Exhibit
10.1


 


AMENDED
AND RESTATED


 


ADVISORY
MANAGEMENT AGREEMENT


 


This AMENDED AND RESTATED ADVISORY MANAGEMENT
AGREEMENT (this “Agreement”) is
entered into on this the 2nd day of October, 2009, by and between BEHRINGER
HARVARD OPPORTUNITY REIT II, INC., a Maryland corporation (the “Company”), and BEHRINGER HARVARD
OPPORTUNITY ADVISORS II LP, a Texas limited partnership (the “Advisor”).


 


W I T N E S
S E T H


 


WHEREAS, the Company and the Advisor previously entered into that certain
Advisory Management Agreement dated January 4, 2008, amended by that
certain First Amendment to the Advisory Management Agreement dated August 13,
2008 (collectively, the “Original Agreement”); and


 


WHEREAS, the Company and the Advisor desire to amend the Original Agreement to,
among other things, (i) change the timing in determining the reimbursement
of organization and offering expenses by the Company during the Offering (as
defined below) and to amend certain other terms regarding the reimbursement of
organization and offering expenses, including the waiver of certain
organization and offering expenses, (ii) provide that acquisition expenses
reimbursable to the Advisor include expenses related to the Advisor directly
providing certain accounting and environmental services in connection with an
acquisition, which services are customarily provided by third parties and
reimbursed as third-party expenses in connection with completed acquisitions,
and (iii) permit the parties to audit the records, books and accounts of
the other party, as related to any fees and reimbursements paid to the Advisor;


 


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


 


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


 


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


 

















 


ARTICLE ONE


 


DEFINITIONS


 


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


 


Acquisition Expenses. A
non-accountable acquisition expense reimbursement in the amount of: (i) 0.25%
of the funds paid for purchasing an Asset, including any debt attributable to
the Asset, plus 0.25% of the funds budgeted for development, construction or
improvement in the case of Assets that we acquire and intend to develop,
construct or improve or (ii) 0.25% of the funds advanced in respect of a
loan or other investment.  In addition,
to the extent the Advisor directly provides services formerly provided or
usually provided by third parties, including without limitation accounting
services related to the preparation of audits required by the Securities and
Exchange Commission, property condition reports, title services, title
insurance, insurance brokerage or environmental services related to the preparation
of environmental assessments in connection with a prospective or completed
investment (the “Additional Services”), the direct employee costs and burden to
the Advisor of providing the Additional Services shall be Acquisition Expenses.  Acquisition Expenses also include any
investment-related expenses due to third parties in the case of a completed
investment, including, but not limited to legal fees and expenses, travel and
communications expenses, costs of appraisals, accounting fees and expenses, third-party
brokerage or finder’s fees, title insurance, premium expenses and other closing
costs.  Acquisition Expenses also include
any payments made to (i) a prospective seller of an asset, (ii) an
agent of a prospective seller of an asset, or (iii) a party that has the
right to control the sale of an asset intended for investment by the Company
that are not refundable and that are not ultimately applied against the
purchase price for such asset (“Non-Refundable Payments”).


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Board. The Board of Directors of
the Company.


 


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


 


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


 


Code. Internal Revenue Code of
1986, as amended from time to time, or any successor statute thereto. Reference
to any provision of the Code shall mean the provision as in effect from time to
time, as the same may be amended, and any successor provision thereto, as
interpreted by any applicable regulations as in effect from time to time.


 


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


 


Competitive Real Estate Commission. A real estate
or brokerage commission paid or, if no commission is paid, the amount that
customarily would be paid for the purchase or sale of a Property that is
reasonable, customary, and competitive in light of the size, type and location
of the Property (as determined by the Board, including a majority of the
Independent Directors).


 


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


 


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


 


Contract Sales Price. The total
consideration provided for in the sales contract for the Sale of a Property.


 


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


 


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


 


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


 


Director. A member of the Board.


 


Disposition Fee. The fee payable to the
Advisor for services provided in connection with the Sale of one or more
Properties pursuant to Section 3.01(c).


