Exhibit 10.2


 


BEHRINGER HARVARD MULTIFAMILY REIT I, INC.


 


FORM OF AMENDED AND RESTATED PROPERTY


MANAGEMENT AGREEMENT


 


THIS AMENDED AND RESTATED PROPERTY
MANAGEMENT AGREEMENT (this “Agreement”) is made as of (although not necessarily
on) the     day of                ,
2008, between BEHRINGER HARVARD MULTIFAMILY REIT I, INC. (the “Company”), a Maryland corporation,
BEHRINGER HARVARD MULTIFAMILY OP I LP (the “OP”),
a Delaware limited partnership (the Company and the OP collectively “Owner”)
and BEHRINGER HARVARD MULTIFAMILY MANAGEMENT SERVICES, LLC, a Texas limited
liability company (“Manager”).


 


WHEREAS, on March 17, 2008, HPT
MANAGEMENT SERVICES LP, a Texas limited partnership (“Former
Manager”) and with the consent of the Company and OP, assigned
any and all rights, duties and obligations to the Manager.


 


ARTICLE I


 


Engagement
of Manager and Rental Responsibility


 


1.1                                 Engagements.  Subject to the restrictions of
this Section 1.1, Owner hereby engages Manager to manage the apartment
communities in which Owner now owns a direct or indirect equity interest or
hereafter acquires a direct or indirect equity interest (whether one or more,
are referred to herein collectively as the “Project”),
and Manager accepts such engagement and agrees to perform the services set
forth herein.   Such engagement shall not
commence with respect to any particular Project until Owner, in its sole
discretion, has the ability to appoint or hire the Manager.  Further, Owner may elect to exclude any
Project from the terms of this Agreement upon written notice to Manager
delivered by Owner within ten (10) days following the later of (i) Owner’s
acquisition of a direct or indirect equity interest in such Project or (ii) the
date on which Owner, in its sole discretion, has the ability to appoint or hire
the Manager with respect to such Project. 
Owner has the right to include any previously excluded Project ten (10) days
following delivery of written notice from Owner to Manager.  Notwithstanding the foregoing, Manager shall
be entitled to an Oversight Fee (as defined herein) pursuant to Section 3.1
with respect to any Project excluded from the terms of this Agreement, but only
after Owner, in its sole discretion, has the ability to appoint or hire the
Manager for such Project.


 


1.2                                 Status of Manager; Limitation on Authority. 
Manager shall act under this Agreement as an independent contractor and
not as Owner’s agent or employee. 
Manager shall not have the right, power or authority to enter into
agreements or incur liability on behalf of Owner except as expressly set forth
herein.  Any personnel hired by Manager
to maintain, operate and/or lease each Project shall be the employees or
independent contractors of Manager and not of Owner.  Manager shall use due care in the selection
and supervision of such employees or independent contractors, who shall be duly
qualified and licensed, as necessary. 
Any action taken by Manager which is not expressly permitted by this
Agreement shall not bind Owner.


 


1.3                                 Leasing of Premises. 
Manager shall perform promotional, leasing and management activities
required to lease apartment units in the Project in accordance with the
parameters established by or otherwise approved in writing by Owner (the “Approved Leasing Parameters”).  Throughout the term of this Agreement,
Manager shall use its diligent efforts to lease apartment units in the
Project.  


 

















 


Subject to reimbursement by Owner, Manager
shall advertise the Project, or portions thereof, prepare and secure
advertising signs, space plans, circular matter, marketing brochures and other
forms of advertising.  Manager is
authorized to advertise the Project in conjunction with general advertising
campaigns and to allocate the cost of such campaigns on a pro rata
basis among the projects being advertised (to the extent authorized by the
Annual Business Plan (hereinafter defined)). 
All inquiries for any leases or renewals or agreements for the rental of
the Project or portions thereof shall be referred to Manager and all negotiations
connected therewith shall be conducted solely by or under the direction of
Manager in accordance with the parameters established by or otherwise approved
in writing by Owner.  Manager is hereby
authorized to execute, deliver and renew leases on behalf of Owner including,
but not limited to tenant and commercial leases (such as laundry room leases)
in accordance with the Approved Leasing Parameters.  Manager is authorized to utilize the services
of apartment locator services and pay compensation of duly qualified and
licensed leasing personnel responsible for the leasing of each Project; the
fees for such services shall be operating expenses of the Project and, to the
extent paid by Manager, reimbursable to Manager by Owner to the extent set
forth in the applicable Annual Business Plan.


 


1.4                                 Manager’s Standard of Care.  In
performing Manager’s duties under this Agreement, Manager shall exercise the
same degree of care, prudence, and skill as other professional property
managers of similar properties in the area. 
In no event shall Manager be liable to Owner for any loss or damage,
unless caused by the misconduct and/or negligence of the Manager, its agents,
servants, or employees.


 


1.5                                 Compliance With Laws; Environmental Matters.


 


(a)                             Owner assumes all responsibility as to the compliance of the Project
with all laws applicable to the Project. 
Owner agrees to defend and indemnify and hold harmless Manager and its
members, officers, directors, employees, managers, successors and assigns
(collectively, the “Manager Indemnified Parties”) from and against any and all
Losses (as defined in Section 2.8(e)(i) hereof) arising out of any
violation, breach or failure of the Project to comply with any or all state or
federal laws applicable to the Project, except for any violations caused by the
misconduct and/or negligence of the Manager, its agents, servants, or
employees.


