the Term without additional remuneration as a director of one
(1) or more of Employer’s other subsidiaries or affiliates (other than ECC) if appointed to
such position(s) by Employer and shall also be entitled to the benefit of indemnification
pursuant to the terms of Section 16.11. Notwithstanding anything to the contrary
contained herein, Executive may resign at any time as a member of the Board (and as a
director of any of Employer’s subsidiaries or affiliates) without affecting the parties’
rights and obligations hereunder (other than Executive’s right to receive remuneration as a
director).

     3. Term. The term of this Agreement shall commence on the Effective Date and shall
end on the earliest of: (a) the fifth (5th) anniversary of its commencement, (b) the
date Executive secures full-time employment other than with Employer or any of its affiliates, (c)
Executive’s death, (d) the “Incapacity Termination Date”, as defined in Section 11.1 or (e)
the date this Agreement and Executive’s employment is terminated for Cause (as defined in
Section 10.3) in accordance with the terms and conditions of Section 10. The term
of part-time employment described in the preceding sentence shall be referred to herein as the
“Term”. Each twelve (12) month period commencing on March 13 and ending on the following March 12
during the Term shall be referred to herein as a “Contract Year.” As used herein, “full-time
employment” shall not include any one or more of the following situations in which Executive
renders services to others: (a) being employed to work 30 hours or less per week ; (b) serving as
a director on a number of boards; (c) being employed to work more than 30 hours per week on
specified projects or transactions e.g. providing legal or consulting services in connection with a
specific acquisition or divestiture; (d) being employed to work more than 30 hours per week;
provided that such employment is for a specified period of time of one year or less; or (e) working
in any capacity other than as an employee (e.g., as an independent contractor).

     4. Base Salary. Upon the terms and subject to the conditions set forth in this
Agreement, for the services described in Section 2.1, Employer shall pay or cause to be
paid to Executive an annualized base salary (the “Base Salary”) of $93,400, payable pursuant to
Employer’s customary payroll practices and subject to applicable taxes and withholdings as required
by law, for each Contract Year during the Term.

     5. Equity. On March 2, 2009, Executive was granted an option (“Option”) to acquire
One Hundred Seventy Five Thousand (175,000) shares of Class A Common Stock of ECC (the “Shares”).
The Option has an exercise price per Share equal to 29.5 cents and shall be evidenced by a written
grant agreement and be exercisable for Shares with such restrictive legends on the certificates in
accordance with applicable securities laws and the applicable Equity Compensation Plan, or any
subsequent equity compensation or similar plan adopted by ECC and generally used to make
equity-based awards to management-level employees of the Emmis Group (the “Plan”). The Option
shall have a ten year term commencing March 2, 2009 and vests one hundred percent (100%) on March
2, 2012. Subject to the above vesting schedule, Executive shall have

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the right to exercise the Option from time to time during the entire ten year term,
notwithstanding any termination of part-time employment prior to expiration of the ten year term,
unless Executive’s employment is terminated for Cause in accordance with Section 10. The
Option is intended to satisfy the regulatory exemption from the application of Code Section 409A
for certain options for service recipient shares, and they shall be administered accordingly. Any
option granted to Executive prior to March 2, 2009 shall continue to vest and become exercisable
during the Term and thereafter (to the extent not already exercisable as of the first day of the
Term) in accordance with the applicable vesting schedule of each such option, and shall remain
outstanding through the last day of the applicable option term provided under the applicable award
agreement pursuant to which each such option was awarded, notwithstanding any termination of
part-time employment prior to expiration of each such option term, unless Executive’s employment is
terminated for Cause in accordance with Section 10. Ownership of any restricted Shares
previously granted to Executive shall continue to vest (to the extent not already fully vested as
of the first day of the Term) in accordance with the vesting schedule applicable to each grant,
notwithstanding any termination of full-time or part-time employment, unless Executive’s employment
is terminated for Cause in accordance with Section 10.

     6. Expenses. Employer shall pay or reimburse Executive for all reasonable expenses
actually incurred or paid by Executive during the Term directly related to the performance of
Executive’s services hereunder upon presentation of expense statements, vouchers or other
supporting documentation as Employer may require of Executive; provided such expenses are otherwise
in accordance with Employer’s policies. Executive shall undertake such travel as may be required
in the performance of Executive’s duties pursuant to this Agreement. During the Term, Executive
shall be provided with a PDA, computer, monitor and printer and shall remain on the Emmis network,
all at no cost to Executive. During the Term, Employer shall reimburse Executive for the
reasonable cost of compliance with his continuing education requirement. Under no circumstances
shall the Employer’s reimbursement for expenses incurred in a calendar year be made later than the
end of the next following calendar year; provided, however this requirement shall not alter the
Employer’s obligation to reimburse Executive for eligible expenses on a current basis.

