Exhibit 10.2


AMENDED AND RESTATED 

ADVISORY MANAGEMENT AGREEMENT


This AMENDED AND RESTATED ADVISORY MANAGEMENT
AGREEMENT (this “Agreement”) is entered into on
this the 29th day of
December 2006, by and between BEHRINGER HARVARD OPPORTUNITY REIT I, INC., a Maryland
corporation (the “Company”), and
BEHRINGER HARVARD OPPORTUNITY ADVISORS I LP, a Texas limited partnership (the “Advisor”).


W I T N E S S E T H


WHEREAS, the Company has issued and will
continue to be issuing shares of its common stock, par value $0.0001, to the
public, such shares to be registered with the Securities and Exchange
Commission and may subsequently issue additional securities;


WHEREAS,
the Company and the Advisor previously entered into that certain Advisory
Agreement, dated September 20, 2005 (as amended, supplemented or restated from
time to time, the “Original Advisory Agreement”), and it is intended that this
Agreement amend and restate the Original Advisory Agreement effective as of and
for all periods after the date hereof;


WHEREAS, the Company is qualified as a real estate
investment trust and intends to invest its funds in investments permitted by
the terms of the Company’s Articles of Incorporation and Sections 856 through
860 of the Internal Revenue Code;


WHEREAS, the Company desires to continue to avail
itself of the experience, sources of information, advice, assistance and
certain facilities available to the Advisor and to have the Advisor continue to
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 continue to
undertake to render such 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 hereto agree as follows:


ARTICLE ONE


DEFINITIONS


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


Acquisition Expenses.  Any
and all expenses incurred by the Company, the Advisor, or any Affiliate of
either in connection with the selection, acquisition or development of any
Asset, whether or not acquired, including, without limitation, legal fees and
expenses, travel and communications expenses, costs of appraisals,
nonrefundable option payments on property not acquired, accounting fees and
expenses, and title insurance premiums. 
Acquisition Expenses paid or incurred by the Advisor or any Affiliate
are on behalf of the Company and will be reimbursed by the Company in
accordance with the terms of Section 3.02(a)(ii).










 



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 Person
(including any fees or commissions paid by or to any Affiliate of the Company
or the Advisor) in connection with making or investing in Mortgages or the
purchase, development or construction of an Asset, including, without
limitation, real estate commissions, selection fees, 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 I LP, a Texas limited
partnership, any successor advisor to the Company, or any Person to which
Behringer Harvard Opportunity Advisors I LP or any successor advisor
subcontracts all or substantially all of its functions.


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


Aggregate Assets Value.  The
aggregate book value of the Assets at the time of measurement before deducting
depreciation, bad debts or other similar non-cash reserves and without
reduction for any debt secured by or relating to such assets; provided, however, that during such periods
in which the Company is obtaining regular independent valuations of the current
value of its net assets for purposes of enabling fiduciaries of employee
benefit plan stockholders to comply with applicable Department of Labor reporting
requirements, “Aggregate Assets Value” will equal the greater of (i) the amount
determined pursuant to the foregoing or (ii) the Assets’ aggregate valuation
established by the most recent such valuation report without reduction for
depreciation, bad debts or other non-cash reserves and without reduction
for any debt secured by or relating to such assets.


Appraised Value. 
Value according to an appraisal made by an Independent Appraiser.


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 from time to time.


Assets. 
Properties, Mortgages and other direct or indirect investments in
equity interests in or loans secured by or otherwise relating to Real Property
(other than investments in bank accounts, money market funds or other current
assets, whether of the proceeds from an Offering or the sale of an Asset or
otherwise) owned by the Company,
directly or indirectly through one or more of its Affiliates or Joint Ventures.


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 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 



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average of such values at the end of each month during such period; provided, however, that during such periods
in which the Company is obtaining regular independent valuations of the current
value of its net assets for purposes of enabling fiduciaries of employee
benefit plan stockholders to comply with applicable Department of Labor
reporting requirements, “Average Invested Assets” will equal the greater of (i)
the amount determined pursuant to the foregoing or (ii) the Assets’ aggregate
valuation established by the most recent such valuation report(s) without
reduction for depreciation, bad debts or other non-cash reserves.


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
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 Securities Exchange Act of
1934, as amended) is or becomes the “beneficial owner” (as defined in Rule
13d-j of the Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Company or the Partnership representing
greater than 50% or more 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.


