ADVISORY AGREEMENT Among HINES REIT PROPERTIES, L.P., HINES ADVISORS LIMITED PARTNERSHIP, and HINES REAL ESTATE INVESTMENT TRUST, INC. July 1, 2008
Among
XXXXX
REIT PROPERTIES, L.P.,
XXXXX
ADVISORS LIMITED PARTNERSHIP,
and
XXXXX
REAL ESTATE INVESTMENT TRUST, INC.
July 1,
2008
TABLE OF
CONTENTS
|
Page
|
|||
|
ARTICLE
1 DEFINITIONS
|
|||
|
ARTICLE
2 APPOINTMENT
|
|||
|
ARTICLE
3 DUTIES OF THE ADVISOR
|
|||
|
3.01
|
Offering
Services
|
||
|
3.02
|
Acquisition
Services
|
||
|
3.03
|
Asset
Management Services
|
||
|
3.04
|
Shareholder
Services
|
||
|
ARTICLE
4 AUTHORITY OF THE ADVISOR
|
|||
|
4.01
|
General
|
||
|
4.02
|
Powers
of the Advisor
|
||
|
4.03
|
Approval
by Directors
|
||
|
ARTICLE
5 BANK ACCOUNTS
|
|||
|
ARTICLE
6 RECORDS AND FINANCIAL STATEMENTS
|
|||
|
ARTICLE
7 LIMITATION ON ACTIVITIES
|
|||
|
ARTICLE
8 RELATIONSHIP WITH DIRECTORS AND OFFICERS
|
|||
|
ARTICLE
9 FEES
|
|||
|
9.01
|
Acquisition
Fees
|
||
|
9.02
|
Asset
Management Fees
|
||
|
9.03
|
Debt
Financing Fees
|
||
|
ARTICLE
10 EXPENSES
|
|||
|
10.01
|
General
|
||
|
10.02
|
Reimbursement
to Advisor
|
||
|
10.03
|
Reimbursement
to Company
|
||
|
ARTICLE
11 OTHER SERVICES
|
|||
|
ARTICLE
12 RELATIONSHIP OF THE ADVISOR AND COMPANY; OTHER ACTIVITIES OF THE
ADVISOR
|
|||
|
12.01
|
Relationship
|
||
|
12.02
|
Time
Commitment
|
||
|
12.03
|
Investment
Opportunities and Allocation
|
||
|
ARTICLE
13 THE XXXXX NAME
|
|||
|
ARTICLE
14 TERM AND TERMINATION OF THE AGREEMENT
|
|||
|
14.01
|
Term
|
||
|
14.02
|
Termination
by Either Party
|
||
|
14.03
|
Termination
by the Company
|
||
|
14.04
|
Termination
by the Advisor
|
||
|
14.05
|
Payments
on Termination and Survival of Certain Rights and
Obligations
|
||
|
14.06
|
Repurchase
of Units
|
||
|
ARTICLE
15 ASSIGNMENT
|
|||
|
ARTICLE
16 INDEMNIFICATION AND LIMITATION OF LIABILITY
|
|||
|
16.01
|
Indemnification
by the Company
|
||
|
16.02
|
Indemnification
by the Advisor
|
||
|
16.03
|
The
Advisor’s Liability
|
||
|
ARTICLE
17 MISCELLANEOUS
|
|||
|
17.01
|
Notices
|
||
|
17.02
|
Modification
|
||
|
17.03
|
Severability
|
||
|
17.04
|
Construction
|
||
|
17.05
|
Entire
Agreement
|
||
|
17.06
|
Waiver
|
||
|
17.07
|
Gender
|
||
|
17.08
|
Titles
Not to Affect Interpretation
|
||
|
17.09
|
Counterparts
|
||
This
Advisory Agreement (this “Agreement”), dated as
of July 1, 2008, is among Xxxxx REIT Properties, L.P., a Delaware limited
partnership, Xxxxx Advisors Limited Partnership, a Texas limited partnership,
and Xxxxx 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)
Xxxxx Advisors Limited Partnership, a Texas limited partnership, or (ii) any
successor advisor to the Company.
“Affiliate” has the
meaning set forth in the Articles of Incorporation. For the purposes of this
Agreement, the Advisor shall not be deemed to be an Affiliate of the Company,
and vice versa.