 


Distributions. Any dividends or other
distributions of money or other property by the Company to Stockholders,
including distributions that may constitute a return of capital for federal
income 


 


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tax purposes but excluding distributions that constitute the redemption
of any Shares and excluding distributions on any Shares before their
redemption.


 


Exchange Act.  The
Securities Exchange Act of 1934, as amended from time to time, or any successor
statute thereto.  Reference to any
provision of the Exchange Act shall mean such provision as in effect from time
to time, as the same may be amended, and any successor provision thereto, as
interpreted by any applicable regulations as in effect from time to time.


 


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


 


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


 


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


 


Intellectual Property Rights. All rights,
titles and interests, whether foreign or domestic, in and to any and all trade
secrets, confidential information rights, patents, invention rights,
copyrights, service marks, trademarks, know-how, or similar intellectual
property rights and all applications 


 


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and rights to apply for such rights, as well as any and all moral
rights, rights of privacy, publicity and similar rights and license rights of
any type under the laws or regulations of any governmental, regulatory, or
judicial authority, foreign or domestic and all renewals and extensions
thereof.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Sale or Sales. (i) Any transaction
or series of transactions whereby: (A) the Company or the Partnership
directly or indirectly (except as described in other subsections of this
definition) sells, grants, transfers, conveys, or relinquishes its ownership of
any Property or portion thereof, including the lease of any Property consisting
of a building only, and including any event with respect to any Property which
gives rise to a significant amount of insurance proceeds or condemnation
awards; (B) the Company or the Partnership directly or indirectly (except
as described in other subsections of this definition) sells, grants, transfers,
conveys, or relinquishes its ownership of all or substantially all of the
interest of the Company or the Partnership in any Joint Venture in which it is
a co-venturer or partner; (C) any Joint Venture directly or indirectly
(except as described in other subsections of this definition) in which the
Company or the Partnership as a co-venturer or partner sells, grants,
transfers, conveys, or relinquishes its ownership of any Property or portion
thereof, including any event with respect to any Property which gives rise to
insurance claims or condemnation awards; (D) the Company or the
Partnership directly or indirectly (except as described in other subsections of
this definition) sells, grants, conveys or relinquishes its interest in any
Mortgage or other loan or portion thereof (including with respect to any
Mortgage or other loan, all payments thereunder or in satisfaction thereof
other than regularly scheduled interest payments of amounts owed pursuant to
the Mortgage or other loan) and any event with respect to a Mortgage or other
loan which gives rise 


 


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to a significant amount of insurance proceeds or similar awards; or (E) the
Company or the Partnership directly or indirectly (except as described in other
subsections of this definition) sells, grants, transfers, conveys, or
relinquishes its ownership of any other Asset not previously described in this
definition or any portion thereof, but (ii) not including any transaction
or series of transactions specified in clause (i) (A) through (E) above
in which the proceeds of such transaction or series of transactions are
reinvested in one or more Assets within 180 days thereafter.


 


Securities Act. The Securities Act of
1933, as amended from time to time, or any successor statute thereto. Reference
to any provision of the Securities Act shall mean the provision as in effect
from time to time, as the same may be amended, and any successor provision
thereto, as interpreted by any applicable regulations as in effect from time to
time.


 


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


 


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


 


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


 


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


 


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


 


Termination Date. The date of termination of
this Agreement.


 


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


 


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


 


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


 


ARTICLE II


 


THE ADVISOR


 


2.01         Appointment. The Company hereby appoints the Advisor to
serve as its advisor on the terms and conditions set forth in this Agreement,
and the Advisor hereby accepts such appointment.


 


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


 


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


 


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


 


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


 


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


 


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


 


(f)            subject to the provisions of Sections 2.02(h) and
2.03 hereof, (i) locate, analyze and select potential investments in
Assets, (ii) structure and negotiate the terms and conditions of
transactions pursuant to which investment in Assets will be made; (iii) make
investments in Assets on behalf of the Company or the Partnership in compliance
with the investment objectives and policies of the Company; (iv) arrange
for financing and refinancing and make other changes in the asset or capital
structure of, and dispose of, reinvest the proceeds from the sale of, or
otherwise deal with the investments in, Assets; and (v) enter into leases
of Property and service contracts for Assets with duly qualified and licensed
Persons and, to the extent necessary, perform all other operational functions
for the maintenance and administration of the Assets, including the servicing
of Mortgages;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


2.03         Authority
of Advisor.


 


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


 


11

















 


qualified and licensed property managers and
other Persons who perform services for the Company, and (vii) arrange for,
or provide, accounting and other record-keeping functions at the Asset level.