Closing Price.  On any date, the last sale price for any
class or series of the Company’s Shares, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, for such Shares, in either case as reported in the principal
consolidated transaction reporting system with respect to Shares listed or
admitted to trading on the NYSE or, if such Shares are not listed or admitted
to trading on the NYSE, as reported on the principal consolidated transaction reporting
system with respect to Shares listed on the principal national securities
exchange on which such Shares are listed or admitted to trading or, if such
Shares are not listed or admitted to trading on any national securities
exchange, the last quoted price on the Nasdaq National Market System, or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the principal automated quotation
system or other quotation service that may then be in use or, if such Shares
are not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in
such Shares selected by the Board.


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
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.


Company. 
Behringer Harvard Opportunity REIT I, Inc., a corporation organized
under the laws of the State of Maryland.


Company Value.  The actual value of the Company as a going concern based on the difference between (a)
the actual value of all of its assets as determined in good faith by the Board,
including a majority of the Independent Directors, and (b) all of its
liabilities as set forth on its then current balance sheet, provided
that (i) if such Company Value is being determined in connection with a Change
of Control that establishes the Company’s net worth (e.g., a tender offer for
the Shares, sale of all of the Shares or a merger) then the Company Value shall
be the net worth established thereby and (ii) if such Company Value is being
determined in connection with a Listing, then the Company Value shall be equal
to the number of outstanding Shares multiplied by the Closing Price of a single
Common Share averaged over a period of
30 trading days during which the Shares are listed or quoted for trading after
the date of 



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Listing.  For purposes
hereof, a “trading day” shall be any day on which the NYSE is open for trading
whether or not the Shares are then Listed on the NYSE and whether or not there
is an actual trade of such Shares on any such day.  If the holder of Convertible Shares disagree
as to the Company Value as determined by the Board, then each of the holder of
Convertible Shares and the Company (determined by a majority of the Independent
Directors) shall name one appraiser and the two named appraisers shall promptly
agree in good faith to the appointment of one other appraiser whose
determination of the Company Value shall be final and binding on the parties as
to the Company Value.  The cost of such
appraisal shall be split evenly between the Company and the Advisor.


Competitive Real Estate
Commission.  A real estate or brokerage commission paid
or, if no such 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 actually paid or allocated in respect of the purchase, development,
construction or improvement of a Property, the amount of funds advanced with
respect to a Mortgage or the amount actually paid or allocated in respect to
the purchase of other Assets, in each case exclusive of Acquisition Fees and
Acquisition Expenses.


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


Convertible Shares.  The
1,000 shares of the Company’s non-participating, non-voting, convertible stock,
par value $.0001 per share.


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 a Property or Mortgage, including the negotiation and
approval of plans, and any assistance in obtaining zoning and necessary
variances and financing for a specific Property, either initially or at a later
date. 
The Development Fee will include the reimbursement of the
specified cost incurred by the Advisor of engaging third parties to assist in
providing such services.


Director.  A
member of the Board.


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


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 such Offering without reduction.



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Independent Appraiser.  A
Person with no material current or prior business or personal relationship with
the Advisor or the Directors and who is a qualified appraiser of Real Property
of the type held by the Company or of other Assets as determined by the
Board.  Membership in a nationally
recognized appraisal society such as the Appraisal Institute shall be
conclusive evidence of such qualification as to Real Property.


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, the Company, the Advisor or any of their Affiliates 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, 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.  A business or professional relationship is
considered material if the aggregate gross revenue derived by the Director from
the Sponsor, the Advisor and their Affiliates exceeds 5% 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 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.


Invested Capital.  The
amount calculated by multiplying the total number of Shares purchased by
Stockholders by the issue price, reduced by the portion of any Distribution
(other than any Stock Dividends) that is attributable to Net Sales Proceeds and
by any amounts paid by the Company to repurchase Shares pursuant to the Company’s
plan for repurchase of Shares.


Joint Ventures.  The
joint venture or partnership arrangements in which the Company or the
Partnership is a co-venturer or general partner, which are established to
acquire or hold Assets.


Listing or Listed.  The
listing of the Shares of the Company on a national securities exchange or the
quotation of shares on the Nasdaq National Market System.  Upon
such Listing, the Shares shall be deemed Listed.


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
evidences 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 evidences of indebtedness or obligations.


NASAA Guidelines.  The
Statement of Policy Regarding Real Estate Investment Trusts of the North
American Securities Administrators Association, Inc. effective September
29, 1993.



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Net Income.  For
any period, the Company’s total revenues applicable to such period, less the
total expenses applicable to such 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.


