Exhibit 10.3

 

EXECUTION VERSION

 

SIXTH AMENDED AND RESTATED
PROPERTY MANAGEMENT AGREEMENT

 

This SIXTH AMENDED AND RESTATED PROPERTY MANAGEMENT AGREEMENT (this “Management
Agreement”) is made and entered into as of this 31st day of August, 2012, by and
among BEHRINGER HARVARD REIT I, INC., a Maryland corporation (“BH REIT”),
BEHRINGER HARVARD OPERATING PARTNERSHIP I LP, a Texas limited partnership
(“BH OP”), and HPT MANAGEMENT SERVICES LLC, a Texas limited liability company
(the “Manager”).

 

WHEREAS, BH OP was organized to acquire, own, operate, lease and manage real
estate properties on behalf of BH REIT; and

 

WHEREAS, BH OP and BH REIT and Manager previously entered into that certain
Property Management and Leasing Agreement dated February 14, 2003, as amended
and restated by the Amended and Restated Property Management and Leasing
Agreement dated June 2, 2003, the Second Amended and Restated Property
Management and Leasing Agreement dated February 11, 2005, the Third Amended and
Restated Property Management and Leasing Agreement dated March 20, 2006, the
Fourth Amended and Restated Property Management and Leasing Agreement dated
December 29, 2006, and the Fifth Amended and Restated Property Management and
Leasing Agreement, dated May 15, 2008, as amended by the First Amendment dated
June 25, 2008, the Second Amendment dated August 13, 2008, the Third Amendment
dated November 9, 2010, and the Fourth Amendment dated February 20, 2012
(collectively, the “Original Management Agreement”); and

 

WHEREAS, Owner desires to continue retaining Manager to manage real estate
properties acquired by Owner upon the terms and subject to the conditions set
forth in this Management Agreement; and

 

WHEREAS, the Board of Directors of BH REIT (based upon the recommendation of the
BH REIT Special Committee), BH OP and Manager have each approved and declared
advisable, this Management Agreement; and

 

WHEREAS, upon the terms and subject to the conditions of this Management
Agreement, Manager desires to grant BH REIT the option and BH REIT desires the
option to undertake the property management functions of Manager as contemplated
by Article IX; and

 

WHEREAS, the Board of Directors of BH REIT (based upon the recommendation of the
BH REIT Special Committee) has determined that this Management Agreement,
including the Buyout Option (as defined below), is in furtherance of and
consistent with its business strategy, is fair and reasonable to BH REIT, and is
in the best interests of its stockholders; and

 

WHEREAS, concurrent with the entry into this Sixth Amended and Restated Property
Management Agreement, BH REIT, Manager, Behringer Harvard REIT I Services
Holdings, LLC, and Behringer Advisors, LLC are entering into that certain Master
Modification Agreement and certain related agreements;

 

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WHEREAS, the Board of Directors of BH REIT (based upon the recommendation of the
BH REIT Special Committee), including a majority of members of the Board of
Directors of BH REIT not otherwise interested in the transactions contemplated
hereby directly or through an Affiliate (as defined in the BH REIT Charter), has
determined that any assets acquired by BH REIT from Manager pursuant to this
Management Agreement are at a price to BH REIT no greater than the cost, to
Manager, of the assets being acquired, or at a price to BH REIT in excess of the
cost, to Manager, of the assets being acquired pursuant to this Management
Agreement, but substantial justification for such excess exists and such excess
is reasonable; and

 

WHEREAS, the parties desire to amend and restate in its entirety the Original
Management Agreement as set forth herein.

 

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, do hereby agree, as
follows:

 

ARTICLE I.
DEFINITIONS

 

Except as otherwise specified or as the context may otherwise require, the
following terms have the respective meanings set forth below for all purposes of
this Management Agreement, and the definitions of such terms are equally
applicable both to the singular and plural forms thereof:

 

1.1           “Account” has the meaning set forth in Section 2.5.

 

1.2           “Adjustment Date” has the meaning set forth in Section 9.5(a).

 

1.3           “Administrative Services Agreement” means that certain
Administrative Services Agreement, dated as of August 31, 2012, by and between
BH REIT and Behringer Advisors, LLC, as amended, supplemented or otherwise
modified from time to time.

 

1.4           “Affiliate” means, except as otherwise provided herein, with
respect to any Person, any other Person which, at the time of determination,
directly or indirectly controls, is controlled by or is under common control
with, such Person. For the purposes of this definition, “control” (including,
with correlative meaning, the terms “controlling,” “controlled by” and “under
common control with”) means the possession, directly or indirectly, of the power
to direct or cause the direction of management and policies of such Person
through the ownership of voting securities, by contract or otherwise. For the
avoidance of doubt, BH REIT, BH OP, and their respective Affiliates shall not be
considered Affiliates of Manager or any Affiliates of Manager, and vice versa.

 

1.5           “Agreement” means any loan agreement, mortgage, indenture, deed of
trust, lease, sublease, contract, covenant, plan, insurance policy or other
agreement, instrument, arrangement, obligation, understanding or commitment,
permit, concession, franchise or license, whether oral or written, expressed or
implied.

 

1.6           “Annual Budget” has the meaning set forth in Section 2.6(c).

 

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1.7           “Behringer Group” means, collectively, (i) Manager, (ii),
Behringer Harvard REIT I Services Holdings, LLC, (iii) Behringer Advisors, LLC,
(iv) Behringer Harvard Holdings, LLC, and (v) all of their respective
Affiliates. For the avoidance of doubt, BH REIT, BH OP, and their respective
Affiliates shall not be considered members of the Behringer Group.

 

1.8           “Behringer Plans” means, collectively, each plan, program, policy
or Agreement providing for compensation, bonuses, pension, retirement, profit
sharing, health, dental, vision, life, disability, severance, termination pay,
performance awards, equity or “profits interests” awards, fringe benefits or
other employee benefits of any kind, if any, including any “employee benefit
plan” within the meaning of Section 3(3) of ERISA, which is sponsored,
maintained, or contributed to by any member of the Behringer Group in which any
Manager Specified Employee participates.

 

1.9           “BH OP” has the meaning set forth in the Preamble.

 

1.10         “BH REIT” has the meaning set forth in the Preamble.

 

1.11         “BH REIT Plans” has the meaning set forth in Section 9.6(e)(i).

 

1.12         “Business Day” means any day other than a Saturday or a Sunday or a
day on which banks located in Dallas, Texas generally are authorized or required
by Law or regulation to close.

 

1.13         “Buyout” means, collectively, the waiver of certain
non-solicitation and non-hire provisions and the other transactions contemplated
by Article IX.

 

1.14         “Buyout Closing” has the meaning set forth in Section 9.3(a).

 

1.15         “Buyout Closing Date” has the meaning set forth in Section 9.3(a).

 

1.16         “Buyout Consideration” means 0.8 times the gross amount of all
Management Fees and Oversight Fees earned by Manager under this Management
Agreement for the trailing consecutive 12-month period ending with the last full
month prior to the delivery of the Buyout Notice; provided, however, that if
(i) the Buyout Notice Date occurs during the one-year period prior to the
Existing Expiration Date, and (ii) Remaining Amount is less than the Buyout
Consideration payable (but for the effect of this proviso), then the Buyout
Consideration means the Remaining Amount.

 

1.17         “Buyout Consideration Schedule” has the meaning set forth in
Section 9.3(c).

 

1.18         “Buyout Notice” has the meaning set forth in Section 9.2.

 

1.19         “Buyout Notice Date” has the meaning set forth in Section 9.2.

 

1.20         “Buyout Option” means the option to consummate the Buyout, on the
terms and subject to the conditions set forth in Article IX.

 

1.21         “Capital Plan” has the meaning set forth in Section 2.4(g).

 

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1.22         “Change of Control” shall occur, with respect to any specified
person, if (a) any Group, who prior to such time beneficially owned (as
determined under Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended) less than 50% of the voting shares or other equity interests
of such specified person (measured by voting power rather than the number of
shares or other equity interests), shall acquire (including by merger, 
consolidation or otherwise) voting shares or other equity interests of such
specified person, in one or more transactions or series of transactions, and
after such transaction or transactions such Group beneficially owns 50% or more
of voting shares or other equity interests of such specified person (measured by
voting power rather than the number of shares or other equity interests), or
(b) such specified person shall sell all or substantially all of its assets to
any Group which, prior to the time of such transaction, beneficially, directly
or indirectly, owned less than 50% of the voting shares or other equity
interests of such specified person (measured by voting power rather than the
number of shares or other equity interests). In addition, any event that causes,
directly or indirectly, any Person other than REIT I to become the beneficial
owner of greater than 50% of the Equity Interests of BH OP shall be deemed a
Change of Control of REIT I.

 

1.23         “Claim” means any threatened, pending or completed claim, action,
suit, litigation, arbitration, alternative dispute resolution mechanism,
investigation, hearing or any other proceeding, whether civil (including
intentional and unintentional tort claims), criminal, administrative,
regulatory, investigative or other, or any inquiry or investigation that might
lead to the institution of any such claim, action, suit, litigation or other
proceeding, whether civil (including intentional and unintentional tort claims),
criminal, administrative, regulatory, investigative or other.

 

1.24         “COBRA” has the meaning set forth in Section 9.6(e)(iii).

 

1.25         “Construction Work” has the meaning set forth in Section 5.2.

 

1.26         “Contracts” has the meaning set forth in Section 3.2(d).

 

1.27         “Damages” means any and all costs, losses, damages, Liabilities,
obligations, lawsuits, deficiencies, Claims, demands, penalties, assessments,
fines, return of any consideration, Judgments, arbitration awards,
indemnification payments, reasonable costs and reasonable expenses, of any
nature whatsoever, reasonable costs and reasonable expenditures required or
incurred to comply with any Judgment, and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing. All Damages shall
be calculated on a pre-Tax basis, without reduction or other adjustment for any
Tax consequences arising out of the payment of such Damages.

 

1.28         “Economic Interest Percentage” means the percentage of capital
contributed directly or indirectly to the Joint Venture as compared with the
total capital contributed to the Joint Venture by all of the owners of the Joint
Venture as the percentage shall be calculated in good faith by the Owner. Any
in-kind contribution shall be considered in the calculation of the Economic
Interest Percentage and valued at the fair market value of the contribution on
the date of contribution as determined by the Owner.

 

1.29         “Employee Release” has the meaning set forth in Section 9.6(d)(i).

 

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1.30         “Equity Interests” means (i) with respect to a corporation, as
determined under the Laws of the jurisdiction of organization of such entity,
shares of capital stock (whether common, preferred or treasury), (ii) with
respect to a partnership, limited liability company, limited liability
partnership or similar Person, as determined under the Laws of the jurisdiction
of organization of such entity, units, interests, or other partnership or
limited liability company interests, or (ii) any other equity ownership.

 

1.31         “Estimated Manager Fees and Expenses” has the meaning set forth in
Section 9.3(f)(ii).

 

1.32         “Existing Expiration Date” has the meaning set forth in
Section 7.1.

 

1.33         “Final Manager Fees and Expenses Amount” has the meaning set forth
in Section 9.5(a).

 

1.34         “Final Manager Fees and Expenses Statement” has the meaning set
forth in Section 9.5(a).

 

1.35         “GAAP” means United States generally accepted accounting principles
in effect on the Original Effective Date, consistently applied.

 

1.36         “Governmental Authority” means any United States or other
international, national, state or local government, any political subdivision
thereof or any other governmental, judicial, public or statutory
instrumentality, authority, body, agency, department, bureau, commission or
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, or any arbitrator with authority to
bind a party at law.

 

1.37         “Gross Revenues” means all amounts actually collected as rents or
other charges for the use and occupancy of the Properties, but excluding
(i) interest and other investment income of Owner, (ii) proceeds received by
Owner from a sale, exchange, condemnation, eminent domain taking, casualty or
other disposition of assets of Owner, and (iii) proceeds received by Owner from
any financing.

 

1.38         “Group” shall mean any person, or any two or more persons acting as
a group within the meaning of Section 13(d) of the Securities Exchange Act of
1934, as amended, and all Affiliates of such person or persons.

 

1.39         “Improvements” means any buildings, structures and equipment from
time to time located on the Properties and all parking and public common areas
located on the Properties.

 

1.40         “Indemnified Parties” has the meaning set forth in Section 6.5(a).

 

1.41         “Intellectual Property Rights” means all right, title and interest,
whether foreign or domestic, in and to any and all trade secrets, confidential
information, patents, inventions, copyrights, service marks, trademarks,
know-how, or similar intellectual property rights and all applications and
rights to apply for these rights, as well as any and all 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.

 

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1.42         “Joint Venture” means an investment in 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 Properties.

 

1.43         “Judgments” means any judgments, injunctions, orders, decrees,
writs, rulings, stipulations, consents, settlements, or awards of any court or
other judicial authority or any other Governmental Authority.

 

1.44         “Laws” means all laws, statutes, by-laws, ordinances, rules,
regulations, common law or Judgments of any Governmental Authority.

 

1.45         “Lease” means, unless the context otherwise requires, any lease or
sublease made by Owner as landlord or by its predecessor.

 

1.46         “Licensing Claim” shall mean any Claim that Manager or any other
member of the Behringer Group does not possess a real estate brokerage or
similar license required by any Law in connection with services provided by such
Person to Owner or any of its Affiliates, or any Claim that arises from or
relates to the foregoing.

 

1.47         “Liabilities” means any liability, indebtedness, guaranty,
assurance, commitment, claim, loss, damage, deficiency, assessment, obligation
or responsibility, whether fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued or unaccrued, absolute, known or
unknown, contingent or unmatured, liquidated or unliquidated, asserted or
unasserted, due or to become due, whenever or however arising (including whether
arising out of any Contract or tort based on negligence or strict liability) and
whether or not the same would be required by GAAP to be stated in financial
statements or disclosed in the notes thereto.