     7. Health Care Coverage. Throughout the Term, Executive and his dependents (as such
term is defined in the applicable health plan of Employer) shall continue to participate in
Employer’s health plan, to the extent permitted under the terms of such plan and at the expense of
Employer, except for any premium co-payment or other similar amounts for which Executive would have
otherwise been responsible pursuant to the terms of the plan. Employer will include as taxable
income on Executive’s W-2 for each calendar year in which Executive participates in Employer’s
health plan under this Agreement an amount equal to the cost of the premiums paid for such
insurance. In the event that the terms of Employer’s health plan do not at any time during the
Term permit Executive and/or his dependents to continue to participate in such plan, Employer shall
reimburse Executive for the cost of securing substantially comparable health care coverage, as
reasonably determined by Executive, (with no preexisting condition exclusion) for Executive and
his dependents.

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     8. Confidential Information.

     8.1 Non-Disclosure. Executive acknowledges that certain information
concerning the business of the Emmis Group and its members (including but not limited to
trade secrets and other proprietary information) is of a highly confidential nature, and
that, as a result of Executive’s employment with Employer prior to and during the Term,
Executive shall receive and develop, proprietary and confidential information concerning
the business of Employer and/or other members of the Emmis Group which, if known to
Employer’s competitors, would damage Employer, other members of the Emmis Group and their
respective businesses. Accordingly, Executive hereby agrees that during the Term and
thereafter, Executive shall not divulge or appropriate for Executive’s own use, or for the
use or benefit of any third party (other than Employer and its representatives, or as
directed in writing by Employer), any information or knowledge concerning the business of
Employer or any other member of the Emmis Group which is not generally available to the
public other than through the activities of Executive. Executive further agrees that,
immediately upon termination of Executive’s employment hereunder for any reason, Executive
shall promptly surrender to Employer all documents, brochures, plans, strategies, writings,
illustrations, client lists, price lists, sales, financial or marketing plans, budgets and
any and all other materials (regardless of form or character) which Executive received from
or developed on behalf of Employer or any member of the Emmis Group in connection with
Executive’s employment prior to or during the Term. Executive acknowledges that all such
materials shall remain at all times during the Term and thereafter the sole and exclusive
property of Employer and that nothing in this Agreement shall be deemed to grant Executive
any right, title or interest in such material.

     8.2 Ownership of Materials. Employer shall solely and exclusively own all
rights of every kind and nature in perpetuity and throughout the universe in: (i) the
programs and broadcasts on which Executive appears or for which Executive renders services
to Employer in any capacity; (ii) the results and proceeds of Executive’s services pursuant
to this Agreement including, without limitation, those results and proceeds provided in
connection with the creation, development, preparation, writing, editing or production by
Executive or any employee of any member of the Emmis Group of any and all materials,
properties or elements of any and all kinds for the programs on which Executive appears or
for which Executive renders services (whether directly or indirectly); and (iii) any
business, financial, sales or marketing plans and strategies, documents, presentations, or
other similar materials, regardless of kind or character, each of which Executive
acknowledges is a work specially ordered by Employer which shall be considered to be a
“work made for hire” for Employer. Therefore, Employer shall be the author and copyright
owner of the programs on which Executive appears or for which Executive renders services
pursuant to this Agreement, the broadcasts and tapes or recordings thereof for all purposes
without limitation of any kind, and all materials described in the immediately preceding
sentence. All characters developed for the programs and broadcasts

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during the Term shall be solely and exclusively owned by Employer, including all
right, title and interest thereto. The exclusive legal title to all of the aforesaid works
and matters, programs, broadcasts, and materials and all secondary and derivative rights
therein, shall belong, at all times, to Employer which shall have the right to copyright
the same and apply for copyright registrations and copyright renewal registrations and to
make whatever use thereof that Employer, in its sole and absolute discretion, deems
advisable, including but not limited to rebroadcasts of programs or use of any portions of
any program in the production or broadcast of other programs at any time, notwithstanding
expiration of the Term or termination of this Agreement for any reason.

     8.3 Injunctive Relief. Executive acknowledges that Executive’s breach of this
Section 8 will cause irreparable harm and damage to Employer, the exact amount of
which will be difficult to ascertain; that the remedies at law for any such breach would be
inadequate; and that the provisions of this Section 8 have been specifically
negotiated and carefully written to prevent such irreparable harm and damage. Accordingly,
if Executive breaches this Section 8, Employer shall be entitled to injunctive
relief (including attorneys’ fees and costs) enforcing this Section 8 to the extent
reasonably necessary to protect Employer’s legitimate interests, without posting bond or
other security.

