Exhibit 10.1

 

THIRD AMENDED AND RESTATED

 

ADVISORY MANAGEMENT AGREEMENT

 

This THIRD AMENDED AND RESTATED ADVISORY MANAGEMENT AGREEMENT (this “Agreement”)
is entered into on this the 5th day of July, 2011, by and between BEHRINGER
HARVARD OPPORTUNITY REIT II, INC., a Maryland corporation (the “Company”), and
BEHRINGER HARVARD OPPORTUNITY ADVISORS II, LLC, a Texas limited liability
company (the “Advisor”).

 

W I T N E S S E T H

 

WHEREAS, the Company and the Advisor previously entered that certain Second
Amended and Restated Advisory Management Agreement dated February 15, 2010 that
is currently effective through January 4, 2012 (the “Original Agreement”); and

 

WHEREAS, the Company is commencing the Follow-on Offering (as defined below) and
in connection with such offering desires to amend certain terms of the Original
Agreement; and

 

WHEREAS, the Company desires to continue to avail itself of the experience,
sources of information, advice, assistance and certain facilities available to
the Advisor and to have the Advisor undertake the duties and responsibilities
hereinafter set forth, on behalf of, and subject to the supervision of, the
Board, all as provided herein; and

 

WHEREAS, the Advisor is willing to undertake to provide these services, subject
to the supervision of the Board, on the terms and conditions hereinafter set
forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
amend and restate the Original Agreement as follows:

 

ARTICLE ONE

 

DEFINITIONS

 

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

 

Acquisition Expenses.  A non-accountable acquisition expense reimbursement in
the amount of: (i) 0.25% of the funds paid for purchasing an Asset, including
any debt attributable to the Asset, plus 0.25% of the funds budgeted for
development, construction or improvement in the case of Assets that the Company
acquires and intends to develop, construct or improve or (ii) 0.25% of the funds
advanced in respect of a loan or other investment.  In addition, to the extent
the Advisor directly provides services formerly provided or usually provided by
third parties, including without limitation accounting services related to the
preparation of audits required by the Securities and Exchange Commission,
property condition reports, title services, title insurance, insurance brokerage
or environmental services related to the preparation of environmental
assessments in connection with a prospective or completed investment (the
“Additional Services”), the direct employee costs and burden to the Advisor of
providing the Additional Services shall be Acquisition Expenses.  Acquisition
Expenses also include any investment-

 

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related expenses due to third parties in the case of a completed investment,
including, but not limited to legal fees and expenses, travel and communications
expenses, costs of appraisals, accounting fees and expenses, third-party
brokerage or finder’s fees, title insurance, premium expenses and other closing
costs.  Acquisition Expenses also include any payments made to (i) a prospective
seller of an asset, (ii) an agent of a prospective seller of an asset, or
(iii) a party that has the right to control the sale of an asset intended for
investment by the Company that are not refundable and that are not ultimately
applied against the purchase price for such asset (“Non-Refundable Payments”).

 

Acquisition Fees.  Any and all fees and commissions, exclusive of Acquisition
Expenses but including the Acquisition and Advisory Fees, paid by any Person to
any other duly qualified and licensed Person (including any fees or commissions
paid by or to any duly qualified and licensed Affiliate of the Company or the
Advisor) in connection with making or investing in Mortgages or other loans or
the purchase, development or construction of an Asset, including, without
limitation, real estate commissions, selection fees, investment banking fees,
third party seller’s fees (to the extent the Company agrees to pay any such fees
as part of an acquisition), Development Fees, Construction Fees, non-recurring
management fees, loan fees, points or any other fees of a similar nature.
Excluded shall be Development Fees and Construction Fees paid to any Person not
affiliated with the Sponsor in connection with the actual development and
construction of any Property.

 

Acquisition and Advisory Fees.  The fees payable to the Advisor pursuant to
Section 3.01(b).

 

Advisor.  Behringer Harvard Opportunity Advisors II, LLC, a Texas limited
liability company, any successor advisor to the Company, or any Person to which
Behringer Harvard Opportunity Advisors II, LLC or any successor advisor
subcontracts all or substantially all of its functions.

 

Affiliate or Affiliated.  As to any Person, (i) any Person directly or
indirectly owning, controlling, or holding, with the power to vote, 10% or more
of the outstanding voting securities of such other Person; (ii) any Person 10%
or more of whose outstanding voting securities are directly or indirectly owned,
controlled, or held, with power to vote, by such other Person; (iii) any Person,
directly or indirectly, controlling, controlled by, or under common control with
such other Person; (iv) any executive officer, director, trustee or general
partner of such other Person; and (v) any legal entity for which such Person
acts as an executive officer, director, trustee or general partner.

 

Articles of Incorporation.  The Articles of Incorporation of the Company filed
with the Maryland State Department of Assessments and Taxation in accordance
with the Maryland General Corporation Law, as amended or restated from time to
time.

 

Assets.  Properties, Mortgages, loans and other direct or indirect investments
(other than investments in bank accounts, money market funds or other current
assets) owned by the Company, directly or indirectly through one or more of its
Affiliates or Joint Ventures or through other investment interests.

 

Asset Management Fee.  The fee payable to the Advisor for day-to-day
professional management services in connection with the Company and its
investments in Assets pursuant to Section 3.01(a) of this Agreement.

 

Average Invested Assets.  For a specified period, the average of the aggregate
book value of the Assets before deduction for depreciation, bad debts or other
non-cash reserves, computed by taking the average of the values at the end of
each month during the period.

 

Board.  The Board of Directors of the Company.

 

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Bylaws.  The bylaws of the Company, as the same are in effect from time to time.

 

Change of Control.  Any (i) event (including, without limitation, issue,
transfer or other disposition of Shares of capital stock of the Company or
equity interests in the Partnership, merger, share exchange or consolidation)
after which any “person” (as that term is used in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3
of the Exchange Act), directly or indirectly, of securities of the Company or
the Partnership representing greater than 50% of the combined voting power of
the Company’s or the Partnership’s then outstanding securities, respectively;
provided, that, a Change of Control shall not be deemed to occur as a result of
any widely distributed public offering of the Shares or (ii) direct or indirect
sale, transfer, conveyance or other disposition (other than pursuant to clause
(i)), in one or a series of related transactions, of all or substantially all of
the properties or assets of the Company or the Partnership, taken as a whole, to
any “person” (as that term is used in Sections 13(d) and 14(d) of the Exchange
Act).

 

Code.  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
the 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.  Behringer Harvard Opportunity REIT II, Inc., a corporation organized
under the laws of the State of Maryland.  Unless the context clearly indicates
otherwise, references to the Company shall include its direct and indirect
subsidiaries, including the Partnership.

 

Construction Fee.  A fee or other remuneration for acting as general contractor
and/or construction manager to construct improvements, supervise and coordinate
projects or to provide major repairs or rehabilitations on a Property.

 

Contract Purchase Price.  The amount (i) actually paid and/or budgeted in
respect of the purchase, development, construction or improvement of a Property,
(ii) of funds advanced with respect to a Mortgage or other loan or
(iii) actually paid and/or budgeted in respect to the purchase of other Assets,
in each case exclusive of Acquisition Fees and Acquisition Expenses but
including any debt attributable to such acquired Assets.