 

1.48         “Losses” has the meaning set forth in Section 6.5(a).

 

1.49         “Management Agreement” has the meaning set forth in the Preamble.

 

1.50         “Management Fees” has the meaning set forth in Section 5.1.

 

1.51         “Manager” has the meaning set forth in the Preamble.

 

1.52         “Manager Fees and Expenses” has the meaning set forth in
Section 9.3(f)(ii).

 

1.53         “Manager Purchased Assets” has the meaning set forth in
Section 9.3(d).

 

1.54         “Manager Purchased Assets Schedule” has the meaning set forth in
Section 9.3(d).

 

1.55         “Manager Representations Letter” has the meaning set forth in
Section 9.4(b)(i).

 

1.56         “Manager Specified Employee” has the meaning set forth in
Section 9.3(e)(i).

 

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1.57         “Manager Specified Employees Schedule” has the meaning set forth in
Section 9.3(e)(i).

 

1.58         “Master Modification Agreement” means that certain Master
Modification Agreement, dated as of August 31, 2012, by and between BH REIT,
Manager, Behringer Harvard REIT I Services Holdings, LLC, and Behringer
Advisors, LLC, as amended, supplemented or otherwise modified from time to time.

 

1.59         “Non-Hired Manager Specified Employee” has the meaning set forth in
Section 9.6(a).

 

1.60         “Notice” has the meaning set forth in Section 8.1.

 

1.61         “Original Effective Date” means February 14, 2003.

 

1.62         “Original Management Agreement” has the meaning set forth in the
Recitals.

 

1.63         “Oversight Fee” has the meaning set forth in Section 5.1.

 

1.64         “Owner” means BH REIT, BH OP or any joint venture, limited
liability company or other Affiliate of BH REIT or BH OP that owns, in whole or
in part, on behalf of BH REIT, any Property or Properties.

 

1.65         “Ownership Agreements” has the meaning set forth in Section 2.4(e).

 

1.66         “Person” means an individual, corporation, association, business
trust, estate, trust, partnership, limited liability company or other legal
entity.

 

1.67         “Pre-Closing Manager Fees and Expenses Schedule” has the meaning
set forth Section 9.3(f)(ii).

 

1.68         “Properties” means all interests in real estate owned by Owner and
all tracts to be acquired by Owner containing income-producing improvements or
on which Owner will construct income-producing improvements. For the avoidance
of doubt, if at any time Owner ceases to own any interest in a Property, it
shall no longer be considered a “Property” for the purposes of this Management
Agreement.

 

1.69         “Proprietary Properties” means 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 Article II that
relate to management advice, services and techniques regarding current and
potential Properties, and all modifications, enhancements and derivative works
of the foregoing.

 

1.70         “PTO Benefits” has the meaning set forth in Section 9.6(c).

 

1.71         “PTO Liabilities” has the meaning set forth in Section 9.6(c).

 

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1.72         “Remaining Amount” shall mean the gross amount of all Management
Fees and Oversight Fees that would have been earned by Manager under this
Management Agreement during the period beginning on the Buyout Closing Date and
ending on the Existing Expiration Date (based on an average of the Management
Fees and Oversight Fees earned by the Manager under this Management Agreement
for the trailing consecutive 12 month period ending with the last full month
prior to the delivery of the Buyout Notice) had the Buyout Option not been
exercised prior to the Existing Expiration Date.

 

1.73         “Severance Schedule” has the meaning set forth in
Section 9.6(d)(i).

 

1.74         “Submanager” has the meaning set forth in Section 8.3(b).

 

1.75         “Support Services Agreement” means any Agreement for services
between any member of the Behringer Group (on the one hand) and BH REIT or its
Affiliates (on the other hand), other than the Administrative Services Agreement
and this Management Agreement.

 

1.76         “Tax Return” means any report, return (including information
return), election, document, estimated tax filing, declaration or other filing
required to be supplied to any taxing or other Governmental Authority with
respect to Taxes, including any amendments thereto.

 

1.77         “Taxes” shall mean all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, property, sales,
withholding, social security, occupation, use, service, service and use,
license, payroll, franchise, transfer and recording taxes, fees and charges,
imposed by the United States, or any state, local or foreign government or
subdivision or agency thereof whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable to or imposed on or with
respect to any such taxes, charges, fees, levies or other assessments and
(ii) any Liability for the payment of amounts determined by reference to amounts
described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group.

 

1.78         “Texas Tax Code” means the Texas Tax Code as amended by Texas H.B.
3, 79th Leg., 3rd C.S. (2006), and reference to any provision of the Texas Tax
Code 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 administrative rules as in effect from time to time.

 

1.79         “Third Party Leasing Agreement” has the meaning set forth in
Section 8.4.

 

1.80         “Third Party Management Agreement” has the meaning set forth in
Section 8.5.

 

1.81         “Transferred Manager Employees” has the meaning set forth in
Section 9.6(a).

 

ARTICLE II.
APPOINTMENT AND STATUS OF MANAGER; SERVICES TO BE PERFORMED

 

2.1           Appointment of Manager. Owner hereby engages and retains Manager
as the manager and as tenant coordinating agent of the Properties, and Manager
hereby accepts such appointment on the terms and conditions hereinafter set
forth; it being understood that this

 

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Management Agreement shall cause Manager to be, at law, Owner’s agent upon the
terms contained herein.

 

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

 

2.3           General Duties. Manager shall devote its reasonable best efforts
to performing its duties hereunder to manage, operate and maintain the
Properties in a diligent, careful and vigilant manner. The services of Manager
are to be of scope and quality not less than those generally performed by
professional property managers of other similar properties in that geographic
area. Manager shall make available to Owner the full benefit of the judgment,
experience and advice of the members of Manager’s organization and staff with
respect to the policies to be pursued by Owner relating to the operation and
leasing of the Properties.

 

2.4           Specific Duties. In addition to the specific authority granted to
Manager by Owner pursuant to Article III of this Management Agreement, but
subject to the terms hereof, Manager’s duties include the following:

 

(a)           Lease Obligations. Manager shall perform all duties of the
landlord under all Leases insofar as such duties relate to operation,
maintenance, and day-to-day management. Manager shall also provide or cause to
be provided, at Owner’s expense, all services normally provided to tenants of
like premises, including where applicable and without limitation, gas,
electricity or other utilities required to be furnished to tenants under Leases,
normal repairs and maintenance, and cleaning and janitorial service. Manager
shall arrange for and supervise the performance of all installations and
improvements in space leased to any tenant that are expressly required under the
terms of the lease of such space.

 

(b)           Maintenance. Manager shall cause the Properties to be maintained
in a manner consistent with, or substantially similar to, the manner in which
similar rental

 

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properties in that geographic region are maintained. Manager’s duties and
supervision in this respect shall include, without limitation, cleaning the
interior and the exterior of the Improvements and making or supervising the
repair, alterations, and decoration of the Improvements, subject to and in
strict compliance with this Management Agreement and the Leases. Construction
activities undertaken by Manager, if any, shall be limited to activities related
to the management, operation, maintenance, and leasing of the Properties (e.g.,
repairs, renovations, and leasehold improvements), including planning and
coordinating the construction of any tenant-paid improvements, in each case, at
Owner’s request.

 

(c)           Leasing Functions. Notwithstanding anything in this Management
Agreement to the contrary, unless requested in writing by Owner and agreed to in
writing by Manager, Manager shall not perform (and, unless so requested and
agreed in a separate written agreement, Manager shall not have any obligation to
perform) any leasing functions, and unless so requested and agreed, all leasing
functions will be performed by Owner or third parties pursuant to Section 8.4.
For the avoidance of doubt, Manager shall not pay and Manager will not be
reimbursed by Owner for, any expenses of leasing a Property (such as newspaper
and other advertising, signage, banners, brochures, referral commissions,
leasing commissions, finder’s fees and salaries, bonuses and other compensation
of leasing personnel responsible for the leasing of the Property) unless Owner
has requested Manager to perform such leasing functions or pay such amount and
Manager has agreed, in accordance with this Section 2.4(c).

 

(d)           Permits; Notice of Violations. At Owner’s request and cost and
expense, Manager shall use commercially reasonable efforts to obtain required
permits for each Property and take all commercially reasonable steps to ensure
compliance in all material respects with applicable Laws. Manager shall forward
to Owner promptly upon receipt, all notices of violation or other notices from
any governmental authority, and board of fire underwriters or any insurance
company, and shall make such recommendations regarding compliance with any
notice as Manager believes is appropriate.

 

(e)           Ownership Agreements. Manager has received copies of (and will be
provided with copies of future) Articles of Incorporation, Agreements of Limited
Partnership, Joint Venture Partnership Agreements and Operating Agreements, each
as may be amended from time to time, of Owner, as applicable (the “Ownership
Agreements”) and is familiar with the terms thereof. Manager shall use
reasonable care to avoid any act or omission that, in the performance of its
duties hereunder, shall in any way conflict with the terms of Ownership
Agreements.

 

(f)            Technology Use and Support. Manager shall utilize the software
and technology platforms that it believes are appropriate in connection with
fulfilling its duties under this Management Agreement. In addition, Manager
shall provide technical support and maintenance with respect to any technology
used in the maintenance, operation, management and leasing of the Properties.

 

(g)           Capital Plans. Not later than 30 days after the Original Effective
Date, and each successive fifth anniversary thereafter, Manager shall prepare
and deliver to Owner

 

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a plan setting forth its strategies for the overall management, operation and
maintenance of the Properties under the terms and conditions of this Management
Agreement, for the five years immediately following the submission (“Capital
Plan”). As often as reasonably necessary during the period covered by any
Capital Plan, the Manager may submit to Owner for its approval an updated
Capital Plan.

 

2.5           The Account. Manager shall establish and maintain a separate
checking account (the “Account”) into which all rent and other monies collected
from tenants shall be deposited. All monies deposited from time to time in the
Account shall be deemed to be trust funds and shall be and remain the property
of Owner and shall be withdrawn and disbursed by Manager for the account of
Owner only as expressly permitted by this Management Agreement. No monies
collected by Manager on Owner’s behalf shall be commingled with funds of
Manager. The Account shall be maintained, and monies shall be deposited therein
and withdrawn therefrom, in accordance with the following:

 

(a)           All sums received from rents and other income from the Properties
shall be promptly deposited by Manager in the Account. Manager may endorse any
and all checks received in connection with the operation of any Property and
drawn to the order of Owner, and Owner shall, upon request by Manager, furnish
Manager’s depository with an appropriate authorization for Manager to make such
endorsement. Manager shall have the right to designate two or more persons, each
of whom shall be approved in advance by BH REIT, who shall be authorized to draw
against the Account, but only for purposes authorized by this Management
Agreement.

 

(b)           All sums due to Manager hereunder, whether (i) for compensation,
(ii) reimbursement for expenditures approved by Owner, including as part of the
Annual Budget in accordance with Section 2.6(c), or (iii) permitted under
Section 2.6(d) shall be a charge against the operating revenues of the
Properties and shall be paid or withdrawn by Manager or Owner from the Account
prior to the making of any other disbursements therefrom.

 

(c)           By the 15th day after the end of each month, Manager shall forward
to Owner all monies contained in the Account other than a reserve of $5,000 and
any other amounts otherwise provided in the budget for the relevant property
which shall remain in the Account.

 

Notwithstanding the foregoing provisions of this Section 2.5, Manager hereby
acknowledges that (A) Owner may obtain one or more mortgage loans secured by one
or more of the Properties and (B) Manager will act in conformity with the
commercially reasonable provisions of the documents evidencing or securing such
mortgage loans. Manager agrees that the existing terms of existing mortgage
loans as of the date hereof shall be deemed to be commercially reasonable for
the purposes of the immediately preceding sentence. For the avoidance of doubt,
neither this Management Agreement nor the rights of Manager under this
Management Agreement shall be subordinated to any future mortgage loans secured
by one or more of the Properties or any renegotiation, amendment, or other
modification to any such existing mortgage loans, in each case, without the
prior written consent of Manager, which consent may be withheld or granted

 

11

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in Manager’s sole discretion, however the withholding or granting of such
consent shall not be unreasonably delayed.

 

Notwithstanding the forgoing provisions of this Section 2.5, Manager shall not
have the duties and responsibilities set forth in this Section 2.5 to the extent
Owner performs the respective activity or function contemplated by this
Section 2.5.

 

2.6           Accounting, Records and Reports.

 

(a)           Records. Manager shall maintain the necessary books and records in
connection with the maintenance and operation of the Properties, including but
not limited to, copies of invoices, leases, billing records, recovery
calculations and budget data. Consistent with past practice, Manager will
provide requested data and support to Owner in order to account properly for the
Properties. Manager also shall provide the following services as reasonably
requested by Owner: (i) billing and collection of rent and other charges;
(ii) management reporting; (iii) variance analysis; (iv) recoveries analysis and
billings; (v) general ledger analysis; (vi) accrual support;
(vii) reforecasting; and (viii) budgeting. Owner and persons designated by Owner
shall at all reasonable time have access to and the right to audit and make
independent examinations of such records, books and accounts and all vouchers,
files and all other material pertaining to the Properties and this Management
Agreement, all of which Manager agrees to keep safe, available and separate from
any records not pertaining to the Properties, at a place recommended by Manager
and approved by Owner.

 

(b)           Copies of Contracts. Manager shall provide the original copies of
all contracts entered into by Manager on behalf of Owner during such period, if
requested by Owner upon 15 days’ prior written notice.

