Exhibit 10.2


 


THIRD
AMENDED AND RESTATED PROPERTY MANAGEMENT AND LEASING AGREEMENT


 


This THIRD AMENDED AND RESTATED PROPERTY MANAGEMENT AND LEASING AGREEMENT
(this “Management Agreement”) is made and entered into as of the 20th
day of March, 2006, by and among BEHRINGER HARVARD REIT I, INC., a
Maryland corporation (“BH REIT”), BEHRINGER HARVARD OPERATING PARTNERSHIP I LP,
a Texas limited partnership (“BH OP”), and HPT MANAGEMENT SERVICES LP,
Texas limited partnership (the “Manager”).


 


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


 


WHEREAS, BH OP and
BH REIT and Manager previously entered into that certain Property
Management and Leasing Agreement dated February 14, 2003 as amended and
restated by the Amended and Restated Property Management and Leasing Agreement
dated June 2, 2003 and the Second Amended and Restated Property Management
and Leasing Agreement dated February 11, 2005 (the “Original Management
Agreement”); and


 


WHEREAS, BH REIT intends to continue to raise money
from the sale of its common stock to be used, net of payment of certain
offering costs and expenses, for investment in the acquisition or construction
of income-producing real estate and other real estate-related investments
(including the making or purchase of mortgage loans), some or all of which are
to be acquired and held by Owner (as hereinafter defined) on behalf of
BH REIT; and


 


WHEREAS, Owner intends to continue to retain Manager
to manage and coordinate the leasing of certain of the real estate properties
acquired by Owner under the terms and conditions set forth in this Management
Agreement; and


 


WHEREAS, the parties desire to amend and restate the
Original Management Agreement in its entirety ion accordance with the terms and
provisions hereof;


 


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


 


ARTICLE I


 


DEFINITIONS


 


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


 


1.1                                 “Affiliate”
means, with respect 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 the 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.


 

















 


1.2                                 “Gross Revenues” means all amounts actually
collected as rents or other charges for the use and occupancy of the
Properties, but shall exclude interest and other investment income of Owner and
proceeds received by Owner for a sale, exchange, condemnation, eminent domain
taking, casualty or other disposition of assets of Owner.


 


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


 


1.4                                 “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.


 


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


 


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


 


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


 


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


 


1.9                                 “Properties” means all real estate properties
owned by Owner and all tracts as yet unspecified but to be acquired by Owner
containing income-producing improvements or on which Owner will construct
income-producing improvements.


 


1.10                           “Proprietary Properties” means all modeling algorithms, tools,
computer programs, know-how, methodologies, processes, technologies, ideas,
concepts, skills, routines, subroutines, operating instructions and other
materials and aides used in performing the duties set forth in Article 2
that relate to management advice, services and techniques regarding current and
potential Properties, and all modifications, enhancements and derivative works
of the foregoing.


 


ARTICLE II


 


APPOINTMENT OF MANAGER; SERVICES TO BE PERFORMED


 


2.1                                 Appointment of Manager. Owner hereby engages and retains Manager as
the manager and as tenant coordinating agent of the Properties, and Manager
hereby accepts such appointment on the terms and conditions hereinafter set
forth; it being understood that this Management Agreement shall cause Manager
to be, at law, Owner’s agent upon the terms contained herein.


 


2.2                                 General Duties. Manager shall devote its best efforts to
performing its duties hereunder to manage, operate, maintain and lease the
Properties in a diligent, careful and vigilant manner. The services of Manager
are to be of scope and quality not less than those generally performed by
professional property managers of other similar properties in the area. Manager
shall make available to Owner the full


 


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benefit
of the judgment, experience and advice of the members of Manager’s organization
and staff with respect to the policies to be pursued by Owner relating to the
operation and leasing of the Properties.


 


2.3                                 Specific Duties. Manager’s duties include the following:


 


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


 


(b)                                 Maintenance.
Manager shall cause the Properties to be maintained in the same manner as
similar properties in the area. Manager’s duties and supervision in this
respect shall include, without limitation, cleaning of the interior and the
exterior of the Improvements and the public common areas on the Properties and
the making and supervision of repair, alterations, and decoration of the
Improvements, subject to and in strict compliance with this Management
Agreement and the Leases. Construction activities undertaken by Manager, if
any, will be limited to activities related to the management, operation,
maintenance, and leasing of the Property (e.g., repairs, renovations, and
leasehold improvements).