     9. Non-Interference; Injunctive Relief.

     9.1 Non-Interference. During the Term, and for a period of two (2) years
immediately following the expiration of the Term, Executive shall not, directly or
indirectly, take any action which has the effect of interfering with Employer’s
relationship (contractual or otherwise) with: (i) on-air talent of any member of the Emmis
Group; or (ii) any other employee of any member of the Emmis Group. Without limiting the
generality of the foregoing, Executive specifically agrees that during such time period,
Executive shall not solicit, hire or engage any on-air talent or other employee of any
member of the Emmis Group or any other employee of any member of the Emmis Group to provide
services for Executive’s benefit or for the benefit of any other business or entity, or
solicit or encourage them to cease their employment with any member of the Emmis Group for
any reason.

     9.2 Injunctive Relief. Executive acknowledges and agrees that the provisions
of this Section 9 have been specifically negotiated and carefully worded in
recognition of the opportunities which will be afforded to Executive by Employer by virtue
of Executive’s continued association with Employer during the Term, and the influence that
Executive has and will continue to have over Employer’s employees, customers and suppliers.
Executive further acknowledges that Executive’s breach of Section 9.1 herein will
cause irreparable harm and damage to Employer, the exact amount of which will be difficult
to ascertain; that the remedies at law for any such breach would be inadequate; and that
the provisions of this Section 9 have been specifically negotiated and carefully
written to prevent such irreparable harm and damage. Accordingly, if Executive

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breaches Section 9.1, Employer shall be entitled to injunctive relief
(including attorneys’ fees and costs) enforcing Section 9.1, to the extent
reasonably necessary to protect Employer’s legitimate interests, without posting bond or
other security. Notwithstanding anything to the contrary contained in this Agreement, if
Executive violates Section 9.1, and Employer brings legal action for injunctive or
other relief, Employer shall not, as a result of the time involved in obtaining such
relief, be deprived of the benefit of the full period of noninterference set forth therein.
Accordingly, the obligations set forth in Section 9.1 shall have the duration set
forth therein, computed from the date such relief is granted but reduced by the time
expired between the date the restrictive period began to run and the date of the first
violation of the obligation(s) by Executive.

     9.3 Construction. Despite the express agreement herein between the parties,
in the event that any provisions set forth in this Section 9 shall be determined by
any court or other tribunal of competent jurisdiction to be unenforceable for any reason
whatsoever, the parties agree that this Section 9 shall be interpreted to extend
only to the maximum extent as to which it may be enforceable, and that this Section
9 shall be severable into its component parts, all as determined by such court or
tribunal.

     10. Termination of Agreement by Employer for Cause.

     10.1 Termination. Employer may terminate this Agreement and Executive’s
employment hereunder for Cause (as defined in Section 10.3 below) in accordance
with the terms and conditions of this Section 10.

     10.2 Effect of Termination. In the event of termination for Cause

as provided in this Section 10:

     (i) Executive shall have no further obligations or liabilities hereunder
except Executive’s obligations under Sections 8 and 9, which shall
survive the termination of this Agreement;

     (ii) Employer shall have no further obligations or liabilities hereunder,
except that Employer shall, not later than two (2) weeks after the termination date
pay to Executive all earned but unpaid Base Salary with respect to any applicable
pay period ending on or before the termination date.

     10.3 Definition of Cause. For purposes of this Agreement, “Cause” means (i)
the willful and continued failure of Executive to perform substantially his duties with
Employer (other than any such failure resulting from Executive’s incapacity due to physical
or mental illness or any such failure subsequent to Executive being delivered a notice of
Termination without Cause by the Employer) after a written demand for substantial
performance is delivered to Executive by the Board which specifically identifies the manner
in which the Board believes that Executive has not substantially performed Executive’s
duties;

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provided that Executive has not cured such failure or commenced such performance
within 30 days after such demand is given to Executive, or (ii) the willful engaging by
Executive in illegal conduct or gross misconduct which is demonstrably and materially
injurious to Employer or its affiliates. For purposes of the preceding sentence, no act or
failure to act by Executive shall be considered “willful” unless done or omitted to be done
by Executive in bad faith and without reasonable belief that Executive’s action or omission
was in the best interests of Employer. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board, based upon the advice of counsel
for Employer (or upon the instructions of Employer’s chief executive officer or another
senior officer of Employer) shall be conclusively presumed to be done, or omitted to be
done, by Executive in good faith and in the best interests of Employer. Cause shall not
exist unless and until Employer has delivered to Executive a copy of a resolution duly
adopted by three-quarters (3/4) of the entire Board (excluding Executive) at a meeting of
the Board called and held for such purpose (after reasonable notice to Executive and an
opportunity for Executive, together with counsel, to be heard before the Board), finding
that in the good faith opinion of the Board an event set forth in clause (i) or (ii) has
occurred and specifying the particulars thereof in detail. Employer must notify Executive
of any event constituting Cause within ninety (90) days following Employer’s knowledge of
its existence or such event shall not constitute Cause under this Agreement.