 


(b)                            Owner hereby warrants and represents to Manager that to the best of
Owner’s knowledge, no Project, upon acquisition of an interest therein 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. 
Furthermore, Owner agrees to indemnify, protect, defend, save and hold
harmless Manager and all of the other Manager Indemnified Parties from any and
all Losses involving, concerning or in any way related to any past, current or
future allegations regarding treatment, depositing, storage, disposal or placement
by any duly qualified and licensed person or entity other than Manager of
hazardous substances on any Project.


 


1.6                                 Treatment Under Texas Margin Tax.  For
purposes of the Texas margin tax, Manager’s performance of the services
specified in this Agreement will cause Manager to conduct part of the active
trade or business of Owner, and Manager’s compensation includes both the
payment of fees due pursuant to Section 3.1 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 Agreement of specified costs
and allocable 


 


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wages and compensation.  Owner and Manager further recognize and
intend that as a result of the relationship created by this Agreement,
reimbursements paid to Manager pursuant to this 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 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.  “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.


 


ARTICLE II




Services to be Performed by Manager


 


2.1                                 Expense of Owner.  All
acts performed by Manager in the performance of its obligations under this
Agreement shall be performed on behalf of Owner, and all obligations or
expenses incurred thereby, if included in the Annual Business Plan or otherwise
approved in writing by Owner, shall be for the account of, on behalf of, and at
the expense of Owner, except as otherwise specifically provided in this Article II.  Owner shall not be obligated to reimburse
Manager for any expense allocable to (i) time spent on projects other than
the Project, or (ii) any personnel other than personnel located at the
Project site and personnel spending a portion of their working hours (to be
charged on a pro rata basis) at the Project
site or in specifically performing Manager’s obligations hereunder, whether on
or off the Project site.  Manager may use
employees normally assigned to other work centers or part-time employees to
properly staff the Project, whose wages and related expenses shall be
reimbursed on a pro rata basis for the time
actually spent at or for the Project to the extent set forth in the applicable
Annual Business Plan.  Owner shall
reimburse to Manager the costs and expenses incurred by Manager on Owner’s
behalf including the wages and salaries and other employee-related expenses and
benefits of all on-site and affiliate employees of Manager who are engaged in
the operation, management, maintenance and leasing or access of a Project,
including taxes, insurance and benefits and legal, travel and other
out-of-pocket expenses directly related to the management of a Project,
provided that such items are reflected in the Annual Business Plan.  Owner acknowledges that the following
miscellaneous expenses, when incurred with respect to the performance of
Manager’s obligations under this Agreement, shall be reimbursable to Manager by
Owner (which list of expenses is not intended to be all-inclusive) to the
extent set forth in the applicable Annual Business Plan:  courier services, postage, photocopies,
signage, check printing, marketing expenses, bank charges, telephone and
answering service (which may be allocated on a pro rata
basis among the Project and other projects managed by Manager).  All reimbursable payments made by Manager
hereunder shall be reimbursed by Owner from funds deposited in an account
established pursuant to Section 4.2 of this Agreement.  Manager shall not be obligated to make any
advance to or for the account of Owner or to pay any sums, except out of funds
held in an account maintained under Section 4.2, nor shall Manager be
obligated to incur any liability or obligation for the account of Owner without
assurance that the necessary funds for the discharge thereof will be provided
by Owner.  All debts and liabilities to
third persons incurred by Manager in the course of its operation and management
of the Project shall be the debts and liabilities of the Owner only, and
Manager shall not be liable for any such debt or liabilities, except to the
extent Manager has exceeded its authority hereunder.  Manager may sub-contract any or all of its
responsibilities hereunder, but Owner shall look to Manager for the performance
of such responsibilities in accordance with this Agreement and Manager shall be
solely responsible for paying the fees and expenses of any duly qualified and licensed 


 


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person or entity  to which it sub-contracts its
responsibilities hereunder, except as otherwise agreed in writing between Owner
and Manager.


 


2.2                                 Covenants Concerning Payment of Operating
Expenses.  Owner covenants to pay all sums for operating
expenses in excess of gross receipts required to operate the Project in
accordance with the Annual Business Plan upon written notice and demand from
Manager within ten (10) days after receipt of such written notice.  Owner further recognizes that the Project may
be operated in conjunction with other properties, and costs may be allocated or
shared between such other properties on a more efficient or less expensive
basis.  In such regard, Owner consents to
the allocation of costs and/or the sharing of any expenses in an effort to save
costs or operate the Project in a more efficient manner so long as such
allocation is done on an equitable basis and so long as the computations of
such allocations are provided to Owner for its approval pursuant to Section 2.12
hereof.


 


2.3                                 Employment of Personnel. 
Manager shall use its diligent efforts to investigate, hire, pay,
supervise and discharge duly qualified and licensed personnel necessary to be employed by it to
properly maintain, operate and lease the Project, including without limitation,
a property manager or business manager at the Project.  Owner has no right of supervision or
direction of agents or employees of the Manager whatsoever.  All Owner directives shall be communicated to
Manager’s senior level management employees. 
Manager and all personnel of Manager who handle or who are responsible
for handling Owner’s monies shall be duly qualified and licensed, bonded under
a fidelity bond or a crime/employee dishonesty insurance policy or equivalent
in favor of Owner.  Manager shall furnish
such fidelity bond/insurance policy at Manager’s sole expense and shall provide
Owner Two Million Dollars ($2,000,000.00) per occurrence coverage with no more
than a Ten Thousand Dollar ($10,000.00) deductible.  Manager shall execute and file when due all
forms, reports, and returns required by law relating to the employment of its
personnel.