 

(c)           Budgets and Leasing Plans. Not later than August 15 of each
calendar year, Owner shall prepare and submit to Manager a leasing plan for each
Property. Utilizing (among other things) the leasing plan provided by Owner, not
later than October 15 of each calendar year, Manager shall prepare and submit to
Owner for its approval an operating budget on each Property for the calendar
year immediately following such submission (each, an “Annual Budget”). In
connection with any acquisition of a Property by Owner, Manager shall prepare an
Annual Budget for the remainder of the calendar year. Each Annual Budget shall
be in the form of the budget and plan approved by Owner prior to the date
thereof. As often as reasonably necessary during the period covered by any such
budget, Manager may submit to Owner for its approval an updated Annual Budget
incorporating any changes as shall be necessary to reflect cost over-runs and
the like during that period. If Owner does not disapprove any proposed Annual
Budget within 60 days after receipt thereof by Owner, the Annual Budget shall be
deemed approved. If Owner shall disapprove any proposed Annual Budget, it shall
so notify Manager within said 60-day period and explain the reasons therefor. If
Owner disapproves of any proposed Annual Budget, Manager shall submit a revised
Annual Budget, as applicable, within 10 days of receipt of the notice of
disapproval, and Owner shall have 10 days to provide notice to Manager if it
disapproves of the revised Annual Budget. If a proposed

 

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Annual Budget is not approved by December 31 of any calendar year, Manager shall
operate the applicable Property pursuant to the proposed Annual Budget for the
following calendar year with respect to those portions approved by Owner and in
accordance with the prior year’s Annual Budget with respect to those portions
not approved by Owner (with the exception of (i) non-recurring expenditures and
capital expenditures which shall be deemed removed from the prior year’s Annual
Budget and (ii) actual increases for real estate taxes, which shall be deemed
added to the prior year’s Annual Budget).

 

(d)           Additional Costs. Manager will not incur any costs other than
those estimated in any Annual Budget except for:

 

(i)            tenant improvements and real estate commissions required under a
Lease;

 

(ii)           maintenance or repair costs under $5,000 per Property;

 

(iii)          reasonable costs incurred in emergency situations in which action
is immediately necessary for the preservation or safety of the Property, or for
the safety of occupants or other persons (or to avoid the suspension of any
necessary service of the Property);

 

(iv)          expenditures for real estate taxes and assessment;

 

(v)           maintenance supplies calling for an aggregate purchase price less
than $25,000 per annum for all Properties; and

 

(vi)          as otherwise required in this Management Agreement.

 

Annual Budgets prepared by Manager shall be for planning and informational
purposes only, and Manager shall have no liability to Owner for any failure to
meet any Annual Budget. However, Manager will use its best efforts to operate
within the approved Annual Budget.

 

(e)           Legal Requirements. Manager shall execute and file when due all
forms, reports, and returns required by law relating to the employment of its
personnel. Manager shall be responsible for notifying Owner in the event Manager
receives notice that any Improvement on a Property or any equipment therein does
not comply with the requirements of any statute, ordinance, law or regulation of
any governmental body or of any public authority or official thereof having or
claiming to have jurisdiction thereover. Manager shall promptly forward to Owner
any complaints, warnings, notices or summonses received by it relating to such
matters. Owner represents that to the best of its knowledge each of its
Properties and any equipment thereon will upon acquisition by Owner comply with
all such requirements. Owner authorizes Manager to disclose the ownership of the
Property by Owner to any such officials.

 

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ARTICLE III.
AUTHORITY GRANTED TO MANAGER AND CERTAIN OWNER OBLIGATIONS

 

3.1           Authority As To Tenants, Etc. Owner agrees and does hereby give
Manager the following authority and powers (all of which, unless otherwise
provided herein, shall be exercised either as Manager for Owner, or in the name
of Owner entered into by Manager as Owner’s authorized agent, and Owner shall
assume all expenses in connection with such matters); provided, however, that
Owner will not assume or be responsible for any costs or expenses that (x) have
not been previously approved by Owner in writing (including, without limitation,
as set forth herein), (y) have not been previously approved by Owner as part of
the Annual Budget, or (z) are not permitted under Section 2.6(d):

 

(a)           to advertise each Property or any part thereof and to display
signs thereon, as permitted by law and subject to the terms and conditions of
the Leases;

 

(b)           to collect from tenants all or any of the following: a late rent
administrative charge, a non-negotiable check charge, credit report fee, a
subleasing administrative charge or broker’s commission;

 

(c)           with Owner’s prior written authorization, to terminate tenancies
and to sign and serve in the name of Owner of each Property such notices related
thereto as are deemed necessary by Manager;

 

(d)           with Owner’s prior written authorization, to institute and
prosecute actions to evict tenants and to recover possession of the Property or
portions thereof; and

 

(e)           with Owner’s prior written authorization, to sue for and in the
name of Owner and recover rent and other sums due; and to settle, compromise,
and release such actions or suits, or reinstate such tenancies. All expenses of
litigation that Manager participates in, at Owner’s prior written request,
including, but not limited to, attorneys’ fees, filing fees and court costs that
Manager shall incur in connection with the collecting of rent and other sums, or
to recover possession of any Property or any portion thereof, shall be deemed to
be an operational expense of the Property. Manager and Owner shall concur on the
selection of the attorneys to handle such litigation.

 

3.2           Operational Authority. Owner agrees and does hereby give Manager
the following authority and powers (all of which, unless otherwise provided
herein, shall be exercised either as Manager for Owner, or in the name of Owner
entered into by Manager as Owner’s authorized agent, and, unless otherwise
provided herein, Owner shall assume all expenses in connection with such
matters); provided, however, that Owner will not assume or be responsible for
any costs or expenses that (x) have not been previously approved by Owner in
writing (including, without limitation, as set forth herein), (y) have not been
previously approved by Owner as part of the Annual Budget, or (z) are not
permitted under Section 2.6(d):

 

(a)           to hire, supervise, discharge, and pay all labor required for the
operation and maintenance of each Property, including but not limited to on-site
personnel, managers, assistant managers, leasing consultants, engineers,
janitors, maintenance supervisors and other employees required for the operation
and maintenance of the

 

14

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Property, including personnel spending a portion of their working hours (to be
charged on a pro rata basis) at the Property; provided, however, that Manager
shall not hire any new personnel, unless the cost and expenses related to such
new personnel have been accounted for in the then Annual Budget or previously
approved by Owner in writing. Any personnel hired by Manager to maintain,
operate and lease the Properties shall be the employees or independent
contractors of Manager and not of Owner. Manager shall use due care in selecting
and supervising these employees or independent contractors. With respect to
these employees, Manager shall be responsible for maintaining timekeeping
records, processing regular payroll, filing payroll tax reports on a timely
basis, ensuring compliance with wage and tax laws and tracking benefit hours and
garnishments and child support orders. All expenses of these employees’
employment shall be deemed operational expenses of the Property.

 

(b)           to perform the duties assigned to Manager in Section 2.4(b);

 

(c)           to administer any Leases;

 

(d)           to prepare, negotiate and enter into, as Manager of the Property,
(i) contracts for all items on budgets that have been approved by Owner, any
emergency services or repairs for items not exceeding $5,000, (ii) appropriate
service agreements and labor agreements for normal operation of the Property,
which have terms not to exceed three years, (iii) agreements for all budgeted
maintenance, minor alterations, and utility services, including, but not limited
to, electricity, gas, fuel, water, telephone, window washing, scavenger service,
landscaping, snow removal, pest exterminating, decorating and legal services, in
connection with the Leases and relating to the Property and (iv) any other
service agreements as Manager may reasonably consider appropriate, consistent
with past practice, and accounted for in the then Annual Budget (collectively,
the “Contracts”); and

 

(e)           to purchase supplies and pay all bills in accordance with the
Annual Budget, or as permitted under Sections 2.6(d)(ii) or 2.6(d)(v).

 

Manager shall use its reasonable commercial best efforts to obtain the foregoing
services and utilities for each Property on terms consistent with, or
substantially similar to, those available to similar rental properties in the
geographic region in which the Property is located. Owner hereby appoints
Manager as Owner’s authorized Manager for the purpose of executing, as Manager
for said Owner, all Contracts. Manager shall secure the approval of, and
execution of appropriate Contracts by, Owner for any non-budgeted and
non-emergency/contingency capital items, alterations or other expenditures in
excess of $5,000 for any one item, securing for each item at least three written
bids, if practicable, or providing evidence satisfactory to Owner that the
Contract amount is lower than industry standard pricing in the geographic region
in which the Property is located, from responsible contractors. Manager shall
have the right from time to time during the term hereof, to contract with and
make purchases from Affiliates of Manager, provided that contract rates and
prices are no less favorable to Owner than those available from unaffiliated
third parties. Manager may at any time and from time to time request and receive
the prior written authorization of Owner of the Property of any one or more
purchases or other

 

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expenditures, notwithstanding that Manager may otherwise be authorized hereunder
to make such purchases or expenditures.

 

3.3           Rent and Other Collections. Owner agrees and does hereby give
Manager the authority and powers (all of which, unless otherwise provided
herein, shall be exercised either as Manager for Owner, or in the name of Owner
entered into by Manager as Owner’s authorized agent, and Owner shall assume all
expenses in connection with such matters) to collect rents, assessments and
other items, including but not limited to tenant payments for real estate taxes,
property liability and other insurance, damages and repairs, common area
maintenance, tax reduction fees and all other tenant reimbursements,
administrative charges, proceeds of rental interruption insurance, parking fees,
income from coin operated machines and other miscellaneous income, due or to
become due and give receipts therefor and to deposit all such Gross Revenue
collected hereunder in the Account. Manager shall also have the authority to
collect and handle tenants’ security deposits, including the right to apply such
security deposits to unpaid rent, and to comply, on behalf of Owner of the
Property, with applicable state or local laws concerning security deposits and
interest thereon, if any.

 

3.4           Advances. Manager shall not be required to advance any monies for
the care or management of any Property, but Owner agrees to advance all monies
necessary therefor, provided that any advanced amounts have been budgeted in the
Annual Budget. If Manager shall elect to advance any money in connection with a
Property, Owner agrees to reimburse Manager within 30 days, and hereby
authorizes Manager to deduct such advances from any monies due Owner. In
connection with any insured losses or damages relating to any Property, Manager
and Owner shall each reasonably cooperate with respect to all steps necessary
regarding any such claim. Manager will not make any adjustments or settlements
in excess of $2,500 without Owner’s prior written consent.

 

3.5           Payment of Expenses. Owner agrees and does hereby give Manager the
authority and power (all of which shall be exercised either as Manager for
Owner, or in the name of Owner entered into by Manager as Owner’s authorized
agent, and Owner shall assume and be responsible for all expenses in connection
with such matters; provided, however, that Owner will not assume or be
responsible for any costs or expenses that (x) have not been previously approved
by Owner in writing (including, without limitation, as set forth herein),
(y) have not been previously approved by Owner as part of the Annual Budget, or
(z) are not permitted under Section 2.6(d)) to pay all expenses of the Property,
including utility and water charges, sewer rent and assessments, from the Gross
Revenue collected in accordance with Section 3.3 above, subject to any lender
requirements, from the Account. All bills shall be paid by Manager within the
time required to obtain discounts, if any. Owner may from time to time request
that Manager forward certain bills to Owner promptly after receipt, and Manager
shall comply with any such request. All expenses shall be billed at net cost
(i.e., less all rebates, commissions, discounts and allowances, however
designed).

 

It is understood that the Gross Revenue will be used first to pay the
compensation to Manager as contained in Article V below, then operational
expenses and then any mortgage indebtedness, including real estate tax and
insurance impounds, but only as directed by Owner in writing and only if
sufficient Gross Revenue is available for such payments. Nothing in this
Management Agreement shall be interpreted in such a manner as to obligate
Manager to pay

 

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from Gross Revenue, any expenses incurred by Owner prior to the commencement of
this Management Agreement, except to the extent Owner advances additional funds
to pay such expenses.

 

3.6           Environmental Matters. Owner hereby warrants and represents to
Manager that to the best of Owner’s knowledge, no Property acquired after the
date of this Management Agreement, upon acquisition by Owner, nor any part
thereof, will be used to treat, deposit, store, dispose of or place any
hazardous substance that may subject Manager to liability or claims under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C.A. Section 9607) or any constitutional provision, statute, ordinance, law,
or regulation of any governmental body or of any order or ruling of any public
authority or official thereof, having or claiming to have jurisdiction
thereover.

 

3.7           Legal Status of Properties. Owner represents that to the best of
its knowledge each Property and any equipment thereon, in each case acquired
after the date of this Management Agreement, when acquired by Owner, will comply
with all legal requirements and authorizes Manager to disclose the identity of
the Owner of the Property to any such officials. In the event it is alleged or
charged that any Improvement or any equipment on a Property or any act or
failure to act by Owner with respect to the Property or the sale, rental, or
other disposition thereof fails to comply with, or is in violation of, any of
the requirements of any constitutional provision, statute, ordinance, law, or
regulation of any governmental body or any order or ruling of any public
authority or official thereof having or claiming to have jurisdiction thereover,
and Manager, in its sole and absolute discretion, considers that the action or
position of Owner, with respect thereto may result in damage or liability to
Manager, Manager shall have the right to stop providing services with respect to
such Property at any time by written cancellation notice to Owner of its
election so to do, which cancellation shall be effective upon the service of
such notice. Such cancellation shall not (a) terminate this Management
Agreement, (b) release the indemnities of Owner set forth in this Management
Agreement or (c) terminate any liability or obligation of Owner to Manager for
any payment, reimbursement, or other sum of money then due and payable to
Manager hereunder.