 


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


 


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


 


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


 


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


 


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


 


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


 


2.06         Limitations on Activities. Anything else in this
Agreement to the contrary notwithstanding, the Advisor shall refrain from
taking any action which, in its sole judgment made in good faith, would (a) adversely
affect the status of the Company as a REIT, (b) subject the Company to
regulation under the Investment Company Act of 1940, as amended, or (c) violate
any law, rule, regulation or statement of policy of any governmental body or
agency having jurisdiction over the Company, the Shares or any of the Company’s
securities, or otherwise not be permitted by the Articles of Incorporation or
Bylaws, except if the action shall be ordered by the Board, in which case the
Advisor shall notify promptly the Board of the Advisor’s judgment of the
potential impact of the action and shall refrain from taking the action 


 


12

















 


until it receives further clarification or instructions from the Board.
In such event the Advisor shall have no liability for acting in accordance with
the specific instructions of the Board so given. The Advisor, its directors,
officers, employees and stockholders, and the directors, officers, employees
and stockholders of the Advisor’s Affiliates shall not be liable to the Company
or to the Board or Stockholders for any act or omission by the Advisor, its
directors, officers, employees or stockholders, or for any act or omission of
any Affiliate of the Advisor, its directors, officers or employees or
stockholders except as provided in Section 5.02 of this Agreement.


 


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


 


2.08         Other Activities of the Advisor. Nothing herein contained
shall prevent the Advisor or its Affiliates from engaging in other activities,
including, without limitation, the rendering of advice to other Persons
(including other REITs) and the management of other programs advised, sponsored
or organized by the Advisor or its Affiliates; nor shall this Agreement limit
or restrict the right of any director, officer, employee, or stockholder of the
Advisor or its Affiliates to engage in any other business or to render services
of any kind to any other Person. The Advisor may, with respect to any
investment in which the Company is a participant, also render advice and
service to each and every other participant therein. The Advisor shall report
to the Board the existence of any condition or circumstance, existing or
anticipated, of which it has knowledge, which creates or could create a
conflict of interest between the Advisor’s obligations to the Company and its
obligations to or its interest in any other Person. The Advisor or its
Affiliates shall promptly disclose to the Board knowledge of such condition or
circumstance.  The Advisor shall inform
the Board at least quarterly of the investment opportunities that have been
offered to other programs with similar investment objectives sponsored by the
Sponsor, Advisor, Director or their Affiliates. 
If the Sponsor, Advisor, Director or Affiliates thereof have sponsored
other investment programs with similar investment objectives which have
investment funds available at the same time as the Company, it shall be the
duty of the Board (including the Independent Directors) to adopt the method set
forth in the Company’s most recent Prospectus for its Shares or another
reasonable method by which investments are to be allocated to the competing
investment entities and to use their best efforts to apply such method fairly
to the Company.


 


2.09         Payment of Certain Organization and Offering Expenses.  The Company shall pay directly all
Organization and Offering Expenses considered underwriting compensation by the
Financial Industry Regulatory Authority, or FINRA.  Such payments, other than Selling Commissions
and the dealer manager fee, shall apply towards the limit on Organization and
Offering Expenses reimbursable by the Company to the Advisor pursuant to Section 3.02(a)(i) below.


 


13
















 


ARTICLE III


 


COMPENSATION AND REIMBURSEMENT OF SPECIFIED COSTS


 


3.01         Fees.


 


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


 


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


 


(c)           Disposition Fee. If the Advisor or an
Affiliate provides a substantial amount of services (as determined by a
majority of the Independent Directors) in connection with the Sale of one or
more Assets, the Advisor or the Affiliate shall receive, subject to the
satisfaction of the condition outlined below, a Disposition Fee in an amount
(the “Disposition Fee”) equal to
(subject to the limitation in the following paragraph) (i) in the case of
the sale of Property, the lesser of (A) one-half of a Competitive Real
Estate Commission or (B) 3% of the sales price of the Property and (ii) in
the case of the sale of any Asset other than Property, 3% of the sales price of
the Asset or Assets.