 


(c)                                  Leasing
Functions. Manager shall coordinate the leasing of the Properties and shall
negotiate and use its best efforts to secure executed Leases from qualified
tenants, and to execute same on behalf of Owner, if requested, for available
space in the Properties, such Leases to be in form and on terms approved
by Owner and Manager, and to bring about complete leasing of the Properties. Manager
shall be responsible for the hiring of all leasing agents, as necessary for the
leasing of the Properties, and to otherwise oversee and manage the leasing
process on behalf of Owner.


 


(d)                                 Notice
of Violations. Manager shall forward to Owner promptly upon receipt all
notices of violation or other notices from any governmental authority, and
board of fire underwriters or any insurance company, and shall make such
recommendations regarding compliance with such notice as shall be appropriate.


 


(e)                                  Personnel.
Any personnel hired by Manager to maintain, operate and lease the Property
shall be the employees or independent contractors of Manager and not of Owner
of such Property, BH OP or BH REIT. Manager shall use due care in the
selection and supervision of such employees or independent contractors. Manager
shall be responsible for the preparation of and shall timely file all payroll
tax reports and timely make payments of all withholding and other payroll taxes
with respect to each employee.


 


(f)                                    Utilities
and Supplies. Manager shall enter into or renew contracts for electricity,
gas, steam, landscaping, fuel, oil, maintenance and other services as are
customarily furnished or rendered in connection with the operation of similar
rental property in the area.


 


(g)                                 Expenses.
Manager shall analyze all bills received for services, work and supplies in
connection with maintaining and operating the Properties, pay all such bills
when due, and, if requested by Owner, pay, when due, utility and water charges,
sewer rent and assessments, and any other amount payable in respect to the
Properties. All bills shall be paid by Manager


 


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within the time required to obtain discounts, if any. Owner may from
time to time request that Manager forward certain bills to Owner promptly after
receipt, and Manager shall comply with any such request. Manager shall pay all
bills, assessments, real property taxes, insurance premiums and any other
amount payable in respect to the Properties out of the Account (as hereinafter
defined). All expenses shall be billed at net cost (i.e., less all rebates,
commissions, discounts and allowances, however designed).


 


(h)                                 Monies
Collected. Manager shall timely collect all rent and other monies, in the form of
a check or money order, from tenants and any sums otherwise due Owner with
respect to the Properties in the ordinary course of business. Owner authorizes
Manager to request, demand, collect and provide receipt for all such rent and
other monies and to institute legal proceedings in the name of Owner for the
collection thereof and for the dispossession of any tenant in default under its
Lease.


 


(i)                                     Banking
Accommodations. Manager shall establish and maintain a separate checking
account (the “Account”) for funds relating to the Properties. All monies
deposited from time to time in the Account shall be deemed to be trust funds
and shall be and remain the property of Owner and shall be withdrawn and
disbursed by Manager for the account of Owner only as expressly permitted by
this Management Agreement for the purposes of performing the obligations of
Manager hereunder. No monies collected by Manager on Owner’s behalf shall be
commingled with funds of Manager. The Account shall be maintained, and monies
shall be deposited therein and withdrawn therefrom, in accordance with the
following:


 


(i)             All sums received from rents
and other income from the Properties shall be promptly deposited by Manager in
the Account. Manager shall have the right to designate two or more persons who
shall be authorized to draw against the Account, but only for purposes
authorized by this Management Agreement.


 


(ii)          All sums due to Manager
hereunder, whether for compensation, reimbursement for expenditures, or
otherwise, as herein provided, shall be a charge against the operating revenues
of the Properties and shall be paid and/or withdrawn by Manager from the
Account prior to the making of any other disbursements therefrom.


 


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


 


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


 


(k)                                  Signs.
Manager shall place and remove, or cause to be placed and removed, such signs
upon the Properties as Manager deems appropriate, subject, however, to the
terms and conditions of the Leases and to any applicable ordinances and
regulations.


 


2.4                                 Approval of Leases, Contracts, Etc. In fulfilling its duties to Owner, Manager may and
hereby is authorized to enter into any leases, contracts or agreements on
behalf of Owner in the ordinary course of the management, operation,
maintenance and leasing of the Property.


 


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2.5                                 Accounting, Records and Reports.