 

3.8           Extraordinary Payments. Owner agrees to give adequate advance
written notice to Manager if Owner desires that Manager make any extraordinary
payment, out of Gross Revenue, to the extent funds are available after the
payment of Manager’s compensation as provided for herein and all operational
expenses, of mortgage indebtedness, general taxes, special assessments, or
insurance premiums.

 

ARTICLE IV.
EXPENSES

 

4.1           Owner’s Expenses. Except as otherwise specifically provided, all
costs and expenses incurred hereunder by Manager in fulfilling its duties to
Owner shall be for the account of and on behalf of Owner. Such costs and
expenses shall include the wages and salaries and other employee-related
expenses, consistent with past practice, of all on-site and offsite employees
(other than the senior executives, identified by title, set forth on Exhibit D)
of Manager who are engaged in the operation, management, maintenance and leasing
or access control of the Properties, including taxes, insurance and benefits
relating to such employees,

 

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costs of technology related to the Properties, including computers, telephone
systems and property management and accounting software and any upgrades or
conversions thereof, and legal, travel and other out-of-pocket expenses that are
directly related to the management of specific Properties. All costs and
expenses for which Owner is responsible under this Management Agreement shall be
paid by Manager out of the Account. In the event the Account does not contain
sufficient funds to pay all said expenses, Owner shall fund all sums necessary
to meet such additional costs and expenses.

 

4.2           Manager’s Expenses. Manager shall, out of its own funds, pay all
of its general overhead and administrative expenses.

 

ARTICLE V.
MANAGER’S COMPENSATION

 

5.1           Management Fees. Owner shall pay to Manager property management
fees in an amount equal to three percent (3%) of Gross Revenues (the “Management
Fees”) on a monthly basis from the income received from the Properties over the
term of this Management Agreement; provided, however, the Management Fees shall
not be less than the following amounts for any Property on a monthly basis:

 

 

 

Minimum Monthly

 

Property Size

 

Management Fees

 

0 to 199,999 square feet

 

$

1,000

 

200,000 to 500,000 square feet

 

$

2,000

 

More than 500,000 square feet

 

$

3,000

 

 

Certain of these Properties may be owned by Joint Ventures. When the Manager is
not paid by the Joint Venture directly in respect of its services, the
applicable Management Fee or Oversight Fee (as defined below) to be paid by the
Owner will be calculated by multiplying the Management Fee by the Economic
Interest Percentage owned directly or indirectly by the Owner in that Property.
In the event that Owner contracts directly with a third-party property manager
not affiliated with the Manager in respect of a Property for which the Owner, in
its sole discretion, has the ability to appoint or hire the Manager, Owner shall
pay Manager an oversight fee (“Oversight Fee”) equal to one-half of one percent
(0.50%) of Gross Revenues. In no event will Owner pay both a Management Fee and
an Oversight Fee to Manager with respect to any Property. If Manager
subcontracts its responsibilities hereunder to another person or entity, Manager
shall be solely responsible for the payment to the third party. The Management
Fee includes the reimbursement of the specified cost incurred by the Manager of
engaging another person or entity to perform Manager’s responsibilities
hereunder; provided, however, that Manager shall be responsible for payment of
all amounts to these third parties. Nothing herein shall prevent Manager from
entering fee-splitting arrangements with third parties with respect to the
Management Fee.

 

5.2           Construction Supervision Fees. Manager shall supervise
construction performed by or on behalf of Owner with respect to the Properties,
including, but not limited to capital repairs and improvements, major building
construction and tenant improvements (collectively, the “Construction Work”).
Owner shall pay Manager a construction supervision fee based on

 

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hard construction costs incurred in connection with the Construction Work and in
accordance with the rates set forth in Appendix 1 attached to the Original
Management Agreement. Owner shall pay construction supervision fees at the same
time it makes payments to any third party contractors in respect of the
Construction Work.

 

5.3           Leasing Fees. In addition to the compensation paid to Manager
under Section 5.1 above, Manager shall be entitled to receive a separate fee as
mutually agreed for leasing services in the event Manager and Owner agree in a
separate written agreement that Manager shall perform leasing services pursuant
to Section 2.4(c).

 

5.4           Audit Adjustment. If any audit of the records, books or accounts
relating to the Properties discloses an overpayment or underpayment of
Management Fees, Owner or Manager shall promptly pay to the other party the
amount of such overpayment or underpayment, as the case may be. If such audit
discloses an overpayment of Management Fees for any fiscal year of more than the
correct Management Fees for such fiscal year, Manager shall bear the cost of
such audit.

 

ARTICLE VI.
INSURANCE AND INDEMNIFICATION

 

6.1           Insurance to be Carried.

 

(a)           Manager shall obtain and keep in full force and effect insurance
liability policies that shall provide sufficient insurance satisfactory to both
Owner and Manager consistent with past practice and shall contain waivers of
subrogation for the benefit of Owner.

 

(b)           Manager shall obtain and keep in full force and effect, in
accordance with the laws of the state in which each Property is located,
employer’s liability insurance applicable to and covering all employees of
Manager at the Properties and all persons engaged in the performance of any work
required hereunder, and Manager shall furnish Owner certificates of insurers
naming Owner as an additional insured and evidencing that such insurance is in
effect. If any work under this Management Agreement is subcontracted as
permitted herein, Manager shall include in each subcontract a provision that the
subcontractor shall also furnish Owner with such a certificate.

 

6.2           Insurance Expenses. Premiums and other expenses of such insurance,
as well as any applicable payments in respect of deductibles shall be borne by
Owner.

 

6.3           Cooperation with Insurers. Manager shall cooperate with and
provide reasonable access to the Properties to representatives of insurance
companies and insurance brokers or agents with respect to insurance that is in
effect or for which application has been made. Manager shall use its best
efforts to comply with all requirements of insurers.

 

6.4           Accidents and Claims. Manager shall promptly investigate and shall
report in detail to Owner all accidents, claims for damage relating to
Ownership, operation or maintenance of the Properties, and any damage or
destruction to the Properties and the estimated costs of repair thereof, and
shall prepare for approval by Owner all reports required by an insurance

 

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company in connection with any such accident, claim, damage, or destruction.
Such reports shall be given to Owner promptly consistent with past practice.
Manager and Owner shall cooperate with respect to settling any claim against an
insurance company arising out of any policy. Manager will not settle any claim
related to a Property or BH REIT against an insurance company arising out of any
policy and, in connection with any such claim, will not execute proofs of loss
and adjustments of loss and to collect and receipt for loss proceeds. Without
the prior written consent of Manager, which consent shall not be unreasonably
withheld or delayed, Owner shall not take a position with respect to any claim
under the portfolio property policy or general liability policy of the Behringer
Group that is inconsistent with past practice.

 

6.5           Indemnification.

 

(a)           Indemnification of Manager. Owner agrees to indemnify, defend,
protect, save and hold harmless Manager and any other member of the Behringer
Group who performs services pursuant to this Management Agreement and their
respective stockholders, partners, members, officers, directors, employees,
managers, successors and assigns (collectively, the “Indemnified Parties”) from
any and all claims, causes of action, demands, suits, proceedings, loss,
judgments, damage, awards, liens, fines, costs, attorney’s fees and expenses, of
every kind and nature whatsoever (collectively, “Losses”) in connection with or
in any way related to (i) any Contract, (ii) each Property, including any past,
current or future allegations regarding treatment, depositing, storage, disposal
or placement by any party other than Manager of hazardous substances on the
Property, from liability for damage to each Property and injuries to or death of
any person whomsoever, and damage to Property, and from liability arising out of
or related to a Property that Owner has abandoned or ceased funding operating
shortfalls, including the cessation of any service by Manager for such Property
as requested by Owner pursuant to Section 8.22, and (iii) the willful
misconduct, gross negligence or unlawful acts (such unlawfulness having been
adjudicated by a court of proper jurisdiction) of Owner, or the failure of Owner
to correct any present or future violation or alleged violation of any and all
present or future laws, ordinances, statutes, or regulations of any public
authority or official thereof, having or claiming to have jurisdiction
thereover, of which it has actual notice; provided, however, that the
indemnification and exculpation shall not extend to any such Losses arising out
of the willful misconduct, gross negligence or unlawful acts (the unlawfulness
having been adjudicated by a court of proper jurisdiction) of Manager, its
agents, servants, or employees; provided, further, that the indemnification and
exculpation shall be limited to the extent that Manager recovers insurance
proceeds with respect to that matter. Manager shall not be liable for any error
of judgment or for any mistake of fact or law, or for any thing that it may do
or refrain from doing, except in cases of willful misconduct, gross negligence
or unlawful acts (the unlawfulness having been adjudicated by a court of proper
jurisdiction).

 

(b)           Indemnification of Owner. Manager agrees to indemnify, defend,
protect, save and hold harmless Owner and its Affiliates and their respective
stockholders, partners, members, officers, directors, employees, managers,
successors and assigns from any and all Losses for any injury or damage to any
person or property whatsoever for which Manager is responsible occurring in, on,
or about the Properties, including, without limitation, the Improvements, when
the injury or damage shall be caused by the willful

 

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misconduct, gross negligence or unlawful acts (the unlawfulness having been
adjudicated by a court of proper jurisdiction) of Manager, its agents, servants,
or employees, except to the extent that Owner recovers insurance proceeds with
respect to such matter.

 

(c)           Limitations. Notwithstanding anything to the contrary in this
Management Agreement, any indemnification and exculpation by the Owner under
this Management Agreement is subject to any limitations imposed under the
Company’s Articles of Incorporation or any amendments thereto.

 

ARTICLE VII.
TERM AND TERMINATION

 

7.1           Term. This Management Agreement shall commence on the Original
Effective Date and shall continue until the earlier of (x) February 14, 2017
(the “Existing Expiration Date”) and (y) the consummation of the Buyout. In
addition, and notwithstanding the foregoing, Owner may terminate this Management
Agreement at any time upon delivery of written notice to Manager not less than
30 days prior to the effective date of termination, in the event of (and only in
the event of) a showing by Owner of willful misconduct, gross negligence, or
deliberate malfeasance by Manager in the performance of Manager’s duties
hereunder; provided, however, that Owner shall not have such a right of
termination if (i) such willful misconduct, gross negligence, or deliberate
malfeasance is cured by Manager within thirty (30) days of written notice
thereof by Owner, and (ii) Manager agrees to indemnify Owner for Losses arising
out of such conduct. In addition, either party may terminate this Management
Agreement immediately upon the occurrence of any of the following:

 

(a)           A decree or order is rendered by a court having jurisdiction
(i) adjudging Manager as bankrupt or insolvent, or (ii) approving as properly
filed a petition seeking reorganization, readjustment, arrangement, composition
or similar relief for Manager under the federal bankruptcy laws or any similar
applicable law or practice, or (iii) appointing a receiver or liquidator or
trustee or assignee in bankruptcy or insolvency of Manager or a substantial part
of the property of Manager, or for the winding up or liquidation of its affairs,
or

 

(b)           Manager (i) institutes proceedings to be adjudicated a voluntary
bankrupt or an insolvent, (ii) consents to the filing of a bankruptcy proceeding
against it, (iii) files a petition or answer or consent seeking reorganization,
readjustment, arrangement, composition or relief under any similar applicable
law or practice, (iv) consents to the filing of any such petition, or to the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency for it or for a substantial part of its property, (v) makes an
assignment for the benefit of creditors, (vi) is unable to or admits in writing
its inability to pay its debts generally as they become due unless such
inability shall be the fault of the other party, or (iv) takes corporate or
other action in furtherance of any of the aforesaid purposes.

 

Except as provided in Section 9.7, this Management Agreement may only be
terminated in whole and not in part.

 

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7.2           Manager’s Obligations Upon Termination. Upon the termination of
this Management Agreement (including termination upon consummation of the
Buyout), Manager shall cooperate with Owner and take all reasonable steps
requested by Owner to make an orderly transition of the Manager’s services,
including without limitation:

 

(a)           Manager shall deliver to Owner or its designee, all books and
records with respect to the Properties.

 

(b)           Manager shall transfer and assign to Owner, or its designee, all
service contracts and personal property relating to or used in the operation and
maintenance of the Properties (including software and other intellectual
property, to the extent assignable), except personal property paid for and owned
by Manager. Manager shall also, for a period of 60 days immediately following
the date of such termination, make itself available to consult with and advise
Owner, or its designee, regarding the operation, and maintenance of the
Properties.

 

(c)           Manager shall render to Owner an accounting of all funds of Owner
in its possession and shall deliver to Owner a statement of all Management Fees
claimed to be due to Manager and shall cause funds of Owner held by Manager
relating to the Properties to be paid to Owner or its designee.

 

(d)           All provisions of this Management Agreement that require Manager
to have insured, or to protect, defend, save, hold and indemnify or to reimburse
Owner shall survive any expiration or termination of this Management Agreement
and, if Owner is or becomes involved in any claim, proceeding or litigation by
reason of Owner having retained services of Manager, such provisions shall apply
as if this Management Agreement were still in effect.

 

7.3           Owner’s Obligations Upon Termination. Upon the termination of this
Management Agreement (including termination upon consummation of the Buyout),
Owner shall cooperate with Manager and take all reasonable steps to make an
orderly transition of the Manager’s services to Owner, including without
limitation:

 

(a)           Owner shall pay or reimburse Manager for any sums of money due it
under this Management Agreement for services and expenses prior to termination
of this Management Agreement. The parties understand and agree that Manager may
withhold funds for 60 days after the end of the month in which this Management
Agreement is terminated to pay bills previously incurred but not yet invoiced
and to close accounts. Should the funds withheld be insufficient to meet the
obligation of Manager to pay bills previously incurred, Owner will, upon demand,
advance sufficient funds to Manager to ensure fulfillment of Manager’s
obligation to do so, within 10 days of receipt of notice and an itemization of
such unpaid bills.