Net Sales Proceeds.  In
the case of a transaction described in clause (i)(A) of the definition of Sale,
the proceeds of any such transaction less the amount of selling expenses
incurred by or on behalf of the Company, including all real estate commissions,
closing costs and legal fees and expenses. In the case of a transaction
described in clause (i)(B) of such definition, Net Sales Proceeds means the
proceeds of any such transaction less the amount of selling expenses incurred
by or on behalf of the Company, including any legal fees and expenses and other
selling expenses incurred in connection with such transaction. In the case of a
transaction described in clause (i)(C) of such definition, Net Sales Proceeds
means the proceeds of any such transaction actually distributed to the Company
from the Joint Venture less the amount of any selling expenses, including legal
fees and expenses incurred by or on behalf of the Company (other than those
paid by the Joint Venture).  In the case
of a transaction or series of transactions described in clause (i)(D) of the
definition of Sale, Net Sales Proceeds means the proceeds of any such
transaction (including the aggregate of all payments under a Mortgage or in
satisfaction thereof other than regularly scheduled interest payments to the
extent such interest accrues at a rate of less than ten percent (10%) per
annum) less the amount of selling expenses incurred by or on behalf of the
Company, including all commissions closing costs and legal fees and
expenses.  In the case of a transaction
described in clause (i)(E) of such definition, Net Sales Proceeds means the
proceeds of any such transaction less the amount of selling expenses incurred
by or on behalf of the Company, including any legal fees and expenses and other
selling expenses incurred in connection with such transaction. In the case of a
transaction described in clause (ii) of the definition of Sale, Net Sales
Proceeds means the proceeds of such transaction or series of transactions less
all amounts generated thereby which are reinvested in one or more Assets within
180 days thereafter and less the amount of any real estate commissions, closing
costs, and legal fees and expenses and other selling expenses incurred by or
allocated to the Company in connection with such transaction or series of
transactions.  Net Sales Proceeds shall
also include any consideration (including non-cash consideration such as stock,
notes, or other property or securities) that the Company determines, in its
discretion, to be economically equivalent to proceeds of a Sale, valued in the
reasonable determination of the Company. Net Sales Proceeds shall not include
any reserves established by the Company in its sole discretion.


NYSE. 
The New York Stock Exchange, Inc.


Offering.  Any
private or public offering of Shares pursuant to an effective registration
statement filed under the Securities Act or exempt from such filing during
periods from and after the date hereof.


Organization and Offering
Expenses.  Specified as any and all costs and expenses,
other than Selling Commissions and the dealer manager fee (as in effect from
time to time), incurred by and to be paid by the Company, the Advisor or any
Affiliate in connection with the formation, qualification and registration of
the Company and the marketing and distribution of its Shares, including,
without limitation, the following: legal, accounting and escrow fees; printing,
amending, supplementing, mailing and distributing costs; filing, registration
and qualification fees and taxes; telecopier and telephone costs; and all
advertising and marketing expenses, including the costs related to investor and
broker-dealer sales meetings. 
Organization and Offering Expenses paid or incurred by the Advisor or
any Affiliate are on behalf of the Company and will be reimbursed by the
Company in accordance with the terms of Section 3.02(a)(i).


Partnership. 
Behringer Harvard Opportunity OP I, LP, a Texas limited partnership,
through which the Company may own Assets.



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Performance Fee.  The
fee payable to the Advisor upon termination of this Agreement under certain
circumstances if certain performance standards have been met pursuant to
Section 4.03(b).


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 venture
arrangements or other partnership or investment interests).


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 investment 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(10) of the Securities
Act, including a preliminary prospectus, an offering circular as described in
Rule 256 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 to
the public.


Real Property. 
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 equity 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 portion thereof (including with respect to any Mortgage, all repayments
thereunder or in satisfaction thereof other than regularly scheduled interest
payments) and any event with respect to a Mortgage which gives rise to a significant
amount of insurance proceeds or similar awards; or (E) the Company or the
Partnership directly or indirectly (except as described in other subsections of
this definition) sells, grants, transfers, conveys, or relinquishes its
ownership of any other Asset not previously described in this definition or any
portion thereof, but (ii) not including any transaction or series of
transactions specified in clause (i) (A) through (E) above in which the
proceeds of such transaction or series of transactions are reinvested in one or
more Assets within 180 days thereafter.



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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 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.


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 $.0001 per share.


Soliciting Dealers. 
Broker-dealers who are members of the National Association of Securities
Dealers, Inc., 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.  Robert
M. Behringer.


Stock Dividend.  Any dividend or other distribution
paid to stockholders of the Company in the form of additional Shares.