 


(a)                                  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
Properties. Such records shall be maintained on a double entry basis. Owner and
persons designated by Owner shall at all reasonable time have access to and the
right to audit and make independent examinations of such records, books and
accounts and all vouchers, files and all other material pertaining to the
Properties and this Management Agreement, all of which Manager agrees to keep
safe, available and separate from any records not pertaining to the Properties,
at a place recommended by Manager and approved by Owner.


 


(b)                                 Monthly
Reports. On or before the 15th day after the end of each month
during the term of this Management Agreement, Manager shall prepare and submit
to Owner the following reports and statements:


 


(i)             rental collection record;


 


(ii)          monthly operating 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.


 


(c)                                  Budgets
and Leasing Plans. Not later than November 15 of each calendar year,
Manager shall prepare and submit to Owner for its approval an operating budget
and a marketing and leasing plan on each Property for the calendar year
immediately following such submission. In connection with any acquisition of a
Property by Owner, Manager shall prepare a budget and marketing and leasing
plan for the remainder of the calendar year. The budget and marketing and
leasing plan shall be in the form of the budget and plan approved by Owner
prior to the date thereof. As often as reasonably necessary during the period
covered by any such budget, Manager may submit to Owner for its approval
an updated budget or plan incorporating such changes as shall be necessary to
reflect cost over-runs and the like during such period. If Owner does not
disapprove any such budget within 30 days after receipt thereof by Owner, such
budget shall be deemed approved. If Owner shall disapprove any such budget or
plan, it shall so notify Manager within said 30-day period and explain the
reasons therefor. If Owner disapproves of any budget or plan, Manager shall
submit a revised budget or plan, as applicable, within 10 (ten) days of receipt
of the notice of disapproval, and Owner shall have 10 (ten) days to provide
notice to Manager if it disapproves of any such revised budget or plan. Manager
will not incur any costs other than those estimated in any budget except for:


 


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


 


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


 


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


 


(iv)      expenditures for real estate
taxes and assessment; and


 


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


 


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


 


(d)                                 Legal
Requirements. Manager shall execute and file when due all forms, reports,
and returns required by law relating to the employment of its personnel. Manager
shall be responsible for notifying Owner in the event it receives notice that
any Improvement on a Property or any equipment therein does not comply with the
requirements of any statute, ordinance, law or regulation of any governmental
body or of any public authority or official thereof having or claiming to have
jurisdiction thereover. Manager shall promptly forward to Owner any complaints,
warnings, notices or summonses received by it relating to such matters. Owner
represents that to the best of its knowledge each of its Properties and any
equipment thereon will upon acquisition by Owner comply with all such
requirements. Owner authorizes Manager to disclose the ownership of the
Property by Owner to any such officials. Owner agrees to indemnify, protect,
defend, save and hold Manager and its stockholders, officers, directors,
employees, managers, successors and assigns (collectively, the “Indemnified
Parties”) harmless of and from any and all Losses (as defined in Section 3.5(a) hereof)
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.


 


2.6                                 Guaranty
of Deposits. Should Owner acquire real property from Behringer Development
Company LP, a Texas limited partnership (“Behringer Development”), Manager
hereby guarantees the full, prompt and unconditional refund of any earnest
money deposit paid by Owner to Behringer Development should Owner be entitled
to such refund as a result of (i) the failure of Behringer Development to
develop the property, (ii) the failure of all or a specified portion of
the pre-leased tenants to take possession under their leases for any reason, or
(iii) the inability of Owner to pay the full purchase price at closing.


 


ARTICLE III


 


AUTHORITY GRANTED TO MANAGER AND CERTAIN OWNER
OBLIGATIONS


 


3.1                                 Authority As To Tenants, Etc. Owner agrees and does hereby give Manager the
following exclusive authority and powers (all of which shall be exercised
either in the name of Manager, as Manager for Owner, or in the name or Owner
entered into by Manager as Owner’s authorized agent, and Owner shall assume all
expenses in connection with such matters):


 


(a)                                  to
advertise each Property or any part thereof and to display signs thereon,
as permitted by law;


 


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(b)                                 to
lease the Properties to tenants;


 


(c)                                  to
pay all expenses of leasing such Property, including but not limited to,
newspaper and other advertising, signage, banners, brochures, referral
commissions, leasing commissions, finder’s fees and salaries, bonuses and other
compensation of leasing personnel responsible for the leasing of the Property;


 


(d)                                 to
cause references of prospective tenants to be investigated, it being understood
and agreed by the parties hereto that Manager does not guarantee the
creditworthiness or collectibility of accounts receivable from tenants, users
or lessees; and to negotiate new Leases and renewals and cancellations of
existing Leases that shall be subject to Manager obtaining Owner’s approval;