“Articles of
Incorporation” means the Second Amended and Restated Articles of
Incorporation of the General Partner, as amended from time to time.
“Asset” or “Assets” means any and
all real estate investments (real, personal or otherwise), tangible or
intangible, owned or held by, or for the account of, the Company, whether
directly or indirectly through another entity or entities, including interests
in any Person or in joint ventures which directly or indirectly own real estate
investments.
“Board of Directors”
means the Board Directors of the General Partner.
“Bylaws” means the
Amended and Restated Bylaws of the General Partner, as amended from time to
time.
“Cash Amount” has the
meaning set forth in the Limited Partnership Agreement.
“Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any successor
statute thereto. Reference to any provision of the Code shall mean such
provision as in effect from time to time, as the same may be amended, and any
successor provision thereto, as interpreted by any applicable regulations as in
effect from time to time.
“Company” means Xxxxx
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, Xxxxx 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 Xxxxx 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.
“Xxxxx” means Xxxxx
Interests Limited Partnership and its Affiliates.
“Independent Director”
has the meaning set forth in the Articles of Incorporation.
“Initial Asset Value”
means (i) in the case of an Asset other than a loan or other financing, the
gross purchase price of real estate investments acquired directly by the
Company, including any debt attributable to such investments, or the pro rata
share of the gross asset value of real estate investments held by entities in
which the Company invests, and (ii) in the case of a loan or other financing,
the total amount of the funds advanced.
“Initial Investment”
means a real estate investment made by the Company after the commencement of the
Third Offering up to an aggregate of $2,000,000,000 in real estate
investments.
“Limited Partnership
Agreement” means the Amended and Restated Limited Partnership Agreement
of Xxxxx REIT Properties, L.P., as the same may be amended and restated from
time to time.
“Managing Dealer”
means Xxxxx Real Estate Securities, Inc., a Delaware corporation, or such other
entity selected by the Board of Directors to act as the managing dealer for the
Offering.
“Offering” means a
public offering of Shares pursuant to any Prospectus.
“Operating Expenses”
has the meaning set forth in the Articles of Incorporation.
“Organizational and Offering
Expenses” has the meaning set forth in the Articles of
Incorporation.
“Participation
Interest” has the meaning set forth in the Limited Partnership
Agreement.
“Person” means an
individual, corporation, partnership, estate, trust, a portion of a trust
permanently set aside for or to be used exclusively for the purposes described
in Section 642(c) of the Code, association, private foundation within the
meaning of Section 509(a) of the Code, joint stock company or other
entity.
“Property Manager”
means Xxxxx Interests Limited Partnership, a Texas limited partnership, or an
Affiliate thereof.
“Property Management and
Leasing Agreement” means any Property Management and Leasing Agreement
between the Company and the Property Manager.
“Prospectus” means the
General Partner’s final prospectus for any public offering within the meaning of
Section 2(10) of the Securities Act of 1933, as amended.
“REIT” means a “real
estate investment trust” under Sections 856 through 860 of the
Code.
“REIT Shares Amount”
has the meaning set forth in the Limited Partnership Agreement.
“Securities” means any
class or series of units or shares of the Company or the General Partner,
including common shares or preferred units or shares and any other evidences of
equity or beneficial or other interests, voting trust certificates, bonds,
debentures, notes or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly
known as “securities” or any certificates of interest, shares or participations
in, temporary or interim certificates for, receipts for, guarantees of, or
warrants, options or rights to subscribe to, purchase or acquire, any of the
foregoing.
“Shares” means shares
of common stock of the General Partner, par value $.001 per share.
“Shareholders” means
the registered holders of the outstanding Shares.
“Subsequent
Investment” means a real estate investment made by the Company after it
has acquired $2,000,000,000 in Initial Investments.
“Termination Date”
means the date of termination of this Agreement.
“Third Offering” means
the offering by the General Partner on Form S-11 (Reg. No. 333-148854) of up to
$3,500,000,000 Shares, including $500,000,000 Shares offered pursuant to the
General Partner’s dividend reinvestment plan.
“2%/25% Guidelines”
has the meaning set forth in the Articles of Incorporation.