 


2.4                                 Utility and Service Contracts. 
Manager shall make, at Owner’s expense and in Owner’s name or in Manager’s
name, as an authorized representative for Owner, contracts for water, electricity,
gas, fuel, oil, telephone, vermin extermination, trash removal, cable
television, security protection and other services deemed by Manager to be
necessary or advisable for the operation of the Project.  Manager shall also place orders in the name of
Owner for such equipment, tools, appliances, materials, and supplies as are
reasonable and necessary to properly maintain the Project.  Manager may make such contracts and place
such orders in Owner’s name or in its own name, as Owner’s authorized representative.  In addition, Owner agrees to specifically
assume in writing all obligations under all such contracts so entered into by
Manager, on behalf of Owner, upon the termination of this Agreement, and Owner
shall indemnify, protect, save, defend and hold harmless Manager and the other
Manager Indemnified Parties harmless from and against any and all Losses
resulting from, arising out of or in any way related to such contracts and that
relate to or concern matters occurring after termination of this Agreement, but
excluding matters arising out of the misconduct and/or negligence of the
Manager, its agents, servants, or employees. 
Owner agrees to pay or reimburse Manager for all expenses and
liabilities incurred in accordance with this Section 2.4.


 


2.5                                 Maintenance and Repair of a Project. 
Manager shall use its diligent efforts to maintain, at Owner’s expense,
the buildings, appurtenances and grounds of the Project in good condition and
repair and in accordance with standards established by Owner in writing from
time to time, including interior and exterior cleaning, painting and
decorating, plumbing, carpentry and such other normal maintenance and repair
work as may be reasonably desirable taking into consideration the amount
allocated therefore in the Annual Business Plan.  With respect to any expenditure not
contemplated by the Annual Business Plan, Manager shall not incur any
individual item for repair or replacement in excess of Five Thousand Dollars
($5,000.00) unless authorized in writing by Owner, excepting, however, that
emergency repairs immediately necessary for the preservation and safety of the
Project or to avoid the suspension of any 


 


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service to the Project or danger of injury to
persons or damage to property may be made by Manager upon written notice to
Owner, but without the approval of Owner. 
Manager shall not be obligated by this Section to perform any major
capital improvements.


 


2.6                                 Supervision of Capital Improvements or Major
Repairs.  When requested by the Owner or set forth in
an Annual Business Plan, Manager, at Owner’s expense and in Owner’s name, shall
supervise the installation and construction of all capital improvements or
major repairs to the Project where such work constitutes other than normal
maintenance and repair, for additional compensation as set forth in a separate
agreement between Owner and Manager.  In
such events, Manager may negotiate contracts with all contractors, subcontractors,
materialmen, suppliers, architects, and engineers approved by Owner, on behalf
of, and in the name of, Owner, and may compromise and settle any dispute or
claim arising therefrom on behalf of and in the name of Owner; provided only
that the Manager shall act in good faith and in the best interest of the Owner
at all times.  Manager will furnish all
personnel necessary for proper supervision of the work and may assign personnel
located at the Project to such supervisory work (and such assignment shall not
reduce or abate any other fees or compensation owed to Manager under this
Agreement).


 


2.7                                 Controlling Agreements. 
Manager has received copies of (and will be provided with copies of
future) articles of incorporation, agreements of limited partnership, joint
venture agreements, operating agreements, loan agreements, deeds of trust or
mortgages, each as may be amended from time to time, of Owner, as applicable
(the “Controlling Agreements”) and is and will be 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 Controlling Agreements.


 


2.8                                 Insurance and Indemnification.


 


(a)                               Insurance to be Carried.


 


(i)                                      Manager shall obtain and keep in full force
and effect insurance on the Project against such hazards as Owner and Manager
shall deem appropriate, but in any event insurance sufficient to comply with
the leases and other agreements with respect to the Project and the Controlling
Agreements shall be maintained.   All
liability policies shall provide sufficient insurance satisfactory to both
Owner and Manager and shall contain waivers of subrogation for the benefit of
Manager.


 


(ii)                                   Manager shall obtain and keep in full force
and effect, in accordance with the laws of the state in which such Project is
located, workers’ compensation and employer’s liability insurance applicable to
and covering all employees of Manager at the Project and all persons engaged in
the performance of any work required hereunder, and Manager shall furnish Owner
certificates of insurance evidencing that such insurance is in effect.  If any work under this 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.


 


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


 


(c)                               Cooperation with Insurers. 
Manager shall cooperate with and provide reasonable access to the
Project 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.


 


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(d)                                 Accidents and Claims. 
Manager shall promptly investigate and shall report in detail to Owner
all accidents and claims for damage relating to the ownership, operation or
maintenance of the Project, and any damage or destruction to the Project and
the estimated costs of repair thereof, and shall prepare for approval by Owner
all reports required by an insurance company in connection with any such
accident, claim, damage, or destruction. 
Such reports shall be given to Owner promptly, and shall be noted in the
monthly reports delivered to Owner pursuant to Section  2.14
below.  Manager is authorized to settle
any claim against an insurance company arising out of any policy and, in
connection with such claim, to execute proofs of loss and adjustments of loss
and to collect and receipt for loss proceeds.


 


(e)                                  Indemnification.


 


(i)                                   On Termination.  In
the event this Agreement is terminated for any reason prior to the expiration
of its original term or any renewal term, Owner shall indemnify, protect,
defend, save and hold harmless Manager and all of the other Manager Indemnified
Parties from and against 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”),
that may be imposed on or incurred by reason of the willful misconduct, gross
negligence and/or unlawful acts (such unlawfulness having been adjudicated by a
court of proper jurisdiction) of Owner, its agents, servants, or employees.