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


Stockholders’ 10% Return.  As
of any date, an aggregate amount equal to a 10% cumulative, noncompounded,
annual return on Invested Capital (calculated like simple interest); provided,
however, that for purposes of calculating the Stockholders’ 10% Return, any
Stock Dividend shall not be included as a Distribution; and provided further
that for purposes of determining the Stockholders’ 10% Return, the return for
each portion of the Invested Capital shall commence for purposes of the calculation
upon the issuance of the shares issued in connection with such capital.


Subordinated 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).


Subordinated Incentive Listing
Fee.  The fee payable to the Advisor under certain
circumstances if the Shares are Listed pursuant to Section 3.01(e).


Subordinated Share of Net Sales
Proceeds.  The fee payable to the Advisor under certain
circumstances following receipt of Net Sales Proceeds pursuant to Section
3.01(d).


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 such provision as in effect from time to time, as the same
may be amended, and any successor provision thereto, as interpreted by any
applicable administrative rules as in effect from time to time.


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, 



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underwriting, brokerage, listing, registration, and other fees,
printing and other such 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) the Subordinated Share of
Net Sales Proceeds, (vi) the Performance Fee, (vii) the Subordinated Incentive
Listing Fee, (viii) Acquisition Fees and Acquisition Expenses, (ix) real
estate commissions on the Sale of Property, and (x) 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).


2%/25% Guidelines.  The
requirement pursuant to the NASAA Guidelines that, in any 12 month period,
Total Operating Expenses not exceed the greater of 2% of Average Invested
Assets during such 12 month period or 25% of Net Income over the same 12 month
period.


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.  The Advisor undertakes
to use its best efforts to present to the Company potential investment
opportunities and to provide a continuing and suitable investment program
consistent with the investment objectives and policies of the Company as
determined and adopted from time to time by the Board.  In performance of this undertaking, 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 an Affiliate of the
Advisor or other Person:


(a)           serve as the Company’s investment and
financial advisor and provide research and economic and statistical data in
connection with the Assets and investment policies;


(b)           provide the daily management of the
Company 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 uncertificated Shares,
if any, and acting as transfer agent for the Company’s Shares;


(d)           investigate, select, and, on behalf
of the Company, engage and conduct business with such Persons as the Advisor
deems necessary to the proper performance of its obligations hereunder,
including but not limited to 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 Affiliates of the Advisor, and 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;



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(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 and, to the extent necessary, perform
all other operational functions for the maintenance and administration of such
Assets, including the servicing of Mortgages;


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


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


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


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


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


(l)            provide the Company with 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 others to act, as attorney-in-fact or agent of the
Company in making, requiring and disposing of Assets, disbursing, and
collecting the funds, paying the debts and fulfilling the obligations of the
Company and 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;


 



 10














 


(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 in connection
with investor relations;


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


(q)           prepare on behalf of the Company 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 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, including oversight of
Affiliated companies that perform property management or other services for the
Company, (vi) oversee non-affiliated and Affiliated property managers and other
non-affiliated and Affiliated Persons who perform services for the Company, and
(vii) undertake 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 such
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
such proposed transactions involving investments in Assets as thereafter
require prior approval, provided however, that such 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 such 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 



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into any such account or accounts, and disburse from any such account
or accounts, any money on behalf of the Company, under such terms and
conditions as the Board may approve, provided that no funds shall be commingled
with the funds of the Advisor; and the Advisor shall from time to time render
appropriate accountings of such collections and payments to the Board, its
Audit Committee and the auditors of the Company.


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


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


2.08        Other Activities of the Advisor. 
Nothing herein contained shall prevent the Advisor or its Affiliates
from engaging in other activities, including, without limitation, the rendering
of advice to other Persons (including other REITs) and the management of other
programs advised, sponsored or organized by the Advisor or its Affiliates; nor
shall this Agreement limit or restrict the right of any director, officer,
employee, or stockholder of the Advisor or its Affiliates to engage in any
other business or to render services of any kind to any other Person.  The Advisor may, with respect to any
investment in which the Company is a participant, also render advice and
service to each and every other participant therein.  The Advisor shall report to the Board the
existence of any condition or circumstance, existing or anticipated, of which
it has knowledge, which creates or could create a conflict of interest between
the Advisor’s obligations to the Company and its obligations to or its interest
in any other Person.  The Advisor or its
Affiliates shall promptly disclose to the Board knowledge of such condition or
circumstance.  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.



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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 1/12th of 0.75% of Aggregate Assets
Value as of the last day of the preceding month.