 

Cost of Investment.  For each Asset, (i) with respect to an Asset wholly owned
by the Company or any wholly owned subsidiary, the Fully Loaded Cost, and
(ii) in the case of an Asset owned by any Joint Venture or in some other manner
in which the Company is a co-venturer or partner or otherwise a co-owner,
(A) the Fully Loaded Cost if the Company (or any subsidiary) controls the Asset;
owns a majority interest, directly or indirectly, in the Asset; or provides a
substantial amount of services in the acquisition, development, or management of
the Asset (as determined by a majority of the Independent Directors) or (B) the
portion of the Fully Loaded Cost that is attributable to the Company’s
investment in the Joint Venture or other interest in such Asset if the Company
does not control, own a majority of, or provide substantial services in the
acquisition, development, or management of, the Asset.

 

Dealer Manager.  Behringer Securities LP, an Affiliate of the Advisor, or such
Person selected by the Board to act as the dealer manager for an Offering.

 

Development Fee.  A fee for the packaging of an Asset, including the negotiation
and approval of plans, and any assistance in obtaining zoning and necessary
variances and financing for a specific development Property, either initially or
at a later date.

 

Director.  A member of the Board.

 

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Distributions.  Any dividends or other distributions of money or other property
by the Company to Stockholders, including distributions that may constitute a
return of capital for federal income tax purposes but excluding distributions
that constitute the redemption of any Shares and excluding distributions on any
Shares before their redemption.

 

Exchange Act.  The Securities Exchange Act of 1934, as amended from time to
time, or any successor statute thereto.  Reference to any provision of the
Exchange Act 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.

 

FINRA.  Financial Industry Regulatory Authority.

 

Follow-on Offering.  The Company’s second public offering of primary Shares
pursuant to Registration Statement no. 333-169345.

 

Fully Loaded Cost.  The Contract Purchase Price of an Asset at the time of
acquisition (exclusive of closing costs), plus the amount actually paid and/or
budgeted for the development, construction or improvement of the Asset,
inclusive of expenses related thereto, plus the amount of any subsequent debt
attributable to such Asset.

 

Gross Proceeds.  The aggregate purchase price of all Shares sold for the account
of the Company through an Offering, without deduction for Selling Commissions,
volume discounts, any marketing support and due diligence expense reimbursement
or Organization and Offering Expenses.  For the purpose of computing Gross
Proceeds, the purchase price of any Share for which reduced Selling Commissions
are paid to the Dealer Manager or a Soliciting Dealer (where net proceeds to the
Company are not reduced) shall be deemed to be the full amount of the Offering
price per Share pursuant to the Prospectus for the Offering without reduction.

 

Independent Director.  A Director who is not on the date of determination, and
within the last two years from the date of determination has not been, directly
or indirectly associated with the Sponsor or the Advisor by virtue of
(i) ownership of an interest in the Sponsor, the Advisor or any of their
Affiliates, other than the Company, (ii) employment by the Sponsor, the Company,
the Advisor or any of their Affiliates, (iii) service as an officer or director
of the Sponsor, the Advisor or any of their Affiliates, other than as a Director
of the Company, (iv) performance of services for the Company, other than as a
Director of the Company, (v) service as a director or trustee of more than three
real estate investment trusts organized by the Sponsor or advised by the
Advisor, or (vi) maintenance of a material business or professional relationship
with the Sponsor, the Advisor or any of their Affiliates.  Notwithstanding the
foregoing, and consistent with (v) above, serving as a director of or receiving
director fees from or owning an interest in a REIT or other real estate program
organized by the Sponsor or advised or managed by the Advisor or its Affiliates
shall not, by itself, cause a Director to be deemed associated with the Sponsor
or the Advisor.  A business or professional relationship is considered material
if the aggregate annual gross revenue derived by the Director from the Sponsor,
the Advisor and their Affiliates (excluding fees for serving as a director of
the Company or other REIT or real estate program organized or advised or managed
by the Advisor or its Affiliates) exceeds five percent of either the Director’s
annual gross income during either of the last two years or the Director’s net
worth on a fair market value basis.  An indirect association with the Sponsor or
the Advisor shall include circumstances in which a Director’s spouse, parent,
child, sibling, mother- or father-in-law, son- or daughter-in-law, or brother-
or sister-in-law is or has been associated with the Sponsor, the Advisor, any of
their Affiliates, or the Company.

 

Initial Offering.  The Company’s initial public offering of primary Shares
pursuant to Registration Statement no. 333-140887.

 

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Intellectual Property Rights.  All rights, titles and interests, whether foreign
or domestic, in and to any and all trade secrets, confidential information
rights, patents, invention rights, copyrights, service marks, trademarks,
know-how, or similar intellectual property rights and all applications and
rights to apply for such rights, as well as any and all moral rights, rights of
privacy, publicity and similar rights and license rights of any type under the
laws or regulations of any governmental, regulatory, or judicial authority,
foreign or domestic and all renewals and extensions thereof.

 

Joint Ventures.  A legal organization formed to provide for the sharing of the
risks and rewards in an enterprise co-owned and operated for mutual benefit by
two or more business partners and established to acquire or hold Assets.

 

Listing or Listed.  The filing of a Form 8-A to register any class of the
Company’s securities on a national securities exchange and an original listing
application related thereto; provided, that the Shares shall not be deemed to be
Listed until trading in the Shares shall have commenced on the relevant national
securities exchange.

 

Mortgages.  In connection with mortgage financing provided, invested in or
purchased by the Company, all of the notes, deeds of trust, security interests
or other evidence of indebtedness or obligations, which are secured or
collateralized by Real Property owned by the borrowers under such notes, deeds
of trust, security interests or other evidence of indebtedness or obligations.

 

NASAA Guidelines.  The Statement of Policy Regarding Real Estate Investment
Trusts adopted by the North American Securities Administrators Association, Inc.
on May 7, 2007, and in effect on the date hereof.

 

Net Income.  For any period, the Company’s total revenues applicable to that
period, less the total expenses applicable to the period other than additions to
reserves for depreciation, bad debts or other similar non-cash reserves and
excluding any gain from the sale of the Assets.

 

Offering.  Any public offering of Shares pursuant to an effective registration
statement filed under the Securities Act, other than a public offering of Shares
under a distribution reinvestment plan.

 

Organization and Offering Expenses.  Any and all costs and expenses incurred by
and to be paid by the Company in connection with an Offering, the formation of
the Company, and including the qualification and registration of the Offering
and the marketing and distribution of its Shares, including, without
limitation:  total underwriting and brokerage discounts and commissions
(including fees of the underwriters’ attorneys); expenses for printing,
engraving, amending registration statements and supplementing prospectuses;
mailing and distribution costs; reimbursement of bona fide due diligence
expenses of broker-dealers; salaries of employees while engaged in sales
activity, such as preparing supplemental sales literature; telephone and other
telecommunication costs; all advertising and marketing expenses, including the
costs related to investor and broker-dealer meetings; charges of transfer
agents, registrars, trustees, escrow holders, depositories and experts; filing,
registration and qualification fees and taxes relating to the Offering under
federal and state laws; and accountants’ and attorneys’ fees.