     10.4 Termination Without Cause. In the event that Employer defaults in its
material obligations hereunder (which default remains uncured ten (10) days after notice
from Executive) or terminates Executive’s employment hereunder prior to the expiration of
the Term (other than for Cause, on account of Executive’s incapacity pursuant to
Section 11, or on account of Executive’s death), at the election of Executive,
Employer shall pay to Executive not later than two (2) weeks following such termination (in
addition to any amounts payable under Section 1 or earned by Executive, but unpaid
as of the termination date) a one-time, lump sum cash payment equal to $15,000 for each
month from the date of termination of employment through March 12, 2014, prorated for any
partial month. In addition, Executive’s ownership of any restricted Shares shall continue
to vest, and Executive shall continue to have the right to exercise the Option and
previously granted options in accordance with Section 5, notwithstanding such
termination of employment, and Employer shall continue to provide the health care coverage
in accordance with Section 7.

     11. Termination of Agreement by Employer for Incapacity.

     11.1 Termination. If Executive becomes unable to perform the services
required by Section 2.1 because of ill health or physical or mental disability as
reasonably determined by a physician selected by Employer, Employer shall continue to
compensate Executive under the terms of this Agreement without diminution and otherwise
without regard to such incapacity or nonperformance of duties until Executive has been
incapacitated for a cumulative period of six (6)

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months, at which time Employer may, in its sole discretion, elect to terminate
Executive’s employment. The date that Executive’s employment terminates pursuant to this
section is referred to herein as the “Incapacity Termination Date.”

     11.2 Obligations after Termination. Executive shall have no further
obligations or liabilities hereunder after an Incapacity Termination Date except
Executive’s obligations under Section 8 and 9 that shall survive the
termination or expiration of this Agreement. After an Incapacity Termination Date,
Employer shall have no further obligations or liabilities hereunder except that Employer
shall, not later than two (2) weeks after an Incapacity Termination Date, pay to Executive
those amounts described in Section 10.2(ii). Nothing in this Section 11
or in Section 12 shall affect the amount of any benefits which may be payable to
Executive under any insurance plan or policy maintained by Employer or Executive or
pursuant to any Employer company practice, plan or program applicable to Executive. In
addition, Executive’s ownership of any restricted Shares shall continue to vest, and
Executive shall continue to have the right to exercise the Option and previously granted
options in accordance with Section 5, notwithstanding such termination of
employment.

     12. Death of Executive. This Agreement shall terminate immediately upon Executive’s
death. In the event of such termination, Employer shall have no further obligations or liabilities
hereunder except that Employer shall, not later than two (2) weeks after Executive’s date of death,
pay or grant to Executive’s estate or designated beneficiary those amounts described in Section
10.2(ii). In addition, Executive’s ownership of any restricted Shares shall continue to vest,
and Executive’s estate or designated beneficiary shall continue to have the right to exercise the
Option and previously granted options in accordance with Section 5, notwithstanding such
termination of employment.

     13. Gross Up for Taxes Imposed Under Code Section 409A.

     13.1 Employer’s Gross-Up Obligation. This Agreement is intended to comply
with Code Section 409A, and it is intended that no amounts payable hereunder shall be
subject to tax under Section 409A. If, however, Executive pays taxes imposed pursuant to
Code Section 409A, Employer shall reimburse Executive to the extent provided in Section
13.2 or 13.3.

     13.2 Reimbursement by Agreement. If, before Executive’s tax return due date
for the year in which an amount is paid hereunder, (i) Employer reasonably determines that
part or all of the amounts payable pursuant to this Agreement during the year was subject
to taxes under Code Section 409A, or (ii) Executive reasonably determines that part or all
of such amounts was subject to taxes under Code Section 409A, and Employer agrees with
Executive’s determination (such agreement not to be unreasonably withheld, conditioned or
delayed), Employer shall reimburse Executive for any taxes under Code Section 409A with
respect to such payment and any additional federal, state, or local income or employment
taxes imposed on Executive due to the foregoing

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reimbursement, so that the after-tax payment to Executive is equal to the after-tax
amount that Executive would have received if Code Section 409A had not applied. Employer
shall pay the reimbursement required by the preceding sentence only if Executive provides
acceptable proof of payment within sixty (60) days after having paid the taxes subject to
reimbursement. If Executive provides acceptable proof to Employer within such period,
Employer shall pay the reimbursement required by this Section 13.2 as soon as
administratively feasible (and under no circumstances more than one hundred twenty (120)
days) after receiving such proof.