“Units” has the
meaning set forth in the Limited Partnership Agreement.
ARTICLE
2
APPOINTMENT
The
Company hereby appoints the Advisor to serve as its advisor on the terms and
conditions set forth in this Agreement, and the Advisor hereby accepts such
appointment.
ARTICLE
3
DUTIES OF THE
ADVISOR
The
Advisor is responsible for managing, operating, directing and supervising the
operations and administration of the Company and its Assets to the fullest
extent allowed by law. The Advisor shall, either directly or by engaging an
Affiliate or third party, perform the following duties:
3.01
Offering
Services. The Advisor shall manage and supervise:
(i)
Development of the product offering, including the determination of the specific
terms of the Securities to be offered by the General Partner and/or
the
Company,
preparation of all offering and related documents, and obtaining all required
regulatory approvals of such documents;
(ii)
Along with the Managing Dealer, approval of the participating broker dealers and
negotiation of the related selling agreements;
(iii)
Coordination of the due diligence process relating to participating broker
dealers and their review of any Prospectus and other Offering and Company
documents;
(iv)
Preparation and approval of all marketing materials contemplated to be used by
the Managing Dealer or others in the Offering of the General Partner’s
Securities;
(v) Along
with the Managing Dealer, negotiation and coordination with the transfer agent
for the receipt, collection, processing and acceptance of subscription
agreements, commissions, and other administrative support
functions;
(vi)
Creation and implementation of various technology and electronic communications
related to the Offering of the General Partner’s Securities; and
(vii) All
other services related to organization of the Company or the Offering, whether
performed and incurred by the Advisor or its Affiliates.
3.02
Acquisition
Services.
(i) Serve
as the Company’s investment and financial advisor and provide relevant market
research and economic and statistical data in connection with the Company’s
Assets and investment objectives and policies;
(ii)
Subject to Section 4.03 and Article 7 hereof and the investment objectives and
policies of the Company: (a) locate, analyze and select potential 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;
(b)
Negotiate and service the Company’s debt facilities and other
financings;
(c)
Monitor applicable markets and obtain reports (which may be prepared by the
Advisor or its Affiliates) where appropriate, concerning the value of
investments of the Company;
(d)
Monitor and evaluate the performance of investments of the Company; provide
daily management services to the Company and perform and supervise the various
management and operational functions related to the Company’s
investments;
(e)
Coordinate with the Property Manager on its duties under any Property Management
and Leasing Agreement and assist in obtaining all necessary approvals of major
property transactions as governed by the applicable Property Management and
Leasing Agreement;
(f)
Coordinate and manage relationships between the Company and any joint venture
partners;
(g)
Consult with the officers and Directors of the General Partner and provide
assistance with the evaluation and approval of potential property dispositions,
sales or refinancings;
|
|
(ii) Accounting
and Other Administrative Services:
|
(a)
Manage and perform the various administrative functions necessary for the
management of the day-to-day operations of the Company;
(b) From
time-to-time, or at any time reasonably requested by the Directors, make reports
to the Directors on the Advisor’s performance of services to the Company under
this Agreement;
(c)
Coordinate with the Company’s independent accountants and auditors to prepare
and deliver to the General Partner’s audit committee an annual report covering
the Advisor’s compliance with certain material aspects of this Advisory
Agreement;
(d)
Provide or arrange for administrative services and items, legal and other
services, office space, office furnishings, personnel and other overhead items
necessary and incidental to the Company’s business and operations;
(e)
Provide financial and operational planning services and portfolio management
functions;
(f)
Maintain accounting data and any other information requested concerning the
activities of the Company as shall be required to prepare and to file all
periodic financial reports and returns required to be filed with the Securities
and Exchange Commission and any other regulatory agency, including annual
financial statements;
(g)
Maintain all appropriate books and records of the Company;
(h)
Provide tax and compliance services and coordinate with appropriate third
parties, including independent accountants and other consultants, on related tax
matters;
(i)
Supervise the performance of such ministerial and administrative functions as
may be necessary in connection with the daily operations of the
Assets;
(j)
Provide the Company with all necessary cash management services;
(k)
Manage and coordinate with the transfer agent the quarterly dividend process and
payments to shareholders;
(l)
Consult with the officers and Directors of the General Partner and assist the
Directors in evaluating and obtaining adequate insurance coverage based upon
risk management determinations;
(m)
Provide the officers and Directors of the General Partner with timely updates
related to the overall regulatory environment affecting the Company, as well as
managing compliance with such matters, including but not limited to compliance
with the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx
Act”);
(n)
Consult with the officers and Directors of the General Partner and the Board of
Directors relating to the corporate governance structure and appropriate
policies and procedures related thereto; and
(o)
Perform all reporting, record keeping, internal controls and similar matters in
a manner to allow the General Partner to comply with applicable law, including
the Xxxxxxxx-Xxxxx Act.