 

Partnership.  Behringer Harvard Opportunity OP II, LP, a Delaware limited
partnership, through which the Company may own Assets or otherwise conduct its
operations.

 

Person.  An individual, corporation, association, business trust, estate, trust,
partnership, limited liability company or other legal entity.

 

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Property or Properties.  As the context requires, any, or all, respectively, of
the Real Property acquired by the Company, either directly or indirectly
(whether through Joint Ventures or other investment interests, regardless of
whether the Company consolidates the financial results of these entities).

 

Proprietary Property.  All modeling algorithms, tools, computer programs,
know-how, methodologies, processes, technologies, ideas, concepts, skills,
routines, subroutines, operating instructions and other materials and aides used
in performing the duties set forth in Section 2.02 that relate to advice
regarding current and potential Assets, and all modifications, enhancements and
derivative works of the foregoing.

 

Prospectus.  Prospectus has the meaning set forth in Section 2(a)(10) of the
Securities Act, including a preliminary prospectus, an offering circular as
described in Rule 253 of the General Rules and Regulations under the Securities
Act or, in the case of an intrastate offering, any document by whatever name
known, utilized for the purpose of offering and selling securities of the
Company.

 

Real Property or Real Estate.  Land, rights in land (including leasehold
interests), and any buildings, structures, improvements, furnishings, fixtures
and equipment located on or used in connection with land and rights or interests
in land.

 

REIT.  A corporation, trust, association or other legal entity (other than a
real estate syndication) that is engaged primarily in investing in interests in
Real Estate (including fee ownership and leasehold interests) or in loans
secured by Real Estate or both in accordance with Sections 856 through 860 of
the Code.

 

Sale or Sales.  (i) Any transaction or series of transactions whereby: (A) the
Company or the Partnership directly or indirectly (except as described in other
subsections of this definition) sells, grants, transfers, conveys, or
relinquishes its ownership of any Property or portion thereof, including the
lease of any Property consisting of a building only, and including any event
with respect to any Property which gives rise to a significant amount of
insurance proceeds or condemnation awards; (B) the Company or the Partnership
directly or indirectly (except as described in other subsections of this
definition) sells, grants, transfers, conveys, or relinquishes its ownership of
all or substantially all of the interest of the Company or the Partnership in
any Joint Venture in which it is a co-venturer or partner; (C) any Joint Venture
directly or indirectly (except as described in other subsections of this
definition) in which the Company or the Partnership as a co-venturer or partner
sells, grants, transfers, conveys, or relinquishes its ownership of any Property
or portion thereof, including any event with respect to any Property which gives
rise to insurance claims or condemnation awards; (D) the Company or the
Partnership directly or indirectly (except as described in other subsections of
this definition) sells, grants, conveys or relinquishes its interest in any
Mortgage or other loan or portion thereof (including with respect to any
Mortgage or other loan, all payments thereunder or in satisfaction thereof other
than regularly scheduled interest payments of amounts owed pursuant to the
Mortgage or other loan) and any event with respect to a Mortgage or other loan
which gives rise to a significant amount of insurance proceeds or similar
awards; or (E) the Company or the Partnership directly or indirectly (except as
described in other subsections of this definition) sells, grants, transfers,
conveys, or relinquishes its ownership of any other Asset not previously
described in this definition or any portion thereof, but (ii) not including any
transaction or series of transactions specified in clause (i) (A) through
(E) above in which the proceeds of such transaction or series of transactions
are reinvested in one or more Assets within 180 days thereafter.

 

Securities Act.  The Securities Act of 1933, as amended from time to time, or
any successor statute thereto.  Reference to any provision of the Securities Act
shall mean the provision as in effect from

 

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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.

 

Selling Commissions.  Any and all commissions payable to underwriters, dealer
managers or other broker-dealers in connection with the sale of Shares,
including, without limitation, commissions payable to Behringer Securities LP.

 

Shares.  Any shares of the Company’s common stock, par value $0.0001 per share.

 

Soliciting Dealers.  Broker-dealers who are members of FINRA, or that are exempt
from broker-dealer registration, and who, in either case, have executed
participating broker or other agreements with the Dealer Manager to sell Shares.

 

Sponsor.  Sponsor has the meaning ascribed to such term in the Articles of
Incorporation.

 

Stockholders.  The record holders of the Company’s Shares as maintained in the
books and records of the Company or its transfer agent.

 

Termination Date.  The date of termination of this Agreement.

 

Texas Tax Code.  The Texas Tax Code as amended by Texas H.B. 3, 79th Leg., 3rd
C.S. (2006).  Reference to any provision of the Texas Tax Code Act shall mean
the provision as in effect from time to time, as the same may be amended, and
any successor provision thereto, as interpreted by any applicable administrative
rules as in effect from time to time.

 

Total Operating Expenses.  All costs and expenses paid or incurred by the
Company, as determined under generally accepted accounting principles, which are
in any way related to the operation of the Company or to Company business,
including the Asset Management Fee, but excluding (i) the expenses of raising
capital such as Organization and Offering Expenses, legal, audit, accounting,
underwriting, brokerage, listing, registration, and other fees, printing and
other expenses and tax incurred in connection with the issuance, distribution,
transfer, registration and Listing of the Shares, (ii) interest payments,
(iii) taxes, (iv) non-cash expenditures such as depreciation, amortization and
bad debt reserves, (v) Acquisition Fees and Acquisition Expenses, (vi) real
estate commissions on the Sale of Assets, and (vii) other fees and expenses
connected with the acquisition, disposition, management and ownership of real
estate interests, mortgage loans or other property (including the costs of
foreclosure, insurance premiums, legal services, maintenance, repair and
improvement of property).

 

Value of Investment.  For each Asset, if available, (i) with respect to an Asset
wholly owned by the Company or any wholly owned subsidiary, the Asset’s value
established by the most recent independent valuation report (without reduction
for depreciation, bad debts or other non-cash reserves), and (ii) in the case of
an Asset owned by any Joint Venture or in some other manner in which the Company
is a co-venturer or partner or otherwise a co-owner, (A) the Asset’s value
established by the most recent independent valuation report (without reduction
for depreciation, bad debts or other non-cash reserves) if the Company (or any
subsidiary) controls the Asset; owns a majority interest, directly or
indirectly, in the Asset; or provides a substantial amount of services in the
acquisition, development, or management of the Asset (as determined by a
majority of the Independent Directors) or (B) the portion of the Asset’s value
established by the most recent independent valuation report (without reduction
for depreciation, bad debts or other non-cash reserves) that is attributable to
the Company’s investment in the Joint Venture or other interest in such Asset if
the Company does not control, own a majority of, or provide substantial services
in the acquisition, development, or management of, the Asset.  Nothing in

 

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this definition is intended to obligate the Advisor to obtain independent
valuations at any point in time beyond those specified in the Company’s
Prospectus.

 

ARTICLE II

 

THE ADVISOR

 

2.01                        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.