     13.3 Reimbursement following Audit. If Employer does not report any portion
of the amounts payable to Executive hereunder as subject to taxes under Code Section 409A,
and as a result of a later tax audit by the Internal Revenue Service, Executive is required
to pay taxes under Code Section 409A, Employer shall reimburse Executive for any taxes
under Code Section 409A with respect to such payment, any interest and penalties imposed on
Executive for the failure to make timely payment of such taxes (with respect to any period
before the end of the audit), and any additional federal, state, or local income or
employment taxes imposed on Executive due to the foregoing reimbursement, so that the
after-tax payment to Executive is equal to the after-tax amount that Executive would have
received if Code Section 409A had not applied. Employer shall pay the reimbursement
required by the preceding sentence only if Executive provides acceptable proof of payment
within sixty (60) days after having paid the taxes subject to reimbursement. If Executive
provides acceptable proof to Employer within such period, Employer shall pay the
reimbursement required by this Section 13.3 as soon as administratively feasible
(and under no circumstances more than one hundred twenty (120) days) after receiving such
proof.

     14. Adjustments for Changes in Capitalization of Employer. In the event of any change
in Employer’s outstanding Shares during the Term by reason of any reorganization, recapitalization,
reclassification, merger, stock split, reverse stock split, stock dividend, asset spin-off, share
combination, consolidation, or other event, the number and class of Shares and/or Options and/or
restricted Shares awarded to Executive (and any applicable Option exercise price) shall be adjusted
by the Compensation Committee of the Board (“Compensation Committee”) in its sole and absolute
discretion and, if applicable, in accordance with the terms of the Plan and any applicable option
agreement or restricted stock agreement evidencing such grants. The determination of the
Compensation Committee shall be conclusive and binding. All adjustments pursuant to this Section
shall be made in a manner that does not result in taxation to the Executive under Code Section
409A.

     15. Notices. All notices, requests, consents and other communications, required or
permitted to be given hereunder, shall be made in writing and shall be deemed to have been made as
of: (a) the date that is three (3) days after the date of mailing, if sent via the U.S. postal
service, first-class, postage-prepaid, (b) the date that is the next date upon which an overnight
delivery service (Federal Express, UPS or DHL only) will make such delivery, if sent via such
overnight delivery service, first-class, postage prepaid, or

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(c) the date such delivery is made, if delivered in person to the notice party specified
below. Such notice shall be delivered as follows (or to such other or additional address as
either party shall designate by notice in writing to the other in accordance herewith):

     (i) If to Employer:

Legal Department

Emmis Communications Corporation

40 Monument Circle, Suite 700

Indianapolis, Indiana 46204

     (ii) If to Executive, to Executive at Executive’s residence address in the
personnel records of Employer.

     16. Miscellaneous.

     16.1 Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Indiana without regard to its conflict
of law principles.

     16.2 Internal Revenue Code Section 409A. To the extent required by Code
Section 409A(a)(2)(B)(i) and the regulations thereunder, if Executive is a “specified
employee” for purposes of such Section, payments on account of Executive’s separation from
service shall be delayed to the earliest date permissible under Code Section
409A(a)(2)(B)(i). For purposes of this Agreement, “termination of employment”, “terminates
employment”, or any variation of such term shall mean “separation from service” within the
meaning of Internal Revenue Code Section 409A(a)(2)(B)(i)

     16.3 Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of any of the
terms and conditions of this Agreement.

     16.4 Benefits-related Agreements. Restricted stock, option and other
benefits-related agreements shall continue in full force and effect, modified only to the
extent expressly provided for herein. Executive’s interest in the Employer’s 401K plan is
fully vested and Executive shall be entitled to continue full participation in that plan.

     16.5 Assignment. This Agreement, and Executive’s rights and obligations
hereunder, may not be assigned by Executive to any third party; provided,
however, that Executive may designate pursuant to Section 16.7 one (1) or
more beneficiaries to receive any amounts that would otherwise be payable hereunder to
Executive’s estate. Employer may assign all or any portion of its rights and obligations
hereunder to any other member of the Emmis Group or to any successor or assignee of
Employer pursuant to a reorganization,

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recapitalization, merger, consolidation, sale of substantially all of the assets or
stock of Employer, or otherwise.