3.04
Shareholder
Services.
(i)
Manage communications with shareholders, including answering phone calls,
preparing and sending written and electronic reports and other communications;
and
|
|
(ii)
Establish technology infrastructure to assist in providing shareholder
support and service.
|
ARTICLE
4
AUTHORITY OF THE
ADVISOR
4.01
General. All
rights and powers to manage and control the day-to-day business and affairs of
the Company shall be vested in the Advisor to the fullest extent allowed by law.
The Advisor shall have the power to delegate all or any part of its rights and
powers to manage and control the business and affairs of the Company to such
officers, employees, Affiliates, agents and representatives of the Advisor or
the Company as it may from time to time deem appropriate. Any authority
delegated by the Advisor to any other Person shall be subject to applicable law
and the limitations on the rights and powers of the Advisor specifically set
forth in this Agreement or the Articles of Incorporation.
4.02
Powers of the
Advisor. Subject to the express limitations set forth in this Agreement,
the power to direct the management, operation and policies of the Company shall
to the fullest extent allowed by law be vested in the Advisor, which shall have
the power by itself and shall be authorized and empowered on behalf and in the
name of the Company to carry out any and all of the objectives and purposes of
the Company and to perform all acts and enter into and perform all contracts and
other undertakings that it may in its sole discretion deem necessary, advisable
or incidental thereto to perform its obligations under this
Agreement.
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.
ARTICLE
7
LIMITATION ON
ACTIVITIES
Notwithstanding
any provision in this Agreement to the contrary, the Advisor shall not take any
action which, in its sole judgment made in good faith, would (i) adversely
affect the ability of the General Partner to qualify or continue to qualify to
be taxed as a REIT, (ii) subject the Company or the General Partner to
regulation under the Investment Company Act of 1940, as amended, (iii) violate
any law, rule or regulation of any governmental body or agency having
jurisdiction over the Company, the General Partner or their Securities, or (iv)
violate the Articles of Incorporation or Bylaws. In the event that an action
that would violate (i) through (iv) of the preceding sentence has been ordered
by the Board of Directors acting on behalf of the General Partner, the Advisor
shall notify the Board of Directors of the Advisor’s judgment of the potential
impact of such action and shall refrain from taking such action until it
receives further clarification or instructions from the Board of Directors. In
such event the Advisor shall, to the 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 compensation from the Company or General Partner for serving
as a Director or officer other than reasonable reimbursement for travel and
related expenses incurred in attending meetings of the Board of
Directors.
ARTICLE
9
FEES
9.01
Acquisition
Fees. The Company will pay the Advisor in cash as compensation for
services described in Section 3.02 an acquisition fee of (i) 2.50% of the
Initial Asset Value of each Initial Investment; and (ii) 0.50% of the Initial
Asset Value of each Subsequent Investment. The Company shall also reimburse the
Advisor for all out of pocket third party expenses incurred by the Advisor in
connection with such services as required by Article 10. The amount of such
acquisition fees and expenses shall be subject to any limitations contained in
the Articles of Incorporation. The Advisor shall submit an invoice to the
Company following the closing or closings of each acquisition, accompanied by a
computation of the fee. The fee shall be payable within ten business days after
receipt of the invoice by the Company.
9.02
Asset Management
Fees. The Company will pay the Advisor in cash as compensation for
services described in Section 3.03 an asset management fee in accordance with
this Section 9.02 as well as reimburse the Advisor for all out of pocket third
party expenses incurred by the Advisor in connection with such services as
required by Article 10. Subject to any limitations contained in the Articles of
Incorporation, this asset management fee shall be earned monthly and the amount
of this asset management fee payable by the Company to the Advisor shall equal
0.0625% multiplied by the net equity invested in real estate investments as of
the end of the applicable month. The Advisor shall submit a monthly invoice to
the Company, accompanied by a computation of the asset management fee for the
applicable period. The asset management fee shall be payable within ten business
days after receipt of the invoice by the Company.