(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 payable at the time and in respect of funds expended
for (i) the acquisition of an Asset, (ii) to the extent that such funds are
capitalized, for the development, construction or improvement of an Asset, or
(iii) the making of a Mortgage.  The total of all Acquisition Fees and
any Acquisition Expenses shall be limited in accordance with the Articles of
Incorporation.


(c)           Subordinated Disposition Fee.  If the Advisor or an Affiliate provides a
substantial amount of the services (as determined by a majority of the
Independent Directors) in connection with the Sale of one or more Assets, the
Advisor or such Affiliate shall receive, subject to the satisfaction of the
condition outlined below, a Subordinated Disposition Fee in an amount (the “Contingent Subordinated 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 such Property and (ii) in the
case of the sale of any Asset other than Property, 3% of the sales price of
such Asset or Assets.  The Contingent
Subordinated Disposition Fee will not be earned or paid unless and until the
Stockholders have received total Distributions in an amount equal to or in
excess of the sum of their aggregate Invested Capital plus the Stockholders’
10% Return.  To the extent that, in any
instance, the Contingent Subordinated Disposition Fees is not earned and paid
due to the foregoing limitation, the Contingent Subordinated Disposition Fees
that would have been earned and paid had the foregoing limitation not been in
place at the time of a Sale shall be a contingent liability of the Company,
which shall be paid if and only if the conditions set forth in this
subparagraph 3.01(c) have been satisfied and, upon the satisfaction of such
condition, the Company shall pay all such Contingent Subordination Disposition
Fees as if such condition had been satisfied with respect to each such prior
Sale.


The
Subordinated Disposition Fee may be payable in addition to real estate
commissions paid to non-Affiliates, provided, however, that the total real
estate commissions paid to all Persons by the Company (together with the
Subordinated 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.


In
the event this Agreement is terminated prior to such time as the Stockholders
have received total Distributions in an amount equal to or in excess of the sum
of their aggregate Invested Capital plus the Stockholders’ 10% Return through
the Termination Date, the Company Value shall be determined and any contingent
liabilities for the payment of Contingent Subordinated Disposition Fees on
Assets previously sold will be paid if the Company Value plus total
Distributions received prior to the Termination Date equals or exceeds the sum
of the aggregate Invested Capital plus the Stockholders’ 10% Return through the
Termination Date and then only to the extent of such excess.



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Following
Listing, and as soon as practicable after determination of Market Value
(defined below), any contingent liabilities for the payment of the Contingent
Subordinated Disposition Fees on Assets previously sold will be earned and paid
if and only if the Stockholders have received or been deemed to have received
total Distributions in an amount equal to or in excess of the sum of the
aggregate Invested Capital plus the Stockholders’ 10% Return through the date
of Listing.  For purposes of the
preceding sentence, in addition to actual Distributions received, Stockholders
will be deemed to have received Distributions in the amount equal to the
product of the total number of Shares outstanding and the average closing price
of the Shares over the 30-trading-day period beginning the date of Listing (the
“Market Value”).  Once any Contingent Subordinated Disposition
Fees are actually paid, such amounts shall thereafter be referred to as “Subordinated
Disposition Fees.”


(d)           Subordinated Share of Net Sales
Proceeds.  Prior to Listing, upon the
consummation of any Sale, the Advisor shall receive a Subordinated Share of Net
Sales Proceeds in an amount equal to 15% of Net Sales Proceeds less the amount
by which the Company’s debt for borrowed money exceeds the aggregate book value
of the Company’s assets after the sale of the Asset(s) in respect of which the
Net Sales Proceeds is being determined. **Notwithstanding the foregoing, the
Subordinated Share of Net Sales Proceeds will not be earned or paid unless and
until the Stockholders have received total Distributions in an amount equal to
or in excess of the sum of their aggregate Invested Capital plus the
Stockholders’ 10% Return.  To the extent
that, in any instance, the Subordinated Share of Net Sales Proceeds is not
earned and paid due to the foregoing limitation, the Subordinated Share of Net
Sales Proceeds that would have been earned and paid had the foregoing
limitation not been in place at the time of a Sale shall be a contingent
liability of the Company, which shall be paid if and only if the conditions set
forth in the preceding sentence of this subparagraph 3.01(d) have been
satisfied and, upon the satisfaction of such condition, the Company shall pay
all such Subordinated Share of Net Sales Proceeds as if such condition had been
satisfied with respect to each such prior Sale.