     16.6 Amendments; Waivers. This Agreement cannot be changed, modified or
amended, and no provision or requirement hereof may be waived, without the written consent
of Executive and Employer. Except as otherwise provided for herein: (i) the failure of a
party at any time to require performance of any provision hereof shall in no manner affect
the right of such party at a later time to enforce such provision, and (ii) no waiver by a
party of the breach of any term or covenant contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such breach or a waiver of the breach of any other term
or covenant contained in this Agreement.

     16.7 Beneficiaries. Whenever this Agreement provides for any payment to
Executive’s estate, such payment may be made instead to such beneficiary as Executive may
have designated in a writing filed with Employer. Executive shall have the right to revoke
any such designation and to re-designate a beneficiary by written notice to Employer (or to
any applicable insurance company).

     16.8 Change in Fiscal Year. If, at any time during the Term, Employer changes
its fiscal year, Employer shall make such adjustments to the various dates and target
amounts included herein as are necessary or appropriate, provided that no such change shall
affect the date on which any amount is payable hereunder.

     16.9 Executive’s Warranty and Indemnity. Executive hereby represents and
warrants that Executive: (i) has the full and unqualified right to enter into and fully
perform this Agreement according to each and every term and condition contained herein;
(ii) has not made any agreement, contractual obligation, or commitment in contravention of
any of the terms and conditions of this Agreement or which would prevent Executive from
performing according to any of the terms and conditions contained herein; and (iii) has not
entered into any agreement with any prior employer or other person, corporation or entity
which would in any way adversely affect Executive’s or Employer’s right to enter into this
Agreement. Furthermore, Executive hereby agrees to fully indemnify and hold harmless
Employer and each of its subsidiaries, affiliates and related entities, and each of their
respective officers, directors, employees, agents, attorneys, shareholders, insurers and
representatives from and against any and all losses, costs, damages, expenses (including
attorneys’ fees and expenses), liabilities and claims, arising from, in connection with, or
in any way related to Executive’s breach of any of the representations or warranties
contained in this Section 16.9.

     16.10 Venue. Any action to enforce, challenge or construe the terms or making
of this Agreement or to recover for its breach shall be litigated exclusively in a state
court located in Marion County, Indiana, except that the Employer may elect, at its sole
and absolute discretion, to litigate the action in the

12

 

county or state where any breach by Executive occurred or where Executive can be
found. Executive acknowledges and agrees that this venue provision is an essential
provision of this Agreement and Executive hereby waives any defense of lack of personal
jurisdiction or improper venue.

     16.11 Indemnification. Executive shall be entitled to the benefit of the
indemnification provisions set forth in Employer’s Amended and Restated Articles of
Incorporation and/or By-Laws, or any applicable corporate resolution, as the same may be
amended from time to time during the Term (not including any limiting amendments or
additions, but including any amendments or additions that add to or broaden the protection
afforded to Executive at the time of execution of this Agreement) to the fullest extent
permitted by applicable law. Additionally, Employer shall cause Executive to be
indemnified in accordance with Chapter 37 of the Indiana Business Corporation Law (the
“IBCL”), as the same may be amended from time to time during the Term, to the fullest
extent permitted by the IBCL as required to make Executive whole in connection with any
indemnifiable loss, cost or expense incurred in Executive’s performance of Executive’s
duties and obligations pursuant to this Agreement. Employer shall also maintain during the
Term an insurance policy providing directors’ and officers’ liability coverage in a
commercially reasonable amount. It is understood that the foregoing indemnification
obligations shall survive the expiration or termination of the Term.

     16.12 Reimbursement of Expenses. If any contest or dispute shall arise under
this Agreement involving termination of Executive’s employment with Employer or involving
the failure or refusal of Employer to perform fully in accordance with the terms hereof,
Employer shall reimburse Executive, on a current basis, for all reasonable legal fees and
expenses, if any, incurred by Executive in connection with such contest or dispute
(regardless of the result thereof); provided, however, Executive shall be required to
repay any such amounts to Employer to the extent that a court or an arbitration panel
issues a final order from which no appeal can be taken, or with respect to which the time
period to appeal has expired, setting forth that Executive has not wholly or partially
prevailed on at least one material issue in dispute. The amount of expenses eligible for
reimbursement in one year pursuant to this Section shall not affect the amount of expenses
eligible for reimbursement in any following year. Under no circumstances shall Employer’s
reimbursement for expenses incurred in a calendar year be made later than the end of the
next following calendar year; provided, however, this requirement shall not alter
Employer’s obligation to reimburse Executive for eligible expenses on a current basis.