 


The Disposition Fee may be payable in
addition to real estate commissions paid to persons not affiliated with the
Company or the Advisor and their respective Affiliates; provided, however, that
the total real estate commissions paid to all Persons by the Company (together
with the Disposition Fee) shall in no case exceed an amount equal to the lesser
of (i) 6% of the Contract Sales Price of an Asset or (ii) the
Competitive Real Estate Commission in respect of any Property.  The Advisor, in its sole discretion, may 


 


14

















 


waive, reduce or defer all or any portion of
the Disposition Fee to which it would otherwise be entitled.


 


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


 


(e)           Development Fee. If the Advisor or an
Affiliate provides the development services, the Company shall pay the Advisor
Development Fees in amounts that are usual and customary for comparable
services rendered to similar projects in the geographic market; provided,
however, that a majority of the Independent Directors must determine that such
Development Fees are fair and reasonable and on terms and conditions not less
favorable than those available from unaffiliated third parties.  Development Fees will include the
reimbursement of the specified cost incurred by the Advisor of engaging third
parties for such services.  The Advisor,
in its sole discretion, may waive, reduce or defer all or any portion of the
Development Fee to which it would otherwise be entitled.  Notwithstanding the above, the Advisor may
engage (on behalf of the Company) third parties to provide development services
pursuant to its authority under Section 2.03 and pay such third parties
all applicable Development Fees.


 


3.02         Expenses.


 


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


 


(i)            Organization and Offering Expenses;


 


(ii)           Acquisition Fees and Acquisition Expenses;


 


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


 


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


 


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


 


15

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(xiv)        audit, accounting and legal fees.


 


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


 


(c)           Selling Commissions and the dealer manager fee,
which are included in the definition of Organization and Offering Expenses,
shall be paid by the Company in accordance with Section 2.09 herein and
the dealer manager agreement or similar 


 


16

















 


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


 


(d)           Notwithstanding anything to the contrary in this Section 3.02,
(i) the Advisor will be responsible for paying all of the
investment-related expenses that the Company or the Advisor incurs that are due
to third parties or in connection with providing the Additional Services with
respect to investments the Company does not make other than Non-Refundable
Payments and (ii) the Company shall be responsible for paying directly or
reimbursing the Advisor for all Non-Refundable Payments.


 


3.03         Other Services. Should the Board request that the Advisor
or any director, officer or employee thereof render services for the Company
other than set forth in Section 2.02, the services shall be separately
compensated at the rates and in the amounts as are agreed by the Advisor and
the Independent Directors, subject to the limitations contained in the Articles
of Incorporation, and shall not be deemed to be services pursuant to the terms
of this Agreement.


 


3.04         Reimbursement to the Advisor. The Company shall not
reimburse the Advisor for Total Operating Expenses to the extent that Total
Operating Expenses (including the Asset Management Fee), in the four
consecutive fiscal quarters then ended (the “Expense
Year”) exceed (the “Excess Amount”)
the greater of 2% of Average Invested Assets or 25% of Net Income for that
period of four consecutive fiscal quarters. Any Excess Amount paid to the
Advisor during a fiscal quarter shall be repaid to the Company. Reimbursement
of all or any portion of the Total Operating Expenses that exceed the
limitation set forth in the preceding sentence may, at the option of the
Advisor, be deferred without interest and may be reimbursed in any subsequent
Expense Year where such limitation would permit such reimbursement if the Total
Operating Expense were incurred during such period. Notwithstanding the
foregoing, if there is an Excess Amount in any Expense Year and the Independent
Directors determine that all 


 