 


(ii)                                Property Damage and Injury to Person. 
Owner agrees to indemnify, defend, protect, save and hold harmless
Manager and all of the other Manager Indemnified Parties from any and all
Losses in connection with or in any way related to each Project and from
liability for damage to each Project and injuries to or death of any person
whomsoever, and damage to property; provided, however, that such
indemnification and exculpation shall not extend to any such Losses arising out
of the misconduct and/or negligence of Manager, its agents, servants, or
employees; provided, further, that such indemnification and exculpation shall
be limited to the extent that Manager recovers insurance proceeds with respect
to such 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 misconduct
and/or negligence.  Manager agrees to
indemnify, defend, protect, save and hold harmless Owner and its stockholders,
officers, directors, employees, managers, successors and assigns from any and
all claims or liability for any injury or damage to any person or property
whatsoever for which Manager is responsible occurring in, on, or about the
Project when such injury or damage shall be caused by the willful misconduct,
gross negligence and/or unlawful acts (such 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.


 


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


 


2.9                                 Collection of Monies. 
Manager shall use its diligent efforts to collect all rents and other
charges due from tenants, users of garage spaces (if any), storage spaces,
commercial lessees (if any) and concessionaires (if any) in respect of the
Project and otherwise due Owner with respect to the 


 


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Project in the ordinary course of business,
provided that Manager does not guarantee the creditworthiness of any tenants,
users, lessees, concessionaires or collectibility of accounts receivable from
any of the foregoing.  Owner authorizes
Manager to request, demand, collect, receive and provide a receipt for all such
rent and other charges and to institute legal proceedings in the name of Owner,
and at Owner’s expense, for the collection thereof, and for the dispossession
of tenants and other persons from the Project or to cancel or terminate any
lease, license or concession agreement for breach or default thereunder, and
such expense may include the engaging of legal counsel approved by Owner in
writing for any such matter.  All monies
collected by Manager shall be deposited in the separate bank account referred
to in Section 4.2 herein.


 


2.10                           Manager Disbursements.


 


(a)                                  Manager shall, from the funds collected and
deposited, cause to be disbursed regularly and punctually (1) Manager’s
compensation, together with all sales or other taxes (other than income) which
Manager is obligated, presently or in the future, to collect and pay to any
applicable governmental authority, (2) the amounts reimbursable to Manager
under this Agreement, (3) the amount of all real estate taxes and other
impositions levied by appropriate authorities which, if not escrowed with any
mortgagee, shall be paid upon specific written direction of Owner before
interest begins to accrue thereon, (4) debt service related to any
mortgages of the Project; and (5) amounts otherwise due and payable as
operating expenses of the Project authorized to be incurred under the terms of
this Agreement.  After (i) making
disbursements as herein specified and (ii) establishing a cash reserve to
pay taxes, insurance, and/or other costs and expenses incidental to the
operation of the Project, including nonrecurring emergency repairs and capital
expenditures which shall become due and payable within the succeeding calendar
month and for which the cash to make such payments may not be generated by
operations during such period, any balance remaining at the end of each
calendar month during the term of this Agreement shall be disbursed or
transferred as generally or specifically directed from time to time by Owner.


 


(b)                                 All costs, expenses, debts and liabilities
owed to third persons that are incurred by Manager pursuant to the terms of
this Agreement and in the course of managing, leasing and operating the Project
shall be the responsibility of Owner and not Manager.  Owner agrees to provide sufficient working
capital funds to Manager so that all amounts due and owing may be promptly paid
by Manager.  Manager is not obligated to
advance any funds.  As of the first day
of each month of this Agreement, Manager will project the cash requirements for
such month and (if it shall reasonably determine that collections will be
insufficient to meet such cash requirements) request the necessary additional
funds from the Owner, which funds will be deposited with the Manager in the
segregated bank account referred to in Section 4.2 on or before ten (10) days
following the receipt of such request. 
If at any month end, the bank balance exceeds the projected cash
requirements, such excess shall be returned to the Owner within five days.  If at any time there is not sufficient cash
in the account with which to promptly pay the bills due and owing, the Manager
will request that the necessary additional funds be deposited in an amount
sufficient to create an operating reserve pursuant to Section 4.4.  Owner will deposit the additional funds
requested by the Manager within five (5) days following the receipt of
such request.


 


2.11                           Use and Maintenance of Premises. 
Manager agrees that it will not knowingly permit the use of the Project
for any purpose which might void any policy of insurance held by Owner or which
might render any loss thereunder uncollectible, or which would be in violation
of any government restriction or any covenant or restriction of any lease of
the Project.  Manager shall use its good
faith efforts to secure substantial compliance by the tenants with the terms
and conditions of their respective leases.


 


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2.12                           Annual Business Plan.


 


(a)                                  On or before October 1 of each calendar
year during the term of this Agreement, Manager shall prepare and submit to
Owner for Owner’s approval, an Annual Business Plan (herein so called) for the
Project for the promotion, leasing, operations, repair and maintenance of the
Project for each calendar year during which this Agreement is in effect.  The Annual Business Plan shall include a
detailed budget of projected income and expenses for the Project for such
calendar year (the “Operating Budget”) and a detailed budget of projected
capital improvements for the Project for such calendar year (the “Capital
Budget”).  Within 30 days
following the purchase of a Project by Owner, after the approval of the Annual
Business Plan for such calendar year, Manager shall prepare and submit to Owner
a comparable business plan for such Project and Manager and Owner must follow
the procedure set forth in (b) below with respect to approving any such
additional business plan.