9.03
Debt Financing
Fees. The Company will pay the Advisor in cash as compensation for
services described in Section 3.02 a debt financing fee equal to 1.0% of the
amount obtained under any property loan or made available to us under any other
debt financing. In no event will the debt financing fee be paid more than once
in respect of the same debt.
ARTICLE
10
EXPENSES
10.01
General. In
addition to the compensation paid to the Advisor pursuant to Article 9 hereof,
the Company shall pay directly or reimburse the Advisor for the following
expenses paid or incurred by the Advisor or Affiliates in connection with the
services provided to the Company pursuant to this Agreement, including, but not
limited to:
(i)
Acquisition Expenses incurred in connection with the selection and acquisition
of Assets including such expenses incurred related to assets pursued or
considered but not ultimately acquired by the Company;
(ii) the
actual out-of-pocket cost of goods and services used by the Company or the
General Partner and obtained from entities not Affiliated with the
Advisor,
including brokerage fees paid in connection with the purchase and sale of
Assets;
(iii)
taxes and assessments on income or Assets and taxes as an expense of doing
business and any other taxes otherwise imposed on the Company and its business
or income;
(iv)
out-of-pocket costs associated with insurance required in connection with the
business of the Company or by its officers and Directors;
(v) all
out-of-pocket expenses in connection with payments to the Board of Directors and
meetings of the Board of Directors and Shareholders;
(vi)
personnel and related employment direct costs incurred by the Advisor or
Affiliates (a) in performing the services described in Section 3.04 or (b) as
otherwise approved by Independent Directors, including but not limited to
salary, benefits, burdens and overhead of all employees directly involved in the
performance of such services, plus all out-of-pocket costs
incurred;
(vii)
out-of-pocket expenses of maintaining communications with Shareholders,
including the cost of preparation, printing, and mailing annual reports and
other Shareholder reports, proxy statements and other reports required by
governmental entities;
(viii)
audit, accounting and legal fees, and other fees for professional services
relating to the operations of the Company and all such fees incurred at the
request, or on behalf of, the Independent Directors or any committee of the
Board of Directors;
(ix)
out-of-pocket costs for the Company to comply with all applicable laws,
regulations and ordinances; and
(x) all
other out-of-pocket costs necessary for the operation of the Company and its
Assets incurred by the Advisor in performing its duties
hereunder.
Except as
specifically provided for above in (vi) related to shareholder services expenses
or as contemplated by Article 11, the expenses and payments subject to
reimbursement by the Company in this Section 10.01 do not include personnel and
related direct employment or overhead costs of the Advisor or Affiliates.
Further, the General Partner shall have no liability with respect to
Organizational and Offering Expenses incurred on its behalf or on behalf of the
Company in connection with the Third Offering. The Advisor shall pay for all
such Organizational and Offering Expenses.
10.02
Reimbursement to
Advisor. Expenses incurred by the Advisor on behalf of the Company and
payable pursuant to this Article 10 shall be reimbursed to the Advisor within 10
days after the Advisor provides the Company with an invoice and supporting
documentation relating to such reimbursement.
10.03
Reimbursement to
Company. The Company shall not reimburse the Advisor during any fiscal
quarter for Operating Expenses that, in the four consecutive fiscal quarters
then ended (the “Expense Year”), exceed the 2%/25% Guidelines for such year (the
“Excess Amount”), unless the Independent Directors determine that such excess
was justified, based on unusual and non-recurring factors which they deem
sufficient, in which case the Excess Amount may be reimbursed. Any Excess Amount
paid to the Advisor during a fiscal quarter without the Independent Directors
determining that such expenses were justified shall be repaid to the Company.