 

2.02                        Duties of the Advisor.  The Advisor shall be deemed
to be in a fiduciary relationship to the Company and its Stockholders.  Subject
to Section 2.08, the Advisor undertakes to use its commercially reasonable best
efforts to present to the Company potential investment opportunities consistent
with the investment objectives and policies of the Company as determined and
adopted from time to time by the Board.  In performing its duties, subject to
the supervision of the Board and consistent with the provisions of the Company’s
most recent Prospectus for Shares, the Articles of Incorporation and Bylaws, the
Advisor shall, either directly or by engaging a duly qualified and licensed
Affiliate of the Advisor or other duly qualified and licensed Person:

 

(a)                                  provide the Company with research and
economic and statistical data in connection with the Assets and investment
policies;

 

(b)                                 manage the Company’s day-to-day operations
and perform and supervise the various administrative functions reasonably
necessary for the management and operations of the Company;

 

(c)                                  maintain and preserve the books and records
of the Company, including stock books and records reflecting a record of the
Stockholders and their ownership of the Company’s Shares;

 

(d)                                 investigate, select, and, on behalf of the
Company, engage and conduct business with the duly qualified and licensed
Persons as the Advisor deems necessary to the proper performance of its
obligations hereunder, including but not limited to duly qualified and licensed
consultants, accountants, correspondents, lenders, technical advisors,
attorneys, brokers, underwriters, corporate fiduciaries, escrow agents,
depositaries, custodians, agents for collection, insurers, insurance agents,
banks, builders, developers, property owners, mortgagors, property management
companies, transfer agents and any and all agents for any of the foregoing,
including duly qualified and licensed Affiliates of the Advisor, and duly
qualified and licensed Persons acting in any other capacity deemed by the
Advisor necessary or desirable for the performance of any of the foregoing
services, including but not limited to entering into contracts in the name of
the Company with any of the foregoing;

 

(e)                                  consult with the officers and the Board and
assist the Board in the formulation and implementation of the Company’s
financial policies, and, as necessary, furnish the Board with advice and
recommendations with respect to the making of investments consistent with the
investment objectives and policies of the Company and in connection with any
borrowings proposed to be undertaken by the Company;

 

(f)                                    subject to the provisions of Sections
2.02(h) and 2.03 hereof, (i) locate, analyze and select potential investments in
Assets, (ii) structure and negotiate the terms and conditions of

 

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transactions pursuant to which investment in Assets will be made; (iii) make
investments in Assets on behalf of the Company or the Partnership in compliance
with the investment objectives and policies of the Company; (iv) arrange for
financing and refinancing and make other changes in the asset or capital
structure of, and dispose of, reinvest the proceeds from the sale of, or
otherwise deal with the investments in, Assets; and (v) enter into leases of
Property and service contracts for Assets with duly qualified and licensed
Persons and, to the extent necessary, perform all other operational functions
for the maintenance and administration of the Assets, including the servicing of
Mortgages;

 

(g)                                 provide the Board with periodic reports
regarding prospective investments in Assets;

 

(h)                                 obtain the prior approval of the Board
(including a majority of all Independent Directors) for any and all investments
in Assets;

 

(i)                                     negotiate on behalf of the Company with
banks or lenders for loans to be made to the Company, negotiate on behalf of the
Company with investment banking firms and broker-dealers, and negotiate private
sales of Shares and other securities of the Company or obtain loans for the
Company, as and when appropriate, but in no event in such a way so that the
Advisor shall be acting as broker-dealer or underwriter; and provided, further,
that any fees and costs payable to third parties incurred by the Advisor in
connection with the foregoing shall be the responsibility of the Company;

 

(j)                                     obtain reports (which may be prepared by
or for the Advisor or its Affiliates), where appropriate, concerning the value
of investments or contemplated investments of the Company in Assets;

 

(k)                                  from time to time, or at any time
reasonably requested by the Board, make reports to the Board of its performance
of services to the Company under this Agreement;

 

(l)                                     assist the Company in arranging for all
necessary cash management services;

 

(m)                               deliver to or maintain on behalf of the
Company copies of all appraisals obtained in connection with the investments in
Assets;

 

(n)                                 upon request of the Company, act, or obtain
the services of duly qualified and licensed others to act, as attorney-in-fact
or agent of the Company in making, acquiring and disposing of Assets,
disbursing, and collecting the funds, paying the debts and fulfilling the
obligations of the Company and retaining counsel or other advisors to assist in
handling, prosecuting and settling any claims of the Company, including
foreclosing and otherwise enforcing mortgage and other liens and security
interests comprising any of the Assets;

 

(o)                                 supervise the preparation and filing and
distribution of returns and reports to governmental agencies and to Stockholders
and other investors and act on behalf of the Company;

 

(p)                                 provide office space, equipment and
personnel as required for the performance of the foregoing services as Advisor;

 

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(q)                                 assist the Company in preparing all reports
and returns required by the Securities and Exchange Commission, Internal Revenue
Service and other state or federal governmental agencies; and

 

(r)                                    do all things necessary to assure its
ability to render the services described in this Agreement.

 

2.03                        Authority of Advisor.

 

(a)                                  Pursuant to the terms of this Agreement
(including the restrictions included in this Section 2.03 and in Section 2.06),
and subject to the continuing and exclusive authority of the Board over the
management of the Company, the Board hereby delegates to the Advisor the
authority to (i) locate, analyze and select investment opportunities,
(ii) structure the terms and conditions of transactions pursuant to which
investments will be made or acquired for the Company or the Partnership,
(iii) acquire Properties, make and acquire Mortgages and other loans and invest
in other Assets in compliance with the investment objectives and policies of the
Company, (iv) arrange for financing or refinancing of Assets, (v) enter into
leases for the Properties and service contracts for the Assets with duly
qualified and licensed non-affiliated and Affiliated Persons, including
oversight of non-affiliated and Affiliated Persons that perform property
management, acquisition, advisory, disposition or other services for the
Company, (vi) oversee duly qualified and licensed property managers and other
Persons who perform services for the Company, and (vii) arrange for, or provide,
accounting and other record-keeping functions at the Asset level.

 

(b)                                 Notwithstanding the foregoing, any
investment in Assets by the Company or the Partnership (as well as any financing
acquired by the Company or the Partnership in connection with the investment),
will require the prior approval of the Board (including a majority of the
Independent Directors).

 

(c)                                  The prior approval of a majority of the
Independent Directors and a majority of the Board not otherwise interested in
the transaction will be required for each transaction with the Advisor or its
Affiliates.

 

(d)                                 If a transaction requires approval by the
Board, the Advisor will deliver to the Directors all documents required by them
to properly evaluate the proposed transaction.

 

The Board may, at any time upon the giving of notice to the Advisor, modify or
revoke the authority set forth in this Section 2.03.  If and to the extent the
Board so modifies or revokes the authority contained herein, the Advisor shall
henceforth submit to the Board for prior approval the proposed transactions
involving investments in Assets as thereafter require prior approval; provided,
however, that the modification or revocation shall be effective upon receipt by
the Advisor and shall not be applicable to investment transactions to which the
Advisor has committed the Company prior to the date of receipt by the Advisor of
the notification.