 

(b)           Owner shall assume in writing all obligations under all Contracts
entered into by Manager, on behalf of Owner of the Property and in accordance
with this Management Agreement, upon the termination of this Management
Agreement.

 

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(c)           All provisions of this Management Agreement that require Owner to
have insured, or to protect, defend, save, hold and indemnify or to reimburse
Manager and the Indemnified Parties shall survive any expiration or termination
of this Management Agreement and, if Manager or an Indemnified Party is or
becomes involved in any claim, proceeding or litigation by reason of Manager
having been Manager of Owner, such provisions shall apply as if this Management
Agreement were still in effect.

 

ARTICLE VIII.
MISCELLANEOUS

 

8.1           Notices. Any notice, report, approval, authorization, waiver,
consent or other communication (each, a “Notice”) required or permitted to be
given hereunder shall be in writing and shall be deemed given or delivered:
(i) when delivered personally; (ii) one business day following deposit with a
recognized overnight courier service that obtains a receipt, provided such
receipt is obtained, and provided further that the deposit occurs prior to the
deadline imposed by such service for overnight delivery; (iii) when transmitted,
if sent by electronic mail, provided a read receipt is delivered to the sender,
in each case provided such communication is addressed to the intended recipient
thereof as set forth below:

 

If to BH REIT, to:

 

Behringer Harvard REIT I, Inc.
17300 Dallas Parkway

Suite 1010

Dallas, Texas 75248
Attention: Telisa Webb Schelin, Esq.

Fax: (214) 365-7112

Email: tschelin@behringerharvard.com

 

with copies (which shall not constitute notice) to:

 

Proskauer Rose LLP

Eleven Times Square

New York, New York 10036

Attention:                 Peter M. Fass

James P. Gerkis

Fax: (212) 969-2900

Email: pfass@proskauer.com

jgerkis@proskauer.com

 

and:

 

Shefsky & Froelich, Ltd.
111 East Wacker

Suite 2800

Chicago, Illinois 60601
Attention: Michael J. Choate

 

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Fax: (312) 275-7554

Email: mchoate@shefskylaw.com

 

If to Manager:

 

HPT Management Services LLC
15601 Dallas Parkway

Suite 600

Addison, Texas 75001
Attention: Robert S. Aisner
Fax: (214) 655-1610

Email: baisner@behringerharvard.com

 

with copies (which shall not constitute notice) to:

 

Behringer Harvard Holdings
15601 Dallas Parkway

Suite 600

Addison, Texas 75001
Attention: Stanton P. Eigenbrodt
Fax: (214) 655-1610

Email: seigenbrodt@behringerharvard.com

 

and:

 

Jenner & Block LLP
353 N. Clark Street
Chicago, Illinois 60654
Attention:                 Donald E. Batterson

Jeffrey R. Shuman

Fax: (312) 923-2707

Email: dbatterson@jenner.com

jshuman@jenner.com

 

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 8.1.
The failure of any Party to give notice shall not relieve any other Party of its
obligations under this Management Agreement except to the extent that such Party
is actually prejudiced by such failure to give notice.

 

8.2           Governing Law: Venue. This provisions of this Management 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 Management Agreement shall be brought exclusively in Dallas County,
Texas.

 

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8.3           Assignment.

 

(a)           Neither this Management Agreement nor any of the rights, interests
or obligations hereunder shall be assigned, transferred, delegated or otherwise
disposed of (whether voluntarily or involuntarily, directly or indirectly, by
operation of law, merger, sale of stock, sale of assets or otherwise), by
Manager without the prior written consent of Owner. Notwithstanding the
foregoing, (i) Manager  may, without the prior consent of Owner, assign,
transfer, delegate or otherwise dispose of, this Management Agreement, or any of
its rights, interests or obligations hereunder to (x) any Person listed on
Schedule 8.3(a) attached hereto or (y) any Affiliate of Behringer Harvard
Holdings, LLC, in whole or not in part; provided, however, that such Affiliate
remains an Affiliate of Behringer Harvard Holdings, LLC at all times following
such assignment, transfer, delegation or other disposition and (if this
Management Agreement is in whole assigned, transferred, delegated or disposed to
such an Affiliate) signs a joinder agreement and is bound hereunder, but no such
assignment, transfer, delegation or other disposition shall relieve Manager of
any of its obligations hereunder, and (ii) this Section 8.3 shall not restrict a
Change of Control of Behringer Harvard Holdings, LLC.  Any purported assignment,
transfer, delegation or disposition by Manager in violation of this Section 8.3
shall be null and void ab initio.

 

(b)           Notwithstanding Section 8.3(a), Manager may delegate partially or
in full its duties and rights under this Management Agreement to (i) a Person
who is not a member of the Behringer Group only with the prior written consent
of Owner or (ii) any Person listed on Schedule 8.3(a) attached hereto. Subject
to the foregoing, Owner acknowledges and agrees that any or all of the duties of
Manager as contained herein may be delegated pursuant to this Section 8.3(b) by
Manager and performed by a person or entity (“Submanager”) with whom Manager
contracts for the purpose of performing such duties. Subject to the foregoing,
Owner specifically grants Manager the authority to enter into such a contract
with a Submanager; provided, however, that, unless Owner otherwise agrees in
writing with such Submanager, Owner shall have no liability or responsibility to
any such Submanager for the payment of the Submanager’s fee or for reimbursement
to the Submanager of its expenses or to indemnify the Submanager in any manner
for any matter; and provided, further, however, that Manager shall require such
Submanager to agree, in the written agreement setting forth the duties and
obligations of such Submanager, to indemnify Owner for all Losses incurred by
Owner as a result of the willful misconduct or gross negligence of the
Submanager, except that such indemnity shall not be required to the extent that
Owner recovers insurance proceeds with respect to such matter. Any contract
entered into between Manager and a Submanager pursuant to this Section 8.3 shall
be consistent with the provisions of this Management Agreement, except to the
extent Owner otherwise specifically agrees in writing. This Management Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective permitted successors and permitted assigns.

 

8.4           Third Party Leasing Services. Manager acknowledges that Owner may
retain a third party to provide leasing services with respect to the Properties
and to compensate such third party for such leasing services. Owner shall have
the authority to enter into such a contract for leasing services with a third
party (a “Third Party Leasing Agreement”); provided that Manager

 

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shall have no liability or responsibility to Owner for any of the duties and
obligations undertaken by such party, and Owner agrees to indemnify Manager for
all Losses incurred by Manager as a result of acts of such third party pursuant
to the Third Party Leasing Agreement. To the extent that leasing services are
specifically required to be performed by a third party pursuant to such Third
Party Leasing Agreement, Manager shall have no obligation to perform such
leasing services and Owner shall have no obligation to Manager for leasing fees
pursuant to Section 5.3 hereof.

 

8.5           Third Party Management Services. Manager acknowledges that from
time to time Owner may acquire interests in Properties in which Owner does not
control the determination of the party that is engaged to provide property
management and other services to be provided by Manager with respect to all
Properties acquired by Owner hereunder. Upon prior written notice to Manager,
Owner shall have the authority to acquire such non-controlling interests in
Properties for which a third party provides some or all of the services
otherwise required to be performed by Manager hereunder (a “Third Party
Management Agreement”); provided that (a) Manager shall have no liability or
responsibility to Owner for any of the duties and obligations undertaken by such
third party, and (b) Owner agrees to indemnify Manager for all Losses incurred
by Manager as a result of the acts of such third party pursuant to the Third
Party Management Agreement, except to the extent such Losses result from the
gross negligence or willful misconduct of Manager. To the extent that property
management and other services are specifically required to be performed by a
third party pursuant to such Third Party Management Agreement, Manager shall
have no obligation to perform such services and Owner shall have no obligation
to Manager for compensation for such services pursuant to Article V hereof.

 

8.6           No Waiver. The failure of Owner to seek redress for violation or
to insist upon the strict performance of any covenant or condition of this
Management Agreement shall not constitute a waiver thereof for the future.

 

8.7           Amendments. This Management Agreement may be amended only by an
instrument in writing signed by the party against whom enforcement of the
amendment is sought.

 

8.8           Headings. The titles and headings of sections and subsections
contained in this Management Agreement are for convenience only, and they
neither form a part of this Management Agreement nor are they to be used in the
construction or interpretation hereof.

 

8.9           Counterparts. This Management Agreement may be executed with
counterpart signature pages or 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
Management 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.

 

8.10         Facsimile Signatures. A facsimile or other electronic signature on
the signature pages hereto shall for all purposes be deemed an original and
shall bind the signor as if such facsimile or other electronic signature were an
original.

 

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8.11         Entire Agreement. Subject to express references to past practices
contained herein, this Management Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements, understandings, inducements and
conditions, express or implied, oral or written, of any nature whatsoever with
respect to the subject matter hereof.

 

8.12         Disputes. If there shall be a dispute between Owner and Manager
relating to this Management Agreement resulting in litigation, the prevailing
party in such litigation shall be entitled to recover from the other party to
such litigation such amount as the court shall fix as reasonable attorneys’
fees.

 

8.13         Activities of Manager. The obligations of Manager pursuant to the
terms and provisions of this Management Agreement shall not be construed to
preclude Manager from engaging in other activities or business ventures, whether
or not such other activities or ventures are in competition with Owner or the
business of Owner.

 

8.14         Independent Contractor. Manager and Owner shall not be construed as
joint venturers or partners of each other pursuant to this Management Agreement,
and neither shall have the power to bind or obligate the other except as set
forth herein. In all respects, the status of Manager to Owner under this
Management Agreement is that of an independent contractor.

 

8.15         No Third-Party Rights. Nothing expressed or referred to in this
Management Agreement will be construed to give any Person other than the parties
to this Management Agreement any legal or equitable right, remedy or claim under
or with respect to this Management Agreement or any provision of this Management
Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to Section 8.3.

 

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

 

8.17         Non-Solicitation. During the period commencing on the Original
Effective Date and ending one year following the termination of this Management
Agreement, BH REIT and BH OP shall not, without the Manager’s prior written
consent, directly or indirectly, (i) solicit or encourage any person to leave
the employment or other service of the Manager, or (ii) hire, on behalf of
BH REIT or BH OP 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

 

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the Manager. During the period commencing on the Original Effective Date through
and ending one year following the termination of this Management Agreement,
BH REIT and BH OP will not, whether for its or their own account or for the
account of any other person, firm, corporation or other business organization,
intentionally interfere with the relationship of the Manager with, or endeavor
to entice away from the Manager, any person who during the term of the
Management Agreement is, or during the preceding one-year period, was a
co-investor, co-developer, joint venturer or other customer of the Manager.

 

8.18         Right of First Refusal. Manager shall have a right of first refusal
to manage all Properties acquired by Owner during the term of this Management
Agreement on the terms and conditions set forth in this Management Agreement.
Subject to the provisions of Section 8.5 regarding Owner’s acquisition of
non-controlling interests in Properties, prior to the time Owner acquires each
Property, Owner shall notify Manager of such acquisition and offer Manager the
right to manage such Property in accordance with this Management Agreement,
including, for the avoidance of doubt, for the compensation set forth in
Article V. Manager shall notify Owner, within ten (10) days of its receipt of
such notice from Manager and all information reasonably requested by Manager
with respect to the proposed Property, whether it accepts such offer. If Manager
fails to give such a notice within such 10-day period, then Owner shall have the
right to enter into an agreement with a third party to provide such services, on
substantially the same terms as this Management Agreement or any other terms
that are not more favorable to such third party.

 

8.19         Licensing Claims. Owner shall not (i) bring or cause to be brought
or support any Licensing Claim or (ii) seek to avoid the observance or
performance of any of the terms to be observed or performed under this
Management Agreement (including, for the avoidance of doubt, Owner’s past or
future payment to Manager of fees and expenses under this Management Agreement)
as result of or with respect to any Licensing Claim. For the avoidance of doubt,
Owner may respond to requests for information from any Governmental Authority
with respect to Licensing Claims. Owner shall not have any indemnification
obligations under Section 6.5 or otherwise with respect to Licensing Claims or
any Losses arising from Licensing Claims.

 

8.20         Tax Cooperation. Each of BH REIT and BH OP, on the one hand, and
Manager, on the other hand, shall provide the other with such assistance and
non-privileged information relating to their respective businesses as may
reasonably be requested in connection with the preparation of any Tax Return or
the performance of any audit, examination or any other proceeding by any
Governmental Authority, whether conducted in a judicial or administrative forum;
provided, however, that the requesting party shall bear all reasonable costs and
expenses associated with such request.

 

8.21         Insurance Premium Allocation. So long as Manager or a member of the
Behringer Group maintains property insurance and general liability insurance
with respect to the Properties, a portion of the premium of such policy shall be
allocated to (and paid for by) BH REIT consistent with the allocation of the
premium on the respective type of policy in effect as of the date hereof with
changes as may be mutually agreed upon in writing by the parties from to time.
BH REIT and Manager acknowledge that the premium allocation for the current
policy period under all such policies has been agreed upon.

 

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8.22         Abandonment of Property. Subject to this Section 8.22, Owner may
abandon or cease funding an operating shortfall with respect to a Property.
Owner shall provide Manager 30 days advance written notice of its intention to
abandon a Property or cease funding operating shortfalls with respect to a
Property. With 30 days advance written notice, Owner may request that Manager
cease performing some or all services under this Management Agreement with
respect to such Property during the period of such abandonment or cessation of
funding. Manager shall thereupon (i) perform only the remaining services (if
any) contemplated by this Management Agreement, requested by Owner, but Manager
may continue to perform any services (at the expense of Owner) required by Law,
and (ii) incur expenses only in the performance of such remaining services (if
any) with respect to such Property during the period of such abandonment or
cessation of funding. For the avoidance of doubt, the rights of the Manager
under this Management Agreement with respect to such Property (including as to
Management Fees, Oversight Fees and expense reimbursements) shall not be
altered, amended or modified as a result of any such abandonment or funding
cessation.