 


(b)                                 Manager shall meet with Owner to discuss the
proposed Annual Business Plan and Owner shall notify Manager with respect to
the approval or disapproval of the proposed Annual Business Plan within 20 days
following the receipt of the Annual Business Plan.  Any notice which disapproves a proposed
Annual Business Plan must contain specific objections in reasonable
detail.  If Owner fails to provide
approval of a proposed Annual Business Plan within such 20 day period, the
proposed Annual Business Plan shall be deemed to be disapproved and the Annual
Business Plan in effect for the previous calendar year shall remain in effect
until Owner approves a new Annual Business Plan for such Project.  Owner acknowledges that the Operating Budget
is intended only to be a reasonable estimate of the Project’s income and
expenses for the ensuing calendar year. 
Manager shall not be deemed to have made any guarantee, warranty or
representation whatsoever in connection with the Operating Budget.


 


(c)                                  Manager may revise the Operating Budget from
time to time, as necessary, to reflect any unpredicted significant changes,
variables or events or to include significant additional, unanticipated items
of revenue and expense.  Any such
revision shall be subject to the prior written approval of Owner.


 


(d)                                 Manager agrees to use diligence and to employ
all reasonable efforts to ensure that the actual costs of maintaining and
operating the Project shall not exceed the Operating Budget which is a part of
the approved Annual Business Plan either in total or in any one accounting
category.  Any expense causing or likely
to cause a variance of greater than ten percent (10%) or $2,000, whichever is
greater, in any one accounting category on a cumulative year-to-date basis
shall be promptly explained to Owner by Manager in the next monthly report
submitted by Manager to Owner under Section 2.14(a) below.  During the calendar year Manager shall inform
Owner of any major increases or decreases in costs, expenses, and income that
were not reflected in the Annual Business Plan.


 


2.13                           Records.  Manager shall maintain all
office records and books of account and shall record therein, and keep copies
of, each invoice received from services, work and supplies ordered in
connection with the maintenance and operation of the Project.  Such records shall be maintained on a double
entry basis.  Owner and persons
designated by Owner shall at all reasonable times 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 Project and
this Agreement, all of which Manager agrees to keep safe, available and
separate from any records not pertaining to the Project, at a place recommended
by Manager and approved by Owner.


 


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2.14                           Financial Reports.


 


(a)                                  Monthly Reports.  On
or before the 10th day after the end of each month during the term
of this Agreement, Manager shall prepare and submit to Owner the following
reports and statements:


 


(i)            rental collection record;


 


(ii)           monthly operating and cash flow statement;


 


(iii)          copy of cash disbursements ledger entries for such period, if
requested;


 


(iv)          copy of cash receipts ledger entries for such period, if requested;


 


(v)           the original copies of all contracts entered into by Manager on behalf
of Owner during such period, if requested; and


 


(vi)          copy of ledger entries for such period relating to security deposits
maintained by Manager, if requested.


 


In addition to the above, Manager shall
deliver to Owner such other reports and statements as are reasonably requested
by Owner.


 


(b)                                 Annual Report. 
Within 60 days after the end of each calendar year of the Project,
Manager shall deliver to Owner a statement showing the results of operations
for the calendar year or portion thereof during which the provisions of this
Agreement were in effect.  Manager shall
cooperate with and submit to Owner at such times as may be required (monthly or
annually, as applicable) such other information, reports or statements requested
by Owner regarding the Project or as may be necessary to comply with any
reporting requirements of Owner or prepare any balance sheets, operating
statements or disclosure statements which may be required to be prepared or
filed by Owner.


 


(c)                                  Returns Required by Law. 
Manager shall execute and file punctually when due all forms, reports
and returns required by law relating to the employment of personnel.


 


2.15                           Compliance with 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 promptly, and in no event later
than 72 hours from the time of receipt, notify Owner in writing of all notices
of violation or other notices relating the Project from any governmental
authority, board of fire underwriters or insurance company, and shall make such
recommendations regarding compliance with such notice as shall be
appropriate.  Manager shall be
responsible for notifying Owner in the event it receives notice that any
improvement on the Project 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 the Project
and any equipment thereon will upon acquisition by Owner comply with all such
requirements.  Owner authorizes Manager
to disclose the ownership of each Project by Owner to any such officials.  Owner agrees to indemnify, protect, defend,
save and hold harmless Manager and the other Manager Indemnified Parties from
and against any and all Losses that may be imposed on them or any or all of
them by reason of 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.


 


9

















 


Owner
acknowledges that Manager does not hold itself out to be an expert or
consultant with respect to, or represent that, the Project currently complies
with applicable ordinances, regulations, rules, statutes, or laws of
governmental entities having jurisdiction over the Project or the requirements
of the board of fire underwriters or other similar bodies (collectively, “Governmental Requirements”).  Manager shall take such action as may be
reasonably necessary to comply with any Governmental Requirements applicable to
Manager, including the collection and payment of all sales and other taxes
(other than income taxes) which may be assessed or charged by any governmental
entities in the state in which the Project is located in connection with
Manager’s Compensation (set forth in Article III below).  If Manager discovers the Project does not
comply with any Governmental Requirements, Manager shall take such action as
may be reasonably necessary to bring the Project into compliance with such
Governmental Requirements, subject to the limitation contained in Section 2.5
of this Agreement regarding the making of alterations and repairs.  Manager, however, shall not take any such
action as long as Owner is contesting or has affirmed its intention to contest
and promptly institute proceedings contesting any such order or requirement.  If, however, failure to comply promptly with
any such order or requirement would or might expose Manager to civil or
criminal liability, Manager shall have the right, but not the obligation, to
cause the same to be complied with and Owner agrees to indemnify and hold
harmless Manager and the other Manager Indemnified Parties from and against any
and all Losses that may be imposed on them or any or all for taking such
actions and to promptly reimburse Manager for expenses incurred thereby.  The Manager also shall not be liable for any effort
or judgment or for any mistake of fact of law, or for anything which it may do
or refrain from doing hereinafter, except in cases of misconduct and/or
negligence of Manager, its agents, servants, or employees.