Within 60 days after the end of any fiscal quarter of the Company for which
total Operating Expenses for the Expense Year exceed the 2%/25% Guidelines and
the Independent Directors determined that such expenses were justified, there
shall be sent to the Shareholders a written disclosure of such fact, together
with an explanation of the factors the Independent Directors considered in
determining that such excess expenses were justified. Such determination shall
be reflected in the minutes of the meetings of the Board of Directors. The
Company will not reimburse the Advisor or its Affiliates for services for which
the Advisor or its Affiliates are entitled to compensation in the form of a
separate fee.
ARTICLE
11
OTHER
SERVICES
Should
(i) the General Partner request that the Advisor or any manager, officer or
employee thereof render services for the Company other than as set forth in this
Agreement or (ii) there are changes to the regulatory environment in which the
Advisor or Company operates that would increase significantly the level of
services performed such that the costs and expenses borne by the Advisor for
which the Advisor is not entitled to separate reimbursement for personnel and
related employment direct costs and overhead under Article 10 of this Agreement
would increase significantly, , such services shall be separately compensated at
such rates and in such amounts as are agreed by the Advisor and the Independent
Directors, subject to the limitations contained in the Articles of
Incorporation, and shall not be deemed to be services pursuant to the terms of
this Agreement.
ARTICLE
12
RELATIONSHIP OF THE ADVISOR
AND COMPANY;
OTHER ACTIVITIES OF THE
ADVISOR
12.01
Relationship.
To the fullest extent allowed by law, the Company and the Advisor are not
partners or joint venturers with each other, and nothing in this Agreement shall
be construed to make them such partners or joint venturers. Nothing herein
contained shall prevent the Advisor from engaging in other activities,
including, without limitation, the rendering of advice to other Persons and the
management of other programs advised, sponsored or organized by the Advisor or
its Affiliates. Nor shall this Agreement limit or restrict the right of any
manager, director, officer, employee, or equityholder of the Advisor or its
Affiliates to engage in any other business or to render services of any kind to
any other Person. The Advisor may, with respect to any investment in which the
Company is a participant, also render advice and service to each and every other
participant therein. The Advisor shall promptly disclose to the Board of
Directors the existence of any condition or circumstance, existing or
anticipated, of which it has knowledge, which creates or could create a conflict
of interest between the Advisor’s obligations to the Company and its obligations
to or its interest in any other Person.
12.02
Time
Commitment. The Advisor shall, and shall cause its Affiliates and their
respective employees, officers and agents to, devote to the Company such time as
shall be reasonably necessary to conduct the business and affairs of the Company
in an appropriate manner consistent with the terms of this Agreement. The
Company acknowledges that the Advisor and other Affiliates of Xxxxx 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 Xxxxx 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 XXXXX
NAME
The
Advisor, Xxxxx and their Affiliates have a proprietary interest in the name
“Xxxxx”. The Advisor hereby grants to the Company a non-transferable,
non-assignable, non-exclusive royalty-free right and license to use the name
“Xxxxx” during the term of this Agreement. Accordingly, and in recognition of
this right, if at any time the Company ceases to retain Xxxxx 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 Xxxxx,
cease to conduct business under or use the name “Xxxxx” 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 “Xxxxx”
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 “Xxxxx”. 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 “Xxxxx” as a part of their name, all
without the need for any consent (and without the right to object thereto) by
the Company or the General Partner.
ARTICLE
14
TERM AND TERMINATION OF THE
AGREEMENT
14.01
Term. This
Agreement shall have an initial term of one year from the date of the Agreement.
This Agreement may be renewed for an unlimited number of successive one-year
terms upon mutual consent of the parties. Any such renewal must be approved by a
majority of the Independent Directors. The General Partner (through the
Independent Directors) will evaluate the performance of the Advisor annually
before renewing the Agreement, and each such renewal shall be for a term of no
more than one year.
14.02
Termination by Either
Party. This Agreement may be terminated upon 60 days’ written notice
without cause or penalty by either party.
14.03
Termination by the
Company. This Agreement may be terminated immediately by the Company upon
(i) any fraudulent conduct, criminal conduct, willful misconduct or the
negligent breach of fiduciary duty of or by the Advisor, (ii) a material breach
of this Agreement by the Advisor not cured within 10 business days after the
Advisor receives written notice of such breach, or (iii) an event of the
bankruptcy of the Advisor or commencement of any bankruptcy or similar
insolvency proceedings of the Advisor.