 


(e)                                  to
collect from tenants all or any of the following: a late rent administrative
charge, a non-negotiable check charge, credit report fee, a subleasing
administrative charge and/or broker’s commission; and Manager need not account
for such charges and/or commission to Owner;


 


(f)                                    to
terminate tenancies and to sign and serve in the name of Owner of each Property
such notices as are deemed necessary by Manager;


 


(i)             to institute and prosecute
actions to evict tenants and to recover possession of the Property or portions
thereof;


 


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


 


3.2                                 Operational
Authority. Owner agrees and does hereby give Manager the following
exclusive authority and powers (all of which shall be exercised either in the
name of Manager, as Manager for Owner, or in the name or Owner entered into by
Manager as Owner’s authorized agent, and Owner shall assume all expenses in
connection with such matters):


 


(a)                                  to
hire, supervise, discharge, and pay all labor required for the operation and
maintenance of each Property including but not limited to on-site personnel,
managers, assistant managers, leasing consultants, engineers, janitors,
maintenance supervisors and other employees required for the operation and
maintenance of the Property, including personnel spending a portion of their
working hours (to be charged on a pro rata basis) at the Property. All expenses
of such employment shall be deemed operational expenses of the Property.


 


(b)                                 to
make or cause to be made all ordinary repairs and replacements necessary to
preserve each Property in its present condition and for the operating
efficiency thereof and all alterations required to comply with lease
requirements, and to decorate the Property;


 


(c)                                  to
negotiate and enter into, as Manager of the Property, contracts for all items
on budgets that have been approved by Owner, any emergency services or repairs
for items not exceeding $5,000, appropriate service agreements and labor
agreements for normal operation of


 


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the Property, which have terms not to exceed three years, and agreements
for all budgeted maintenance, minor alterations, and utility services,
including, but not limited to, electricity, gas, fuel, water, telephone, window
washing, scavenger service, landscaping, snow removal, pest exterminating,
decorating and legal services in connection with the Leases and service
agreements relating to the Property, and other services or such of them as
Manager may consider appropriate; and


 


(d)                                 to
purchase supplies and pay all bills.


 


Manager shall use its
best efforts to obtain the foregoing services and utilities for the Property
under terms that are as cost-effective and otherwise favorable to Manager as
possible for the quality of services and utilities required. Owner hereby
appoints Manager as Owner’s authorized Manager for the purpose of executing, as
Manager for said Owner, all such contracts. In addition, Owner agrees to
specifically assume in writing all obligations under all such contracts so
entered into by Manager, on behalf of Owner of the Property, upon the
termination of this Agreement, and Owner shall indemnify, protect, save, defend
and hold Manager and the other 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 Manager’s willful
misconduct, gross negligence and/or unlawful acts. Manager shall secure the
approval of, and execution of appropriate contracts by, Owner for any
non-budgeted and non-emergency/contingency capital items, alterations or other
expenditures in excess of $5,000 for any one item, securing for each item at
least three written bids, if practicable, or providing evidence satisfactory to
Owner that the contract amount is lower than industry standard pricing, from
responsible contractors. Manager shall have the right from time to time during
the term hereof, to contract with and make purchases from Affiliates of
Manager, provided that contract rates and prices are competitive with other
available sources. Manager may at any time and from time to time request
and receive the prior written authorization of Owner of the Property of any one
or more purchases or other expenditures, notwithstanding that Manager may otherwise
be authorized hereunder to make such purchases or expenditures.


 