 


2.16                           Dealings with Advisor. 
Unless Owner specifically informs Manager to the contrary, Behringer
Harvard Multifamily Advisors I LP, or its successor as advisor to the Company,
may perform any of the obligations or exercise any of the rights of Owner under
this Agreement.


 


2.17                           Branding.  Manager shall maintain and administer for Owner the standards
of branding established by Behringer Harvard Holdings, LLC with respect to all
billboards, signage and uniforms.


 


2.18                           Risk Management.  Manager shall provide to Owner risk
management services, including, but not limited to, the following: assisting
and providing ways to mitigate, minimize, control, and transfer risk through
the prudent use of risk management, insurance programs and recommendations of
safety and loss control techniques; selecting and managing insurance brokers
and service products; preparing underwriting data for use in marketing
insurance programs; negotiating and placing insurance and related services;
serving as liaison for insurance brokers and monitoring insurance premium invoices
for accuracy; managing and settling loss control and insurance claims;
consulting and coordinating  insurance requirements for financing
properties; reviewing and monitoring sub-contractor certificates of insurance;
and consulting regarding insurance verbiage requirements for leases and
contracts.


 


2.19                           Real Estate Tax Management.  Manager shall provide to Owner tax
management services with respect to the Properties, including, but not limited
to, the following: coordinating payment of real estate taxes; contesting real
estate taxes, as Manager deems appropriate; accounting for all bills to be
processed at any given installment, and following up on missing bills; data
entry of tax amounts and equalized values when available; providing copies of
documents as requested (including following up on cancelled checks, monitoring
payment by third parties, communicating with interested parties and forwarding
tax bills to purchasers and other parties as necessary).


 


2.20                           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 Agreement.  


 


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In
addition, Manager shall provide technical support and maintenance with respect
to any technology used in the maintenance, operation, management and leasing of
properties.


 


ARTICLE III




Manager’s Compensation, Term


 


3.1                                 Management Fee. Commencing on the date hereof, Owner shall
pay Manager a monthly management fee (“Management
Fee”) equal to three and three-quarters percent (3-3/4%) of
Gross Revenue (as defined below) for each Project for such month payable
monthly in arrears. The term “Gross
Revenues” shall mean all amounts actually collected as rents or
other charges for use and occupancy of apartment units and from users of garage
spaces (if any), leases of other non-dwelling facilities in each Project and
concessionaires (if any) in respect of each Project, including furniture
rental, parking fees, forfeited security deposits, application fees, late
charges, income from coin operated machines, proceeds from rental interruption
insurance, and other miscellaneous income collected at each Project; but shall
exclude all other receipts not related to the use of real or personal property
relating to the Project, including but not limited to, income derived from
interest on investments or otherwise, proceeds of claims on account of
insurance policies (other than rental interruption[s] insurance), abatement of
taxes, awards arising out of eminent domain proceedings and discounts and
dividends on insurance policies.  Certain
of these Projects may be owned by Joint Ventures.  We define a “Joint
Venture” as 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.   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 such Project.
The term “Economic Interest Percentage”  shall
mean 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 such percentage shall be calculated
in good faith by the Owner. For purposes of defining Economic Interest
Percentage, any in-kind contribution shall be considered in the calculation and
valued at the fair market value of the contribution on the date of contribution
as determined by the Owner. In the event that Owner contracts directly with a
third-party property manager not affiliated with the Manager in respect of a
Project 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 of such Project.


 


In
no event will Owner pay both a Management Fee and an Oversight Fee to Manager
with respect to any Project. If Manager subcontracts its responsibilities
hereunder to another person or entity, Manager shall be solely responsible for
the payment to such third party. The Management Fee includes the reimbursement
of the specified cost incurred by the Manger of engaging another person or
entity to perform Manager’s responsibilities hereunder; provided, however, that
Manager shall be responsible for payment of all such amounts to such third
parties. Nothing herein shall prevent Manager from entering fee-splitting
arrangements with third parties with respect to the Management Fee.


 


3.2                                 Term  This Agreement commenced as of November 22,
2006, and shall thereafter continue for a period of seven years from said
commencement date, unless otherwise terminated as provided herein.  If no party gives written notice to the other
at least thirty (30) days prior to the expiration date hereof that this
Agreement is to terminate, then this Agreement shall automatically continue
thereafter for consecutive five-year periods until terminated by any party by
written notice given at least 30 days in advance of such termination.  Provided, however, that in the event the
Company terminates its advisory management agreement with Behringer Harvard
Multifamily Advisors I LP, Manager, upon at least thirty (30) days prior written
notice, shall have the right to terminate this Agreement.  In addition, and notwithstanding the
foregoing, Owner may terminate this Agreement (i) at any time upon
delivery of written notice to Manager not less than thirty (30) days prior to
the effective 


 


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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 of the Manager, its agents, servants or employees in the
performance of Manager’s duties hereunder and (ii) 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 liquidating 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; or


 


(c)                                With respect to any particular Project, the sale of such Project.


If
Owner shall materially breach its obligations hereunder, and such breach
remains uncured for a period of 10 days after written notification of such
breach, then Manager may terminate this Agreement by giving written notice to Owner
and Owner agrees to pay Manager the fees due to Manager pursuant to Section 3.1  for the unexpired portion of the term.