 

8.23         No Presumption Against Drafter. Each of the parties has jointly
participated in the negotiation and drafting of this Management Agreement. In
the event of an ambiguity or a question of intent or interpretation arises, this
Management Agreement shall be construed as if drafted jointly by each of the
parties, and no presumptions or burdens of proof shall arise favoring any party
by virtue of the authorship of any of the provisions of this Management
Agreement.

 

ARTICLE IX.
BUYOUT OPTION

 

9.1           Buyout Option. On or after June 30, 2015 and prior to the Existing
Expiration Date, BH REIT has the right to exercise the Buyout Option, on the
terms and subject to the conditions of this Management Agreement. For the
avoidance of doubt, the Buyout Option may not be consummated prior to June 30,
2015, notwithstanding the delivery of the Buyout Notice prior to such date.

 

9.2           Buyout Notice. No less than 90 and no more than 180 days prior to
the proposed date of the Buyout Closing, BH REIT shall deliver to Manager a
notice of its irrevocable intent to exercise the Buyout Option in substantially
the form set forth as Exhibit A hereto (such notice, the “Buyout Notice” and the
date such Buyout Notice is delivered to Manager, the “Buyout Notice Date”),
which Buyout Notice shall include, among other things: (a) the representations
and warranties set forth in Article I of the Buyout Notice and (b) a proposed
date for the Buyout Closing.

 

9.3           Buyout Closing.

 

(a)           Buyout Closing. The closing of the Buyout (the “Buyout Closing”)
shall occur on the date specified in the Buyout Notice, or on such other date as
BH REIT and Manager mutually agree (the “Buyout Closing Date”), at the offices
of Behringer Harvard Holdings, 15601 Dallas Parkway, Addison, Texas, or at such
other place as BH REIT and Manager may mutually agree. The Buyout Closing shall
be deemed effective for all purposes at the open of business on the Buyout
Closing Date.

 

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(b)           Conditions to Buyout Closing. The obligations of Manager and BH
REIT to consummate the Buyout shall be subject solely to those conditions set
forth in Section 9.4 hereto.

 

(c)           Final Buyout Consideration Calculation. At least twenty  (20)
Business Days prior to the Buyout Closing, Manager shall deliver to BH REIT a
schedule setting forth its calculation of the Buyout Consideration (such
schedule, the “Buyout Consideration Schedule”).

 

(d)           Manager Purchased Assets. Upon the terms and subject to the
conditions of this Article IX, BH REIT shall acquire from Manager and Manager
shall convey, transfer, assign and deliver, or cause to be conveyed,
transferred, assigned and delivered, to BH REIT (or its designee) at the Buyout
Closing, all of Manager’s right, title and interest in, to and under the assets
and Agreements (which shall be conveyed, if any, on an “as is, where is” basis)
expressly set forth in the schedule of assets and Agreements delivered by
Manager at least twenty (20) Business Days prior to the Buyout Closing (such
schedule, the “Manager Purchased Assets Schedule” and such assets and
Agreements, the “Manager Purchased Assets”).  The Manager Purchased Assets
Schedule shall be prepared in good faith by Manager and shall include such
assets as BH REIT and Manager shall mutually agree at the time of the Buyout.
For the avoidance of doubt, BH REIT and BH OP shall not assume any liabilities
of Manager arising under the Manager Purchased Assets, other than liabilities
under any Contracts to be assumed by Owner pursuant to Article VII.

 

(e)           Waiver of Certain Non-Solicit/Non-Hire Provisions.

 

(i)            At the Buyout Closing, Manager shall be deemed to have
irrevocably waived the non-solicitation and non-hire provisions contained in
Section 8.17 (Non-Solicitation) of this Management Agreement with respect to
each employee (each, a “Manager Specified Employee”) set forth in a schedule
prepared in good faith and delivered by Manager to BH REIT at least ten
(10) Business Days prior to the Buyout Closing (the “Manager Specified Employees
Schedule”). The Manager Specified Employees Schedule shall include (A) each
employee of the Behringer Group performing property management services for BH
REIT on-site at Properties under this Management Agreement as of the Buyout
Closing and (B) such other employees of the Behringer Group performing property
management services under this Management Agreement as of the Buyout Closing
that occupy the functions or have the titles set forth in Exhibit C hereto. It
is the intention of BH REIT and the Manager that the Manager Specified Employees
Schedule only set forth employees performing property management services
primarily or exclusively for Owner. For avoidance of doubt, the Manager
Specified Employees Schedule shall not include any employee of the Behringer
Group performing services under the Administrative Services Agreement, any
Support Services Agreement, or any other Ancillary Agreement (as defined in the
Master Modification Agreement).

 

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(ii)           At the Buyout Closing, Manager shall be deemed to have
irrevocably waived or cause to be waived any non-solicitation, non-hire,
non-compete or other similar provisions contained in any Agreement between
Manager (or an Affiliate of Manager) and any Manager Specified Employee to allow
such Manager Specified Employee to work for BH REIT.

 

(iii)          Except as contemplated by Section 9.3(e)(i) and
Section 9.3(e)(ii) above, neither Manager nor any other member of the Behringer
Group (A) waives any right under any non-solicit or non-hire provision of this
Management Agreement, the Administrative Services Agreement, any Support
Services Agreement, or any other Agreement, (B) waives any such rights with
respect to any employee who is not a Manager Specified Employee, or (C) waives
any non-solicitation, non-hire, non-compete or other similar provisions
contained in any Agreement between any of them and any Manager Specified
Employee, and all such Agreements remain in full force and effect without
limitation, including with respect to prohibition or limitation of the
solicitation of employees (and other covered service providers) of the Behringer
Group who are not Manager Specified Employees and are covered by such a
provision.

 

(f)            Buyout Closing Payments.

 

(i)            Buyout Consideration Payments. At the Buyout Closing, in
consideration for the agreements, covenants and obligations of Manager in
connection with the Buyout, BH REIT shall pay Manager an amount equal to the
Buyout Consideration in cash by wire transfer of immediately available funds to
the bank account as shall be designated in writing by Manager at least two
Business Days prior to the Buyout Closing Date.

 

(ii)           Pre-Closing Manager Fees and Expenses. At least three
(3) Business Days prior to the Buyout Closing Date, Manager shall deliver to
BH REIT a schedule (the “Pre-Closing Manager Fees and Expenses Schedule”)
setting forth Manager’s good faith estimate of the amount of all fees and
expenses due from BH REIT to Manager for all services rendered through the
Buyout Closing under this Management Agreement or otherwise due to Manager with
respect to the period before the Buyout Closing under this Management Agreement
(such fees and expenses, the “Manager Fees and Expenses” and the amount of such
estimate, the “Estimated Manager Fees and Expenses”). At the Buyout Closing, BH
REIT shall pay the Estimated Manager Fees and Expenses to Manager in cash by
wire transfer of immediately available funds to the bank account as shall be
designated in writing by Manager. The payment of such Estimated Manager Fees and
Expenses is subject to adjustment as set forth in Section 9.5.

 

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9.4           Conditions to Buyout Closing.

 

(a)           Conditions to Manager’s Obligations. The obligation of Manager to
consummate the Buyout is subject to the satisfaction of the following conditions
as of the Buyout Closing, any of which may be waived in writing exclusively by
Manager:

 

(i)            Representations of BH REIT. The representations and warranties of
BH REIT set forth in the Buyout Notice shall be true and correct in all material
respects both when made and at and as of the Buyout Closing as though then made.

 

(ii)           No Proceedings. No Judgment of any court or Governmental
Authority of competent jurisdiction nor any applicable Law shall be in effect
which would (a) prohibit the consummation of the Buyout, (b) declare unlawful
the Buyout, or (c) cause such Buyout to be rescinded.

 

(iii)          Receipt of Payments; No Dispute.

 

(A)          BH REIT shall have paid and Manager shall have received in full
(upon the Buyout Closing) the payments contemplated by Section 9.3(f);

 

(B)           there shall be no outstanding payment due and payable by BH REIT
to any member of the Behringer Group under the Master Modification Agreement or
any Ancillary Agreement (as defined in the Master Modification Agreement); and

 

(C)           no dispute shall be ongoing between BH REIT and Manager regarding
the payment of any fees, the reimbursement of any expenses or any other payments
under this Management Agreement.

 

(iv)          Other Buyout Closing Deliverables. BH REIT shall have delivered or
caused to be delivered to Manager on or before the Buyout Closing Date the
following:

 

(A)          instruments of authority from the Board of Directors of BH REIT, or
an authorized committee thereof, in form and substance reasonably acceptable to
Manager, authorizing the Buyout; and

 

(B)           a certificate by the Principal Executive Officer or Principal
Financial Officer of BH REIT, in his or her capacity as such, that the
conditions of the Buyout Closing set forth in this Section 9.4(a) have been met,
in form and substance reasonably satisfactory to Manager.

 

(b)           Conditions to BH REIT’s Obligations. The obligation of BH REIT to
consummate the Buyout is subject to the satisfaction of the following conditions
as of the Buyout Closing, any of which may be waived in writing exclusively by
BH REIT:

 

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(i)            Representations of Manager. Manager shall deliver to BH REIT at
the Buyout Closing representations and warranties in substantially the form set
forth as Exhibit B to this Management Agreement (the “Manager Representations
Letter”), which representations and warranties shall be true and correct in all
respects as of the Buyout Closing.

 

(ii)           No Proceedings. No Judgment of any court or Governmental
Authority of competent jurisdiction nor any applicable Law shall be in effect
which would (A) prohibit the consummation of the Buyout, (B) declare unlawful
the Buyout, or (C) cause such Buyout to be rescinded.

 

(iii)          Other Buyout Closing Deliverables. Manager shall have delivered
or caused to be delivered to BH REIT on or before the applicable date specified
elsewhere in this Article IX the following:

 

(A)          the Manager Specified Employees Schedule;

 

(B)           the Severance Schedule;

 

(C)           the Buyout Consideration Schedule;

 

(D)          the Manager Purchased Assets Schedule;

 

(E)           the Pre-Closing Manager Fees and Expenses Schedule;

 

(F)           prior to the Buyout Closing, instruments of authority from
Manager, in form and substance reasonably acceptable to BH REIT, authorizing the
Buyout;

 

(G)           (F)           a certificate by a senior executive officer of
Manager, in his or her capacity as such, that the conditions of the Buyout
Closing set forth in Section 9.4(a) have been met, in form and substance
reasonably satisfactory to BH REIT.

 

9.5           Post-Closing Manager Fees and Expenses Adjustment.

 

(a)           Preparation of Final Manager Fees and Expenses Statement. As soon
as practicable after the last day of the next calendar quarter of BH REIT after
the Buyout Closing Date (the last day in such quarter, the “Adjustment Date”),
but in no event later than forty-five (45) days after the Adjustment Date,
Manager shall prepare in good faith and deliver to BH REIT a final statement
(the “Final Manager Fees and Expenses Statement”) calculating the Manager Fees
and Expenses for all services rendered through the Buyout Closing under this
Management Agreement or otherwise due to Manager with respect to the period
before the Buyout Closing under this Management Agreement (the “Final Manager
Fees and Expenses Amount”). BH REIT shall have the right to dispute the Final
Manager Fees and Expenses Statement and the calculation of the Final Manager
Fees and Expenses Amount. Each party shall make available to the other party
such

 

33

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books, records and personnel as shall be reasonably necessary for the other
party in connection with the matters contained in this Section 9.5(a).

 

(b)           Post-Closing Manager Fees and Expenses Payment. If the Final
Manager Fees and Expenses Amount exceeds the Estimated Manager Fees and
Expenses, then within five (5) Business Days of the receipt of the Final Manager
Fees and Expenses Statement, BH REIT shall pay the amount of such difference to
Manager in cash by wire transfer of immediately available funds to the bank
account as shall be designated in writing by Manager. If the Estimated Manager
Fees and Expenses exceeds the Final Manager Fees and Expenses Amount, then
within five (5) Business Days of the delivery of the Final Manager Fees and
Expenses Statement, Manager shall pay the amount of such difference to BH REIT
in cash by wire transfer of immediately available funds to the bank account as
shall be designated in writing by BH REIT.

 

9.6           Manager Specified Employee Matters.

 

(a)           Employees and Offers of Employment. Effective as of the Buyout
Closing, BH REIT shall offer employment to the Manager Specified Employees on
the terms and subject to the conditions of this Article IX and the other terms
and conditions determined by the Compensation Committee of the Board of
Directors of BH REIT consistent with this Article IX. The Manager Specified
Employees who accept and commence employment on or after the Buyout Closing with
BH REIT are hereinafter collectively referred to as the “Transferred Manager
Employees.” For the period commencing on the Buyout Closing Date and ending on
the December 31 next following the one year anniversary of the Buyout Closing
Date, such Transferred Manager Employees shall receive substantially similar (or
more beneficial) base salaries and cash bonus opportunities as received
immediately prior to the Buyout Closing Date. Further, BH REIT hereby assumes,
as of the Buyout Closing, all Liabilities of Transferred Manager Employees
(including the employment and termination thereof) arising on and after the
Buyout Closing Date in connection with their employment by BH REIT. Except for
BH REIT’s indemnification for PTO Liabilities pursuant to Section 9.6(c) and
reimbursement for severance benefits as provided in Section 9.6(d), BH REIT does
not assume, and shall not be liable or responsible for, any Liabilities with
respect to any Manager Specified Employee who does not become a Transferred
Manager Employee (each, a “Non-Hired Manager Specified Employee”) or any other
employee of the Behringer Group.