Following
Listing, and as soon as practicable after determination of Market Value, if the
Stockholders have received or been deemed to have received total Distributions
in an amount equal to the sum of their aggregate Invested Capital and
Stockholders’ 10% Return through the date of Listing, the Advisor shall receive
a Subordinated Share of Net Sales Proceeds in an amount equal to 15% of Net
Sales Proceeds less the amount by which the Company’s debt for borrowed money
exceeds the aggregate book value of the Company’s assets after the sale of the
Asset(s) in respect of which the Net Sales Proceeds is being determined.  For purposes of this subparagraph (d), in
determining whether the Subordinated Share of Net Sales Proceeds is payable
following Listing, in addition to actual Distributions received, Stockholders
will be deemed to have received Distributions in the amount equal to the Market
Value.


(e)           Subordinated Incentive Listing Fee.  Following Listing, and as soon as practicable
after determination of Market Value, the Advisor shall be entitled to receive a
Subordinated Incentive Listing Fee payable in the form of an interest bearing
promissory note (the “SILF Note”)
in a principal amount equal to 15% of the amount by which (i) the market value
of the outstanding Shares, measured by taking the Market Value, plus the total of all Distributions paid to
Stockholders from the Company’s inception until the date of Listing, exceeds
(ii) the sum of (A) 100% of Invested Capital and (B) the total Distributions
required to be paid to the Stockholders in order to pay the Stockholders’ 10%
Return from inception through the date of Listing.  Interest on the SILF Note will accrue beginning on the date of Listing
at a rate deemed fair and reasonable by the Independent Directors on the date
of Listing.  The Company shall repay the SILF Note using
the entire Net Sales Proceeds of each Sale after Listing until the SILF Note is
paid in full, with interest.  If the SILF
Note has not been paid in full within five 



 14
 






 



years from the date of
Listing, then the Advisor, its successors or assigns, may elect to convert the
balance of the SILF NOTE, including accrued but unpaid interest, into Shares at
a price per Share equal to the average Closing Price of the Shares over the ten
trading days immediately preceding the date of such election.  If the Shares are no longer listed at such
time as the SILF Note becomes convertible into Shares as provided by this
paragraph, then the price per Share, for purposes of conversion, shall equal
the fair market value for the Shares as determined by the Board based upon the
Appraised Value of the Assets as of the date of election.  The principal amount of the SILF Note shall
be referred to as “Subordinated Disposition Fees.”


(f)            Debt Financing Fee.  In the event of the origination 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 one percent
(1%) of the amount available under such 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.


(g)           Limitations on Payments.  Notwithstanding the foregoing, no payments
shall be made under Sections 3.01(d), 3.01(e) or 4.03(b) if, at or prior to the
time the payment is due, the Convertible Shares have been converted into Shares
in the case of Sections 3.01(d) and 3.01(e), or, in the case of Section
4.03(b), the determination of the number of Shares issuable upon conversion of
the Convertible Shares has been made in accordance with Section 5.3(iii)(c) of
Article V of the Articles of Incorporation, in each case, without any reduction in the number of
Convertible Shares converted or in the value or number of Shares to be issued
upon such conversion that may be triggered under the terms of the Convertible
Shares to avoid jeopardizing the Company’s REIT status.  If, however, the Convertible Shares have been
converted into Shares in the case of Sections 3.01(d) and 3.01(e), or, in the
case of Section 4.03(b), the determination of the number of Shares issuable
upon conversion of the Convertible Shares has been made in accordance with
Section 5.3(iii)(c) of Article V of the Articles of Incorporation, in each
case, with a reduction in the
number of Convertible Shares converted or in the value or number of Shares
issued upon such conversion triggered under the terms of the Convertible Shares
to avoid jeopardizing the Company’s REIT status, (i) no payments otherwise due
and payable under Section 3.01(d) (“Offset Payments”)
shall be paid until the aggregate amount of such Offset Payments equals the
aggregate value of the Shares (as determined at the time of such conversion as
being the Company Value divided by the number of Shares outstanding at such
time) issued or issuable upon conversion of the Convertible Shares, and (ii)
any payments otherwise due and payable under Sections 3.01(e) or 4.03(b) shall
be reduced, dollar-for-dollar, by an amount equal to the aggregate value of the
Shares (as determined at the time of such conversion as being the Company Value
divided by the number of Shares outstanding at such time) issued or issuable
upon conversion of the Convertible Shares.