     16.13 Waiver of Insurance Reimbursement. Executive waives the right to
receive a reimbursement under Section 6.2 of the 2008 Employment Agreement for the contract
year ending February 28, 2009.

13

 

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

	 	 	 	 	 	 	 
	 	 	EMMIS OPERATING COMPANY

(“Employer”)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeffrey H. Smulyan
 

Jeffrey H. Smulyan
	 	 
	 

	 	 	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	GARY L. KASEFF

(“Executive”)	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Gary L. Kaseff	 	 
	 

	 	 
	 
	 

	 	 
	 	 	       Gary L. Kaseffexv10w3

Exhibit 10.3

ADVISORY AGREEMENT

Among

HINES REIT PROPERTIES, L.P.,

HINES ADVISORS LIMITED PARTNERSHIP,

and

HINES REAL ESTATE INVESTMENT TRUST, INC.

                    , 20     

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1 DEFINITIONS
	 	 	1	 
	ARTICLE 2 APPOINTMENT
	 	 	4	 
	ARTICLE 3 DUTIES OF THE ADVISOR
	 	 	4	 
	3.01 Offering Services
	 	 	4	 
	3.02 Acquisition Services
	 	 	5	 
	3.03 Asset Management Services
	 	 	5	 
	3.04 Shareholder Services
	 	 	7	 
	3.05 Financing Services
	 	 	8	 
	3.06 Disposition Services
	 	 	8	 
	ARTICLE 4 AUTHORITY OF THE ADVISOR
	 	 	8	 
	4.01 General
	 	 	8	 
	4.02 Powers of the Advisor
	 	 	8	 
	4.03 Approval by Directors
	 	 	9	 
	ARTICLE 5 BANK ACCOUNTS
	 	 	9	 
	ARTICLE 6 RECORDS AND FINANCIAL STATEMENTS
	 	 	9	 
	ARTICLE 7 LIMITATION ON ACTIVITIES
	 	 	10	 
	ARTICLE 8 RELATIONSHIP WITH DIRECTORS AND OFFICERS
	 	 	10	 
	ARTICLE 9 FEES
	 	 	11	 
	9.01 Acquisition Fees
	 	 	11	 
	9.02 Asset Management Fees
	 	 	11	 
	9.03 Debt Financing Fees
	 	 	11	 
	ARTICLE 10 EXPENSES
	 	 	11	 
	10.01 General
	 	 	11	 
	10.02 Reimbursement to Advisor
	 	 	13	 
	10.03 Reimbursement to Company
	 	 	13	 
	ARTICLE 11 OTHER SERVICES
	 	 	14	 
	ARTICLE 12 RELATIONSHIP OF THE ADVISOR AND COMPANY; OTHER ACTIVITIES OF THE ADVISOR
	 	 	14	 
	12.01 Relationship
	 	 	14	 
	12.02 Time Commitment
	 	 	14	 
	12.03 Investment Opportunities and Allocation
	 	 	15	 
	ARTICLE 13 THE HINES NAME
	 	 	15	 
	ARTICLE 14 TERM AND TERMINATION OF THE AGREEMENT
	 	 	15	 
	14.01 Term
	 	 	15	 
	14.02 Termination by Either Party
	 	 	16	 
	14.03 Termination by the Company
	 	 	16	 
	14.04 Termination by the Advisor
	 	 	16	 
	14.05 Payments on Termination and Survival of Certain Rights and Obligations
	 	 	16	 
	14.06 Repurchase of Units
	 	 	17	 
	ARTICLE 15 ASSIGNMENT
	 	 	17	 
	ARTICLE 16 INDEMNIFICATION AND LIMITATION OF LIABILITY
	 	 	17	 
	16.01 Indemnification by the Company
	 	 	17	 
	16.02 Indemnification by the Advisor
	 	 	18	 

 

 

	 	 	 	 	 
	 	 	Page	 
	16.03 The Advisor’s Liability
	 	 	18	 
	ARTICLE 17 MISCELLANEOUS
	 	 	19	 
	17.01 Notices
	 	 	19	 
	17.02 Modification
	 	 	20	 
	17.03 Severability
	 	 	20	 
	17.04 Construction
	 	 	20	 
	17.05 Entire Agreement
	 	 	20	 
	17.06 Waiver
	 	 	20	 
	17.07 Gender
	 	 	21	 
	17.08 Titles Not to Affect Interpretation
	 	 	21	 
	17.09 Counterparts
	 	 	21	 

 

 

ADVISORY AGREEMENT

     This Advisory Agreement (this “Agreement”), dated as of                     , 20     , 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 supplemented by the Articles Supplementary and as otherwise amended from
time to time.