 


3.3                                 Manager’s Obligations Upon Termination.  Upon
the termination of this Agreement, Manager shall have the following duties:


 


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


 


(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 Project, except personal property paid for and owned by
Manager.  Manager shall also, for a
period of sixty (60) days immediately following the date of such termination,
make itself available to consult with and advise Owner, or its designee,
regarding the operation, maintenance and leasing of the Project.


 


(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 fees and reimbursements claimed to be due to Manager and shall cause
funds of Owner held by Manager relating to the Project to be paid to Owner or
its designee.


 


(d)                               Within sixty (60) days immediately following the date of such
termination, Manager shall deliver to Owner the report required by Section 2.14(a) for
any period not covered by such a report at the time of termination, and within
sixty (60) days immediately following the date of such termination, Manager
shall deliver to Owner, as required by Section 2.14(b), the statement of
operations for the fiscal year or portion thereof ending on the date of
termination.


 


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3.4                                 Owner’s Obligations Upon Termination.  Upon
any termination of this Agreement by Owner other than under subparagraph (i) of
the introductory paragraph to this Section 3.2, Manager shall be entitled
to receive all compensation and reimbursements, if any, due to Manager through
the date of termination.  Such amounts
will be due Manager no later than 30 days from the date of such termination.  All provisions of this Agreement that require
Owner to have insured, or to protect, defend, save, hold and indemnify or to
reimburse Manager shall survive any expiration or termination of this
Agreement, but only to the extent the applicable claim or cause of action is
based on an event occurring prior to the date of termination.


 


The
parties understand and agree that Manager may withhold funds for sixty (60)
days after the end of the month in which this 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 ten (10) days
of receipt of notice and an itemization of such unpaid bills.


 


ARTICLE IV




Procedures for Handling Receipts and Operating Capital


 


4.1                                 Security Deposits. 
Tenant security deposits shall be held by Manager in accordance with the
laws of the jurisdiction in which the Project is located.  Owner agrees to indemnify and hold harmless
Manager and the other Manager Indemnified Parties from and against any and all
Losses with respect to any use by Owner of the tenant security deposits that is
inconsistent with the terms of the lease and applicable laws.


 


4.2                                 Separation of Owner’s Monies. 
Manager shall establish and maintain, in a bank of Manager’s choice
whose deposits are insured by the Federal Deposit Insurance Corporation, and in
a manner to indicate the custodial nature thereof, a separate bank account for
the deposit of all monies of Owner. 
Manager shall also establish such other special bank accounts as may be
reasonably required by Owner.  All monies
deposited from time to time in these accounts shall be deemed trust funds and
shall be and remain the property of Owner and shall be withdrawn and dispersed
by Manager for the account of Owner only as expressly permitted by this
Agreement for the purposes of performing the obligations of Manager
hereunder.  No monies collected by
Manager on Owner’s behalf shall be commingled with the funds of Manager.


 


4.3                                 Depository Accounts. 
Owner and Manager agree that Manager shall have no liability for loss of
funds of Owner contained in the bank accounts for the Project maintained by
Manager pursuant to this Agreement due to insolvency of the bank or financial
institution in which its accounts are kept, whether or not the amounts in such
accounts exceed the maximum amount of federal or other deposit insurance
applicable with respect to the financial institution in question.


 


4.4                                 Working Capital.  In
addition to the funds derived from the operation of the Project, Owner shall
furnish and maintain in the operating accounts of the Project such other funds
as may be necessary to discharge financial commitments required to efficiently
operate the Project and to meet all payrolls and satisfy, before delinquency,
and to discharge all accounts payable.  Manager
shall have no responsibility or obligation with respect to the furnishing of
any such funds.  Nevertheless, Manager
shall have the right, but not the obligation, to advance funds or contribute
property on behalf of Owner to satisfy obligations of Owner in connection with
this Agreement and the Project.  Manager
shall keep 


 


13

















 


appropriate records to document all
reimbursable expenses paid by Manager, which records shall be made available
for inspection by Owner or its agents on request.  Owner agrees to reimburse Manager upon demand
for money paid or property contributed in connection with the Project and this
Agreement.


 


4.5                                 Authorized Signatures.  Any persons from time to time designated by
Manager shall be authorized signatories on all bank accounts established by
Manager pursuant to this Agreement and shall have authority to make
disbursements from such accounts.  Funds
may be withdrawn from all bank accounts established by Manager, in accordance
with this Article IV, only upon the signature of an individual who has
been granted that authority by Manager and funds may not be withdrawn from such
accounts by Owner unless Manager is in default hereunder.


 


ARTICLE V




Miscellaneous


 


5.1                                 Assignment.  Manager may delegate partially or in full its
duties and rights under this Agreement but only with the prior written consent
of Owner.  Owner acknowledges and agrees that any or all of the duties of
Manager as contained herein may be delegated by Manager and performed by a
person or entity (“Submanager”) with whom Manager contracts for the purpose of
performing such duties.  Owner specifically grants Manager the authority
to enter into such a contract with a Submanager; provided 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 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 issuance proceeds with respect to such matter.  Any
contract entered into between Manager and a Submanager pursuant to this Section 5.1
shall be consistent with the provisions of this Agreement, except to the extent
Owner otherwise specifically agrees in writing.  This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.