3.02        Expenses.


(a)           In addition to the compensation paid
to the Advisor pursuant to Section 3.01 hereof, the Company shall pay directly
or reimburse the Advisor for the specified cost of all expenses paid or
incurred by the Advisor in connection with the services it provides to the
Company pursuant to this Agreement, including, but not limited to:


(i)            Organization and Offering Expenses;
provided, however, that within 60 days after the end of the month in which an
Offering terminates, the Advisor shall reimburse the Company for any
Organization and Offering Expenses reimbursement 



 15
 






 



received by the Advisor
pursuant to this Section 3.02, to the extent that such reimbursement exceeds 2%
of the Gross Proceeds exclusive of Gross Proceeds from shares sold under the
Company’s Distribution Reinvestment Plan. 
The Advisor shall be responsible for the payment of all Organization and
Offering Expenses in excess of 2% of the Gross Proceeds exclusive of Gross
Proceeds from shares sold under the Company’s Distribution Reinvestment Plan;


(ii)           Acquisition Expenses incurred in
connection with the selection and acquisition of Assets in an amount equal to
up to 0.5% of the Contract Purchase Price of each Asset;


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


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


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


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


(vii)         expenses of managing and operating
Assets owned by the Company, whether payable to an Affiliate of the Company or
a non-affiliated Person;


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


(ix)           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, Listing and registration fees, and other
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, revising,
amending, converting, modifying, or terminating the Company or 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)         administrative service expenses
(including personnel costs; provided, however, that no reimbursement shall be
made for costs of personnel to the extent that such personnel perform services
in transactions for which the Advisor receives a separate fee); and



 16
 






 



(xiv)        audit, accounting and legal fees.


(b)           Expenses 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, and shall deliver
such statement to the Company within 45 days after the end of each quarter.


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, such services shall be separately compensated at such rates and
in such 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 such year.  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 such excess was
justified, based on unusual and nonrecurring factors which they deem
sufficient, the Excess Amount may be reimbursed to the Advisor.  Within 60 days after the end of any fiscal
quarter of the Company for which there is an Excess Amount which the
Independent Directors conclude was justified and reimbursable to the Advisor,
there shall be sent to the Stockholders a written disclosure of such fact,
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.


ARTICLE IV


TERM AND TERMINATION


4.01        Term; Renewal.  Subject to Section 4.02
hereof, this Agreement shall continue in force until the first
anniversary of the date hereof. 
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 (i)
immediately upon a Change of Control or (ii) upon 60 days written notice
without cause or penalty (in either case, if termination is by the Company,
then such termination shall be upon the approval of a majority of the
Independent Directors).  Notwithstanding
the foregoing, the provisions of this Agreement which provide for payment to
the 



 17
 






 



Advisor of expenses, fees or other compensation following the date of
termination (i.e., Sections
3.01(e) and 4.03) shall continue in full force and effect until all amounts
payable thereunder to the Advisor are paid in full.


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 such 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, provided that the Subordinated Incentive Listing Fee, if any, shall
be paid in accordance with the provisions of Section 3.01(e).  In the event the Subordinated Incentive
Listing Fee is paid to the Advisor following Listing, no Performance Fee will
be paid to the Advisor pursuant to Sections 4.03(b) below.


(b)           Upon termination, unless such
termination is by the Company because of a material breach of this Agreement by
the Advisor, or upon Listing (in which case the Subordinated Incentive Listing
Fee will be paid in accordance with the provisions of Section 3.01(e)), the
Advisor shall be entitled to receive a Performance Fee payable in the form of
an interest bearing promissory note (the “Performance
Fee Note”) in a principal amount equal to the product of 0.15 times the amount, if any,
by which (i) the Company Value plus
the total Distributions paid to holders of Shares through the Termination Date,
exceeds (ii) the sum of the aggregate Invested Capital plus the Stockholders’
10% Return through the Termination
Date.  Interest on the Performance Fee Note will accrue beginning on the
Termination Date at a rate deemed fair and reasonable by the Independent
Directors.  The Company shall repay the Performance Fee Note using the entire Net Sales Proceeds of each Sale after the
Termination Date until the Performance
Fee Note is paid in full, with
interest.  If the Performance Fee Note has not been paid in full within five years from the Termination
Date, then the Advisor, its successors or assigns, may elect to convert the
balance of the Performance Fee
Note, including accrued but
unpaid interest, into Shares at a price per Share equal to the average Closing
Price of the Shares over the ten trading days immediately preceding the date of
such election if the Shares are Listed at such time.  If the Shares are not Listed at such time,
the Advisor, its successors or assigns, may elect to convert the balance of the
Performance Fee Note, including accrued but unpaid interest, into
Shares at a price per Share equal to the fair market value for the Shares as
determined by the Board based upon the Appraised Value of the Assets on the
date of election.  In no event will the
amount paid to the Advisor under the Performance Fee Note, including interest,
exceed the amount considered presumptively reasonable under Section IV.F. of
the NASAA REIT Guidelines in effect on the date hereof (the “NASAA Limit”).  In such event, the aggregate amount payable
under the Performance Fee Note, including interest, shall be reduced to an
amount equal to the NASAA Limit.