“Articles Supplementary” means the Articles Supplementary establishing and fixing the
rights and preferences of the Preferred Shares, 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,

1

 

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.

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

“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.

“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.

“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.

2

 

“Managing Dealer” means Hines Real Estate Investments, 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 Securities 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.

“Preferred Shares” means shares of [ ]% Series A Cumulative Preferred stock of the General
Partner, par value $.001 per share.

“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 the Common Shares and the Preferred Shares.

3

 

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

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

“Preferred Offering” means the offering by the General Partner on Form S-11 (Reg. No.
333-                    ) of up to $750,000,000 Preferred Shares, including $50,000,000 Preferred 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 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) preparation and approval of all marketing materials to be used by the Managing Dealer or
others in the Offering of the General Partner’s Securities;

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

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

4

 

     (vi) 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; 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 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;

5

 

     (b) 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;

     (c) 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;

     (d) 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;

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

     (f) 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;

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

     (ii) Accounting and Other Administrative Management 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) 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;

6

 

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

     (e) 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;

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

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

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

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

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

     (k) 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;

     (l) 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”);

     (m) 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

     (n) 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

7

 

calls, preparing and sending written and electronic reports and other communications; and

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

     3.05 Financing Services

     (i) Identify and evaluate potential financing and refinancing sources, engaging a third-party
broker if necessary;

     (ii) Negotiate terms, arrange and execute financing agreements;

     (iii) Manage relationships between the Company and its lenders; and

     (iv) Monitor and oversee the service of the Company’s debt facilities and other financings.

     3.06 Disposition Services.

     (i) Consult with the Board of Directors and provide assistance with the evaluation and
approval of potential asset dispositions, sales or other liquidity events; and

     (ii) Structure and negotiate the terms and conditions of transactions pursuant to which real
estate investments may be sold.

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

8

 

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 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 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.

9

 

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 the 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
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.

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

10

 

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
investment. The Company shall also reimburse the Advisor for all 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 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:

11

 

     (i) all issuer costs, including expenses of the Company’s organization, actual legal,
accounting, bona fide out-of-pocket itemized due diligence expenses, printing, filing fees,
transfer agent costs, postage, escrow fees, data processing fees, advertising and sales literature
and other offering related expenses; provided, however, the Company shall not
reimburse the Advisor for any Organizational and Offering Expenses to the extent that such
reimbursement would violate Section 9.6 of the Articles of Incorporation;

     (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) expenses incurred in connection with obtaining debt financing for the Company;

     (iv) 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;

     (v) 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;

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

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

     (viii) 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;

     (ix) 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;

     (x) third-party 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;

     (xi) personnel and related employment direct costs and overhead of the

12

 

Advisor and its affiliates in connection with providing professional services for the Company
and the General Partner in-house, including legal services, tax services, internal audit services,
technology related services and services in connection with compliance with the Sarbanes-Oxley Act
of 2002;

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

     (xiii) expenses incurred in connection with disposition services; and

     (xiv) 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 (viii) and (xi) related to
shareholder services expenses, in-house professional services 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.

     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. The Company shall reimburse the Advisor or Affiliates of the Advisor for all
expenses incurred in connection with the services provided pursuant to this Agreement to the
Company or the General Partner prior to the execution of this Agreement.

     10.03 Reimbursement to Company.

     (i) 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.

13

 

     (ii) The Advisor shall reimburse the Company to the extent Organizational
and Offering
Expenses, including selling commissions and the dealer manager fee payable to the Managing
Dealer,
exceed 15% of the Gross Proceeds raised in the Preferred Offering within 30 days after the
Company provides the Advisor with an invoice and supporting documentation relating to such
reimbursement.

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.

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

14

 

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 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 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

15

 

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.

     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

16

 

     (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, Common 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 Common Shares available for issuance pursuant to this Section 14.06 and shall issue
Common 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 Common 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 Common 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

17

 

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 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, 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

18

 

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 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.

ARTICLE 17

MISCELLANEOUS

     17.01 Notices. Any notice, report or other communication required or

19

 

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.

     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

20

 

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.

     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.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

21

 

     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:
	 	Charles N. Hazen	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	Hines Advisors Limited Partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Hines Advisors GP LLC	 	 
	 

	 	Its:
	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Sherri W. Schugart	 	 
	 

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

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Charles N. Hazen	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 

22

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