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
(d)
cooperate with the Company to provide an orderly transition of advisory
functions.
Upon the
expiration or termination of this Agreement, neither party shall have any
further rights or obligations under this Agreement, except that Articles 13, 16
and 17 shall survive the termination or expiration of this
Agreement.
14.06
Repurchase of
Units. In the event this Agreement expires without the consent of the
Advisor, or is terminated for any reason other than by the Advisor pursuant to
Section 14.02 or Section 14.04, the Company shall (to the fullest extent funds
are legally available for such purpose) at the election of the Advisor or any of
its Affiliates and at any time (and from time to time) after the effective date
of such expiration or termination, purchase all or a portion of the Units or
Participation Interest (as applicable) held by the Advisor and its Affiliates.
The purchase price shall be paid in cash or, at the election of the seller,
Shares, and shall be payable within 120 days after the Advisor or its Affiliates
(as applicable) gives the Company written notice of its desire to sell all or a
portion of the Units or Participation Interest held by such Person to the
Company. The General Partner agrees to keep a sufficient number of authorized
but unissued Shares available for issuance pursuant to this Section 14.06 and
shall issue Shares as may be required hereunder. The purchase price of each
interest in the Company pursuant to this Section 14.06 shall be (i) in the event
the seller elects to receive cash, the Cash Amount the seller would receive
under a redemption of such interests under Section 3.2 of the Limited
Partnership Agreement assuming the Company paid cash for such redemption, or
(ii) in the event the seller elects to receive Shares, the REIT Shares Amount
the seller would receive under a redemption of such interests under Section 3.2
of the Limited Partnership Agreement assuming the Company paid Shares for such
redemption.
ARTICLE
15
ASSIGNMENT
This
Agreement may be assigned by the Advisor to an Affiliate with the consent of the
General Partner by approval of a majority of the Independent Directors. The
Advisor may assign any rights to receive fees or other payments under this
Agreement without obtaining the approval of the Board of Directors. This
Agreement shall not be assigned by the Company without the consent of the
Advisor.
ARTICLE
16
INDEMNIFICATION AND
LIMITATION OF LIABILITY
16.01
Indemnification by the
Company. The Company shall indemnify and hold harmless the Advisor and
its Affiliates, including their respective managers, officers, directors,
partners and employees, from all liability, claims, damages or losses arising in
the performance of their duties hereunder, and related expenses, including
reasonable attorneys’ fees, to the extent such liability, claims, damages or
losses and related expenses are not fully reimbursed by insurance, subject to
any limitations imposed by the laws of the State of Texas, the Articles of
Incorporation or Agreement of Limited Partnership of the Company, provided that:
(i) the Advisor and its Affiliates have determined that the course of conduct
which caused the loss or liability was in the best interests of the Company,
(ii) the Advisor and its Affiliates were acting on behalf of or performing
services for the Company, (iii) the indemnified claim was not the result of
negligence, misconduct, or fraud of the indemnified person or resulted from a
breach of the agreement by the Advisor, and (iv) in the event the loss ,
liability or expense arises from or out of an alleged violation of federal or
state securities laws by the Advisor or its Affiliates, the conditions set forth
in at least one of clauses (X), (Y) or (Z) of Section 12.2(b) of the Articles of
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
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 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:
Xxxxx
REIT Properties, L.P.
c/x Xxxxx
Real Estate Investment Trust, Inc.
0000 Xxxx
Xxx Xxxx., Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
To the
Advisor:
Xxxxx
Advisors Limited Partnership
0000 Xxxx
Xxx Xxxx., Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
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 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
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
and year first above written.
Xxxxx REIT Properties,
L.P.
By:Xxxxx Real Estate Investment Trust,
Inc.
Its: General Partner
By:
Name:Xxxxxxx X.
Xxxxx
Title:President and Chief
Executive
Officer
Xxxxx Advisors Limited
Partnership
By:Xxxxx Advisors GP LLC
Its:General Partner
By:
Name:Xxxxxx X.
Xxxxxxxx
Title:Chief Financial
Officer
Xxxxx Real Estate Investment Trust,
Inc.
By:
Name:Xxxxxxx X. Xxxxx
Title:President and Chief
Executive
Officer