 


5.2                                 Non-Solicitation.  During the period commencing on the date on
which this Agreement is entered into and ending one year following the
termination of this Agreement, the Company and 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 any of
its affiliates, or (ii) hire, on behalf of the Company or OP or any other
person or entity, any person who has left the employment of the Manager or any
of its affiliates within the one-year period following the termination of that
person’s employment with the Manager or any of its affiliates.  During the period commencing on the date
hereof through and ending one year following the termination of this Agreement,
the Company and 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 or any of its
affiliates with, or endeavor to entice away from the Manager or any of its
affiliates, any person who during the term of this Agreement is, or during the
preceding one-year period was, a tenant, co-investor, co-developer, joint
venturer or other customer of the Manager or any of its affiliates.


 


5.3                                 Notices.  All notices required or
permitted by this Agreement shall be in writing and shall be sent by registered
or certified mail, addressed in the case of Owner to 15601 Dallas Parkway, Suite 600,
Addison, Texas 75001, and in the case of Manager to 15601 Dallas Parkway, Suite 600,
Addison, Texas 75001, or to such other address as shall, from time to time,
have been designated by written notice by either party given to the other party
as herein provided.


 


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5.4                                 Entire Agreement.  This
Agreement shall constitute the entire agreement between the parties hereto and
no modification thereof shall be effective unless in writing executed by the
parties hereto.


 


5.5                                 No Partnership. 
Nothing contained in this Agreement shall constitute or be construed to
be or create a partnership or joint venture between the Owner, its successors
or assigns, on the one part, and Manager, its successors and assigns, on the
other part.


 


5.6                                 No Third Party Beneficiary. 
Neither this Agreement nor any part hereof nor any service relationship
shall inure to the benefit of any third party, to any trustee in bankruptcy, to
any assignee for the benefit of creditors, to any receiver by reason of
insolvency, to any other fiduciary or officer representing a bankrupt or
insolvent estate of either party, or to the creditors or claimants of such an
estate.  Without limiting the generality
of the foregoing sentence, it is specifically understood and agreed that
insolvency or bankruptcy of either party hereto shall, at the option of the
other party, void all rights of such insolvent or bankrupt party hereunder (or
so many of such rights  as the other
party shall elect to void).


 


5.7                                 Severability.  If
any one or more of the provisions of this Agreement, or the applicability of
any such provision to a specific situation shall be held invalid or
unenforceable, such provision should be modified to the minimum extent
necessary to make it or its application valid and enforceable, and the validity
and enforceability of all other provisions of this Agreement and all other
applications of such provisions shall not be affected thereby.


 


5.8                                 Captions, Plural Terms. 
Unless the context clearly requires otherwise, the singular number
herein shall include the plural, the plural number shall include the singular
and any gender shall include all genders. 
Titles and captions herein shall not affect the construction of this
Agreement.


 


5.9                                 Attorneys’ Fees. 
Should either party employ an attorney to enforce any of the provisions
of this Agreement, or to recover damages for breach of this Agreement, the
non-prevailing party in any action agrees to pay to the prevailing party all
reasonable costs, damages and expenses, including reasonable attorneys’ fees,
expended or incurred by the prevailing party in connection therewith.


 


5.10                           Signs.  Manager shall have the right
to place signs on the Project in accordance with applicable Governmental
Requirements stating that Manager is the manager and leasing agent for the Project.


 


5.11                           Survival of Indemnities.  The
indemnification obligations of the parties to this Agreement shall survive the
termination of this Agreement to the extent of any claim or cause of action
based on an event occurring prior to the date of termination.


 


5.12                           Ownership of Proprietary Property.  The
Manager retains ownership of and reserves all Intellectual Property Rights (as
defined below) in the Proprietary Property (as defined below).  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 


 


15

















 


or
hereafter requested by the Manager to perfect, defend or confirm the assignment
described herein, in a form determined by the Manager.


 


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


 


“Proprietary
Property” 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 by
Manager in performing its duties set forth in this Agreement that relate to
management advice, services and techniques regarding current and potential
Projects, and all modifications, enhancements and derivative works of the foregoing.


 


5.13                 Governing Law, Venue.  This
Agreement shall be construed under and in accordance with the laws of the State
of Texas and is fully performable in Dallas County, Texas.


 


5.14                 Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original.


 


5.15                 Savings Clause.  If any provision of this Agreement is
held unenforceable, then such provision will be modified to reflect
the parties’ intention. By way of example and without limitation, if any
provision requiring the reimbursement of  certain of the Manager’s
expenses should be deemed unenforceable, the parties shall take such action to
reach an agreement for Owner to pay such reimbursable expenses.  All
remaining provisions of this Agreement shall remain in full force and
effect.


 


[REST
OF PAGE INTENTIONALLY LEFT BLANK]


 


16

















 


IN WITNESS WHEREOF, the parties hereto
have caused this instrument to be duly executed by their duly authorized
representatives.


 


	
  “OWNER”

  	
   

  	
  “MANAGER”

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BEHRINGER HARVARD MULTIFAMILY

  REIT I, INC.

  	
   

  	
  BEHRINGER HARVARD MULTIFAMILY

  MANAGEMENT SERVICES, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Gerald
  J. Reihsen, III

  	
   

  	
   

  	
   

  	
  Gerald
  J. Reihsen, III

  
	
   

  	
   

  	
  Executive
  Vice President – Corporate

  	
   

  	
   

  	
   

  	
  Executive
  Vice President – Corporate

  
	
   

  	
   

  	
  Development
  and Legal

  	
   

  	
   

  	
   

  	
  Development
  and Legal

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BEHRINGER HARVARD MULTIFAMILY 

  OP I LP

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  BHMF, Inc.,
  its General Partner

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Gerald
  J. Reihsen, III

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Executive
  Vice President –

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Corporate
  Development and Legal

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


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