 

2.04                        Bank Accounts.  The Advisor may establish and
maintain one or more bank accounts in its own name for the account of the
Company or in the name of the Company and may collect and deposit into any
account or accounts, and disburse from any account or accounts, any money on
behalf of the Company, under the terms and conditions as the Board may approve;
provided that no funds of the Company or the Partnership shall be commingled nor
shall any of such funds be commingled with the funds of the Advisor; and the
Advisor shall from time to time render accountings of the collections and
payments to the Board, its Audit Committee and the auditors of the Company.

 

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2.05                        Records; Access.  The Advisor shall maintain records
of all its activities hereunder and make the records available for inspection by
the Board and by counsel, auditors and authorized agents of the Company, at any
time or from time to time during normal business hours.  The Advisor shall at
all reasonable times have access to the books and records of the Company.

 

2.06                        Limitations on Activities.  Anything else in this
Agreement to the contrary notwithstanding, the Advisor shall refrain from taking
any action which, in its sole judgment made in good faith, would (a) adversely
affect the status of the Company as a REIT, (b) subject the Company to
regulation under the Investment Company Act of 1940, as amended, or (c) violate
any law, rule, regulation or statement of policy of any governmental body or
agency having jurisdiction over the Company, the Shares or any of the Company’s
securities, or otherwise not be permitted by the Articles of Incorporation or
Bylaws, except if the action shall be ordered by the Board, in which case the
Advisor shall notify promptly the Board of the Advisor’s judgment of the
potential impact of the action and shall refrain from taking the action until it
receives further clarification or instructions from the Board. In such event the
Advisor shall have no liability for acting in accordance with the specific
instructions of the Board so given.  The Advisor, its directors, officers,
employees and stockholders, and the directors, officers, employees and
stockholders of the Advisor’s Affiliates shall not be liable to the Company or
to the Board or Stockholders for any act or omission by the Advisor, its
directors, officers, employees or stockholders, or for any act or omission of
any Affiliate of the Advisor, its directors, officers or employees or
stockholders except as provided in Section 5.02 of this Agreement.

 

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

 

2.08                        Other Activities of the Advisor.  Nothing herein
contained shall prevent the Advisor or its Affiliates from engaging in other
activities, including, without limitation, the rendering of advice to other
Persons (including other REITs) 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 director, officer, employee, or
stockholder 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 report to the Board 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.  The Advisor or its
Affiliates shall promptly disclose to the Board knowledge of such condition or
circumstance.  The Advisor shall inform the Board at least quarterly of the
investment opportunities that have been offered to other programs with similar
investment objectives sponsored by the Sponsor, Advisor, Director or their
Affiliates.  If the Sponsor, Advisor, Director or Affiliates thereof have
sponsored other investment programs with similar investment objectives which
have investment funds available at the same time as the Company, it shall be the
duty of the Board (including the Independent Directors) to adopt the method set
forth in the Company’s most recent Prospectus for its Shares or another
reasonable method by which investments are to be allocated to the competing
investment entities and to use their best efforts to apply such method fairly to
the Company.

 

2.09                        Payment of Certain Organization and Offering
Expenses.  The Company shall pay directly all Organization and Offering Expenses
considered underwriting compensation by FINRA.  Such payments, other than
Selling Commissions and the dealer manager fee, shall apply towards the limit on

 

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Organization and Offering Expenses reimbursable by the Company to the Advisor
pursuant to Section 3.02(a)(i) below.

 

ARTICLE III

 

COMPENSATION AND REIMBURSEMENT OF SPECIFIED COSTS

 

3.01                        Fees.

 

(a)                                  Asset Management Fee.  The Company shall
pay the Advisor a monthly Asset Management Fee on the 15th day of each month in
an amount equal to 1/12 th of 1.0% of the sum of, for each and every Asset, the
higher of the Cost of Investment or the Value of Investment.  The Advisor, in
its sole discretion, may waive, reduce or defer all or any portion of the Asset
Management Fee to which it would otherwise be entitled.

 

(b)                                 Acquisition and Advisory Fees.  The Company
shall pay the Advisor a fee in the amount of 2.5% of the Contract Purchase Price
of each Asset as Acquisition and Advisory Fees.  The total of all Acquisition
Fees and any Acquisition Expenses shall be limited in accordance with the
Articles of Incorporation.  Acquisition and Advisory Fees shall be paid as
follows: (1) for real property (including properties where
development/redevelopment is expected), at the time of acquisition, (2) for
development/redevelopment projects (other than the initial acquisition of the
real property), at the time a final budget is approved, and (3) for loans and
similar assets (including without limitation mezzanine loans), quarterly based
on the value of loans made or acquired.  In the case of a
development/redevelopment project subject to clause (2) above, upon completion
of the development/redevelopment project, the Advisor shall determine the actual
amounts paid.  To the extent the amounts actually paid vary from the budgeted
amounts on which the Acquisition and Advisory Fee was initially based, the
Advisor will pay or invoice the Company for 2.5% of the budget variance such
that the Acquisition and Advisory Fee is ultimately 2.5% of amounts expended on
such development/redevelopment project.  The Advisor, in its sole discretion,
may waive, reduce or defer all or any portion of the Acquisition and Advisory
Fees to which it would otherwise be entitled.

 

(c)                                  Debt Financing Fee.  In the event of any
debt financing obtained by or for the Company (including any refinancing of
debt), the Company will pay to the Advisor a debt financing fee equal to 1% of
the amount available under the financing.  The Debt Financing Fee includes the
reimbursement of the specified cost incurred by the Advisor of engaging third
parties to source debt financing, and nothing herein shall prevent the Advisor
from entering fee-splitting arrangements with third parties with respect to the
Debt Financing Fee.  The Advisor, in its sole discretion, may waive, reduce or
defer all or any portion of the Debt Financing Fee to which it would otherwise
be entitled.

 

(d)                                 Development Fee.  If the Advisor or an
Affiliate provides the development services, the Company shall pay the Advisor
Development Fees in amounts that are usual and customary for comparable services
rendered to similar projects in the geographic market; provided, however, that a
majority of the Independent Directors must determine that such Development Fees
are fair and reasonable and on terms and conditions not less favorable than
those available from unaffiliated third parties.  Development Fees will include
the reimbursement of the specified cost incurred by the Advisor of engaging
third parties for such services.  The Advisor, in its sole discretion, may
waive, reduce or defer all or any portion of the Development Fee to which it
would otherwise be entitled.  Notwithstanding the above, the Advisor may engage

 

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(on behalf of the Company) third parties to provide development services
pursuant to its authority under Section 2.03 and pay such third parties all
applicable Development Fees.