3.3                                 Rent
and Other Collections. Owner agrees and does hereby give Manager the
exclusive authority and powers (all of which shall be exercised either in the
name of Manager, as Manager for Owner, or in the name or Owner entered into by
Manager as Owner’s authorized agent, and Owner shall assume all expenses in
connection with such matters) to collect rents and/or assessments and other
items, including but not limited to tenant payments for real estate taxes,
property liability and other insurance, damages and repairs, common area
maintenance, tax reduction fees and all other tenant reimbursements,
administrative charges, proceeds of rental interruption insurance, parking
fees, income from coin operated machines and other miscellaneous income, due or
to become due and give receipts therefor and to deposit all such Gross Revenue
collected hereunder in the Account. Manager may endorse any and all checks
received in connection with the operation of any Property and drawn to the
order of Owner, and Owner shall, upon request, furnish Manager’s depository
with an appropriate authorization for Manager to make such endorsement. Manager
shall also have the exclusive authority to collect and handle tenants’ security
deposits, including the right to apply such security deposits to unpaid rent,
and to comply, on behalf of Owner of the Property, with applicable state or
local laws concerning security deposits and interest thereon, if any. Manager shall
not be required to advance any monies for the care or management of any
Property. Owner agrees to advance all monies necessary therefor. If Manager
shall elect to advance any money in connection with a Property, Owner agrees to
reimburse Manager forthwith and hereby authorizes Manager to deduct such
advances from any monies due Owner. In connection with any insured losses or
damages relating to any Property, Manager shall have the exclusive authority to
handle all steps necessary regarding any such claim; provided that Manager will
not make any adjustments or settlements in excess of $10,000 without Owner’s
prior written consent.


 


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3.4                                 Payment of Expenses. Owner agrees and does hereby give Manager
the exclusive authority and power (all of which shall be exercised either in
the name of Manager, as Manager for Owner, or in the name or Owner entered into
by Manager as Owner’s authorized agent, and Owner shall assume all expenses in
connection with such matters) to pay all expenses of the Property from the
Gross Revenue collected in accordance with Section 3.3 above, from the
Account. It is understood that the Gross Revenue will be used first to pay the
compensation to Manager as contained in Article 5 below, then operational
expenses and then any mortgage indebtedness, including real estate tax and
insurance impounds, but only as directed by Owner in writing and only if
sufficient Gross Revenue is available for such payments. Nothing in this
Agreement shall be interpreted in such a manner as to obligate Manager to pay
from Gross Revenue, any expenses incurred by Owner prior to the commencement of
this Agreement, except to the extent Owner advances additional funds to pay
such expenses.


 


3.5                                 Certain Owner Indemnification Obligations.


 


(a)                                  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 Manager and all of the other Indemnified
Parties harmless 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 Manager 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.


 


(b)                                 Property
Damage, Etc. Owner agrees to indemnify, defend, protect, save and hold
Manager and all of the other Indemnified Parties harmless from any and all
Losses in connection with or in any way related to the Property and from
liability for damage to the Property and injuries to or death of any person
whomsoever, and damage to property; provided, however, that such
indemnification shall not extend to any such Losses arising out of the willful
misconduct, gross negligence and/or unlawful acts (such unlawfulness having
been adjudicated by a court of proper jurisdiction) of Manager or any of the
other Indemnified Parties. Manager shall not be liable for any error of
judgment or for any mistake of fact or law, or for any thing that it may do
or refrain from doing, except in cases of willful misconduct, gross negligence
and/or unlawful acts (such unlawfulness having been adjudicated by a court of
proper jurisdiction).


 


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


 


3.7                                 Legal Status of Properties. Owner represents that to the best of its
knowledge each Property and any equipment thereon, when acquired by Owner, will
comply with all legal requirements and authorizes Manager to disclose the
identity of the Owner of the Property to any such officials and agrees to
indemnify, protect, defend, save and hold Manager and the other Indemnified
Parties harmless of and from any and all Losses that may be imposed on
them or any 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


 


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 jurisdiction thereover, of which it has actual
notice. In the event it is alleged or charged that any Improvement or any
equipment on a Property or any act or failure to act by Owner with respect to
the Property or the sale, rental, or other disposition thereof fails to comply
with, or is in violation of, any of the requirements of any constitutional
provision, statute, ordinance, law, or regulation of any governmental body or
any order or ruling of any public authority or official thereof having or
claiming to have jurisdiction thereover, and Manager, in its sole and absolute
discretion, considers that the action or position of Owner, with respect
thereto may result in damage or liability to Manager, Manager shall have
the right to cancel this Agreement at any time by written notice to Owner of
its election so to do, which cancellation shall be effective upon the service
of such notice. Such cancellation shall not release the indemnities of Owner
set forth in this Agreement and shall not terminate any liability or obligation
of Owner to Manager for any payment, reimbursement, or other sum of money then
due and payable to Manager hereunder.