(c)           In the event that the Advisor
disagrees with the valuation of Shares pursuant to Section 4.03(b) where the
Shares are not Listed, for purposes of determining the number of shares to be
issued to the Advisor following the Advisor’s election to convert the balance
of the Performance Fee Note owed to the Advisor, then the fair market value of
such shares shall be determined by an independent appraiser of equity value
selected by the Advisor and the Company. 
If the Advisor and the Company are unable to agree upon an expert
independent appraiser, then each of the Company and the Advisor shall name one
appraiser and the two named appraisers shall promptly agree in good faith to the
appointment of one such appraiser whose determination shall be final and
binding on the parties.  The cost
of such appraisal shall be shared evenly between the Company and the Advisor.


 



 18














 


(d)           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.


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, under the
Articles of Incorporation, 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) such 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) such 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 



 19
 






 



merits by a court of competent jurisdiction as to the particular indemnitee; and (iii) a
court of competent jurisdiction approves a settlement of the claims against a
particular indemnitee and finds that indemnification of the settlement and the
related costs should be made, and the court considering the request for
indemnification has been advised of the position of the Securities and Exchange
Commission and of the published position of any state securities regulatory
authority in which securities of the Company were offered or sold as to
indemnification for violations of securities laws.


(b)           The Articles of Incorporation provide
that the advancement of Company 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 such Advisor or its
Affiliates, including their respective officers, directors, partners and
employees, are found not to be entitled to indemnification.


(c)           The indemnity provided for pursuant
to this Section 5.01 shall extend, without limitation, to any claims to the
extent relating to any of the events or outcomes set forth in the Prospectus as
possible results, outcomes or risks associated with the business and investment
objectives of the Company. 
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 such 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,
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 may be assigned by the Advisor to an Affiliate of the Advisor 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 such 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 



 20
 






 



binding on successors to the Company resulting from a Change of Control
or sale of all or substantially all the assets of the Company or the
Partnership, and shall likewise be binding upon any successor to the Advisor.


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


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


6.04        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 I, Inc.

  
	
   

  	
   

  	
  15601 Dallas Parkway

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  	
   

  
	
  To the Advisor:

  	
   

  	
  Behringer Harvard Opportunity Advisors I 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.


6.05        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
assignees.



 21
 






 



6.06        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.


6.07        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.


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


6.09        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 such 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 such waiver.


6.10        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.


6.11        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.


6.12        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.


6.13        Name.  Behringer Harvard Opportunity Advisors I LP
and/or one or more of its Affiliates has a proprietary interest in the names “Harvard”
(for the businesses engaged in by the Company and its Affiliates) and “Behringer” (for all purposes). 
Accordingly, and in recognition of this right, if at any time the
Company ceases to retain Behringer Harvard Opportunity Advisors I LP or an
Affiliate thereof to perform the services of Advisor, the Company will, promptly
after receipt of written request from Behringer Harvard Opportunity Advisors I
LP, cease to conduct business under or use the name “Harvard” or “Behringer” or
any diminutive thereof and the Company shall use its best efforts to change the
name of the Company to a name that does not contain the name “Harvard” or “Behringer”
or any other word or words that might, in the sole discretion of Behringer
Harvard Opportunity Advisors I LP LP, be susceptible of indication of some form
of relationship between the Company and Behringer Harvard Opportunity Advisors
I LP or any Affiliate thereof. Consistent with the foregoing, it is
specifically recognized that Behringer Harvard Opportunity Advisors I LP or one
or more of its Affiliates has in the past and may in the future organize,
sponsor or otherwise permit to exist other investment 



 22
 






 



vehicles (including vehicles for investment in real estate) and
financial and service organizations having “Harvard” or “Behringer” as a part
of their name, all without the need for any consent (and without the right to
object thereto) by the Company or its Board.


6.14        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.


6.15        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.


[The remainder of this page has been intentionally left blank]


 



 23














 


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


	
  

  	
   

  	
   

  	
  BEHRINGER
  HARVARD OPPORTUNITY

     REIT I, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Gerald J. Reihsen, III

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Executive Vice President — Corporate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
     Development and Legal

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  BEHRINGER
  HARVARD OPPORTUNITY

     ADVISORS I, LP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Harvard Property Trust,
  LLC,

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  its General Partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Gerald
  J. Reihsen, III

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Executive Vice President — Corporate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
     Development and Legal

  	
   

  



 



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