 

3.02                        Expenses.

 

(a)                                  In addition to the compensation paid to the
Advisor pursuant to Section 3.01 hereof and except as noted in Section 2.09
above, the Company shall pay directly or reimburse the Advisor for all of the
costs and expenses paid or incurred by the Advisor that are in any way related
to the operations of the Company or the business of the Company or the services
the Advisor provides to the Company pursuant to this Agreement, including, but
not limited to:

 

(i)                                     Organization and Offering Expenses;

 

(ii)                                  Acquisition Fees and Acquisition Expenses;

 

(iii)                               the actual cost of goods, services and
materials used by the Company and obtained from Persons not affiliated with the
Advisor, other than Acquisition Expenses, including brokerage fees paid in
connection with the purchase and sale of Shares or other securities;

 

(iv)                              interest and other costs for borrowed money,
including discounts, points and other similar fees;

 

(v)                                 taxes and assessments on income or property
and taxes as an expense of doing business;

 

(vi)                              costs associated with insurance required in
connection with the business of the Company or by the Board;

 

(vii)                           expenses of managing and operating Assets owned
by the Company, whether or not payable to an Affiliate of the Advisor;

 

(viii)                        all expenses in connection with payments to the
Board for attendance at meetings of the Board and Stockholders;

 

(ix)                                except as otherwise limited by the Articles
of Incorporation, expenses associated with Listing or with the issuance and
distribution of Shares and other securities of the Company, such as selling
commissions and fees, advertising expenses, taxes, legal and accounting fees and
Listing and registration fees, but excluding Organization and Offering Expenses;

 

(x)                                   expenses connected with payments of
Distributions in cash or otherwise made or caused to be made by the Company to
the Stockholders;

 

(xi)                                expenses of organizing, reorganizing,
liquidating or dissolving the Company and the expenses of filing or amending the
Articles of Incorporation;

 

(xii)                             expenses of any third party transfer agent for
the Shares and of maintaining communications with Stockholders, including the
cost of preparation, printing, and mailing annual reports and other Stockholder
reports, proxy statements and other reports required by governmental entities;

 

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(xiii)                          personnel and related employment costs incurred
by the Advisor or its Affiliates in performing the services described herein,
including but not limited to reasonable salaries and wages, benefits and
overhead of all employees directly involved in the performance of such services;
provided, that no reimbursement shall be made for costs of such employees of the
Advisor or its Affiliates to the extent that such employees perform services for
which the Advisor receives a separate fee other than in connection with the
Advisor directly providing the Additional Services; and

 

(xiv)                         audit, accounting and legal fees.

 

(b)                                 Expenses, other than Organization and
Offering Expenses (which shall be reimbursed in accordance with subsection
(c) herein), incurred by the Advisor on behalf of the Company and payable
pursuant to this Section 3.02 shall be reimbursed no less than quarterly to the
Advisor within 60 days after the end of each quarter.  The Advisor shall prepare
a statement documenting the expenses of the Company during each quarter,
including Organization and Offering Expenses, and shall deliver the statement to
the Company within 45 days after the end of each quarter.

 

(c)                                  Selling Commissions and the dealer manager
fee, which are included in the definition of Organization and Offering Expenses,
shall be paid by the Company in accordance with Section 2.09 herein and the
dealer manager agreement or similar agreement or agreements that the Company
enters in connection with any Offering.  Organization and Offering Expenses
(other than Selling Commissions and the dealer manager fee) incurred by the
Advisor on behalf of the Company on or after January 1, 2009 and payable
pursuant to Section 3.02(a) shall be reimbursed no less than quarterly to the
Advisor within 60 days after the end of each quarter until an aggregate of
$7,500,000 of such Organization and Offering Expenses have been reimbursed to
the Advisor.  Thereafter, no such Organization and Offering Expenses shall be
reimbursed to the Advisor until the Advisor has prepared and delivered to the
Company within 90 days after the end of the year in which the Follow-on Offering
ends a reconciliation of amounts of Organization and Offering Expenses incurred
in connection with the Initial Offering and Follow-on Offering and the
reimbursement obligations of the Company therefor under this Agreement, unless
the terms of this Agreement are amended upon renewal to provide otherwise in
connection with any subsequent Offering.  The Advisor, on behalf of itself and
its Affiliates, and its and their respective successors and assigns, hereby
waives the Company’s obligation to pay $3,500,000 of Organization and Offering
Expenses (other than Selling Commissions and the dealer manager fee) incurred by
the Advisor on behalf of the Company through December 31, 2008. Notwithstanding
the foregoing, upon receipt of the reconciliation discussed above, the Company
shall reimburse the Advisor for Organization and Offering Expenses (other than
Selling Commissions and the dealer manager fee) to the extent such reimbursement
would not cause the total amount spent by the Company on Organization and
Offering Expenses (other than Selling Commissions and the dealer manager fee and
excluding the $3,500,000 of Organization and Offering Expenses reimbursement
waived by the Advisor as set forth above) to exceed 1.5% of the Gross Proceeds
raised in the completed Initial Offering and Follow-on Offering; provided
however, that the Advisor shall reimburse the Company for any Organization and
Offering Expenses (other than Selling Commissions and the dealer manager fee) to
the extent that such Organization and Offering Expenses (other than Selling
Commissions and the dealer manager fee) paid by the Company exceed 1.5% of the
Gross Proceeds raised in the completed Initial Offering and Follow-on Offering;

 

(d)                                 Notwithstanding anything to the contrary in
this Section 3.02, (i) the Advisor will be responsible for paying all of the
investment-related expenses that the Company or the Advisor

 

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incurs that are due to third parties or in connection with providing the
Additional Services with respect to investments the Company does not make other
than Non-Refundable Payments and (ii) the Company shall be responsible for
paying directly or reimbursing the Advisor for all Non-Refundable Payments.

 

3.03                        Other Services.  Should the Board request that the
Advisor or any director, officer or employee thereof render services for the
Company other than set forth in Section 2.02, the services shall be separately
compensated at the rates and in the 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.

 

3.04                        Reimbursement to the Advisor.  The Company shall not
reimburse the Advisor for Total Operating Expenses to the extent that Total
Operating Expenses (including the Asset Management Fee), in the four consecutive
fiscal quarters then ended (the “Expense Year”) exceed (the “Excess Amount”) the
greater of 2% of Average Invested Assets or 25% of Net Income for that period of
four consecutive fiscal quarters.  Any Excess Amount paid to the Advisor during
a fiscal quarter shall be repaid to the Company.  Reimbursement of all or any
portion of the Total Operating Expenses that exceed the limitation set forth in
the preceding sentence may, at the option of the Advisor, be deferred without
interest and may be reimbursed in any subsequent Expense Year where such
limitation would permit such reimbursement if the Total Operating Expense were
incurred during such period.  Notwithstanding the foregoing, if there is an
Excess Amount in any Expense Year and the Independent Directors determine that
all or a portion of such excess was justified, based on unusual and nonrecurring
factors which they deem sufficient, the Excess Amount may be reimbursed to the
Advisor.  If the Independent Directors determine such excess was justified,
then, after the end of any fiscal quarter of the Company for which there is an
Excess Amount for the 12 months then ended paid to the Advisor, the Advisor, at
the direction of the Independent Directors, shall cause such fact to be
disclosed in the next quarterly report of the Company or in a separate writing
and sent to the Stockholders within 60 days of such quarter end, together with
an explanation of the factors the Independent Directors considered in
determining that such Excess Amount was justified. Such determination shall be
reflected in the minutes of the meetings of the Board.  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.  All
figures used in any computation pursuant to this Section 3.04 shall be
determined in accordance with generally accepted accounting principles applied
on a consistent basis.