 


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


 


ARTICLE IV


 


EXPENSES


 


4.1                                 Owner’s Expenses. Except as otherwise specifically provided,
all costs and expenses incurred hereunder by Manager in fulfilling its duties
to Owner shall be for the account of and on behalf of Owner. Such costs and
expenses shall include the wages and salaries and other employee-related
expenses of all on-site and off-site employees of Manager who are engaged in
the operation, management, maintenance and leasing or access control of the
Properties, including taxes, insurance and benefits relating to such employees,
and legal, travel and other out-of-pocket expenses that are directly related to
the management of specific Properties. All costs and expenses for which Owner
is responsible under this Management Agreement shall be paid by Manager out of
the Account. In the event the Account does not contain sufficient funds to pay
all said expenses, Owner shall fund all sums necessary to meet such additional
costs and expenses.


 


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


 


ARTICLE V


 


MANAGER’S COMPENSATION


 


5.1                                 Management Fees. Commencing on the date hereof, Owner shall
pay Manager property management and leasing fees in an amount equal to three
percent (3.0%) of Gross Revenues (the “Management Fees”) on a monthly basis
from the rental income received from the Properties over the term of this
Management Agreement. In the
event that Owner contracts directly with a non-affiliated third-party property
manager in respect of a Property, Owner shall pay Manager an oversight fee
equal to one percent (1%) of Gross Revenues of such Property to compensate
Manager for transition services to coordinate and align the systems and
policies of the third-party property manager with those of Manager. Manager’s
compensation under this Section 5.1 shall apply to all renewals,
extensions or expansions of Leases that Manager has originally negotiated. In the event Manager assists with planning
and coordinating the construction of any tenant-paid finish-out or
improvements, Manager shall be entitled to


 


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receive
from any such tenant an amount equal to not greater than five percent (5.0%) of
the cost of such tenant improvements.


 


5.2                                 Leasing Fees. In addition to the compensation paid to
Manager under Section 5.1 above, Manager shall be entitled to receive a
separate fee for the Leases of new tenants and renewals of Leases with existing
tenants in an amount not to exceed the fee customarily charged in arm’s length
transactions by others rendering similar services in the same geographic area
for similar properties as determined by a survey of brokers and agents in such
area.


 


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


 


ARTICLE VI


 


INSURANCE AND INDEMNIFICATION


 


6.1                                 Insurance to be Carried.


 


(a)                                  Manager
shall obtain and keep in full force and effect insurance on the Properties
against such hazards as Owner and Manager shall deem appropriate, but in any
event insurance sufficient to comply with the Leases and Ownership 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.


 


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


 


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


 


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


 


6.4                                 Accidents and Claims. Manager shall promptly investigate and
shall report in detail to Owner all accidents, claims for damage relating to
Ownership, operation or maintenance of the Properties, and any damage or
destruction to the Properties and the estimated costs of repair thereof, and
shall prepare for approval by Owner all reports required by an insurance
company in connection with any such accident, claim, damage, or destruction. Such
reports shall be given to Owner promptly, and any report not so given within 10
(ten) days after the occurrence of any such accident, claim, damage or
destruction shall be noted in the monthly operating statement delivered to
Owner pursuant to Section 2.5(b). Manager is authorized to settle any
claim against an insurance company arising out of any policy


 


11

















 


and,
in connection with such claim, to execute proofs of loss and adjustments of
loss and to collect and receipt for loss proceeds.


 


6.5                                 Indemnification. Manager shall hold Owner harmless from and
indemnify and defend Owner against 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 Properties, including, without
limitation, the Improvements when such injury or damage shall be caused by the
negligence of Manager, its agents, servants, or employees, except to the extent
that Owner recovers insurance proceeds with respect to such matter. Owner will
indemnify and hold Manager harmless against all liability for injury to persons
and damage to property caused by Owner’s negligence and which did not result
from the negligence of misconduct of Manager, except to the extent Manager
recovers insurance proceeds with respect to such matter.


 


ARTICLE VII


 


TERM AND TERMINATION


 


7.1                                 Term. This Agreement shall commence on the date first above written and
shall continue until the seventh (7th) anniversary of such date and
thereafter for successive seven (7) year renewal periods, unless on or
before 30 days prior to the date last above mentioned or on or before 30 days
prior to the expiration of any such renewal period, Manager shall notify Owner
in writing that it elects to terminate this Agreement, in which case this
Agreement shall be thereby terminated on said last mentioned date. In addition,
and notwithstanding the foregoing, Owner may terminate this Agreement at
any time upon delivery of written notice to Manager not less than thirty (30)
days prior to the effective date of termination, in the event of (and only in
the event of) a showing by Owner of willful misconduct, gross negligence, or
deliberate malfeasance by Manager in the performance of Manager’s duties
hereunder. In addition, either party may terminate this Agreement
immediately upon the occurrence of any of the following:


 


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


 


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


 


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


 


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


 


12

















 


(b)                                 Manager
shall transfer and assign to Owner, or its designee, all service contracts and
personal property relating to or used in the operation and maintenance of the
Properties, 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
Properties.