17

















 


or a portion of such excess was justified, based on unusual and
nonrecurring factors which they deem sufficient, the Excess Amount may be
reimbursed to the Advisor.  If the
Independent Directors determine such excess was justified, then, after the end
of any fiscal quarter of the Company for which there is an Excess Amount for
the 12 months then ended paid to the Advisor, the Advisor, at the direction of
the Independent Directors, shall cause such fact to be disclosed in the next
quarterly report of the Company or in a separate writing and sent to the
Stockholders within 60 days of such quarter end, together with an explanation
of the factors the Independent Directors considered in determining that such
Excess Amount was justified. Such determination shall be reflected in the
minutes of the meetings of the Board. The Company will not reimburse the
Advisor or its Affiliates for services for which the Advisor or its Affiliates
are entitled to compensation in the form of a separate fee. All figures used in
any computation pursuant to this Section 3.04 shall be determined in
accordance with generally accepted accounting principles applied on a
consistent basis.


 


3.05         Audit
of Advisor Payments.  It
is the intention of the parties hereto to conform strictly to the applicable
provisions hereof as to fees, reimbursements and any other amounts (the “Advisor Payments”) to be paid to the Advisor hereunder.  However, at any time, either party shall have
the right, upon reasonable written notice, to engage a separate audit, on a
confidential basis, of its own and the other party’s records, books and
accounts in respect of Advisor Payments to ascertain whether the Advisor
Payments were properly determined and paid. 
An audit may be engaged only once in any 12-month period regardless of
which party engages the audit.  Any such
audit shall be conducted by an independent certified public accounting firm of
recognized national standing designated by the party requesting the audit (the
“Requesting Party”), other than the then
current auditor of its or any of its Affiliates’ financial statements, and
shall be conducted during regular business hours and in such a manner so as not
to interfere with the Company’s or the Advisor’s regular business
activities.  The Requesting Party shall
bear the costs of the audit unless the audit conclusively reveals an
underpayment or overpayment of Advisor Payments adverse to the Requesting Party
in an amount greater than 10% of the total amount of Advisor Payments owed for
the period being inspected, in which case the other party shall bear the costs
of the audit.  Any auditor who is engaged
to perform an audit shall not be compensated on a contingent basis or any other
basis that would tend to give the auditor an interest in the outcome of the audit,
and the auditor shall perform its audit on an impartial basis and certify in
writing as such.  If the audit
conclusively reveals an overpayment or underpayment of Advisor Payments, the
Company or the Advisor shall promptly pay to the other party the amount of the
overpayment or underpayment, as the case may be, without interest; provided,
however, that in the event that the audit conclusively reveals an overpayment
of Advisor Payments and the Advisor has at any time previously waived or
forgiven in writing any Advisor Payments that it would otherwise have been
entitled to hereunder (including the $3,500,000 waiver of Organization and
Offering Expense reimbursement set forth in Section 3.02(c) above),
the Company shall credit against the overpayment any amounts previously waived
or forgiven, without interest, and the Advisor shall not be obligated to repay
the Company to the extent that the overpayments do not exceed the aggregate of
the waived or forgiven amounts not already so credited.  Any underpayment or overpayment under this
Agreement shall not be a breach of this Agreement unless and until an audit
performed in accordance with this Section 3.05 is completed and the party
who may be obligated to make a payment hereunder as a result of such audit
shall have failed to promptly make any required payment.


 


18

















 


ARTICLE IV


 


TERM AND TERMINATION


 


4.01         Term; Renewal. Subject to Section 4.02 hereof, this
Agreement shall continue in force until January 4, 2010. Thereafter, this
Agreement may be renewed for an unlimited number of successive one-year terms
upon mutual consent of the parties. It is the duty of the Board to evaluate the
performance of the Advisor annually before renewing the Agreement, and each
such renewal shall be for a term of no more than one year.


 


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


 


4.03         Payments to and Duties of Advisor upon Termination.


 


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


 


(b)           The Advisor shall promptly upon termination:


 


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


 


(ii)           deliver to the Board a full accounting, including a
statement showing all payments collected by it and a statement of all money
held by it, covering the period following the date of the last accounting
furnished to the Board;


 


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


 


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


 


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


 


19

















 


(ii)           In the event that an Advisory Management Agreement
Termination (as such term is defined in the Articles of Incorporation) occurs
after the commencement of an Offering and prior to the Company’s or the
Advisor’s reimbursement of Organization and Offering Expenses pursuant to the
provisions of Section 3.02(c), the appropriate party, within 90 days after
the end of the year in which such Offering terminates shall make the necessary
reimbursement.