 

(b)           “At Will” Employment. Subject to applicable Law and the terms of
any Agreement between a Transferred Manager Employee and BH REIT, each
Transferred Manager Employee shall be, upon accept and commencement of
employment with BH REIT, an “at will” employee of BH REIT, and nothing in this
Article IX shall create a contract of employment between (i) BH REIT or any of
its Affiliates and (ii) a Transferred Manager Employee, nor limit the right of
BH REIT and its Affiliates to terminate the employment of any Transferred
Manager Employee at any time, for any reason, with or without cause, and without
notice; provided that nothing in this Section 9.6(b) shall limit the other
obligations of BH REIT as provided in this Article IX.

 

34

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(c)           Paid Time Off; Other Leave. For the twelve (12) month period
following the Buyout Closing Date, BH REIT shall provide to each Transferred
Manager Employee paid time off, vacation, and other accrued leaves of absence
benefits (“PTO Benefits”) substantially comparable in the aggregate as those
provided by the Behringer Group immediately prior to the Buyout Closing, and BH
REIT shall give each Transferred Manager Employee credit for the remaining PTO
Benefits accrued by such Transferred Manager Employee during his or her
employment with the Behringer Group prior to the Buyout Closing (that has not
been forfeited or lost as of the Buyout Closing), but BH REIT may subject such
accrued PTO Benefits to any accrual caps and use limitations (such as a “use it
or lose it” policy) that are comparable to the accrual caps and use limitations
under the comparable Behringer Group policies for PTO Benefits, as BH REIT may
reasonably determine. To the extent that any member of the Behringer Group
incurs any Damages with respect to any Liabilities for PTO Benefits with respect
to any Manager Specified Employee (collectively, the “PTO Liabilities”), BH REIT
shall indemnify such member of the Behringer Group with respect to such Damages.

 

(d)           Severance Obligations.

 

(i)            From the Buyout Closing and for the twelve (12) month period
following the Buyout Closing Date, BH REIT shall provide severance benefits
substantially comparable to those which would be applicable using the formula
set forth in the severance schedule attached hereto (the “Severance Schedule”),
to any Transferred Manager Employee who is involuntarily terminated by BH REIT
under circumstances that would entitle the Transferred Manager Employee to
severance benefits had his or her employment been terminated by a member of the
Behringer Group immediately prior to the Buyout Closing (for example, BH REIT
shall be under no obligation to provide severance benefits to any Transferred
Manager Employee who has been terminated for cause). If BH REIT or any of its
Affiliates seeks a release from any Transferred Manager Employee with respect to
Claims of such Transferred Employee against BH REIT or its Affiliates (an
“Employee Release”), BH REIT shall use commercially reasonable efforts to obtain
a release, releasing (among other Persons) the Behringer Indemnified Parties (as
defined in the Master Modification Agreement) of all Claims of such Transferred
Manager Employee arising during his or her term of service (as an employee or
otherwise) with the Behringer Group prior to the Buyout Closing on substantially
similar terms as such Employee Release.

 

(ii)           BH REIT shall reimburse the applicable member of the Behringer
Group for any severance benefits paid up to the amount determined using the
formula set forth in the Severance Schedule, to any Non-Hired Manager Specified
Employee who has his or her employment terminated by the applicable member of
the Behringer Group within ninety (90) days of the Buyout Closing Date.

 

(e)           Employee Benefit Plans.

 

(i)            Effective as of the Buyout Closing Date, Transferred Manager
Employees shall cease participation in any and all Behringer Plans and shall be

 

35

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eligible to participate in employee benefit and fringe benefit plans maintained
by BH REIT or one of its Affiliates (the “BH REIT Plans”). Effective as of the
Buyout Closing Date and continuing for a period ending on the December 31 next
following the one year anniversary of the Buyout Closing Date, BH REIT shall
provide to the Transferred Manager Employees through BH REIT Plans, employee
benefits and fringe benefits which are, in the aggregate, substantially
comparable to the employee benefits and fringe benefits provided to such
Transferred Manager Employees under the Behringer Plans immediately prior to the
Buyout Closing Date.

 

(ii)           Following the Buyout Closing Date, (A) each Transferred Manager
Employee shall receive credit for all purposes (including credit for
eligibility, benefit accrual and for vesting) under the BH REIT Plans for years
of service with the Behringer Group; provided, however, that with respect to any
credit for benefit accruals under any BH REIT Plans, there shall be no
duplication of benefits or accruals under the employee benefit plans or programs
of BH REIT and those of the Behringer Group (for example, with respect to
employer contributions under a BH REIT 401(k) Plan), and (B) BH REIT shall cause
any and all pre-existing condition limitations, eligibility waiting periods and
evidence of insurability requirements under any BH REIT Plans that are group
health plans in which such Transferred Manager Employees and their eligible
dependents shall participate to be waived (but only to the extent that such
Transferred Manager Employees would be covered under the applicable group health
plan of the Behringer Group) and shall provide credit, during the applicable
plan year, for any co-payments and deductibles prior to the Buyout Closing for
purposes of satisfying any applicable deductible, out-of-pocket or similar
requirements under any such plans that may apply after the Buyout Closing. It is
the intention of the parties that the Transferred Manager Employees and their
eligible dependents be placed in no worse position (as employees of BH REIT)
than if they had remained participants in the group health plans of the
Behringer Group. Manager and BH REIT Agree to work together in good faith
between the Buyout Notice Date and the Buyout Closing Date to ensure the orderly
transition of the Transferred Manager Employees from Behringer Plans, including
401(k), flexible spending account, and group health plans, to corresponding
BH REIT Plans.

 

(iii)          As of the Buyout Closing, (A) BH REIT hereby assumes all
obligations and Liabilities under the Consolidated Omnibus Budget Reconciliation
Act of 1985 (“COBRA”) for each Transferred Manager Employee (and his/her
dependents and beneficiaries) and (B) no member of the Behringer Group shall
have any Liabilities under COBRA with respect to such Transferred Manager
Employees (and their dependents and beneficiaries).

 

(f)            No Third Party Beneficiaries. No provision of this Section 9.6
shall create any third party beneficiary or other rights in any employee or
former or future employee (including any beneficiary or dependent thereof) of
the Behringer Group or BH REIT or any of its Affiliates (including the
Transferred Manager Employees) in respect of employment, continued employment
(or resumed employment), compensation, benefits,

 

36

--------------------------------------------------------------------------------

 

or severance, and no provision of this Section 9.6 shall create any such rights
in any such Persons in respect of any benefits that may be provided, directly or
indirectly, under any Behringer Plan or any plan or arrangement which may be
established by BH REIT or any of its Affiliates. No provision of this Management
Agreement is intended as, nor shall any provision of this Management Agreement
constitute, the establishment, amendment, or modification of, or supplement to,
any employee benefit plan subject to ERISA, any other Behringer Plan or BH REIT
Plan. No provision of this Management Agreement shall constitute a limitation on
the rights of Behringer Group, BH REIT or their respective Affiliate to
establish, amend, modify, supplement or terminate after the Buyout Closing Date
any such plans or arrangements.

 

9.7           Buyout Option Termination. If this Management Agreement is
terminated pursuant to Article VII prior to Buyout Closing, the Buyout Option
shall terminate automatically and the Buyout shall not be consummated.

 

9.8           Survival. The covenants and agreements under this Management
Agreement to be performed after the Buyout Closing (including, for the avoidance
of doubt, the obligations pursuant to Sections 7.2 and 7.3) shall not expire
until all obligations have been fully discharged with respect thereto. The
representations and warranties of the parties with respect to the Buyout Option
and the provisions of Section 9.9(c) shall survive until the expiration of the
applicable statute of limitations.

 

9.9           Miscellaneous Buyout Provisions.

 

(a)           Non-Assignment. The Buyout Option is a contractual right under
this Management Agreement and is granted solely to BH REIT and may not be
assigned to any other Person separate and apart from this Management Agreement;
provided, that any assignment of this Management Agreement (whether voluntarily
or involuntarily, directly or indirectly, by operation of law, merger, sale of
stock, sale of assets or otherwise) by Owner without the prior written consent
of Manager shall result in the automatic termination of this Article IX;
provided further that a Change of Control of Owner shall not automatically
terminate this Article IX. Any purported assignment, transfer, delegation or
disposition by Owner of Article IX in violation of this Section 9.9 shall be
null and void ab initio (provided, that for the purposes of this Article IX
only, all references to “50%” contained in the definition of “Change of Control”
set forth in Section 1.22 shall be deemed to be references to “25%”).

 

(b)           Further Assurances. The parties hereto shall use their
commercially reasonable efforts to do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments or documents as any other party
may reasonably request in order to carry out the intent and purposes of this
Article IX and the consummation of the transactions contemplated hereby,
including the Buyout.

 

37

--------------------------------------------------------------------------------

 

(c)           LIMITATIONS ON REPRESENTATIONS AND WARRANTIES.

 

(i)            BH REIT HEREBY ACKNOWLEDGES THAT, EXCEPT TO THE EXTENT
SPECIFICALLY STATED IN REPRESENTATIONS AND WARRANTIES ACTUALLY DELIVERED BY
MANAGER TO BH REIT PURSUANT TO THE REPRESENTATIONS LETTER, MANAGER MAKES NO
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, AT LAW OR IN
EQUITY, IN CONNECTION WITH OR WITH RESPECT TO THE SUBJECT MATTER OF THIS
MANAGEMENT AGREEMENT OR IN RESPECT OF ANY OF MANAGER, THE BEHRINGER GROUP, THEIR
RESPECTIVE EMPLOYEES, THE MANAGEMENT AGREEMENT OR ANY AGREEMENT BETWEEN ANY
MEMBER OF THE BEHRINGER GROUP (ON THE ONE HAND) AND BH REIT OR ITS AFFILIATES
(ON THE OTHER HAND) OR THE SERVICES PROVIDED THEREUNDER, OR WITH RESPECT TO ANY
INFORMATION PROVIDED OR MADE AVAILABLE TO BH REIT OR ITS DIRECTORS, OFFICERS,
EMPLOYEES, REPRESENTATIVES OR AGENTS, INCLUDING WITH RESPECT TO ANY
REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR
PURPOSE OR USE, TITLE, OR NON-INFRINGEMENT, AND THAT ALL OTHER REPRESENTATIONS
AND WARRANTIES ARE DISCLAIMED BY MANAGER. MANAGER ACKNOWLEDGES THAT EXCEPT AS
EXPRESSLY SET FORTH IN THIS MANAGEMENT AGREEMENT AND THE BUYOUT NOTICE, BH REIT
DOES NOT MAKE ANY REPRESENTATION OR WARRANTY OF ANY KIND, WHATSOEVER, EXPRESS OR
IMPLIED, AT LAW OR IN EQUITY, IN CONNECTION WITH OR WITH RESPECT TO THE SUBJECT
MATTER OF THIS MANAGEMENT AGREEMENT. FOR THE AVOIDANCE OF DOUBT, THE FOREGOING
SHALL NOT AFFECT OR OTHERWISE LIMIT ANY EXPRESS REPRESENTATIONS OR WARRANTIES
CONTAINED IN THE MASTER MODIFICATION AGREEMENT OR ANY OTHER AGREEMENT BETWEEN
ANY MEMBER OF THE BEHRINGER GROUP (ON THE ONE HAND) AND BH REIT OR ITS
AFFILIATES (ON THE OTHER HAND).

 

(ii)           MANAGER HEREBY ACKNOWLEDGES THAT, EXCEPT TO THE EXTENT
SPECIFICALLY STATED IN REPRESENTATIONS AND WARRANTIES ACTUALLY DELIVERED BY BH
REIT TO MANAGER PURSUANT TO THE BUYOUT NOTICE, BH REIT MAKES NO REPRESENTATION
OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN CONNECTION
WITH OR WITH RESPECT TO THE SUBJECT MATTER OF THIS MANAGEMENT AGREEMENT OR IN
RESPECT OF BH REIT, BH OP, THEIR RESPECTIVE EMPLOYEES, THE MANAGEMENT AGREEMENT
OR ANY AGREEMENT BETWEEN BH REIT OR ITS AFFILIATES (ON THE ONE HAND) AND ANY
MEMBER OF THE BEHRINGER GROUP (ON THE OTHER HAND) OR THE SERVICES PROVIDED
THEREUNDER, OR WITH RESPECT TO ANY INFORMATION PROVIDED OR MADE AVAILABLE TO
MANAGER OR ITS

 

38

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DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES OR AGENTS, INCLUDING WITH
RESPECT TO ANY REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY
PARTICULAR PURPOSE OR USE, TITLE, OR NON-INFRINGEMENT, AND THAT ALL OTHER
REPRESENTATIONS AND WARRANTIES ARE DISCLAIMED BY BH REIT. BH REIT ACKNOWLEDGE
THAT EXCEPT AS EXPRESSLY SET FORTH IN THIS MANAGEMENT AGREEMENT AND THE BUYOUT
NOTICE, MANAGER DOES NOT MAKE ANY REPRESENTATION OR WARRANTY OF ANY KIND,
WHATSOEVER, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN CONNECTION WITH OR WITH
RESPECT TO THE SUBJECT MATTER OF THIS MANAGEMENT AGREEMENT. FOR THE AVOIDANCE OF
DOUBT, THE FOREGOING SHALL NOT AFFECT OR OTHERWISE LIMIT ANY EXPRESS
REPRESENTATIONS OR WARRANTIES CONTAINED IN THE MASTER MODIFICATION AGREEMENT OR
ANY OTHER AGREEMENT BETWEEN BH REIT OR ITS AFFILIATES (ON THE ONE HAND) AND ANY
MEMBER OF THE BEHRINGER GROUP (ON THE OTHER HAND).