 


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


 


7.3                                 Owner’s Obligations Upon Termination. Owner shall pay or reimburse Manager for
any sums of money due it under this Agreement for services and expenses prior to
termination of this Agreement. 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
and, if Manager is or becomes involved in any claim, proceeding or litigation
by reason of having been Manager of Owner, such provisions shall apply as if
this Agreement were still in effect.


 


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 VIII


 


MISCELLANEOUS


 


8.1                                 Notices. All notices, approvals, consents and other communications hereunder
shall be in writing, and, except when receipt is required to start the running
of a period of time, shall be deemed given when delivered in person or on the
fifth day after its mailing by either party by registered or certified United
States mail, postage prepaid and return receipt requested, to the other party,
at the addresses set forth after their respect name below or at such different
addresses as either party shall have theretofore advised the other party in
writing in accordance with this Section 8.1.


 


	
   

  	
  Owner:

  	
  BEHRINGER HARVARD OPERATING
  PARTNERSHIP I LP

  
	
   

  	
   

  	
  c/o Behringer Harvard
  REIT I, Inc.

  
	
   

  	
   

  	
  15601 Dallas Parkway

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  	
  Attention: Chief Legal
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Manager:

  	
  HPT MANAGEMENT SERVICES LP

  
	
   

  	
   

  	
  15601 Dallas Parkway

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  	
  Attention: Chief Legal
  Officer

  



 


8.2                                 Governing Law; Venue. This Management Agreement shall be governed
by and construed in accordance with the laws of the State of Texas, and any
action brought to enforce the


 


13

















 


agreements
made hereunder or any action which arises out of the relationship created
hereunder shall be brought exclusively in Dallas County, Texas.


 


8.3                                 Assignment. Manager may delegate partially or in full its duties and rights
under this Management 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 8.3
shall be consistent with the provisions of this Agreement, except to the extent
Owner otherwise specifically agrees in writing. This Management Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.


 


8.4                                 Third Party Leasing Services. Manager acknowledges that from time to time
Owner may determine that it is in the best interests of Owner to retain a
third party to provide certain leasing services with respect to certain
Properties and to compensate such third party for such leasing services. Upon
the prior written consent of Manager, Owner shall have the authority to enter
into such a contract for leasing services with a third party (a “Third Party
Leasing Agreement”); provided that Manager shall have no liability or
responsibility to Owner for any of the duties and obligations undertaken by
such party, and Owner agrees to indemnify Manager for all Losses incurred by
Manager as a result of acts of such third party pursuant to the Third Party
Leasing Agreement. To the extent that leasing services are specifically
required to be performed by a third party pursuant to such Third Party Leasing
Agreement, Manager shall have no obligation to perform such leasing services
and Owner shall have no obligation to Manager for leasing fees pursuant to Section 5.2
hereof.


 


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


 


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


 


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


 


8.8                                 Headings. The headings of the various subdivisions of this Management Agreement
are for reference only and shall not define or limit any of the terms or
provisions hereof.


 


8.9                                 Counterparts. This Management Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Management
Agreement to produce or account for more than one such counterpart.


 


8.10                           Entire Agreement. This
Management Agreement contains the entire understanding and all agreements
between Owner and Manager respecting the management of the Properties. There
are no representations, agreements, arrangements or understandings, oral or
written, between Owner and Manager relating to the management of the Properties
that are not fully expressed herein.


 


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


 


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


 


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


 


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


 


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


 


15

















 


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


 


	
   

  	
  BEHRINGER HARVARD REIT I, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Executive Vice President—Corporate

  
	
   

  	
   

  	
  Development &
  Legal

  
	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD OPERATING

  PARTNERSHIP I LP

  
	
   

  	
   

  
	
   

  	
  By: Behringer Harvard REIT I, Inc.

  
	
   

  	
         General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
  Executive Vice President—Corporate

  
	
   

  	
   

  	
   

  	
  Development &
  Legal

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HPT MANAGEMENT SERVICES LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Executive Vice President—Corporate

  
	
   

  	
   

  	
  Development &
  Legal

  



 


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