 


ARTICLE V


 


INDEMNIFICATION


 


5.01         Indemnification
by the Company.


 


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


 


20

















 


regulatory authority in which securities of
the Company were offered or sold as to indemnification for violations of
securities laws.


 


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


 


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


 


5.02         Indemnification by Advisor. The Advisor shall
indemnify and hold harmless the Company from contract or other liability,
claims, damages, taxes or losses and related expenses including attorneys’
fees, to the extent that the liability, claims, damages, taxes or losses and
related expenses are not fully reimbursed by insurance and are incurred by
reason of the Advisor’s bad faith, fraud, misfeasance, misconduct, gross
negligence or reckless disregard of its duties, but the Advisor shall not be
held responsible for any action of the Board in following or declining to
follow any advice or recommendation given by the Advisor.


 


ARTICLE VI


 


MISCELLANEOUS


 


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


 


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sale of all or substantially all the assets of the Company or the
Partnership, and shall likewise be binding upon any successor to the Advisor.


 


6.02         Relationship of Advisor and Company. The Company and the
Advisor are not partners or joint venturers with each other, and nothing in
this Agreement shall be construed to make them such partners or joint venturers
or impose any liability as such on either of them.


 


6.03         Notices. Any notice, report or other communication required
or permitted to be given hereunder shall be in writing unless some other method
of giving such notice, report or other communication is required by the
Articles of Incorporation, the Bylaws, or accepted by the party to whom it is
given, and shall be given by being delivered by hand or by overnight mail or
other overnight delivery service to the addresses set forth herein:


 


	
  To the Directors and to the Company:

  	
   

  	
  Behringer Harvard Opportunity REIT II, Inc.

  
	
   

  	
   

  	
  15601 Dallas Parkway

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  	
   

  
	
  To the Advisor:

  	
   

  	
  Behringer Harvard
  Opportunity Advisors II LP

  
	
   

  	
   

  	
  15601 Dallas Parkway

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas 75001

  



 


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


 


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


 


6.05         Severability. The provisions of this Agreement are
independent of and severable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for
any reason any other or others of them may be invalid or unenforceable in whole
or in part.


 


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


 


6.07         Entire Agreement. This Agreement contains
the entire agreement and understanding among the parties hereto with respect to
the subject matter hereof, and supersedes all prior and contemporaneous
agreements, understandings, inducements and conditions, express or implied,
oral or written, of any nature whatsoever with respect to the subject matter
hereof. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms
hereof. This Agreement may not be modified or amended other than by an
agreement in writing signed by each of the parties hereto.


 


22

















 


6.08         Waiver. Neither the failure nor any delay on the part of a
party to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further exercise of
the same or of any other right, remedy, power or privilege, nor shall any
waiver of any right, remedy, power or privilege with respect to any occurrence
be construed as a waiver of the right, remedy, power or privilege with respect
to any other occurrence. No waiver shall be effective unless it is in writing
and is signed by the party asserted to have granted the waiver.


 


6.09         Gender; Number. Words used herein regardless of the number
and gender specifically used, shall be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine or
neuter, as the context requires.


 


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


 


6.11         Execution in Counterparts. This Agreement may be
executed in multiple counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.


 


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


 


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


 


6.14         Treatment Under Texas Margin Tax. For purposes of the Texas
margin tax, the Advisor’s performance of the services specified in this
Agreement will cause the Advisor to 


 


23

















 


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


 


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


 


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


 


	
   

  	
  BEHRINGER HARVARD OPPORTUNITY REIT II, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Executive Vice President — Corporate Development & Legal

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD OPPORTUNITY ADVISORS II LP

  
	
   

  	
   

  
	
   

  	
  By: Harvard Property Trust, LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Executive Vice President — Corporate Development & Legal and
  Secretary

  



 


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