 

39

--------------------------------------------------------------------------------

 

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

 

 

BEHRINGER HARVARD REIT I, INC.

 

 

 

 

 

 

 

By:

/s/ Charles G. Dannis

 

 

Name: Charles G. Dannis

 

 

Title: Chairman of the Special Committee

 

 

 

 

BEHRINGER HARVARD OPERATING PARTNERSHIP I LP

 

 

 

 

By: BHR, Inc.

 

 

 

 

 

 

 

 

By:

/s/ Telisa Schelin

 

 

Name:

Telisa Schelin

 

 

Title:

SVP - Legal

 

 

 

 

HPT MANAGEMENT SERVICES LLC

 

 

 

 

By:

/s/ M. Jason Mattox

 

 

Name: M. Jason Mattox

 

 

Title: Executive Vice President

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

FORM OF BUYOUT NOTICE

 

, 20

 

HPT Management Services LLC
15601 Dallas Parkway

Suite 600

Addison, Texas 75001

Attention: Chief Legal Officer

Fax: (214) 655-1610

 

Pursuant to Section 9.2 of that certain Sixth Amended and Restated Property
Management Agreement, dated as of August 31, 2012, by and among Behringer
Harvard REIT I, Inc., a Maryland corporation (“BH REIT”), Behringer Harvard
Operating Partnership I LLC, a Texas limited partnership (“BH OP”), and HPT
Management Services LLC, a Texas limited liability company (the “Manager”), as
amended, supplemented or otherwise modified from time to time (the “Management
Agreement”), BH REIT hereby provides this irrevocable notice (this “Buyout
Notice”) of its intent to exercise the Buyout Option. Capitalized terms used
herein and not otherwise defined shall have the respective meanings set forth in
the Management Agreement.

 

ARTICLE I.
REPRESENTATIONS AND WARRANTIES OF BH REIT

 

BH REIT represents and warrants to Manager as of the date hereof and as of the
Buyout Closing Date, as follows:

 

1.1           Organization and Qualification.

 

(a)           BH REIT is a corporation validly existing and in good standing
under the laws of the State of Maryland. BH REIT has the requisite corporate
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted except where the failure to
have such power and authority would not reasonably be expected to impact
BH REIT’s ability to perform its obligations under the Management Agreement and
the transactions contemplated thereby, including the Buyout.

 

(b)           BH OP is a limited partnership validly existing and in good
standing under the laws of the State of Texas. BH OP has the requisite
partnership power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted except
where the failure to have such power and authority would not reasonably be
expected to impact BH REIT’s ability to perform its obligations under the
Management Agreement and the transactions contemplated thereby, including the
Buyout.

 

A-1

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1.2           Authority; No Conflicts; Approvals.

 

(a)           BH REIT has full corporate power and authority to consummate the
transactions contemplated by (i) Management Agreement and (ii) this Buyout
Notice and each other agreement, instrument or document executed and delivered
under the Management Agreement upon the Buyout Closing (each such document, a
“Ancillary Buyout Document”), including the Buyout. No provision of Law
applicable to BH REIT or the bylaws, charter or other organizational documents
or BH REIT (such documents, the “BH REIT Organizational Documents”) requires
approval by the stockholders of BH REIT of the transactions contemplated by the
Management Agreement, including the Buyout. The execution and delivery by
BH REIT of this Buyout Notice and each other Ancillary Buyout Document to which
it is a party, and the consummation by BH REIT of the transactions contemplated
hereby and thereby, including the Buyout, have been duly authorized by all
necessary corporate action and no other proceedings on the part of BH REIT are
necessary to authorize the execution and delivery of this Buyout Notice, the
Ancillary Buyout Documents and the consummation of the transactions contemplated
hereby and thereby. The Management Agreement and this Buyout Notice have been,
and each Ancillary Buyout Document to which BH REIT is a party when executed and
delivered will be, duly and validly executed and delivered by BH REIT and,
assuming the due authorization, execution and delivery hereof and thereof by the
other parties hereto or thereto, constitutes or will constitute, as applicable,
a legal, valid and binding agreement of BH REIT, enforceable against BH REIT in
accordance with its terms, except that such enforcement may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting or relating to enforcement of creditors’ rights generally, and
(ii) general equitable principles.

 

(b)           BH OP has full partnership power and authority to consummate the
transactions contemplated by Management Agreement and the Ancillary Buyout
Documents, including the Buyout. No provision of Law applicable to BH OP or the
partnership agreement of BH OP requires approval by the limited partners of
BH OP of the transactions contemplated by the Management Agreement, including
the Buyout. The execution and delivery by BH OP of each Ancillary Buyout
Document to which it is a party, and the consummation by BH OP of the
transactions contemplated thereby, to the extent applicable to BH OP, have been
duly authorized by all necessary partnership action and no other proceedings on
the part of BH OP are necessary to authorize the execution and delivery of such
Ancillary Buyout Documents and the consummation of the applicable transactions
contemplated thereby. Each Ancillary Buyout Document to which BH OP is a party
when executed and delivered will be duly and validly executed and delivered by
BH OP and, assuming the due authorization, execution and delivery hereof and
thereof by the other parties hereto or thereto, constitutes or will constitute,
as applicable, a legal, valid and binding agreement of BH OP, enforceable
against BH OP in accordance with its terms, except that such enforcement may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting or relating to enforcement of creditors’ rights
generally, and (ii) general equitable principles.

 

(c)           To the knowledge of BH REIT and BH OP, no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
Governmental

 

A-2

--------------------------------------------------------------------------------

 

Authority or any other Person is required to be made, obtained or given by or on
behalf of BH REIT or BH OP the absence of which would prevent the consummation
by BH REIT or BH OP of the transactions contemplated by this Buyout Notice or
the other Ancillary Buyout Documents, including the Buyout, or the performance
by BH REIT or BH OP of its obligations under the Management Agreement and the
Ancillary Buyout Documents to which it is party, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals obtained
prior to the date hereof.

 

ARTICLE II.
PROPOSED CLOSING DATE

 

BH REIT proposes that the Buyout Closing occur on                               
        , 20    , or such other Business Day as BH REIT and Manager shall agree,
at the offices of Manager, or such other location as BH REIT and Manager shall
agree.

 

*  *  *  *  *  *

 

A-3

--------------------------------------------------------------------------------

 

 

Sincerely,

 

 

 

BEHRINGER HARVARD REIT I, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

CC (with attachments):

 

Behringer Harvard Holdings
15601 Dallas Parkway

Suite 600

Addison, Texas 75001
Attention:  Robert S. Aisner
Fax: (214) 655-1610

 

Behringer Harvard Holdings
15601 Dallas Parkway

Suite 600

Addison, Texas 75001
Attention:  Chief Legal Officer
Fax: (214) 655-1610

 

Jenner & Block LLP
353 N. Clark Street
Chicago, Illinois 60654
Attention:                 Donald E. Batterson

Jeffrey R. Shuman

Fax: (312) 923-2707

 

A-4

--------------------------------------------------------------------------------

 

EXHIBIT B

 

FORM OF MANAGER REPRESENTATION LETTER

 

, 20

 

Behringer Harvard REIT I, Inc.
15601 Dallas Parkway

Suite 600

Addison, Texas 75001
Attention: [                            ]
Fax: [                            ]

 

Pursuant to Section 9.4(b)(i) of that certain Sixth Amended and Restated
Property Management Agreement, dated as of August 31, 2012, by and among
Behringer Harvard REIT I, Inc., a Maryland corporation (“BH REIT”), Behringer
Harvard Operating Partnership I LP, a Texas limited partnership (“BH OP”), and
HPT Management Services LLC, a Texas limited liability company (the “Manager”),
as amended, supplemented or otherwise modified from time to time (the
“Management Agreement”), Manager hereby delivers this Manager Representations
Letter. Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Management Agreement. Manager hereby
represents and warrants to BH REIT, as of the Buyout Closing, as follows:

 

Section 1. Organization.

 

Manager is a limited liability company validly existing and in good standing
under the laws of its jurisdiction of organization.

 

Section 2. Authority; No Conflicts; Approvals.

 

(a)           Manager has full limited liability company power and authority to
consummate the transactions contemplated by (i) Management Agreement and the
Ancillary Buyout Document, including the Buyout. The execution and delivery by
Manager of each Ancillary Buyout Document to which it is a party, and the
consummation by Manager of the transactions contemplated thereby, including the
Buyout, have been duly authorized by all necessary limited liability company
action and no other proceedings on the part of Manager are necessary to
authorize the execution and delivery of the Ancillary Buyout Documents to which
it is a party and the consummation of the transactions contemplated thereby,
including the Buyout. The Management Agreement has been, and each Ancillary
Buyout Document to which Manager is a party when executed and delivered will be,
duly and validly executed and delivered by Manager and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto or thereto, constitutes or will constitute, as applicable, a legal, valid
and binding agreement of Manager, enforceable against Manager in accordance with
its terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting or
relating to enforcement of creditors’ rights generally, and (ii) general
equitable principles.

 

B-1

--------------------------------------------------------------------------------

 

(b)           To Manager’s knowledge, no declaration, filing or registration
with, or notice to, or authorization, consent or approval of, any Governmental
Authority or any other Person is required to be made, obtained or given by or on
behalf of Manager the absence of which would prevent the consummation by Manager
of the transactions contemplated by the Ancillary Buyout Documents, including
the Buyout, or the performance by Manager of its obligations under the
Management Agreement and the Ancillary Buyout Documents to which it is party,
other than such declarations, filings, registrations, notices, authorizations,
consents or approvals obtained prior to the date hereof.

 

Section 3. Title to Manager Purchased Assets

 

Manager is the sole owner of and has good and valid title to each of the Manager
Purchased Assets, free and clear of all Liabilities (except for immaterial
Liabilities). At the Buyout Closing, Manager will deliver to BH REIT good and
valid title in and to the Manager Purchased Assets, free and clear of all
Liabilities (except for immaterial Liabilities).

 

B-2

--------------------------------------------------------------------------------

 

 

Sincerely,

 

 

 

HPT MANAGEMENT SERVICES LLC

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

CC:

 

Jenner & Block LLP
353 N. Clark Street
Chicago, Illinois 60654
Attention:                 Donald E. Batterson

Jeffrey R. Shuman

Fax: (312) 923-2707

 

Proskauer Rose LLP

Eleven Times Square

(Eighth Avenue & 41st Street)

New York, New York 10036

Attention: Peter M. Fass

James P. Gerkis

Fax: (212) 969-2900

 

Shefsky & Froelich, Ltd.
111 East Wacker

Suite 2800

Chicago, Illinois 60601
Attention: Michael J. Choate

Fax: (312) 275-7554

 

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EXHIBIT C

 

FUNCTIONS AND TITLES OF MANAGER SPECIFIED EMPLOYEES

 

Current Job Title

 

Current Job Descriptions

Senior Vice President — Commercial Property Management

 

Responsible for directing, coordinating and exercising functional authority for
the overall performance and profitability of the Property Management business on
a national level; establishing and maintaining policy and procedure manual;
leading preparation and presentation of annual property budgets; developing
overhead budgets, tracking variances and ensuring operational performance in
accordance with investment objectives; and overseeing key tenant relationships
and resolving critical impact tenant relations’ issues.

Vice President — Operations

 

Responsible for managing and supervising the commercial property and management
offices; setting measurable goals for the staff; assuring the timely preparation
of annual budgets and monthly reports; developing, implementing and assuring
adherence to company policies and procedures; supervising property management
regional staff; and working with asset management personnel to help make
properties run better.

Vice President — Engineering

 

Responsible for providing technical support to properties; managing operating
expenses; developing and implementing an auditable and consistent set of
engineering quality standards and processes; developing, implementing and
managing (1) an audit program to ensure property-level compliance, (2) a program
to ensure property-level code and regulatory compliance, and (3) a technical
skills enhancement program for all property-level engineering and maintenance
personnel; ensuring property-level compliance with OSHA required training;
assisting in scoping and negotiating national and regional agreements for major
services (e.g., water treatment); ensuring that all applicable properties
benchmark their energy consumption utilizing the online EPA Energy Star
Portfolio Manager tool; developing list of typical energy conserving capital
projects to be considered; developing minimum maintenance standrads for all
major equipment and system types; assisting in the development and review of
5-year capital plans; and review and comment on payback analysis, contract
proposals, bid analysis summaries, scope of work and request for proposals.

Vice President — Project Management

 

Responsible for assisting owner in defining development projects; managing the
project construction process from concept to completion; assist owner in
defining scope, size and type of project; assist in due diligence; preparing
requests for proposals; reviewing bids; negotiating contracts with consultants;
reviewing and recommending changes to construction documents; preparing

 

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and monitoring construction budgets; managing contract pricing negotiations;
orchestrating project meetings with consultants, construction team and local
city and building officials; monitoring contractor performance; managing tenant
improvement construction; preparing project reports as needed; reviewing project
Punch Lists, contractor record drawings, and contractor maintenance and
operations books; and review and process final application and certificate for
payments.

Director of Project Management

 

Responsible for ensuring project management policies and procedures are adhered
to for all portfolio properties called upon to serve, and recommending policy
enhancements when necessary; managing capital expenditure and tenant improvement
projects in the specified region as directed by the regional Vice President of
Property Management; tracking and preparing backup for billing of Project
Management Fees; assisting with due diligence assignments; and assisting
Property Management with the preparation of the annual and 5-10 year capital
budgets.

 

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