 

3.05                        Audit of Advisor Payments.  It is the intention of
the parties hereto to conform strictly to the applicable provisions hereof as to
fees, reimbursements and any other amounts (the “Advisor Payments”) to be paid
to the Advisor hereunder.  However, at any time, either party shall have the
right, upon reasonable written notice, to engage a separate audit, on a
confidential basis, of its own and the other party’s records, books and accounts
in respect of Advisor Payments to ascertain whether the Advisor Payments were
properly determined and paid.  An audit may be engaged only once in any 12-month
period regardless of which party engages the audit.  Any such audit shall be
conducted by an independent certified public accounting firm of recognized
national standing designated by the party requesting the audit (the “Requesting
Party”), other than the then current auditor of its or any of its Affiliates’
financial statements, and shall be conducted during regular business hours and
in such a manner so as not to interfere with the Company’s or the Advisor’s
regular business activities.  The Requesting Party shall bear the costs of the
audit unless the audit conclusively reveals an underpayment or overpayment of
Advisor Payments adverse to the Requesting Party in an amount greater than 10%
of the total amount of Advisor Payments owed for the period being inspected, in
which case the other party shall bear the costs of the audit.  Any auditor who
is engaged to perform an audit shall not be compensated on a contingent basis or
any other basis that would tend to give the auditor an interest in the outcome
of the audit, and the auditor shall perform its audit on an impartial basis and
certify in writing as

 

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such.  If the audit conclusively reveals an overpayment or underpayment of
Advisor Payments, the Company or the Advisor shall promptly pay to the other
party the amount of the overpayment or underpayment, as the case may be, without
interest; provided, however, that in the event that the audit conclusively
reveals an overpayment of Advisor Payments and the Advisor has at any time
previously waived or forgiven in writing any Advisor Payments that it would
otherwise have been entitled to hereunder (including the $3,500,000 waiver of
Organization and Offering Expense reimbursement set forth in
Section 3.02(c) above), the Company shall credit against the overpayment any
amounts previously waived or forgiven, without interest, and the Advisor shall
not be obligated to repay the Company to the extent that the overpayments do not
exceed the aggregate of the waived or forgiven amounts not already so credited. 
Any underpayment or overpayment under this Agreement shall not be a breach of
this Agreement unless and until an audit performed in accordance with this
Section 3.05 is completed and the party who may be obligated to make a payment
hereunder as a result of such audit shall have failed to promptly make any
required payment.

 

ARTICLE IV

 

TERM AND TERMINATION

 

4.01                        Term; Renewal.  Subject to Section 4.02 hereof, this
Agreement shall continue in force until January 4, 2012.  Thereafter, this
Agreement may be renewed for an unlimited number of successive one-year terms
upon mutual consent of the parties.  It is the duty of the Board to 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.

 

4.02                        Termination.  This Agreement will automatically
terminate upon Listing.  This agreement also may be terminated at the option of
either party upon 60 days’ written notice without cause or penalty (if
termination is by the Company, then the termination shall be upon the approval
of a majority of the Independent Directors).  Notwithstanding the foregoing, the
provisions of Section 4.03, Article V and Article VI shall continue in full
force and effect and shall survive the termination or expiration of this
Agreement.

 

4.03                        Payments to and Duties of Advisor upon Termination.

 

(a)                                  After the Termination Date, the Advisor
shall not be entitled to compensation for further services hereunder except it
shall be entitled to and receive from the Company within 30 days after the
effective date of the termination all unpaid reimbursements of expenses, subject
to the provisions of Section 3.04 hereof, and all contingent liabilities related
to fees payable to the Advisor prior to termination of this Agreement.

 

(b)                                 The Advisor shall promptly upon termination:

 

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

 

(ii)                                  deliver to the Board 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 Board;

 

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(iii)                               deliver to the Board all assets, including
the Assets, and documents of the Company then in the custody of the Advisor; and

 

(iv)                              cooperate with the Company and take all
reasonable actions requested by the Company to provide an orderly management
transition.

 

(c)                                  In the event that this Agreement is
terminated or allowed to expire without renewal, which termination or expiration
occurs prior to the Company’s or the Advisor’s reimbursement of Organization and
Offering Expenses pursuant to the provisions of Section 3.02(c), the appropriate
party, within 90 days after the end of the year in which the Follow-on Offering
terminates, shall make the necessary reimbursement.

 

ARTICLE V

 

INDEMNIFICATION

 

5.01                        Indemnification by the Company.

 

(a)                                  The Company shall indemnify and hold
harmless the Advisor and its Affiliates, including their respective 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 Maryland, the
Articles of Incorporation and the NASAA Guidelines. Notwithstanding the
foregoing, the Company shall not indemnify or hold harmless the Advisor or its
Affiliates, including their respective officers, directors, partners and
employees, for any liability or loss suffered by the Advisor or its Affiliates,
including their respective officers, directors, partners and employees, nor
shall it provide that the Advisor or its Affiliates, including their respective
officers, directors, partners and employees, be held harmless for any loss or
liability suffered by the Company, unless all of the following conditions are
met: (i) the Advisor or its Affiliates, including their respective officers,
directors, partners and employees, have determined, in good faith, that the
course of conduct which caused the loss or liability was in the best interests
of the Company; (ii) the Advisor or its Affiliates, including their respective
officers, directors, partners and employees, were acting on behalf of or
performing services of the Company; (iii) the liability or loss was not the
result of negligence or misconduct by the Advisor or its Affiliates, including
their respective officers, directors, partners and employees; and (iv) the
indemnification or agreement to hold harmless is recoverable only out of the
Company’s net assets and not from stockholders. Notwithstanding the foregoing,
the Advisor and its Affiliates, including their respective officers, directors,
partners and employees, shall not be indemnified by the Company for any losses,
liability or expenses arising from or out of an alleged violation of federal or
state securities laws by such party unless one or more of the following
conditions are met: (i) there has been a successful adjudication on the merits
of each count involving alleged securities law violations as to the particular
indemnitee; (ii) such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction as to the particular indemnitee; and (iii) a
court of competent jurisdiction approves a settlement of the claims against a
particular indemnitee and finds that indemnification of the settlement and the
related costs should be made, and the court considering the request for
indemnification has been advised of the position of the Securities and Exchange
Commission and of the published position of any state securities regulatory
authority in which securities of the Company were offered or sold as to
indemnification for violations of securities laws.

 

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(b)                                 The Company may advance funds to the Advisor
or its Affiliates, including their respective officers, directors, partners and
employees, for legal expenses and other costs incurred as a result of any legal
action for which indemnification is being sought is permissible only if all of
the following conditions are satisfied: (i) the legal action relates to acts or
omissions with respect to the performance of duties or services on behalf of the
Company; (ii) the legal action is initiated by a third-party who is not a
stockholder or the legal action is initiated by a stockholder acting in his or
her capacity as such and a court of competent jurisdiction specifically approves
such advancement; (iii) the Advisor or its Affiliates, including their
respective officers, directors, partners and employees, undertake to repay the
advanced funds to the Company together with the applicable legal rate of
interest thereon, in cases in which the Advisor or its Affiliates, including
their respective officers, directors, partners and employees, are found not to
be entitled to indemnification.

 

(c)                                  Notwithstanding the provisions of this
Section 5.01, the Advisor shall not be entitled to indemnification or be held
harmless pursuant to this Section 5.01 for any activity which the Advisor shall
be required to indemnify or hold harmless the Company pursuant to Section 5.02.

 

5.02                        Indemnification by 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 the 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, misfeasance, misconduct, gross negligence or
reckless disregard of its duties, but the Advisor shall not be held responsible
for any action of the Board in following or declining to follow any advice or
recommendation given by the Advisor.

 

ARTICLE VI

 

MISCELLANEOUS

 

6.01                        Assignment to an Affiliate.  This Agreement and any
rights, duties, liabilities and obligations hereunder and the fees and
compensation related thereto may be assigned by the Advisor, in whole or in
part, to a duly qualified and licensed Affiliate of the Advisor without
obtaining the approval of the Board.  Any other assignment shall be made only
with the approval of a majority of the Board (including 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.  This Agreement shall not be assigned by the Company without the consent
of the Advisor, except in the case of an assignment by the Company to a
corporation or other organization which is a successor to all of the assets,
rights and obligations of the Company, in which case the successor organization
shall be bound hereunder and by the terms of said assignment in the same manner
as the Company is bound by this Agreement.  This Agreement shall be binding on
successors to the Company resulting from a Change of Control or sale of all or
substantially all the assets of the Company or the Partnership, and shall
likewise be binding upon any successor to the Advisor.

 

6.02                        Relationship of Advisor and Company.  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 or impose any liability as such on either of them.

 

6.03                        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

 

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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 Directors and to the Company:

 

Behringer Harvard Opportunity REIT II, Inc.

 

 

15601 Dallas Parkway

 

 

Suite 600

 

 

Addison, Texas 75001

 

 

 

To the Advisor:

 

Behringer Harvard Opportunity Advisors II, LLC

 

 

15601 Dallas Parkway

 

 

Suite 600

 

 

Addison, Texas 75001

 

Either party shall, as soon as reasonably practicable, give notice in writing to
the other party of a change in its address for the purposes of this
Section 6.03.

 

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

 

6.05                        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.

 

6.06                        Choice of Law; Venue.  The provisions of this
Agreement shall be construed and interpreted in accordance with the laws of the
State of Texas, and venue for any action brought with respect to any claims
arising out of this Agreement shall be brought exclusively in Dallas County,
Texas.

 

6.07                        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 signed by each of the
parties hereto.

 

6.08                        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 the 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 the waiver.

 

6.09                        Gender; Number.  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.

 

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6.10                        Headings.  The titles and headings of sections and
subsections 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.

 

6.11                        Execution in Counterparts.  This Agreement may be
executed in multiple 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.

 

6.12                        Initial Investment.  The Advisor or one of its
Affiliates has contributed $200,000 (the “Initial Investment”) in exchange for
the initial issuance of Shares of the Company.  The Advisor or its Affiliates
may not sell any of the Shares purchased with the Initial Investment while the
Advisor acts in an advisory capacity to the Company.  The restrictions included
above shall not apply to any Shares acquired by the Advisor or its Affiliates
other than the Shares acquired through the Initial Investment.  Neither the
Advisor nor its Affiliates shall vote any Shares they now own, or hereafter
acquire, in any vote regarding removal of the Advisor or its Affiliates or the
approval of any transaction between the Company and the Advisor or its
Affiliates.

 

6.13                        Ownership of Proprietary Property.  The Advisor
retains ownership of and reserves all Intellectual Property Rights in the
Proprietary Property.  To the extent that the Company has or obtains any claim
to any right, title or interest in the Proprietary Property, including without
limitation in any suggestions, enhancements or contributions that Company may
provide regarding the Proprietary Property, the Company hereby assigns and
transfers exclusively to the Advisor all right, title and interest, including
without limitation all Intellectual Property Rights, free and clear of any
liens, encumbrances or licenses in favor of the Company or any other party, in
and to the Proprietary Property. In addition, at the Advisor’s expense, the
Company will perform any acts that may be deemed desirable by the Advisor to
evidence more fully the transfer of ownership of right, title and interest in
the Proprietary Property to the Advisor, including but not limited to the
execution of any instruments or documents now or hereafter requested by the
Advisor to perfect, defend or confirm the assignment described herein, in a form
determined by the Advisor.

 

6.14                        Treatment Under Texas Margin Tax.  For purposes of
the Texas margin tax, the Advisor’s performance of the services specified in
this Agreement will cause the Advisor to conduct part of the active trade or
business of the Company, and the compensation specified in Article III includes
both the payment of management fees and the reimbursement of specified costs
incurred in the Advisor’s conduct of the active trade or business of the
Company.  Therefore, the Advisor and Company intend Advisor to be, and shall
treat Advisor as, a “management company” within the meaning of
Section 171.0001(11) of the Texas Tax Code.  The Company and the Advisor will
apply Sections 171.1011(m-1) and 171.1013(f)-(g) of the Texas Tax Code to the
Company’s reimbursements paid to the Advisor pursuant to this Agreement of
specified costs and wages and compensation.  The Advisor and the Company further
recognize and intend that (i) as a result of the fiduciary relationship created
by this Agreement and acknowledged in Section 2.02, reimbursements paid to the
Advisor pursuant to this Agreement are “flow-though funds” that the Advisor is
mandated by law or fiduciary duty to distribute, within the meaning of
Section 171.1011(f) of the Texas Tax Code, and (ii) as a result of Advisor’s
contractual duties under this Agreement, certain reimbursements under this
Agreement are “flow-through funds” mandated by contract to be distributed within
the meaning of Section 171.1011(g) of the Texas Tax Code.  The terms of this
Agreement shall be interpreted in a manner consistent with the characterization
of the Advisor as a “management company” as defined in Section 171.0001(11), and
with the characterization of the reimbursements as “flow-though funds” within
the meaning of Section 171.1011(f)-(g) of the Texas Tax Code.

 

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6.15                        Non-Solicitation.  During the period commencing on
January 4, 2008 and ending one year following the termination of this Agreement,
the Company shall not, without the Advisor’s prior written consent, directly or
indirectly, (i) solicit or encourage any person to leave the employment or other
service of the Advisor or its affiliates or (ii) hire, on behalf of the Company
or any other person or entity, any person who has left the employment within the
one year period following the termination of that person’s employment the
Advisor or its affiliates.  During the period commencing on January 4, 2008 and
ending one year following the termination of this Agreement, the Company shall
not, whether for its own account or for the account of any other person, firm,
corporation or other business organization, intentionally interfere with the
relationship of the Advisor or it affiliates with, or endeavor to entice away
from the Advisor or its affiliates, any person who during the term of the
Agreement is, or during the preceding one-year period was, a customer of the
Advisor or its affiliates.

 

[The remainder of this page intentionally blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Third Amended and
Restated Advisory Management Agreement as of the date first above written.

 

 

BEHRINGER HARVARD OPPORTUNITY REIT II, INC.

 

 

 

 

 

By:

/s/ Robert S. Aisner

 

 

Robert S. Aisner

 

 

President and Chief Executive Officer

 

 

 

BEHRINGER HARVARD OPPORTUNITY ADVISORS II, LLC

 

 

 

 

 

By:

/s/ Gerald J. Reihsen, III

 

 

Gerald J. Reihsen, III

 

 

Executive Vice President — Corporate Development & Legal and Assistant Secretary

 

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